(Preliminary thoughts. Comments welcome).
I don’t know the exact answer to this but who could? We should give something on the basis of deontology (Kant’s “helping a stranger” problem – the imperative is to give at least a “little” where “little” is defined as that amount that creates “low” costs to us). This sets a lower bound. Would most of us suffer if our incomes fell by 3 cents in the dollar. If not then the transfer should be at least 3% of GDP. But I cannot agree with extreme utilitarianism that insists in equalising incomes across countries even if preferences are identical. I am persuaded by the contractualist arguments of T.M. Scanlon that giving away all your income, so that you yourself become poor, is not obligatory ethically. Thus the upper bound is certainly something less than the equalising redistribution. More precisely it is the amount that you could give that recipients could not reasonably object to as being too small. Thus you propose to the poor people you are giving income to that you will give some assistance but something less than the amount that would make you become as poor as they are. Scanlon claims (and I agree) that the poor could not reasonably reject this argument. Suppose I earn $100,000 and a poor person that I am making a transfer too earns $1000. If I give them $49,500 then incomes will be equalised and I think that excessively egalitarian. Suppose I instead give* $5000, $10,000, $20,000, $30,000 etc. What is the minimum amount that I could give them that they could not reasonably complain about? The answer to this is the required transfer and my roost reasonable guess is something of the order of $5000-$10,000 implying that the aid budget should be less than 10% of GDP.
I certainly don’t agree with the care ethics position that charity begins at home although I do acknowledge that we have special ethical responsibilities to those close to us on the basis of obligations/duties/affinities. We also need, of course, to address issues of domestic poverty for the same sorts of reasons. But we also have more abstract moral duties to anonymous non-Australian humanity who, even though they are anonymous, suffer and feel pleasure as much as we do.
Generally though I am left in limbo as to the size of the transfer – it has to be positive but not be so large that it comprises almost everything you have got.
All that said I’ll make the claim that Australia is giving less than it should and that the stingy Coalition are worse in this respect than stingy Labor. We need to give more than we do and could do so at negligible cost to ourselves. I tire of hearing how “tough’ economic conditions in Australia are. The claim is a purposeful exaggeration designed to rationalise national stinginess and shows how deluded and self-obsessed we have become as a nation. The statistical picture painted in this Age article supports my view. Private contributions should fill in some of the public offerings but, in a nation of stingy people, they cannot adequately replace them. Please read this article.
* The “give” here needs to be interpreted liberally as some kind of transfer that provides some sort of greater equality – for example equality of opportunity at birth.