Comment on Seven patterns and trends in Australian aid

Nick, thank you for your kind comments and your very good questions. A quick response here, and then more in future installments of the Aid Open Paper. Others may also want to add comments as well.

On multilateral aid, we've not done a detailed analysis yet of who Australia supports and how this compares to other donors, but here are a few thoughts.

1. We wrote an article last week on support to IDA that found that Australia was about average, but less generous that the top donors. http://devpolicy.org/tripling-australias-ida-contribution-quick-decision-required/

2. We note in the first installment of the Aid Open Paper that one of the reasons that Australia's multilateral aid is low is that we are not part of some multilateral clubs, notably the European Union which accounts for a significant share of European donors multilateral aid. But this also means that Australia has more resources available to give more to other multilateral agencies.

3. Australia is a contributor to various UN agencies and the Asian Development Bank. And one question is whether Australia should contribute to other multilateral agencies, such as the African Development Bank or the Inter-American Development Bank.

On fragmentation of aid, you make a very good observation. One of the reasons for the proliferation of projects is a change in the way aid is delivered. In the 1970s and 1980s, Australia gave a lot of aid in the form of budget support grants. In the 1990s, this was phased out and aid became more project based. And we note in the paper that multilateral aid fell as a proportion of aid in the last decade. This largely explains why project size has fallen, but not how AusAID is responding.

As part of the Aid Open Paper, we're planning a section on multilateral aid and will also explore the fragmentation issue in more detail, so we will keep your questions in mind. Thanks again for your comment and we look forward to hearing more insights on these issues.

Comment on Seven patterns and trends in Australian aid

Fantastic first post Stephen and Matthew - a very welcome and needed look at the trends within Australian aid. This kind of data and analysis has been missing from a debate that is increasingly focussing on how Australia's aid program can be more effective - so I look forward to further installments in your open paper. A few questions:

With regard to multilateral giving, are there any trends in what Australia IS giving to, and what it isn't? Is our lack of commitment to multilaterals across the board, or are there individual areas where we are particularly behind on?

Also, what do you think is driving the trend towards smaller projects, and the associated fragmentation? Surely AusAID would be aware of the costs an manageability issues associated with this, so I'm curious as to why this trend remains nonetheless.

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Stephen - Thanks for a very interesting post. You are of course right to call out the US as the major obstacle to progress. Those of us who live here have a special responsibility to try to fix that. I look forward to hearing more about the upcoming conference!

Comment on Quality of aid: How does Australia fare?

The Quality of Offocial Development Aid Assessment report compares 31 aid agencies on four composite measures. AusAID performs poorly on three of these measures.

1) AusAID is ranked in the bottom third of agencies in terms of maximising efficiency (21 out of 31).
2) AusAID also ranks poorly in terms of the fostering institutions in the recipient countries (19 out of 31).
3) In terms of reducing the burden on the recipient countries, AusAid ranks in the middle.
4) However, on the measure of transparency and learning, AusAid ranks first.

This last ranking must be questioned, particularly in the light of the poor rankings on the other composite measures. Transparency and learning means little if it does not produce better results in terms of efficiency and improved aid delivery systems in recipient countries.

It is possible, using the linked website to compare AusAid with the UK’s aid agency (Department for International Development). This comparison shows that the UK aid agency performs much better on the three measures that matter.

This evidence indicates that a major reform of Australia’s systems for delivering aid are needed. (If AusAid disagrees with these indicators, because they omit key information or are out-of-date, then what performance indicators does AusAid propose?)

This form of scrutiny is essential to enable the public to judge whether AusAID is doing its job better and is able to manage effectively an expanded aid program.

Comment on Developmentally speaking: Clegg and Rudd

Since giving his MDG Summit statement, Kevin Rudd delivered a speech on the Australian aid program at a dinner with NGOs on 20 October. It was encouraging that he highlighted the importance of research and evidence in guiding the aid program and improving the quality of aid.

Below are five basic principles that he said would guide his approach to the delivery of Australia's aid program.

1) maximise aid effectiveness with a central emphasis on the measurement of real development outcomes against the MDG targets we have accepted.
2) draw on the best research and practical experience to make evidenced-based decisions.
3) full engagement, support and ownership of recipient countries and communities.
4) fully knowledgeable of, and when appropriate, fully engaged with the UN, UN agencies and the International Financial Institutions including the World Bank.
5) active and creative engagement of Australian NGOs because we do not see ourselves as having a monopoly on wisdom.

He also announced that $40 million in savings from more selective use of technical assistance in PNG would be used for health and education programs. This is a start, yet more could have been said about how the broader and deeper reforms that will improve the impact of Australian aid.

http://www.foreignminister.gov.au/speeches/2010/kr_sp_101020.html

Comment on Quality of aid: How does Australia fare?

Thanks for your interest in our QuODA assessment. We hope that it will be a useful tool.

Just as a point of clarification on the 'contribution to multilaterals' indicator: Our numbers are based on the DAC, which includes only core contributions, and does not include earmarked funding. This probably explains the difference between our results and what is on the AusAID website. Also, our figure is based on multilateral ODA as a fraction of total ODA gross disbursements; I'm assuming that the 30% figure from AusAID is also referring to a portion of gross ODA disbursements, in order for the numbers to be comparable.

-Rita Perakis
Center for Global Development

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Comment on Quality of aid: How does Australia fare?

Kate,

You're absolutely right that this report is a great addition to the aid analysis toolbox.

And good timing too. With the government expected to announce some type of review (anyone like to hazard a guess on its form: white paper; independent report; internal review?) of the aid program to assist with the huge budget boost, this is the kind of analysis that we need and it should feed into the discussions around how to scale-up the aid program effectively.

I think the ‘Maximizing Efficiency’ dimension – which is where Australia performs worst, is critical for this debate. There are several indicators within this dimension which are likely to dominate the ongoing conversation, or already do.

The ‘Focus/specialisation by recipient country’ indicator fits right into the discussion around whether to expand the aid program geographically further into Africa & Latin America, or remain focused on the Asia and the Pacific region.

The ‘Share of allocation to poor countries’ indicator is also increasingly contentious, as represented by the ‘poor people Vs poor country debate’ that has been discussed both on this blog and elsewhere.

The ‘Low administration costs’ indicator is often where aid budgets receive significant critique, and scrutiny in this area is only likely to increase as the aid budget almost doubles.

If Australia can look to how other nations are dealing with these issues and adapt its approach, or put up good reasons as to why they should buck the trend with some of these indicators (eg. Justifying a geographic expansion of the aid program), it will contribute significantly to improving the quality of its aid.