Budget Toolkit: Australia

Why is understanding donor budgets important for advocates?

The OECD collects and publishes granular data on DAC donors' ODA. While this data, featured in our Donor Tracker Profiles, provides the most comprehensive view of donor government ODA spending and is crucial for accountability and transparency, it provides only a past perspective. The time taken to collect and verify the information means that preliminary data are published about 3 months after the calendar year ends, and the complete and detailed data on resource flows take more than 12 months to be published.

To get a more up-to-date view on donors’ future plans and to influence ODA budgetary decisions, advocates need to look to donor budgets and their surrounding decision-making processes for insight. The majority of donors publish draft budgets and conduct negotiations in the last quarter of the calendar year before finalizing the next year’s budget. Through this series of Donor Budget Toolkits, the Donor Tracker aims to support advocates in better understanding donor budget timelines, how they translate to ODA spending, and how decision-making processes work, so they can best advocate for development cooperation in donor budgets negotiations. The series will be released over the upcoming months, in line with ongoing budget negotiations in markets tracked by the Donor Tracker.

How much ODA does Australia contribute?

Australia is the 13^th-largest economy in the world, as well as the 13^th-largest donor country to international development in absolute terms.

ODA represented 0.22% of Australia’s GNI in 2021, putting it below many other major donors in terms of its prioritization of global development. 2022 preliminary figures show Australia's rankings dropped in both absolute and relative terms, from 13^th to 14^th place and from 21^st to 26^th place, respectively.

What are the main sources of Australia's ODA?

94% of Australia’s ODA is managed by DFAT. Importantly, the development budget is embedded in the Ministry of Foreign Affairs’ budget and is not a major point for negotiation in Australian budget politics.

The budget is composed of two major funding lines:

• Country and Regional Programs: This contains budget lines for major regions, which are further broken down by annual allocations to specific country programs; and
• Global Programs: This envelope includes budget lines for multilaterals, CSOs, and humanitarian assistance to the UN, Commonwealth, and Other International Organizations. The Global Fund; Gavi; and GPEI are usually included in the health-specific sub-funding line, ‘Contribution to Global Health Programs.

Who decides on the development budget?

Australia is a federal parliamentary democracy and a constitutional monarchy.

The Executive Branch:

The Monarch: Australia is a constitutional monarchy, and the monarch (the current King or Queen of England) is the ceremonial head of state with symbolic powers.

The Government: The executive authority is held by the government, led by the Prime Minister. The government is responsible for preparing the federal budget and presenting it to the legislative branch for approval.

The Legislative Branch:

Parliament: The Australian Parliament is a bicameral legislature, consisting of the House of Representatives (lower house) and the Senate (upper house).

The government develops a detailed budget proposal outlining revenue and expenditure plans for the upcoming fiscal year, which is presented to the House of Representatives. The House of Representatives plays a central role in the budget process. Members of Parliament review and debate the budget proposal, and it must pass in the House of Representatives to become law. The Senate reviews the budget and can suggest amendments, but the final authority rests with the House of Representatives.

Judicial Branch:

Does not participate directly in the budget process.

Key Stakeholders:

When and how are decisions on Australia's budget made?

Timeline

The Australian fiscal year runs from July 1 to June 30. Throughout the fiscal year, DFAT holds a significant amount of discretion on the distribution of funds not yet allocated.

What does the current development budget tell us about Australia's ODA?

Australia’s ODA budget for FY2023/24 (July 2023-June 2024) is AUD4.8 billion ( US$3.3 billion).

Australia’s ODA budget has been steadily declining since its peak in FY2013/14. Despite this steady decline, ODA increased 8% from 2020 to 2021 due to an increase in bilateral grants, primarily for COVID-19 vaccine donations and health system assistance.

In 2022, Australian ODA decreased by 13% because of differences in its financial year reporting and the timing of its COVID-19 related expenditure compared to 2021. These reporting differences may result in an increase in reported ODA for 2023.

Australia’s Labor Party government, elected in May 2022, abolished the previous government’s AUD4 billion ( US$ 2.8 billion) budget cap. Previously, that limit was surpassed by excluded ‘temporary, targeted & supplementary measures’ that supported COVID-19 assistance, economic recovery, and regional partnerships. Australia’s total ODA budget is set at AUD4.8 billion ( US$3.3 billion) in FY2023/24, which extends from July 2023 to June 2024. ODA is expected to increase by AUD62 million ( US$43 million) in FY2024/25.

A revised budget was released in October 2022, which seeks to increase Australian ODA by AUD1.4 billion ( US$971 million) over four years. In the FY2023/24 budget, released in May 2023, the government committed to increasing the ODA budget by 2.5% annually from FY2026/27 onward. It also aimed to increase Australia’s overseas assistance by AUD8.6 billion ( US$6 billion) over a ten-year period starting in FY2027/28. Although the Australian government has spoken in terms of rebuilding its ODA budget, in fact, this commitment only acts to maintain the current monetary value of its ODA for a decade from FY2027/28. As a result, Australia’s ODA/GNI ratio will continue to fall as the economy grows.

What are the next steps?

Preparations for the FY2024/25 (July 2024-June 2025) budget will likely begin in October 2023. In November, the ERC of the Cabinet, composed of the Prime Minister, Treasurer, Finance Minister, and other ministers, will meet to determine budget priorities. Based on these priorities, DFAT and other departments will start to prepare funding requests. From December to February, DFAT will prepare its overall budget proposal and requests for specific budget lines. At the end of this process, the Foreign Affairs Minister will submit the Department’s 2024/25 budget request to the Cabinet’s ERC.

The Mid-Year Economic and Fiscal Outlook update was released on December 13, 2023. Policy decisions in the update added a relatively small net AUD5.3 billion (US$3.6 billion) in spending, with the government noting that while there is an improvement for FY2023-24 compared to the May budget, most revenue improvements have been banked. The significant new spending initiatives included allocating AUD576 million (US$386 million) over 11 years for the Aukus nuclear submarine acquisition, AUD300 million (US$201 million) over five years for cybersecurity, and AUD187 million (US$125 million) in assistance to Ukraine over two years.

The Assistant Treasurer and Minister for Financial Services has called for submissions from individuals, businesses, and community groups on their views regarding priorities for the 2024–25 budget. Interested parties are able to submit their responses to this consultation until January 25, 2024.