OECD Development Co‑operation Peer Reviews: Australia 2025

Annex B. Progress against OECD legal instruments under responsibility of the DAC

Recommendations adopted by the Development Assistance Committee (DAC)

DAC Recommendation on the Terms and Conditions of Aid [OECD/LEGAL/5006]

Australia met two of three provisions of the DAC Recommendation on the Terms and Conditions of Aid. The average grant element of Australia’s official development assistance (ODA) commitments in 2022‑2023 was 99.0%, above the norm of 86%. In 2022 and 2023, Australia met the commitment on the special terms for least developed countries (LDCs), exceeding the 90% norm. The grant element of Australia’s bilateral ODA commitments to LDCs was 100% in 2022-2023. Over the same period, Australia also met the alternative norm of maintaining a three-year average of grant element of bilateral ODA to LDCs beyond 86%.

At 0.19% in 2022 and 2023, Australia’s ODA as a share of gross national income (GNI) was below the DAC average country effort, 0.30% and 0.31% respectively. Australia therefore did not meet this third dimension of the Recommendation.

DAC Recommendation on Untying Official Development Assistance [OECD/LEGAL/5015]

Australia reports all ODA as untied and the government remains legally required to untie its ODA. Since the last review, Australia has improved its adherence to the transparency provisions of the Recommendation. Since 2023, Australia has started notifying ex ante procurement opportunities via the DAC bulletin board and reporting on ex post contract awards, resulting in an increase in foreign bids. DFAT notes that, since 2023, Australia has also enhanced engagement with stakeholders by delivering more than 30 industry outreach and engagement activities in its region, resulting in increased interest from foreign suppliers.

Australia is one of the countries where the contrast between de jure untying (consistently 100% untied) and actual distribution of contract awards is the most striking, with close to 100% of eventual suppliers based in Australia. Aligning with Australia’s recent focus on local content and sustainable procurement, there appears to be a slight increase in the share of contracts awarded to suppliers bidding from abroad, particularly in terms of number of contracts, and to a lesser extent, contract value. In terms of local procurement, Australia acknowledges significant barriers for local organisations seeking to secure lead contracts awarded by DFAT, including limited capacity to manage large-scale projects. To better capture the participation of local suppliers across the ODA delivery supply chain, DFAT has introduced a reporting system whereby lead commercial suppliers disclose information on their subcontracting arrangements (see Box 11).

Figure B.1. Breakdown of untied ODA contracts awarded by Australia by origin of supplier, 2019‑2023

Value of contracts awarded to ODA recipients and sectors covered by the DAC Recommendation (USD millions)

Source: OECD (2025[1]), OECD DAC Contract Awards (database, non-public).

Statlink

DAC Recommendation on the Humanitarian-Development-Peace (HDP) Nexus [OECD/LEGAL/5019]

Across the three pillars (co‑ordination, programming and financing), Australia aligns with the principles of the DAC Recommendation on the HDP Nexus, even if it does not consistently cite it as a guiding framework in key policy documents. Australia demonstrates a solid understanding of the interconnections that help partners address key drivers of fragility and instability, linkages that lie at the core of the Recommendation.

Regarding co‑ordination across the HDP Nexus, Australia has developed risk-informed and gender-sensitive analyses of structural drivers of conflict risk that includes relevant government departments. This joint analysis informs Australia’s Development Partnership Plans (DPPs) and programming beyond DFAT, providing analytical capacity across the HDP Nexus. At country level, Australia assesses UN capacity to co‑ordinate international development efforts on a case-by-case basis and, when relevant, also supports partner governments in strengthening their capacity to engage with the international community and align co‑ordination with domestic priorities.

On programming across the HDP Nexus, Australia’s comparatively high support for peace-related sectors is consistent with the DAC Recommendation. DPPs are also designed to reduce the risk of violent conflict through support to public administration, legal and justice systems, particularly in countries facing medium or high fragility. Conflict prevention is also pursued through Australia’s strong emphasis on tackling exclusion and promoting gender equality, including support for the Women, Peace and Security (WPS) agenda. These areas are aligned with the DAC Recommendation on the HDP Nexus. However, Australia’s investment in joint learning and evidence across humanitarian, development and peace action is less clear, and DFAT could potentially organise its knowledge and analysis on conflict prevention in a more structured way (see section on Supporting Stability, Peace and Equality).

