Policy objectives and international commitments
This chapter will address the policy objectives of the Australian aid
program and the international commitments Australia has made in relation to
overseas aid and development assistance. In particular, it will examine changes
to the objectives of Australia's aid program, Australia's contribution to international
development programs, including achievement of the MDGs, and the role of
Australian aid in developing sustainable development goals post-2015. As an
Organisation for Economic Cooperation and Development (OECD) donor, the
Australian Government is committed to the MDGs as the agreed international
development targets. Australia is also a signatory to both the Paris
Declaration on Aid Effectiveness and the Accra Agenda for Action, which focus
on improving coordination of donor effort and aligning donor programs with
recipient government priorities
The importance of having a clear statement of the policy objectives of a
national aid program is well-recognised. Lesson 1 of the OECD report on
effective aid management identified a need for 'a clear, top-level statement of
the purpose of development co-operation, whether in legislation or another
form, that has wide ownership and can remain relevant for a sufficient period'.
Statements of policy objectives provide clarity, certainty and predictability
across all government agencies and for partners, the Australian public and
overseas communities. They also support alignment with other areas of
government policy that impact on aid and development efforts such as trade,
migration and investment.
The objectives of Australia's aid program have been stated a number of
times. In the 2006 white paper on Australian aid, the outlined strategic
framework 'centred on the objective of Australia's aid program...[t]o assist
developing countries to reduce poverty and achieve sustainable development, in
line with Australia's national interest'.
The Independent Review noted that much of the debate regarding the objectives
of Australia's aid program has focused on 'how appropriate it is to link the
aid program to the national interest' but concluded it was 'simplistic to argue
that there is an inherent incompatibility between national interest and poverty
reduction'. It stated:
The Review Panel agrees, indeed urges, that the fundamental
objective of the program should be to reduce poverty. But it is unrealistic to
expect the aid program would not be used to pursue Australia's other interests.
Australia, like every nation, has legitimate and specific interests it needs to
advance by helping developing countries. This is not wrong provided that the
activities undertaken are directed to assisting the poor and that there is a
credible pathway to this fundamental goal.
Drawing on the Independent Review's views, the previous government's Comprehensive
Aid Policy Framework outlined:
The fundamental purpose of Australian Aid is to help people
overcome poverty. This also serves Australia's national interest by promoting
stability in our region and beyond. We focus our efforts on areas where
Australia can make a difference and where our resources can most efficiently
and effectively be deployed.
Six months in, the Australian Government has yet to clarify how these
objectives have changed. It appears that the objectives of Australia's aid
program are still in the process of being developed. DFAT outlined in its
submission that the 'Government's strategic direction, policy framework and
priorities for Australia's bilateral, regional and global aid programs will be
fully developed in the 2014-15 budget process'. It stated that this work would
be guided by:
- a strong focus on Australia's geographic region;
consolidating the aid program, geographically and by sector, to
reduce fragmentation and improve value for money for the Australian taxpayer;
supporting those multilateral programs and organisations that are
most efficient and effective and which contribute to development outcomes in
Australia's geographic region.
At the public hearing, the Secretary of DFAT, Mr Peter Varghese,
clarified that 'poverty reduction remains a central objective of our aid
program'. He noted that budget papers state that the purpose of 'the
government's aid program is to promote Australia's national interests by
contributing to international economic growth and poverty reduction' and
highlighted that the Foreign Minister 'on numerous occasions in public speeches
has reaffirmed the commitment to poverty reduction'.
Mr Varghese also expanded on the role of the aid program in Australia's
broader national interests:
The stability of our region is fundamental to our national
security, and, to the extent that poverty creates instability and uncertainty,
anything which gets economies on an economic growth path is in our strategic
interests. I think we have also important economic interests in living in a
region which is growing economically, which is trading strongly and which is
connected to the global economy, and the whole aid-for-trade framework is
intended to reinforce those objectives. So, from the points of view of both
foreign policy and economic interest, the aid program has an important role to
play. Doing the right thing is also always important, of course.
During the inquiry, a number of witnesses and submissions argued there
was a need for further clarity in relation to what has changed in the policy objectives
of Australia's overseas aid program and how these objectives fit within the
framework of Australia's broader foreign policy. In particular, many wished for
a clearer emphasis on poverty reduction. For example, World Vision sought a 'renewed
policy framework with a clear purpose for the aid program grounded in poverty
alleviation as a core objective and focused on achieving the [MDGs]'.
