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Bishop's aid crusade must heed the poor

  • 20 June 2014

Sometimes an unexpected coincidence occurs, such as Pope Francis and Foreign Minister Julie Bishop both speaking — with passion, and within days of each other this week — about how to address poverty in the world's poorest countries.

At a conference in Rome on so-called 'Impact Investing' to promote economic and social change in poor countries, Francis called for actions which are designed to have a positive impact on people's lives and which promote an economy of inclusion, rather than exclusion of the marginalised.

The Pope urged investment from wealthy countries like Australia into organisations and companies that are likely to achieve positive and measureable impacts on poor communities and the environment.

On the following day in Canberra, Bishop launched her new Australian aid and development policy and performance framework. Its main thrust is to 'leverage private sector investment and domestic finance' in promoting economic growth and reducing poverty.

Bishop rightly pointed out that Australia's aid program can make a significant difference by creating opportunities for poor people to develop and use their skills and to get productive work. There are undoubtedly more innovative ways in which this objective can be pursued by both government, the churches and the broader NGO sector in coming years.

However, in shifting the basis of Australia's official aid program towards private sector investment, we need to tune in to the clear and recent messages from the International Monetary Fund (IMF), World Bank and Organisation for Economic Cooperation and Development. All favour maximising the role of local private sector entrepreneurs, but also insist that social inclusion, justice and fairness must be central to aid planning.

In simple terms, the 1960s trickle-down theory of economic development is rejected by these institutions, all of which give emphasis to enabling the participation of poor and marginalised communities in planning aid work. In March this year in Sydney, IMF Managing Director, Christine Lagarde, explained why we need to adopt a thoughtful policy balance in promoting economic growth:

Today, we are more keenly aware of the damage done by inequality. A severely skewed income distribution harms the pace and sustainability of growth over the longer term. It leads to an economy of exclusion, and a wasteland of discarded potential.

It is a great reflection on Australia's successive governments since Robert Menzies that our official aid program has achieved a balance in its program design, as recommended by Lagarde. This has certainly won Australia plaudits over those decades, including a