On financing across the HDP Nexus, Australia works with a broad range of partners, including multilateral organisations and international financial institutions, governments, the private sector and civil society, providing predictable, flexible, multi-year financing, including for humanitarian responses in protracted situations. This is aligned with the DAC Recommendation on the HDP Nexus. Coherence across the Nexus is ensured because DFAT manages both development and humanitarian funding streams and the Development Partnership Plans co‑ordinate the engagement of different departments, such as the Department of Defence and the Australian Federal Police or the Department of Agriculture, Fisheries and Forestry.

The HDP Nexus approach is referenced in Australia’s DPPs with countries affected by conflict or facing particularly high risks, such as Myanmar (DFAT, 2024[2]). In these contexts, linkages are explicit between Australia’s development and humanitarian programmes. In other protracted crises outside the priority Indo-Pacific region, such as in the Middle East, Australia has less capacity to analyse the connections between conflict and local political dynamics, humanitarian needs and development opportunities, and therefore focuses primarily on humanitarian responses delivered through partners.

DAC Recommendation on Gender Equality and the Empowerment of All Women and Girls in Development Co-operation and Humanitarian Assistance [OECD/LEGAL/5022]

DFAT released a new gender equality strategy in February 2025 outlining five strategic priorities: work to end sexual and gender-based violence (SGBV) and protect and advance women’s sexual and reproductive health and rights (SRHR); pursue gender responsive peace and security efforts; deliver gender equitable climate action and humanitarian assistance; promote women’s economic equality and inclusive trade; and support locally led approaches to women’s leadership (DFAT, 2025[3]). Implementation of the strategy is guided by a set of principles, including that gender equality is a human right, gender equality benefits everyone, and that gender equality should be integrated into all areas of Australia’s foreign policy. Delivery by staff is supported by new guidance and training. In addition to the 2025 gender equality strategy, DFAT has also developed the Inclusion, Equity and Diversity Strategy (2024-2027) which focuses on how DFAT builds a workplace that values diversity and gender equality from within.

DFAT has established a target that 80% of development investments effectively address gender equality. In 2022-2023, 51% of Australia’s bilateral allocable ODA had gender equality objectives. While this is slightly above the DAC average of 46%, Australia could go further in integrating gender equality objectives across its ODA in accordance with its policy priorities and strong advocacy work. At 7%, Australia allocated a slightly higher share of ODA to gender equality as a principal objective compared to the DAC average of 4% in 2022-2023. As Australia’s specialist infrastructure financing vehicle within DFAT, AIFFP is also strengthening its ability to integrate gender equality objectives into its investments and projects following recent reviews.

Australia takes an intersectional approach to gender equality, linking it clearly with LGBTQIA+ rights and disability inclusion – also priorities – although this good practice is less explicitly articulated in the February 2025 strategy on gender equality. DFAT has also developed tools and resources to support integration of gender equality in climate change work, although this remains a work in progress.

Australia’s work on locally led approaches enables direct action on gender equality and women’s empowerment. This work is illustrated in the Pacific Women Lead programme and with Australia’s support to different Pacific women’s funds. The Balance of Power Initiative likewise aims to shift attitudes and norms by engaging political and traditional leaders in the region. Australia has also done work on gender lens investing through the Pacific RISE programme.

DAC Recommendation on Ending Sexual Exploitation, Abuse and Harassment in Development Co-operation and Humanitarian Assistance [OECD/LEGAL/5020]

Australia has a solid policy foundation for preventing and responding to ending Sexual Exploitation, Abuse and Harassment (SEAH) in development co-operation and humanitarian assistance in accordance with the Recommendation. This is built around a trauma-informed and victim-survivor-centred approach, with clear obligations for DFAT staff and implementing partners.

DFAT’s policy on protection from sexual exploitation, abuse and harassment (DFAT, 2025[4]) includes publicly available codes of conduct that apply to both DFAT and its partners, and mandatory SEAH training for management, staff and implementing partners. SEAH is also being integrated into gender-based violence (GBV) and child protection programmes, particularly in the Pacific region. Moreover, Australia collaborates with DAC members, non-DAC providers, and implementing partners to strengthen SEAH prevention globally and encourages programme managers to work with local partners on complaint mechanisms.

