Development priorities and the delivery of aid
This chapter considers the development priorities of the Australian aid
program as well as the approaches to its delivery. Appropriate mechanisms for
the delivery of the Australian aid program are also considered including: aid
delivered by non-government organisations; multilateral organisations; the
private sector, partner governments and Australia civil society.
The development priorities of the Australian aid program have changed
over time. In 2011, the Independent Review noted that there has been reduction
in the proportion of the program spent on governance while there have 'been
significant increases in the proportion of the program spent on health,
education, infrastructure, rural development and the environment'.
The Treasury noted that 'education and governance have been key focuses for the
aid program' since 2000-01, 'rural development has seen a drop-off over the
period, while health and infrastructure have exhibited varying degrees of
Figure 3 – Australian
ODA by sector – 2000-01 to 2012-13
DFAT's submission outlined that the allocation of development priorities
in the Australian aid program for 2013-14 was: education (22 per
cent); economic development (20 per cent); health (19 per cent); humanitarian
(16 per cent); governance (16 per cent); and general development support (7 per
A range of specific aid priority areas were discussed during the inquiry,
particularly those perceived as subject to reduced funding or attention. These
development priorities included:
emergency and humanitarian relief;
health and medical research;
climate change and environment; and
private sector engagement.
Emergency and humanitarian aid
In 2011, the Independent Review recommended a substantial increase in
humanitarian and emergency assistance as a part of Australia's aid program. It
pointed out that this was an area of growing importance, was globally
underfunded and was an aid area in which Australia performed well.
One of the key components of the funding cuts announced on 18 January
2014 was a reduction for the global program for humanitarian and emergency
response from $163.3 million in 2012-13 to $137.4 million in 2013-14.
Submissions and witnesses were almost uniformly critical of this funding
change. For example, the Development Policy Centre noted that the recent cuts
'could constrain Australia's ability to respond appropriately to crises'.
ACFID, and a number of other NGO contributors to the inquiry, called for
at least 10 per cent of Australia's aid program to be allocated to humanitarian
ACFID considered this focus 'was appropriate for Australia, given the Asia
Pacific region accounted for 85 per cent of the world's deaths and 38 per cent
of global economic losses due to natural disasters over the last three decades'.
Ms Melissa Wells from Save the Children told the committee:
The humanitarian budget has been cut this year. It is
currently at about 5.2 per cent of total aid as a proportion, and we would like
to see it recover in the coming years to be around 10 per cent. That is
consistent with our OECD peers; it is also consistent with the independent
review of aid effectiveness.
On 16 January 2014, the Australian Government pledged $10 million in aid
for Syria, with an additional $2 million for efforts toward destroying Syria's
However, witnesses at the hearing expressed concern that Australia was not
providing appropriate support for humanitarian aid to Syria.
Mr Andrew Johnson from World Vision suggested that the cuts in funding were
reducing the ability of Australia to respond to new or emerging needs. In
relation to Australia's contribution, he stated 'our estimate is that
Australia's fair share to the recent pledging conference was about $100
million; the commitment made was about $10 million'.
World Vision argued that it is important to ensure that humanitarian
funding decisions continue to be made in accordance with Good Humanitarian
Donorship (GHD) Principles which were endorsed by Australia in 2003:
Although the Australian Government has stated that it will
prioritise funding for development assistance in the Indo-Pacific region, funding
for humanitarian assistance should be the exception to this. In line with the
GHD Principles, humanitarian funding should not be subject to pre-determined
geographic priorities, but should be allocated on the basis of need – wherever
that need arises. Humanitarian funding should also be allocated and used in a
neutral and impartial manner, independent of political, economic, military or
At the public hearing, DFAT officers indicated that '[a]s part of the
budget reprioritisation process and the budget allocation process that we are
going through now, one of the areas that we will need to actively consider is
whether the humanitarian bucket is sufficient for what the government wants to
do'. However, in terms of Australia's present capacity to respond to
humanitarian crises, DFAT argued that aid funding has not changed
The mandate of flexibility budget has been at about $120
million in the past. At the end of 2012, that budget was reduced as part of the
reprioritisation that occurred. It was then set for the 2013-14 budget at $90 million
rather than $120 million. When this was revisited by the government in January
this year, they maintained that at $90 million.
In 2012-13, disaster preparedness was one of the five strategic goals of
the previous government's aid policy.
The OECD Peer Review highlighted that Australia is a leading donor in disaster
risk reduction and recommended that it 'expand its disaster risk reduction
programmes to all partner countries; and share its tools and good practices
with other donors'.
Investment in disaster risk reduction was also recognised as a
significant part of the Australian aid program. Oxfam Australia noted that 'disasters
have a devastating impact on development, taking the deepest toll on poor
countries, and can reverse progress on poverty reduction'. It commented:
Studies have proven that disaster risk reduction measures are
both highly effective and a highly cost-effective way of protecting long-term
development gains, minimising economic losses and damage to infrastructure...Continued
Australian investment in disaster risk reduction can help further strengthen
these countries' resilience, in turn increasing chances to attract investment,
improve competiveness and sustainability.
Australian investment in disaster risk reduction has almost
doubled since 2009, making Australia one of only a few countries to meet the
commitment made by governments in 2011 to allocate at least 1 per cent of all
development funding to disaster risk reduction.
Save the Children also highlighted that 'in addition to saving lives,
disaster risk reduction saves money':
It is not yet clear whether the government will meet
commitments made in June 2012 to allocate $100 million to Disaster Risk
Reduction over five years. We strongly recommend this commitment is retained.
Investment in disaster risk reduction saves lives, safeguards development
investments and protects economic growth.
Education was repeatedly listed as a vital part of the Australia's aid
to developing countries. For example Oaktree stated:
We believe that education is a key way in which we can end
extreme poverty. In line with this, most of our projects are focused on
education and practical skills training for those living in extreme poverty in
the Asia-Pacific region.
Education has been a key development priority for the Australian aid
program which also aligns with the MDG target of achieving universal primary
education by 2015. Out of the approximately 61 million children of primary
school age who are out of school, around 20 million live in the Asia Pacific.
