Where is your AID money going?
The Australian government will spend $4.3 billion on foreign aid in 2010-11. Aid spending is often seen as a selfless and philanthropic exercise for the benefit of people in less wealthy countries. In reality, aid is often driven by Australia’s national political and commercial interests.
What is aid?
In recent years Australian aid figures have been inflated by the inclusion of spending on:
- controlling ‘irregular’ immigration and upgrading of detention facilities in Indonesia;[1]
- training Burmese intelligence officers and counter-terrorism workshops;[2]
- cancellation of debt, which is contrary to international agreements.[3]
The reality of Australian government aid
Concerns have been raised not only over the amount of aid Australia gives, but also the quality and effectiveness of aid. In particular, concerns have been raised about:
- the corporatisation of aid, that results in aid money going into the pockets of Australian companies, consultants and advisers instead of the people who need it most;
- unfair conditions on aid money that privilege Australian companies and national priorities at the expense of local self-determination;
- aid facilitating a trade liberalisation agenda, often at the expense of local livelihoods;
- securitisation of aid, which has seen increased Australian police presence in the Pacific in the name of good governance. This has been motivated by Australia’s national security interests rather than the relief of poverty.
- Technical Assistance - Technical Assistance (TA) funding often goes to experts (usually from Australia) to assist people in developing countries develop skills in particular areas. Internationally, TA has been a source of considerable criticism due to its high cost and lack of effectiveness in developing capacity.[5]
- Aiding Climate Change - The impacts of climate change are being felt most harshly by the poor worldwide, and not least in the Pacific Islands. Australia’s climate aid is not only inadequate, but a large portion is being misspent on controversial carbon offset schemes in Indonesia and PNG. [6]
Multilateral development agencies
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Australia gives more money to theWorld Bank and the Asian Development Bank (ADB) than to United Nations agencies and programs.
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The World Bank and ADB in particular have been criticised for conditionality of their loans, undemocratic governing structures, and funding large-scale projects that undermine people’s lives and livelihoods.
Non-Government Organisations (NGOs)
Many people see NGOs as the main agents of development. However only $135 million of Australias $4.3 billion 2010-11 aid budget is allocated to NGOs and community engagement programs, this amounts to a mere 2.5%.[7]
For most NGOs, it is donations from philanthropic individuals and organisations, rather than government funding, that keep them going.
Find here some of the key considerations to take into account when deciding which NGO to donate to.
Take Action
AID/WATCH is gearing up for a broad campaign to change Australia’s aid policies and practices. And we need your help!
Last updated 15 November 2010 Next page
[1] Australian Government, Budget 2010-2011, Budget Paper No. 2, Immigration and Citizenship. http://www.budget.gov.au/2010-11/content/bp2/html/bp2_expense-15.htm
[2] Goodman, J. (2007) The Australian aid program: Aiding the Burmese Intelligence systems. AID/WATCH, Sydney.
[3] United Nations (2003) Monterrey Consensus of the International Conference on Financing for Development, p10. http://www.un.org/esa/ffd/monterrey/MonterreyConsensus.pdf
[4] Doran, C. (2007) Determining Their National Interest: Australia’s Economic Intervention in Iraq, AID/WATCH, Sydney.
[5] ActionAid (2006) Real Aid 2: Making Technical Assistance Work. http://www.actionaid.org.uk/doc_lib/real_aid2.pdf
[6] Goodman, J. and Roberts, E. (2010) Australian REDD Aid to Indonesia – Ineffective and Unjust. In Reality of Aid 2010, Aid and Development Effectiveness: Towards Human Rights, Social Justice and Democracy, Reality of Aid, Manila. Pp 53-60. http://www.realityofaid.org/roa-reports/index/secid/375/part/1
[7] Australian Council For International Development, Aid Budget Analysis 2010/11, June 2010 p7 http://www.acfid.asn.au//resources/docs_resources/docs_papers/ACFID%20Bu... , p3
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What is aid?
Wealthy donor countries set the guidelines for defining “Official Development Assistance”. This allows donors to artificially inflate the amount of aid they claim to provide by including items which do not contribute to poverty alleviation.
In addition, there are many misconceptions about aid, trade and foreign policy which affect our analysis of Australia’s and other nation’s aid programs.
Contemporary approaches to aid and development follow a long history from colonialism and post-colonialism through the post-World War II establishment of the United Nations and other international institutions. An understanding of this history enables us to appreciate the structural inequalities and imbalances in power in the global community.
In recent years, some new players have emerged in the aid environment. These developments reflect changes in global power relations. This includes states such as China and Taiwan taking on roles as key bilateral donors and the growth of private actors as donors. The growth of philanthropy and private capital flows in aid may be seen a reflection of the increasing power of private capital in the global economy, vis a vis nation states.
Aid priorities are subject to various differences of opinion between AusAid, NGOs and others. There are competing views on issues such as:
- aid for development driven by economic growth
- security interests
- increased recipient autonomy
- grassroots development.
The official objective of Australia’s overseas aid program is “to assist developing countries reduce poverty and achieve sustainable development, in line with Australia’s national interest”.
- Aid should be first and foremost guided by the needs of communities, allowing communities to determine their own development needs
- Aid should promote local ownership and sustainability
- Aid should be based on principles of social and environmental justice and support sustainable and long-term self-determination.
- Aid should be a mechanism of global social responsibility; not a tool for Australia’s national interest.
- The final outcome of aid should be to remove the need for aid
The international community addresses the conflicting views on aid priorities through initiatives such as the Millennium Development Goals and the Paris Declaration, intended to render aid more effective in alleviating poverty.
Myths about aid
NGOs get all the money
NGOs receive less than 10% of the Australian aid budget.
A much larger proportion of Australian aid is in fact paid to private (mostly Australian) corporations[i]
“Developing countries need Trade not aid”
Trade alone is not enough to reduce poverty. Harsh free trade policies increasingly pushed on ‘developing’ countries by rich, western governments often do more harm than good.
Chronically poor communities “are often not in a position to take advantage of economic growth”[ii]. Many countries that experienced large increases in economic productivity, such as Brazil and Mexico, also experienced sharp increases in income inequality with no increase in living standards for the very poorest people.[iii] A 2007 World Food Program Survey found that every second rural child in Lao PDR was chronically malnourished and that there had been no improvements in this chronic malnutrition over the past 10 years[iv] despite strong GDP growth in that period (4-7% per year[v]) . The experience of Pacific Island communities further challenges the much repeated mantra that ‘growth is good’. According to Tim Anderson:
“The orthodox economic argument for policies aimed at ‘broad based growth’ (the benefits of which are said to ‘trickle down’) is particularly thin in PNG, a food rich country with a huge subsistence sector. If subsistence farming is displaced by corporate industries which do not both outweigh the value of subsistence production and evenly distribute the benefits of that production, people will be worse off. Economic growth by itself means little in PNG.”[vi]
Export-driven global trade is also a key accelerator of global warming. Climate change will have a devastating effect on the world’s poor, particularly communities living along coastal areas.
“Aid can help Australia and poor countries at the same time”
Australian aid motivated by our own security and commercial interests has frequently ignored the needs of the poor. Two of AusAID’s largest projects during the last five years, the Enhanced Cooperation Program (ECP) to Papua New Guinea and the Regional Assistance Mission to the Solomon Islands (RAMSI) were heavily motivated by Australia’s security interests in the region rather than direct poverty alleviation. Australian assistance to Iraq has also been dominated by a narrow pursuit of economic interests dealing little with the reconstruction of Iraq.[vii]
A recent IMF report also points to the influence of other interests in government aid allocation. Governments and NGOs have committed to working to meet the Millennium Development Goal on reducing infant mortality. However, an IMF investigation revealed that NGO aid favours countries with high infant mortality, where as bilateral (government) aid actually favours countries with already lower infant mortality. The IMF found that “NGO aid significantly reduces infant mortality while bilateral aid does not.” [viii]
Last updated 12 November 2010
[i]‘Who profits from our foreign aid? Where the little known dominate’
http://www.crikey.com.au/2010/07/23/who-profits-from-our-foreign-aid-carving-up-the-pie-where-the-little-known-dominate/
Accessed 29th October 2010
[ii] UK Department For International Development – Research for Development http://www.dfid.gov.uk/r4d/chronicpovertyfeature.asp
[iii] Hensman, C.R, Rich Against Poor: the Reality of Aid, Middlesex, England: Penguin Books Limited, 1975.
[iv] Lao PDR Comprehensive Food Security & Vulnerability Analysis - December, 2007, World Food Programme, Vulnerability Analysis and Mapping Branch, p13.
http://documents.wfp.org/stellent/groups/public/documents/ena/wfp178397.pdf
[v] Promotion of Renewable Energy, Energy Efficiency And Greenhouse Gas Abatement (PREGA) Lao PDR, May 2006, UNCAP, Green Growth, p12.
[vi] Anderson, Tim. Australia pushing the new colonial agenda in PNG, Post Courier, PNG, 13 December 2004.
[vii] Doran,Chris. Determining their National Interests: Australia’s Economic Intervention in Iraq, AID/WATCH, 2007.
[viii] Does Foreign Aid Reduce Poverty? Empirical Evidence from Nongovernmental and Bilateral Aid - IMF Working Paper, IMF Institute, Nadia Masud and Boriana Yontcheva, 2005, p20. http://www.imf.org/external/pubs/ft/wp/2005/wp05100.pdf
What is NOT aid?
ODA is not limited to funds spent by Australia’s aid agency, AusAID. You may be surprised to learn that Australian aid figures are inflated by including spending on:
- controlling ‘irregular’ immigration and upgrading of detention facilities in Indonesia;[2]
- training Burmese intelligence officers and counter-terrorism workshops;[3]
- cancellation of debt, which is contrary to international agreements.[4]
Debt cancellation:
- Is a crucial step forward for developing countries;
- Releases them from unfair repayments, many of which were accrued by undemocratically elected dictators or through irresponsible lending by donors;
- Repayments divert much needed government funds away from programs addressing social problems affecting health, education and local infrastructure;
Debt cancellation should not be regarded as official development aid. Wealthy countries must take responsibility for their complicity in generating the global debt program through unscrupulous trade policies.
Australia's Debt Cancellation
Debt cancellation is usually counted as an expense for the Department of Foreign Affairs. However, in the 2008-09 budget $238.2 million in debt cancellation for Iraq was included as ODA. An additional $668 million had been included in the previous two financial years. Australia’s 2010 contribution to the Multilateral Debt Relief Initiative (MDRI) is also included in the budget and amounts to $22.6 million.[5]
Many countries, particularly in Scandinavia, do not include debt cancellation as part of their ODA. In fact, Norway has gone a step further, accepting shared responsibility for having played a role in the global debt problem due to irresponsible lending policies.
Counting debt cancelation as part of Australia’s aid program artificially inflates the size of our aid budget.
Scholarships
Aid figures are also inflated through the inclusion of scholarships supporting students from developing countries to study in Australia.[8]
Scholarships:
- Bring financial benefits to Australian institutions:[9]
- Are funded through the Australian Scholarships Initiative to the tune of $1.4 Billion of aid money every 5 years:[10]
There is little evidence to suggest that scholarships deliver any significant benefit (in terms of poverty alleviation or otherwise) to the students’ home countries.
By contrast, significant evidence exists that direct spending to national education within recipient countries leads to poverty alleviation[11]; yet Australia’s aid initiative for national education receives only $540 million over 5 years[12]– one third of the amount spent on scholarships!
Aid funding in grants or loans?
Half of Australia’s 2005 tsunami aid package to Indonesia took the form of an interest-free loan requiring repayment[13]. Although the conditions of loans provided as aid are more lenient than those in private capital markets, the obligation to pay them is no less a burden.
In addition, the decision of where the loan money is spent is made by Australia and the governing elite in developing countries, yet the people who will pay back the loan are the children of the poor majority of those countries.
According to James K. Boyce the “default setting is for aid to flow to those who wield power” rather than directly to the people who need it most.[14]
To change this, donors have to make a conscious effort in determining where their aid money goes, paying close attention to inequalities which exist across income classes as well as racial, ethnic, linguistic, religious, and cultural divides. Donor nations must consider not only which countries, but who within those countries, receive and control aid.
Find out more about AID/WATCH's priorities for aid and the policy changes which we would like the Australian Government to take.
Last Updated November 15 2010 Next page
1 Reality of Aid, 2006, Online http://www.realityofaid.org/roareport.php?table=roa2006&id=5 accessed June 2008
[2] Australian Government, Budget 2010-2011, Budget Paper No. 2, Immigration and Citizenship. http://www.budget.gov.au/2010-11/content/bp2/html/bp2_expense-15.htm
[3] Goodman, J. (2007) The Australian aid program: Aiding the Burmese Intelligence systems. AID/WATCH, Sydney.
[4] United Nations (2003) Monterrey Consensus of the International Conference on Financing for Development, p10. http://www.un.org/esa/ffd/monterrey/MonterreyConsensus.pdf
[5] AusAid 2010-11 Budget Summary p.60
[6] Doran, C. (2007) Determining Their National Interest: Australia’s Economic Intervention in Iraq, AID/WATCH, Sydney, p.12.
[7] PM commits nation to war March 20, 2003
http://www.smh.com.au/news/After-Saddam/PM-commits-nation-to-war/2003/09/15/1078191366124.html
[8] AusAid, Scholarships Overview, http://www.ausaid.gov.au/scholar/pdf/overview.pdf
[9] EURODAD, 2006, ActionAid, 2006, Reality of AID, 2006 Op Cit.