Australia has no dedicated fund for survivors’ assistance, with support being determined on a case-by-case basis and no formal victim support standard. Developing these areas would strengthen Australia’s progress in line with the Recommendation.

No incentives for good SEAH practices are present in DFAT's performance management structures and overall the integration of SEAH prevention policies into broader institutional settings remains an area for further improvement.

DAC Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Assistance [OECD/LEGAL/5021]

With respect to Pillar One (Respecting, Protecting and Promoting Civic Space), Australia has taken steps to align its 2023 International Development Policy (IDP) and the new Civil Society Partnerships Fund (CSPF), announced in August 2024, with the Recommendation showing coherence in supporting freedom of assembly, association and expression in partner countries. In the 2023 IDP, Australia “recognises the value of civil society, and that civic space is shrinking in many parts of the world”. While the CSPF is a promising mechanism, it is still in its early stages, and its specific role in protecting and promoting civic space remains to be seen. Positive initiatives, such as work with Palang Merah Indonesia (Indonesian Red Cross Society), demonstrate impact, but the civic space dimension is not always clearly articulated. There is also scope for Australia to consider how the Recommendation and 2023 IDP can provide leverage for diplomatic engagement and co-ordination with other development actors to strengthen civic space more systematically.

With respect to Pillar Two (Supporting and Engaging with Civil Society), Australia has made notable progress in consulting and engaging with CSOs, embedding partner-led and locally led engagement, which are core features of the 2023 IDP. Opportunities for Australian civil society to engage with DFAT have expanded through consultations on key new policies, including the 2023 IDP. The government has also committed to involve CSOs in the design of DPPs and committed in the 2023 IDP to conduct biennial partner perception surveys that include CSO perspectives, the first of which will be undertaken in 2025. In its efforts to promote and support locally led development, Australia recognises the importance of using partners’ own planning, monitoring and reporting systems wherever feasible, guided by a risk-based approach. There is potential to strengthen this further by enabling greater CSO leadership, including in the design of investments, and by providing more core and flexible funding to Australian and partner country CSOs. Nevertheless, long-term and predictable partnerships, such as with the Australian Council for International Development (ACFID) and the Australian Humanitarian Partnership, stand out as good practice.

With respect to Pillar Three (Incentivising CSO Effectiveness, Transparency and Accountability), Australia actively supports CSO effectiveness by fostering community participation in programmes and supporting locally led approaches to capacity strengthening and peer learning, as seen in its support for partner country gender equality and disability inclusion CSOs. However, questions remain about whether Australia’s funding modalities and requirements enable CSOs to strengthen accountability at the partner-country level. Greater clarity on this aspect would help ensure that funding mechanisms not only support the operational effectiveness of CSOs, but also reinforce their legitimacy and responsiveness to local communities.

Recommendations adopted by the Council under the DAC’s responsibility (joint with other OECD committees)

Recommendation on Policy Coherence for Sustainable Development [OECD/LEGAL/0381]

Australia continues to advance policy coherence for sustainable development in the Pacific in line with the Recommendation, making effective use of interdepartmental structures, such as the Secretaries Board and Australian Government Cabinet process led by the Prime Minister and Cabinet (PM&C), as well as interdepartmental committees. Australia uses these structures to respond to key regional priorities. However, progress on policy coherence for sustainable development issues beyond the Pacific, including climate change and meeting human rights obligations in its private sector, are less clear. Australia could also leverage more effectively its robust regulatory framework to assess the impacts of its policies on developing countries and the Sustainable Development Goals (SDGs).

In its regulatory framework, impact assessment frameworks consider alignment with international obligations and regulatory standards. However, there is no systematic monitoring of spillover effects on other countries, and the link to the SDGs is implicit rather than explicit. Australia could leverage its regulatory structures more effectively to advance policy coherence for sustainable development. In considering international obligations, adding an explicit requirement to look at potential negative impacts on other countries, notably developing countries, would support this.

As Australia seeks to strengthen the coherence of its engagement with politically and technically complex global challenges, it could invest further in strategic partnerships with academia and think tanks. This would help foster evidence-based policy debate and citizen awareness of, and engagement with, the trade-offs Australia navigates. There is also the potential to engage and leverage more effectively the knowledge of First Nations peoples in public debate on challenging policy coherence issues, as their unique perspectives and alternative knowledge has been historically marginalised in policy fora.

