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Aid program remains stable despite political change
With Kevin Rudd reinstalled as Australian Prime Minister, an area of key policy in the spotlight is foreign aid.

After a dramatic week in Canberra, the question is which government policies Prime Minister Kevin Rudd will now change.

In the centre of the spotlight is Australia's asylum seeker policy but little is expected to alter on foreign aid. As government revenues slumped this year, Australia delayed a promised boost in aid, a decision which will particularly affect assistance to Indonesia and Papua New Guinea.

Jim Middleton speaks with Peter Baxter, the Director General of Australia's aid agency AusAID.
Transcript
JIM MIDDLETON, PRESENTER: After a dramatic week in Canberra, the question is which government policies reinstated Prime Minister Kevin Rudd will now change.

In the centre of the spotlight is Australia's asylum seeker policy but little is expected to alter on foreign aid. As government revenues slumped this year, Australia delayed a promised boost in aid, a decision which will particularly affect assistance to Indonesia and Papua New Guinea.

Peter Baxter is the Director General of Australia's aid agency AusAid.

Peter Baxter, thanks for talking to us.

PETER BAXTER, DIRECTOR GENERAL, AUSAID: A great pleasure.

JIM MIDDLETON: The delay in Australia's aid deadline twice now. How serious an impact is that having on aid programs? What are you going to have to cut?

PETER BAXTER: There were two... well one re-prioritisation more accurately of the aid program which happened in December last year. And that was to provide $375 million worth of official development assistance to funds. Some of the Australian costs of people seeking to have their refugee status determined. Because that was a mid-year change in our Budget and of course we had allocated our Budget, we did have to defer or delay and in some cases cut a number of programs.

JIM MIDDLETON: South Asia and Africa have been rising areas of priority for Australia's aid budget. Given this change in priority, what can now not go ahead?

PETER BAXTER: In South Asia, our program overall will increase by about $50 million during the next financial year. While the rate of increase has slowed we are still increasing. So we will do all the things we have committed to do publicly but some of them we might do at a slower rate. In the case of Africa it's been a very small drop about $30 million over $350 million spend.

JIM MIDDLETON: Papua New Guinea for historical reasons an because it's such a close country to Australia has been a significant recipient of Australian aid for a very long time. It's now as I understand it not on target to meet any of the United Nations millennium development goals. What has gone wrong? Why is it such a struggle?

PETER BAXTER: Okay well the first thing, we do have a big aid program in Papua New Guinea, it's around $500 million. But let's put that in context.

At the time of independence in 1975, Australian assistance made up almost half of the government Budget in Papua New Guinea. Today, it's seven per cent.

So 93 per cent of Papua New Guinea's resources are their own, derived from their enormous natural resource wealth and other economic activity in the country. So the key determining factor on what development outcomes will be achieved in Papua New Guinea will largely be from the decisions that the Papua New Guinea makes on how it allocates its own resources.

JIM MIDDLETON: Does that mean there really needs to be better coordination with the PNG government or is it a problem that people in PNG simply don't have the skill sets that are needed to ensure efficient delivery of Australia's aid budget?

PETER BAXTER: I think you will find that the Papua New Guinea Prime Minister, Mr Peter O'Neill, has said publicly he is frustrated at the slow rate of improvement in basic service delivery at the village and district level where most Papua New Guineans live, and he is very significantly increased the resource allocation to subnational levels of the Government in the country we are getting behind that. We are getting behind a greater push and we're enthusiastic supporters of Prime Minister O'Neill's efforts to improve service delivery.

But, as you know, Papua New Guinea is a difficult country in terms of its terrain. And it's a country where you have 700 different language groups, and an enormous number of challenges in terms of the actual delivery of aid because of still relatively low capacity.

JIM MIDDLETON: One final subject, Myanmar which is a significant priority for Australia's aid. In the past it's all been channelled through third parties. You're in discussions with the Myanmar Government about how to deliver it directly through them. How successful are those talks? How quickly do you think you will be able to achieve those goals?

PETER BAXTER: That has to be our goal, where we can get to a situation where the priorities identified by the Myanmar Government, whether it be in education and health and strengthen their systems while at the same time delivering aid. We have to look at the stability of our programs. If you go into Myanmar and do one-off programs that are parallel to Government you will not get the long term impacts we are seeking to achieve.

We know it will take time because the capacity within the Government in Myanmar is very low and I will give you one very good example. At the moment, Myanmar spends about $1.7 per cent of GDP on education, that is a amongst the lower expenditure levels of any government in the world.

If we're going to see real progress in education levels, that has got to be increased but it's also a demonstration of how low the capacity is within the Myanmar Government to deal with the education issues such as almost half of children not even completing five years of school.

JIM MIDDLETON: Peter Baxter, thank you very much indeed.

PETER BAXTER: Thank you, Jim.
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