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Australian Business Group Wants Government to Cut Foreign Aid

A library in the small community of Cardwell, Australia, is without a roof and badly damaged after Cyclone Yasi brought heavy rain and howling winds, February 4, 2011

Australia's influential Business Council wants to cut foreign aid to help pay for the country’s flood rebuilding effort. The council says spending cuts should be made before the government imposes a controversial flood tax.

The Australian government estimates that it will cost $5.6 billion to repair the damage from recent floods across the states of Queensland and Victoria. The government says the money should come from cuts to public spending and a one-time flood tax, which would raise about a third of the funds.

Australia’s Business Council opposes the levy. Instead it wants deeper budget cuts to pay for the reconstruction.

The council, which represent 100 of Australia’s most important companies, says that cuts to the foreign aid budget would be a sensible way to help.

Its president, Graham Bradley, says one option would be cutting education programs in Indonesia. "I think it would come as a bit of a surprise to a lot of Australians that nearly $500 million is being spent on Indonesian schools but I'm not saying that is a bad use of funding. I think that should be looked at in terms of the real value and its relative importance compared to other demands on the government. So we'd welcome a thorough review of foreign aid spending to look at whether we are getting full value for it," he said.

The Business Council also suggests cutting disability pensions in Australia.

The government is committed to pushing its controversial flood tax through parliament. Critics, however, say the government should either borrow the money or make bigger budget cuts.

Prime Minister Julia Gillard rejects calls to cut foreign aid. She says the country has an obligation to tackle poverty and it was in Australia’s interest for its regional partners to peaceful and prosperous.

This year Australia will provide $4.3 billion in official development aid, mostly focused on the Asia-Pacific region, which is home to two-thirds of the world’s poorest people.

Within five years, officials say Australia’s foreign aid budget could reach around $8 billion.

Australia also provides help to Africa, the Caribbean, Latin America and the Middle East. Canberra’s aid to Africa has increased in recent years and represents around five percent of the total aid budget.