Main Findings and Recommendations
|See also Australia's Aid-at-a-Glance
Australia’s unique position within the Pacific
Australia’s geographic location within the Asia Pacific Region is unique, and represents a challenge few donors face in terms of the proximity of countries affected by poverty, deficient governance and political instability. Australia’s security and economic progress and development interests in neighbouring countries are therefore highly interdependent. This implies that, for Australia, defining and implementing effective development co operation policies with its neighbouring countries is both central to its national interest and highly challenging. Australia’s immediate region remains fragile. Since 2000, some promising change processes (Indonesia, Timor-Leste, Bougainville) have been in train, alongside deepening problems in Melanesia. The security environment in Solomon Islands deteriorated to the point that Australia and its regional partners were invited by the Prime Minister of Solomon Islands to intervene to supply law and order and restore financial stability. Papua New Guinea (PNG) also invited Australia to help strengthen basic law and order and administrative functions. For humanitarian, developmental and broader security considerations, Australia cannot walk away from these low-income countries under stress and has had to adapt its responses to address their needs. Being the largest donor in a number of these situations presents opportunities and challenges for Australia in terms of partnership and co ordination.
1. Overall framework and new orientations
Major policy and organisational reforms in line with aid effectiveness principles
Australia’s development co operation policy frameworks and organisational structures and processes have evolved to adapt both to the new challenges faced by the region and to the imperative of aid effectiveness. These efforts have resulted in a stronger policy focus and an innovative whole-of-government approach. Australia has started to engage with harmonisation and alignment issues, and has begun moving toward the adoption of aid modalities that involve increased donor co ordination, aid effectiveness and national ownership.
An overarching poverty reduction framework Reducing Poverty: The Central Integrating Factor of Australia’s Aid Program was developed in 2001 to strengthen the poverty reduction focus of AusAID programmes. In endorsing this framework, the 2002 Ministerial Statement Australian Aid: Investing in Growth, Stability and Prosperity re affirmed the stated objective of Australia’s aid - “to advance Australia’s national interest by assisting developing countries to reduce poverty and achieve sustainable development”. The statement outlined the five guiding themes shaping Australia’s efforts: i) promoting democratic and accountable government and effective administration; ii) assisting developing countries to access and maximise the benefits from trade and new information technologies; iii) improving basic services; iv) strengthening regional security; v) promoting sustainable approaches to the management of the environment and the use of scarce resources.
Australia is actively engaged in fragile countries
In order to support its neighbouring countries facing serious development challenges, Australia has developed a graduated and comprehensive approach, with the dual objective of helping to reduce the impact of failed systems on the poor and encouraging governments to embark on a reform path. This approach aims to reinforce the mutual goals of peace, security, respect for the rule of law, human rights, and social and economic development in the Pacific, drawing also on the principles and support of Australia’s partners in the Pacific Islands Forum. Strengthening regional security by enhancing partner governments’ capacity to prevent conflict, enhance stability and manage trans-boundary challenges has also become an important part of Australia’s development co operation programme. To this end Australia introduced in 2002 its Peace, Conflict and Development Policy addressing conflict prevention, conflict management and post conflict recovery.
Need for a strengthened poverty focus
Australia’s close identification of its aid objectives with its national interest has some basic implications. It places a premium on ensuring that its national interests and the development interests of its partner countries remain closely aligned, in both the short and the long term. In particular, effective development policies in its fragile region are the key to long-term regional political viability and economic progress. Moreover, greater attention to the impact of development actions on the overall objective to reduce poverty and achieve sustainable development will bring clear benefits in terms of engaging the Australian public/political constituencies.
Over the last five years, Australia has strengthened its focus on economic and wider governance issues - notably law and justice - in its partnerships with key partners. This orientation reflects a convincing analysis of the key constraints to their development. However, the relationship between governance and poverty reduction could be more clearly spelled out. In addition, the comprehensive approach to governance leads Australia to include as ODA elements of counter-terrorism and illegal migration. Such additional elements should be closely monitored to ensure that they do not result in a weaker focus on poverty reduction.