AusAID's Annual report 2012-13 stated:
Australia is committed to promoting opportunities for all
children to receive a quality education. Education helps people escape poverty
by improving incomes, employment and enterprise opportunities. Australia has
bilateral education programs in 21 countries across Asia and the Pacific including
in Indonesia, Papua New Guinea, the Philippines, Afghanistan and Pacific Island
countries. Australia's investment in education in 2012–13 was an estimated $841
million, or 17 per cent of [ODA].
The Global Partnership for Education (GPE) is another key plank in
Australia's support for education in developing countries. The GPE is a
partnership of donors and developing countries dedicated to improving education
in the world's poorest countries. GPE maintains a strong focus on gender
parity, and almost half of GPE's funds are allocated to fragile or conflict-affected
Support was also expressed for the New Colombo Plan, an Australian
undergraduate study and internship program aimed at lifting knowledge of Asia
and the Pacific in Australia and strengthening our people-to-people and
institutional relationships in the region. The key elements of the plan are the
delivery of scholarships and student mobility grants, facilitated internship options
and, where appropriate, support to universities.
The cross regional program for gender and disability in the aid program
was cut from $29 million in 2012-13 to $25 million in 2013-14.
The important role of Australian aid in empowering women in developing
countries was frequently mentioned in submissions. ActionAid noted that '[n]ot
only are women disproportionately affected by poverty, but progress in addressing
women's poverty is lagging'.
Women were also perceived as critical to development success, for example,
Oxfam Australia stated that 'over the past 30 years no other indicator has had
a greater impact on development outcomes than gender equality'.
ACFID also noted that:
Investment in women's and girls' education and health...yield
some of the highest returns of all development investments including increased
household incomes, reduced rates of maternal mortality, and better educated and
healthier children. Each additional year of female education reduces child
mortality by 18 per every thousand children.
The International Women's Development Agency (IWDA) also highlighted that
gender equality results in better development outcomes, but outlined its
concern that 'there is a very real danger that consistent work to support
gender equality won't happen unless it is explicitly prioritised and funded'.
The IWDA called for a 'gender lens' to be able to be applied across all
decisions in regard to aid.
At the hearing, Ms Jo Hayter, CEO of IWDA emphasised the risk of 'policy
evaporation' or, in other words, gender equality being 'everywhere but nowhere'
in the aid program. She stated:
In the [PNG] report you can see that in a country program
budget totalling $448.5 million, as estimated expenditure for 2012-13, $2.9 million
or one per cent of Australia's bilateral program with PNG is directly earmarked
for gender equality and women's empowerment...There is no doubt that gender
equality and women's empowerment is being progressed through other dimensions
of the program, it is just that none of us can see where or how or how
significant this spending is.
IWDA also drew the committee's attention to the legislative progress of
the International Development Gender Equality Bill 2013-14 in the United
Kingdom. This bill establishes a statutory obligation to promote gender
equality by the government in development assistance and humanitarian
The IWDA also highlighted a number of specific initiatives and investments
which would assist to address gender inequality and assist the Australian
Government 'give effect to its broad policy commitments to women's leadership,
economic empowerment and ending violence against women' including the Pacific
Women Shaping Pacific Development (PWSPD) program.
Additionally, several organisations in the NGO sector expressed their support
for the appointment of a Global Ambassador for Women and Girls.
Ms Hayter noted that it would be 'an important role in terms of
bringing...multisectoral voices together'.
The IWDA noted that pregnancy and childbirth remain some of the greatest
killers of women worldwide. Accordingly, it was 'crucial that sexual and
reproductive health and rights remains a priority in the aid program and in
Australia's diplomatic and international engagements where relevant, especially
in discussions concerning the post-2015 development framework'.
DFAT noted that one of the government's priorities for the aid program
was 'investing more in women and girls' with a focus on:
increasing access to education;
building women's leadership skills and opportunities, especially
in our region;
promoting women’s economic empowerment and participation in the
tackling gender violence and preventing sexual violence in
supporting women's role in peace-building and conflict
The recent OECD DAC peer review of Australia highlighted Australia's 'exceptional
emphasis on disability which makes it a leader in this area internationally'.
It noted that 'Australia's strategy Development for All: Towards a
disability-inclusive Australian aid programme 2009-14 was developed through
a participatory process and is the most detailed of any donor'.
In 2012-13 targeted AusAID funding for disability was an estimated $16.3
On 3 December 2013, the Parliamentary Secretary to the Minister for Foreign
Affairs, Senator the Hon Brett Mason, announced the Australian Government 'will
develop a new strategy to ensure that people with disability play an active and
central role in Australia's aid program beyond 2015'.
CBM Australia welcomed the announcement of a second disability strategy
but considered it was 'essential that the Australian Government's renewed
commitment to leading the field in disability inclusive development is
supported by a predictable, long-term funding commitment'. It also highlighted
the need for persons with disability to be included in the design of the new
strategy and improved systems to track and monitor budgetary allocations
towards disability inclusion.
CBM Australia proposed that the appointment of an Ambassador for Disability
Inclusive Development 'would provide a focal point for promoting effective strategies
to mainstream disability as a cross-cutting issue across Australia's aid
program and partnerships'.
Vision 2020 described people with disability in developing countries as
'the world's largest minority group estimated at 15 per cent of the global
population, or one billion people':
As 80 per cent of people with disability live in developing
countries, some of the world's poorest people are often excluded from communities,
public health services and development programs. This exclusion increases their
vulnerability to poverty and creates a vicious cycle of poverty and disability.
To end this cycle, all aid and development programs must be equipped to include
people with disability. Disability inclusive aid and development policy and
practice ensures that people with disability have equal access opportunities in
education, rehabilitation, livelihoods and social inclusion, to lift them out
In particular, Vision 2020 outlined the links between vision impairment
and lack of access to opportunities such as education, employment, and social
inclusion, and to basic needs such as health services, good nutrition, safe
housing and clean water and sanitation. Further, it stated that research
indicated eye health and vision care programs were cost effective interventions.
Food and nutrition
The Annual Review of Aid Effectiveness in 2011-12 identified
under-nutrition, in particular childhood under-nutrition, as a challenge in many
of the regions and developing countries where Australia delivers aid, and as an
emerging issue for the aid program.
In June 2013, Australia joined the Global Nutrition for Growth Compact and signed
on to the Scaling Up Nutrition (SUN) movement, a collective global movement to
scale up evidence-based nutrition interventions.
