Three years seems like a long time ago in today’s world — pre-Trump 2.0, pre-Gaza conflict and pre-Iran War. So, the August 2023 launch of the Albanese Labor government’s International Development Policy already seems like an age away. The policy was described by the government as “the foundation on which we will build a program fit for our times”.
Where do we stand three years on? In 2023, I assessed the policy against the three “Ps”: purpose, priorities and plumbing. I’ll persist with that framework here and add a fourth “P”: perspective.
The policy’s purpose subsumes the aid program’s longstanding, and more modest, remit of advancing Australia’s national interests through poverty reduction to a much broader set of goals centred around a range of threats, both named and unnamed, to “peace, stability and prosperity”. This more ambitious, and ambiguous, set of goals — accompanied by the mandatory mantra of “statecraft” — was always going to be a big task for a fiscally smaller, geographically narrower and, with the abolition of AusAID as an executive agency, institutionally weaker aid program than the one that existed pre-2013.
Three years on, progress against these goals of peace, stability and prosperity remains unsurprisingly difficult to assess. Do, for example, the various wins and losses associated with a “permanent contest” with China in the Pacific reflect the effectiveness or otherwise of Australia’s aid, or simply logical hedging by small states trying to minimise their dependency on any single larger power? Conflict, economic shocks and instability have all increased since the policy was announced, but nobody serious would lay this at the feet of Australian aid. It seems to me that we have made what is a very modest aid program accountable for things it is not necessarily designed, or able, to deliver.
This is not my judgement alone. Australia’s OECD peers warned in their recent review that “overloading development assistance with competing objectives risks undermining its impact and retaining clarity over goals will be essential to ensuring its programming is effective”. Put another way, while the business of statecraft might be about always expanding a country’s choices, the business of aid is about always narrowing choice in a publicly defensible and accountable way.
In relation to priorities, the policy highlights three broad areas that will receive a strengthened focus under Labor — combatting climate change, inclusive development (encompassing gender equality, disability equity and First Nations partnerships) and locally led development. An ambitious new climate spending target is a centrepiece of the policy. However, in the context of a budget that has remained flat in real terms since 2022-23 and is projected to decline, the development trade-offs involved in reaching this target have not been set out. It does seem that while economic infrastructure, governance and humanitarian programs have either grown or been protected, core development sectors like health and education have been the losers, with spending on both declining since 2023 once adjusted for inflation.
Geographically, the aid program has become even more concentrated in the Pacific since the release of the policy, despite the document’s broader “Indo-Pacific” framing. There are well known, structural barriers to aid effectiveness in the Pacific. Neither the policy nor the individual country strategies that have been published since spend any time discussing these barriers, or what Australia might have learnt about navigating them over decades of aid programming.
Much of the policy’s focus is on “plumbing” — improving DFAT capability in areas like aid performance and evaluation, development finance and partnering with local organisations, as well as strengthened transparency and accountability. This is where more tangible progress has been made through things like annual performance reporting, guidance on locally-led development and a new, dedicated transparency portal. But there are some troubling gaps in implementation — the extent to which basic aid program documents are accessible on the portal remains highly variable.
It also remains unclear when the promised mid-term reviews of the development partnership plans will roll out, how independent of program areas these reviews will be, and whether they will be published. A promised civil society partnership fund to advance locally led development remains in limbo. And there remain wider questions around the development capability agenda — what has been achieved as a result of additional resourcing in areas like procurement and evaluation, and how are effective development management skills being replenished, recognised and rewarded through DFAT’s human resource, posting and promotion systems?
The development finance plumbing has branched and changed in ways not obviously consistent with the International Development Policy. The policy was released alongside a Development Finance Review that promised a larger role for loans, guarantees and equity, and better coordination of them.
Three years on, the main vehicle remains the Australian Infrastructure Financing Facility for the Pacific (AIFFP), which finances infrastructure in Pacific countries and Timor-Leste through a mix of loans and grants. Its composition has shifted markedly: as at the end of 2023-24, the facility reported AUD1.1 billion in loan and guarantee commitments and AUD840 million in grant commitments, with actual spending running three-to-one in favour of grants — the reverse of the facility’s original design ratio. That shift is cheaper for Pacific recipients but more expensive for the aid budget, with the government allocating another AUD550 million in grants for AIFFP from within existing resources.
Australian Development Investments — a rebranded and scaled-up version of the earlier Emerging Markets Impact Investment Fund, with its investment cap lifted to AUD250 million under the review — has begun reporting on its portfolio but remains small relative to the claims made for blended finance.
The largest new financing commitment since 2023, the AUD2 billion Southeast Asia Investment Financing Facility, sits with Export Finance Australia (EFA) and is not counted as aid. It is framed as a clean energy and infrastructure vehicle but operates under a trade and investment mandate with an Australian benefit test. Its connection to the development objectives set out in the policy is indirect at best and remains opaque given EFA’s commercial confidentiality provisions.
My additional “P”, perspective, asks what the policy looks like using a 2026 lens. Two changes since 2023 stand out.
The first is the global aid cuts, led by but certainly not limited to the US, which put the government’s aid policy in a genuinely new light. Australia can now legitimately claim to be a more reliable and predictable donor than many of its increasingly fickle peers, even if the government’s stated ambition of “rebuilding” the development program is now more accurately described as “stabilising”.
The second is the deterioration in the wider environment in which developing countries operate: armed conflict in the Middle East and Europe, new tariffs and the fragmentation of the trading system, and the fuel, food and freight price shocks that follow. These are particularly challenging for the small, import-dependent economies of the Pacific.
Australia has not followed its peers in cutting the overall aid budget, though the latest budget did reduce or end a number of core multilateral contributions, funding for UNAIDS among them, in order to “reprioritise” spending towards bilateral and regional programs. However, the government has said very little about how this very different operating environment has altered Australia’s approach to aid effectiveness. Nor has it chosen to respond to a relatively modest set of recommendations in this area offered by the aforementioned OECD review.
In a world in which the aid landscape has dramatically changed, is more crisis-prone and in which a premium seems to be placed upon flexibility above almost everything else, maybe all of this is just what “fit for our times” looks like. But there remain structural issues — around clarity of purpose, how trade-offs are made, and how development capability is built and maintained — that the policy did not address. Ignoring them doesn’t make them go away. They remain central to aid’s political and public license and deserve to be revisited. Hopefully, in our times.