Similarly, Mr Marc Purcell from ACFID emphasised the need for 'some sort
of overarching policy framework' for aid that would 'put flesh on the bones of
the policy directions of economic growth and poverty alleviation'. ACFID argued
'the thrust of Australia's aid program in the future should be targeted to the
bottom 40 per cent of developing countries' as well as those people who live
just above the threshold of the poverty line and are vulnerable to back-sliding
It suggested that an 'aid policy statement should also articulate why it is in
Australia's national – as well as ethical - interest to alleviate poverty'. It
quoted the then Foreign Minister, Alexander Downer in 1997:
[I]n an increasingly globalised world, it is in our
self-interest to help. Not to do so would harm our own economy. By promoting
growth in developing countries, the aid program helps foster stability and
expands trade and investment opportunities for Australia. Through aid, we are
also addressing many threats to our own prosperity, such as HIV/AIDs, illegal
migration, refugee flows, global environment problems and narcotics. Many of
these problems need to be dealt with at a global level and Australia must pull
its weight internationally.
A range of views regarding the appropriate policy objectives of the
Australian aid program were also expressed. For example, IDC Australia
considered it was timely for the government to articulate in detail its
proposed revised aid policies and strategies. It identified the crucial
question as 'how to efficiently deliver effective aid in a reduced funding
Others perceived a need for clarity to assist effective implementation of the
aid program. For example, Mr Paul Kelly from Care Australia commented:
During this transition period we encourage the government to
quickly address uncertainty about budget and program objectives. Effective aid
requires a long-term horizon and predictable, consistent support, and frequent
shifts disrupt program implementation. Providing a clear policy framework for
the aid program will allow partners to undertake planning and implementation
with clarity of priorities.
The Development Policy Centre noted that there is 'a range of other
policy measures requiring clarification from the new government'. It
recommended that the government 'should address them in a standalone policy
statement or in the May budget statement, both through its articulation of the
overall objective of the aid program and through its articulation of specific
The appropriate weighting of national interest considerations in the
objectives of the aid program was also a key consideration. For example,
Dr Karl Claxton from the Australian Strategic Policy Institute noted
that the size of the aid budget was no longer 'small change' and considered it
was important 'that ODA both promotes poverty reduction and the national
He recommended a new foreign affairs and aid white paper be prepared 'to help
government think its way through and articulate the agenda it wants to
Economic growth and aid for trade
DFAT noted that the aid program would be guided by the government's
priorities, which included:
- a strong contribution to building economic growth as an integral
part of the Government's economic diplomacy agenda, including
- an increased role and funding
for 'Aid for Trade', including to foster open trading systems and support
developing countries' connections to value chains
DFAT stated that Australia's national interests are served by an
effective aid program which 'helps shape and accelerate global and regional
economic growth and poverty reduction, including through opening up trade,
encouraging investment and creating jobs'. Further it noted that '[e]conomic
growth in our region also creates new markets for Australian goods and services'.
The increased emphasis on economic growth and 'aid for trade' in the
approach of the Australian aid program was highlighted in a number of
submissions. Some noted that significant gains in poverty reduction have been achieved
in regions where there has been sustained economic growth. For example, the
Business Council of Australia indicated its support for the 'current
government's stated aim for the aid program to prioritise the promotion of
economic development, with a focus on aid for trade'.
The Centre for Independent Studies pointed out that it was recognised
that overseas aid 'is much less important for economic development than a
country's domestic policies'. Accordingly, it recommended that Australia's
strategic goals in the aid program should include 'the goal of encouraging and
facilitating the domestic policy reforms [in developing countries] needed to
enable economic growth'.
Ms Melissa Wells from Save the Children stated:
We are fully supportive of aid for trade in the sense of not
only the macro architecture [of] developing countries having more access to
export markets but also at the micro level of connecting people into markets,
whether it is through transport linkages or the cooperatives that enable them
to get their goods to market.
However, other witnesses and submitters set out their concerns regarding
this change—particularly the risk that an increased focus on economic growth in
the Australian aid program could increase inequality in developing countries.
For example, Care Australia stated:
Economic growth is a
necessary factor in poverty reduction and development, but it is not sufficient
to ensure these outcomes. Growth without sustainability or equity entrenches
poverty and vulnerability which creates the foundations for instability and
Further, Mr Paul Kelly from Care Australia stated:
Achieving growth with equity requires deliberate action to
improve the lives of the poorest 40 per cent of the population. These are the
people who are missing out on the benefits of economic growth because they are
not easily reached. They are remote, they are disadvantaged, they are
marginalised and often they are women of ethnic minority and/or they are
The perceived limitations of the approach were also highlighted. Dr Karl
Claxton from ASPI noted that '[a]s much as we would like to help countries
trade their way out of poverty, both in terms of saving lives and creating the
conditions for them to develop economically so they can escape poverty, aid
will remain important'. 
Similarly, the Burnet Institute stated that while 'improvements in Fair Trade,
strategic investments in economic growth industries and strengthened financial
governance may lead to improved macro-economic indicators, they will not
necessarily benefit the very poor'.
