Despite being on track to deliver a surplus, the Federal Government has effectively frozen overseas aid in the 2018-19 Federal Budget at $4.2 billion.
The failure to replenish the overseas aid budget will further undermine Australia's international reputation and ability to promote inclusive and equitable development in our region and beyond. But most crucially, it impacts on the world's most vulnerable children and their families, leaving them at risk of falling further behind.
Effectively this Budget represents a new cut to aid of $141 million.
"We recognise tough fiscal trade-offs need to be made to strengthen the economy, but cuts made to Australia's overseas aid budget have been short-sighted," Save the Children acting CEO Dianne Francois said.
"They have come at a cost to Australia's international standing, but most importantly, have come at a cost to the world's poor."
In the forward estimates, just 0.19 per cent of Gross National Income (GNI) is allocated to overseas aid in 2021-22, bringing it the lowest level on record – well below the benchmark established by other major OECD donors at 0.7 per cent of GNI.
Cuts to education and health in the overseas aid budget are short-sighted measures that will undermine Australia's capacity to tackle one of the greatest challenges of our times – rising inequality.
Health will drop to 10.9 per cent of the aid budget in 2018-19, down from 13.3 per cent in 2017-18. Education, which sat at 18.1 per cent in 2017-18 will drop to 16 per cent in 2018-19.
Priority must be given to investing in human capital as a foundation for inclusive, equitable and sustainable development. This requires increased investment in education, health and nutrition as the building blocks for inclusive growth, and to overcome barriers to social and economic exclusion.
Save the Children's Dianne Francois said difficult choices must be made to bring the budget back to surplus and stressed that now is the time to start making the right investments for disadvantaged children and families in order to yield strong social and economic returns over the longer term.
"We welcome the Treasurer's announcement that the Budget will be back in balance in 2019-20," Ms Francois said.
"Now is the time for the Government to live up to its undertakings and to acknowledge that, as the ninth largest economy in the world Australia has the economic capacity to increase its investment in human capital to promote inclusive and equitable development overseas.
"Successive cuts to our overseas aid budget have come at a cost to Australia's international standing and capacity to promote peace, stability and security in our region and beyond. Most crucially, they have come at a cost to the poor."
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