Isn’t it time we got real about the cost of overseas development aid?

By Matt Cooper

Friday, October 22, 2010

AS the Government seeks to cut its own spending massively a question arises: should Irish money for overseas development aid and foreign disaster relief come from the coffers of the state or directly to charities and aid agencies from the pockets of private citizens without any involvement by the state?

It is a legitimate question to ask now that our country’s financial position is so dire. The cuts to the public funding of our health service next year, for example, are expected to amount to somewhere between €600m and €1bn as part of overall reductions (and tax increases) that could amount to as much as €5bn.

The final figure for health cuts alone is likely to be roughly equivalent to the amount of money we donate to overseas development aid each year. Why cut life-saving and life-enhancing services to our ill, elderly and vulnerable while we maintain payments to Third World countries with which we have no real connection?

I imagine that many people might regard such a question as gross and immoral, one that should not even be entertained. After all there is a strong argument that it is our responsibility as a developed country, with a much higher standard of living than that enjoyed in other countries, to spend some of our wealth on helping those at risk of death from starvation and disease. It is almost a measure of our humanity.

Ireland is the seventh largest aid donor in the world in per capita terms, spending about €670m this year, with about four-fifths of it going to sub-Saharan Africa where advocates say it is needed desperately. The Government distributes this money to 40 or so non-governmental organisations that rely on it for their projects and employment, so you can understand why they are very worried about the potential of further cuts to their budgets. The NGOs are effective lobbyists when it comes to mixing intellectual and emotional arguments in favour of maintaining spending at existing levels.

Only the most cynical would argue that this vigour is prompted by a desire to maintain their own employment, although in some isolated cases that might well be true. There is a genuine belief that poverty in Africa in particular, and parts of Asia, is unlike anything we suffer in modern Ireland and that the people who suffer it are entitled to our financial assistance.

These NGOS have had to get by after a significant fall of about a quarter from what the state donated at its peak, but we are not the only country to have reduced such expenditure sharply. More than half of the OECD countries cut their aid budgets last year, but few would have experienced the scale of economic downturn that we have endured or have to pay as much as we do to borrow money. And yet we remain at seventh in the global league table, with our spend still running at 2006 levels.

Our own state’s perilous financial position is an impediment to limitless generosity. When we are borrowing €80m a day — which has to be paid back with interest, irrespective of what use we make of the money — just to keep things ticking over we have to ask if it is right that some of it, even if a relatively small amount, be sent to the Third World in the hope that it might do some good.

When economic times were good — and the Government had an excess of revenues over spending — few argued strongly that it was inappropriate that the Government committed to spending 0.7% of gross domestic product (GDP) on overseas aid.

As it happens we failed to deliver that amount, reaching a ceiling of 0.54%, despite promises from successive governments (some of which famously were extracted from then Taoiseach Bertie Ahern under public duress by Bono at a U2 concert in Croke Park) to increase the amount committed.

The public versus private dimension of financing development aid should be considered now. In many respects foreign charitable donations might be better viewed as a personal choice. That Irish people are generous when faced with pictures of disaster is beyond doubt. This has been the case for generations, reacting particularly to combating the effects of starvation in Africa.

Even during the boom — when people were supposed to be materially obsessed and somehow less compassionate — the public reacted spontaneously and very generously to the effects of the Asian tsunami in 2004, to the earthquake in Pakistan in 2005 and, most notably, to the earthquake in Haiti earlier this year.

That is to be applauded. But why should those who don’t feel inclined to help in this way be required to do so anyway by way of higher taxation, which is effectively what will be required to repay the money borrowed to send away?

There is an argument of course that much of the work done by NGOs is long-term in nature but that this does not attract sufficient private support or on a consistent enough basis: people react instead to disasters. It is a reasonable contention. But that raises the issue as to whether the spending is justified. Why, for example, is Irish money, public or private, being spent in India or China — far wealthier economies than ours — or in somewhere like Pakistan which is a nuclear power spending a massive amount on a large army and where corruption is so endemic that you have to question how and where our money will be spent?

The bulk of it is spent in Africa of course. The depth of the poverty in many countries served by Irish NGOs is almost unfathomable to us.

However, serious questions have to be asked as to whether or not we are financing a dependency culture. Why, for example, should aid agencies locate themselves in Nigeria, an oil-rich country that would, if it was governed properly by its own people, be a wealthy country that could easily look after its own?

AFRICA is blighted by corruption, war and famine. There is also a strong argument that it is overpopulated. Aid may not be helping Africa to address its problems but may actually compound them. Yet we have little or no debate about this.

The now infamous An Bord Snip Nua report — much of which remains unimplemented — recommended that our overseas development aid (ODA) target of 0.7% of GDP be put back three years to 2015. It stated that it was an ambitious target made at a time when we didn’t envisage the sort of economic crisis we now face. As it happens our GDP is falling so the overall amount would come down anyway but hardly by enough to justify borrowing to send money away.

The old saying that charity begins at home comes to mind. We are worried that our spending cuts will further depress the economy, sending it into a spiral with even less tax revenues and a demand then for further cuts. Reducing the ODA budget by a few hundred million euro a year again would not only help the public purse but would not have a further impact domestically. That may seem harsh, but there is nothing to stop people who are outraged by this from giving more from their own after-tax income directly to NGOs. After all, we elect governments to run our economy, not those of other countries. It is time for a debate on this, at the very least.

The Last Word with Matt Cooper is broadcast on 100-102 Today FM, Monday to Friday, 4.30pm to 7pm.

This appeared in the printed version of the Irish Examiner Friday, October 22, 2010