1301.0 - Year Book Australia, 2007  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 24/01/2007   
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Contents >> International Relations >> Australian overseas aid program (AusAid)


The Australian Government’s overseas aid program aims to assist developing countries to reduce poverty and achieve sustainable development, in line with Australia’s national interest. The aid program works with Australia’s developing country partners, other donors, UN agencies and multilateral organisations such as the World Bank, to promote economic growth, stability, security, and functioning governments. Focusing predominantly on the Asia-Pacific region, the aid program also helps reduce the adverse impacts of conflict, natural and other disasters on vulnerable populations; and address long-term constraints to development including poor governance, corruption and instability.

The Government’s recently released White Paper, Australian Aid: Promoting Growth and Stability (2006) will help guide the direction of the overseas aid program in coming years. It provides a comprehensive account of how the Australian Government will approach the doubling of its aid budget to about $4b annually by 2010. The White Paper provides four guiding themes for the aid program: accelerating economic growth; fostering functioning and effective states; investing in people; and promoting regional stability and cooperation.

Australia’s peace and security is inextricably linked to that of its neighbouring countries. By helping to reduce poverty and promote sustainable development, the aid program is an integral part of Australia’s foreign policy and security agenda. The aid program reflects a coordinated whole-of-government approach to international development issues which draws on the skills and expertise of a wide range of Government agencies and other parts of the Australian community, including the business and academic sectors.

Over the last 20 years, more than 500 million people in the Asia-Pacific region have been lifted out of poverty, but another 700 million live on less than US $1 per day and almost 2 billion live on less than US $2 per day, including over half the population of Indonesia. Asia is making progress towards the UN Millennium Development Goals, but much of the Pacific is not. The Asia-Pacific states such as China, Thailand and Vietnam, are growing strongly while still facing large economical social challenges, while other countries still have to overcome some serious challenges to achieve and sustain growth and reduce poverty - including PNG, most of the Pacific island countries, East Timor, Cambodia, Laos, Indonesia and the Philippines.

In 2006-07, the Australian Government is providing an estimated $2.946b in Official Development Assistance (ODA), an increase of $455m over the 2005-06 budget figure of $2.491b. The ratio of Australia’s ODA to gross national income for 2006-07 is estimated at 0.30%. Details of ODA to partner countries in 2006-07 are provided in table 3.3.


Major partner countries/regions

Papua New Guinea and Pacific
Papua New Guinea
Solomon Islands
Regional Pacific
East Asia
Indonesia (ongoing program)
Indonesia (AIPRD)(b)
East Timor
Regional East Asia
South Asia, Africa and Other
Sri Lanka
Regional South Asia and Other
Middle East and Central Asia
Other Government Departments (not attributed to country/region)
Core contributions to multilateral organisations, other ODA, reconciliation of expenses to cash
Total ODA (cash)

(a) Budget estimates for 2006-07.
(b) Australia-Indonesia Partnership for Reconstruction and Development.
Source: AusAID.
    Further information and publications on the aid program can be obtained from the web site of the Australian Agency for International Development, <http://www.ausaid.gov.au>.


    AusAID is an administratively autonomous agency within the Australian Government's Foreign Affairs and Trade portfolio. The agency is responsible for management of Australia’s overseas aid program on behalf of the Government. The objective of the aid program is to assist developing countries reduce poverty and achieve sustainable development, in line with Australia’s national interest.

    Guiding themes of the overseas aid program

    With three overarching priorities - gender equality, partnerships and untied aid - the 2006 White Paper on Australian Aid sets out four themes to guide the direction of the aid program:
    • Accelerating economic growth

      Growth is fundamental for poverty reduction and critical to stability in many parts of the region.
      As a means to achieve this, the aid program works to improve the policy environment for growth; promotes free trade through assistance to enhance trade facilitation; and supports the strengthening of important drivers of growth through assistance for infrastructure, skilled workforce development and rural and business development.

      A new Australia-Pacific Technical College reinforces Australia’s commitment to workforce development in the region. Assistance to strengthen rural development through research, small scale infrastructure, agricultural safeguards and business development, will improve the economic prospects of the region’s poor, the majority of whom live in rural areas.
    • Fostering functioning and effective states

      The goal of significantly increasing Australia’s overseas aid by 2010 is conditional on improved governance in partner countries. Australia has a strong focus on governance and aims to build demand for stronger, more responsible leadership.

      A new Pacific Leadership Program, commencing in 2006-07 will foster the development of future leaders from a variety of fields including the academic, social, scientific, business and political. The Government places considerable emphasis on strengthening law and justice institutions and systems in a number of countries in the region, particularly in the Pacific.