[10] 2007-08 Federal aid budget statement,p25
[11] Simon Appleton, Education, Incomes and Poverty in Uganda in the 1990s, Centre for Research in Economic Development and International Trade, University of Nottingham, United Kingdom, P.5.
http://www.nottingham.ac.uk/economics/credit/research/papers/CP.01.22.pdf
Servaas van der Berg, Poverty and Education, International Academy of Education, p.1.
http://www.iiep.unesco.org/fileadmin/user_upload/Info_Services_Publications/pdf/2009/EdPol10.pdf
[12] 2007-08 Federal aid budget statement,p25
[13] AID/WATCH, International Response to the Indian Ocean Disaster: a donor analysis focus on Australia, 2005
[14] James K. Boyce, ‘Unpacking aid’, Development and Change, 2002, 33(2), pp. 239-246
A brief history of aid
[i] For more, see Hunt J., ‘Aid in an era of globalisation’, Dialogue: Journal of the Academy of the Social Sciences in Australia, 22:3/2003, pp 4-11.(9) Louis Emmerij, 2002, “Aid as a flight forward”, Development and Change, 33(2), pp. 247-260.
[ii] Louis Emmerij, 2002, ‘Aid as a flight forward’, Development and Change, 33(2), p.239-246.
[i] The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action, OECD, 2008 http://www.oecd.org/dataoecd/11/41/34428351.pdf
Resources for research on the history of foreign aid
http://www.britannica.com/EBchecked/topic/213344/foreign-aid/256255/History
The emergence of new donors
In recent years, China and Taiwan have emerged as significant donors in the Asia-Pacific region. Concerns have been raised from traditional donor nations such as Australia, with both nations accused of:
- Exchanging aid funds for political and diplomatic purposes;
- A lack of cooperation with other donors;
- Operating a ‘no questions asked’ approach to aid, which fails to encourage ‘good governance’ or engage with international aid effectiveness criteria;[i]
- Beyond the Asia-Pacific, Britain has warned that China’s unconditional aid and cheap loans in Africa risks driving countries back into debt and undermines efforts to create democratic and accountable administrations.[ii] However, China has described its aid program as a “strategic partnership with Africa, featuring political equality and mutual trust, economic win-win cooperation”.[iii] Both China and Taiwan have proved vulnerable to donor criticisms and have signalled an increased willingness toward international cooperation and away from their so-called ‘dollar diplomacy’ approach.
Criticisms from Britain, Australia and other traditional donor nations may have some merit, however they are also highly hypocritical. Most nations seek to pursue their own economic and national interests through programs of foreign aid, including the Australian government.
[i] Strings Attached: China’s Pacific aid under the spotlight’ABC News, 22nd June 2008. Online http:// www.abc.net.au/news/stories/2008/06/22/2282018.htm , Accessed 12th September 2008
[ii] The Guardian, ‘Chinese aid to Africa may do more harm than good, warns Benn’ 8th February,2007
[iii] Ibid.
Philanthropists
How does philanthropy fit in with the established aid players?
Philanthropic donors and bilateral government agencies are increasingly adopting joint partnerships, with public private partnerships (PPPs) being the most dominant form of collaboration. After signing a Memorandum of Understanding in February 2006, AusAID pledged $25 million over a four year period to a collaborative partnership with the William J. Clinton Foundation.(16) Aimed at addressing HIV/AIDS in the Asia-Pacific region, the Clinton Foundation and AusAID are working together with public health authorities in countries like PNG, China and Indonesia to scale-up treatment and care for people living with HIV/AIDS.
As with many institutions involved in aid, philanthropic foundations are to varying degrees open and democratic. Generally they do not give grant recipients or the communities in which they operate the ability to hold them to account.(20) To respond to this it is essential there be mutual accountability. This refers to the parties within a partnership being accountable to one another for their actions and the honouring of agreements. This approach is difficult to measure, however, and requires the philanthropic individual or body to take a degree of responsibility for how the money they give away is used.
(14) L ucy Bernholz, Creating Philanthropic Capital Markets: The Deliberate Evolution. Wiley, US, 2004. (15) Philanthropy Australia, Tax Concessions for Arts Donations: Australia, US, UK, Canada. Australia, 2001, pg.1. (16) AusAID, AusAID-Clinton Foundation Partnership.http://www.ausaid.gov.au/keyaid/hivaids/foundation.cfm accessed 28th May 2008. (17) Bill & Melinda Gates Foundation, Foundation Fact Sheet, http://www.gatesfoundation.org/MediaCenter/ FactSheet/default.htm accessed 10th May 08. (18) World Health Organisation, Programme Budget 2008-09 (19) Arata Kochi cited in The side-effects of doing good. The Economist, New York, 23/02/2008. (20) Peter Frumkin, Trouble in Foundationland: Looking Back, Looking Ahead. Bradley Centre for Philanthropy and Civic Renewal, Hudson Institute.
What are aid priorities?
Priorities of AusAID
The official objective of Australia’s overseas aid program is “to assist developing countries reduce poverty and achieve sustainable development, in line with Australia’s national interest”.[i] The 2006 White Paper, Australian Aid: Promoting Growth and Stability set out a policy framework for the aid program, with economic growth and regional stability at the centre of Australian aid. The paper set out four key themes:
- Accelerating economic growth
- Fostering functioning states
- Investing in people
- Regional stability and cooperation
The Howard Government maintained that accelerating economic growth was the foundation of aid effectiveness, contrary to international action plans in the Millennium Development Goals and 2005 Paris Declaration on Aid Effectiveness.
Delivering aid in line with Australia’s own national interests has seen aid used as a tool to promote strategic and commercial concerns over poverty alleviation. This has led to significant increases in funding to governance programs and decreases in funding for health and education over the last ten years.
An Aid/Watch survey showed that only 4% of Australian community members support using aid to advance Australia’s strategic interests, as opposed to 43% of Australian Parliamentarians[ii].
The new Labor government: a new beginning or more of the same?
The change of government in 2007 hailed some changes in Australian aid, however much still needs to be done to make our aid more effective. Setting the Millennium Development Goals (MDGs) as aid effectiveness benchmarks and committing to increasing levels of aid are good first steps. The Labor government has so far been very strong on symbolism with ‘partnerships’ and ‘mutual responsibility’ being the new aid rhetoric. However, there is still a long way to go to meet international aid targets and many aid practices remain unchallenged, such as Australia’s high levels of Technical Assistance and the use of tied aid (Link to :see 'Australian government' aid web section). AusAID’s priority of national interest in aid also remains unchanged.
[i] http://www.ausaid.gov.au/about/default.cfm Accessed 29th October 2010
[ii] Aid Watch, Attitudes to Aid - Survey p4.
Reality of Aid and NGOs
The Reality of Aid (RoA) project is the only major North/South international initiative focused exclusively on analysing and lobbying for poverty eradication policies and practices in international aid. The RoA network believes that aid must have a clear, exclusive focus on poverty: The promotion of donor short-term foreign policy interests, so common over three decades in the allocation of aid resources, must give way to a mandate for ODA that focuses exclusively on poverty reduction and the rights of poor and vulnerable people.(22)
Vulnerable people include indigenous groups, persecuted ethnic groups and classes, as well as victims of environmental degradation. The priority given to security, which focuses mainly on the Western preoccupation with the ‘war on terror’, must be removed from the official criteria of aid. Instead, international assistance needs to be guided by international human rights and humanitarian laws, closely aligned with the United Nations’ Millennium Development Goals.
From this perspective aid must also promote local ownership in conflict resolution, which will ensure peace is a process owned by locals, not introduced from the outside. Aid should support and protect spaces for inclusive processes allowing the people involved to build frameworks for peace. Donors must assist by investing in conflict prevention, which can reduce the costly reconstruction of societies hit by conflict.
The RoA network promotes donor harmony with bilateral, multilateral organisations and NGOs working towards the same goal of poverty alleviation guided by a collective focus on human rights.
Another voice in the aid debate is Make Poverty History (MPH). MPH is a “non-partisan coalition of more than 60 aid organisations, community and faith-based organisations” which encourages all political parties to move towards achieving the Millennium Development Goals by 2015. MPH argues that aid is an important strategy for achieving the MDGs.
However, if aid is to work effectively in assisting the poor it needs to be accompanied by a just global trade environment.
(22) For a more detailed breakdown of aid trends and themes, see the 2006 Reality of Aid report online http://www.realityofaid.org/roareport.php?table=roa2006&id=5
Southern Groups
The Foundation of the People of the South Pacific International (FSPI) is a network of NGOs which focuses on people-centred programs in Pacific communities that foster self-determination and self-reliance.
Many Southern CSOs and NGOs like FSPI advance the rights of southern citizens by promoting more effective states, essential services in health and education and the autonomy of diverse peoples. They view aid, not as service provision, but as support for their activities that promote social justice and self-reliance. This contrasts with many aid programs delivered by government agencies and development NGOs from rich donor countries like Australia.
Case Studies: Alternative Development Approaches
[1] UN FPA ‘Population Issues’ Online http://www.unfpa.org/pds/urbanization.htm Accessed 12th June 2008
[2] http://sdinet.org/rituals/ritual9.htm Accessed 29th October 2010
AID/WATCH
- Aid should be first and foremost guided by the needs of communities, allowing communities to determine their own development needs;
- Aid should promote local ownership and sustainability;
- Aid should be based on principles of social and environmental justice and support self-determination;
- Aid should be a mechanism of global social responsibility; not a tool for Australia’s national interest;
- The final outcome of aid should be to remove the need for aid.
These priorities require significant work at the grassroots level and towards a restructuring of global development finance.
Last Updated November 15 2010 Next page
Millennium Development Goals and the Paris Declaration
Millennium Development Goals
The United Nation's eight Millennium Development Goals (MDGs) focus on key social factors that are crucial to poverty alleviation:
- Eradicate extreme poverty and hunger
- Achieve universal primary education
- Promote gender equality and empower women
- Reduce child mortality
- Improve maternal health
- Combat HIV/AIDS, malaria and other diseases
- Ensure environmental sustainability
- Develop a Global Partnership for Development.10
Although the MDGs have been justifiably criticised for their top down, one-size-fits-all approach, they unite international development efforts around the single focus of tackling poverty. The Reality of Aid Network has recently released a detailed assessment of the MDGs and the progress of donors with regard to this.
The Paris Declaration on Aid Effectiveness
- The 2005 Paris Declaration on Aid Effectiveness makes further progress towards improvements in international aid but it does not go far enough.
- The Declaration is limited by a failure to place human rights and justice at the heart of development. It fails to redress the imbalance of power between donors and recipients[i] and it has weak targets.
- The Reality of Aid Network believes that without redressing these failures the Paris Declaration will not be enough to alleviate poverty [ii]
According to a 2008 OECD survey, Australia’s progress in its commitment towards the Paris Declaration target is far behind the other donor countries.
Australia’s progress in implementing the Paris Declaration (2008)[i] 
[i] AusAID's Management of the Expanding Australian Aid Program, The Australian Agency for International Development (AusAID), Australian NAtional Audit Office, Attorney-General’s Department, ACT, Australia, 2010 p96.
[i] Reality of Aid 2008 Report (Abridged version) page 4
[ii] 1Reality of Aid 2008 Report (Abridged version) page 23
Australian government aid
The official objective of the program is to 'assist developing countries to reduce poverty and achieve sustainable development, in line with Australia’s national interest'.[1]
While providing aid in line with Australia’s national interest might seem like a good idea, there are often times when these interest conflict with those of the people the aid is supposed to be assisting. When this occurs, the ability of the aid to combat poverty is often compromised and in same cases it can result in the aid doing more harm than good.
Australian aid delivery and priorities are criticised for their close relationship to national political and commercial interests, these are reflected in a number of concerning trends:
- the corporatisation of aid: aid delivered primarily through for-profit companies often results in aid funds going into the pockets of Australian companies, consultants and advisers instead of the people who need it most;
- unfair conditions on aid money that privilege Australian companies and national priorities at the expense of local self-determination;
- aid facilitating a trade liberalisation agenda, often at the expense of local livelihoods;
- securitisation of aid: aid motivated by Australia’s national security interests rather than the relief of poverty. This has seen an increase in Australian police presence in the Pacific in the name of good governance and regional stability.
- Climate aid funding which is inadequate, in breach of UN commitments and misspent
Australia will spend $4.3 billion on its aid program this year, equal to 0.33% of GDP, far below the average of 0.48% and the international target of 0.7%.[2] The Australian aid program focuses on the Asia-Pacific region, although we increasingly provide aid to Africa and the Middle East.
Aid figures alone do not tell us much about the quality of our aid program or even the true quantity of government aid. Australia, like many other countries, inflates its aid figures by including expenditure which is not focused on poverty alleviation.
How does Australian government aid measure up internationally?
A good benchmark to compare Australia to is Denmark, a country that is often cited as having one of the better aid programs both in terms of the amount of aid it provides and its overall effectiveness in addressing poverty. In comparison Australia’s program suffers due to the low quantity of aid, as well as high levels of tied aid and excessive levels of technical assistance.
Last updated 15 November 2010
[1] AusAID Corporate Plan – 2006 to 2010, AusAID http://www.ausaid.gov.au/publications/pdf/corplan06.pdf last accessed 11 Nov [Emphasis added]
[2] Australian Council For International Development, Analysis: AID BUDGET 2010/11, June 2010, http://www.acfid.asn.au//resources/docs_resources/docs_papers/ACFID%20Budget%20Analysis%20revised%20June%202010.pdf
Australian aid picture
Australia’s policy of prioritising its national interests means that aid does not always reflect the priorities and needs of recipient countries and communities. This also creates a dramatic power imbalance between Australia and aid recipient countries. More often than not, Australian aid reflects the political and commercial interests of Australia. In 2003 the words of PNG Prime Minister, Michael Somare indicated how aid funding with such an imbalance in power plays out:
"[Australia’s] aid money is totally controlled by them. They decide how much money they want to spend on PNG and on what projects. They keep the money in Australia. They manage it through AusAID. They appoint their own companies in Australia to manage the projects. They decide on who carries out the projects.[2]"
Source: http://www.sxc.hu/
The 1997 Simons Review of Australia’s aid program recommended a shift away from the foreign policy and commercial objectives of aid in favour of ‘One Clear Objective’ an aid program focused on poverty alleviation and sustainable development. Unfortunately, more than ten years on, Australian aid still falls short of incorporating this recommendation.
