Why are two in five Australian aid investments rated unsatisfactory on completion?

In 2021 and 2022, two in five completed aid investments were rated as unsatisfactory by the Department of Foreign Affairs and Trade (DFAT), up from one and a half or even one in five just a few years earlier. Since 2020, the average completed investment has been rated as less than satisfactory for both effectiveness and efficiency. There is also a large and growing disconnect between the assessments of ongoing and completed investments. This report documents these recent trends in reported Australian aid performance and shows that a major factor behind them is methodological. DFAT is to be commended for having moved in 2019 to a more independent system of ratings for completed investments. However, further reforms are needed given the significantly lower ratings that have resulted. We recommend that DFAT re-establish its performance-oversight architecture – in the form of the Office of Development Effectiveness and the Independent Evaluation Committee – and strengthen other parts of its performance review and reporting system.