An important component of Australia's support for providing access to
adequate nutrition to those in developing countries is through contributions to
the World Food Programme, the lead UN agency for humanitarian food assistance
in emergencies. Australia's contribution to the World Food Programme remained
at $46 million in the January aid budget changes.
Continued support for measures to alleviate hunger was expressed in many
submissions. For example, Ms Ertharin Cousin, Executive Director of the
World Food Programme stated:
The devastating impact of hunger, food insecurity and
malnutrition on people and economies is clear and evidence-based. Hunger stunts
physical and mental growth potential. Affected economies lose an estimated 6 to
16 percent of GDP in productivity each year. Children who suffer early growth
failure will as adults, experience and suffer from lower earning potential and
more chronic illnesses, and often fail to realize their educational promise.
Ms Cousin also noted that Australia has been instrumental in advancing
resilience-based approaches to food security. The 2012-13 AusAID Annual
report lists as one of the achievement of the aid program 'helping more
than 700,000 poor women and men gain access to and use agricultural
technologies to improve their food security, and increasing the value of
additional agricultural production by more than $131 million'.
Further, the Australian Centre for International Agricultural Research encourages
research for the purpose of solving agricultural problems of developing
Oxfam Australia also highlighted the large number of people affected by
hunger in the Indian Ocean Asia-Pacific region and argued that Australia's aid
program should focus on food security'. Ms Jo Pride from Oxfam
Australia observed that 'Australia's investment in food security initiatives
through the aid program has declined over the last decade and it is vital that
this trend is reversed'.
Save the Children noted that Australia, as part of joining the SUN
movement, had committed to contribute $40 million over four years to nutrition
measures in the Asia-Pacific region:
Save the Children recommends delivering on Australia's
commitment to tackle under-nutrition, with priority given to boosting
investment in life-saving interventions for mothers and children in the crucial
1,000-day window (from the start of a woman's pregnancy until her child's
second birthday) – such as distribution of vitamin A, iodised salt and zinc
supplements, and the promotion of healthy behaviour, including hand washing,
exclusive breastfeeding and complementary feeding practices.
Health and medical research
As outlined above, investment in 'health' forms about 19 per cent of
Australia's aid program.
Several submissions called for health to continue and be expanded as a
development priority. The School of Population Health, at University of
Queensland, considered that there is a 'clear evidence based health development
agenda for the Asia Pacific region' and noted Asian Development Bank research
which identified health priorities for Asia and the Pacific.
World Vision recommended that at least 20 per cent of the overall aid
budget should be allocated to the health sector. It particularly focused on the
health impacts for children:
Despite significant improvements in global health indicators
over the last two decades, there are still very significant health needs in our
region and across the globe. Child mortality rates in the Pacific remain
approximately nine times higher than in Australia; in Southeast Asia, six times
higher; in South Asia, 12 times higher; and in Africa, 20 times higher...It is
estimated that at least four million of the almost seven million deaths of
children each year are preventable with simple, cost-effective responses.
Providing access to health services was frequently cited as a
value-for-money development intervention and critical for the success of
overseas aid programs overall. For example, Professor Graham Brown from the
Nossal Institute of Global Health (Nossal Institute) noted:
[P]oor health is a barrier to development: no development
without health, no health without development—they all go together, with many
contributing to it. A common reason that families just managing above the poverty
line drop below it is a catastrophic health event, so we think it is a very
Similarly, the Burnet Institute noted that the 'top five value-for-money
investments are fighting malnutrition; malaria medicines; expanded childhood
immunisation coverage; deworming treatments for children; and expanded TB
It believed that a focus on efficiently delivering some of the highly ranked
health interventions would have a major impact on the health and well-being of
populations in partner countries, and contribute to poverty reduction. However,
the Burnet Institute also cautioned that health interventions were unlikely to
be effective without strengthened health systems in developing countries and
continued medical research.
Medical Research Strategy
AusAID's Annual report 2012-13 noted that a key achievement was the
launch of the Medical Research Strategy providing funding of around $40 million
over five years from 2012-13 to 2016-17.
However, Aeras noted it has received advice that DFAT was 'unable to continue
to fund medical research at this time' due to the cuts to the aid program
budget for 2013-14'.
At the public hearing DFAT confirmed:
The last payment in relation to medical research that was $10
million in June 2013. There was no further funding in the budget for 2013-14,
so that will be considered as part of the priorities that are currently
In June 2013, AusAID awarded $10 million as part of the Medical Research
Strategy to four organisations to advance new medical technologies targeting
diseases that disproportionately affect poor people in the Asia Pacific region:
Global Alliance for TB Drug Development (TB Alliance)—to develop
Aeras—to develop new TB vaccines.
Medicines for Malaria Venture (MMV)—to develop drugs to treat
Foundation for Innovative New Diagnostics (FIND)—to develop
diagnostic tools for the control of malaria and tuberculosis.
A large number of submissions received by the inquiry urged continued
and increased funding for medical research through Australia's aid program. For
example, the International AIDS Vaccine Initiative stated:
In January 2014, DFAT reportedly stated that the 2013-14
budget for global health investments, including health research, is fully
committed on government priorities, and they are as such unable to continue to
fund medical research at this time...With numerous new products approaching human
clinical trials, it seems misguided to cut funding just at the point when
strong returns on investment might reasonably be expected.
Professor Michael Toole from the Burnet Institute also commented on the
Medical Research Strategy. He noted that the 'very modest $10 million' had been
effectively channelled into private-public partnerships which have been 'an excellent
mechanism for getting new drugs and vaccine development that otherwise would
The significance of Australian aid contributions to support efforts to
combat a number of communicable diseases, particularly through the Medical
Research Strategy program, was frequently highlighted. These submissions outlined
the impacts of diseases such as HIV/AIDS, tuberculosis, malaria and polio in
The Nossal Institute noted that while new cases and deaths from HIV/AIDS
were decreasing, the number of people living with the disease was projected to
increase with unmet need in the Asia Pacific estimated at 2 million.
The International AIDS Vaccine Initiative also highlighted that HIV/AIDS
remains a serious public health issue in the Asia Pacific and argued that
continued support for product development partners was needed to develop new
health technologies to treat and prevent diseases.
