Readily available statistics on Australia’s aid program go back to 1971. Since that time no Australian government has ever increased aid as a share of GNI when Commonwealth net debt has been greater than 10% of GDP. In other words, it is very hard, perhaps impossible, to achieve growth in the aid program when the Commonwealth is seen to have significant debt.

Aid is only a small part of total Commonwealth budget expenditure (the 0.5% of GNI promise would cost just 2% of the Commonwealth budget), however the much higher priority the public and MPs generally give to domestic expenditure and the fact that aid can be cut without Senate approval make cuts to aid a very popular option for Treasurers and Finance Ministers looking for money. This has been shown most recently in the three decisions of the Coalition to cut planned aid by $11.3 billion over 5 years, and much more beyond that. While aid is only about 1% of total budget expenditure it has made up around 25% of total budget cuts announced by the Government for the period 2013-14 to 2018-19.

Australia’s net debt is currently 16.9% of GDP and is forecast to rise to 18.5% by 2017-18 under the Government’s current budget consolidation plan, which is driven by a gradual increase in revenue and very significant expenditure constraint. Under this plan debt will not drop below 10% of GDP before 2025-26.