It's a blue moon occasion for Australia's foreign aid program to be the lead story across the morning news media.

But bad policy decided in secret and then leaked to the media can ensure front page headlines, even for aid. And that's what has happened this week with the Government's decision to shift $375 million from its aid budget to meet domestic asylum seeker costs. The Government's scrambling to justify this decision hasn't dulled the outcry or criticism. And it hasn't turned a bad policy into a good one.

In fact, there are now two bad aid policies instead of one. The first bad policy was when the Government committed in 2007 to increase the aid budget to 0.5% of Australia's gross national income by 2015.

The increase in itself isn't the bad policy; it's the tight deadline that undermines it. Given Australia's economic position at the time, it would have meant doubling the budget to around $9 billion, with much of the increase postponed to the last four or so years even when the commitment was pushed out to 2016 in this year's budget. In other words, the Government's aid agency would have to spend an extra $1 billion a year every year for four or so years. Hardly an effective or efficient way to ensure value for money.

The second bad policy is this week's decision to follow the lead of a number of other developed countries which use aid funds to cover in-country refugee costs.

Australia is certainly not alone in deciding to use aid money in this way. OECD figures show that the US spent US$885 million of its total aid budget on this in 2010, France US$435 million, Sweden US$397 million, and Canada US$284 million. Switzerland spent almost 16% of its total aid budget on this item.

So the amount the Government wants to spend isn't out of the ballpark and it is internationally recognised as a legitimate use of official aid money. What makes us different is that the Government didn't want to tell us and it took a leak from Treasury for it to get into the public arena.

This doesn't necessarily make it bad policy. What does make it bad is the impact this has on our reputation as a development partner. The money being diverted from this year's aid budget, so late in the year, will come from scheduled and planned aid programs developed in consultation with Australia's developing partners. We don't know who they are because the Government hasn't told us. So we have to assume that there will be a mixture of bilateral partners and multilateral organisations which had been led to believe that Australia would be supporting them in some project in health or education or another important development priority. Now, that activity won't go ahead or will be delayed.

Cutting programs isn't bad in itself – what's bad is when it's unilaterally and secretly decided, when it remains unexplained and when it runs counter to stated policy and operational imperatives.

Photo by Flickr user Leo Reynolds.