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...

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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

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Last updated: 12 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.

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Last updated 12 November 2010

Corporatisation

Corporatisation 2.jpg

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

AID/WATCH Policy Asks

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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:

1. nationally-tied – aid money is provided on the condition that the receiving country buys goods and services from the donor country; 
2. project or program-tied – aid which must be spent on specific projects or sectoral programs determined by Australia; or 
3. 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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Last updated 12 November 2010

[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

climate 1.jpg

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

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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

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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:

                AID/WATCH Policy Asks

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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