Recommendation for Development Co‑operation Actors on Managing the Risk of Corruption [OECD/LEGAL/0431]

Australia has established comprehensive corruption risk management mechanisms that align with the objective and provisions of the Recommendation. These include prevention and awareness raising measures, such as DFAT’s Integrity Strategy 2024-2026 and the public sector-wide APS Code of Conduct, as well as ethics advisory services within the department and training opportunities for staff.

DFAT provides annual e-training to staff, including locally engaged staff, along with targeted specialised training for staff working overseas on corruption risk management issues relevant to the programmes they are managing. Such tailored training is key for effective corruption risk management. Staff are also “encouraged to promote a positive ‘risk culture’ and embed risk management in day-to-day decision making” (DFAT, 2025[5]).

In terms of assessing and monitoring risks, Australia reports using risk screening and risk assessments in both project design and implementation. Further, mitigation strategies are devised and controls adjusted through regular reviews. Corruption risk management throughout the project cycle is highly important and DFAT has taken steps to ensure this is done from design through to implementation and termination of activities. A key component of DFAT’s risk management framework is the 2025 DFAT Fraud and Corruption Control Framework, which outlines the department’s approach to preventing, detecting and responding to fraud and corruption. Its aims include better alignment with the department’s framework and expanded coverage of corruption risks. Australia also reports adopting a risk-based approach to determine the level of due diligence required, although this is yet to lead to varying compliance expectations for partners depending on partner capacity and size of investment. An exception is in relation to child protection and protection from sexual exploitation, abuse and harassment where small, locally based organisations are initially required to meet “essential standards” only. They are then given extra time to comply with the comprehensive standards when necessary. Further, some partners report that risk is not shared but rather transferred to partners, which is something DFAT should address with a view to safeguarding development objectives.

As stated in the DFAT Fraud and Corruption Control Policy Statement (included in the DFAT Fraud and Corruption Control Framework 2025), Australia has zero tolerance for inaction on fraud and corruption, and DFAT requires proactive reporting and transparency. To facilitate this, various mechanisms are in place to enable reporting by public officials and DFAT staff, contractors, delivery partners and members of the public. This broad access to reporting mechanisms – albeit through a multiplicity of channels – is important for purposes of efficiency as illustrated by the 2022 Implementation Report [C(2022)175] which shows that reporting of allegations of corruption is primarily undertaken by implementing partners, with only a minority of investigated allegations resulting from reports filed by internal staff.

Regarding Australia’s sanctioning regime, it is notable that all potential instances of fraud or corruption must be reported within five days, unless an alternative agreement has been reached. While such a short timeline supports a quick response, it could discourage – or make impossible – the reporting of allegations, thereby contributing to under-reporting of corruption. A more flexible approach might be considered. DFAT also promotes a case-by-case, proportionate approach, in line with the Recommendation, but it is unclear how this is being operationalised and what criteria are taken into account in the definition of the sanction.

Regarding partner country contexts, Australia often collaborates with other providers of development assistance and local partners in information sharing, including through regular meetings at ambassador level in partner countries.

Australia reports that when ODA is delivered through budget support, corruption risks, especially in public financial management (PFM), are analysed using an Assessment of National Systems (ANS) framework. The ANS focuses on assessing both the levels of corruption risks and the credibility of anti-corruption reform processes in partner countries. However, this approach only addresses part of the broader corruption risk landscape. A more holistic approach would also examine other modalities (i.e. project support, multilateral ODA, etc.). DFAT’s recent emphasis on building political economy analysis capacity is welcome and could usefully be further complemented by a more consistent use of complementary diagnostic tools.

Recommendation on Environmental Assessment of Development Assistance Projects and Programmes [OECD/LEGAL/0458]

Australia has made progress in implementing the OECD Recommendation on Environmental Assessment of Development Assistance Projects and Programmes, integrating environmental considerations more systematically across its development co-operation. In March 2019, DFAT published an updated Environmental and Social Safeguard Policy which applies to all new development programme investments (DFAT, 2019[6]), building on the policy in place since January 2018. DFAT committed to review the policy at least every two years. DFAT conducted an internal review of the policy in June 2021 with a further review and update planned for 2026. The policy requires that environmental and social safeguard risks be considered throughout the programme life cycle, including design, implementation, monitoring and evaluation.