      Australia is actively engaged in international research, analysis and program development with respect to fragile states. Expertise from AusAID, the Treasury, the AFP, the Department of Defence and external research organisations is being drawn upon to build understanding and analysis of fragile states, and improve the impact of Australian overseas aid.
    • Investing in people

      The Government is investing in people in developing countries by strengthening national health systems; tackling major diseases (HIV/AIDS, malaria and potential pandemics); strengthening national education systems; and supporting higher education through scholarships and linkages.

      The aid program is developing new strategies in education and health to build stronger basic services, and focus on financial management, human resources and policy development. The aid program is building on Australia’s HIV/AIDS leadership role, including through boosting its response to HIV/AIDS in PNG and, more broadly, through support for the work of Australia’s Ambassador for HIV/AIDS. Australia is undertaking significant planning and preparedness work to manage outbreaks of infectious disease including Avian Influenza. The aid program supports higher education through a comprehensive range of scholarships and learning support programs.

      Gender equality is an essential element in all successful development efforts. The aid program highlights the importance of gender equality through expanding activities in girls’ education, maternal and reproductive health, and promoting the role of women in decision making. The elimination of violence against women is also a priority for the aid program.
    • Promoting regional stability and cooperation

      Stability is a critical pre-determinant for growth and poverty reduction. Challenges to stability continue to emerge, most notably transboundary threats. These are not only direct threats to development - they also deter investment, diminish legitimate and stable employment prospects and have spill-over impacts on neighbouring countries. Australia addresses corruption, illicit drugs, people trafficking and terrorism through a range of whole-of-government initiatives.

      With the goal of enhancing growth and reducing the cost of governance through regional integration, Australia is supporting greater regional integration, where appropriate, through ASEAN, APEC and the Asian Development Bank (ADB) Greater Mekong Sub-region program. Further assistance is being provided to promote regional governance in the Pacific, including targeted support for the Pacific Plan.

    Aid effectiveness

    The projected increase in Australia's overseas aid by 2010 is subject to the continued and effective application of resources and the performance of partner governments and institutions. The aid program is building on Australia’s commitment to aid effectiveness, placing it at the forefront of international development practice.

    The effectiveness of the aid program is ensured by:
    • Strengthening the performance orientation of the aid program

      Australia aims to provide significant incentives for good performance by allocating additional resources to selected countries that meet agreed performance criteria. A new Office of Development Effectiveness monitors the quality and evaluates the impact of Australian aid and prepares the Annual Review of Development Effectiveness.
    • Combating corruption

      Australia’s goal to increase overseas aid is conditional on strengthened governance and reduced corruption in partner countries. Anti-corruption is a key consideration in the design and implementation of aid activities. AusAID works with whole-of-government partners and through regional and global initiatives to help mitigate corruption. The aid program works closely with partner countries to help them better monitor their performance and to enhance policy dialogue around anti-corruption and good governance themes.
    • Enhancing Australia’s engagement with the Asia-Pacific region

      Australia is building on its strong record of policy coherence in the Asia-Pacific region, especially in relation to trade and development policy. AusAID is broadening its cooperation with other government departments and agencies to deliver more effective aid programs in the region. New country and regional strategies will also involve whole-of-government consultation and provide a single framework for planning and review of development activities.

      In addition to stronger government engagement in the region, the aid program is promoting further research, non-government organisation (NGO) and community links. The development research program will be underpinned by a new strategy which encourages long-term partnerships with research organisations both in Australia and overseas. Further assistance is being provided through NGO programs to support development priorities in partner countries. Linkages with new groups in the region such as community-based organisations, professional bodies and businesses are being fostered.
    • Working in partnership with regional governments and other donors

      The aid program works closely with partner countries and other donors. Country strategies increasingly reflect the 2006 White Paper themes and individual country circumstances and priorities, and are produced jointly with partner governments.

      Australian overseas aid is fully untied. This means that all suppliers, irrespective of where they are based, are potentially able to supply goods and services for Australian development assistance. This enhances relations with partner governments and achieves better value for money through increased competition.


    Map 3.4 shows the geographical distribution of Australian aid in 2005-06. An outline of individual country and regional current aid programs is provided in the following paragraphs.


Papua New Guinea (PNG)

While PNG faces considerable challenges, the PNG Government has initiated strong reforms with respect to central bank independence, tariff reforms, the labour market and the financial sector. Economic activity suffers, however, because of poor infrastructure, burdensome regulation and licensing, and the effects of crime. Over 40% of the population lives on less than US$1 per day. Developments such as the PNG-Australia gas pipeline present new opportunities for long-term growth.