The TB Alliance stated that Australia's investment of $2.5 million through
the Medical Research Strategy 'has been instrumental in accelerating the
development of lifesaving new therapies to tackle TB' and urged continued
With the Australian government's support in 2012-2013 through
AusAID's Medical Research Strategy, TB Alliance has made ground-breaking
progress in advancing its portfolio of improved TB treatments, with anticipated
near-term impact in Australia and across the Asia Pacific region.
The Burnet Institute used malaria as an example of where additional
medical research was needed to address a major health issue in the Asia Pacific
through the surveillance of drug resistant malaria and the development of
diagnostic tests and new treatments. Sir Richard Feachem also
noted that Australia had played a leading role in fighting malaria. He noted
that with continued efforts '[b]y 2035, the whole of Asia Pacific can be
malaria-free, which will be a historic achievement of unparalleled magnitude'.
Mr Brian Knowles, the National Advocacy Advisor for Rotary's PolioPlus
program, emphasised the importance of continued efforts to eradicate polio. He
outlined the concern that Australia would not proceed with a grant of $80
million to the World Health Organisation for the Global Polio Eradication Initiative.
Mr Knowles stated:
The global eradication of polio could provide net benefits of
at least $40-$50 billion if transmission of the wild polio viruses is stopped
within the next 5 years. Polio eradication is a cost effective public health
investment, as its benefits accrue forever. On the other hand, as many as
200,000 children could be paralysed in the next 10 years if the world fails to
capitalise on the more than $10 billion already invested.
The ongoing impact of polio was also highlighted during the inquiry. For
example, the World Health Organisation has identified an outbreak of polio in
Syria, a country which had been considered free of the disease for 14 years.
Water and sanitation
Assistance for water, sanitation and hygiene (WASH) programs was also
highlighted as providing a broad range of benefits for developing countries.
For example, ACFID commented that these 'are proven high impact aid investments
– transforming communities, reducing caring and domestic burdens (especially on
women and children), lifting education access and performance, and building a
healthy population, all of which are key foundations for economic development'.
One of the ways Australia supports WASH programs in developing countries
is through the United Nations Children's Fund (UNICEF). For example, in
2013-14, Australia partnered with UNICEF to provide improved water and
sanitation facilities for 7,800 disadvantaged rural children in northwest Mongolia.
However, WaterAid noted that Australia 'allocated just 3.56% of its aid
budget to water, sanitation and hygiene projects, putting it below the [OECD] DAC
average of 4.2%'. It recommended that a minimum of 5 per cent of Australia's
overall aid program be committed to water, sanitation and hygiene, with a
particular focus on sanitation and hygiene, especially in schools and health
Further, it recommended that water, sanitation and hygiene be integrated into
Australia's health and education aid programs:
Each year Australian aid supports the construction of
thousands of schools and health facilities. Integrating and prioritising water,
sanitation and hygiene services into Australia's education and health programs
will maximise value for money and ultimately improve the effectiveness of our
aid program to deliver against stated objectives, preventing the spread of
deadly diseases and infections and ensuring children receive a quality
Climate change and environment
The most significant cuts to the aid budget announced in January impact
on climate change and environment programs. Cross regional climate change and
environmental and sustainability programs were cut from $17 million in 2012-13
to $500,000 in 2013-14 and Australia's contribution to global environment
programs cut from $74 million in 2012-13 to zero in 2013-14.
At the public hearing, Mr Robin Davies from the Development Policy
Centre noted that the current outlook for budget allocations for environment
and climate change issues was 'quite uncertain'. He outlined the key programs
supported by previous governments and noted that there had been 'substantial
expenditure, both multilateral and bilateral, on climate change mitigation, particularly
reducing emissions from deforestation and climate adaptation, especially in the
small island states of the Pacific and further afield'. He stated:
In the recent funding adjustment we essentially saw a zeroing
of allocations, at least for global and cross-regional programs, related to
climate change. Putting all of that together, there is a large question about
the government's intentions in this area. It is entirely possible that there is
an intention to pursue climate change programming through bilateral allocations
and perhaps to support multilateral initiatives as the need arises. There are
no immediate needs now or in the months ahead.
...[I]n practical terms of our relationships, particularly with
Pacific Island governments, it is [not] going to be feasible for Australia to
refuse to support climate change adaptation interventions. These have multiple
There was considerable support expressed in submissions and by witnesses
for continued funding of climate change and environmental programs through
Australia's aid program. For example, ACFID noted that Australia's region was
highly vulnerable to the predicted effects of climate change, including higher
sea levels, intense storm surges and cyclones, erratic rainfall patterns, and
major temperature fluctuations. Further, it stated:
Policies to promote environmental sustainability are integral
to reducing poverty and ensuring hard-won development gains are not eroded,
given the poor are most often at risk to natural disasters and climate change,
and depend heavily on natural resources for their food, water, livelihoods and
The United Nations Association of Australia argued that, as one of the world's
highest emitters of greenhouse gases per capita, Australia has a responsibility
to the international community to contribute to global action to address
climate change. Further, it noted that Australia has 'made a commitment under the
UN Framework Convention on Climate Change to support international efforts to
reduce greenhouse gas emissions and to support international efforts for
climate change mitigation and adaptation'.
The Green Climate Fund is a multilateral climate change fund,
established through UN climate change negotiations to support developing
countries to address the challenges of climate change.
ActionAid encouraged the Australian Government to provide 'adequate and prompt
support to the green climate fund, as well as long term climate finance'. It
The Foreign Minister has suggested that the government will
reconsider Australia's long-term commitment to the Green Climate Fund. It is
widely understood that multilateral climate financing measures are more
effective than bilateral ones, and the Fund is designed to attract private
sector funding, something that this government has expressed significant
The Development Policy Centre recommended that '[i]n its forthcoming aid
policy statement, the government should state that it is prepared to use the
aid budget to help fund at least certain categories of action on climate change
in developing countries, including adaptation programs'.
Private sector engagement
DFAT noted that one of the government's priorities for the aid program
is 'support for increased private sector activity and helping to overcome the obstacles
to private sector investment in infrastructure and other productive
This builds on recent efforts to promote private sector engagement
within the aid program. In 2011, the Independent Review identified the
engagement with private sector as 'crucial for the success of aid recipient
countries' and an underutilised partner for donor countries. It considered
there were opportunities for Australia's aid program to expand engagement with
the private sector significantly.