The adoption of the Millennium Development Goals as the benchmark for the Australian aid program by the Labor government was a welcome development. In 2008 the government also committed to “beginning a new era of cooperation with the island nations of the Pacific”– one based on “partnership, mutual respect and mutual responsibility.” (See Port Moresby Declaration)
The rhetoric, however, has not been matched by meaningful action. The Australian Government continues to use its position as a major aid donor and trading partner in the region to push its own interests on issues of critical importance to the Pacific islands such as trade and climate change.
[1] AusAID Corporate Plan – 2006 to 2010, AusAID http://www.ausaid.gov.au/publications/pdf/corplan06.pdf last accessed 11 Nov
[2] PNG Post Courier, Sept1, 2003
Last updated 12 November 2010
Australian aid aids Australia
Aid figures alone do not tell us much about the quality of our aid program or even the true quantity of government aid.
According to international research the practice of inflating aid figures is a common problem in the international donor community. Australia is no exception.
AID/WATCH research in 2007 revealed that nearly a billion dollars in aid was not poverty focused[1] or directly working towards meeting the internationally agreed Millennium Development Goals (MDGs).
In addition:
- Australia’s 2010/2011 aid budget provides aid funds for controlling ‘irregular’ immigration and upgrading of detention facilities in Indonesia;[2]
- Aid money is being used to fund REDD pilot schemes in Indonesia and PNG where “the Australian Government very explicitly states that the primary purpose for these pilots is to influence the international negotiating agenda for a post-Kyoto climate agreement” [3]
- In 2003 Australian aid funds paid up to a million dollars for the salaries of Australian Wheat Board executives to pursue corrupt wheat deals in Iraq at the time of the allied invasion.[4]
- Around AUD600 million of Australia’s 2010-11 aid money will be spent on AusAID departmental, ACIAR and other Australian government departments. AusAID did not provide information about which other government departments would receive this funding.[5]
Australia follows the Organisation for Economic Cooperation and Development (OECD) guidelines for determining what counts as Official Development Assistance (ODA). This has allowed Australian aid to be spent not only within AusAID but any form of government department expenditure that fits the criteria set by the OECD’s Development Assistance Committee (DAC). Since the criteria is determined by donor governments, it is prone to reflect donor interests and legitimise aid trends such as security-focused aid.
While it may be reasonable for Australian Government funding to support Australia’s national interests in the above mentioned ways, such funding should not be considered as ‘aid’, as they do not contribute to the aid goals of long term poverty alleviation and sustainable development.
[1] AID/WATCH, Fighting Poverty or Fantasy Figures? The Reality of Australian aid, Flint Duxfield and Kate Wheen, May 2007
[2] Australian Government, Budget 2010-2011, Budget Paper No. 2, Immigration and Citizenship. http://www.budget.gov.au/2010-11/content/bp2/html/bp2_expense-15.htm
[3] Friends of the Earth Australia, Aid/Watch, WALHI, & Serikat Petani, What a Scam!Australia’s REDD offsets for Copenhagen, November 2009
[4] Doran, C. (2007) Determining Their National Interest: Australia’s Economic Intervention in Iraq, AID/WATCH, Sydney.
[5] Australian Council For International Development, Aid Budget Analysis 2010/11, June 2010 p7 http://www.acfid.asn.au//resources/docs_resources/docs_papers/ACFID%20Bu...
Last updated 14 November 2010
Australian aid distribution at a glance
Australia’s aid spending of approximately $4.3 billion for 2010-11 currently sits at 0.33% of the Gross National Income (GNI).[1]
Whilst both the major political parties have made a commitment to increase the aid budget to 0.5% of GNI by 2015, this still falls short of the internationally agreed target of 0.7%.
Some of the larger country and region recipients for 2008-11
Further reading on Australia’s aid to the Pacific:
Articles from AID/WATCH website
- Moratorium needed on Pacific trade talks, warn Pacific Civil Society Organisations*
- Pacific Islands Trade: a year's worth of bad outcomes
- Public forum in Sydney on Australian aid to Pacific
- We are the Pacific's Best Frenemy
- Masking false assumptions in Australia's aid delivery
- PNG Aid Money Wasted*
- Foreign Aid Spending*
- More pressure on Australia's aid program*
- Concerns over land reform policies in Melanesia*
- Aid workers earning more than Rudd
- Australia Talks - Overseas Aid*
- Australian Overseas Development Assistance and the Rural Poor
- Our Aid Dollars Not Reaching Those In Need
- Take the pace out of PACER
- 'Little to be seen' for Timor aid
- Australian foreign aid to East Timor 'wasted'*
- Australia's 'boomerang aid' slammed*
- Defence deal alarms aid workers*
- Australia's Defence Dept and aid agency AUSAID sign agreement*
- Concerns Laos-Australia aid being 'corporatised'*
- Is Australia Genuine About a "New Approach" to the Pacific?
- When tax-free salaries count as aid*
*Articles that mention AID/WATCH
[1] AusAid, 2010-11 Budget
Last updated: 12 November 2010
How do we measure up internationally?
Whilst Denmark does not give much more aid than Australia in terms of dollar amounts, as a percentage of Gross National Income (GNI), Denmark’s spending of 0.88% of GNI is almost 3 times that of Australia.[1] Denmark is also one of only five countries to achieve the UN target of 0.7% of GNI. The current average spending for OECD member countries is 0.48%.[2]
Australia and Denmark’s aid policies differ significantly in terms of focus. While Australia’s aid program emphasises development and poverty “in line with Australian interests”, Denmark places much more emphasis on achieving the Millennium Development Goals (MDGs). Australia’s increasingly security-oriented approach to aid since 2001 also starkly contrasts with Denmark’s strong poverty-oriented approach.
Denmark’s aid strategy is characterised by a clear, overarching policy objective based on political consensus. Denmark has ensured accountability at all levels: political, official and public. Its aid strategy is credited for being highly inclusive of public input (i.e. through NGOs), and is consensual and transparent. For instance, it has been a great supporter of local NGOs in an effort to increase public awareness on aid. This is essential to sustain high levels of aid spending. In contrast only $135 million of Australia’s $4.3 billion 2010-11 aid budget is allocated to NGOs and community engagement programs, this amounts to a mere 2.5%.[3]
Unlike Australia, Denmark does not include debt service as aid, a practice that artificially inflates the size of the aid budget. Denmark has also considerably reduced the amount of tied aid (currently running at around 3% of its total ODA) and expressed the determination to eventually untie all its aid. Australian aid, on the other hand, is dogged by claims of “phantom aid” with much of the program lacking a clear poverty alleviation focus.
Last updated 12 November 2010
[1] http://webnet.oecd.org/oda2009/ (accessed 9 September 2010
[2] OECD Net ODA Assistance Table http://www.oecd.org/dataoecd/17/9/44981892.pdf
[3] Australian Council For International Development, Aid Budget Analysis 2010/11, June 2010 p7 http://www.acfid.asn.au//resources/docs_resources/docs_papers/ACFID%20Bu... , p3
Australian aid priorities
Issues to watch out for in the aid program
- Aiding Australia's national interest
- Aiding Governance
- Technical Assistance
- Security interests in aid
- Aiding climate change
- Commercial interests in aid
Last updated 14 November 2010
Governance
Governance
Governance is a funding priority of the aid program which increased significantly in the post-September 11 security environment, peaking in 2005/06 at 36% of ODA. In the same year health, education and infrastructure spending made up 33% of ODA combined. Of the governance spending, 47% went to “Law and Justice” and a mere 2% for “Improved Democratic Processes”.
The aid program’s focus on governance has allowed for a securitisation of aid through interventionist programs such as the Regional Assistance Mission to the Solomon Islands (RAMSI) and the Enhanced Cooperation Project (ECP) in Papua New Guinea. Both programs bolstered Australia’s regional presence with a 2225-strong intervention force initially deployed under RAMSI and $1 billion in funding toward the ECP, primarily for placing Australian police and departmental personnel in PNG with a mandate to promote ‘good governance’.
The PNG Supreme Court ruled that parts of the ECP were in violation of the PNG constitution and the 150 police were withdrawn in 2005.
In the 2010-11 budget ‘Governance’ makes up approximately 21% of ODA. While programs focused on ‘civil society and human rights’ come under the heading of ‘good governance’, so does a great amount of our technical assistance, high levels of which according to the Office for Development Effectiveness “can create problems, particularly in fragile states”. It is crucial we maintain a critical watch on how strengthening governance can become an imposition of western systems of governance which fit with our commercial and strategic interests but may not be compatible with traditional and culturally relevant systems of governance.
Last updated 12 November 2010
Corporatisation
Corporate involvement in aid
A major concern of Australia’s aid program is that it favours commercial interests in aid delivery. The commercialisation of aid often results in “Boomerang Aid”- aid which ends up funding private Australian companies, consultants, advisors and goods and services, bypassing those who need it the most and returning to Australia (See also: “Technical Assistance”). Considering the diverse portfolios of the largest aid contract recipients, it becomes most fitting to talk about aid delivery in terms of an ‘aid industry’. A small number of large Australian companies manage projects across health, education, governance and capacity building, employing short-term private consultants to service their contracts.
Criticisms of Commercialisation:
Commercialisation is criticised because it is an expensive way to deliver aid. There are also concerns regarding the lack of transparency, public oversight and accountability in commercialised aid provision, because contracts are often bound by commercial-in-confidence agreements.
A 2009 report by the Australian National Audit Office notes that 20 of Australia’s largest managing contractors “were together responsible for delivering 70% of Australia’s bilateral aid program expenditure.”[1]
- In 2006, 45% of the aid program or $1.35 billion was available for tender to private companies.
- GRM International Pty Ltd is an Australian company, until recently owned by the Packer family, which received more than $1 billion in AusAID contracts between 2001 and 2010.[2]
Further information:
Australian Govt Aid – Australian Aid Priorities – Tied Aid
Australian Govt Aid – Australian Aid Priorities – Technical Assistance
Next page
Last updated 12 November 2010
[1] Australian National Audit Office (2009) AusAID's Management of the Expanding Australian Aid Program, ANAO Audit Report No. 15 2009-10, p.87.
[2] “Who profits from our foreign aid, the untold story of GRM International” http://www.crikey.com.au/2010/07/12/who-profits-from-our-foreign-aid-the-untold-story-of-grm-international/
Tied Aid
International research has shown that the tying of aid is costlier and less effective than untied aid.[1] The tying of aid is a practice which privileges Australian companies and national priorities in the aid program. Aid is tied in three ways:
- nationally-tied – aid money is provided on the condition that the receiving country buys goods and services from the donor country;
- project or program-tied – aid which must be spent on specific projects or sectoral programs determined by Australia; or
- performance or condition-tied – aid tied to particular performance outcomes or conditions.
While in 2006 Australia officially untied its aid program from national procurement (nationally-tied aid), the informal tying of aid continues with Australian companies receiving the majority of aid contracts.
Performance-based aid
The most heavy-handed form of tied aid is performance-based aid. Performance-based aid is made available to countries when they meet certain conditions, triggering the allocation of aid into high priority areas such as roads, health and education. This form of aid acts as an incentive for recipient countries to carry out political and economic reform in areas such as education management, improved budget management, utility regulation, private sector development and sub-national government administration.
Minh Nguyen on aid conditionality writes:
While few would oppose donor or lender conditions to ensure that funds are well spent, current practices have gone beyond what is necessary for basic fiduciary accountability. Conditions are now so intrusive that they can cover recipients’ trade and investment policies and even the structure of government.(41)
In 2010-11, Australia will fund performance-based initiatives through a four-year $336.1 million program in Asia and the Pacific. [2] Linking aid funding to outcomes decided by Australia undermines developing country rights for self-determination.
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[1] See for example, Clay, E. J., B. Riley and I. Urey (2005), The Development Effectiveness of Food Aid: Does Tying Matter? OECD, Paris; OECD DAC (2005). Final Report of the OECD Development Assistance Committee Development Partnership Forum on Improving Donor Effectiveness in Combating Corruption, 9–10 December; United Nations (2005) Human Development Report: International Cooperation at a Crossroads: Aid, Trade and Security in an Unequal World (New York).
[2] AusAid Australia’s International Development Assistance Budget 2010 p.24
Aiding climate change
Unchecked global warming is already having a devastating impact. It is felt most harshly by the poor worldwide, and not least in the Pacific Islands. Yet Australia’s additional climate aid is zero.
The $160 million to be spent on climate aid during 2010-11 is from previously announced commitments. Australia double-counts this money as both United Nations Framework Convention on Climate Change (UNFCCC) financing and as ODA, breaking UN requirements that climate finance be additional to ODA.
The World Bank estimates that at least US $70 billion is needed annually to help developing countries adapt to the effects of climate change.[1] Australia’s current contribution of $160 million is 0.002% of the amount World Bank says is needed.
Not only is climate aid inadequate and in breach of UN commitments, but a large proportion is being misspent.