Thus, though the poverty reduction statement of 2001 was a welcome development, it now needs to be build upon with more clarity about how principles and values guiding the Australian aid programme contribute to poverty reduction. Australian programming should give greater prominence to poverty reduction to ensure consistency with AusAID’s policy objectives. Australia should highlight the relationship between poverty reduction, and governance, security, and the whole-of-government approach in its future policy statements, aid programming and country operations. Poverty reduction efforts and cross-cutting priorities should also be closely monitored and evaluated. The on-going preparation of an MDG8 report and AusAID’s involvement in the global discussion on how to make progress toward the MDGs is welcome.
The importance of using the MDG framework as a broad reference for the aid programme and the growing international consensus on improving the effectiveness of poverty-focused assistance point to the need for a greater degree of clarity regarding how Australia can ensure its ODA is fully focused on poverty reduction.
Australia enjoys high and increasing public support for overseas aid. At the same time further support for development education would be valuable. In a context where few NGOs are involved in public education and the private sector appears unwilling to address the issue of advocacy and generating public support for the aid sector, AusAID’s role is critical. Its Global Education programme is proving a good means to reach remote populations and to convey key messages on a wide range of development issues. AusAID could consider how to extend its development awareness work outside the education sector.
Translating cross-cutting policies at country level
AusAID has developed a rich policy agenda over the past few years encompassing cross cutting issues, thematic/sectoral policies and implementation approaches. A key approach to implementation of cross cutting policies is mainstreaming, particularly in relation to environment, gender and HIV/AIDS. But ensuring full translation of cross-cutting and thematic policies at country level remains a challenge for many bilateral donor agencies including AusAID. Australia should actively engage with other OECD donors to share its experiences and learn from the successes and failures of other approaches.
Gender equality is a stated AusAID policy priority. In 1997, an ambitious policy statement Gender and Development: Australia’s Aid Commitment set out the policy rationale and approach of Australia's aid commitment to gender. This policy required AusAID to ensure that a gender perspective be integrated throughout the programme, with the needs, priorities and interests of women as well as men being considered at all levels and stages of development activities. Implementation has proved understandably challenging. AusAID's efforts to promote gender throughout its aid programme are especially welcome and important as its programmes are predominantly located in countries where the situation of women is particularly difficult and sensitive.
A revised HIV/AIDS Strategy, based on Australia’s experience in responding to the epidemic and closely related to the commitments included in the UN Declaration on HIV/AIDS, was launched in July 2004. In addition to the need for strong political leadership, it emphasises the importance of working with regional and country-led partnerships; strengthening local capacities to respond to the epidemic; encompassing prevention, treatment and care; and investing in research for more effective responses. This new strategy provides an opportunity for a stronger and more systematic response to HIV across the programme, including HIV/AIDS within country strategies as a cross-cutting issue rather than developing specific HIV/AIDS projects. Maintaining the current Australian high profile on this issue and ensuring that the strategy will be fully translated into global, regional and country programmes requires strong oversight, revised programming instruments and adequate human resources including a high level of technical expertise. AusAID is actively engaged to this end.
2. Aid volume and distribution
Australia is underperforming on aid volume
Though Australia has enjoyed thirteen years of economic expansion, its solid economic performance has not been reflected in the evolution of its ODA/GNI ratio over the same period. Increases in Australia’s ODA totalling 9% in real terms between 1999 and 2003 are welcome though they fall below its cumulative economic growth of 13% over the same period (and GDP growth of 17%). Australia’s ODA/GNI ratio has fallen progressively to reach 0.25% in 2001 and remains at that level in 2003, despite a small increase in 2002 (0.26%). The 2003 ODA/GNI ratio equals the total DAC ratio (0.25%) but lags behind the average DAC members’ effort (0.41%). Australia ranks 15th out of 22 DAC members on ODA and 13th on ODA/GNI ratio.
Australia has endorsed the 0.7% ODA/GNI international objective, but has yet to publish a timeframe for achieving this target. In the context of the 2002 Monterrey Conference, Australia was one of the few DAC countries that did not make a specific commitment to maintain or increase ODA. Australia should revisit the issue of ODA commitments in view of the fact that it has much to contribute as a bilateral donor and in light of the needs of its partners and its ambitious agenda in the region. Further sustained increases in its ODA levels would provide it with an opportunity to do more to address the many pressing development challenges in its region.