In 2012, AusAID launched its strategy for development of the private sector in
partner countries. The strategy noted that a 'growing private sector—the engine
of economic growth—is fundamental to moving people out of poverty'.
The recent Lessons from Australian aid report of the Office of
Development Effectiveness summarised the aid program's approach to the private
Australia also recognises that a dynamic private sector that
powers economic growth, generates employment and contributes to public services
through taxation is fundamental to moving people out of poverty. Australian aid
has provided significant assistance aimed at creating the enabling environment
for private sector development...More recently, the aid program has indicated its
preparedness to provide targeted interventions to assist specific firms or
industries, where these are important players in fragile and conflict-affected
states, remote island countries and in areas of entrenched poverty.
An example of how the Australian aid program has worked with the private
sector is through the Mining for Development initiative launched in 2011. The
initiative aims at assisting partner governments to maximise the development
potential of their extractives sectors in a socially and environmentally
Another example is Australia's support for the Africa Enterprise Challenge Fund
Research, a fund 'to stimulate the private sector to commercialise existing,
readily available and near-complete agricultural research and technology
products for the benefit of the rural poor in Africa'.
The discussion of the aid program's engagement with the private sector
was often linked to the Australian Government's focus on economic growth and
'aid-for-trade' in the aid program, and how the national interest should fit
within the priorities of the aid program. For example, the Business Council of
Through effective linkages with business, there are
opportunities to develop and utilise innovation and creativity, and to leverage
knowledge and coordination of activities for the purpose of achieving sustained
economic and social outcomes. The integration of AusAID into [DFAT] should
further assist the aid program's engagement with the private sector.
The Development Policy Centre also recommended that the government
'explore a small number of practical poverty reduction partnerships with
businesses'. It noted '[t]hese might involve using business systems for aid
delivery, or they might involve measures to encourage businesses to change
their operating models for the benefit of poor people as suppliers, employees
However, a number of submissions also expressed caution and requested
clarity in relation to the increased role of the private sector in aid. Oxfam
Australia noted that the profit motives of the private sector 'are not always
consistent' with effective and targeted aid. It recommended:
The Australian aid program should support private enterprise
in developing countries where it empowers local communities, particularly women,
to participate in decisions regarding the management of their natural resources
and should support the implementation of compulsory revenue transparency
The Australia aid program should also support micro and small
enterprises in developing countries that have the capacity to significantly
address and alleviate hunger.
AID/WATCH also warned that aid policies can be pursued with clear
advantage for the private sector and 'little thought given to the poverty
alleviation component of the program'. It stated that 'development
can actually have a negative effect on poverty, largely due to the fact the economic
gains are often distributed unevenly resulting in more inequality between the
rich and the poor'.
In particular it singled out the Mining for Development Initiative:
There is little evidence to demonstrate where mining has had
a positive effect on peoples' levels of poverty or indeed 'lifted' people out of
poverty. Minimal effort has been made to articulate how large-scale mining, as
promoted through the 'Mining for Development Initiative', is "sustainable",
either for economies or the environment.
Other priority areas
Other areas were raised as development priorities including security,
child protection, law and justice, and aid research and innovation.
Dr Karl Claxton from ASPI supported the creation of a security sector of
the aid budget. He stated:
[W]e should be doing more in terms of security as a key
enabler of development using aid. As you know, securing conditions for
development is sometimes referred to as 'the missing millennium development
goal'. So when the MDGs are revisited in a couple of years we would suggest
that security—securing the conditions that allow development so that we can
prevent poverty and so that we can mitigate the circumstances of poor people
who do face poverty—is an important thing that Australia could be doing more
He also noted aid cooperation could be used to assist in building a
broader relationship with other countries, such as China. 
Save the Children noted that while Australia had been the first to implement
a child protection policy in international development, that area was
significantly under- resourced in terms of personnel, strategy and practical
initiatives to deliver on our child protection aims:
The revised 2013 Child Protection policy puts the issue
firmly on Australia's agenda and is a powerful example of how DFAT can
influence global practice. Obligations for safeguarding children cascade down
to all international development contractors, NGOs and other partners to the
Australian aid program.
Law and justice
The Law Council of Australia noted that international legal assistance
projects have become increasingly relevant as means to support 'social and
economic stability and creating a sustainable environment in which bilateral
trade can florish'. It considered:
Australia's ODA program must formally recognise and support
the development of the legal profession, its peak organisations and tertiary
legal education providers as equally important players in the law and justice
sector. Failure to do so to date has impeded the effectiveness of Australia's
activities to promote and strengthen the rule of law, particularly in the South
Aid research and innovation
ACFID argued that '[r]esearch and evaluation is crucial to a better,
more accountable and innovative aid program:
Ongoing research investment leads to evidence-informed policy
and practice by establishing a robust and relevant knowledge base for accountable
decisions. It can also ensure Australia's aid program generates knowledge that
responds to a rapidly changing global environment and increases opportunities for
innovation where Australia can play a lead role in identifying solutions.
ACFID recommended this should include support for Australian Development
Research Awards Scheme (ADRAS)—a competitive grant process to support applied
research and assist the Government in meeting the priority areas for the aid
program. It noted that since its introduction in 2007, the ADRAS has supported
129 primary research projects and 17 systematic reviews of development
At the public hearing Professor Michael Toole from the Burnet Institute
identified a range of initiatives 'that were valuable mechanisms to both
generate knowledge for the aid program and to build capacity'. These were Knowledge
Hubs for Health, the Australian Development Research Awards, the Australian
Fellowship Program and the ANCP innovations grants.
IWDA noted it had been directly affected by recent cuts in relation to the ANCP
Innovation Fund. Ms Jo Hayter stated:
Unfortunately for us, that fund represented research work. So
in a space where data is already very, very limited, particularly in the Pacific
region, in terms of women's liberalities and the demographic analysis that we
need to understand in order to make a difference in relation to poverty
alleviation and, in fact, empowerment for women, we were not able to progress a
range of research ideas that we had proposed.
Delivery of aid
The DFAT submission outlined the broad range of channels for the
delivery of Australia's aid program:
Australia's aid program is delivered at the individual
country level, at the regional level and through global programs. It is
delivered through a range of partners, including partner governments,
commercial suppliers, multilateral and regional organisations, global funds,
Australian and international NGOs, other donors and other Australian government
agencies that administer ODA.