$200 million of Australia’s climate aid is funding a government campaign for the recognition of forest carbon credits at the UN, as a way of offsetting Australian emissions. The money is being spent on ‘Reduced Emissions from Deforestation and Forest Degradation’ (REDD) in Indonesia and PNG, to demonstrate the offsets are viable. Many NGOs and indigenous people’s organisations argue REDD offset schemes are ineffective in reducing overall emissions, undermine the livelihood of subsistence farmers and displace forest-dwelling indigenous peoples.[2]
Indonesian activists protest outside the Australian embassy in Jakarta - Courtesy - Teguh Surya WALHI
The record of the multilateral banks on climate change is even more concerning. Both the Asian Development Bank and the World Bank have a long history of supporting destructive, carbon intensive fossil fuel projects with little concern for their impacts on people and the environment. Between 2000 – 2006 one quarter of the ADBs energy sector lending went to fossil fuel projects while only 4% supported renewable energy generation.(46) Positive movement is shown by the ADB doubling its spending on clean energy projects between 2007 and 2009.[3]
The Bank Information Centre has shown that in the 2008 financial year the World Bank’s private sector arm more than doubled its support for fossil fuel projects to $US2.2 billion, while funding for renewable energy in the same period was a mere US$ 243 million.(47) Recent research shows that, through initiatives like the Clean Development Mechanism, the World Bank continues to pay lipservice to this issue without effective action.[4]
These figures highlight that there is still a lot that needs to be done when it comes to addressing climate change through development financing.
In the first place it is clear that when it comes to the climate crisis, prevention is unquestionably the best form of cure. Bilateral donors and multilateral institutions must cease all support for projects which lock developing countries into fossil fuel futures and must immediately act to reduce emissions in their own countries in line with international targets. They should also support a just and equitable Global Deal on climate change to support developing countries through transition to renewable energy policies.
Secondly, given the far reaching consequences of climate change for the world’s poor it’s clear that funding for climate adaptation needs to be rapidly increased to match the scale of the challenge.
This funding must be in addition to the 0.7% aid target or else climate financing is likely to undercut aid for non-climate development objectives. Indeed, there are strong arguments that this funding should not be considered as aid at all, but as compensatory climate financing in recognition of the disproportionate share the global north has played in bringing about the climate crisis.
Indonesian activists protest outside the Australian embassy in Jakarta - Courtesy - Teguh Surya WALHI
Last updated 12 November 2010
[1] World Bank (2010) The Economics of Adaptation to Climate Change, A Synthesis Report, Final Consultation Draft (August), World Bank, Washington, p 10.
http://siteresources.worldbank.org/EXTCC/Resources/EACC_FinalSynthesisReport0803_2010.pdf
[2] Goodman, J. and Roberts, E. (2010) Australian REDD Aid to Indonesia – Ineffective and Unjust. In Reality of Aid 2010, Aid and Development Effectiveness: Towards Human Rights, Social Justice and Democracy, Reality of Aid, Manila. Pp 53-60.
http://www.realityofaid.org/roa-reports/index/secid/375/part/1
[3] http://www.adb.org/Clean-Energy/ (accessed 9 September 2010)
[4] http://upsidedownworld.org/main/international-archives-60/1710-the-world-bank-and-climate-change-sustainability-or-exploitation- (accessed 9 September 2010)
National Interest
Courtesy of New Zealand Electronic Text Centre - nzetc.org/tm/scholarly/tei-GriWom2-c3.html
AusAID’s primary objective is To assist developing countries to reduce poverty and achieve sustainable development, in line with Australia’s national interest. [1].
Promoting Australia’s national interest in aid undermines the objective of poverty alleviation. Australia’s strategic interests often divert aid from regional development priorities to countering regional ‘security threats’ through particular good governance programs, law and order and military assistance. Focusing on the national interest means that the more altruistic intentions of Australian aid can easily be subverted by business and politics.
- The former Australian Wheat Board director, Trevor Flugge, received an AusAID contract in 2003 to the value of almost $700 000 to promote Australian wheat exports to Iraq instead of providing genuine advice on issues of food security and agricultural reform. Then Prime Minister, John Howard, stated in Parliament that “our principle concern was to stop American Wheat growers from getting our markets. We thought Mr Flugge would fight hard for the Australian wheat industry.”
Australian government aid by sector – 2008-11
Further information:
What is Aid - A brief history of Aid – Colonialism
What is Aid – What are Aid priorities
Last updated 12 November 2010
[1] AUSTRALIA’S INTERNATIONAL DEVELOPMENT ASSISTANCE PROGRAM - budget statement, Stephen Smith and Bob McMullen, 2010, p106, [Enphasis added]
Technical Assistance
Most of these salaries stay in Australia and hence this form of aid delivery creates a ‘boomerang aid’ effect. See also: “Corporatisation”
Criticisms of Technical Assistance:
TA is criticised internationally as both expensive and yet to be proven as effective in its stated purpose of capacity development.
- Research published by the UK-based organisation ActionAid in 2006 found that TA increases the cost of aid by at least 25%.
- Both the OECD Development Assistance Committee (DAC) and the UN Development Program (UNDP) have expressed concern over the ability of TA to deliver on its capacity building outcomes.(38)
Australia’s over reliance on Technical Assistance has come under increasing criticism for a number of reasons:
- A 2009 report by the Australian National Audit Office found that about 46% of AusAID’s budget goes to ‘technical assistance’, which is twice the average of other OECD countries.[1]
- As at 31 July 2010, there were 1,204 technical advisers in the aid program. According to AusAID, the average cost for long-term expatriate advisers was $20,015 per month and for short-term advisers, $1,618 per day.[2] Salaries of this magnitude are unattainable for the local staff in aid recipient countries, who work alongside these consultants. TA pay disparities can cause resentment amongst local staff as well as privilege western ‘expert’ advice over local knowledge and experience.
- A review commissioned by the governments of Australia and Papua New Guinea found that “the heavy reliance on technical assistance for capacity building in the Australian aid program to PNG is its most controversial aspect.”[3] Noting that the “capacity building model through advisors” is not working, the review called for a reduction in reliance on technical assistance in the aid program to PNG.
- In response to the growing criticisms of Australia’s over reliance on technical assistance in the aid program, in the 2010-2011 budget the government announced it would undertake a review on the use of advisers in selected partner countries. In October 2010, the government announced that around one-third of adviser positions in the aid program to PNG and Timor Leste will be phased out within two years; however, the reviews have yet to be made publicly available. It remains to be seen whether the reviews will lead to significant changes in the way capacity building needs are identified and delivered.
Further information:
Last updated 12 November 2010
[1] ACFID Analysis: Aid budget 2010, p14 http://www.acfid.asn.au/resources/docs_resources/docs_papers/ACFID%20Bud...
[2] Senate Foreign Affairs, Defence and Trade Legislation Committee, Budget estimates 2010-2011; June 2010, Answers to questions on notice from AusAID, pp. 10-11.
http://www.aph.gov.au/senate/committee/fadt_ctte/estimates/bud_1011/dfat/Ans-AusAID-Jun10.pdf
[3] Review of the PNG-Australia Development Cooperation Treaty (1999), 19 April 2010, p 3. http://www.ausaid.gov.au/publications/pdf/PNGAustralianAidReview.pdf
Multilateral aid
About 30% of Australian aid money is channelled through multilateral institutions and funds.
Australia gives more money to the World Bank and the Asian Development Bank (ADB) than to United Nations agencies and programs.
The World Bank and ADB in particular have been criticised for conditionality of their loans, undemocratic governing structures, and funding large-scale projects that undermine people’s lives and livelihoods.
Last updated 12 November 2010
What is multilateral aid?
A multilateral organisation is an international organisation whose membership is made up of member governments, who collectively govern the organisation and are its primary source of funds. The OECD estimates that in 2008 around 40% of ODA or nearly US$50 billion from DAC countries was channelled through multilateral institutions and funds.[1]
There are a number of reasons why donor countries such as Australia give aid through multilateral institutions:
- multilateral aid is generally seen as a less political form of aid than bilateral aid, encouraging international cooperation rather than strategic and commercial interests of respective donor countries;
- multilateral aid pools resources enabling the implementation of large-scale programs that are beyond the capacity of individual donor countries through bilateral aid;
- multilateral aid can help coordinate donors to address issues at regional and global levels and harmonise their efforts, thereby reducing donor burden in recipient countries.
One of the biggest problems with multilateral aid is the lack of accountability to the people aid is intended to assist. Furthermore many donor countries favour certain multilateral organisations and funds over others. For example, Australia gives more money to multilateral development banks such as the World Bank and the Asian Development Bank, where voting is weighted according to financial contributions,[2] and less to the United Nations agencies where voting is equal and less of the money is returned to the donor countries.
Last updated: 12 November 2010
[1] OECD DAC (2010) DAC 2010 Report on Multilateral Aid, p.11. http://www.oecd.org/dataoecd/23/17/45828572.pdf
[2] Voting rights are tied to capital subscriptions or shareholdings, which do not necessarily come out of the aid budget. The recent capital increase to the ADB (estimated US$197.6 million over 10 years from 2010-11) did come out of the aid budget, see: 2009-10 aid budget, p. 66. http://www.budget.gov.au/2009-10/content/ministerial_statements/ausaid/download/ms_ausaid.pdf
World Bank and Asian Development Bank
Firstly, multilateral development banks (MDBs) are the largest source of development finance in the world. According to the Bank Information Center, MDBs typically lend $30 to $40 billion dollars a year to low and middle income countries.[1]
Secondly, MDBs also strongly influence the direction of development policies through the generation of technical research, analysis and statistics concerning aid and development.[2] Many donor countries and development institutions, including Australia, take the lead from MDBs, especially the World Bank.
The 2006 White Paper on Australia’s aid program, for example, draws almost solely on World Bank-generated knowledge.[3] In discussing the extent of poverty (and therefore how poverty is defined), the place of aid versus trade, lessons about the appropriate role of aid, and the focus on fragile states, the White Paper cites World Bank sources and articulates the World Bank’s neoliberal framework on poverty and economic growth, globalisation and the role of institutions and private investment in development.
The vast majority of Australia’s funding for MDBs is channelled through the World Bank and Asian Development Bank.[4] In 2007-08 over $500 million of Australian aid money was given to and through the two banks, which accounted for 50% of money delivered through international and regional organisations. As the 2010-11 aid budget states “The World Bank and Asian Development Bank continue to be central partners for Australia's aid.”[5]
The table and graphs below provide some information on the structure and operations of the World Bank and ADB, with a particular focus on their concessional lending arms, that is, the International Development Association (IDA) and Asian Development Fund (ADF).
For more information and critiques on the structure, role and operations of the banks, see:
- Bank Information Center (undated) Tools for Activists: An Information and Advocacy Guide to the World Bank Group
- NGO Forum on ADB and Bank Information Center (2008) Unpacking the ADB: A Guide to the Asian Development Bank
World Bank (IDA) and ADB (ADF) at a glance
Where do the banks spend the money?
Source: World Bank Annual Report
Source: Asian Development Bank Annual Report
What do the banks spend the money on?
The World Bank and ADB run a large variety of programs from infrastructure development to small loans often termed ‘microfinance’ to education and health programs. Despite the diversity of projects, in 2009 both the World Bank (IDA) and ADB (ADF) devoted about 40% of their lending towards economic infrastructure, that is the combined sectors of transport and communication, energy and mining, and tourism and trade.
Last updated 12 November 2010
[1] Bank Information Center, Institutions, http://www.bicusa.org/en/Institutions.aspx Accessed 8 November 2010
[2] Ibid.
[3] See especially sections 2.1, 2.3, 2.4 and 2.5 of the White Paper
[4] Australia also gives aid money to the International Monetary Fund (around $2.8 million in 2007-08)
[5] Australia’s International Development Assistance Budget 2010-11, 11 May 2011, p.59.
http://www.budget.gov.au/2010-11/content/ministerial_statements/ausaid/download/ms_ausaid.pdf
United Nations Agencies
The structure of other multilateral organisations particularly the United Nations agencies is different to that of the World Bank and ADB. Many of the main agencies involved in multilateral aid such as the United Nations Children’s Fund (UNICEF), the World Food Programme (WFP), Joint United Nations Program on HIV/AIDS (UNAIDS) and the Office of the United Nations High Commissioner for Refugees (UNHCR) are answerable to the General Assembly, in which all member countries participate and have an equal vote. Many are also answerable to the Economic and Social Council which coordinates the economic and social work of UN agencies. However, most of these agencies are largely self-contained with their own executive heads, constitutions, budgets, and representatives from member countries.
Last updated 12 November 2010
Australia’s multilateral aid
Until recently, however, there has been little in the way of a publicly articulated framework which explains how the Australian Government determines its funding relationship with the banks and other multilateral institutions.
In 2009 AusAID developed a draft multilateral engagement strategy which for the first time articulated a broad framework giving some direction to decisions about funding levels, priority partners and priority areas of concern.[1] Some key directions outlined in the strategy include:
- maintaining aid channelled through multilateral organisations at between 25 and 35%
- increasing core funding to priority multilateral institutions based on their effectiveness, relevance to Australia’s aid priorities and responsiveness to Australia’s interests
- using multilateral funding to increase Australia’s profile and influence institutions to focus on areas that are of strategic importance to Australia, i.e. the Asia-Pacific region.
Since 2008, the Australian Government has also signed partnership framework agreements with 10 UN humanitarian and development agencies, which include commitments for increased multi-year funding. The partnership agreements include mutual commitments to: the Millennium Development Goals; increase aid effectiveness; support UN reforms; and increase public awareness of partnerships between AusAID and respective UN agencies.[2]
Next page Last updated 12 November 2010
[1] AusAID (2009) Draft Multilateral Engagement Strategy for the Australian Aid Program 2010 -2015. As at October 2010, it is unclear whether the draft strategy has been finalised as it is not publicly available.
