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14 October 2020

With Greg Earl

Aid is up

The Morrison government increased development aid funding by about 4 per cent in the federal budget delivered last week. 

The government plans to spend an extra A$304.7 million over two years in Timor-Leste and the South Pacific to help with the coronavirus recovery. An extra A$23.2 million will be spent over three years to assist with the distribution of vaccines in a broader group of countries, mostly in South-East Asia.

The increased funding was a surprise to aid advocates, who feared that the cuts of recent years would continue, especially as the government turns its attention to pandemic recovery measures at home.

In May, the government expressed concern about the impact of the virus on the stability of neighbouring countries and swiftly reallocated existing aid funding. Lingering clusters in those countries continue to be seen as a threat to Australia’s own recovery.

The increased funding outlined in the budget is a welcome recognition from the government that further cuts to aid – in regions such as South Asia, or to multilateral organisations – would not efficiently deliver the extra money that the South Pacific needs. 

However, the budget did not formally classify the new funding as overseas development aid, labelling it a “COVID-19 Response Package” instead. This suggests it still plans to cap aid at about the current level of A$4 billion a year in the long term.

This leaves us with two important questions.

The first is whether the continued focus on aid spending in the Pacific is appropriate when COVID-19 is causing more poverty and dislocation in countries like the Philippines and Indonesia than in much of the Pacific.

The second is whether a budget that contains permanent spending increases for defence and intelligence but only a temporary increase for foreign aid has struck the right balance.


Asian travel bubbles

Scott Morrison has suggested that Australia is moving to establish travel zones, or “bubbles”, with certain Asian countries, including Japan, South Korea and Singapore. Travel bubbles with New Zealand and parts of the South Pacific are also planned.

Travel bubbles will help tourism-dependent Pacific countries in their economic recovery, but they also pose risks: these states have a limited capacity to manage potentially infected travellers from Australia. This is less likely to be an issue for Asian countries.

The prospect of Asian travel bubbles raises interesting questions about whether the COVID-19 crisis will change Australians’ attitudes about whether Australia is now part of Asia or becoming more Asian.

According to the federal budget delivered last week, Australia’s trade with Asia will benefit the domestic recovery, but fewer inbound visitors and immigrants from Asia will set it back.

More importantly, many Asian countries have demonstrated an administrative and cultural capacity to manage the pandemic better than Western countries, such as the United States and the United Kingdom, to which Australia has traditionally turned for leadership in times of crisis.

Enabling travel to Asian countries that have managed the pandemic well may open the eyes of Australians who are still sceptical about their future place in the world.


Pyongyang’s poker game

North Korea’s decision to showcase a new intercontinental ballistic missile at a military parade on Saturday has shown that the threat it poses to regional stability has not gone away during the COVID-19 crisis.

While the capabilities of the missile remain uncertain, North Korea appears to be sending a message to the next US administration that the Kim Jong-un regime must be reckoned with. 

The Kim dynasty has a long history of extracting concessions from US presidents when it suits North Korea, and it may be desperate for some economic gains due to the impact of the pandemic.

However, the United States’ presidential election campaigns have so far focused on other issues, including China, trade and the coronavirus pandemic. 

Australia is not a member of the six-nation group that has at times managed North Korea’s weapons program, but it has a lot at stake in the outcome of these efforts.

In the future, Australia’s three largest trading partners in Asia – China, Japan and South Korea – may need to cooperate on dealing with a North Korean nuclear crisis or regime collapse. However, the framework for such cooperation is unclear, given the regions’ various tensions with China. In the event of such crises, Australia would likely be called on to participate in any clean-up and recovery activities.

North Korea’s missile announcement is another reason for the Morrison government to remind the United States and China that they should be prepared to cooperate on some issues, despite their growing rivalry.


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