… while there is an appropriate geographical and sectoral distribution …
In 2003, 47% of total estimated bilateral Australian ODA was allocated to Papua New Guinea (PNG) and the Pacific Islands, and 42% to Asia. Australia’s strong focus on the Asia Pacific region is a logical consequence of Australia’s position and role, and contributes to a rational division of labour between aid donors. It has also led Australia to reduce the number of recipient countries, which helps AusAID to act effectively where it is involved. Australia devotes 76% of its aid volume to least developed countries (LDCs) and other low income countries (LICs), well above the DAC average of 55%, while the Pacific focus allows Australia to consistently support small island countries, thus addressing target 14 of MDG8 regarding the special needs of small island developing states.
AusAID’s new strategic approach toward a more focused aid programme is appropriate and should be continued, drawing on Australia’s comparative advantage balanced against other donors’ sectoral involvement in each partner country. The stronger focus on governance, which is crucial in the Asia Pacific context, is costly particularly wherever it implies police contingents and in line Australian public servants, as in the Regional Assistance Mission to Solomon Islands (RAMSI) intervention and the Enhanced Cooperation Program (ECP) in PNG. This is reflected in the increased share of aid (from 6% in 1997 98 to 15% in 2002 03 and an estimated 33% in 2004-05).
… and good practice in terms of strategic approach to resource allocation between multilateral organisations.
Australia is engaging individual multilateral agencies strategically, while recognising the important role that multilateral organisations can play in the Asia Pacific region. Australian multilateral aid is allocated on the basis of agencies’ performance at the country level. To this end, Australia conducts on a regular basis assessments of multilateral organisations, with a view to building a knowledge base of multilateral organisations’ operations and achievements, making better informed funding decisions, improving Australia’s dialogue with multilateral organisations, and, ultimately, improving accountability to parliament. However, the share of multilateral aid in Australian ODA has steadily decreased over the last decade from 29% in 1991-92 to 20% in 2003, below the DAC average of 27%.
3. Policy coherence for development
Policy coherence is at the forefront of Australia’s agenda
Policy coherence for development is at the forefront of Australia’s agenda, reflecting awareness that development investments informed by coherent policy approaches maximise the impact of Australian aid. It is supported by a high-level policy commitment across the government. In Australia’s view, policy coherence for development means taking account of the needs and interests of developing countries in the evolution of the global economy. It implies the systematic synchronisation of policies and actions across government to support economic growth and poverty reduction in developing countries, which requires much more than foreign aid. Australia’s priorities in this respect are: i) enhancing trade liberalisation and market access for developing country exports; ii) supporting economic governance and law and justice reform through a strengthened engagement with its Pacific partners; iii) developing formal strategic partnership agreements with key Australian government agencies; and iv) promoting the policy coherence agenda at the international level.
Innovative institutional mechanisms: Whole-of-government approach and strategic partnerships
The policy coherence approach is underpinned by a whole-of-government strategy, which aims at improving co-ordination across the Australian government through a more integrated approach to work which spans more than one agency. While the Cabinet is the principal co-ordination forum of the executive arm of the Australian government, the whole of government work is co-ordinated by interdepartmental committees, complemented by various mechanisms, such as dedicated taskforces. DFAT has overall responsibility for Australia’s external relations, but other agencies have the lead for international negotiations on a number of specific issues. Processes designed to achieve whole of government outcomes on domestic policy issues are generally used to co-ordinate this work. Building a strong culture of consultation on international activities is important in generating better decision making and programme delivery, given the increasing linkages between international issues and domestic policy matters. The strong links being established through strategic partnership agreements between AusAID and key governmental agencies, such as Treasury, are a welcome move in this respect.
Whole-of-government approach: a challenging opportunity
The whole-of-government approach provides an important opportunity to contribute to aid effectiveness through ensuring a focus on policy coherence across government and by recognising the importance of building institutional linkages with recipient countries. Efforts toward “mainstreaming” development across the government are commendable, and this new approach can indeed benefit AusAID as a way of promoting the development dimension in the whole of government agenda.
