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Aust changes aid strategy in Pacific region, says new study

PAPUA New Guinea, Fiji and Nauru had squandered US$75 billion (K234.38 billion) in Australian aid money through poor governance.
Burnt by this experience, Australia has now placed a priority on improving administrative capacities in recipient nations, a new study, released by the Australian Strategic Policy Institute (ASPI), has said.
The study said international aid was in crisis and a better way to help Third World countries including PNG would be to help their businesses, rather than their governments.
It said strengthening the private sector in developing nations was vital to achieving development.
And to do that, the Australian federal government should amend tax laws to allow a 150% tax deduction to encourage Australian companies to help businesses in Third World nations.
The report says that currently, Australia’s aid agency AusAID followed the conventional aid delivery path, which helped governments – rather than business – create a market-friendly environment for the private sector, because aid funds were taxpayers’ money.
“But for better results, it should pick winners among commercial enterprises,” the report said.
The success of developed nations had overwhelmingly stemmed from the success of their private sector, from the business world, the study said.
Countries which had received most aid, particularly those in Africa, had failed to achieve economic development.
In contrast, many countries which had achieved economic success in Asia had prospered from factors apart from development aid.
Most of Australia’s A$2 billion (K5 billion) annual aid goes to 10 Asia-Pacific region nations.
A recent treasury study says the largest aid recipient, PNG, received aid at the rate of US$40 (K125) a person, compared with US$31 (K97) a head for Africa.
Yet average incomes were only just above sub-Saharan levels.