[2] AusAID (2010) Multilateral Organisations http://www.ausaid.gov.au/partner/multilateral.cfm Partnership agreements with UN agencies are available at: http://www.ausaid.gov.au/partner/partnership_frameworks.cfm
How does Australia contribute to multilateral institutions?
There are various ways in which Australia channels money to and through multilateral institutions and funds:
Core funding: Core funding allows multilateral institutions greater control over how that money is spent. Because core funding arrangements are generally negotiated on a multi-year basis, they also provide greater security and predictability of funding for multilateral organisations. Noting that “multilateral organisations need secure, long-term funding to engage in strategic planning and reform and be responsive to developing country priorities,” AusAID’s 2009 draft multilateral engagement strategy makes a commitment to increase core funding to “priority multilateral organisations.”[1]
Non-core funding: According to an OECD report on multilateral aid published in 2010, out of DAC donors, Australia made the second highest level of non-core contributions or earmarked funding to multilaterals.[2] Non-core contributions give AusAID more control over how money is spent (e.g. by selecting which programs and projects to fund) but decreases the predictability of funding for the multilateral institution.
Multi-donor trust funds (MDTFs): One means by which Australia provides non-core funding is through MDTFs, which pools money from a range of donors for a common stated purpose (for example, the Afghanistan Reconstruction Trust Fund). These funds are held in trust by multilateral institutions and governed by joint committees comprised of representatives of donor countries. MDTFs have become an increasingly important mechanism for multilateral institutions to mobilise funds. From a donor perspective, MDTFs give more selectivity over the use of their funds than providing core contributions. In 2007-08, Australia contributed nearly $190 million to over 60 MDTFs, of which about $116 million went to funds administered by the World Bank.[3]
Parallel financing: Parallel financing typically occurs when a bank identifies a large project with multiple components and then seeks funding from other donors to deliver discrete components of the overall project.
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[1] AusAID (2009) Draft Multilateral Engagement Strategy for the Australian Aid Program 2010 -2015, p.3.
[2] OECD DAC (2010) DAC 2010 Report on Multilateral Aid, p.39. http://www.oecd.org/dataoecd/23/17/45828572.pdf
[3] Senate Standing Committee on Foreign Affairs, Defence and Trade, Additional estimates 2008-2009; February 2009, Answers to questions on notice from AusAID, pp. 31-35. http://www.aph.gov.au/senate/committee/fadt_ctte/estimates/add_0809/dfat/ans_ausaid_feb09.pdf
Australia’s contributions at a glance
In 2007- 08, approximately one billion dollars or 30% of Australia’s aid money was channelled to and through multilateral institutions and funds.[1] As the chart below shows, in 2007-08 the ADB and World Bank received 50% of Australia’s multilateral funding; with the World Bank alone receiving about 37.5%.
Source: AusAID (2010) Statistical Summary
World Bank Group: $389 million
Australia contributes core and non-core funding to various organisations within the World Bank, including:
- International Development Association, the concessional lending arm of the World Bank which provides interest-free loans to 79 countries;
- Highly Indebted Poor Countries/ Multilateral Deb Relief Initiative, which provides debt relief for poor countries that have a demonstrated commitment to reform;
- International Finance Corporation, the private sector lending arm of the World Bank, which provides financial services to businesses investing in developing countries.
- In 2007-08 Australia contributed around $116 million to various MDTFs administered by the World Bank.[2]
- In the 2010-11 aid budget the government announced that from 2011-12 it would contribute to a capital increase (about US$51.6 million over five years) for the International Bank for Reconstruction and Development, which lends money to middle-income countries.[3]
Asian Development Bank: $140 million
In 2007-08, Australia contributed $140 million to the ADB of which $91.5 million went to the Asian Development Fund (ADF). The ADF works in a similar way to the World Bank’s IDA in that it provides interest-free loans to developing member countries in the Asia-Pacific region.
United Nations agencies and programs: $368.3 million
In 2007-08 Australia contributed funds to over 25 UN agencies and programs. The six largest recipients received over 80% of this funding:
- World Food Programme – WFP (86.5 million);
- United Nations Children Fund – UNICEF (60.3 million);
- United Nations Development Programme – UNDP ($56.5 million);
- World Health Organisation – WHO ($36.5 million);
- United Nations Office for the Coordination of Humanitarian Affairs - OCHA ($26.3 million)
- United Nations High Commissioner for Refugees - UNHCR (26.1 million)
Global Environment Facility: $19.7 million
Established in 1991, the Global Environment Facility coordinates key multilateral environmental agreements and funds projects related to biodiversity, climate change, international water systems, land degradation, the ozone layer, and persistent organic pollutants.[4]
Global Fund: $45 million
Created in 2002, the Global Fund to Fight Aids, Tuberculosis and Malaria has become the main source of finance for programs to fight AIDS, tuberculosis and malaria. The Global Fund provides funding for more than 572 programs in 144 countries to the tune of US$ 19.3 billion.[5]
Commonwealth Organisations: $12.9 million
While Australia contributes to a number of Commonwealth organisations, most of its contributions have been directed towards the Commonwealth Fund for Technical Cooperation (about $11 million or 85% in 2007-08), which provides small-scale short term assistance in a range of sectors.
Other international and regional organisations (including IMF): $66.5 million
In 2007-08 Australia contributed around $66.5 million to a range of other international and regional organisations including the South Pacific Islands Forum/ SPC ($23.7 million), GAVI Alliance ($5.2 million), International Monetary Fund ($2.7 million), and Mekong River Commission ($4.7 million).
Last updated 12 November 2010
[1] AusAID (2010) Statistical Summary 2005-2006, 2006-2007, 2007-2008, Australia’s International Aid Program http://www.ausaid.gov.au/publications/pdf/statsummary.pdf
[2] Senate Standing Committee on Foreign Affairs, Defence and Trade, Additional estimates 2008-2009; February 2009, Answers to questions on notice from AusAID, pp. 31-35. http://www.aph.gov.au/senate/committee/fadt_ctte/estimates/add_0809/dfat/ans_ausaid_feb09.pdf
[3] Australia’s International Development Assistance Budget 2010-11, 11 May 2011, p.61.
http://www.budget.gov.au/2010-11/content/ministerial_statements/ausaid/download/ms_ausaid.pdf
Issues and Debates
These include:
- conditions attached to loans, programs and projects
- undemocratic decision-making structures and processes
- bureaucratic structures
- social and environmental impacts of projects
Conditionality
A long-standing issue surrounding aid from multilateral development banks (MDBs) is what is known as conditionality. Conditionality refers to the conditions attached to aid money dispersed from MDBs like the World Bank and the Asian Development Bank.
While the conditions imposed on aid-recipient countries vary, common examples of the types of conditions in loans provided by MDBs include:
• Cutting back on public spending and reducing the size of government departments and services. This is often concentrated in areas such as health and education where costs are high. This has major impact on people’s access to health care and schooling, particularly among the poorest.
• Privatising key sectors of government and public services. Countries have been required to privatise key sectors such as water provision, essential infrastructure, hospitals, electricity, and transport. This puts control of key sectors into private (and often foreign) hands, which may not have the best interests of the country in mind. This has often resulted in the inequitable provision of key services as private providers tend to prioritise servicing of areas that are profitable.
• Lifting essential subsidies. In many poor countries governments subsidise essential items such as rice, grain, oil, and even petrol. They do this so that the prices of essential items do not prohibit people from meeting their daily needs. Sometimes governments are required to lift these subsidies which can lead to increases in prices of essential items, making them unaffordable for many people.
Last updated 12 November 2010
Undemocratic and Bureaucratic
Undemocratic decision-making
Multilateral development banks have been criticised for being undemocratic due to the disproportionate power and influence wealthier member countries have in decision-making. Since voting power is weighted according to the financial contributions of member countries, the wealthy countries who contribute more money have the greatest say and influence over decisions at these institutions. For example,
- In the IDA of the World Bank 12 countries control more than 50% of the vote, which is greater than votes held by the remaining 158 member countries;[1]
- In the ADB, seven countries control more than 50% of the vote, which is greater than votes held by remaining than 60 member countries.[2]
While in 2010 the World Bank implemented reforms to its voting power, the Bretton Woods Project notes that high-income countries will still control over 60% of the votes. [link to: http://www.brettonwoodsproject.org/doc/wbimfgov/wbgovreforms2010.pdf]
Furthermore, the ways in which MDBs prioritise and implement programs and projects have been characterised by lack of participation and consultation with local communities and lack of accountability to affected communities.[3]
Bureaucratic culture
A common criticism of MDBs is that they are overly bureaucratic and often prescribe a single set of policies as solutions, without sufficient regard to local needs and contexts. This can result in inappropriate projects and programs which at times can do more harm than good, as demonstrated in the section on conditionalites.
United Nations agencies have also been criticised for taking too long to respond to problems because of their complex bureaucracies, and also that much of the aid money is spent on the salaries of personnel in these organisations rather than on the actual programs and projects.
Last updated 12 November 2010
[1] http://siteresources.worldbank.org/BODINT/Resources/278027-1215524804501/IDACountryVotingTable.pdf
[2] http://www.adb.org/About/membership.asp
[3] For case studies of problem projects funded by the World Bank and ADB, see: http://www.bicusa.org/en/Institution.Projects.5.aspx; http://www.forum-adb.org/inner.php?sec=1&id=2
Social and environmental impacts of projects
Social and environmental impacts of projects
The ability of MDBs to mobilise sufficient funds for large-scale ‘development’ projects is often cited as one of their key advantages. However, their involvement in promoting, funding and implementing large-scale projects has also been a source of controversy.
Firstly, the technical expertise necessary to manage and build large-scale infrastructure has meant that much of the aid money has been channelled to companies, consultants and technical experts that oversee the projects.
Secondly, while these projects may generate revenue and contribute to economic growth, they can also have detrimental social and environmental impacts. For example, the World Bank and ADB have been heavily criticised for funding large dams that have degraded rivers and destroyed local livelihoods.
Whether some of the projects funded by the banks ‘alleviate poverty’ (as the banks claim) or further impoverish populations (as critics claim) is a matter of much debate. For an example from the Mekong Region in Southeast Asia, see Hidden Costs: The underside of economic transformation in the Greater Mekong Subregion
Australian Multilateral Assessment
Tracking the Independent Review: Measuring up the Multilaterals
The Australian Government’s Independent Review of Aid Effectiveness recommended an assessment of the multilateral organisations that the Government funds as part of Australia's aid program. In response AusAID implemented the ‘Australian Multilateral Assessment’. This process is designed to assess multilateral institutions by ranking them against a fixed set of criteria.
As part of our ‘Tracking the Aid Review’ project, AID/WATCH is releasing alternative profiles of multilateral agencies that consider criteria that AusAID is not looking at, including ecological impact and footprint, genuine pro-poor focus and commitment to working with the poor, not merely on their behalf.
AID/WATCH’s introductory analysis of the Australian Multilateral Assessment, Tracking the Independent Review: Measuring up the Multilaterals, looks at the criteria AusAID has used and questions the objectives and of the process and its capacity to deliver aid more effectively.
The $1.3b Question: Where Is Your Aid Money Going?
AusAID moved quickly to implement the ‘Australian Multilateral Assessment’ (AMA), a process recommended by the Government’s Independent Review. This process is designed to assess multilateral institutions by ranking them against a fixed set of criteria. As part of our ‘Tracking the Aid Review’ project, AID/WATCH has released alternative profiles of multilateral agencies that consider criteria that AusAID is not looking at, including ecological impact and footprint, genuine pro-poor focus and commitment to working with the poor, not merely on their behalf.
Changing the Paradigm or More of the Same?
Around 40 per cent of Australia's aid budget ($1.3 billion in 2009-10) goes to international institutions, also known as multilateral agencies. These agencies range from specialised United Nations divisions to development banks to a new breed of public/private partnership organisations. Their share of the aid budget is set to increase significantly as a result of the Independent Review of Aid Effectiveness, released in 2011. The Review recommended, among other things, that core funding (that is, unrestricted funding) be significantly increased as a percentage of the total aid program.
AID/WATCH has taken a strong interest in this process. It may lead to very large funding increases to agencies whose development philosophy and performance we have previously critiqued, such as the World Bank and the Asian Development Bank, as well as to more effective organisations such as the Global Crop Diversity Trust or the United Nations Population Fund. It will certainly involve an AusAID investment worth several hundred million dollars, which could make a massive difference to the life of the global poor – but it could also lead to ‘development’ projects that will perpetuate and deepen poverty.
An AID/WATCH Analysis
AID/WATCH has looked at four agencies likely to receive the most scrutiny in the process. Instead of narrowly based set of criteria, we looked at four holistic indicators that speak to their ability to end global poverty and take actions of relevance to the global poor. We consider these criteria to be the glaring omissions from the AusAID review. Two of them are among AusAID’s most favoured multilateral agencies, the Asian Development Bank and the World Bank. Together they represent the single biggest channel for Australian aid, some 17% of the total aid program. The other two agencies analysed are examples that have come in for significant criticism by both the UK review and preliminary comments by the, then, foreign minister, the International Labour Organisation (ILO) and the Food and Agriculture Organisation (FAO).
Our review looked at
- Human Development – what is the agencies development approach and how relevant is their mandate to human development.
- Ecological Impact – ecology is the long overlooked development challenge whilst at the same time ‘greenwashing’ is on the increase. Does the agency commit to conservation or just talk about it.
- Working with the Poor - too often, agencies work on behalf of the poor, without ever asking them. Does this agency genuinely work with poor people and their organisations on issues of importance to them?
