Aid overview and outlook

Australia’s new development policy and performance framework

On 18 June 2014, Foreign Minister Bishop launched the Government’s new aid policy, Australian aid: promoting prosperity, reducing poverty, enhancing stability, and new performance framework, Making Performance Count: enhancing the accountability and effectiveness of Australian aid. These documents establish the rationale, direction and performance framework underpinning a targeted and effective aid program.

The aid program’s purpose—to promote Australia’s national interests by contributing to sustainable economic growth and poverty reduction—acknowledges that economic growth is the most sustainable way to reduce poverty and lift living standards.

The reshaped aid program will achieve its purpose by focussing on two development outcomes: strengthening private sector development and enabling human development. Our aid program will focus on the Indo–Pacific and investments in six priority areas addressing regional barriers to growth and key poverty challenges.

Figure 18: Aid program strategic framework

 

The development of the Government’s new performance framework was a key priority for the department. We undertook broad-based consultation to inform our work. In particular, we:

• supported Senator Mason in a series of meetings and roundtables with representatives from partner governments, NGOs, multilateral organisations, private sector firms and academia;
• established an informal working group comprising representatives from the Australian Council for International Development and the International Development Contractors’ group;
• released a consultation paper on the department’s website and invited public submissions; and
• hosted meetings with representatives from multilateral organisations, NGOs, donor country governments and international think tanks in Australia and overseas.

In total, the department received input from more than 40 consultation events with over 70 stakeholders and experts, as well as 48 written submissions. We also drew on the submissions to, and findings of, the Senate inquiry into Australia’s aid program undertaken in early 2014.

The framework was independently reviewed by the Chair of the department’s Independent Evaluation Committee, former Vice President of the World Bank Jim Adams, who assessed it to be a credible and effective system for overseeing the performance of Australian aid.

At a strategic level, the performance framework has 10 high-level targets to ensure the aid program is effectively managed and delivering on Government priorities.

• Promoting prosperity: Promote economic development by increasing Australia’s aid for trade investments to 20 per cent of the aid budget by 2020.
• Engaging the private sector: All new investments will explore innovative ways to promote private sector growth or engage the private sector in achieving development outcomes.
• Reducing poverty: By July 2015, all country and regional programs will have Aid Investment Plans that describe how Australia’s aid will promote economic growth in ways that provide pathways out of poverty.
• Empowering women and girls: More than 80 per cent of investments, regardless of their objectives, will effectively address gender issues in their implementation.
• Focusing on the Indo–Pacific region: Increase the proportion of country program aid that is spent in the Indo–Pacific region to at least 90 per cent from 2014–15.
• Delivering on commitments: From July 2015, progress against mutual obligations agreed between Australia and its key partner governments and organisations will form part of program performance assessments.
• Working with the most effective partners: By July 2015, design and apply new systems to assess the performance of the aid program’s key delivery partners and ensure stronger links between performance and funding.
• Ensuring value-for-money: Deliver high standards of value-for-money in at least 85 per cent of aid investments. Where standards are not met and improvements are not achieved within a year, investments will be cancelled.
• Increasing consolidation: Reduce the number of individual investments by 20 per cent by 2016–17 to focus efforts and reduce transaction costs.
• Combatting corruption: Develop and implement new fraud control and anti-corruption strategies for all major country and regional programs by July 2015.

At the country program level, rigorous performance benchmarks tailored to country circumstances will provide a sharper basis for assessing program performance.

Management requirements will be tightened to ensure funding is directed to individual aid investments making a difference. Aid investments that are assessed as performing poorly will need to be improved within one year or be cancelled. 

For further discussion on aid performance, efficiency and effectiveness, see Departmental program support Outcome 1 (ODA).

2013–14 Aid program

In 2013–14, total Australian official development assistance (ODA) was an estimated $5 billion. The department was responsible for managing $4.3 billion of that total. The balance was delivered by other government agencies. (See also DPSO and Appendix 4.)