In relation to people with disability, CBM Australia argued that '[e]conomic
development does not necessarily lead to a reduction of poverty on an equal basis
for all'. It noted that there is 'growing research that unless targeted support
is included, people with disability may not always benefit from economic
development and that "the disparity between people with disability and
the general population appears to increase with overall economic development..."'.
Concerns were also expressed that short term diplomatic or trade
imperatives could override longer term aid and development priorities. The
Development Policy Centre commented that it 'would be desirable to clarify in
any policy statement that aid for trade is essentially about building partner
countries' international trading capacity, and not about subsidising Australian
In relation to 'aid for trade', at the public hearing, Mr Varghese, the
Secretary of DFAT, clarified:
[W]hen I talk about aid for trade I am not talking about
using the aid program to advance the commercial interests of Australian
companies; I am talking about the use of the aid program to strengthen the capacity
of developing countries to participate in the global trading system, because
the more they participate in the global trading system the more their economy
will grow. So it is really building up the infrastructure for engaging in the
global trading system.
The Office of Aid Effectiveness recently noted that '[g]eography plays a
defining role in Australia's aid priorities and allocation decisions—more than
for any other OECD donor'.
This fact was reflected during the inquiry as many linked the geographic focus
of Australia's aid program with its overall policy objectives.
Minister Bishop's announcement of the revised aid budget 2013-14 stated
the Australian aid program would be 'refocused on reducing poverty in the
Indo-Pacific region'. DFAT defined the geographic priority for the Australian
aid program, as 'the Indo-Pacific region, especially the South Pacific and
South East Asia'.
Figure 1 - Region
This was consistent with some of the recommendations of the Independent
Review, but ignored the critical issues of continuing assistance to African
countries. For example, Mr Paul O'Callaghan, representing the Church Agencies
Network, characterised recent changes to the Australian aid program as moving
from a global aid program approach to a 'New Zealand model' with a more limited
aid program focusing on our immediate region. He urged the Australian
Government 'to look at its forward plan for the next four years, starting with
the May budget, to basically chart back into the territory that would be more
reflective of Australia's historical position as a global player and a middle
Sir Richard Feachem, on the other hand, argued for 'a relentless focus
on the Asia Pacific'.
Similarly, the Australia-PNG Business Council suggested it was a time for
consolidation in the aid program. It stated 'there is no doubt that the
extraordinary growth in the Australian development assistance expenditure in
recent years, including its seemingly unrestrained expansion into parts of the
globe far beyond the Asia Pacific, leaves considerable scope for adjustments'.
Many expressed concern that despite the regional focus there was no
rationale or explanation for the funding cuts made to the aid programs to many
countries in the Pacific and Africa as well as fragile and conflict-affected
The importance of Australian aid in the Pacific was highlighted in the
ODE report Lessons from Australian Aid. It observed that '[r]oughly one-quarter
of Australian aid goes to countries in the Pacific, providing around half of
all aid received in the region. Australia is the largest bilateral donor in
nine partner countries in the region and as the 'primary aid donor in many of
these very poor countries, Australia is under pressure to deliver regardless of
the partner government's performance'.
Australia has also agreed Partnerships for Development with a number of Pacific
states which include mutually agreed targets, development priorities and
During the inquiry, the Pacific was recognised as one of the regions
which had made the least progress toward the MDGs.
Despite this lack of progress, ACFID noted that the Pacific region had suffered
a cut in the January reprioritisation. It noted that the '2013/14 budget for the
Pacific Islands region has been cut from $943.7 million to $882.2 million, with
the smaller Pacific Island countries being collectively cut by 22 per cent'.
Sir Richard Feachem urged continued Australia support for the Pacific
but also consideration of new approaches to aid. In the case of small Pacific
Island nations, he argued special strategies and policies are needed:
For many of these countries, Australia is the only or
predominant source of financial and technical assistance. They face unique
challenges for which tailor-made solutions are required. [T]he guiding
principle should be that if it hasn’t worked well in the past, it should not be
continued. The risk of trying bold new approaches is less than the risk of
continuing with failed policies.
The Development Policy Centre noted that a large portion of the funding
cuts announced on 18 January 2014 had been 'essentially achieved by cutting the
allocation to Africa and the Middle East by almost 40 per cent relative to the
2012-13 allocation, from $329 million to $200 million'.
A number of witnesses and submissions urged greater Australian aid
spending in Africa. For example, Mr Ben Thurley from Micah Challenge noted that
'while the greatest number of poor people live in our immediate region, the
absolutely poorest people on the planet live in sub-Saharan Africa'.
