Independent review of aid effectiveness

On 16 November 2010, Foreign Minister Kevin Rudd announced an ‘Independent Review of Aid Effectiveness’ which will examine the effectiveness, efficiency and strategic direction of Australia’s aid program ‘in line with Australia’s national interests’.  It is expected to be completed by April 2011 and will be the first major review of the program since the Simons Review commissioned by the Howard Government in 1996.

The review will be conducted by a panel chaired by Sandy Holloway and includes Stephen Howes, former Chief Economist at AusAID.

Outlay on Australia’s Official Development Assistance (ODA) has doubled over the last five years to an estimated $4.3 billion in 2010–11 and is expected to double again to meet the Government’s commitment to increase ODA to 0.5 per cent of Gross National Income (GNI) by 2015. This is also a target endorsed by the Opposition.

The establishment of this review follows a similar proposal by the Treasury. Earlier this year, in a brief prepared for the incoming government (the Red Book), Treasury had advised
 [The increase] will need to be managed in a strategic and cost-effective way. Simply scaling up existing activities will not deliver value for money...  
ODA is expected to increase from $4.3 billion in 2010-11 to around $8.6 billion in 2015-16. The Department of Finance and Deregulation (Finance) led Strategic Review should consider the geographical and sectoral scope of the aid program to ensure that scaling up the aid budget by this magnitude can be delivered effectively and in line with Australia’s priorities, and that AusAID has the required capacity.
The current review also incorporates recommendations made in the Australian National Audit Office (ANAO) report, AusAID’s Management of the Expanding Australian Aid Program, published in 2009.
According to the Terms of Reference, the review will focus on:
  •  the appropriate geographic and sectoral focus of the program including the ability of partner countries to absorb aid.
  • the relative costs and benefits of different means of delivery of aid including bilateral, multilateral and through NGOs.
  • the efficiency and effectiveness of Australia’s aid program including lessons learnt.
  • the appropriate future organisational structure for AusAID, arrangements for the coordination of ODA across the public service as well with other donors and institutions.
  • review and evaluation of the aid program including the Office of Development Effectiveness (ODE) and options for improvement.
The announcement of the review has been welcomed by the Australian Council for International Development (ACFID), the peak body for aid and development NGOs, which had previously called for such a review.
A media release from ACFID indicates there is wide support for the review: 
 "This review is welcome as the Australia aid budget is one of the fastest growing in the world. By 2015/16 AusAID, the government's aid agency, will be amongst the top five government agencies in terms of disbursements," said Tim Costello, CEO of World Vision Australia and ACFID board member.
 "Australians want the most effective use of their tax dollars in overseas aid. A review is an excellent tool to help ensure this outcome."
Julia Newton-Howes, CEO of CARE Australia and ACFID board member, said that this review comes at a crucial time, with five years left to reach the Millennium Development Goals.
"We have a responsibility to meet the commitment we gave the 1.4 billion people living in extreme poverty - to ensure our aid funding really makes the most difference it can to their lives..”
"Australia is in a unique position in our part of the world as fifty per cent of our aid goes to countries in Asia and the Pacific where governance is weak, or there is conflict. As such, we need to know how Australian aid will be best delivered in these difficult places," said Marc Purcell, Executive Director of ACFID.
The Opposition supports the review and has indicated that it would like to see a ‘greater focus on the delivery of aid through NGOs’.