In ordering administrative upheaval in Foreign Affairs and Trade, Tony Abbott finally killed off an aid consensus that had lasted for a brief political moment, while quietly breaking an Iron Law of politics that ruled for seven decades.

The Iron Law was that when the Coalition was in power, the junior party in the form of the wombat tribe (the Country-turned-National Party) always got Trade. But no longer. That change marks an interesting turn in Australian trade and international thinking, which the next column will return to.

First, let’s adopt the standard Canberra custom and follow the money and the power. In integrating AusAID into Foreign, the Abbott government is trying to bring the cash and the cachet closer together: AusAID has had the money while Foreign has had the power. The mismatch was getting out of hand and something had to change.

The crash and boom of shoving AusAID inside Foreign gave a modicum of covering noise to killing off what had been, for a brief political moment, the golden consensus on a big boost to Australian aid spending. The brief aid consensus ran from the late Howard era to the first version of the Rudd government. That consensus, to rapidly ramp up the money spent on foreign aid, was a product of boom, bible and UN millennialism.

On the boom side, as the mining dollars surged through the budget in the early 2000s, the Howard government happily signed up to the Millennium Development Goals and Australia set out on the trek to spend 0.5% of its Australia’s Gross National Income on international development by 2015–16.

The ‘bible’, or internationalist, dimensions of the Rudd personality meant he was keen to pick up what Howard began and really shovel dollars into aid. The Libs couldn’t criticise Rudd for carrying on what Howard had started. From 2005 to 2010, aid spending doubled. So was born what in 2010 I dubbed Canberra’s ‘new golden consensus on aid.’

It was golden because the gold was gushing. The consensus between Labor and the Coalition meant there wasn’t much political or popular debate about the purposes and priorities of this growing cash mountain. While the consensus prevailed, aid was a protected species.

The aid industry couldn’t believe its luck and talked intensely and loudly to itself about what it could all mean. Happy days, indeed! But the lack of any political or broader public discussion meant the new aid consensus was neither broadened nor deepened in the polity. The target was juicy and not well entrenched.

By 2010, aid had already doubled to $4 billion and was on track to double again by 2015. AusAID was speeding towards becoming a strange $8 billion behemoth; strange because it would have been an extremely rich bureaucracy that sat low on the Canberra power totem pole. The mismatch between cash and cachet is nicely captured by the way some other big beasts (we’re looking at you, Defence) referred to AusAID as the ATM—the automatic teller machine.

The 2010 election was a highpoint for the symbolism of the new golden consensus. Like Howard and Rudd, both Abbott’s Liberals and Gillard’s Labor pledged to keep climbing towards the $8 billion spend. Unlike Howard and Rudd, they didn’t mean it. When Gillard started raiding the AusAID kitty for desperately-needed cash, the golden consensus was dead; Abbott has merely done the burial rite. AusAID must cut $656 million from announced spending this financial year and strip out a $3.8 billion from projected spending over the next three years.

Aid has gone from protected species to prime target. Now that it’s open season on AusAID, a new Liberal-Labor consensus means there is, again, not much argument. The two sides joined to create the consensus and the two sides were tacit partners in its cremation. The aid purists have been driven out and the politicians are back in charge. The purist/pol distinction is drawn from Peter McCawley, usually one of the smartest chaps in the room (and for an economist, easy to understand):

There is a deep divide between two groups of people in the global aid game—call them the ‘generalists’ (politicians and diplomats) and the ‘specialists’ (the development aid lobby). The generalists (who win hands-down most of the time) see aid programs as a subset of foreign policy. They regard it as obvious that aid has multiple objectives, of which only one is the promotion of development. For the generalists, other key objectives are political and diplomatic goals, and commercial goals.

For the generalist perspective in action, see the email that the Secretary of DFAT, Peter Varghese, sent out to staff on the principles for the integration of AusAID into Foreign (courtesy of Devpolicy). The first two principles state:

• Australia’s aid program will promote Australia’s national interests through contributing to international economic growth and poverty reduction. It will be designed and implemented to support Australian foreign and trade policy. Its geographic priority will be the Indo-Pacific region, especially the South Pacific and South East Asia.
• The outcome of integration will be a transformed Department that aligns and implements foreign, development, and trade policies and programs in a coherent, efficient and effective manner, in pursuit of Australia’s national interests.

Integrating AusAID back into Foreign Affairs might gladden the generalists, but it doesn’t really address the financial hole that has become a structural problem in Australian international policy. The strange imbalance is that Australia has been able to find extra dollars for aid, defence and intelligence while starving its diplomacy. The Lowy Institute has done a good job in analysing the ‘diplomatic deficit’ which has hollowed out and stretched Foreign Affairs—a point that Russell Trood reinforced in ASPI’s pre-election publication.

And in its ‘Punching below our weight’ report last year, the Parliament’s Joint Foreign Affairs Committee made the same point about the ‘chronic underfunding of DFAT over the last three decades’.

Integrating AusAID back into Foreign must be about much more than a cover for a covert money transfusion to Foreign.

Graeme Dobell is the ASPI journalist fellow. Image courtesy of Department of Defence.