The Future of Australia's Overseas Aid Program: Government Response
to the Simons Report
Ravi Tomar
Foreign Affairs Defence and Trade Group
6 April 1998
On 2 May 1997, the Report of the Committee to Review Australia's Overseas
Aid Program(1) was handed over to the Minister for Foreign Affairs, Mr.
Alexander Downer, by the Chairman of the Committee, Mr. Paul Simons. With
a total of 79 recommendations, the Report, One Clear Objective: Poverty
Reduction Through Sustainable Development, was the most comprehensive
examination of the program since the Jackson Report of 1984. Comprising
20 chapters and running some 350 pages, the Report covered virtually all
aspects of Australia's aid program ranging from its objectives to its
implementation.
On 18 November 1997 the Minister for Foreign Affairs tabled in Parliament
the Government's response to the Report. It was announced that the objective
of the Australian overseas aid program would be 'to advance Australia's
national interest by assisting developing countries to reduce poverty
and achieve sustainable development'. It was also announced that six
key principles would form the cornerstone of Australia's aid program:
- In order to ensure that the aid program remains focused on meeting
the priority needs of developing countries, it will continue be formulated
and implemented in partnership with the recipient nations.
- The aid program would be made more responsive in order to provide
rapid relief to victims of natural disasters and emergencies.
- The program would focus on realistic and practical approaches in assessing
what can be achieved.
- Australia's aid program will move towards better targeting and definition
of aid projects.
- The aid program is a reflection of Australian values and will remain
identifiably Australian.
- It would be outward-looking and would be open to new ideas both from
Australia and overseas.
Of the 79 recommendations contained in the Simons Report, the Government
accepted fully, in part or in principle, 64 of these, noted another six
for further consideration and rejected nine.
Keeping in view that the ratio of Australia's Overseas Development Assistance
(ODA) to Gross National Product (GNP) has declined from 0.31 per cent
in 1995-96 to an estimated 0.27 per cent in 1997-98 (or over 12 per cent
in real terms), the Report recommended that the commitment to the target
was no longer realistic and that realistic targets be adopted. However,
the Government has retained its support for the UN target of 0.7 per cent
ODA/GNP ratio subject to budget considerations, Australia's economic circumstances
and ability to assist.
Other recommendations of the Simons Report that have not been accepted
by the Government include:
- That the focus of Pacific programs be restricted to the current core
group;
- No scholarships be awarded to countries with which AusAID does not
have a formal country program;
- An independent study of the economic impact of the tying of Australian
aid be carried out (The government argued that such a study would be
'too expensive, time-consuming and inconclusive');
- AusAID should support only those environmental activities which have
close links with poverty reduction-global activities to be funded by
other government organisations;
- A modest increase in funding for development research;
- An internationally recognised expert in development studies be appointed
as academic-in-residence;
- The creation of a legislatively based Development Cooperation Charter.
The Government's response also announced that AusAID is currently undertaking
a major review of its operations and structures 'taking into account issues
raised in the Simons Report and the opportunities provided by the Government's
workplace and APS reforms'. Significant changes would be introduced in
the near future. These would include the establishment of a permanent
committee to advise the Minister on aid and development issues as well
as advisory groups for key sectors to assist AusAID in considering sectoral
policy and program implementation issues. While independent performance
assessment and accountability checks would continue to be made by the
Australian National Audit Office (ANAO), the quality assurance function
within AusAID would be strengthened. A separate work unit with direct
access to the Director-General would be established.
On the controversial issue of untying Australian aid (ie. not buying
from Australian sources) the Government only partly accepted the recommendation
of the Simons Report which suggested a total untying of aid to the poorest
countries and partial untying of aid in bilateral programs to allow procurement
in recipient countries where this would be cost effective.
The Government's response was that significant changes are not required.
'Australia's aid program must remain identifiably Australian-it is a reflection
of Australian values and interlinks with our national interest.'
Currently, about one-third of Australia's aid program is formally tied
to Australian goods and services but around three-quarters of the total
aid program goes to Australian procurement. Some flexibility in the procurement
of consultancy services is proposed and, through sub-contracting, firms
in recipient countries will be encouraged to play a role in the delivery
of Australian aid.
On another controversial issue, that a tied aid mixed credit scheme such
as Development Import Finance Facility (DIFF)(2)(3)(4)(5)(6)(7) should
not be reintroduced, the Government agreed it also had 'no in principle
objection' with the proposal to create a new untied soft loans scheme
'...but not at the expense of other high priority aid objectives. It will
therefore consider the introduction of soft loans in the context of the
1998-99 budget'.
Overall, the Government response to the Simons report has been fairly
conservative. Apart from the management and structural review of AusAID
that is currently underway most of the changes announced, it could be
argued, amount to a fine tuning or extension of changes already in the
pipeline. The tied aid or Australian content of the program has been retained,
an improved, restructured 'son of DIFF' has been accepted in principle.
What is perhaps most curious is the commitment to the principle of ODA/GNP
ratio of 0.7 per cent when the aid budget has effectively declined by
over 12 per cent in the last two years to a 0.27 per cent ratio.
Note: Charts have been taken from Australia's Overseas Aid Program
1997-98, AGPS, Canberra 1997.
- One clear Objective: poverty reduction through sustainable development.
AusAID. Canberra 1996.
- For details refer Ravi Tomar A DIFFerence of Opinion: Cancellation
of the Development Import Finance Facility, Current Issues Brief No.
20 1995-96.
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