- Development Politics – Where does the agency stand on fundamental issues such as trickledown effect, neoliberalism and the politics of development?
The attached profiles are not comprehensive, but show a snapshot of each agency in areas that AusAID won’t be looking. Whilst each agency has its flaws it is clear that there are significant problems that won’t be addressed by the multilateral review as well as significant strengths that won’t be picked up, illustrating the problematic approach of a uniform ranking system.
For example, in terms of representation the FAO and the ILO have structures where poor people’s organisations are able to debate policy and influence the organisation, whilst the World Bank and Asian Development Bank are highly state centric and centralise control of the organisation in the hands of the developed countries. Another factor looked at is development approach, some organisations take holistic views of development looking at human well-being whilst other take a purely economic point of view.
The purpose of these frameworks is not to recommend one multilateral agency over another, but to illustrate the complexities of rigid ranking systems and the variety of factors that influence multilateral agencies. AusAID must consider each multilateral agency on its own merits.
AID/WATCH Assessments
Read the AID/WATCH assessments of the four multilateral organisations attached below.
| Attachment | Size |
|---|---|
| ADB_profile.pdf | 54.88 KB |
| FAO_profile.pdf | 50.33 KB |
| ILO profile.pdf | 49.14 KB |
| WB_profile.pdf | 48.27 KB |
Non-Government Organisations
What is a Non Government Organisation (NGO)
NGOs are a diverse mix of organisations with varied purpose, issues and supporters.
A small number of NGOs pioneered private overseas aid during the colonial period before World War II. A larger number were established in the post-war period, and today over 1.5 million Australians are involved in supporting an overseas aid and development NGO[1]
NGOs play an important role in development. There are over 100 NGOs working towards development in Australia and overseas.
Different NGOs take different approaches to development work, including grassroots development, humanitarian / emergency relief, advocacy and international volunteering.
Working with NGOs enables AusAid to benefit from community partnerships and specialised knowledge.
Funding
Practical matters such as fundraising activities have an impact on NGO work - raising issues of financial and political independence and sustainability.
NGOs rely mostly on donations from philanthropic individuals and organisations, rather the government. In 2008, 1.7 million Australians donated $812 million – 76% of all money raised by NGOs.[2]
Many Australians want to give money and take action when immediate help is needed, but deciding who to donate money to can be a difficult process.
Effectiveness and Accountability
NGOs have a responsibility to be accountable to the communities in which they work and to effectively support poverty alleviation. These responsibilities may be challenged by:
- Differences in pay and lifestyles between international and local workers; which can also push up local inflation.
- Favoring visible short-term results over long-term sustainable outcomes
- Failing to adequately consult and communicate with communities.
Provision of humanitarian or disaster relief can be particularly problematic unless local communities are actively and meaningfully engaged.
Faith-based NGOs have a strong presence in the development sector. It is worth considering whether the religious foundations of an organisation potentially impede their activities
Want advice about how to make decisions on donating? Click here
Last updated 16 November 2010
[1]ACFID, 2009, Facts and Figures, http://www.acfid.asn.au/resources/facts-and-figures, last accessed 8/10/10
[2] ACFID, 2009, Facts and Figures, http://www.acfid.asn.au/resources/facts-and-figures, last accessed 8/10/10
What is an NGO?
Overseas development NGOs are just a small fraction of this wider group, with more than 100 operating in Australia. Some international development NGOs have local affiliates, such as Red Cross, Oxfam and World Vision, whilst others are wholly Australian, for example Palms Australia. Some NGOs operate from Australia whilst others transfer funds to partner NGOs in recipient countries.
A small number of NGOs pioneered private overseas aid during the colonial period before World War II. A larger number were established in the post-war period, and today over 1.5 million Australians are involved in supporting an overseas aid and development NGO, with almost $800 million raised by Australian NGOs for overseas aid and development in 2008.[2]
NGOs enjoy high levels of public confidence. Research by the World Economic Forum in 2004 based on interviews of 19,000 people across 20 countries revealed that NGOs are widely regarded as the most trustworthy of organisations. Australians had an even higher degree of trust in NGOs than the other nations involved in the survey.[3]
NGOs can help provide a voice for disadvantaged people in society, a crucial aspect of a democratic society.[4] However, this role has been threatened, with the attitudes of previous governments ranging from apathy to outright hostility. The previous Howard Government was particularly hostile towards advocacy NGOs in all areas, for criticising government policy, and sought to exclude NGOs deemed too political from charitable status, which allows them to offer tax-deductible donations. The removal of charitable status can drastically reduce an NGO’s funding, as donor foundations are only able to donate to NGOs because of their tax-deductible status.[5]
Last updated 4 November 2010
[1] Ball, C. and Dunn, L. Non-Governmental Organisations in the Commonwealth: Guidelines for Good Policy and Practice, London: The Commonwealth Foundation, 1994
[2] ACFID, 2009, Facts and Figures, http://www.acfid.asn.au/resources/facts-and-figures, last accessed 8/10/10
[3] World Economic Forum, Global Survey on Trust: Update 2004, http://trustenablement.com/local/World_Economic_Forum.pdf
[4] Dalton, Bronwen; Lyons, Mark, Representing the Disadvantaged in Australian Politics: the Role of Advocacy Organisations, Canberra: The Australian National University, 2005.
[5] Maddison, Sarah; Denniss, Richard; Hamilton, Clive, Silencing dissent: non-government organizations and Australian democracy, The Australia Institute, 2004. Accessed at www.tai.org.au/documents/dp_fulltext/DP65.pdf
Australian Development NGOs
Australian Development NGOs
NGOs play numerous roles in development work, including:
- providing direct services to members of marginalised groups;
- advocating for changes to the nature of aid; and,
- providing a necessary and critical voice about implementation of international aid.
Financially the NGO sector is tiny, out of Australia’s $4.3 billion 2010/2011 aid budget, only $135 million is allocated to NGOs and community engagement programs, this amounts to a mere 2.5%. [1]
In addition, of the tendered contracts shown in the Australian tenders database, less than 4% of the total value of aid contracts between 2007 and 2010 were given to NGOs - see the pie chart below [2]
Graph sourced from Crikey, October 2010.
Many NGOs rely on public support to stay viable. By definition, they are not-for-profit and although some may receive funds from government, it is donations from philanthropic individuals and organisations that keep them going.
International aid and development funds managed by Australian NGOs, 2004–2008[3]
Graph sourced from ACFID.
In the 2008-09 period, Australian NGOs received just over $800 million in private donations. This makes up 73% of total funds raised by NGOs. Private donations include Australians supporting overseas aid and development NGOs as regular donors,by supporting a fundraiser event, or giving a one-off donation.
In comparison, government funding for NGOs through Aus AID amounted to $160.45 million in the 2008-09 period, which represents 14.5% of the total funds managed by the sector. [4]
Many Australians want to give money and take action when immediate help is needed - but who to give to? There are over 100 NGOs fundraising in Australia working towards development through different methods and in different fields.
Check out some key considerations to take into account when donating to NGOs.
Check the NGO profiles for more detailed information on specific NGOs.
Last updated 17 December 2010
[1] Australian Council For International Development, Aid Budget Analysis 2010/11, June 2010 p7 http://www.acfid.asn.au//resources/docs_resources/docs_papers/ACFID%20Bu... , p3
[2] Bacon, W. and He, S.S, 23.7.10, Who Profits from our foreign aid?: Carving up the pie, where the little-known dominate, Crikey , http://www.crikey.com.au/2010/07/23/who-profits-from-our-foreign-aid-carving-up-the-pie-where-the-little-known-dominate/, last accessed 17/12/10
[3] ACFID, 2009, Facts and Figures, http://www.acfid.asn.au/resources/facts-and-figures/australian-giving-to-aid , last accessed 17/12/10
[4] ACFID, 2009, Facts and Figures, http://www.acfid.asn.au/resources/facts-and-figures, last accessed 20/12/10
NGO involvement with AusAID
There are a limited number of ongoing forums for government and NGO policy dialogue. The Committee for Development Cooperation (CDC) is a joint consultative body drawing representatives from NGOs, AusAID and the Australian Council for International Development (ACFID). The CDC facilitates debate on policy issues relating to AusAID, NGO accreditations and the operation of NGO programs.[1]
Australian NGOs deliver very little of Australia's bilateral aid, winning only an average of 6% of contracts in the period 2007-2010.[3] Direct funding to Australian Development NGOs through the AusAID-NGO cooperation program this budget (2010/11) received only $69 million and direct funding for local recipient countries is even less with $8.25 million allocated to the Direct Aid Program (DAP) for 2010-2011.[4]
Comparison to Public Giving
World Vision receives the most funding from private donors in Australia, accounting for 42.03% of all donations to Australian development NGOs in 2008.[6] Oxfam Australia is a distant second, raising just 5.75% of funds from the Australian community. Caritas, Childfund Australia, Save the Children and PLAN International Australia are NGOs that are some of the larger recipients of both AusAID funding and public giving.
Funds raised by Australian NGOs from the Australian community, 2008
This shows the top 14 surveyed Australian NGOs that generate the largest amount of funds for their international development work through donations, fundraising, legacies and bequests from the Australian public.[7]
Source: ACFID, 2008, ACFID member and Code of Conduct signatories’ audited financial statements, http://www.acfid.asn.au/resources/facts-and-figures/which-agencies-raise-most/?searchterm=financial%20statements , last accessed 12/10/10
1. World Vision Australia 42.03%
2. Other NGOs 18.74% (total 85 agencies)
3. Oxfam Australia 5.75%
4. Médecins Sans Frontières 5.46%
5. Save the Children Australia 3.88%
6. ChildFund Australia 3.46%
7. CBM Australia 3.06%
8. Global Development Group 2.79%
9. Caritas Australia 2.72%
10. Plan International Australia 2.63%
11. CARE Australia 2.42%
12. WWF-Australia 1.79%
13. TEAR Australia 1.79%
14. The Fred Hollows Foundation 1.78%
15. UNICEF Australia 1.70%
The regional distribution of these funds differs somewhat from the Australian Aid Program priority areas. For example, Africa recieved over 40% of publicly donated funds in 2008, whilst AusAid fund channeled through Australian NGOs in the same period directed only 17% to the same region. See ACFID for more details.
Last updated 4 November 2010
[1] AusAID, 1999, Working with Australian NGOS: an Australian Aid Program Policy Paper, Canberra
[2] AusAID, ibid
[3] Crikey “Who profits from our foreign aid?” 23 July 2010, http://www.crikey.com.au/2010/07/23/who-profits-from-our-foreign-aid-car... , accessed 21 October 2010
[4] Australian Government: Department of Foreign Affairs and Trade, ‘Direct Aid Program (DAP)’, http://www.dfat.gov.au/direct_aid_program/ , last accessed 20/10/10
[5] ACFID, May 2010, Analysis: AID Budget 2010/11, http://www.acfid.asn.au//resources/docs_resources/docs_papers/ACFID%20Budget%20Analysis%20revised%20June%202010.pdf, accessed 28/10/10
[6] ACFID, 'Facts and Figures'. Online: http://www.acfid.asn.au/resources/facts-and-figures/whichagencies-raise-... Accessed July 2008
[7] ACFID, ‘Which Agencies raise most?’ http://www.acfid.asn.au/resources/facts-and-figures/which-agencies-raise-most, last accessed 3.9.2010
NGO approaches to development assistance
Grassroots Development targets disadvantaged groups through small, locally based projects. The overall aim is to empower people to become self-reliant through projects that take into account their specific environment and needs. These projects usually involve training and education programs to transfer skills and build the capacity and confidence of local organisations and communities. This approach at its most successful allows the benefits of a project to continue beyond the duration of the project itself.
Humanitarian/Emergency Relief focuses on relief in times of disaster such as earthquakes, floods and cyclones. NGOs in this area aim to gain access to disaster zones as quickly as possible to provide emergency health services and food aid.
Advocacy aims to draw public attention to an issue and influence government policy either on behalf of, or alongside, a particular community interest group. In the international development context advocacy is normally associated with communities in the majority world. Different NGOs target specific communities, groups or sectors in their advocacy work. Advocacy can be approached through NGO participation in high level policy dialogues, lobbying, or through grassroots and community campaigning. Approaches to advocacy and the level of involvement of affected communities differ with each organisation.
Volunteer programs run by NGOs facilitate sending volunteers overseas to offer technical assistance, project support and capacity building in a variety of sectors such as nursing, education, engineering and agriculture.
Last updated 4 November 2010
Fundraising
Fundraising costs
How much does an NGO spend on fundraising compared to program spending?
A US-based organisation, Smart Givers, has set a standard for the NGOs it accredits, with at least 70% of the organisation's annual expenses going towards program activity and not more than 30% for management/general and fundraising combined.[2]
However, comparing the fundraising costs of NGOs can be problematic. There are a number of factors affecting fundraising costs that have little to do with efficiency, accountability or transparency, including the size of the organisation and the initial costs of developing a public profile.[3]
All NGOs should be open to public scrutiny on the strategies behind their fundraising activities. Ethical fundraising should provide donors with clear information on an organisation's purpose and programs rather than exploiting people's guilt. When presented with emotive images and little information, it is worth asking questions about the specific activities and projects the organisation engages in. See here for more tips on donating responsibly.It is the responsibility of an organisation to be accountable to their members and financial supporters.
Fundraising activities
An organisation's fundraising activities are influenced by organisational factors such as resources, organisational values and priorities as well as external factors such as fundraising regulations.[4]
Common fundraising sources and strategies:
- Canvassing/Face-to-face solicitation
- Grants from government, trusts and foundations
- Media advertisement
- Mail-outs
- Membership
- Merchandise sales
- Door knock appeals
- Roadside collections
- Special events
- Online donations
Last updated 4 November 2010
[1] Report of the Committee of Review, One Clear Objective: poverty reduction through sustainable development, Canberra: AusAID, 1997.