Australian support to PNG is guided by the PNG-Australia Development Cooperation Strategy 2006-2010 and focuses on four central themes: improved governance and state building; sustainable economic growth and productivity; improved stability and service delivery; and fighting HIV/AIDS. Australia is developing a performance-based partnership with PNG that is underpinned by the new country strategy and performance framework.

Australia continues to assist PNG with economic and public sector reforms including implementation of the PNG Government’s Public Sector Reform Strategy and efforts to review and rationalise public expenditure. Other assistance covers corporate planning, provincial financial management and payroll integrity. Australia also supports the Enhanced Cooperation Program (ECP). Which focuses on action to address corruption and seeks to improve economic management and growth, law and order, and border control and transport security.

Australia assists key agencies in the law and justice sector and community organisations in accordance with priorities set by PNG's National Law and Justice Policy and Plan of Action, and Medium Term Development Strategy 2005-2010.

Australia is helping PNG achieve economic growth which engages rural populations as both contributors and beneficiaries. Australia is providing significant assistance to PNG’s primary agricultural research and development institutions through the PNG-Australia Agricultural Research and Development Support Facility.

Australia assists infrastructure development through the Transport Sector Support Program to address PNG’s transport infrastructure constraints. Strengthening the private sector remains an important component of Australia’s approach in PNG. In addition to investment in infrastructure and rural development, Australia is working with the private sector and with the ADB to develop small and medium size enterprises in PNG.

Australia supports PNG’s National Education Plan 2005-2014 and assists PNG to improve education delivery in areas such as teacher training, curriculum development and infrastructure maintenance. Australia works closely with other donors to support improvements in PNG’s health sector, including through capacity building and training delivered to key health sector providers, delivery of clinical health services and training of local staff.

Australia is assisting Bougainvilleans and the Government of PNG to implement autonomy in Bougainville. Australia provides practical assistance to the autonomous government for economic development, with the aim to support self reliance and stability.

HIV/AIDS prevalence in PNG is approaching 2% of the adult population. Australia supports the implementation of PNG’s National Action Plan on HIV/AIDS. In particular, the aid program is addressing gender aspects of HIV/AIDS including domestic violence; support for primary health care services to handle sexually transmitted infections; expanded prevention and behavioural change programs; and support for stakeholders, including government and community-based organisations.

Pacific region

Most countries in the Pacific region have under-resourced institutions and narrow economic and resource bases. They suffer from small size, remoteness from major markets and vulnerability to natural disasters. Melanesian countries, in particular, have large numbers of young working-age people and low economic growth, leading to high unemployment and increased poverty. Australia has bilateral aid programs with a number of Pacific island nations including Solomon Islands, Vanuatu, Fiji, Samoa, Kiribati and Tonga. It provides assistance to micro-states including Cook Islands, Niue, Tuvalu, Federated States of Micronesia, Palau, Tokelau and Marshall Islands.

Australia’s Pacific Regional Aid Strategy 2004-2009 provides a framework for assistance to the Pacific to support its development goals. The strategy focuses on economic growth; effective, accountable and democratic government; strengthened law, justice and security; and enhanced service delivery.

Pacific 2020 is an initiative supported by Australia to foster dialogue and debate on actions to accelerate economic growth in the Pacific, PNG and East Timor. Pacific 2020 provides practical policy guidance for Pacific island countries on realising opportunities and managing challenges in nine critical growth areas:
    • four crosscutting growth factors - private sector investment, land, labour and political governance; and
    • five important economic sectors - agriculture, fisheries, forestry, mining and petroleum, and tourism.

    As a means to accelerate economic growth in the Pacific, Australia, through a new Pacific Land Mobilisation program, will contribute to research on the difficult issue of land tenure and disseminate information on innovative land mobilisation practices. Where there is clear demand, Australia will work with Pacific partners to deliver innovations and improvements in land tenure arrangements.

    Australia will support regional governance solutions, where appropriate, to foster greater stability and cooperation. Australian support for the Pacific Plan, endorsed by Pacific leaders in October 2005, includes strengthening regional audit arrangements, establishing a regional ombudsman’s office, and building country and regional statistical systems.

    Australia is establishing an Australia-Pacific Technical College to deliver Australian standard qualifications to the Pacific, and contribute to the upgrading of technical skills. Pacific island economies will benefit from a larger skilled workforce to support economic growth; and graduates will benefit from greater employment prospects in both domestic and regional labour markets.

