Why Australia Funds Foreign Aid

By June Ramli

Perth, June 3: As Australians face rising pressure from housing costs, healthcare demand and the cost of living, foreign aid remains a frequent point of public debate.
But former Australian diplomat and foreign policy expert Jane Hardy says Australia’s aid program should not simply be viewed as money leaving the country, but as an investment in regional stability, diplomacy and long-term national interest.

Hardy said public sentiment towards foreign aid was stronger than many critics assumed, pointing to polling showing many Australians supported well-designed aid and humanitarian assistance, particularly for neighbouring countries.
According to Hardy, Australia’s overseas development programs are shaped by humanitarian, strategic, diplomatic and economic considerations. However, she said the central purpose remained humanitarian, with stable and resilient societies also helping create a safer regional environment for Australia.

Australia’s aid relationships with countries such as Indonesia, Papua New Guinea and Pacific Island nations have long formed a major part of the national aid program. Hardy said these partnerships often focused on long-term development priorities, including infrastructure, education and health.

She said Australia also benefits from these relationships because they help support a stable and prosperous neighbourhood.
Hardy described well-designed foreign aid as both an investment and a form of diplomacy, arguing that Australia’s international engagement was more important than ever in an uncertain global environment.

Below is the complete Q&A with Jane Hardy:

Many Australians question why Australia spends money on foreign aid when there are significant domestic challenges such as housing affordability, healthcare pressures and cost-of-living concerns. How do policymakers justify foreign aid spending to taxpayers?

Some Australians may question the Australian Government’s commitment to providing aid and development funds to partner countries in our region, but good quality polling (e.g.Lowy Institute) has for many years actually shown that Australian citizens are supportive of well-designed aid and humanitarian assistance especially for neighbouring countries – and attitudes have actually become even more positive in recent polling.
Two-thirds of Australians (66 per cent) say the current aid budget is either ‘about right’ (49 per cent) or ‘too low’ (17 per cent), while one-third say it is ‘too high’ (33 per cent). This is a significant 11-point increase since 2017 for those who say the aid budget is ‘about right’.

To what extent is foreign aid driven by humanitarian concerns versus Australia’s strategic, diplomatic and economic interests?

Australia’s overseas development and assistance programs encompass all of the above – strategic, diplomatic (by this I assume you are referring to government-to-government relationships) and economic interests. But the primary drive is humanitarian concerns – stable and thriving societies, able to recover from disasters, and a stable international environment generates the conditions whereby good governance, and well-designed economic development contribute also to Australia’s strategic interests.

Australia provides aid to countries such as Indonesia, Papua New Guinea and Pacific Island nations. What benefits does Australia receive from maintaining these aid relationships?

Our closest neighbours, notably Indonesia, PNG and the Pacific Island countries, have for many decades formed the largest share of Australia’s overall aid budget. The majority of these programs are focused on long-term development and projects, including infrastructure, education and health, and are designed by the partner countries in conjunction with Australia. Thus, these programs have delivered stability over time. They are highly scrutinised programs and would not survive if they were not delivered with high levels of integrity. The benefit to Australia is a stable and prosperous neighbourhood.

How is Australia’s foreign aid budget determined, and what factors influence decisions about which countries receive assistance?

In close discussion with partner countries, the aid program as a whole is spread over sectors and themes and among a wide group of countries and organisations. When devising the aid budget, DFAT officials consider the history of involvement with countries, the trajectory of development – are the projects of a decade ago still the best allocation of resources or has the environment changed? – and needs-based analysis. DFAT’s website and annual reports describe this process in detail.

Is foreign aid best viewed as a cost, an investment, or a form of diplomacy?

Investment is the best description of well-designed aid programs. They are all a form of diplomacy.

As governments face growing fiscal pressures, how do policymakers balance domestic priorities with international commitments such as aid, humanitarian assistance and regional partnerships?

Australia’s most recent federal Budget is worth studying, and comparing with past federal Budgets. The 2026 Budget shows some reallocation of program funds, but overall a significant and sustained increase in Australia’s overseas aid and development.

What are the potential diplomatic or security consequences if Australia were to significantly reduce its foreign aid program?

Several decades ago, the Australian Government made a significant cut to its overall overeas aid programs. Critics both at home and abroad including some countries in our neighbourhood, were loud in their response, challenging Australia’s commitment to the ‘Global South’. In actual fact, however, programs in Australia’s region were quarantined from the cuts, which were mainly levelled at multilateral organisations and in regions of the world which were already receiving the largest share of aid funding from the rich countries of North America and Europe.

What are the biggest misconceptions Australians have about foreign aid and international engagement?

Like anywhere, some misconceptions are evident about aid programs going to the ‘wrong’ people, or costing too much in terms of administration as a share of the overall expenditure, or being diverted by ‘corrupt’ players, either donors or recipients. However, as already noted (above) Australians are supportive of the Australian government’s aid programs.

In an increasingly uncertain world, how important is it for a middle power like Australia to remain actively engaged in international development, diplomacy and regional partnerships?

Australia’s active engagement in international development, diplomacy and regional partnerships is more important than ever. This engagement generates long-term positive relationships, synergies of effort and powerful networks which safeguard Australia and all its partner countries from being buffeted by economic coercion or strategic effects by other players, be they major powers, minor countries or rogue operators.

Looking ahead, do you expect Australia’s foreign policy priorities to shift more toward domestic concerns, or will international engagement remain a key pillar of government policy?

Australia has always been an outward-looking country and society. Since the middle of last century, the proportion of the Australian population to hold passports has been among the highest globally. Not only do ordinary people travel, but they learn about history and culture in a way which has a lasting positive impact on our international relationships. And Australia’s high intake of foreign students has since the 1980s generated interest among the broader population in foreign issues. Most Australians are exposed to the idea that our global trade – agriculture, mining, services – has delivered a high standard of living back home. The fact that one in three Australians was born overseas, and one in two has a parent born overseas, will help you understand why attitudes are positive towards the Australian Government continuing to have international engagement as a key policy pillar.