Comments

Hi Vern, Thanks for your comment. A good question. With regards to government aid, the aid world is quite transparent about overheads, although its efforts at transparency are hampered by poor website design and maintenance. The OECD DAC's website provides detailed data on government donor expenditure and if you go to <a href="http://stats.oecd.org/Index.aspx?datasetcode=TABLE1" rel="nofollow">this link</a> and then reconfigure the table (click on customise) and move country to the filter and aid type to the row field, and then filter for Australia you can find out how much money has been spent on staff and TA. In the case of New Zealand (which I know best, being a New Zealander) we are also provided with very clear information on overheads in the government aid programme by our Treasury. I imagine this may well be the case in Australia too. (We make use of the NZ data in <a href="https://papers.ssrn.com/sol3/Data_Integrity_Notice.cfm?abid=2292300" rel="nofollow">this paper</a>, and report on NZ govt aid programme overheads, which average at around 10% of total spend; I suspect Australia is similar). In the case of NGOs data can often be gathered from their annual reports (and if they don't offer it, there's no need to donate to them.) Just as a more general point, while I agree that transparency on overheads is important, as I've written <a href="https://devpolicy.org/aid-mythbusters-low-overheads20110311/ " rel="nofollow">here</a>, focusing on lowering them will often lead to worse aid, not better. Thanks again. Terence

Thanks Garth. And I agree with some of what you say. In terms of your proposed alternative, I your approach is definitely preferable if it is possible. However, I don't think it is. I think that the amount of information on activity efficacy available to DFAT staff is less than you make it out to be. All the more so because of the AusAID re-integration. That said, I could be wrong and maybe a better guide to cuts is possible. My fear though is that the cuts may possibly be guided by worse heuristics (i.e. geostrategic ones) and so part of the reason I have proposed my approach is that if the cuts land in significantly different places, we are then in a position to ask why. Perhaps we will be provided with good answers, in which case I will have no objection. Also, WRT need. This needs to be thought of in terms of immediate need (depth of current poverty) and ongoing need (the odds of development progress that is not driven by Australian aid in the medium term). In terms of of immediate need countries such as Indonesia would obviously score highly, but in terms of ongoing need I would say Pacific countries such as PNG and Solomons are much more worth focus countries. Thanks again.

Here's wishing her every success. She will certainly need it. If the Secretariat is to deliver on her / the leaders vision - it will need to be completely rethought and rebuilt.

Thank you for your contribution Fei I agree wholeheartedly that the future of regionalism/regional architecture cannot begin and end with the Pacific Islands Forum - there are many more aspects, not least of which are the sub-regional groups that have become increasingly active in recent years. And yes this is a discussion that needs to be conducted in an inclusive manner to give all parties adequate opportunity to reflect and contribute. Bridging the gap between regional decision-making and national priorities is not a new challenge but it remains a very present one. Tess

These figures (and all the figures I come across on Australian aid expenditure) never provide answers to the important questions: how much of the total spend is on DFAT administration and management and consultants' fees, how much is on recipient government/NGO administration and management, and how much is spent by local non-government actors actually relieving poverty or building capacity. Why is this information not readily available? It's the information that every disinterested citizen and taxpayer wants to know, but is seemingly denied to us.

Thank you for continuing to highlight the importance of this process Terence. Cutting one fifth of the aid program will have a significant effect on millions of people's lives and it deserves to have the best, and most transparent, process possible especially given the short time frame available. No doubt the culling process will in some way involve proportional cuts to current country funding but I hope that DFAT does not use the model you propose which takes no account of the levels of need or likelihood of benefit of current projects. I understand and sympathise with your method. However focussing on the countries you suggest will make the program even less poverty focussed, is likely to cull many of the most cost effective activities and will reduce the aid program’s support for the extremely poor people who need it most. Given the active monitoring and management of country programs by DFAT staff there is also no reason that the effectiveness and likely impact of activities could not be central to the selection process. Yes six months is a short time frame, but DFAT staff have access to the large body of evidence on the likely impact of different types of projects and they actively monitor the implementation, quality and impact of current activities. They are not starting with zero knowledge here. It seems to me that it is quite feasible in this time frame to implement an effective, if not perfect, system for assessing the likely impact and cost effectiveness of each major activity and making informed culling decisions within and across countries on this basis, in association with other pragmatic factors.

Thanks Harry!

Loving the links to weekend reading! Keep it up!

The allocation framework you mention was applied for the most part to building blocks defined at the regional level. The only individual countries mentioned were PNG, Indonesia, Solomon Islands and Timor-Leste (and these last two were bracketed together). In addition, the framework served only to sort the building blocks into a hierarchy of five 'focus categories', with category 1 comprising the four countries just listed. Obviously it's possible to question the current relevance of the above process. When undertaken, it was about identifying where billions of additional dollars might reasonably be absorbed over several years with the most benefits per dollar. The task now is very different in nature: to identify where $1.3 billion can be extracted over two years with the least possible damage. Perhaps country A can better absorb additional aid than country B, but it clearly does not follow that country B can better absorb the pain of aid cuts than country A. Relevance aside, even when first propounded the aid review's allocation framework entailed nothing much about the appropriate magnitude of aid to specific countries. The 'scope for expansion' table at p. 131 of the report of the aid review suggested that PNG and the Pacific shouldn't expand much, and that Indonesia could expand quite a bit, but did qualify this judgement by saying, 'at the same time, Australia is starting [in Indonesia] from a high base'. The aid review was elsewhere silent on this last point, effectively taking it for granted that the marginal aid dollar had more impact in Indonesia than elsewhere. Even with an implausibly low 'scenario 1' allocation of around $230 million per annum, Indonesia would still be Australia's second-largest bilateral aid recipient, by a very long way, and therefore a focus category 1 country. So the aid review's allocation framework is consistent with both a bigger allocation to Indonesia, and a much smaller one, provided Indonesia remains among our top few recipients. That reduces the utility of the framework to aid pruners.

Hi Robin. Thanks for this thought provoking piece. I was surprised that there was no mention of the framework proposed in the independent aid review (p.126) for allocating aid to countries that Stephen played a key role in crafting for the Rudd Government. Country allocations in this framework were based on i. poverty; ii. national interest; and iii. Australia’s capacity to make a significant difference. Indonesia unsurprisingly scored the highest priority with a '1' - 'medium' for poverty, and 'high' for the two other categories. While you highlight the practicalities of having to take the aid portfolio to the chopping block and there has been a lot of water under the bridge since the independent aid review, wouldn't these same criteria make for a worthwhile framework in considering the aid cuts now?

This is interesting; but a couple of points from my own research. As a % of GDP aid from NGOs has been remarkably stable at around 0.03% for the last fifty years. It has gone up (to as much as 0.08%, but is now back to about 0.04%) in the last 10 years following the tsunami effect. In sense it depends on your base year to determine grimness. The ABC story chose 2004 to show things as being particularly grim, but that was an abnormally 'good' year. It is in line with the long run levels. It is the attitude to aid that has tanked and is a real issue, which is another story about the drop off in development education spending since the 1990s. The rise in ACFID membership is really about associate members being abolished (2010 I think?) and them all being full members to be able to sign the Code If we count the associate and full members over the last forty years the change had not been that great. There are both definitional and baseline issues in this analysis.

G'day Jonathan, First time caller, long time listener. I'm fascinated to know your thoughts on why MSF and Compassion choose not to be part of ACFID. Does it really matter? Do they need to be part of ACFID? Cheers!