Come austerity season, foreign aid budgets are often the first to go under the knife.
The last time the federal government decided to take a serious stab at the deficit, in 1995, then-Finance Minister Paul Martin cut international assistance spending by more than 20 per cent over three years.
Jim Flaherty and the Conservatives weren’t hesitant to place aid funds on the chopping block in last week’s federal budget either. By the 2014-15 fiscal year, spending on foreign aid will have shrunk by $377.6 million. That’s more than 7 per cent of the current total. And if you consider that the aid budget has been frozen since 2010, the cuts appear all the more significant.
“On the generosity index, this budget moves Canada closer to the bottom of the world’s 22 donor countries,” said Oxfam Canada’s Mark Fried in a statement last week.
According to a 2010 report put out by the World Bank, Canada was already pretty close to that rank. Out of 38 aid-providing countries and institutions, Canada ranked 29th based on factors like predictability, coordination with other donors and alignment with the priorities of recipient countries. Most European countries, including debt-plagued Spain and Italy, placed higher than Canada.
“I think this is eating away at our reputation,” says Edward Jackson, a development consultant and professor of public policy at Carleton University.
Jackson says much of this has to do with how the government decides which aid programs and organizations to fund, and which to cut. He refers to recent cuts to foreign aid groups like KAIROS and Development and Peace, a Montreal-based NGO that will receive less than one-third of the $49.2 million it requested over the next five years.
The government has instead chosen to fund projects that work more closely with Canadian businesses overseas. Last year, for instance, World University Service Canada was granted funding to partner up with mining giant Rio Tinto Alcan to provide skills training to 400 young people in the community near one of the company’s mines in Ghana.
“It’s very ideological,” says Jackson. “If you have a vaguely progressive or left wing approach to doing development, this government is not going to support you.”
A large majority—85 per cent—of the foreign aid spending cuts announced in the budget will come from the Canadian International Development Agency (CIDA). By the 2012-13 fiscal year, CIDA will lose 4.5 per cent of its total budget.
That’s consistent with a long-term trend that has seen the agency lose influence over the portfolio it was founded to administer, says Patrick Johnston, former president of the Walter Gordon Foundation now working as a philanthropy consultant in Toronto.
In a 2010 essay, Johnston describes how the Department of Foreign Affairs and International Trade now takes the lead on major international assistance efforts, such as Canada’s operation in Haiti following the devastating earthquake there in January 2010.
He believes this reflects how Canada’s international aid agenda has shifted away the goals people typically associate with such activities—like the alleviation of poverty and the delivery of basic services. “We’re using foreign aid to sort of serve our own foreign policy and security interests,” he says.
At the same time, Johnston contends that the rise of online microcredit organizations like Kiva.org (which allows anyone to send small loans to entrepreneurs in impoverished countries), aid organizations led by billionaire philanthropists and the increasing ease with which money is transferred electronically have changed the way international assistance is done in the years since CIDA was founded in 1968. There are more players on the aid scene, and that gives government room to back off.
Johnston points to money transfers from people in Canada to relatives and friends in the developing world. According to the U.S. Hudson Institute, US$12.2 billion in remittances were sent from Canada to recipients in developing countries in 2009. That’s more than twice the government’s total aid budget.
For these reasons, Johnston predicts that CIDA will “implode under the weight of its own irrelevance,” and be folded into the Foreign Affairs Department. “I’d put money on it that CIDA will disappear,” he says. “You heard it here first.”