If anything, the more generous a country is to foreigners, the more it usually provides for its own people.
Fri 8 May 2026 01.00 AEST
Photo: AAP Image/Lukas Coch
Foreign aid does not come at the expense of spending to help those struggling at home; if anything, the more generous a country is to foreigners, the more it usually provides for its own people.
This finding may be surprising given how often foreign aid cuts are justified by reference to domestic services.
During the 2025 election campaign, the Liberal-National Coalition promised to cut $813 million from Australia’s foreign aid programs. Jane Hume, now deputy Liberal leader, told a press conference that the move would “ensure that every dollar spent by government is focused on delivering essential services and strengthening our nation.”
US President Donald Trump made sweeping cuts to America’s ‘USAID’ program upon taking office, with similar rationale. Pauline Hanson has promised to cut “up to $3 billion annually” from foreign aid to “redirect funds where they are most needed”.
Australia’s foreign aid spending is already very low compared to other developed countries like the UK or France. Despite longstanding international commitments to spend 0.7% of national income on foreign aid, Labor policy is to reach a target of 0.5%. The Albanese Government isn’t close to achieving either goal – spending only 0.2% annually.
But, as shown in the graph above, Australia’s spending on social services (such as healthcare, aged pensions, and social housing) is also low.
Outside of the COVID-19 Pandemic, when Australia spent far more than normal on social services because of programs like JobKeeper, the country spent around 17% of our GDP on social services. That is low compared to other developed countries.
In 2022, for example (the most recent year where the OECD has data for Australia), New Zealand’s social expenditure was around 25% of its GDP, and countries like Finland and France spent around 30%.
Generosity is infectious. Most developed countries that spend above average on foreign aid also spend above average on domestic services, and Australia’s spending is low on both foreign aid and social services.
The graph above shows how much 32 developed countries spent on foreign aid and social services as a percentage of their GDP for each year from 2015 to 2024. The black line shows the general trend: that countries with more spending on social services also tend to spend more on foreign aid, and vice versa.
It is based on research by the US-based think tank Brookings, who observed eight years ago that:
“Spending money on poverty programs, whether domestic or international, requires an empathy and understanding that public resources are well spent on such activities. The arguments underlying these programs therefore apply equally to all kinds of social spending.”
Australia’s low levels of foreign aid spending haven’t meant more money for Australian social services. It didn’t stop the Albanese government from cutting billions in funding – and at least 160,000 Australians – from the National Disability Insurance Scheme. It didn’t mean unemployment benefits could finally be raised above the poverty line. And it didn’t spur the Federal Government to pay for free public transport nationwide during the fuel crisis.
As well as foreign aid and social spending being somewhat complementary causes, it is also the case that foreign aid is relatively cheap.
In the last budget Australia spent just over $5 billion on foreign aid. That money can go far in helping developing countries, but in the scale of a total $786 billion budget it’s a small commitment for a wealthy, powerful country like Australia.
If politicians wanted to stop huge overseas giveaways, they’d be far better off calling for a 25% tax on gas exports than cuts to foreign aid.
Multinational gas corporations get most of the gas they export from Australia for free – a 25% tax on those exports could have raised up to $70 billion if the Albanese government had implemented it upon taking office.
Seven in ten Australians support such a tax – including a majority of those voting Labor, One Nation, Greens and Liberal.
Budgets are about choices, but playing foreign aid off against domestic spending is a fraud. In this year’s Budget, Labor could meet our international commitments on foreign aid and increase spending on domestic healthcare, childcare and aged care, just by properly taxing an industry most Australians think is taking the piss.
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