The OECD’s Development Assistance Committee (DAC) conducts peer reviews of individual members once every five to six years. Reviews seek to improve the quality and effectiveness of members’ development co-operation, highlighting good practices and recommending improvements. The peer review of Australia, led by Finland and Ireland, explored Australia’s efforts to revitalise its development co-operation, positioning it as a central pillar of foreign policy in response to intensifying regional and global challenges. Its 2023 International Development Policy outlines a whole-of-government approach that prioritises strategic partnerships in the Indo-Pacific region and locally led development, alongside continued championing of gender equality and disability inclusion. While Australia’s official development assistance (ODA) has stabilised, it remains low by international standards. In a context of geostrategic pressure, the extent to which Australia’s systems are fit to deliver a more ambitious policy while keeping poverty reduction and partner country development priorities at the core were key questions guiding this review. Sustained political leadership, strengthened institutional capability and targeted resourcing that can meet interconnected regional and global challenges are now needed to fully realise Australia’s policy ambitions.
OECD Development Co‑operation Peer Reviews: Australia 2025
Abstract
Executive summary
Proximity to partners and growing threats to regional stability shape Australia’s development co‑operation. Backed by political and public support, the Australian government has significantly strengthened its development co-operation offer since 2023 with a renewed focus on strategic partnerships in the Indo-Pacific and whole-of-government action. In a context of geostrategic pressure, the extent to which Australia’s systems are fit to deliver this more ambitious, joined-up development effort – while keeping poverty reduction and partner country development priorities at the core – were key questions guiding this review. To fully realise its policy ambitions, Australia must now match its greater strategic clarity with strengthened investment. Delivering this will require sustained political leadership, institutional capability and targeted resourcing that can meet interconnected regional and global challenges.
An “all tools of statecraft” approach to foreign policy has provided renewed strategic clarity. The 2023 International Development Policy (IDP) sets out a more ambitious direction for Australia’s development co-operation as an integral part of the country’s foreign policy. This has been supported by swift action to strengthen the development architecture including through resourcing and new co-ordination structures. In consultation with country partners and capturing the full breadth of Australia’s development engagement, new Development Partnership Plans provide a foundation for refreshed bilateral partnerships and strengthened development rigour. Australia has also stepped-up efforts to address structural barriers facing Pacific Small Island Developing States (SIDS), including on labour mobility and financial inclusion. A growing use of bilateral treaties further reflects the ongoing pivot to more formally linking security and development priorities in Australia’s region. Overloading development assistance with competing objectives risks undermining its impact, and retaining clarity over goals will be essential to ensure programming is effective.
Australia’s official development assistance (ODA) has stabilised following sustained decline, supported by a rebuilt baseline and 2.5% annual indexation – a positive signal in a challenging global landscape. Australia’s ODA is low by international standards at 0.19% of gross national income in 2024 – ranking 28th among 32 DAC countries. At 0.65% of the national budget, it also falls short of domestic expectations. While efforts to rebuild the baseline through additional budget measures and the annual 2.5% increase reflect an encouraging shift and stand out amid global uncertainty, without additional resources Australia risks continuing to trade off regional responsiveness against sustained global engagement. This is highlighted in declining multilateral funding, which contrasts with Australia’s important advocacy for global norms and a multilateral system that is fit for delivering on behalf of the Pacific and SIDS.
Further scaling innovative finance whilst retaining a focus on poverty reduction will ensure Australia’s continued added value. Australia has established a set of diverse innovative finance instruments that reflect different contexts, needs and opportunities in the Pacific and in Southeast Asia and with a focus on additionality. A key challenge is how to bring these together to support scaling, ensure strategic coherence, and centralise expertise and learning across government. In its infrastructure work in the Pacific, Australia’s focus on local procurement sets a strong example for others. Continuing to manage for debt distress, increasing transparency, and ensuring that poverty reduction is at the heart of a growing portfolio of infrastructure investments will be important for retaining Australia’s comparative advantage.
Efforts to rebuild the Department of Foreign Affairs and Trade’s (DFAT) development capability are underway, backed by ministerial leadership and resourcing. Finalised in 2023, DFAT’s Ten-Year Future Capability Plan sets out a reform agenda while the 2023/24 federal budget provided for additional resourcing for development capability over a period of four years. Nevertheless, DFAT’s staffing levels and development capability continue to warrant attention. Maximising the role of locally engaged staff in strengthened partnerships and commitments to locally led development would be a step in the right direction. Tackling institutional disincentives to risk-taking will also be important for delivering on the government’s more ambitious policy. Building a stronger departmental culture of innovation and critical challenge along with an ongoing focus on staff well-being will be key to strengthening and reinforcing DFAT’s ability to lead a whole-of-government programme and to attract and retain the right talent.
Evaluation and oversight structures have been strengthened but could better support strategic decision-making. DFAT has reinforced its oversight and governance structures, while the development programme benefits from robust policies and guidance, such as on gender equality, disability and social inclusion (GEDSI). Nevertheless, incentives for bold programming and cross-portfolio learning remain untapped. Strengthening the governance of Australia’s evaluation work, including the use of and follow-up on evaluative findings, would facilitate cross-programme learning. A greater focus on strategic evaluations that look across portfolios of investments and target key strategic priorities, challenges and enablers would help drive effectiveness in the current context of significant change.
Significant use of contractors across design and delivery is contributing to missed opportunities. Managing contractors continue to play a significant role in the design, management and implementation of Australia’s development programme. When coupled with high turnover and often limited development experience among posted DFAT staff, this can contribute to short-term, risk averse decision making, leading to missed opportunities for more strategic, innovative and transformative programming. It can also result in layered funding arrangements that undermine value for money. Rethinking how DFAT selects delivery partners upstream would help address risks of path dependency. Moving towards less complex programme designs would also encourage clarity over programme objectives and flexibility.
Australia’s leadership in delivering locally led development demonstrates practical learning for other DAC countries. Supported by a clear policy vision in the 2023 IDP, Australia’s approach to locally led development is being integrated across the development programme. Effective use of budget support in SIDS as well as dedicated guidance and monitoring frameworks are supporting delivery of the 2023 IDP’s commitments. Ensuring funding reaches downstream local CSO partners and incentivising international partners to pass on overhead costs would further support local decision making and capacity.
In supporting peace, Australia benefits from an integrated crisis response model as well as strong policies on gender equality and social inclusion. Australia’s conflict prevention and peacebuilding efforts benefit from effective whole-of-government co-ordination, with the 2024 Humanitarian Policy a key reference point. Support to civic space and human rights, increasingly important in Australia’s neighbourhood, warrant continued focus. Better capturing, structuring and sharing the existing, informal knowledge on linking development and peace objectives within DFAT would further enhance this work. Australia’s global leadership on GEDSI highlights its capacity to drive change while underscoring the value of sustained in-house technical expertise on key policy priorities.
Further attention to policy coherence for sustainable development would maximise positive impacts for Australia’s partners. Since the last review, the government has taken important action to advance policy coherence in the Pacific, including by working across stakeholders and adjusting domestic policy settings to better align with regional needs. Nevertheless, as a major fossil fuel exporter, Australia continues to face contradictions in its advocacy on the vulnerability of Pacific SIDS to climate change. Treatment of asylum seekers remains challenged by domestic and international stakeholders in relation to Australia’s humanitarian commitments. Continuing to build whole-of-government understanding of international commitments and further leveraging Australia’s robust regulatory framework to more systematically assess and address areas of policy incoherence at a global level would support progress.