    Australia is assisting the Pacific to address its environmental challenges such as changing sea levels and climate variability. A new environment strategy which is under development will focus on climate change and adaptation, freshwater management and strengthening environmental regulatory regimes.

    Australia will continue to take a leadership role in promoting expanded access to HIV/AIDS treatment. Australia will also continue its assistance to prevent the spread of HIV/AIDS, including through programs to support surveillance, behavioural change and community-based programs. Australia is `assisting Pacific countries prepare for emerging diseases, including Avian Influenza, with a particular focus on strengthening the capacity of regional and national systems to respond to potential outbreaks.

    Australia is supporting Solomon Islands as it emerges from a history of recent upheavals and challenges with a view to establishing positive patterns for long-term growth and development. Development assistance is provided through the Regional Assistance Mission to Solomon Islands (RAMSI) and through a bilateral aid program. Australia’s contribution to RAMSI involves broad Australian Government expertise.

    Australia’s aid program supports long-term stability for Vanuatu by accelerating economic growth and improving governance. A major governance initiative focuses on supporting necessary structural reforms and government policies that promote economic growth and improve services for the people of Vanuatu.

    Australia is working with the Fiji Government and other donors to promote economic growth and stability, in particular by strengthening the enabling environment for private sector development. Equally important is supporting Fiji’s own public sector reform agenda, with a focus on financial management, planning and human resource development.

    East Asia

    The East Asian region has enjoyed strong economic growth and reductions in poverty levels. The proportion of people living on less than US$1 per day in East Asia dropped from 58% in 1981 to 15% in 2001. This trend continues, largely due to growth in China. Yet despite this progress, East Asia remains home to 585 million people living on less than US$2 per day. Many parts of the region lack economic opportunities and suffer high poverty rates. Australia has bilateral programs with several East Asian countries including Indonesia, Philippines, Vietnam, China, Cambodia, East Timor and Laos.

    Australia supports regional initiatives to address and manage threats such as pandemics, natural disasters and transnational crime (including people smuggling, illegal fishing, drug trafficking and money laundering). These threats require national as well as transnational responses.

    Australia provides a valuable contribution to addressing HIV/AIDS in the region. Australia’s regional assistance will support the reduction of HIV-related harm associated with injecting drug use, improve treatment for injecting drug users and strengthen national HIV/AIDS policy-making and programming.

    Australia is addressing corruption through further developing its anti-corruption strategy to encourage the rule of law, promote improved public sector management and strengthen civil society. Australia is also working with the World Bank to address corruption in natural resource management and infrastructure, and supports the OECD’s Anti-Corruption Initiative for the Asia-Pacific.

    Australia is supporting studies on regional integration. The aid program is working with ASEAN, multilateral development banks and other key donors to pilot activities in regional security, private investment, infrastructure development and donor coordination.

    Australian support through the Australia-Indonesia Partnership for Reconstruction and Development has made a major contribution to international relief and reconstruction efforts in Aceh and other tsunami-affected areas, as well as to broader development in Indonesia. The program aims to improve economic and public sector management, rebuild essential infrastructure and enhance economic growth. Ongoing assistance will be provided to support the education and health sectors address communicable diseases such as HIV/AIDS.

    In the Philippines, Australia’s development priorities are: economic governance; security and stability; and addressing rural poverty in the south. Australia is laying the foundation for performance-based initiatives which will support health, education and infrastructure investments. Australia continues to support activities to promote security and stability.

    Australia’s aid program to Vietnam seeks to strengthen economic growth through improving private sector development and facilitating economic integration. Australia’s development cooperation program supports Vietnam’s Five Year Socio-Economic Development Plan 2006-2010.

    Australia’s strategy for development cooperation with Cambodia has three themes: strengthening the rule of law; increasing the productivity and incomes of the rural poor (particularly in the agriculture sector); and reducing the vulnerability of the poor to natural disasters.

    Australia is assisting East Timor build institutions for the efficient use of new resource-based revenues. Australia supports effective and accountable planning, budgeting and expenditure management to improve public sector management. Australia is also committed to supporting peace and stability in East Timor, following the civil unrest in mid-2006.

    South Asia

    Australia is assisting Pakistan through the commitment of 500 new scholarships for study in Australia. These scholarships will be provided over the next five years through AusAID in partnership with the Australian Government Department of Education, Science and Training. Australia’s support to Pakistan’s reconstruction efforts following the South Asian earthquake in October 2005 includes the rebuilding of education and health facilities.