DFAT also commented that '[p]artners will continue to be selected on the
basis of their ability to deliver value for money and the capabilities they can
contribute to the achievement of the Government's aid objectives'.
During the inquiry, evidence focused on a number of channels for the delivery
of overseas aid: multilateral organisations, non-government organisations, the
private sector, partner governments and civil society.
In March 2012, AusAID undertook the first Australian Multilateral
Assessment (AMA) exercise to:
provide a firm base of information about the effectiveness and
relevance of multilateral organisations, from the perspective of the Australian
inform decisions on funding allocations in the 2012–13 budget;
design a rating system that can be used on an annual basis to
inform decisions on subsequent funding allocations and policy engagement.
The AMA found that Australian contributions to multilateral
organisations were overwhelmingly (96 per cent) provided to organisations that
were rated as being effective. However, it also identified a number of areas
where multilateral partners could do more to improve their performance.
Its major findings included: a considerable variation in the effectiveness of
many multilateral organisations at a country and regional-level; a need for
improved coordination; and an insufficient attention to value-for-money.
Micah Challenge noted that supporting the work of well-performing multinationals
has been identified as one of the best ways to achieve value-for-money in aid
spending. It was disappointed that the Australian Government's announced
priorities involve a reduction in funding to multilateral organisations.
Similarly, the United Nations Association of Australia urged continuing support
to UN agencies and sought an assurance from the Australian Government that further
cuts to the aid program will not unduly target these agencies. It noted that:
Many UN agencies have received the same funding this year as
last year, despite inflation and increasing demands. Overall, it appears that
about $20 million has been cut from UN agencies this year.
Australia also contributes to multilateral organisations such as the
GAVI Alliance, the public-private global health partnership created in
2000 in response to declining immunisation rates in developing countries. The
GAVI Alliance highlighted that its activities align well with the Australia's
regional focus, development priorities and emphasis on results-based financing.
Australia joined the GAVI Alliance in 2006. Between
2006-2013, Australia has provided approximately AUD $231 million to GAVI in
direct contributions and is also providing $250 million over 20 years to GAVI’s
International Finance Facility for Immunisation (IFFIm). Australia's support to
GAVI through direct contribution and IFFIm helps countries build their health
system by providing better maternal and child health care services, training
health staff, improving health facilities and supplying life-saving vaccines.
Non-government organisations (NGOs)
Australian aid funding to NGOs can come through multiple channels—including
the Australian NGO Cooperation Program (ANCP), as partners on bilateral country
programs, and indirectly through Australian contributions to multilateral
organisations, particularly for humanitarian assistance.
Analysis of the changes announced in January by Mr Robin Davies from the
Development Policy Centre indicated that funding directed to NGOs was cut by
7 per cent relative to the 2013-14 budget. However, he noted that NGOs
will still receive 24 per cent more than was allocated in 2012-13.
In relation to the ANCP, Save the Children indicated that allocations to
partner NGOs 'were reduced in the main by 8.3 percent across the board'.
In its submission, DFAT stated that 'Australian NGOs with a strong track
record of effectiveness will continue to play an integral role in delivering
At the public hearing, DFAT confirmed that funding for NGOs was part of the
ongoing budget process.
Several NGOs welcomed the Coalition's pre-election statement to 're-prioritise
foreign aid allocations towards non-government organisations that deliver on-the-ground
support for those most in need'. For example World Vision considered the
statement was recognition of the capacity, strengths and results achieved by
Australian NGOs in delivering aid:
Effective non-government organisations have already been identified
through Australian government assessment and accreditation systems. They
provide the opportunity to reduce management costs, work with local partners to
target the poorest and most marginalised, and achieve results in areas not
directly reached by bilateral aid.
A number of NGOs argued that they were effective channels for the
delivery of Australian aid.
For example, Oxfam Australia noted that the ANCP comprises less than three
percent of the Australian aid program, but it 'represents a unique, strategic,
efficient and effective mechanism for delivering Australian aid'. It noted:
The Accreditation to receive funds through ANCP is rigorous
and an important prerequisite is becoming a signatory to the ACFID Code of
Conduct. The current ANCP portfolio supports 27 projects in 13 countries across
three thematic areas- Gender; Governance, Leadership and Accountability, and
While some NGOs noted that they did not wish to become dependent on
government aid funding, they also identified capacity for increased delivery of
Australian aid. For example, ACFID suggested that some efficiencies could be
found in directly funding NGOs for humanitarian response programs, rather than
indirectly through multilateral agencies.
At the hearing, Mr Andrew Johnson from World Vision described a number of
ways to increase the delivery of aid through Australian NGOs:
One is the ability to increase the amount of funding that
goes to NGOs where larger NGOs are capable of scaling-up proven work...The other
point was about whether we should be broadening the number of NGOs getting
government funding. There was a recognition that, in line with a demonstrated
effectiveness, there are small NGOs with niche expertise that are doing new and
innovative work in microfinance and other particular things....There is the
ability, once you have proven innovative models from specialist agencies, to
then look at whether you can parse them together or whether there are consortia
of agencies to scale up those initiatives.
Mr Paul Kelly from Care Australia also noted that 'different players
bring different strengths' to the delivery of aid:
What is important about the allocation of aid is that it is
specific to the context and what is trying to be achieved....[T]he use of NGOs is
an important part of achieving the broader government's objective.
Recommendations made by IDC Australia stressed the importance of
partnership with industry and consultation with the private sector deliverers
of aid programs. One of the core themes of its submission was 'the aid program
can be more effective and efficient through better harnessing the capabilities
and experiences of the private sector'.
Some witnesses and submissions took a cautious view of aid delivery by
the private sector. Ms Kate Lee from the APEDHA urged a review of aid delivered
through the for-profit and commercial sector and considered it vital that these
organisations comply with the same standards of transparency and accountability
applied to most Australian NGOs with the ACFID Code of Conduct.
Similarly, Oxfam Australia commented:
[T]he Government should proceed with caution in seeking to
increase the role of the private sector in the delivery of Australian aid as
the profit motives of the private sector are not always consistent with the
delivery of effective and targeted aid, particularly when situations on the
ground are complex and require more than 'off the shelf' solutions.
