The federal budget shows the foreign aid program is increasingly being used as a slush fund to pay for the government’s political priorities and pet schemes — from sending asylum seekers back home to managing concerns about animal cruelty in the live export trade.

The budget papers show that $415 million will be cut from existing AusAID programs overseas, despite Foreign Minister Bob Carr’s statements that spending on aid will continue to increase. It is unclear which overseas development programs will be hit, but from refugees to mining, what is clear is that aid designed to meet Australia’s “national interests” has remained unscathed.

The cuts to AusAID are happening because the government again deferred its promise to lift aid spending to 0.5% of gross national income. This latest deferral saves the government $1.5 billion over three years. This comes on top of the $447 million in cuts for 2012/13 made in last year’s budget.

As a result of Defence’s admission it had misreported $190 million of its military work in Afghanistan as “aid” over the last few years, this year’s budget forecasts aid spending by Defence to fall to only $0.4 million next year. This is welcome news, but it masks a significant increase in aid delivered by government departments outside of AusAID that have no development mandate, from $506 million in 2011/12 to $834.6 million this year.

This is largely the result of the already announced “diversion” of $375 million in aid spending to Australia’s onshore refugee program. Counting the costs of processing asylum seekers within Australia as aid has been heavily criticised by aid groups and refugee advocates. The Australia Institute pointed out that this change alone made Australia the third largest recipient of its own aid.

While the government has spun this as a “cap” to ensure funding for other aid programs, what is significant is that in the context of aid cuts, spending for refugees has been entrenched over the forward estimates (i.e. the next four years). Even more aid has been allocated to the Department of Immigration and Citizenship to support its punitive approach to refugees in this budget. It will receive an additional $65 million to “combat people smuggling”.

“… the budget papers flag that removing people from Australia against their will can now also be counted as aid.”

Recently, the federal government has been forcibly returning more asylum seekers home, particularly to Sri Lanka, ostensibly to send the “deterrence” message advocated by the government’s Expert Panel on Asylum Seekers. As well as funding the costs of community detention, the budget papers flag that removing people from Australia against their will can now also be counted as aid.

Aid is also being misused to address another problematic policy area — live animal exports. As part of the $10.2 million allocated to the Agriculture Department, aid will fund the Improved Animal Welfare program, which is described as helping ensure better livestock transport, feedlot handling and slaughter of animals. The program will operate within Australia’s key trading partners for live animal exports (including Egypt and Indonesia) that have featured in media stories on animal cruelty.

According to the Organisation for Economic Co-operation and Development, overseas development assistance must be primarily for the “economic development and welfare of developing countries”. It is hard to interpret this spending as anything other than an attempt to salvage Australia’s live animal export industry and take some political heat off the government.

Other government departments are not the only way aid is being used to promote Australian interests. AusAID itself will fund the Mining for Development initiative, worth $127 million over four years. The initiative is promoted in the budget as one of the key ways that aid “engages with Australian business”, due to the growing amounts of foreign direct investment pouring into mining around the world, particularly Africa.

The history of mining in developing countries shows that economic growth from the mining sector rarely translates to improvements in income or basic services for the poor. AusAID claims it the program will make aid more “sustainable”, and this year will target Afghanistan, Burma and Mongolia. The program will likely only manage to spread the resource curse, which leaves a legacy of social inequality, political corruption and ecological damage.

These examples of aid being misused dwarf the cuts to AusAID programs. In many ways, this year’s budget marks a return to the Howard years, when aid was used as a slush fund for the government’s political and commercial priorities.

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