Australia Cuts Relief to China, India in Aid Revamp

The Australian government says it is planning to phase out direct aid to China and India as part of sweeping reforms to the country's overseas aid budget. Foreign Minister Kevin Rudd also wants a more active role for non-government organizations in the aid program.

Australia spends around $5 billion on foreign aid each year. That figure is expected to rise to $8 billion by 2016, which represents half a percent of national income.

In defending the increased foreign aid budget, Rudd said it is not in Australia’s nature “to be indifferent to the sufferings of others.”

Fraud allegations

However, there have been allegations that fraud has become rampant in the foreign aid system, although government figures state that for every $1,000 spent on aid, only 21 cents is skimmed off.

The foreign minister says there will be a new effort to improve transparency in the budget and the performance of every aid program, as well as an evaluation by an independent committee.

Rudd says the biggest changes will be the ending of direct financial assistance to China and India.

“These countries are already substantial and significant economies in their own right - one the second largest economy in the world, the other the sixth largest economy in the world," Rudd said. "If we continue to support programs within these countries, we will rely primarily on multilateral mechanisms.”

Spending shift

Australia will focus about 75 percent of its spending on programs in Southeast Asia and the Pacific Islands.

The country’s so-called “fragile” neighbors: East Timor, Indonesia, the Solomon Islands and Papua New Guinea - will be at the heart of Canberra’s efforts abroad to promote gender-equality as well as humanitarian and emergency assistance.

About 11 percent of the aid budget will fund aid programs in Africa and the Middle East.

Rudd also wants Australian charities and other non-government relief agencies to have a greater role in reducing poverty overseas. Charities and the conservative opposition have broadly welcomed the aid review, which they say demonstrates Australia’s generosity is saving lives in poorer countries.