Such deepened and extensive partnerships are not without risks. The main risk is that development programme is dominated by an Australian-driven law and order agenda rather than a broader development agenda with strengthening local ownership. Recent statements indicate that Australia is aware of this risk and recognises the importance of local ownership and capacity building. As described in the introduction above, in PNG and in Solomon Islands, the development agenda co exists with the foreign affairs agenda. Australia’s own security interests as well as the development interests of these partners - which have invited both Australian policing and administrative support - are closely linked. Another risk lies in the new way of implementing the aid programme. An increasing proportion of Australian ODA is administered through government departments and agencies other than AusAID - amounting to 20% of Australian ODA announced for 2004-05 and representing 74% of the overall increase in the aid programme provided for that year. While there is undoubtedly a place for other government agencies in the delivery of aid, this carries risks if these agencies are involved without any requirement to include development objectives (sustainability, capacity building and local ownership) in their strategic plans and their performance monitoring and reporting systems.
It is appropriate that AusAID is afforded a lead policy-making role in the context of the whole-of- government approach to relations with key developing partner countries. Not only can AusAID contribute from its impressive knowledge base regarding institution/capacity building in difficult contexts, but it can also bring to bear international best practice from other systems and approaches. AusAID is encouraged to reinforce its proactive approach based on sound analytical work drawing on its knowledge of development issues and its direct experience and knowledge of developing countries. These corporate assets enable AusAID to lead discussions within the government, and this leadership in areas linked with developing countries issues should be reinforced to ensure that the development perspective is at the forefront in the government agenda.
Pursuing efforts to ensure consistency with internationally agreed good practice
Australia has a strong record on trade liberalisation and has made commendable efforts with tariff and quota free access for all goods produced in LDCs from July 2003 - as well as for goods from the Pacific Islands and PNG - added to increased trade related technical assistance and capacity building since 2001. An in principle policy of untying free standing technical assistance to LDCs was adopted in January 2004. Australia should pursue its efforts toward enhanced policy coherence. It could benefit from the elaboration of a national strategy on development and poverty reduction, as a means to set up a policy and structural framework to guide government agencies acting in and with developing countries.
4. Aid management and implementation
Strengthened corporate management
AusAID’s Strategic Plan was issued in December 2001 and has provided a robust framework to guide AusAID’s operations, with three main objectives: i) improve the quality of AusAID’s programmes; ii) enhance the agency’s policy and analytical capacity; and iii) improve AusAID’s people management and corporate systems. The Strategic Plan has allowed AusAID to re engineer its structures, policies and programmes for improved effectiveness and reinforced strategic positioning.
AusAID’s knowledge management is a good example of these positive changes. A number of systems and tools were developed within AusAID, aiming at reinforcing communication and team based approaches with posts and across the agency. The AusAID Knowledge Warehouse (AKWa) provides a tool for lessons learnt in delivering the aid programme, while the electronic activity management manual AusGuide and the Country Programme Infoshare tool provide knowledge sharing across AusAID. Thematic networks have been established, and a strengthened peer review process, implemented at both concept stage and appraisal stage, was introduced in March 2002. These efforts have resulted in an improvement of the design of new programmes, with a real effort to take into account the lessons learnt.
AusAID’s Strategic Plan was initiated three years ago and is being implemented: i) supporting the devolution of activity management in country; ii) enhancing the strategic direction of programmes, iii) utilising more flexible and innovative programming and contracting mechanisms; iv) streamlining work practices; and v) engaging more strategically with other government departments, multilateral institutions and NGOs. Significant progress has been made and further implementation of the strategic plan will support the maturing of the devolution process as well as the shift to a more policy focussed agency, and reinforce AusAID’s positioning within the whole-of government approach.
Aligning management and staffing practice with the new aid paradigm
Australia has begun decentralising the management of its aid programme to AusAID offices in partner countries. This process benefits from the high quality and committed expatriate and local staff and is proving successful. The current move is being extended in a number of countries, and broadened on the basis of country by country analysis and assessment. This requires strengthening AusAID’s overseas capacity and could include elements such as: i) increasing the proportion of AusAID staff based in partner countries; ii) delegating more responsibilities to the field and clarifying the respective functions and decision making roles between Canberra and the posts; iii) reinforcing stability and continuity within the national staff; iv) providing additional support to the field, through an enhanced technical advisory capacity, and v) pursing on going efforts to improve communication between the field and headquarters. AusAID has tried different institutional models to reinforce its field office capacity, which should be carefully assessed against the need to ensure a strong policy and analytical capacity within the agency.
