Australia's Foreign Aid Dilemma

Humanitarian aspirations confront democratic legitimacy

Jack Corbett

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781315523477
• Edition: 1
• Topic: Social Sciences
• Subtopic: Global Development Studies
• Index: Social Sciences

The Australian aid program faces a fundamental dilemma: how, in the absence of deep popular support, should it generate the political legitimacy required to safeguard its budget and administering institution?

Australia's Foreign Aid Dilemma tells the story of the actors who have grappled with this question over 40 years. It draws on extensive interviews and archival material to uncover how 'court politics' shapes both aid policy and administration. The lesson for scholars and practitioners is that any holistic understanding of the development enterprise must account for the complex relationship between the aid program of individual governments and the domestic political and bureaucratic contexts in which it is embedded. If the way funding is administered shapes development outcomes, then understanding the 'court politics' of aid matters.

This comprehensive text will be of considerable interest to scholars and students of politics and foreign policy as well as development professionals in Australia and across the world.

Part 1

1 The post-war period and the Whitlam government

Development texts classically begin the well-known account of the global birth of foreign aid with a reference to United States President Harry S. Truman’s inaugural address in January 1949, during which he challenged Americans to ‘embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas’.¹ This emphasis on scientific advancement and industrial progress foreshadowed the extent to which international development assistance – be it bilateral or multilateral – would be premised on fostering economic growth in poor countries. The belief was that economic growth would facilitate the type of institutional and political development that underpinned the stability and prosperity of leading Western nations. This linear, materialist and ethnocentric notion of development was, in turn, a reflection of prevailing modernisation theory, which viewed the transition from pre-industrial to industrial society as an ‘inevitable international historical and unidimensional process which all societies undergo at different times’.² Development was said to occur over a series of progressive stages from traditional society at one end of the historical continuum to modern consumer society at the other.³ In service of this aim, development assistance largely meant the judicious injection of budgetary support, investment loans and technical expertise from the ‘First World’ into the newly independent states of the ‘Third World’. Aid was viewed then, and is still seen by many today, as essentially a technical enterprise aimed at fostering economic growth, and thereby development, in recipient countries.

Embodying a modernist and linear view of human history, Truman’s reference to ‘underdeveloped areas’ brought an entire industry into being. Australia would contribute to the establishment of international organisations, including the Bretton Woods institutions, during this period⁴ – the then Minister for External Affairs, H. V. ‘Doc’ Evatt, was President of the United Nations General Assembly during the 1948–49 session – but the headline story of its foreign aid program begins a little later when Evatt’s successor as Minister for External Affairs, Percy Spender,⁵ at a meeting of British Commonwealth Foreign Ministers in 1950, helped initiate the Colombo Plan.⁶ It was here that the seeds which would ultimately beget the Australian aid program were sown.⁷

Inception

The Colombo Plan drew inspiration from the Marshall Plan but was designed to service the newly independent Commonwealth countries of India, Pakistan and Ceylon rather than battle-scarred European states⁸. Later, the number of countries expanded, but it remained focused on South and South East Asia. Between 1951 and 1965, Australia hosted nearly 5,500 students and trainees.⁹ Political instability and the spread of communism were key concerns of the Australian foreign policy community during this period. Aid was seen as one way of stemming the tide and thus, Spender explained, should not be considered ‘mere humanitarianism’ but, rather, ‘serious self-interest’:¹⁰

By concentrated action, we, the countries which have had the greater opportunities in the past, can help the countries of South East Asia to develop their own democratic institutions and their own economies and thus protect them against those opportunists and subversive elements which take advantage of changing political situations and low living standards.¹¹

Aside from the Colombo Plan, the other main aid effort during this period fell under the Southeast Asia Collective Defence Treaty (later Southeast Asia Treaty Organization [SEATO]). Again, Australia’s participation in SEATO was directed against the threat of communist aggression. The military interventions are well known – the Korean War (1950–52), the Malayan Emergency (1955–60), the Indonesian Confrontation with Malaysia over Borneo in the mid 1960s, and the war in Vietnam (1962–75) – but throughout, development aid was employed in support of military aims.¹² Officially, the economic assistance provided via SEATO was ‘quasi-military’ in nature, involving the provision of defence equipment ranging from trucks and barbed wire to foodstuffs and officer training, but excluding weapons.¹³ A concerted effort was made to keep the Colombo and SEATO programs structurally separate, but they served the same overarching policy objective.¹⁴ When combined with Australia’s contributions to the administration of its overseas territories and the Bretton Woods institutions, these programs made up the bulk of Australia’s aid effort for much of the 1950s and early 1960s. The program’s effectiveness was judged according to its contribution to halting the spread of communism via the improvement of living standards in neighbouring countries and the resulting goodwill towards Australia.¹⁵ This latter objective would become even more significant when larger quantities of Australian aid began to flow to Indonesia in the late 1960s.¹⁶ By then, the faint outline of what would become recognised as Australia’s aid program had emerged.