The DFAT Environmental and Social Safeguard Policy is also applied by AIFFP, which requires social and environmental impact assessments to identify safeguards, risks and appropriate frameworks to manage and monitor environmental and social issues. AIFFP supports project proponents to integrate environmental and social analysis early in investment planning. AIFFP uses Rapid or Strategic Environmental and Social Assessment (SESA) as tools to inform planning and design, and to assess a borrower’s capacity to implement and monitor safeguards. AIFFP projects usually include a Project Management Office (or unit) and a Project Management and Supervision Consultant to oversee safeguards for implementation and monitoring. AIFFP actively monitors projects through regular project reporting and six‑monthly site visits to ensure progress is aligned with the Environment and Social Management Framework (ESMP). The ESMP contains the project’s risk mitigation and management measures. The assessment process is also used to identify opportunities to adapt proposed interventions or include additional interventions to maximise the development outcomes achieved by the project, which is good practice. For example, during early social and environmental impact assessments for the Tuvalu project to enhance boat harbours, training opportunities were identified to build local capacity and increase the project’s impact. These were developed to mitigate potential project risks to local communities and improve awareness.

OECD-DAC Declarations

OECD DAC Declaration on a new approach to align development co-operation with the goals of the Paris Agreement on Climate Change [OECD/LEGAL/0466]

Australia’s 2023 International Development Policy (IDP) sets clear commitments on strengthening the integration of climate change into its development programme. The 2023 IDP and Australia’s Climate Change Action Strategy (2020-2025) set a target, starting from financial year 2024/25, to have a climate change objective for at least half of all new bilateral and regional investments valued at more than AUD 3 million, aiming to reach 80% by 2028/29. In 2022-2023, Australia committed 45.0% of its total bilateral allocable ODA (USD 1.1 billion) in support of the environment and the Rio Conventions, up from 35.8% in 2020-2021. A higher share (45.0%) of total bilateral allocable ODA (USD 1.1 billion) also focused on climate change overall compared to 34.4% in 2020-2021 (OECD, 2025[7]). This trajectory indicates that Australia is on track to meet its targets.

In line with the Declaration’s emphasis on the need to scale up climate action, Australia’s 2023 IDP commits to increase the total number of climate-related investments. However, Australia has largely relied on its existing ODA budget to reach its climate targets. At COP29, Australia strengthened its climate finance commitment with an expectation to deliver AUD 3 billion (USD 2 million) in global climate finance over 2020-2025. However, this will largely be achieved through existing ODA commitments, rather than new and additional climate finance (OECD, 2025[8]).

Australia integrates climate objectives into its development programmes. At the country level, climate change risks and opportunities are considered through Development Partnership Plans, which are aligned with partner governments’ Nationally Determined Contributions and National Adaptation Plans, and through programme design at investment level. Guidance to integrate climate into development programmes was issued in May 2024 for DFAT staff and key implementing partners. A new Climate Resilient Communities Facility (AUD 208.5 million, 2024/25 to 2028/29) aims to incentivise DFAT country and regional programmes to integrate climate change across the development programme and increase climate investments over time.

Australia’s development co-operation has a strong focus on supporting climate adaptation and resilience, in line with the priorities of Small Island Developing States (SIDS), as called for in the Declaration. Reflecting this focus, in financial year 2022/23, Australia targeted a greater proportion of its climate ODA commitments to adaptation (42.5%) than to mitigation (22.9%) (OECD, 2025[7]). Australia’s support for climate adaptation in Pacific Island countries has a strong focus on disaster resilience and preparedness. This includes supporting community-based disaster risk reduction initiatives, work with Indo-Pacific governments, regional organisations, and partners to scale-up anticipatory approaches and improve the planning and availability of disaster risk financing, greater regional response capabilities, and humanitarian supply stores positioned closer to disaster-prone areas. Australia is also investing in climate and disaster resilient infrastructure under the Pacific Climate Infrastructure Financing Project (PCIFP), implemented through AIFFP. Australia is also a member of multilateral initiatives such as the Coalition for Disaster Resilient Infrastructure, the Blue Dot Network, and the G20 Infrastructure Working Group.

