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My apologies for not returning to this sooner as I have been undertaking fieldwork in Indonesian schools and districts. There are three different issues that should worry us about this aid modality in Indonesian education, both in relation to the completed AIBEP and what is now planned by Australia. First, is the question of whether school construction support is justifiable in Indonesia at all at its present stage of development. Is Indonesia really unable to fund school construction from its own budget when, for example, it allocates so much of its budget to subsidising the sale of fuel? A convincing case that school construction is an effective way to assist in educational development has not been demonstrated. Neither has the case for the significant amount of funding to be provided. Even if such case can be made, should Australia be spending money on an activity that is not sustainable? The Independent Completion Report (ICR) you refer to provides a clear warning that school construction may not be sustainable: "Maintenance of new school facilities and provision of budgets that can cover this together with teaching materials and books remains a concern." (p.iii) The second issue is one of how donors and the government of Indonesia can reliably know where these new school assets are actually needed. The poor quality of Indonesian data for educational planning is widely understood to be an impediment to good planning. Only now are some districts and provinces beginning to get a reasonably accurate understanding of the educational assets they have, their school demographic data and therefore their needs. This understanding is occurring through aid-supported data management tools and analytical skills development. So, how can AusAID have reliably known where to build new schools to meet actual needs in the past? The third issue of concern is the ICR itself. I am not convinced that the ICR on the Indonesia Basic Education Program is 'compelling evidence' at all. Evidence, yes, but is it compelling? The publicly available ICR documents on the AusAID website show why this is an issue; the documents paint a clear picture of the tight time frames, over-management of the evaluation process by AusAID, complex terms of reference that run to 11 pages, and firm editorial control. The documents raise serious questions about true 'independence'. This is not to question, in any sense at all, the integrity and hard work of the independent evaluators who were so pressed for time in the evaluation that they were only able to visit 11 schools (out of a construction total of 2014), but rather the bureaurcratic environment in which they operated that lead to the finished ICR. That the claimed evidence for implementation through govermment working 'very well' may not be the good evidence we would wish, is flagged by these remarks in the ICR: "An issue raised by MoNE and some development partners for future education programs was whether more emphasis should be given to refurbishment of existing schools rather than constructing new schools. Indonesia has approximately one million classrooms, with 30-50% of these in need of repairs or refurbishment. The cost to refurbish schools is approximately 55% of the cost to construct new schools. AusAID and other development partners need to examine whether rebuilding of schools nationwide, and extending facilities by adding laboratories and libraries, would have a greater impact than expanding the number of schools (p.iii)" "It is understood that there has been no formal review of the structural design to confirm extent of earthquake resistance however, the design appears to be more resistant than comparable regional buildings. The use of a standard structural design solution across all regions irrespective of site conditions remains a concern... (p.4)" "School site selection was an issue that led to challenges beyond the anticipated expertise ... With respect to construction criteria only, it appears that sites were often chosen based simply on availability, e.g. the site may have been ‘less desirable’ vacant public land or unproductive land donated by a benefactor. Other factors such as proximity of rivers and main roads need to be considered - for example, at one school site visited it was found that some nearby students did not attend due to an extremely busy highway between. At another site, the new school was located approximately 100 metres off the access road - sites fronting the access road were above flood level, but not the school site; this particular site is flooded with up to two metres depth for seven months of the year. (p.7)" "As noted, some sites were not ideal for school construction. Some exceed minimum allowable slopes; some are adjacent to natural (e.g. abutments) and other manmade hazards (e.g. busy roads). The District was responsible for site preparation prior to construction, but this did not always occur due to limited District financial and human resource capacity. Typically, drainage and essential landscaping to school sites was incomplete at the time the school becomes operational. (p.7)" I do not believe that donors building schools in Indonesia can be justified now, except in disaster recovery situations. It might be good for publicity and it does make schools available for some children, but there is clear evidence from the ICR itself to cast serious doubt on this working "very well": doubts about sustainability are raised; there are doubts whether construction is better than refurbishment; and serious concerns about design and site selection are raised in at least two of the 11 schools visited - a very high proportion indeed. If this is the "best example" of funding to recipient governments then I think we have much to be concerned about.

I have a question that pakistan and USA do not have same objectives as well as same policies towards certain things then how can both hae strategic convergence? Both are deceiving one another and will end up in a mess.

Our backyard or not our backyard? It is indeed a tricky question. I am of the school of thought that NZ's aid should not be so widely dispersed but how/why is a tough qwuestion to answer.

Yeah! I love to read it but the question is, Are we going to achieve these goals? With high levels of political corruption how can rural people benefit from all these projects coming up?

