PUBLISHED IN THE AUSTRALIAN April 12, 2012: HAVING just returned from leading a political delegation to Vietnam, I have a confession: I had no idea Australia had recently given $160 million to Vietnam for a new bridge. But then neither did the Vietnamese I met.
In almost 20 meetings with senior Vietnamese leaders, Australia’s funding of the Coa Lanh bridge – our largest aid project in Southeast Asia – was not raised once apart from on the single occasion when I prompted it. Our tertiary education support, however, was raised at almost every meeting. This is where more of our aid dollars should be directed.
It is not that funding bridges is wasteful. On the contrary, bridges are very often important pieces of social and economic infrastructure. The Coa Lanh bridge in the Mekong Delta, for example, will benefit 170,000 road users.
But funding bridges (or other expensive infrastructure) is low value for Australia. It is the equivalent of handing over a bucket of money. We have no particular competence above other rich nations in handing over cash. Nor do we gain great returns for our generosity.
From the recipient’s perspective, cash is, of course, always welcomed, but it can have negative impacts, just like any form of welfare. Countries can become dependent on aid rather than reforming their own systems to grow their economies. In autocracies such as Vietnam, which is run by the Communist Party, a big cash donation from a rich democracy gives extra legitimacy to the regime.
In 1996, the Howard government deliberately moved away from funding expensive infrastructure in developing countries, for similar reasons as outlined above. One of the few infrastructure items it did fund, the My Thuan Bridge (also in Vietnam), was already promised by Keating. Howard delivered on Keating’s commitment, but at least managed to extract additional trade concessions.
In announcing the Coa Lanh bridge in late 2010, Julia Gillard has returned our aid program to the Keating era. What will now stop other developing countries asking for similar handouts? How can we refuse such requests (without offending) now that a precedent has been set?
Instead of funding bridges, we should be initiating a new Colombo-style plan that sets ambitious targets to educate the next generation of leaders from our region.
Education is the indispensable agent of change. In our meetings in Vietnam, it was common for the political leaders to say that increasing their human capital was their priority.
The impacts of educating future leaders cascades throughout the society. Better business decisions get made, regulations are improved, buildings and bridges are better designed.
Providing scholarships is also directly in Australia’s interests. If a significant proportion of the region’s emerging leaders have an Australian experience, not only are our ideas spread, but the relationships developed are deep, real and genuine.
Further, by offering opportunities to study in Australia, we export our values, particularly those of democracy, human rights and the rule of law. This can only enhance our nation, as we have the strongest ties with those countries that share our values. As the Deputy Chairman of the Vietnam National Assembly told us, people who study in Australia “have their minds opened”.
The vision for a new Colombo-style plan would be built on strong foundations. In Vietnam, we are already the leading government provider of scholarships, with 245 offered last year. Further, through RMIT University, we have the largest foreign university presence in Vietnam.
We could at least double our efforts within our existing aid budget to Vietnam. The $160m spent on the Coa Lanh bridge (over five years) could have paid for an extra 1600 scholarships of $100,000 each. Similar initiatives could be done for other developing countries in our region.
Cash donations will still be required in emergency situations: during a famine or after a natural disaster. But, for ordinary times, we should leverage our advantages and use our aid for a much greater impact.