Australia uses blended finance mechanisms to mobilise additional private sector investment to address climate challenges, for example to deliver off-grid renewable energy projects in remote and rural communities under PCIFP. In 2023, Australia launched the AUD 250 million Australian Development Investments (ADI), which focuses on climate resilience and gender equality. ADI is an expanded version of its predecessor, the Emerging Markets Impact Investment Fund, which was established in 2020. This aligns with the Declaration’s call for the use of ODA to leverage additional public, private and blended finance. ADI also supports the integration of gender lens investing through technical assistance grants to investee funds and portfolio companies. This supports its implementation of the Declaration’s emphasis on gender responsive, equitable climate action. DFAT reports that its blended finance mechanisms are demonstrating strong climate outcomes. In 2024, ADI portfolio companies reportedly abated 110 608 tons of CO₂eq, comparable to removing an estimated 23 405 gasoline-powered cars from the road for a year. In addition, DFAT reports that ADI’s investments added 145.60 MW of new solar capacity, enough to power around 145 000 households annually across Southeast Asia.

Australia advocates on behalf of Pacific Island countries in line with the Declaration’s recognition of the challenges faced by SIDS in accessing international climate and environment funds. Australia advocates for increased recognition of the distinct challenges faced by Pacific SIDS to climate threats and backs their calls for increased access to concessional finance for climate resilience in multilateral contexts, including in its support to global climate funds such as the Green Climate Fund. Australia has also aimed to address the climate finance gap faced by Pacific SIDS through supporting regional funds, including a AUD 100 million foundational contribution to the Pacific Resilience Facility.

Australia’s 2023 IDP commits to expanding support for environmental protection and biodiversity conservation, but only 4% of its ODA is focused on environmental issues as a principal objective, compared with the DAC average of 9.6% in 2022-2023. In the same period, 4% of Australia’s screened bilateral allocable ODA (USD 106.1 million) focused on biodiversity overall, down from 6.5% in 2020-2021. The small proportion of, and decline in, Australia’s biodiversity ODA contrasts with its aims to promote the sustainable management and use of ocean and coastal resources in the Pacific, in line with the aims of the Declaration. Australia will support Palau’s Chairing of AOSIS (2025-2026) by helping resource AOSIS’ negotiating capacity to strengthen the ability of SIDS to shape outcomes in the Intergovernmental Negotiating Committee on Plastic Pollution, the Agreement on Marine Biodiversity of Areas beyond National Jurisdiction (BBNJ Agreement), and the Third United Nations Ocean Conference. Further support for biodiversity and the environment in its climate finance and development programming would strengthen Australia’s implementation of the Declaration and align with its support for regional priorities and vulnerabilities.

References

[5] DFAT (2025), 2025 OECD DAC Peer Review Self-Assessment of Australia, OECD, https://one.oecd.org/document/DCD/DAC/AR(2025)1/23/en/pdf.

[3] DFAT (2025), Australia’s International Gender Equality Strategy: For a safer, more prosperous Indo-Pacific and World, Australian Government, Canberra, https://www.dfat.gov.au/sites/default/files/australias-international-gender-equality-strategy.pdf.

[4] DFAT (2025), “Protection from sexual exploitation, abuse and harassment”, https://www.dfat.gov.au/international-relations/themes/protection-sexual-exploitation-abuse-and-harassment (accessed on 30 October 2025).

[2] DFAT (2024), “Australia – Myanmar Development Partnership Plan 2024–2029”, https://www.dfat.gov.au/publications/development/australia-myanmar-development-partnership-plan-2024-2029 (accessed on 30 October 2025).

[6] DFAT (2019), Environmental and Social Safeguard Policy Updated MARCH 2019 (version 1.4), Australian Government, Canberra, https://www.dfat.gov.au/sites/default/files/environmental-social-safeguard-policy.pdf.

[8] OECD (2025), “Delivering on Climate Commitments: How DAC Members Are Aligning with the Goals of the Paris Agreement”, https://one.oecd.org/official-document/DCD/DAC(2025)17/FINAL/en.

[7] OECD (2025), Development Co-operation Profiles: Australia, OECD Publishing, Paris, https://www.oecd.org/en/publications/development-co-operation-profiles_04b376d7-en/australia_b4d74d53-en.html (accessed on 25 August 2025).

[1] OECD (2025), OECD DAC Contract Awards (database, non-public).