News that $375 million of this year’s aid budget will be diverted to the costs of processing and supporting asylum seekers in Australia (and possibly offshore) is the second time in the space of weeks that the government has found itself on the edge of internationally recognised rules on aid.

Aid organisations and refugee rights activists have criticised the decision, the latest example of a government raiding Australia’s aid program for its own political ends.

Foreign Minister Bob Carr claims “OECD guidelines provide that if you’re spending money on refugees on your own soil, it can be counted as if you were spending money on refugees in refugee camps around the world”. The argument is shaky.

While assistance to refugees within donor countries is reportable as official development assistance, this is only the case for the first 12 months following their arrival. Many asylum seekers wait several years for their claims to be processed and others face the prospect of indefinite detention. It is therefore likely aid will be used to fund prolonged detention — against OECD rules.

More broadly, the main objective of ODA must be the “promotion of the economic development and welfare of developing countries”. It is difficult to see how recent changes in refugee policy — which the UNHCR says has “seriously undermined” rights and protection for refugees and Amnesty says “punishes people for seeking safety” — will meet this objective.

Rather than meeting humanitarian goals, the failure to achieve the stated policy objective of deterring boat arrivals indicates that the government’s punitive treatment of asylum seekers is targeted at the domestic audience. However, the opposition’s catchy line that the “Gillard government is now the third largest recipient of Australian aid” obscures the reality that Australian aid has long been inward-looking.

The Howard government spent $27 million in aid money to construct detention centres on Nauru and Manus Island in PNG as part of the first incarnation of the Pacific Solution. Of the much-praised $1 billion tsunami aid package to Indonesia, only about $50 million made its way to Aceh, with the remainder directed to areas that were more beneficial to Australia’s diplomatic relations.

In fact, the largest recipient of aid under the Liberals was Australian business, with the proportion of the aid budget going to private contractors peaking at 41% in 2005-6. This figure included the multi-million dollar salary paid by AusAID to the Iraq-based consultancy of disgraced former AWB chairman Trevor Flugge.

Whether buying votes for the Security Council, furthering military objectives in Afghanistan or paying the costs of processing asylum seekers in Australia, Labor is simply continuing the tradition of Australian governments using aid as a political football. In doing so, it is illustrating some of the inherent problems of the commitment to increase aid to 0.5% of gross national income in an aid program dominated by the “national interest”.

Without mechanisms to ensure the aid program is genuinely accountable to the poor in developing countries, the goal is likely to reduce the quality of Australia’s overseas development programs. In the context of surplus budgeting, Carr’s equation of aid assisting refugees in camps in Jordan, Lebanon and Sudan with the costs of processing asylum seekers in Australia is part of an increasing trend of governments looking for new ways to count other priorities — regardless of how far they depart from reducing poverty — as aid.

*AID/WATCH is an independent membership-based watchdog, which acts as an independent monitor of Australia’s aid and trade