Similarly, the Church Agencies Network acknowledged the case for a geographic
focus of Australian aid but nonetheless argued 'it is imperative to be engaged
with the most poor and vulnerable and these people are mostly living in
Mr Paul O'Callaghan, representing the Church Agencies Network, noted that other
major aid donors were expanding their programs in that region and that Africa
was an area where Australia had substantial interests:
We have 700 mining projects by Australian companies in Africa
right now—220 companies...There is more than $10 billion of two-way merchandise
trade and the outlook is for six per cent growth on average for African
countries in the next 10 years, according to the IMF. There are a billion
people in Africa. We obviously have strong trade and investment interests
there. Why would we be cutting that off completely?
The Australian Trade and Development Group and the Institute for
International Trade also highlighted Australia's economic interests in Africa.
They pointed out there 'are other strategic reasons for maintaining close
allies in Africa - on the trade front, on global security issues and most
important of all, because of a long history of commitment to justice and
poverty reduction on that continent for which Australia has a very strong
Mr Marc Purcell from ACFID considered that the eastern-seaboard Africa
should be included in the 'Indo-Pacific' focus of Australia's aid program:
We believe that there is $20 billion of Australian investment
there, that there is a strong diaspora presence in Australia, and that there is
significant poverty. And Australian money can be used effectively there in aid
programs, whereas there is still a lot to do to achieve human development—that
anglophone part of Africa from Kenya and downwards.
Fragile and conflicted affected
Australia is one of only six donor countries to devote more than half of
its country-specific aid to fragile and conflict-affected states. In 2012-13, more
than 55 per cent of Australia's bilateral and regional development
assistance—approximately $1.77 billion—went to fragile or conflict-affected
The Australian Strategic Policy Institute noted the importance of Australian
aid 'fostering development and mitigating deprivation in fragile states...' and
providing niche contributions 'further afield'. ACFID also
A growing share of the world's poor live in fragile states,
with some projections indicating this will exceed 50 per cent within the next
five years. Poverty rates are 20 per cent higher in countries affected by
violence and the World Bank's 2011 report on Conflict, Security and Development
found that a civil conflict costs the average developing country roughly 30
years of GDP growth.
Afghanistan was a frequently mentioned fragile and conflict-affected
region. As at the budget 2013-14 it was to receive $151.5 million which was reduced
to $130.9 million in the revised budget. Concerns were expressed by witnesses
about the scaling back of aid to Afghanistan and the impact of the cuts to post
conflict development. Oxfam Australia noted:
Australia has made generous and strategic long-term funding
and capacity building commitments to the Government of Afghanistan. As
international forces complete their withdrawal from Afghanistan, meeting these
commitments will be essential to sustain many of the development gains
Australia has contributed to over the past decade, and to avoiding unintended
Oxfam Australia made the point that if Australia did not meet its
commitments under the Tokyo Mutual Accountability Framework it could undermine
the international community's leverage with the Afghan Government to support
key development outcomes.
TEAR Australia also noted that '$20.6 million in cuts or deferrals to the aid
budget for Afghanistan comes at a time when the country is in an extremely
In contrast, the Centre for Independent Studies recommended that 'Australia's
ODA in Afghanistan be scaled back dramatically in light of increasing
instability and violence and the absence of a viable long-term international
commitment to security'. It stated 'the particularly precarious and
deteriorating security environment in Afghanistan suggests that Australia's ODA
will be used neither efficiently nor effectively there'.
Australia is a signatory to a number of significant international
agreements. The commitment to these international obligations and Australia's
role in supporting the rights upheld by these conventions are principles which
underpin the aid program. This framework of international obligations includes:
the Universal Declaration of Human Rights;
the International Covenant on Civil and Political Rights;
the Convention on the Elimination of All Forms of Discrimination
the Convention on the Rights of Persons with Disabilities;
the United Nations Framework Convention on Climate Change; and
the Convention of the Rights of the Child.
During the inquiry a number of these international obligations were
highlighted by witnesses and submitters.
In particular, the Australian Lawyers for Human Rights emphasised Australia's
broader 'obligation to assist' foreign countries in terms of human rights and
Others expressed concern about the impact of climate change, and that cuts to
those programs and international commitments could be interpreted as an
abrogation of Australia responsibilities under the United Nations Framework
Convention on Climate Change.
The Law Council of Australia observed that Australia's international
obligations arose from multiple sources including 'treaties; membership of
international organisations; and bilateral and multilateral agreements for
trade, aid and development, security and law enforcement'. It stated:
Critically none of the reviews of Australia's aid
effectiveness or government policy statements since 2006 have considered the
full gamut of these commitments and whether they impact on the delivery of
Australia’s ODA. The Law Council submits that a comprehensive review of
Australia’s aid and development obligations should be undertaken to inform
future ODA policy development.
