Australia’s new aid policy:  the good, the bad and 5 next steps

Australia’s new aid policy: the good, the bad and 5 next steps

Mothers wait with their children at a health centre in Kenya. Photo: Morgana Wingard/ONE

Mothers wait with their children at a health centre in Kenya. Photo: Morgana Wingard/ONE

Last week, Australia’s Foreign Minister Julie Bishop announced the government’s much-anticipated new aid policy and performance framework, calling it a “new paradigm” for the world’s tenth largest donor country.

It sets out strategic priorities for Australia’s official development assistance (ODA) programme. A framework like this is crucial to give coherence to spending decisions, so its publication is welcome, but it’s unfortunate that it took nine months to arrive. In the meantime, the government had already closed AusAID and made drastic cuts to the aid budget.

So how does the new framework shape up?

In short, it’s a mixed bag, and vague on some important details. Here’s the good, the bad, and five key steps that could be taken by the government to truly transform the impact of Australia’s development efforts.

The good

1. It’s great to see the government retain a strong emphasis on its traditional priorities of health, education and agriculture, as well as effective governance and institutions.

Smart aid investments in these areas have shown proven success and are critical for supporting poor people to improve their opportunities and livelihoods. Linked to this, the government should continue its admirable stance of not using any of the overseas aid budget for costs of processing asylum seekers within Australia.

Step 1: Boost Australia’s contributions to key multilateral funds that are driving incredible progress in these priority areas, including the Global Fund and GAVI.

2. The government has continued its clear focus on aid effectiveness.

Commitments to reduce the number of individual investments, improve anti-corruption and fraud control, and maintain fully untied aid, will help resources reach the people who need them. The government also confirmed that it will publish an annual performance report, and that each country programme will have a new ‘Aid Investment Plan’ with tailored targets. It also recommitted in full to the International Aid Transparency Initiative (IATI).

Step 2: Building on the recommitment to IATI, accelerate efforts towards monthly publication of all aid data to IATI by the end of next year. The new framework could also be strengthened by including transparency as an explicit performance target.

Selling vegetables at a market in Tanzania. Photo: Morgana Wingard/ONE

Selling vegetables at a market in Tanzania. Photo: Morgana Wingard/ONE

The bad 

3. The government has made a big deal of its efforts to “reshape” the Australian aid programme towards boosting economic growth in developing countries, including commitments to devote at least 20% of the ODA budget to ‘aid-for-trade’ and to work more closely with the private sector.

However, it is extremely concerning that poverty reduction is not clearly and unequivocally positioned as the primary goal of Australia’s programme.  In the four new ‘tests’ that will guide aid spending, it seems to play second fiddle to “pursuing national interest and extending Australia’s influence”. And yet a recent public poll found that 75% of Australians think that reducing poverty is the most important objective of the aid programme. 

Step 3: Clarify that poverty reduction is the primary purpose of Australia’s aid programme, and that this will be its ultimate test of success overall and in the new country-level ‘Aid Investment Plans’.

4. ONE is all for smart investments in infrastructure, trade and private-sector development, but improving the lives of the poorest requires much more than economic growth alone. What makes government aid programmes unique is their mandate to focus relentlessly and exclusively on development impacts for poor and disadvantaged people.

In the context of large reductions to projected aid spending – the documents released yesterday are light on details of how the government proposes to ensure that increased private-sector engagement will result in improved development outcomes for the poorest people.

Step 4: Publish further details on its private-sector strategy, and also work with the private sector to support policies (beyond aid) that have a dramatic impact on development.

For example, the Australian government should require oil, gas, and mining companies to publish what they pay to governments for the commercial development of natural resources. It should take concrete steps to stem illicit financial flows by implementing a public register of the individuals that own or control companies and trusts. Endorsing the Open Data Charter would help make businesses more accountable and responsive.

5. According to the new framework, aid projects judged to be ineffective will have their funding cancelled after one year.

A year may sound like a long time, but in a typical development project it is not very long at all. New activities and processes – especially working with multiple partner organisations and in complex situations – take time to embed, and the real impacts of programmes can sometimes take years to show.

Clearly, a balance has to be struck, but a one-year window to make such a drastic decision is unrealistic. Not only could it make funding erratic and unpredictable, and even create a culture of ‘massaged’ results, it also seems directly counter to government’s active attempts to promote innovation, which, by definition, can be riskier.

Step 5: Reconsider the one-year cancellation policy and develop a more sophisticated approach towards determining and acting upon successes and failures that does not threaten predictability, innovation and transparency.

Coffee beans are graded and sold at Ethiopia's Commodity Exchange in Addis Ababa. Photo: ONE

Coffee beans are graded and sold at Ethiopia’s Commodity Exchange in Addis Ababa. Photo: ONE

Some unanswered questions

The release of these documents have made some elements of the government’s aid policy much clearer. But there are still many unanswered questions.

For instance, all 10 of the Strategic Targets that underpin the new framework focus on processes and inputs, such as what percentage of the budget will be allocated to different activities. There is nothing to explain what outcomes and results the government expects to see, which is crucial for any proper assessment of performance.

Such targets will apparently be included in the new country Aid Investment Plans, but there is very little detail about what these will be and how they will be designed. With this – and likewise, with the policy’s defining focus of private-sector engagement – the devil will be in the detail of how this policy translates into action.

In the meantime, by following ONE’s 5 key steps, the Australian government could go a large way to improving the impact it has on the lives of the world’s poor – and that should be the ultimate test of success.

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