By Michelle Grattan
THE federal government will divert up to $375 million this financial year from its foreign aid budget to support asylum seekers who are being processed in the Australian community.
The use of the money is part of the government's battle for savings as it tries to keep its promise to deliver a surplus, and also reflects the bigger than expected influx of people coming on boats, which is putting additional pressure on costs.
Foreign Minister Bob Carr said the aid budget - $5.2 billion in 2012-13 - was not being cut. He said the use of the funds for asylum seekers being processed locally was in line with OECD guidelines for the allocation of foreign aid. It was done by the US, France, Canada and others.
But the aid sector reacted angrily.
Paris Aristotle: "If everyone stays in their trenches, then we won't protect anyone."
The head of World Vision, Tim Costello, accused the government of ''sleight of hand'' and said Australia was disappointing the rest of the world. He said one of the big arguments in Australia's successful Security Council bid was that it had been increasing its aid budget.
That budget is 0.35 per cent of gross national income with a promise that it will rise to 0.5 per cent. The May budget pushed out the timetable for getting to 0.5 per cent by a year; it is due to be achieved in 2016-17.
Mr Costello questioned the lack of transparency by the government, and called on it to say which part of the aid budget would suffer from the diversion of funds. ''Will it be health? Will it be education?''
He said money was not diverted from the aid budget to, for instance, indigenous programs, even though some of these people were living in third world conditions.
When the story was broken by the Ten Network, Senator Carr initially responded: ''I'm just saying to you that Australia's got a big generous aid budget. We're very proud of that.'' Later he said: ''Money spent on refugees within a country is legitimate aid.''
Mr Carr's spokesman said the funds would only be spent on asylum seekers who were yet to be processed or were being processed, not on people judged to be refugees. Under the government's policy to discourage people coming on boats, those who get refugee status could be in the community for up to five years without the right to work, living on welfare payments.
Senator Carr said on Monday night the money would be spent on ''basic subsistence''. ''This will cover food, shelter and other essential items.''
Opposition foreign affairs spokeswoman Julie Bishop said: ''Not only can Australians not trust Julia Gillard, the rest of the world can't rely on her word.''
The Australian Council for International Development - which brings together non-government aid bodies - said the decision was a breach of trust between the government and the public. It would ''strip money from the world's poorest'', said executive director Marc Purcell.