However, in considering Australia's international obligations in
relation to the overseas aid program most submitters and witnesses focused on
two: the commitment to achieve the Millennium Development Goals by 2015; and
the UN commitment for donor countries to reach 0.7 per cent of ODA/GNI.
Millennium Development Goals
The Millennium Development Goals (MDGs) are a set of development targets
with the overall objective of reducing poverty and increasing living standards
worldwide by 2015. In 2000, Australia was one of the 189 countries who
committed to achieve the MDGs. There are eight MDGs with
a number of targets and associated measurable health, social and economic
indicators for each goal. The MDGs are:
- Goal 1 - Eradicating extreme poverty and hunger.
Goal 2 - Achieving universal primary education.
Goal 3 - Promoting gender equality and empowering women.
Goal 4 - Reducing child mortality rates.
Goal 5 - Improving maternal health.
Goal 6 - Combating HIV/AIDS, malaria, and other diseases.
Goal 7 - Ensuring environmental sustainability.
Goal 8 - Developing a global partnership for development.
The United Nations report on the MDGs for 2013 highlighted that several
MDGs have been reached or are close to being achieved. For example, the extreme
poverty reduction target was considered to be met five years ahead of schedule.
However, the UN report also identified that accelerated progress was needed in
relation to a large number of MDGs. For example, the number of children out of
school declined by almost half between 2000 and 2011, but progress has slowed
meaning that the target of universal primary education is unlikely to be
achieved by 2015.
Similarly, the mortality rate for children under five dropped 41 per cent
between 1990 and 2011, but 'rapid progress is needed to meet the 2015 target of
a two-thirds reduction'.
Progress towards the MDGs is also frequently described as 'uneven' both
among and within countries. While countries such as China, India and Brazil
have made significant progress in achieving many of the MDGs, countries in
regions such as Sub-Saharan Africa have not been as successful. For example,
the percentage of people living on less than $1.25 per day only fell from 56
per cent to 48 per cent between 1990 and 2010 in Sub-Saharan Africa.
The MDG Gap Task Force report for 2012 noted that while each previous
annual report had tracked additional progress toward the MDGs, its assessment
of recent progress was 'sobering'. It stated that the 'Task Force has had
difficulty identifying areas of significant new progress and for the first time
there are signs of backsliding. With no apparent commitment by national
governments to 'reverse' this change, the Task Force concluded that 'fewer MDGs
will be reached in fewer countries as a result' by 2015.
Progress towards the MDGs in Australia's region has also been described
as 'uneven'. For example, the AusAID Annual report 2012-13 noted:
Cook Islands, Niue, Samoa and Tonga have recorded impressive
gains in improving maternal health, achieving universal primary education,
promoting gender equality and eradicating extreme hunger and poverty. However
progress has been uneven at best in Papua New Guinea, Solomon Islands, Vanuatu
and Fiji, and Papua New Guinea is unlikely to achieve any of the Millennium Development
Goals by 2015.
Nonetheless, the Annual Review of Aid Effectiveness 2011-12
concluded that Australia's aid program had made 'a major contribution towards
the achievement of the Millennium Development Goals in our region and across
the world'. It noted:
Education remains our flagship program, acknowledging the
work still needed to meet MDG 2—achieve universal primary education. We have
also invested heavily in health, gender and food security to address other
In July 2012, the UN Secretary-General Ban Ki-moon convened a panel of
eminent persons, including President Susilo Bambang Yudhoyno and Prime Minister
David Cameron, to make recommendations on the vision and shape of the
development agenda post-2015. The report of the High-Level Panel of Eminent
Persons on the Post-2015 Development Agenda, released in May 2013, identified
that the future development agenda to 2030 needed to be driven by 'five
transformative shifts'. These were:
no one behind.
sustainable development at the core.
economies for jobs and incentives.
peace and effective, open and accountable institutions for all.
a new global partnership.
The Post-2015 Development Agenda report was responded to by Australia at
a special event in 2013 to follow up efforts made towards achieving the MDGs.
In a statement, the Foreign Minister, the Hon Julie Bishop MP, reaffirmed
Australia's commitment to the MDGs and highlighted the positive contribution of
the private sector and trade in reducing poverty. She commented that 'the new
framework needs to take account of the barriers of development – poor
governance, insecurity and instability'. She emphasised that 'economic
transformation and job creation, as well as sound institutions and peaceful
societies, must be core to the post 2015 agenda'.
A large number of submissions, many from aid-related NGOs, argued that
Australia needed to do more to achieve the MDGs.