However, IDC Australia argued that private sector contractors could add
significant value in aid delivery:
[T]here is evidence to highlight that where the use of
advisory inputs is required, that engaging these inputs through a managing
contractor model can offer better value for money when compared to a public
service deployee in the same environment. This is a consequence of what is appropriately
allowed to be included for an adviser engaged through a private sector
contractor, compared with what conditions are accepted (possibly expected) for
IDC Australia also emphasised '[a]ccountability within the private
sector groups is strong...particularly in the area of "cost
Throughout the whole aid delivery cycle, from procurement
through implementation, to evaluation, private sector contractors are some of
the most highly scrutinised in the aid program. All aspects of our engagement
with the aid program show contestability, transparency and accountability...
Private sector contractors, particularly the larger
organisations, are put through a forensic due diligence process, undertaken by
Private sector contracts include a regime of ongoing
reporting addressing financial, technical and risk dimensions, as well as a
range of independent review cycles throughout implementation...
Private sector contractors are assessed twice each year
through a Contractor Performance Assessment (CPA) process, the results of which
can be provided to future assessment panels when considering tender awards.
Larger private sector contractors (or more accurately, larger value contracts)
are put through an annual 'whole of portfolio' assessment, the results of which
are also available to future tender assessment panels.
Obstacles in relation to effective private sector aid delivery were also
identified. IDC Australia stated that 'a number of procurement and
contracting-related practices continue to negatively impact a competitive and
diverse marketplace and hence the effectiveness, efficiency and value for money
in the aid program'.
IDC Australia noted that while the introduction of the Adviser
Remuneration Framework (ARF) had defined 'acceptable' fee levels according to
the role being performed, there were cases where these fee levels constrain
access to some high calibre candidates due to the rates being paid being below
their current remuneration level.
Further, Sustineo argued that an exemption from compliance with the
Commonwealth Procurement Rules had resulted in an inequitable market for
development assistance technical services, leading to it being dominated by
large multinationals. It considered increased access for the Australian SME
sector would improve aid program design, encourage innovation and re-establish
competition in the industry. Mr Andrew Rowe, Managing
Director of Sustineo commented:
Using commercial providers through a properly functioning,
competitive market mechanism is a highly efficient, cost-effective and flexible
way of deploying capability and services. Indeed, in some development contexts,
it is the best way of providing development assistance. But, because of the
issues we are highlighting here, in the Australian aid program it is often more
costly than it needs to be and less effective than it can be.
At the public hearing, DFAT advised that it was in consultation with
stakeholders on these matters as part of the integration process:
We are looking here...at whether our systems are fit for
purpose and what sort of processes need to change as a result of that. Through
this consultation process, which also includes the benchmarks that are
currently underway, we will end up with a system that reflects, I think, not
only the Commonwealth government procurement guidelines but also the priorities
in terms of the government...[W]e are consulting across the board. Some of those
issues relate to just the process of large tenders and how small and medium
enterprises can be engaged with those.
The Independent Review observed that 'in most countries, the recipient
government is the key partner for the aid program' and there has been a 'shift
to the greater use of government systems' in the delivery of aid. It noted that
overall the experience of putting more aid through government systems has been
The use of government systems should not be the default
option. It requires careful consideration of the country context. However, it
does have two main advantages: avoiding the creation of systems parallel to the
government and helping influence partner government policies and programs
beyond the aid activity itself.
In relation to the delivery of aid, Minister Bishop has flagged a 'move away
from direct service delivery because that is the responsibility of a mature
DFAT also noted that Minister Bishop had indicated 'her intention to introduce
mutual obligations and mutual accountability between the Australian Government
and our partner countries'.
However, Mr Paul O'Callaghan representing the Church Agencies Network commented
that this practice had not been successful in the past:
I think back to the time of the previous coalition
government, when Foreign Minister Alexander Downer sought to pursue mutual
accountability quite aggressively initially with PNG, the Solomon Islands and
East Timor. He found after a year—and I think he would admit to this—that the
carrot-and-stick approach does not really work very well in overseas aid. In
fact, you might know of the instance in Indonesia about 30 years ago: when the
Dutch tried to introduce that scheme, the Indonesian government terminated the
relationship for aid. They just ended the aid program.
Australian civil society
The aid program has also provided opportunities for the Australian
community to become involved in the delivery of the aid. This support included:
providing funding for volunteer placements; training and deploying civilian
experts through the Australian Civilian Corps; the AusAID Civil Society
Engagement Framework; and the Business Engagement Steering Committee. This
support was in addition to the funding provided to Australian NGOs through the
ANCP and funding for NGOs to address humanitarian emergencies.
In particular, the value of the international volunteering program, as
part of Australia's overall aid program, has been recognised in a recently
released Office of Development Effectiveness evaluation of the Australian
Volunteers for International Development (AVID) program:
Although AVID is one of the most visible elements of
Australia's aid effort, it comes at a modest cost relative to the annual aid
budget. In 2011-12, it represented around one per cent of Australian aid...
The evaluation confirmed that AVID is making an effective
contribution to Australian and partner government development objectives. It is
also an effective public diplomacy mechanism. Volunteers benefit from their
experience and bring expertise and professionalism that host organisations
value highly; they are often compared favourably to volunteers from other
countries or paid technical advisers. Volunteers contribute to the capacity of
host organisations, develop people-to-people links and generate goodwill for
domestic and foreign diplomacy.
In the revised budget the AVID Program annual budget was reduced by 25
per cent, reducing funding from $65.3 million to $55.3 million. The likely
impact is to significantly reduce the number of new volunteers. In the revised
aid budget, the total for NGO, Volunteer and Community Programs was cut from
$221.7 million in 2012-13 to $199.4 million.
Health and medical research
The Independent Review of Aid Effectiveness identified a number of
factors to determine a sectoral aid flagship program. These factors were: 'Australia's
comparative advantage; neglected needs; the presence of a 'tipping point'; high
prospects for success; and related Australian interests'.
In the view of the committee, health and medical research met all of these
In particular, Australia has a comparative advantage in medical research
which should continue to be exploited, particularly in relation to the
development of diagnostic tests, treatments and vaccines. Developments in
medical research can benefit those affected in developing countries, but are
also clearly in Australia's broader national interest. The spread of
drug-resistant strains of serious diseases, such as TB in developing countries
to Australia's north, is of serious concern.