AusAID has introduced desirable improvements to its evaluation efforts, with an increased focus on programme strategy outcomes and an on going implementation of a Results-Based Management approach. To ensure the independence of the evaluation function, AusAID should consider the establishment of a direct accountability line between the Office of Review and Evaluation (ORE) and the Office of the Director General - rather than via the hierarchy of the Policy and Global Programmes group.
In implementing its People Management Strategy (2002-06), AusAID has increasingly sought to strengthen its ability to access relevant policy and technical knowledge through long-term partnerships with research institutes and by appointing principal advisers. AusAID should continue to invest in its internal capacity, and should also look at ways to ensure the specialist skills that exist within the programme are used efficiently and effectively. The relatively high level of staff turnover, added to a high internal mobility, proves to be a real constraint for developing constructive relationships with key partners, which may negatively impact the quality of aid delivery. AusAID is currently seeking ways to address this issue, and could also consider the possibility of increasing the duration of postings overseas. Indeed, while the two plus one (optional) year duration of these postings may ensure a permanent flow of policy, programme and country knowledge between field and headquarters, it may also weaken the post’s capacity to deal with enlarged responsibilities in the context of the devolution process. Increasing the duration of postings, coupled with greater decentralisation to the field may have a positive impact on staff turnover as AusAID has identified that the opportunity to develop field experience is a relevant factor in attracting and retaining staff.
An evolving approach to aid delivery, harmonisation and alignment
At the country level, Australia actively supports the implementation of partnership principles through aligning with partner government priorities in designing country strategies, strengthening their capacity to undertake country analytical work, and supporting aid co-ordination. Australia has also strengthened its collaboration with other donors, notably through joint country strategies, co financing and delegated programmes. Australia and New Zealand are developing a strong partnership in delivering South Pacific aid programmes, as illustrated by the establishment of a delegated co-operation programme in the Cook Islands. This strong co ordination is an example of best practice, which should be closely monitored to identify the co financed or delegated programmes’ best modalities, in order to further extend them in the Asia Pacific region. Australia is also actively involved in helping to develop regional strategies in the Pacific through the Pacific Islands Forum and other regional groupings. Since 1999, Australia has been experimenting with new aid instruments and modalities (SWAps), shifting from project to programmatic approach in some of its key partner countries, a move which should be extended whenever appropriate conditions permit.
Some principles remain difficult to implement due notably to the lack of strong host country leadership and tensions between greater alignment and accountability requirements in some key partner countries. The latter face low capacity and weak institutions, resulting in a lack of credible frameworks for alignment. Low capacity and weak institutions also create conditions for corruption. Addressing such sensitive issues forms part of Australia’s governance work. Australia should continue to take advantage of its strong relationships established with a number of partner countries to raise these problems in policy dialogues with partner countries. This requires a balanced approach and close co-ordination among donors. The regional approach promoted by Australia in the Pacific region seems appropriate to this end.
Aid delivery, even in countries under stress, must ensure that capacity building and to the extent possible local ownership are at the forefront. This points to the need to ensure that AusAID’s way of working, which is, so far, mostly based on external technical assistance - technical co-operation accounted for 46% of total Australian ODA in 2003 - and relies highly on Australian managing contractors, is consistent with these objectives. It may also be necessary to reinforce the field offices’ capacity to manage the programme implementation, in order to better ensure the translation of AusAID’s core policies into programmes/projects as well as ensure consistency with the principles of sustainability and ownership. AusAID’s shift towards SWAps and its whole-of-government approach have led to reconsideration of the role of Australian managing contractors. The review of external technical assistance in PNG should provide useful information regarding the effective use of this modality in programme-based approaches.
