Five aid challenges for the new Foreign Minister

Written by Stephen Howes

The outgoing Foreign Affairs Minister Kevin Rudd was an energetic advocate for the aid program and its expansion. Whoever is the new Foreign Minister will have his or her work cut out to deliver the targeted doubling of the aid budget (formally, an increase to 0.5% of GNI) by 2015. While this remains a bipartisan commitment, its achievement is by no means a done deal in an environment of fiscal restraint and aid scepticism. The coming budget will be crucial as it will be the first in which the 3-year forward-estimates period will extend to the target 2015-16 date within which the Government will need to deliver its 0.5% aid commitment. The budget will also see the release of AusAID’s first 4-year budget strategy.

Equally compelling challenges await the new Foreign Minister on the aid effectiveness front. I focus on five here.

The main complaint of the Independent Review of Aid Effectiveness, in which I participated, concerned the aid program’s fragmentation: its splintering into too many pieces of dispersed effort which threatens to make the growing program unmanageable. We made two important recommendations in this regard, neither of which the Government has so far accepted. The first was for the aid program to exit (over time) Latin America and the Caribbean, a region of little poverty and strategic importance to Australia, into which Australian aid has only recently ventured. The second was that any additional growth in Australian aid to Africa be only through international organizations and NGOs already active on the ground, and not through further expansion of the bilateral aid program, which would mean more aid posts, staff and projects.

It is not only geographic consolidation of the aid program which is needed. We have had an Australian Council for International Agricultural Research since 1982. It funds collaborative international agricultural research. Do we really also need an Australian International Food Security Centre, which was established last year with the same remit to fund collaborative international agricultural research?

A second important challenge would be to stop focusing on the wrong issue, fraud, and start focusing on the right one, aid effectiveness. Ever since a series of media articles in 2010, fraud and its control have been a top priority for the aid program. Yet, uncovered fraud is only about 0.1% of Australia’s aid. By contrast, some 15% of all aid projects are failing, according to AusAID’s own admission, not because of fraud, but rather due to a range of factors which undermine their performance – from overly complex design to unrealistic objectives to poor management. Of course, not all aid projects should be expected to succeed, but a good aid agency is one which learns from, and tries to correct its mistakes. Certainly a shift in the spotlight from fraud, a tiny problem, to failing projects, a much bigger one, is long overdue.

A third major challenge is in the area of evaluation. AusAID’s Office of Development Effectiveness, established in 2006 to evaluate the aid program, has not produced any sectoral or country evaluations for the last two years, even though it has been working on some for several years. ODE’s last annual report – produced in December in two parts – was criticized, by myself and others, for being more an exercise in advocacy than independent evaluation (see a summary of that discussion here).

AusAID has agreed to the Aid Review’s recommendation that an Independent Evaluation Committee be established to oversee ODE’s evaluative work and strengthen its independence. Prompt action is required on this, and the overdue evaluations need at last to see the light of day. But more important than any of this will be for the Minister to send a signal that he or she actually welcomes good evaluations, critical or not, because without them the prospects for effective aid are diminished.

A fourth and related challenge is to accelerate the move to transparency. AusAID has released a Transparency Charter and has started to release more information, but there is a lot more it could do and quickly. A good place to start, as suggested here, would be to release the agency’s performance data.

Finally, there is the issue of the Minister’s title, and of AusAID’s status. While there are many who argue that aid is now so big and important that it deserves its own Minister, the Aid Review made only the cautious recommendation that the Minister for Foreign Affairs be re-titled the Minister for Foreign Affairs and International Development. Even that was a step too far for the Gillard Government. Perhaps a new Minister is an opportunity for a new title.

Related, and more important, is the issue of AusAID’s status. Despite being one of the Commonwealth’s biggest spenders, AusAID is neither a department nor a statutory agency. Rather it is an executive agency, one of six, alongside other much smaller entities such as the Bureau of Meteorology, Old Parliament House and the National Archives. AusAID should be made either a department or a statutory agency. It is big enough to warrant it, and the change would also help AusAID more effectively play its aid coordination role across government.  (See here for an example of how the Australian Federal Police opted out of the latest attempt at whole-of-government aid coordination.)

These five points by no means exhaust the aid effectiveness agenda. The risk of aid performance declining as the budget rises should not be underestimated. Defending an increasing aid budget will be important, but for the new aid spending to be effective, and for the commitments around increased aid to be durable, reforming the aid program to increase its effectiveness needs to be a priority for the new Foreign Minister.

