LABOR is diverting $375 million from its foreign aid budget this financial year to pay for the rising costs of food and housing for asylum seekers released into the community - a move that has deeply angered foreign aid advocates.
As the government struggles to meet the spiralling costs of its border protection policies while returning the budget to surplus next year, it has deferred or cut other foreign aid projects to provide $375 million until June to provide basic services for refugee applicants in Australia.
The government confirmed the controversial move as a member of its expert panel on asylum seekers - refugee advocate Paris Aristotle - predicted Australia could expect 30,000 more asylum seekers to attempt the dangerous sea voyage next year and warned that the navy could be overwhelmed by boats in distress.
The Foreign Affairs Minister, Bob Carr, said: ''If you're providing support for refugees, or potential refugees, on your home turf, that's regarded as equivalent to providing support for refugees in Jordan, Lebanon and Sudan.''
He told Fairfax Media: ''It is internationally accepted that spending on potential refugees onshore is the same as spending it on the same people offshore.''
Scott Morrison, the Coalition spokesman on immigration, said: ''This is another case of robbing Peter to pay Paul. Labor's border failures have not only denied thousands of refugees waiting in camps around the world a resettlement place in Australia, now they are denying those who Australia is trying to help offshore, by slashing the aid budget.''
The executive director of the Australian Council for International Development, Marc Purcell, said the decision was ''a politically expedient plundering of the aid budget for domestic political purposes and a breach of promises made by Prime Minister Julia Gillard when she was lobbying for a seat on the UN Security Council.
''This is a cut to the aid program which is supposed to help people overcome extreme poverty in developing countries,'' he said.
The chief executive of World Vision, Tim Costello, said the cut was ''very discouraging and damaging for Australia's international reputation''.
Under the government's policy that refugees arriving by boat have ''no advantage'' compared with those waiting to be processed overseas, refugee applicants in Australia are not permitted to work and must live on a payment of $430 a fortnight, possibly for as long as five years.
The diverted money will pay for community programs that help them ''subsist'' on those payments. A spokesman for the Department of Immigration said the diverted money would be used only to ''support basic needs'' and would not be used for the forced return of those found not to be refugees or for the costs of detention centres in Australia or on Nauru and Manus Island.
Labor backbenchers expressed concern before the midyear economic update in October at the possibility of using the foreign aid budget to fund asylum-seeker policies. A NSW backbencher, Janelle Saffin, said at the time she would consider any ''reallocation'' of money to be a foreign aid cut.
In evidence to a parliamentary inquiry yesterday, Mr Aristotle said ''at the current rate of arrivals we could see upwards of 25,000 to 30,000 people coming. There is simply no way the navy has the capacity to get to every boat that will get into distress in those circumstances.''
Mr Carr's spokesman said the US had used $895 million of its aid budget for similar purposes, France $435 million and Canada $284 million this financial year.