Thanks Derek. I agree insomuch as that I think that, if migration were to be on the table in these agreements, then there really would be development ramifications. cheers Terence

Julie Bishop's op ed this week was terrific and I commend it to to DPC readers. Another important event was the long-awaited launch of the <a href="http://www.fahcsia.gov.au/sa/women/pubs/govtint/action_plan_women_peace/Pages/default.aspx" rel="nofollow">Australian National Action Plan on Women,</a> Peace and Security - this might be the opportunity to have serious positive impact on women's lives in our region <a href="http://cigj.anu.edu.au/cigj/link_documents/Publications/Building%20Democracy%20after%20Conflict%20SI%20TRC.pdf" rel="nofollow">Read more</a> about why Julie's words are so important in the context of the Solomons Truth Commission process

The fundamental problem with PACER is that it continues to be pursued through the narrow confines of a trade negotiation. My reading is that the Pacific leaders wanted a broader, more in-depth agreement much like the economic partnership between Australia and New Zealand (ANZCER). Trade is only one part of the equation. Regional integration requires a broader consideration, one that also encapsulates the aid program, the investment debate and the migration debate. One that considers the depth of history, social, cultural and political affiliations between countries. Added to the protracted fiasco of PACER Plus is the obsession to hard-wire a ‘regional’ solution. Have we not yet learnt that this only leads to more regional disunity? Before we can cooperate on a regional basis, first each country has to know and own the agenda. We are nowhere close to such country buy in. A broader conversation could bridge the gap, give us an indication of what the people of the Pacific aspire to, and ultimately establish the architecture that will lead to deeper regional integration.

Thank you Wesley and Arnie, Those are very interesting points. Wesley, your point about other avenues through which Australia and New Zealand could assist with trade is excellent - I agree completely. If the govts. of Aus and NZ were really serious about aiding trade in the Pacific these are the areas they ought to be looking into, rather than worrying about PIC tariffs. Thanks Terence

Creating a tidy conclusion to the development/trade issue in Pacific is a bit like a Rubik's cube, particularly when we begin to work out the various sides. Where green may = climate change; blue = private investment; red = development aid; yellow = militarization; white = independence/decolonisation; orange = food/water security. As we begin to spin the cube, the various issues collide until we begin to sort through them, unraveling the system that the cube represents. I personally see Pacer and Picta and FTAs as representing just a part of the cube, neglecting green, orange and white, for example. These agreements are a two-dimensional attempt at justifying its assertion of economic hegemony to pacific island peoples and resources. Do these agreements allow for peoples to steward their lands, labor and resources? How do these agreements allow for Pacific Island governments to profit long-term from exploiting deregulated environmental protections? Part of this problem is that large countries economic growth is generally much faster than small countries, as large countries have greater control over markets, commodities and assets. When Pacific Island's resources are included in the larger countries economies, our potential for growth is even more stunted when we can only include a small percentage of our resources as part of our economic output. If this were in any way a reasonable assessment of the situation, how might we re-frame the problem so that small countries trade with other small countries with expectations of low economic growth? It should be of some interest that large countries with high growth also suffer from high debt, and that small countries should not be further punished by the large countries to pay for a system that is not inherently sustainable. There are unexplored routes for Pacific peoples and nations, and agreements that seemingly purport integration while in reality funnel revenue streams to transnational investments, ought to be put on hold rather than bundled into regional cooperations like APEC.

Great blog Terence. Well summarised overview of the debate around trade policy in the Pacific. With regard to SPARTECA, it should be pointed out that Pacific states did develop some export industry under the preferential access offered to Australian and New Zealand markets. Exports of car parts from Samoa and textiles from Fiji are a case in point. However, SPARTECA isn’t as lenient as is often suggested. Both the car parts and textile exports to Australia relied on ad-hoc derogations from the Rules of Origin (RoO) requirements of SPARTECA. Hence SPARTECA’s restrictive RoO may have acted as a brake on the development of other export industries. So SPARTECA evidently needs to be improved, and the Island countries have called for this for some time. Similarly for agricultural exports, Australian quarantine authorities have been notoriously slow at assessing the entry of new Pacific produce to Australian markets. Certainly there are more export pathways for Pacific tropical fruits and vegetables to New Zealand. So new export pathways are needed for Pacific island agricultural goods. And of course in recent years Pacific island countries have also exported labour to Australia and New Zealand as part of short-term labour mobility schemes in the horticultural sector. So we know that, if designed well, labour mobility schemes can be mutually beneficial. The point is, even if PACER-Plus is less relevant today, there are a number of alternative ways that Australia and New Zealand could help Pacific island countries benefit from trade - if there is sufficient political will.

Thanks Stret - the PNG example you point to seems like a very good example of the ambiguous impacts of tariffs.

You are heading in the right direction with these views. Having worked in the aid supported trade and investment promoting regional I can confirm the following: 1. There is a huge amount of hot air, papers, meetings, reports etc that achieve nothing, cost a huge amount and are an extremely inefficient attempt at promoting development. Over 30% of the time and money spent in aid supported trade & investment bodies can be spent on reporting rather than achieving. 2. The Pacific is made up of island micro nations with micro economies while most economic theory is based on experience in large developed continental nations. The exception is PNG where the arguments can be made either way - a successful job creating sugar industry has survived thanks to its granted monopoly and export trade benefits yet PNG suffers from overpriced cement and fuel due to open ended protectionism offered to foreign investors. PNG often offers overly generous terms to attract FDI. 3. Often the cost of delivering trade assistance, aid, and support far outweighs the value and benefit of what is delivered. Money is spent on activities that deliver nothing and when there is a tangible delivery the delivery cost is much too high. 4. The Pacific can't afford inefficiency with its limited resources. Costs of goods and materials need to come down but this is difficult in micro markets that can only support limited competition in many areas. Inefficient and wasteful governance is seen in government, trade and aid bodies, and regional organizations. 5. The economic text books and theory need to be rewritten to suit isolated micro island micro economies. Officials in Canberra, Wellington,Geneva & New York needs to understand that we don't live in a one size fits all world.