Stephen Howes is the Director of the Development Policy Centre.

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Stephen Howes

Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

3 Comments

  • Prof Howes mentions the Aid Review’s recommendation of a ministerial post for International Development, or at least the explicit appending of ‘International Development’ to the Foreign Affairs portfolio. A Minister for International Development is a move that many in the development community would support and indeed see as long overdue. The Government’s reticence to establish such a portfolio seems to be at least in part from electoral nervousness and timidity about its commitment -ostensibly with bi-partisan support – to increasing foreign aid spending in a context of ‘fiscal constraint and aid scepticism’.

    One observation of Kevin Rudd’s time as foreign minister, was that although he was as Prof Howes rightly points out, a strong advocate for Australia’s aid program, that seemed rarely to translate into sustained public (eg media) championing of Australian aid. It could be argued that the government felt politically vulnerable to a withdrawal of bipartisan support and therefore did not confidently champion Australian aid to the nation – more a ‘don’t mention the war!’ approach. While perhaps intended to protect the aid program as an expenditure domain from too much public or political scrutiny in fiscally challenging times, it has potentially made it more vulnerable, as many Australians are’nt aware of its many achievements in recent years. There is a place for honest and transparent public discourse about the program’s shortcomings, as Prof Howes makes abundantly clear. But that discourse should be within a broader acknowledgement of what is good and improving in the program – 15% fail rates means 85% of projects aren’t failing. While this needs to drastically improve, and despite its legitimate criticisms, Australian aid is saving and improving lives. Sadly, few Australians understand to what extent that is the case.

    Perhaps there is an opportunity for Senator Carr to be a very public, if warts-and-all-honest champion and advocate for what is being achieved through Australian aid. Very public leadership of Australia’s aid program, such as that seen under Gordon Brown and now Andrew Mitchell and David Cameron in the UK, can strengthen public support, and thereby create a more confident space for honest but constructive critique and development of our international development program. Hiding the light – and the dark, embarrassing bits – of Australian development assistance under a political bushel is not in the interests of the Australian people, or those assisted by our (God-willing) expanding and improving program.

    • Hi DJ Konz – I suspect (and I admit this is purely speculation on my part) that a big part of the reluctance to establish a Department for International Development in Australia is the desire to keep the aid program closely aligned to the foreign affairs portfolio – the Security Council agenda in particular. Elevating AusAID to a Department would move the Agency away from DFAT’s influence. AusAID’s ability to quickly bring ‘resources’ to the table (in the form of projects or programs) as nascent diplomatic relationships are formed is an extremely useful asset for DFAT. Of course this only holds as long as the pursuit of Security Council status is an overriding foreign policy objective. It remains to be seen if the new Minister for Foreign Affairs sees it as such.

  • I agree wholeheartedly with Stephen’s first three proposals – reduced fragmentation, improved evaluation and greater aid transparency. Hopefully in each of these areas significant improvements are currently being implemented: by cutting sectoral spread in each country, through a simpler, easier to understand and outcome-focused performance framework and through implementation of the Aid Transparency Charter.

    Yet as Stephen points out there is much more to do in each of these areas. Aid transparency for me particularly stands out. When at least the ten biggest country programs have updated web pages with the promised new level of detail and when the IATI activity data is complete and just one quarter behind then I think we can say there has been some real movement in terms of transparency.

    I’ll pass on Stephen’s fourth and fifth priorities and instead suggest two others: ensuring accountability to affected communities and getting serious about the aid program objective of “saving lives”.

    AusAID is working to improve accountability to Australian civil society, the Australian Cabinet and to partner developing countries – we need a similar effort to build accountability to the communities touched by our aid – in the interests of both justice and effectiveness.

    The first strategic goal of the aid program is “saving lives”. The intrinsic importance of action in this area and its proven effectiveness demands that it be given a greater share of aid funding. Health should join education as the second flagship funding area of the program and all country strategies should ensure that health assistance is adequately covered by the donor pool before considering support for any other sector. We wouldn’t neglect health in budgeting for the Australian population and we wouldn’t in planning emergency aid, yet this is what is happening with Australia’s long term development assistance. Aid for health needs to rise from around 14% of the program to around 20% (25% when including funding for sanitation and water) if we are to meet the commitments we have made to cut maternal and child deaths, to provide universal treatment for HIV/AIDS, TB and malaria and to provide family planning.

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