The Departments of Finance and Foreign Affairs are close to agreement on a plan to increase overseas aid spending by set amounts for a three-year period.
The deal, which is to be considered by the Cabinet shortly, would take aid spending out of the annual hurly-burly of prebudget haggling and allow the Department of Foreign Affairs to plan staged increases in the Republic's overseas aid programme. It would also bring to an end a period of disagreement between the two departments over the level of aid spending. However, the expected increases are unlikely to be sufficient to put spending back on track towards the Government's interim target of 0.45 per cent of gross national product, or the United Nation's target of 0.7 per cent of GNP. The Government will resist attempts by the Labour Party to have increases towards these targets put on a statutory footing.
Aid spending is currently languishing at 0.30 per cent - less than when the Government came into office in 1997 - despite the economic boom. Internationally, this fact is a source of some embarrassment to the Government, which had repeatedly claimed that the Republic was on an "upward trajectory" for aid spending.
Aid agencies are dissatisfied with the levels of spending, and with their share of the cake. Mr David Begg, chief executive of the largest agency, Concern, recently castigated Irish Aid for "marginalising" the agencies in the distribution of the State's funding. But Concern's broadside is only the latest difference of opinion to emerge on the future of the Irish aid budget. The raw amount spent on aid has increased massively in recent years, from £40 million in 1992 to an estimated £190 million this year. This amounts to one of the fastest increases in the OECD group of countries, but agencies and - according to surveys - the general public think it isn't enough, especially considering the Republic's economic boom.
Neither does the junior minister responsible for overseas aid, Ms Liz O'Donnell. She threatened to resign in 1998 over the Department of Finance's plans to freeze the aid budget.
In the end, the minister didn't resign, the Department of Finance kept that year's increase down to a minimum and a compromise was hacked out. This provided for set increases over the following three years.
The problem is that these increases don't come anywhere near the amounts needed to ensure that Irish aid grows as a proportion of GNP, which is the internationally-accepted method of calculating overseas assistance. Back in 1970, the UN set a target for the rich countries to spend 0.7 per cent of GNP on aid, but 30 years on, only four countries have met this target. The Republic has consistently supported the target without ever doing much to reach it. In the past, politicians argued that we were too poor to fork out large increases in Third World aid. Then the last government came up with an interim target of 0.45 per cent and this was adopted in the Cabinet's programme for government. The interim target date was set for 2002.
With the economy growing so fast, however, GNP-based targets are difficult to achieve. The Department of Finance thinks conservatively, and consistently under-estimated GNP growth in recent years. In addition, the Central Statistics Office introduced a new method of calculating GNP, which further increased the figure.
The result has been a standstill in aid spending as a proportion of GNP. When Fianna Fail and the PDs came to power in 1997, the Republic was spending 0.31 per cent of GNP on aid; today, that figure is 0.30 per cent. The Government had a simple solution for wriggling out of the commitments it made; in the revised programme for government agreed last year, the interim target of 0.45 per cent is restated, but the reference to a target date has been removed. The target is effectively meaningless.
However, Ms O'Donnell's officials are still struggling to agree planned increases in the aid budget with the Department of Finance. "Multi-annual funding" would allow Irish Aid to take a measured approach to growth, instead of being tied to a "moving target" dictated by GNP growth, officials feel. With the lead-in time for new projects as long as 18 months, the Department needs as much predictability as possible in the planning of future developments.
Labour has proposed that increases in aid be defined in legislation. The party - which never suggested the idea when it was in government - says this is the only way the UN target can be reached. Not surprisingly, the Government is unenthusiastic about this proposal. "The purpose of such a move would be to guarantee increased allocations," the Minister of State at the Department of the Environment, Mr Bobby Molloy told the Dail last week. "But, since the Government is committed to substantial increases, that purpose is achieved."
If only politics were that simple.
pcullen@irish-times.ie