    In Bangladesh, Australia is supporting education and fostering stronger governance through regional and bilateral mechanisms. In Sri Lanka, Australia is building consensus for durable peace through international NGOs, UN agencies and local partners, and is providing assistance to communities affected by conflict. Australian aid to India is based on mutual strategic interest and providing Australian skills and expertise where they can offer most value.

    Africa and the Middle East

    Australia has a strong record in responding to humanitarian situations in Africa and will continue to help ease the impact of humanitarian crises. The Government is working with the World Food Program, UN Children’s Fund, the World Bank and the UK Department for International Development to facilitate HIV/AIDS prevention and care, provide for vulnerable children, improve water and sanitation, and enhance food security.

    Australia supports the Afghanistan Compact which provides a road map for building a stable and democratic state. Australia is involved in international efforts to support security and stability in Afghanistan. Australian assistance will help rebuild government institutions, provide further support for human rights, and deliver critical health and education services.

    Australia will provide further assistance to Iraq to support international efforts in establishing a viable and stable democracy. Australian aid assistance to Iraq includes significant recognition of bilateral debt relief. Other assistance focuses on strengthening governance and institutional capacity in key ministries.

    Australia partners with UN agencies, international NGOs and other multilateral agencies to support humanitarian activities which deliver relief and essential services to vulnerable communities in Lebanon and Palestine.


    Emergency, humanitarian and refugee programs

    Recent events in the Asia-Pacific underscore the high degree of vulnerability of regional countries relation to natural disasters and humanitarian crises. The 2004 Indian Ocean tsunami killed more than 167,000 people and caused up to US$1.2b in damage to productive sectors. The May 2006 earthquake in Yogyakarta, Indonesia killed at least 5,782 people, injured more than 33,000 and left more than 200,000 homeless. In the Pacific, cyclones and other natural disasters, such as volcanic eruptions, are an ongoing concern. Australia’s humanitarian, emergency and refugee programs contribute significantly to reducing the impact of conflict and natural and other disasters on vulnerable groups.

    The aid program is strengthening its partnerships with Australian institutions. These partnerships draw in expertise and personnel from both state government and Australian Government agencies, and from the volunteer, health and business sectors. Australia is also bolstering partner-country disaster and emergency response capabilities.

    Australia provides core support for key humanitarian agencies such as the UN Office for the Coordination of Humanitarian Affairs, the International Committee of the Red Cross and the UN Central Emergency Response Fund. Australia maintains a significant partnership with the WFP and works closely with the UN High Commissioner for Refugees. Through the International Refugee Fund, Australia helps to address the needs of people displaced by conflict.

    Multilateral organisations

    The Australian Government actively encourages the World Bank and ADB to focus on policies and initiatives that will benefit developing countries in its region. These international financial institutions are principal partners in the region given their financial resources, specialist skills and important roles in global development policy.

    Australia continues to support the Heavily Indebted Poor Countries Initiative. This provides multilateral debt relief to the world’s poorest and most heavily indebted countries which have demonstrated commitment to reform. Australia is providing a substantial up-front contribution to finance its share of multilateral debt relief through the G8 Multilateral Debt Relief Initiative.

    Australia is committed to the Global Environment Facility which supports projects in developing countries concerning biodiversity, climate change, international waters, the ozone layer, land degradation and persistent organic pollutants. Australia also supports the Multilateral Fund for the Montreal Protocol on Substances that Deplete the Ozone Layer.

    Support for UN development agencies extends the reach of Australia’s aid program. These organisations mobilise and coordinate resources on a scale beyond the capacity of individual donors and play a significant role in consensus building on development issues. Australia supports core UN agencies that play a significant global developmental role. Australia is strengthening its engagement with UN partners that focus on HIV/AIDS, emerging infectious diseases, women and children’s health, and good governance.

    Australia’s support for Commonwealth organisations will focus on the Commonwealth Fund for Technical Cooperation which provides assistance to member countries - many of them small island developing nations.

    Non-government, volunteer and community programs

    NGOs play an important role in the delivery of Australian aid. They mobilise public support for development and, through their networks in partner countries, strengthen civil society and provide specialist skills. By assisting the development of local communities, NGOs can help build sustainability and enhance ownership of the development process. The AusAID-NGO Cooperation Program supports accredited Australian NGOs to undertake cost effective, practical and direct poverty reduction activities. The aid program is developing ties with community-based organisations, professional bodies, businesses, and local government institutions to diversify its range of partners in addressing regional development challenges.

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