Some submissions noted that international discussions were in progress to
resolve what policy agenda should follow the MDGs post-2015. ACFID stated:
The Australian Government must also continue to be active in
negotiations and agreements to ensure a new development framework that is
practical yet ambitious is agreed by September 2015, and that such a framework
reflects the changing nature of poverty; incorporates cross-cutting priorities
including gender, environmental sustainability, disaster risk reduction,
disability, and indigenous peoples; and includes important new focus areas such
as peace and security, and governance.
The ACTU/APHEDA submission supported a continued focus on 'full
employment and decent work for all'. It commented:
More generally, we
believe the Australian government should be advocating for the development of
strong and focused actionable global goals with clear and time-bound targets
and adequate indicators. The focus of targets and indicators should be on
outcomes – both quantitative and qualitative – rather than outputs.
Vision 2020 observed that recent cuts to aid funding could reduce
Australia's potential influence on post-2015 development agenda discussions. It
To date, Australia has been a key player in discussions to ensure
that the new agenda is broadened, but also practical for current and future challenges
in Asia and the Pacific. Promoting the inclusion of action on non-communicable diseases
and people with disability are two examples that demonstrate Australia's
Official development assistance
The target of raising official development assistance (ODA) to 0.7 per
cent of donor countries' gross national income (GNI) (originally gross domestic
product), was first agreed at the UN General Assembly in 1970 and has been
repeatedly endorsed at subsequent high level international aid and
While the 0.7 per cent of GNI target has been widely supported, the United
States has stated that, while countries should make their best efforts to
increase ODA, it did not subscribe to 'specific targets or dates'.
In 2012, net ODA from developed countries stood at US$125.6 billion,
representing 0.29 per cent of donors' countries combined GNI. This is a 4
per cent drop in real terms from 2011, which was 2 per cent below the 2010
level. The UN report on progress toward the MDG attributes this recent decline
to 'the economic and financial crisis and euro zone turmoil, which have led
many governments to implement austerity measures and reduce their aid budgets'.
As previously noted, in 2012–13, it was estimated AusAID provided $4.314
billion in ODA. Assistance delivered by more than 20 other government agencies
brought total Australian ODA to an estimated $5.149 billion, or an estimated
0.35 per cent of GNI.
The submission from the Treasury outlined how Australia's aid program has
expanded significantly over the past three decades. It noted that 'Australia's
ODA in real terms has increased every year since 2001-02, with an average real
increase of 6.5 per cent over the 12 year period, compared to an average
increase of 2.8 per cent over the last 30 years'.
However, it stated that 'Australia's ODA fell as a proportion of GNI over much
of the past three decades as a result of a growing real economy'.
Figure 2 – ODA/GNI
ratio (per cent)
Further, Treasury indicated that the Mid-Year Economic and Fiscal
Outlook showed 'a significant deterioration in the fiscal outlook across the
forward estimates and the medium term' showing that the budget will remain in
deficit for each year to 2023-24. It noted that:
The Government has committed to returning the budget to
sustainable surpluses that build to at least 1 per cent of GDP by 2023-24.
Given the sustained pressure on the budget over the forward estimates and
beyond, the Government will be required to carefully evaluate expenditure
priorities in order to meet this commitment.
Treasury also suggested there were potential problems with the use of
the ODA/GNI targets. It argued that 'determining the ODA budget by targeting a
specific percentage of GNI also presents some difficulties with respect to
budgeting'. Treasury pointed out that '[b]y targeting a specific percentage of
GNI, governments must find sufficient proposals to meet the funding envelope in
any given year, rather than funding proposals on their merits'.
Mr Robin Davies from the Development Policy Centre also provided some
analysis of the announced changes to aid funding:
Australia was the eighth-largest OECD donor in 2012 (the last
year for which comparative data are available), rising toward sixth-largest
with projected budget growth. Given an aid budget of $5 billion this year and
into the future, Australia is likely to sit at about ninth...At the time of the
2013-14 budget, Australia's aid-to-GNI ratio was expected to be 0.37 per cent.
It will now fall to 0.33 per cent and probably stabilise at 0.32 per cent or so
for the next several years. Australia's ODA/GNI ranking, thirteenth in 2012, is
fairly secure even after the recent cuts—but only because no country below us
is close...Thus at present Australia's reduced aid effort is roughly commensurate
with its standing among world economies, but not more than that.
Appropriate level of ODA funding
The majority of submissions highlighted that while there was bipartisan
support for a commitment for Australia to reach 0.5 per cent of ODA/GNI, there
did not appear to be a clear path to achieve this level of funding. ACFID, and
many others, wished to see a 'clear timetable' for Australia to lift its aid
levels to 0.5'.
