Monday 26 Oct 2020 | 20:34 | SYDNEY
Monday 26 Oct 2020 | 20:34 | SYDNEY

Fixing the international architecture of aid

4 November 2011 13:19

Peter Baxter is Director General of AusAID. Hear his recent Lowy Institute speech here.

What we do at AusAID is hard work. If there was a simple template for development we would have been using it already. We allocate our funds and efforts based on need, our capacity to make a difference, the effectiveness and scale of our efforts and Australia's national interest.

AusAID contributes to broader Australian foreign policy goals and national security efforts to promote stability and prosperity in our region. Our work supports just about every area of public policy you can think of — from vaccinating millions of children around the world, to working beside our ADF and DFAT colleagues in Uruzgan province in Afghanistan implementing development programs, to leading the Australian Government's negotiations on the G20's development agenda and the design of the Green Climate Fund.

We are responsible for coordinating the government's response to international natural disasters and humanitarian emergencies and maintain a 24/7 capability. We responded to over 30 disasters last financial year and we are leading the Australian Government's response to the current crisis in the Horn of Africa. So what does the Australian public think of aid and the work AusAID does?

The Lowy Institute conducts what is widely seen as the most authoritative public opinion poll on foreign policy issues each year. The 2011 Lowy poll included two specific questions about the aid program:

  1. How much did people think the Australian government spent on aid?
  2. How much did they think the government should spend on aid?

In response to the first question, on average, respondents thought the government spent about 16% of the federal budget on overseas aid, although a third believed the level was 20% or more. In responding to the second question, Australians on average thought that 12% of the federal budget should be spent on aid. Interestingly, some 93% of respondents thought the current level or more should be spent on aid. It's interesting to note that in 2010 over two million Australians donated their own money to NGOs working on international development issues.

The current level of aid expenditure accounts for 1.3% of the federal budget (or 0.35% of Gross National Income). There is currently bipartisan support for the government commitment to increase the aid program to 0.5% of GNI by 2015-16. That could see the aid program double in size again depending on economic growth. This is a lot of money and needs to be used wisely.

I welcome debate on Australia's aid program. The size of the aid program, what it is used for, the results and failures it is responsible for, and the administration of a large amount of taxpayer's funds, are of course, all legitimate subjects for debate — just like any other area of public expenditure.

By international standards Australia is a moderately generous donor. Last year we ranked 13th out of the 23 OECD countries by GNI and 11th by dollar volume. We are around the 13th largest economy in the world. Countries like Belgium, Norway and Ireland have been far more generous than Australia in terms of the percentage of their GNI they devote to aid. It needs to be noted that none of these countries live near a developing region.

I'd argue that the bipartisan target of placing Australian aid slightly above the OECD average as a donor is not an overly ambitious or ill-conceived policy for a country with Australia's values and national interests. I'd argue if ever a country had good reason to invest wisely in an effective aid program it is Australia given we are situated in a region where 22 of our 24 neighbouring countries are developing, and several of them are fragile states. That's why we spend over three quarters of Australia's aid budget in the Asia Pacific.

I'd also suggest that the Australian public supports the government's position of using the aid program to contribute to global public goods such as the impacts of climate change, sustainable development, empowering women and girls, and eliminating preventable deaths from communicable diseases.The mandate for aid agencies has expanded in recent years — humanitarian, economic growth, climate change adaptation, stabilisation in conflict affected areas, anti-corruption, counter-terrorism, debt, state-building to name a few.

The global aid system has responded to that agenda by becoming even more fragmented and evidence shows that fragmentation leads to ineffective aid. The international architecture of aid needs fixing.

A recent study found there were 56 donor countries, 197 bilateral agencies, and 263 multilateral agencies. I don't think that includes NGOs — of which about 800 turned up in the aftermath of the Haiti earthquake. It is frightening to think that only one multilateral development agency has ever closed since WWII — the Nordic Development Bank. The program aimed at streamlining UN programs in developing countries, 'One UN', has yet to deliver widespread benefits.

Aid is also changing in other ways with new donors entering the scene. In the 1990s, assistance from OECD donors was about 80% of total aid. By 2008, non-Development Assistance Committee (DAC) aid had grown to 5% and private philanthropy to 32%. In the current food crisis in Somalia we are seeing emerging donors like Turkey and Qatar taking more prominent roles in delivering assistance. China is often seen as the fastest growing donor — maybe as much as 30% per year.

It remains to be seen whether these new donors will want to use the existing aid architecture or whether they will work outside it. A key question over the next decade is, will China, India, Brazil and other emerging donors sign on to the OECD DAC rules that have dominated aid for the last few decades?

For what it is worth, my view is that all assistance to developing countries should be delivered in a predictable, transparent and open way with full accountability for results — no matter where it comes from. It is reasonable for emerging donors to want to have a key role in deciding the new aid landscape.

Later this month countries from around the world, developed and developing, will meet in Busan, Korea to consider the new global architecture for aid effectiveness. It will be the first time such a conference has been held since the emerging donors have scaled up their operations to the level of billion dollar programs. It will be fascinating to see if established and emerging donors can come together and agree on some common ground rules around transparency and accountability.

Photo courtesy of AusAID.