Scrapping Innovation Xchange short-sighted

Scrapping the Innovation Xchange in the Department of Foreign Affairs and Trade would be a short-sighted blow to solving intractable aid problems, Julie Bishop says.

The federal opposition has vowed to abolish the agency if Labor is elected on July 2, in a bid to claw back $400 million in savings, claiming it is "focused on purchasing bean bags".

But the foreign minister says the agency is finding solutions that will save lives in the Pacific, and help Australia better prepare for natural disasters and humanitarian crises in the region.

Money had been thrown at aid problems in the past to no good effect, with countries in the region whose economic and social indicators slipped backwards even though their aid was increased, she said.

"If Labor were to scrap the Innovation Xchange, it would mean a return to the old problems of not being able to achieve better outcomes in aid," Ms Bishop told reporters in Sydney on Monday.

"It would be very short-sighted and a real disappointment to those countries who are benefiting from the ideas, the innovation and the creativity of the Innovation Xchange."