[2] Charities Review Council (no date), Statement of Accountability. Online: http://www.smartgivers.org/sites/623b9026-c292-4f47-9b9d-8aac6d22782d/uploads/Accountability_Standards_with_Philosophies.pdf Accessed 12 June, 2008.
[3] Fundraising Institute Australia, Research on Key Issues in Fundraising, 2004. Accessed at http://www.fia.org.au/AM/Template.cfm?Section=Home
[4] Fundraising Institute of Australia, Research on key issues in fundraising, 2004. Online http://www.fia.org.au/Content/NavigationMenu/Fundraising_Resources/FIA-Principal_research_findings.pdf, accessed October 2010
Are NGOs Effective?
Challenges NGOs face in maintaining faithfulness to their primary goal of poverty alleviation include:
- Differences in pay and lifestyles between international and local workers can result in local inflation and economies dependant on the aid industry dollar.
- Opting for visible short-term results, particularly in emergency and humanitarian relief, over the longer-term needs of communities.
- Failing to prioritise working alongside local partners.
- Failing to adequately consult and communicate with communities, resulting in culturally inappropriate and ineffective aid.
NGOs have a responsibility to be accountable to the communities in which they work. The best way to do this is to build relationships with those communities and to seek to make aid unnecessary. NGO aid should:
- Empower people and strengthen community processes.
- Be based on respect, dialogue and long-term partnership.
- Be poverty-focussed.
- Be sustainable.
- Work in solidarity with local communities for social justice.
- Be mutually transparent and accountable.
- Actively seek to address unequal power between international and local staff and the organisations and the communities they work with.
Last updated 4 November 2010
Religion in aid
Historically, religious missionary activity has been related to hardships, cultural disruption and social upheaval for communities all over the world. Some are sceptical of ideologies and values being presented as intrinsically linked with material wealth. Some argue that modern faith-based aid still poses a risk of delivering a hidden evangelical agenda.
Alistair Gee, Executive Director of Act for Peace, disagrees:
[Act for Peace] is based on (what we believe to be) universal values or 'good practices', including full recognition of the importance of local participation, transparency, mutual responsibility, developing capacity, non-discrimination, gender equality, cultural and spiritual sensitivity, protection of human rights, advocacy, promotion of peace and reconciliation, effective communication and environmental sustainability. Religious values can help to reinforce these universal values. There is an important distinction though between a development agency set up by a church and a mission agency. It is very important to us that we support development work which is distinct from evangelism and we monitor programs to ensure this is the case.(2)
It is worth considering whether the religious foundations of an organisation potentially impede an NGO's ability to participate in vital development activities. For example, would the Catholic Church's anti-contraception stance hinder its involvement in HIV/AIDS prevention programs? If so, are there other organisations working in partnership with the faith-based organisation and fulfilling such needs?
Last updated 4 November 2010
((1)49.6% of total funds raised were shared by 4 religious based NGOs: World Vision Australia, CBM Australia, Caritas Australia and TEAR Australia. Of the remaining 50.4%, 31.66% was shared between 10 secular organisations. The remaining 18.74% represented contributions made to the remaining 85 ACFID members and Code of Conduct signatories, which are both religious and non-religious based.
Source: ACFID, Which agencies raise most? http://www.acfid.asn.au/resources/facts-and-figures/which-agencies-raise-most , last accessed 11/10/10
(2) Interview, Stephanie Lusby, NCCA offices 379 Kent St Sydney, September 2007
Humanitarian and disaster relief
People are often at their most generous when giving to emergency appeals. The 2004 Boxing Day Tsunami attracted Australian public donations in excess of $260 million.[1] Governments also pledge the greatest humanitarian assistance packages during these emergency situations.
There are practical problems with the distribution of such large amounts of funds to a small number of people in a short period of time. For example, only around 20% of the Australian Government's $1 billion Boxing Day Tsunami package went directly to localities affected by the disaster.[2] Common issues include:
- loss of donations through corruption;
- misspending on areas that are not of prime concern or sensitive to the needs of affected communities at the time; and,
- late arrival of assistance.
Government humanitarian aid may be used to inflate their Official Development Assistance (ODA) figures or repackage existing aid as new aid money. For example, half of the $1 billion Australian Government Tsunami relief package was not in the form of grants, but loans.[3]
Check out this article on Australia's aid for the 2004 Boxing Day tsunami
NGOs deliver humanitarian assistance and services more directly but still experience problems:
- The donation of material goods can be problematic as they are difficult to transport and in the case of clothing can be climatically and culturally inappropriate.
- Humanitarian aid funds have traditionally only funded short-term emergency relief rather than longer-term disaster prevention strategies.
Humanitarian aid is most effective when local communities, local NGOs and grassroots organisations are primarily responsible for coordinating and conducting needs assessments in their respective areas. The expertise and knowledge of these individuals and groups must be utilised to ensure aid activities directly reflect the requirements and desires of the communities they represent. Unfortunately, these groups are frequently overlooked.
Last updated 4 November 2010
[1] ACFID in AID/WATCH, Australian Aid: The Boomerang Effect, 2005
[2] AusAID, Annual Report, 2007
[3] AID/WATCH, International Response to the Indian Ocean Disaster: a donor analysis focus on Australia, 2005
Child Sponsorship
Child sponsorship is often promoted as giving sponsors the unique opportunity to witness the life-changing effect of their donations, achieved through personalised correspondence with their sponsor child. Child sponsorship has a broad appeal amongst the public due to the emotional aspect of direct communication with disadvantaged children overseas. However, child sponsorship, by focusing on individual children does not empower communities or respond to community needs, limiting its benefits and effectiveness.
New Internationalist, a magazine focused on global justice, provided scathing critiques of Child Sponsorship during the 1980's. The magazine argued that child sponsorship organisations see children as an easy, marketable product which will attract many sponsors because a child is viewed as innocent in what is inflicted upon them.(77) Advertisements can also portray the children and the communities they live in as passive, helpless and needy,(78) thus, over-simplifying the problems afflicting them and perpetuating negative stereotypes of the countries involved in child sponsorship.
Additionally child sponsorship programs involve high administration costs. The letters, reports and photos prepared for sponsors, as well as keeping track of the needs of the child and the family can be quite expensive and time-consuming, reducing the focus on actual development programs and actions. Correspondence from sponsors also runs the risk of being culturally inappropriate and disempowering.
In response to such criticisms, some child sponsorship organisations have modified their sponsorship programmes to focus on the development of the community in which the child lives, rather than simply the individual child, however children are still promoted as the face of those communities. Other organisations have removed child sponsorship from their aid program altogether.
Last updated November 2007
(76) ACFID, 'Facts and Figures'.Online: http://www.acfid.asn.au/resources/facts-and-figures/which-agenciesraise-... Accessed July 2008.
(77) 'A guide to giving', in New Internationalist issue 148, June 1985.
(78) Coulter, P. 'Pretty as a Picture' in New Internationalist, April 1989, issue 194.
How to Donate Responsibly
You can learn more about an NGO by checking their website, annual reports or profile. You can also call them - when NGO’s realise that potential donors are interested in the quality of their work they will be more inclined to improve this.
Some important issues to find out about before donating:
- What is the NGO’s policy on being accountable to its donors and the Australian public?
- Do they just give you stories and pictures or do they provide detailed project evaluation reports and budgets
- What is the NGO’s policy on being accountable to the people they claim to be helping
- Are communities able to get information about the project plans, budgets and evaluations?
- What is the NGO’s policy on allowing communities to participate in the projects that are supposed to be helping them?
- When the NGO approaches a community with a project idea what changes do they allow the community to make to it? In what ways can a community make changes to a project once it has started? Try asking for examples.
- Does the NGO directly support local communities, groups and civil society?
- Does the NGO have environmental sustainability, accountability and human rights as core values? How have they implemented these?
- Does the NGO have a religious affiliation? If so you should feel comfortable with this
- Is the NGO a signatory to the Australian Council For International Development (ACFID) Code of Conduct which ensures accountability or equivalent? To find out check on ACFIDs list
- How big is the NGO?
- Consider searching out smaller organisations that do equally good work but may not have the public profile of larger organisations. – you can get information on the size of an organisation by looking at the financial and administrative information at Giving One Percent
- For emergency relief - has the NGO been active in the affected area?
- This indicates the likelihood that they will continue providing support in the long term, which is very important for recovery.
Check out the links below for specific information on choosing who to give to and how much to give:
Giving One Percent - Information on deciding how much to give and who to give to (free)
Give Well (Australia) - Charity research for fee-paying subscribers, one free charity search per day
Philanthropy Australia - Information on giving, particularly directed at philanthropic foundations and trusts
[i] AUSAID BUDGET STATEMENT 2010 - AUSTRALIA’S INTERNATIONAL DEVELOPMENT ASSISTANCE - STATEMENT BY THE HONOURABLE STEPHEN SMITH MP MINISTER FOR FOREIGN AFFAIRS AND THE HONOURABLE BOB MCMULLAN MP PARLIAMENTARY SECRETARY FOR INTERNATIONAL DEVELOPMENT ASSISTANCE 11 MAY 2010 http://www.budget.gov.au/2010-11/content/ministerial_statements/ausaid/html/ms_ausaid.htm
[ii] Review of the PNG‐Australia Development Cooperation Treaty, 19 April 2010, p30 at http://www.ausaid.gov.au/publications/pdf/PNGAustralianAidReview.pdf
[iii] Australian Government, Budget 2010-2011, Budget Paper No. 2, Immigration and Citizenship. http://www.budget.gov.au/2010-11/content/bp2/html/bp2_expense-15.htm
[iv] Goodman, J. (2007) The Australian aid program: Aiding the Burmese Intelligence systems. AID/WATCH, Sydney.
Abbreviations and Acronyms/Glossary
ACFID: Australian Council for International Development
ADB: Asian Development Bank
ADF: Asian Development Fund
ANCP: AusAID-NGO Cooperation Program
AusAID: Australian Agency for International Development
Bonds: A bond is a debt security in which the authorised issuer (usually a government) owes the holder a debt and is obliged to repay the debt and interest at a later date.
BRG: Bismark Ramu Group: a grassroots civil society organisation that works with communities in the Madang province of Papua New Guinea.
BWIs: Bretton Woods Institutions
ECP: Enhanced Cooperation Program
CDC: Committee for Development Cooperation
CDI: Commitment to Development Index
CGD: Center for Global Development
Conditionality: refers to the conditions attached to aid money or loans
CSOs: civil society organisations
DAC: Development Assistance Committee (of the OECD)
DAP: Direct Aid Program
FSPI: Foundation of the People of the South Pacific International
HIPCI: Heavily Indebted Poor Countries Initiative
IBRD: International Bank for Reconstruction and Development
IDA: International Development Association
IDS: Institute of Development Studies
IFIs: International Financial Institutions
IMF: International Monetary Fund
MDGs: Millennium Development Goals
MDRI: Multilateral Debt Relief Initiative
New Internationalist: a not-for profit cooperative which publishes the New Internationalist magazine. It is renowned for its radical, campaigning stance on a range of world issues.
North/South: terms used to denote wealthy and poor nations respectively. The terms originated in the Brandt report of the 1970s which drew a line depicting this non-geographical divide separating the hemispheres according to wealth.
ODA: Official Development Assistance
OECD: Organisation for Economic Cooperation and DevelopmentPhantom aid: aid figures which appear as aid, inflating ODA, however, are not poverty focussed.
PPPs: Public-Private Partnerships
RAMSI: Regional Assistance Mission to the Solomon Islands
Reality of Aid (RoA): the only major North/South international initiative focused exclusively on analysing and lobbying for poverty eradication policies and practices in international aid
SDI: Slum Dwellers International: a network that stretches across the globe of people, mostly women, who live in slums around the world
TA: Technical Assistance
UN Democracy Fund: Established in 2005 its primary purpose is to support democratisation throughout the world.
UN Economic & Social Council: United Nations organ facilitating international cooperation on standards-making and problem-solving in economic and social issues.
WB: World Bank
What you can do
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Last updated 12 November 2010
Aid Review
Dear All,
The Australian Government has commissioned an Independent Review of Aid Effectiveness. This is our chance to make real changes to Australia’s aid program so that it makes a positive and long-lasting contribution to the lives of the poor.
This year the Australian Government will spend $4.3 billion in aid – and by 2015-16 this is expected to double to over $8 billion. Australia’s aid program can make a huge difference to the lives of millions of people.
Unfortunately, the aid program continues to be driven by Australia’s commercial and strategic interests which means a lot of money ends up in the pockets of Australian consultants and companies – instead of to the people who need it most. Furthermore, lack of transparency hides the reality of how our aid money is being spent.
You can help ensure Australia’s aid money is being spent effectively to build a more sustainable and just world for all by writing a submission to the Independent Review.
Check out our suggested submission and tailor it for yourself or, if you’re busy, just copy it directly. Then email it to submissions [at] aidreview [dot] gov [dot] au Remember to add your name and details at the bottom.
The deadline for submission is 2 February 2011 – This is your chance to have a say.
Together we can work to ensure Australia’s aid makes a valuable contribution to addressing poverty and inequality.
Many thanks for your support!
Warm Regards
Gary, Nishan and the whole AID/WATCH team
PS – It would be great if you could BCC makeaidfair [at] aidwatch [dot] org [dot] au so we know how many people are making submissions
PPS – Forward this link to your friends, the more submissions the better!