Table 10: Australian ODA by agency, 2013–14

Department / Agency	Estimated Outcome 2013–14 ($m)
Department of Foreign Affairs and Trade(1)	4,296.3
Department of Immigration and Border Protection	429.3
Australian Federal Police	126.8
Australian Centre for International Agricultural Research	94.1
Department of Education	27.6
Treasury	26.6
Department of Health	9.4
Department of Employment	7.0
Department of Agriculture	5.0
Attorney-General’s	4.5
Commonwealth Scientific and Industrial Research Organisation	2.9
Department of Infrastructure and Regional Development	2.2
Department of Defence	2.0
Department of Communications	1.5
Department of Finance	1.1
Australian Sports Commission	1.0
Other Australian government agencies	5.4
States and Territories	2.1
Total	5,044.9

(1) Includes actual expenditure for programmed aid and an expected outcome for departmental expenditure and adjustments as estimated at May 2014.

 

While developing the new aid policy, we began reshaping the aid program to reflect the Government’s new policy priorities.

We also implemented business and aid management reforms to streamline existing processes for efficient and effective delivery of the aid program (see DPSO).

Our aid investments achieved significant development results, reported below against priority areas, and in the following sections of the report. (See Programs 1.6–1.13; and Appendix 5.)

Infrastructure, trade facilitation and international competitiveness

The department invested $514.6 million of ODA in infrastructure development, trade facilitation and international competitiveness. Better infrastructure reduces the cost of doing business and improves international competitiveness, while support for trade facilitation ensures that businesses can take advantage of international opportunities. (See also Aid for trade.) Support included:

• technical assistance for developing countries’ implementation of the WTO Agreement on Trade Facilitation;
• training customs officials and simplifying cross-border processing for cargo trucks in the Mekong region;
• public–private partnerships in infrastructure building; and
• improving transport links in Vietnam through construction of the Cao Lanh Bridge.

Agriculture, fisheries and water

The department invested $205.5 million of ODA in agriculture, fisheries and water. Our support helped improve food security and productivity in our region by:

• providing access to agriculture technologies for more than 417 000 poor women and men;
• improving water management in the Mekong River Basin, which is contributing to more constructive engagement on water-related issues between the six Mekong countries and helping increase technical knowledge of the Mekong River Basin’s water resources; and
• assisting Pacific regional fisheries to promote onshore investment and increase Pacific island government revenues to over US$250 million (from US$100 million in 2011).

Effective governance

The department invested $600.1 million of ODA to support measures to improve governance in developing countries. These investments helped our partner governments, the private sector and civil society to build institutions that have a direct role in promoting stability, inclusive economic growth and poverty reduction. Support included:

• strengthening the management of Indonesia’s electoral system, including through training 1598 election officials on election operations in the lead up to the 2014 elections;
• training and infrastructure development for the Royal Papua New Guinea Constabulary, including in Bougainville; and
• regional efforts to combat corruption by helping Transparency International to establish and operate its network of national advocacy and legal advice centres in the Indo–Pacific region.

Education and health

The department invested $952.1 million of ODA in education. Investments in education build critical skills and create opportunities for young people to contribute to the economy. Australia supported bilateral education programs with 21 countries throughout Asia and the Pacific, by:

• building more than 9000 additional classrooms; training over 100 000 teachers to improve education quality; and enabling over 1.3 million more children to enrol in schools across the region;
• offering 4450 new Australia Awards, enabling students and future leaders from developing countries to study in Australia;
• assisting the Philippines Government extend basic education from kindergarten to grade12; and
• funding education programs in response to humanitarian crises in Syria, Iraq and Yemen, benefiting around 2.1 million children inside Syria and 390 000 in the region.