For example, Save the Children recommended setting out a firm plan to increase
foreign aid to 0.5 per cent of GNI 'to ensure that Australia is well positioned
to benefit from the increased importance of the Asian region globally and to
cost effectively mitigate the risks associated with instability in our region'. Similarly,
Childfund called on 'the Government and Opposition to establish concrete dates
to honour the commitment to contribute 0.5% of GNI to overseas development
Several submissions reminded the committee that the UN target of 0.7 per
cent of ODA/GNI has already been achieved by some other developed countries
such as the United Kingdom. For example, the Australian Christian Lobby pointed
out that despite the economic downturn in Europe, five European countries have
reached and surpassed the 0.7 per cent target.
In this context, Mr Paul Kelly from Care Australia stated:
[R]esetting the aid budget at $5 billion sets the GNI-ODA
ratio in the low 0.30s, amongst the middle of the pack. This profile we build
does not match the ambition seen elsewhere in the Australian government's
foreign policy. We feel that Australia can afford to be more generous and we have
learnt elsewhere that reducing aid now risks paying more in the future and for
The Business Council of Australia highlighted that Australia's aid
program represents a significant investment of federal revenue, noting that
Australia is the 'eighth largest aid donor in the OECD in absolute dollar
terms, and the 13th largest as a share of gross national income (GNI)'. It
supported an aid program that was aligned with the government's commitment to
fiscal restraint in the current budget context.
An alternative view was provided by the Development Policy Centre which
In line with its continued commitment to a 0.5 per cent
ODA/GNI target, and to maintain Australia's generosity while recognizing the
federal deficit reduction imperative, the Government should adopt the target of
keeping constant the current ODA/GNI ratio of 0.33 per cent. This would require
increasing aid volumes at an average amount of $300 million per year over the
next four years, rather than the $100 million required to adjust aid only in
line with inflation.
Setting the direction of the
Australian aid program
The Comprehensive Aid Policy Framework to 2015-16 (CAPF) sets out a four
year strategy for aid policy commitments, including the methodology for assessing
progress, clear benchmark expectations and progress thresholds to take
Australia beyond the 2015 MDG program. This comprehensive framework has
provided clarity and certainty for other countries, Australian government
agencies, private sector partners and participating NGOs. The government has
not identified any policy failures within this framework, which was developed
in response to recommendation 24 of the Independent Review:
The government should develop and implement a
Cabinet–endorsed Four–Year Strategy for the entire aid program for policy and
The Independent Review noted:
Having no comprehensive policy statement creates problems. It
risks a scattered effort. And it makes assessing the overall effectiveness of
Australia's aid program more difficult.
The committee considers that the Australian Government needs to identify
any failings in the Comprehensive Aid Policy Framework (CAPF) and clarify how
its strategic policy framework will differ. This is a critical factor in providing
clarity and certainty about the direction and rationale for the cuts to the aid
budget, and how those cuts reflected a shift in Australia's aid policy. Like
many submitters and witnesses to the inquiry, the committee was disappointed by
the lack of a detailed rationale for the funding cuts imposed on the aid
program in January 2014.
Submitters and witnesses also noted the previous government's CAFP as an
example of a four-year plan for how, why and where Australian aid will be spent
and the intended results that will be achieved with that investment. Witnesses
also sought clarification on the status of the action plans outlined in the
CAPF as well as shifts in priorities and focus. This underlined the current
absence of strategic clarity in the Australian Government's approach to the aid
It is clear that Australia's aid program is in a period of transition.
Significant funding deferrals and recent cuts will change the profile and
outlook of Australia as a major donor. In this context, the committee considers
there is also merit in a white paper process to provide a long term strategic
framework to guide the direction and delivery of Australia's overseas aid
program over the next decade. The last white paper on overseas aid was released
The committee recommends the Australian Government release an
overarching policy framework for Australia's aid program as part of the
May 2014 budget process.
The committee recommends the Australian Government undertake a white
paper process to refine the long term strategic objectives of Australia's aid
program and identify measures to achieve these objectives.
A pathway to 0.5 per cent ODA/GNI
The quality of aid programs is critical, but the quantity of funding to
support these programs is just as important to achieve outcomes. Underlying
much of the evidence the committee received was frustration that the aid budget
increases had been repeatedly deferred or reallocated. The importance of
predictability and certainty in aid funding for stakeholders was consistently
However, while there remains a bipartisan commitment to increase Australia's
annual aid funding to 0.5 per cent of GNI, the Australian Government has not
indicated a date it intends to reach this target.
The committee urges the development of a clear pathway to reach the 0.5
per cent ODA/GNI level of aid funding, noting that other comparable developed
countries have already reached the UN target of 0.7 per cent of GNI in their
overseas aid programs. Any changes to achieve the 0.5 per cent overseas aid
funding level should continue to be viewed as only a 'stepping stone' to reach
the preferred target of 0.7 per cent.