PPPS – Support our work to make aid fair by becoming a member, making a donation or joining our e-list
PPPPS - All submissions are treated as public unless indicated otherwise.
Suggested submission
To the panel of the Independent Review of Aid Effectiveness,
I call upon the Australian Government to implement the following changes:
- End the practice of using aid to further Australia’s national interests:
- Remove reference to national interest from the objective of Australia’s aid program
- Establish AusAID as a separate department (currently under the Department of Foreign Affairs and Trade) with a Cabinet level minister responsible for international development.
- Recognise that the impacts of climate change will drastically undermine development prospects for low-income countries:
- Commit to at least A$2.1 billion per year funding for climate aid, commensurate with Australia’s contribution to global ODA.
- Ensure that this climate aid is new money, not funds redirected from other development priorities and that it is aimed primarily at assisting the most vulnerable communities.
- Improve the transparency, accountability and monitoring of Australian aid spending:
- Demonstrate how Australia’s policies on trade, investment, finance, migration, security and climate change are consistent with the promotion of poverty alleviation, gender equity and sustainable development.
Yours Sincerely,
<full name >
<address >
<phone number >
<email address>
How to help make aid fair
Remove ‘national interest’ from the aid program’s objective
The official objective of Australia’s aid program is “to assist developing countries reduce poverty and achieve sustainable development, in line with national interest.”[i] Australia’s aid program should focus on achieving poverty alleviation and sustainable development in accordance with the needs and priorities of recipient communities. However, greater importance is often attached to Australia’s commercial and strategic interests, thus compromising the effectiveness of aid to combat poverty. For example, the 2010-2011 aid budget spends about $30 million over four years on controlling 'irregular' immigration and upgrading of detention facilities in Indonesia.
Learn more about Australia’s skewed aid objectives
AusAID currently sits within the Department of Foreign Affairs and Trade (DFAT), which has a primary objective of advancing Australia’s national interest. For the aid program to maintain a clear focus on poverty alleviation and avoid being used as a vehicle to promote Australia’s strategic and commercial interests, AusAID needs to be established as a separate department with a Cabinet-level minister.
Fund additional climate aid to $A2.1billion per year
The impacts of climate change are felt most harshly by the poor worldwide. As the latest annual review of development effectiveness highlights “unless the global community adequately addresses the challenges of climate change, it will be more difficult to achieve and sustain the MDGs, and the impacts of climate change will undermine development gains already achieved.”[ii]
According to a 2010 World Bank report at least US$70 billion is needed annually to help developing countries adapt to the effects of climate change:
“the cost between 2010 and 2050 of adapting to an approximately 2oC warmer world by 2050 is in the range of $70 billion to $100 billion a year. This range is of the same order of magnitude as the foreign aid that developed countries now give developing countries each year, but it is still a very low percentage of the wealth of countries as measured by their GDP”. [iii]
Australia must pay its fair share of these costs. The Australian aid program, at about A$4.3 billion, is about 3 per cent of the total global ODA (of US$120 billion). If the government view is that this is a fair proportion of Australia's contribution to development aid, then the same should apply to climate aid. Thus Australian Government should commit to at least $2.1 billion per year in climate aid, commensurate with Australia's contribution to global ODA.
Currently the small amount of funding provided by Australia to address climate impacts is double-counted as climate aid to the UNCFCCC, and as ODA to the OECD. This practice violates the UNFCCC requirement that climate aid be additional to ODA.
Australian government must ensure that climate aid funding does not divert funds from other development priorities, and that it is aimed at primarily assisting the most vulnerable communities.
Establish an independent aid monitor
The Office of Development Effectiveness (ODE) is the government body responsible for monitoring the quality and evaluating the impact of Australian aid. However, the ODE is answerable to the Director of AusAID, rather than the parliament. This undermines the ODE’s ability to voice a genuine critique of Australia’s aid program. In addition, the majority of ODE reports have not been made publicly available[iv].
By contrast, the UK Government has committed to establishing an Independent Commission for Aid Impact which “will be totally independent from Government”, “will report directly to Parliament” and “will have completely separate decision-making powers, staff and location from the Department for International Development.” The Commissions’ “reports will be published on their website directly – with no interference from Government.”[v]
Independent monitoring and evaluation of Australia’s aid program is critical to ensuring quality and effectiveness. This includes public release of all evaluations and reports.
Improve transparency and accountability of the aid program
It is widely recognised that increased transparency and accountability of aid is crucial to improving the effectiveness of aid. AusAID is a signatory to the International Aid Transparency Initiative Accra Statement [vi], which commits it to:
- Share more detailed and up-to-date information about aid in an accessible format
- Be transparent about conditions attached to aid and expected project outputs and outcomes
Despite signing on to this statement, AusAID has fallen short of its commitments. As the Australian National Audit Office report (2009) highlights: “AusAID needs to develop better systems for capturing information on how Australian aid is delivered… At present, in the absence of published information, it is difficult for AusAID to be held to account for commitments to change the way Australian aid is delivered.”[vii]
AusAID must start translating its commitments into practice by providing up-to-date and detailed information about all aid programs, projects and initiatives to the public in a timely and accessible manner.
Improve transparency of commercial aid contracts
According to the DAC peer review of Australia’s aid program, about 20 to 25 per cent of Australian aid is delivered by commercial contractors[viii]. All aid contracts are covered by commercial-in-confidence agreements, making it difficult to know how millions of dollars in aid money is being spent. While AusAID publishes a list of aid contracts over $100,000 in value on its website, this provides only vague, one-sentence descriptions.
Check out more info about the commercialisation of Australia’s aid.
There is a need for greater transparency for commercial aid contracts. The Department of Finance and Administration has published a ‘Confidentiality Test’ in its Financial Management Guidelines,[ix] this provides some level of accountability into the proper use of commercial-in-confidence clauses in contracts (for example not allowing blanket inclusion of all information in a contract as commercial-in-confidence). All parts of commercial aid contracts that do not satisfy this ‘Confidentiality Test’ should be made publicly accessible over the Internet.
Reduce spending on Technical Assistance
Technical Assistance (TA) refers to the funding of experts (usually from Australia) to provide advise and build skills and capacity in developing countries. TA accounts for 40-50% of the Australian foreign aid budget, twice the average of other OECD countries. Internationally, TA has been a source of considerable criticism due to its high cost and lack of effectiveness in developing capacity[x].
A review commissioned by Australia and Papua New Guinea (PNG) governments highlights the ineffectiveness of TA, noting that “[t]he emphasis on technical assistance for capacity building and the lack of much to show for it is at the heart of the political difficulties the Australian aid program to PNG is facing.” [xi]
AID/WATCH believes that TA should only be used when appropriately led by aid recipients, who must be able to define their own capacity development needs and identify what support, if any, is required from foreign advisers.
Be guided by host governments, communities and civil society organisations
As a signatory to the Paris Declaration on Aid Effectiveness (2005) and Accra Agenda for Action (2008) Australia has made commitments to better align development assistance with national development strategies and strengthen country ownership over aid delivery. However, Australia's performance in adhering to these aid effectiveness principles has been “below par”.
For example, only 38 per cent of Australian Technical Assistance was carried out “in a way that enables partner countries to exercise leadership over the assistance provided.” This falls short of the donor (DAC) average of 59 per cent[xii]. Similarly only 23 per cent of Australia’s aid is subject to partner countries’ procurement systems, which falls short of the donor (DAC) average of 44 per cent. [xiii]
In addition to recipient governments, local communities and civil society organisations should also have ownership over development initiatives. Those for whom development initiatives are aimed at helping must have a say in designing, implementing and evaluating such initiatives.
Ensure a cohesive approach to development
While aid can make a significant impact in terms of improving development outcomes for people, aid alone is not enough. There is a need for greater policy coherence across a broad range of sectors that affect developing countries, such as trade, investment, finance, migration, security and climate change. It is therefore important that these policies support – and not undermine – efforts to achieve internationally agreed development goals, including the Millennium Development Goals.
The Government needs to demonstrate how it is taking this ‘whole of government’ approach to promoting agreed development goals. It should do this, for instance, by instituting a precautionary criteria-based approach that requires policy-makers in these fields to establish how their decisions promote poverty alleviation, gender equity and sustainable development.
[i] AUSTRALIA’S INTERNATIONAL DEVELOPMENT ASSISTANCE PROGRAM - budget statement, Stephen Smith and Bob McMullen, 2010, p106, [Enphasis added]
[ii] Annual Review of Development Effectiveness 2009 – Improving basic services for the poor, AusAID Office of Development Effectiveness, p9
[iii] World Bank (2010) The Economics of Adaptation to Climate Change, A Synthesis Report, Final Consultation Draft (August), World Bank, Washington, p 10. (emphasis in original)
[iv] Australian National Audit Office (2009) AusAID's Management of the Expanding Australian Aid Program, ANAO Audit Report No. 15 2009-10, p.150.
[v] ‘New independent commission unveiled’, United Kingdom Department For International Development, media release 29 October 2010, < http://www.dfid.gov.uk/Media-Room/News-Stories/2010/New-independent-commission-unveiled/>
[vi] INTERNATIONAL AID TRANSPARENCY INITIATIVE ACCRA STATEMENT, 4th September 2008, < http://www.aidtransparency.net/wp-content/uploads/2009/06/iati-accra-statement-p1.pdf >
[vii] Australian National Audit Office (2009) AusAID's Management of the Expanding Australian Aid Program, ANAO Audit Report No. 15 2009-10, p.148.
[viii] Development Assistance Committee Peer Review of Australia, Organisation for Economic Cooperation and Development, 2008/09, p. 64.< http://www.oecd.org/dataoecd/38/29/42019772.pdf >
[ix] Guidance on Confidentiality in Procurement, Financial Management Guidelines 3, Department of Finance and Administration, p10 < http://www.finance.gov.au/publications/fmg-series/docs/FMG_3_Final_for_Publication.pdf >
[x] ActionAid International (2006) Real Aid 2: Making Technical Assistance Work, < http://www.actionaid.org/assets/pdf/Real%20Aid%202%20small%20pdf%20version%20for%20emailing.pdf > and Duxfield, F. & Wheen, K (2007). Fighting Poverty or Fantasy Figures: The Reality of Australian Aid, AID/WATCH, Sydney
[xi] Review of the PNG-Australia Development Cooperation Treaty (1999), 19 April 2010, p 26. http://www.ausaid.gov.au/publications/pdf/PNGAustralianAidReview.pd
[xii] Australian National Audit Office (2009) AusAID's Management of the Expanding Australian Aid Program, ANAO Audit Report No. 15 2009-10, p.90
[xiii] Annual Review of Development Effectiveness 2009 – Improving basic services for the poor, AusAID Office of Development Effectiveness, p42
Policy Asks
Below are the Australian government policy changes that AID/WATCH believes are necessary for an aid program based on social justice and human rights, and environmental sustainability.
Join the campaign to make this happen!
1 - Remove ‘National Interest’ from the objective of Australia’s aid program.[1]
2 - Avoid the securitsation of aid.
Funds for placing Australian security forces overseas should not be considered as aid funding as this is inherently linked to Australia’s own national security
3 - Reduce the proportion of Technical Assistance in the AusAID budget to at least the OECD average; and ensure that any Technical Assistance funded is carried out in partnership with recipient governments.
Currently only 38% of Australian Technical Assistance is carried out in partnership, as opposed to the OECD average of 59% of aid conducted in government partnership1 TA should only be used when appropriately led by aid recipients who must be able to define their own capacity development needs and identify what support, if any, is required from foreign advisors.
4 - Create an independent body to monitor aid effectiveness and accountability.
This could be achieved by transforming the existing Office of Development Effectiveness into a genuinely independent body which makes all its reports public. All ODE reports include a detailed breakdown of expenditures.
Currently the budget shows a $330 million item with only a sentence of explanation to the Australian public.
5 - Reduce the amount of aid channelled through private corporations.
6 - Improve the transparency of commercial aid contracts.
Currently commercial-in-confidence contracts prevent transparency on AusAID contracts; million dollar contracts are awarded with only a few general words explaining to the public what the money is used for. Budgets should be broken down and evaluation reports should be made public.
7 - Increase the proportion of aid channelled through NGOs.
At present less than 10% of the value of aid contracts are administered through NGO’s
8 - Prioritise aid programs that help grassroots communities become eco-sufficient and culturally autonomous.
9 - Uphold Australia’s commitment made in the Kyoto Agreement that funds on climate change will not come out of existing aid commitments for MDGs.
Under the 1995 Berlin Mandate, which Australia signed at the time, and implemented under the later 1997 Kyoto Agreement, finally signed by Australia in 2007, the UNFCCC agreed that funding for joint implementation of climate mitigation would be additional to ‘current official development assistance (ODA) flows’ [2]
10 - Cease artificially inflating the aid budget.
For example, by including funding for debt cancellation, processing of asylum seekers, scholarship schemes, national security concerns and government departments. These should be funded in addition to the Australian aid budget.
11 - Fund education for public understanding of the implications and impacts of aid.
Last updated 14 November 2010 Next Page
[1] AusAID's Management of the Expanding Australian Aid Program, The Auditor-General Ian Mc-Phee, Audit Report No.15 2009–10 - Performance Audit, 2010
[2] UNFCCC (1995) Report of the Conference of the Parties on its First Session, held at Berlin from 28 March to 7 April 1995, Decision 5/CP1; see also Friends of the Earth Australia (2009) Stronger communities greener growth: environment and climate change strategy for Australian development assistance, Submission to AusAID, FoEA, Melbourne.
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Email us at MakeAidFair [at] aidwatch [dot] org [dot] au or use our contact form and we’ll respond with how you can join the campaign
Last updated 12 November 2010