In the early 1950s, the Colombo Plan was managed by a small team of ten officers employed on a temporary basis by the Department of External Affairs (at that time, the Public Service Board mandated a seven-year minimum project length for permanent positions, and the Plan was initially only scheduled to run for six).¹⁷ These officers were located in the Economic and Technical Assistance Branch and had limited knowledge and experience of aid and of the South East Asian region.¹⁸ The arrangements in the Department of External Territories, whose responsibilities included Papua and New Guinea, were different again, but at this stage, efforts were largely distinct. Treasury managed Australia’s relationships with the Bretton Woods institutions, while various other departments administered discrete aspects of the aid program over this and later decades, including Education and Science, Labour and National Service, Immigration, Primary Industry and Supply.¹⁹ The result was a relatively ad hoc arrangement that reflected the emerging nature of the policy area and its low standing in the hierarchy of government business.

Outside elections, the cadence of federal administration is set by the budget cycle. Tensions between External Affairs and Treasury over the level of aid funding were apparent as early as the Colombo Plan. Treasury antipathy towards spending on foreign affairs is legendary, and it is difficult to mount a case that aid received uniquely harsh treatment.²⁰ In the main, Treasury objected to the idea that aid would be an ongoing budget commitment.²¹ Importantly, Cabinet tended to take its side. Minister for External Affairs R. G. Casey recalled bitterly in 1955, ‘The fact that I did everything possible to help the Treasury last year by keeping our Colombo Plan requirements down to £3 million (actually spent only £2.8 million) is now working to my disadvantage’.²²

These initial forays set a tone that would be repeated in decades of subsequent negotiations. At times, strong advocacy for aid thwarted Treasury line in Cabinet, but for much of its history, the opposite has been true, with rearguard action and bitter disappointment recurring themes in budget debates.

The first development decade – the 1960s

In the mid 1960s, Australia’s aid program shifted gear due to a combination of influential ideas, individuals and events. The first was a change in the international context and debates about the role and place of aid relative to development. On the one hand, high expectations that development would provide quick solutions to the challenges of ‘emerging areas’ were unfulfilled.²³ On the other, decolonisation was sweeping across the globe. Large portions of South East Asia and Africa had already gained independence in the 1950s and early 1960s. Closer to home, in the Pacific region, Samoa gained independence from New Zealand in 1962 and Cook Islands would follow later that decade. The Australian government had also commenced negotiations with Nauru, then an external territory, about its future political status, while in Papua New Guinea, the first House of Assembly, an important step on the road to self-rule, met in 1964. In this climate, humanitarian and moral obligations came to feature more prominently in policy discussions.²⁴

The local and global emphasis on self-determination reflected the mood of the time and provided a sense of urgency to the Truman-esque vision of scientific knowledge being freely transferred to new nations. This sentiment began to enjoy growing support within certain Canberra circles. The Australian Council for Overseas Aid (ACFOA) was formed in 1965.²⁵ Its first President, Sir John Crawford, would be a significant figure in the aid lobby during the 1970s and early 1980s.²⁶ In official policy statements, ‘economic development’ became a guiding principle of aid efforts around this time, although it remained subsidiary to foreign policy objectives and the threat of communist aggression in particular.

Amidst this mood for change, Paul Hasluck, then a senior Liberal Party politician who would became Governor-General, was appointed Minister for External Affairs (now Foreign Affairs) in 1964. Hasluck had previously been Minister for External Territories for twelve and a half years and, as a result, had considerable first-hand experience of development issues.²⁷ Within months of taking the post, he initiated an interdepartmental review of the ‘nature, extent and effectiveness’ of Australia’s external aid.²⁸ The review took place in late 1964 and early 1965 and was chaired by the head of the Department of External Affairs, Sir Arthur Tange. It was largely made up of departmental officers along with representatives from Treasury and PM&C. It was the first and only such initiative in the pre-1970s era. The review confirmed the dominance of foreign policy and diplomatic imperatives for aid but, crucially, also tackled the question of scale and complexity: could the current arrangements deal with what would most likely be increasing demands on Australian aid in a postcolonial era? The answer was a resounding ‘no’.

One recommendation of the...