The committee considers that returning a level of stability to overseas
aid funding is vital. In this context, the Australian Government's commitment
to annually increase aid funding by CPI is welcome. However, the Australian
Government should ensure that the funding for overseas aid does not fall over
time. Therefore it is the view of the committee that the 0.33 ODA/GNI ratio
should be viewed as the base level of funding for the Australian aid program
into the future.
In the medium term, the committee considers that gradual increases to
the aid budget should be made to reach the 0.5 per cent of GNI funding goal.
The most effective mechanism to ensure this occurs would be a bipartisan
agreement to support and implement gradual increases in Australia's aid program
for the next decade to reach the 0.5 per cent target. Once the pathway is
agreed, it should be incorporated into the Australian Government's strategic
framework for aid.
As far as possible, future increases in the total funding for
Australia's aid program should be depoliticised. While different aid and
international development priorities may be supported by the different
political parties, the preferred level of contribution by Australia is not in
dispute. In the view of the committee, it is not unreasonable for a bipartisan
public compact to be agreed for overseas aid funding to gradually increase to
the target level within the next decade.
The committee recommends the Australian Government maintain its commitment
to increase the funding by the Consumer Price Index in 2014-15.
The committee recommends that, in future years, the Australian
Government ensures that Australia's ODA/GNI ratio does not fall below 0.33.
The committee recommends the Minister for Foreign Affairs and the Shadow
Minister for Foreign Affairs develop a bipartisan agreement for the long term
funding of Australia's overseas aid and development assistance program to
achieve the ODA/GNI target of 0.5 per cent by 2024-25.
Post-2015 development agenda
DFAT has stated that Australia is actively contributing to the setting
of the post-2015 development agenda. As a non-permanent member of the UN
Security Council and host of G20 2014, Australia is in a good position to make
its voice heard on the priorities of the development agenda post-2015. In
December 2012, Australia became co-chair of the G20 Development Working Group.
Australia will also have a leadership opportunity in promoting food security
issues as World Food Programme Executive Board Vice President and President in
2014 and 2015 respectively.
DFAT has noted that the integration with AusAID will provide the
opportunity to bring 'the full weight of Australia's diplomatic resources to
support development objectives'.
The committee considers this is a key opportunity where the alignment of
Australia's diplomatic resources and development priorities should be fully
exploited. In particular, Australia, in consultation with its development
partners, should be highlighting issues critical for developing countries in
the Asia Pacific region in the post-2015 development agenda discussions.
The committee recommends that the Australian Government promote the
interests of developing countries in the Asia Pacific in the post-2015
development agenda discussions.
Regionally focused and globally
Throughout the inquiry there was a broad consensus that Australia's aid
program should continue to focus geographically on the Asia Pacific. The vast
majority of Australia's nearest neighbours are developing countries including
several which have not achieved substantial progress towards the MDGs.
Australia will continue to have a special responsibility and interest in
supporting development and reducing poverty in its immediate region. However,
the committee is concerned that recent aid funding cuts appear to be reducing
engagement within the Pacific countries, as well as drawing back from providing
international development assistance in Africa.
Given the Australian Government's stated intent to refocus on 'reducing
poverty in the Indo-Pacific region', in the view of the committee, it was
counterproductive for the revised aid budget for 2013-14 to include substantial
cuts to many of the smaller countries of the Pacific. Due to its close
proximity, the welfare and stability of the Pacific is clearly in the national
interest of Australia. Australia is the leading donor across the Pacific region
and accounts for more than half of overseas aid to the region. The committee
considers that Australia's reputation as a responsible donor is closely linked
to its capacity to encourage and support development in the Pacific. The
committee urges the Australian Government to reverse these funding cuts in the
2014-15 aid budget and to renew its commitment to supporting development for
all the nations of the Pacific.
It is also important for Australia to continue its development
engagement with Africa. In 2011, the Independent Review recommended a 'high
expansion' of Australian aid to Sub-Saharan Africa and proposed that Australia
should commit to join the African Development Bank (AfDB). The committee agrees
that '[j]oining the AfDB would represent value for money and be a high-level
indication of Australia's commitment to development in Africa'.
The overarching objective of the AfDB is to spur sustainable economic
development and social progress in Africa, and thus contribute to poverty
reduction. Legislation to enable Australia's membership of the AfDB lapsed at
the dissolution of the last Parliament. In joining the AfDB, Australia would be
making a clear statement regarding its commitment to development in Africa and
would join other comparable donor countries which already have membership of the
The committee recommends that the Australian Government reverse funding
cuts made to Pacific nations in the 2014-15 budget.
The committee recommends that the Australian Government reintroduce and
support legislation to enable Australia to become a member of the African
Development Bank Group.
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