AusAID is aware of the risks to the long-term objective of capacity development and ownership of the more hands-on approach recently adopted in countries in difficult situations such as Solomon Islands or PNG - notably the placement of Australian civil servants in line and advisory positions within the partner country government. The numbers, role, composition and competencies of Australian civil servants should continue to be carefully monitored in order to avoid substitution. To this end, terms of reference for expatriates in line positions and those working as advisers should continue to include requirements to train successors, develop systems that they can operate, and identify simple benchmarks of performance. Moreover, Australia should ensure that sustainable exit strategies for recent major initiatives in Solomon Islands and PNG emerge over time, which requires careful articulation of approaches now.
NGOs play an important complementary role in delivering the Australian development co operation programme. The Australian government provides approximately 15% of the total funds managed by the NGO sector. Along with an accreditation process, it is engaging in a new strategic and longer-term approach with NGOs, through co-operation agreements.
5. Humanitarian action
A new approach to humanitarian donorship…
Australia has doubled its allocations for humanitarian action over the last three years. Disbursements for emergency and distress relief have increased from USD 25 million in 1993 to USD 113 million in 2003. The emergency assistance share of gross ODA disbursements has also increased, from 3% in 1993 to 11% in 2003. This trend clearly indicates the increasing importance of humanitarian action in Australia’s foreign policy which has called for renewed and coherent policies for Australia’s support to humanitarian action.
In December 2004 Australia launched its new policy for humanitarian action. It takes its departure from the Principles and Good Practice of Humanitarian Donorship (GHD) endorsed by Australia in 2003 and declares that these principles constitutes the general benchmark against which Australia will assess the coherence, impact and accountability of its humanitarian actions. Furthermore, it indicates a shift from reactive response to a growing recognition that “the humanitarian imperative has a place in development” and outlines the relationship between development assistance and conflict resolution. Policies relating to resource allocation between multilateral and bilateral channels are not explicitly stated but Australia aims to increase its support to multilateral humanitarian agencies.
Humanitarian action is mainly managed by AusAID. AusAID’s role in managing co ordination and communication in this area should be recognised but could be strengthened further. The new policy will place increased demands on management and monitoring systems which need to be further adjusted before all aspects of the policy will be reflected and implemented. Australia could also further develop its procedures for ensuring adequate involvement of beneficiaries in the design, implementation, monitoring and evaluation of humanitarian response to complex emergencies.
… taking on a regional responsibility …
Following the focus of its overall aid programme resulting from its special geographical position and role, Australia’s support to humanitarian action is primarily concentrated within the Asia Pacific region. This regional approach plays an important role by targeting emergencies that would otherwise be unlikely to attract broader international attention. Australia’s security interests and regional focus could risk compromising its needs based approach to humanitarian response and the principles of neutrality and impartiality. This risk requires care in defining and designing responses to emergencies.
Australia’s long-term commitments in its engagement in complex emergencies in the region have also resulted in a positive approach to the relationship between humanitarian assistance and development co-operation, integrating transition issues into its country and regional development co-operation strategies. This is further reflected in Australia’s Peace, Conflict and Development Policy.
Australia also recognises natural disaster prevention and preparedness as key features of its humanitarian action and AusAID is a main actor in capacity building for reducing vulnerability to natural disasters in the Pacific region. Australia has been a major contributor in establishing regional emergency response stand-by mechanisms together with key donors in the Pacific.
… with a potential to do more and address challenges ahead.
Through its new humanitarian action policy Australia has committed itself to respond to emergencies on a needs-based approach. In view of Australia’s recent strong economic growth and the positive experiences of its humanitarian programme, there is an opportunity for improving its humanitarian performance and for increasing allocations to meet humanitarian needs in other regions.
The humanitarian action policy states that Australia will “improve the effectiveness, efficiency and combined efforts of military and humanitarian actors” and in this context it is important that Australia affirms the primary position of civilian organisations in implementing humanitarian action, particularly in situations of armed conflict and during peace keeping and/or military interventions.
One general finding from the Peer Review of Australia is that the lack of policy relevant DAC data makes it difficult to monitor donor performance in humanitarian action and that present vague reporting definitions and formats constitute a serious challenge for harmonised donor practices and improved efficiency among DAC members collectively.
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