The department invested $701.8 million of ODA in health, including basic water, sanitation and hygiene. Health assistance included support for:

• nearly 900 000 additional births attended by a skilled birth attendant; over 2.3 million children vaccinated; increased access to safe water for over 2.9 million people; increased access to hygiene for over 2.0 million people and increased access to basic sanitation for over 1 million people;
• a review of the Indonesian health sector to help determine priorities for the coming five years and funding to reduce the number of maternal deaths in some of the poorest regions of Indonesia; and
• the third phase of Vietnam’s National Target Program on Rural Water Supply and Sanitation (2011–15), which has a greater focus on basic services in low income districts, and working with the private sector.

Building resilience: humanitarian assistance, disaster risk reduction and social protection

The department invested $635.8 million of ODA in humanitarian assistance, promoting disaster risk reduction and resilience, and strengthening social protection to enable the poor to build skills and increase their participation in the economy. In particular, we:

• responded to emergencies in 24 countries, including Typhoon Haiyan in the Philippines and flooding in Solomon Islands, and provided $271.5 million to deliver instances of life-saving assistance to approximately 10.2 million people;
• worked with international partners to build the disaster resilience of countries in the Indo–Pacific, the most disaster-affected region in the world (see 1.10), including resilience to climate-related shocks and the impacts of climate change (see 1.4);
• invested $76 million in social protection to help a number of governments in the Indo–Pacific region to improve the effectiveness, efficiency and reach of their national social protection systems. For example, our support in Indonesia, enabled the government’s existing social protection programs to reach over 2.8 million more poor people.

Gender equality and empowering women and girls

An estimated $2.2 billion of the department’s total aid investments contributed to promoting gender equality and women’s empowerment, acknowledging the significant benefits that flow to whole communities from women’s participation.

The department played an active role in promoting gender equality and the empowerment of women and girls, including advancing equal access to health and education; promoting women’s economic empowerment; enhancing women’s roles in decision-making, leadership and peacebuilding; and ending violence against women. (See also 1.1(10).) Our support included:

• helping over 66 000 women survivors of violence access critical services such as emergency shelters, counselling and legal advice including in Bangladesh, Sri Lanka, Cambodia, Timor-Leste, Papua New Guinea, Fiji, Solomon Islands, Vanuatu and Sub-Saharan Africa; and
• in association with the Government of Pakistan and international community, helping 1441 women in Pakistan establish small businesses and increase their monthly incomes.

Figure 19: Estimated Australian ODA by sector, 2013–14¹

(1) This chart presentation is based on sectors identified in the aid policy released on 18 June 2014.

(2) In 2013–14, the ‘Building resilience’ investment priority included approximately $360 million for on-shore asylum seeker costs as reported by the Department of Immigration and Border Protection. The Government phased out the use of ODA for onshore asylum seeker costs in July 2014.

 

Figure 20: Estimated department ODA by sector, 2013–14¹

(1) This chart presentation is based on sectors identified in the aid policy released on 18 June 2014.

Outlook

The department will focus on implementing the new development policy and performance framework for Australia’s aid program. We will continue to reshape aid programming to align with the new priorities and ensure progress against targets. We will develop new aid investment plans for all country and regional aid programs by July 2015.

We will maintain high standards of transparency and accountability in the management of the aid program and continue to publish aid information on our website www.dfat.gov.au.

We will produce an annual Performance of Australian Aid report to assess progress against the strategic targets and performance benchmarks, provide a whole-of-aid-program summary of country and regional program performance and a snapshot of overall results.

To ensure a stronger link between funding and performance, the department will design a Performance Incentive Fund to begin operating in 2015–16. This fund will provide an incentive for programs, countries and partners to continually improve their effectiveness.

An early priority will be establishment of a new Development Innovation Hub to drive innovation in the aid program. Backed with funding of $140 million over the next four years, the Development Innovation Hub will test new ideas and leverage funding from the private sector, NGOs, academia, partner governments and other actors to maximise results from our aid program. It will use partnerships, secondments and exchanges to develop ideas and approaches from leading innovators.