The committee notes the high level of public and specialist interest in
maintaining the Medical Research Strategy, which was a notable focus of
submissions. In the view of the committee, the existing strategy has delivered
a high return on investment, supporting a portfolio of 71 drug, 14 vaccine and
19 diagnostic projects conducted by product development partnerships for a
comparatively modest investment of $10 million.
In the view of the committee, additional funding should be made
available to the Medical Research Strategy in the coming years. The committee
believes that investing in the Medical Research Strategy generates high health
impacts and substantial cost-savings to aid programs in the region, and
future-proofs Australia's aid investments against drug-resistant disease
Nevertheless, the Medical Research Strategy can and should be improved
to address a number of issues. These issues include:
insufficient funding, with investment levels well below that of
other OECD countries;
inefficient distribution of funding between the three main
research areas (basic, operational research and product development);
the lack of an over-arching global health research and
development strategy; and
limited coordination across the key agencies that fund global
health research and development (DFAT, NHRMC, Department of Industry, CSIRO).
The committee recommends that the Australian Government renew the
Medical Research Strategy and expand funding for the program to
$50 million per annum.
The committee recommends that the Medical Research Strategy should:
have a broader remit to include all research relevant to the
major health challenges in developing countries, including early and product
development and operational/field research; and
continue to have priority focus on product development
The committee recommends that the Australian Government establish an
interdepartmental taskforce, chaired by the Department of Foreign Affairs and
Trade, to develop a global health research and development strategy.
The Australian Government's continued focus on gender inequality through
the overseas aid program is welcomed by the committee. In particular, the
committee considers the appointment of an Ambassador for Women and Girls, Ms
Natasha Stott Despoja, is a positive step which will assist international
advocacy supporting the Australian Government's policies and programs to
empower women and girls.
The committee notes the concern outlined by the International Women's
Development Agency that committed resources and outcomes in relation to gender
issues can be difficult to track within the aid program. In the view of the
committee, this could be an important area of reform.
The committee recommends that the Department of Foreign Affairs and
Trade investigate creating a mechanism to track gender issues across the
Australian aid program and budget.
The committee also welcomes the announcement made by the Parliamentary
Secretary to the Minister for Foreign Affairs, Senator the Hon Brett Mason,
that the 'Australian Government will develop a new strategy to ensure that people
with disability play an active and central role in Australia’s aid program
beyond 2015'. Senator Mason stated that '[t]he strategy will reflect the
Government's focus on building skills, creating jobs and fostering economic
growth in the Indo-Pacific region, and will build on the success of the
Development for All 2009-2014 strategy'.
The committee urges the Australian Government to continue to engage with
the disability sector to ensure that people with disability in developing
countries are given a voice in the development of a new strategy.
Climate change and environment
The committee notes that a significant feature of the cuts announced on
18 January 2014 was a funding reduction to programs focused on mitigating
the effects of climate change on developing countries and for environmental
protection. In the view of the committee, this is a retrograde step. Developing
countries, particularly those in the Asia Pacific are well-recognised as some
of the most vulnerable to climate change risks – including inundation of
low-lying regions, more frequent natural disasters and threats to food
production. Continuing to support developing countries tackle climate change is
critical to Australia's and the region's future.
The committee recommends that the Australian Government restore an
appropriate level of funding for climate change mitigation and environmental
protection programs within the aid budget.
Responding to crises
Humanitarian aid and disaster assistance has been an area where it is
recognised that Australia has excelled. The committee notes that many
submissions and witnesses singled out humanitarian aid as a priority area where
aid funding should be protected. Given that the Asia Pacific is a region prone
to natural disasters, the committee also considers this is a component of the
aid program which should be appropriately resourced.
The committee recommends that the Australian Government commit to
allocating 10 per cent of the aid budget for emergency and humanitarian
Engagement with business
In the view of the committee there is substantial scope for the
increased engagement with the private sector in the delivery and in partnership
with Australia's aid program. The committee notes that Australia has previously
completed private sector aid engagement programs such as the Enterprise
Challenge Fund for the Pacific and South East Asia (ECF). The ECF was a six
year pilot grant fund that provided funding directly to businesses offering
innovative solutions to address market failures and to stimulate long-term
inclusive economic growth.
The committee notes that the Joint Committee on Foreign Affairs, Defence
and Trade is currently conducting an inquiry into the role of the private
sector in promoting economic growth and reducing poverty in the Indo-Pacific
region. The committee is confident this inquiry will result in worthwhile
recommendations for further engagement by the Australian aid program with the
Delivery of aid
The Australian aid program is delivered through a number of different
channels—non-government organisations, private sector contractors, bilateral
agreements, multilateral organisations and several others. During the inquiry
the committee received conflicting evidence regarding the merits of each. In
general, the committee considers that the channel for the delivery of overseas
aid should be context specific. Australian aid should always be allocated to
the most effective mechanism for delivery rather than preferentially.
However, the committee does have specific concerns in relation to two
aspects of the delivery of aid: innovation in aid delivery and procurement for
the aid program. In particular, the committee considers that additional funding
should be made available to re-establish the 'AusAID NGO Cooperation Program
Innovation Fund'. This small fund would add considerable value through promoting
innovative practices to improve the effectiveness of aid delivery in the NGO
Further, the committee notes that the US Agency for International
Development and UK Department for International Development have established a Global
Development Innovation Ventures (GDIV) initiative. This investment platform is
'designed to source powerful solutions from anywhere in the world, test them
using rigorous methods and staged financing, and bring to scale those that
offer more value for money than standard practice and improve the lives of
The committee considers that this initiative to develop innovative solutions to
'intractable development challenges' should also be supported by Australia. The
committee notes that Minister Bishop has recently undertaken to join GDIV.
The committee was concerned to receive evidence during the inquiry that
the market for the procurement of technical services for the aid program may be
unbalanced or overly restricted. In the view of the committee, a more open
competitive market for aid procurement would assist the Australian Government
achieve its overseas aid objectives in a cost effective manner. This matter
should be independently reviewed.
The committee recommends that the Australian Government re-establish the
AusAID NGO Cooperation Program Innovation Fund.
The committee recommends that the Australian Government join the Global
Development Innovation Venture.
The committee recommends that the Australian National Audit Office
consider the procurement of aid-related technical services by the Department of
Foreign Affairs and Trade.
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