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AUSTRALIA'S OVERSEAS AID PROGRAM
These principles will guide the aid program in delivering sustainable development gains.
The Australian Agency for International Development (AusAID) manages Australia's overseas aid program on behalf of the Government. AusAID is an administratively autonomous agency within the Foreign Affairs and Trade portfolio. The aid program's principal focus is on the Asia-Pacific region. The aid program has an international reputation for flexibility, responsiveness and effectiveness.
Australia’s aid program was reviewed favourably by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) in 2008. The DAC review noted efforts to promote effectiveness, including through the establishment of the Office of Development Effectiveness (ODE) and the production of the first Annual Review of Development Effectiveness. Australia is one of only two bilateral donors to produce such a review on a regular basis.
Responding to the global recession
Dramatic changes have been made to the international landscape over the past year due to the impact of the global recession. Declines in foreign direct investment, export revenue, remittances, tourism and other adverse impacts of the recession will reduce economic growth and, in turn, may unravel progress towards the MDGs. Based on economic growth projections made in late March 2009, it is estimated that up to 90 million extra people world-wide (62 million in Asia) will live in extreme income poverty in 2009 as a result of the economic slowdown. This represents not just a slowing but a reversal in the global extreme poverty reduction trend since 2005, with the global number of extreme income poor rising to over 1.2 billion people in 2009.
The objective of Australia’s aid response to the global recession is to maintain progress towards the MDGs and to support early, sustainable recovery. Priority has been given to generating employment and restoring growth; supporting delivery of basic services, such as health care and education, to the poor; and helping the vulnerable.
Increased efforts to generate employment will be an essential component of an effective response to the global recession in almost all developing countries. Keeping people in work, even on minimal incomes, helps to maintain essential household purchases and promotes social stability, especially in countries where systems of social protection are weak.
The employment generation impacts of existing aid programs in infrastructure and enterprise development will be boosted significantly by 2009-10 budget initiatives in rural development and food security and economic infrastructure. Emphasis will be given to labour-intensive public works programs, such as road maintenance, especially in regional areas, where alternative employment opportunities are scarce. Programs to increase employment opportunities will be targeted to groups most affected by the recession, such as women in export-oriented industries or rural youth. Australian support for technical and vocational training will also continue to be expanded.
Sustaining investment in infrastructure, including maintenance, is also critical to avoid exacerbating future infrastructure bottlenecks which will lengthen the impact of the recession and slow economic recovery.
Established and successful programs of support in economic governance in the Asia-Pacific region have positioned Australia well to assist developing country partners to implement structural changes that will better prepare them for economic recovery and increase their overall resilience to future economic shocks. Potential areas for increased support may include efforts to promote private sector activity, including privatisation of poorly performing state-owned enterprises, increased tendering of inefficient government services such as road maintenance and wider efforts to improve the business-enabling environment.
Supporting service delivery
As government revenues decline it will be important to focus limited resources on essential health, education, and economic infrastructure services. Australia will assist partner countries to assess fiscal gaps, re-prioritise expenditures and improve the quality of budgeting and expenditure management. Budget initiatives in 2009-10 to increase the use of performance-linked aid and improve transparency and accountability in government will support partner country efforts.
There is likely to be greater demand for basic public health services at the community and facility level with less ability to pay out-of-pocket expenses. Australia will work with partner countries to ensure aid spending is effectively targeted towards minimising recession impacts on the delivery of essential services. Appropriate actions to support maintenance of basic health and education services may include increased school-based grants, fee relief, and funding to maintain essential pharmaceutical supplies to health centres.
Helping the vulnerable
The impact of the global recession is being felt differently in different countries. The most vulnerable groups include:
Australia will work with partner governments, civil society groups and other development partners to improve the quality and timeliness of vulnerability assessments particularly in the Asia-Pacific region. To support those most at risk of falling into extreme poverty and avoid the risks of life-long ‘poverty traps’ social protection programs may include:
The global economic slowdown demonstrates clearly the link between broad-based economic growth and sustained improvements in the lives of the poor. In 2009-10, a range of new initiatives will support accelerated economic growth, through investments in rural development, microfinance and infrastructure development.
Global population growth of one per cent per year, increased consumption and the diversion of food crops for biofuel production and for intensive feeding of livestock, have all increased the total global demand for food, resulting in food shortages in particular countries. According to the United Nations, there are currently close to one billion malnourished people globally. Changes in climatic conditions, soil degradation, scarcity of arable land, a decline in the standard of rural infrastructure and use of outdated agricultural practices have affected the global community’s capacity to respond.
Over 90 per cent of the poor in East Asia and the Pacific live in rural areas with most dependent on agriculture and fisheries for their livelihoods. A decrease over the past several decades in investments in agriculture and agricultural research and development has compounded the problems in developing countries of food insecurity and persistent rural poverty.
Australia’s response to this problem includes both short and medium-term investments to support increased agricultural productivity, better functioning of rural markets, trade reform, improved fisheries management and removal of barriers to rural private sector growth. Direct spending on rural development is estimated to be $230 million in 2009-10, or approximately six per cent of total ODA. This includes the first year of the new initiative Food Security through Rural Development ($464 million over four years) introduced in the 2009-10 Budget.
Increased funding will build on successful current large-scale program support (such as agricultural livelihoods training in 45 provinces of Vietnam) as well as smaller-scale projects (such as assisting local farmers in the Solomon Islands to identify better performing varieties of subsistence root crops).
Microfinance and financial services
In 2009-10, the Australian aid program will facilitate economic growth through expanded support for microfinance activities in both urban and rural areas. This will enable poor people, who commonly lack collateral or are considered too costly to serve, to access affordable small-scale financial services such as deposits, loans, remittance transfer systems and insurance. New assistance will support activities in the Pacific, Papua New Guinea and East Timor, and Africa and West Asia, including Afghanistan and Iraq. In this work Australia will draw on partnerships with non-government organisations (NGOs), regional network organisations and the private sector. Financial support for the Consultative Group to Assist the Poor, a World Bank policy and research body which disseminates best practice advice on microfinance will continue.
Poor infrastructure is a major constraint to economic development and achievement of the MDGs. Conversely, infrastructure investment has a demonstrated positive impact on economic growth and poverty reduction. Reliable transport infrastructure improves access to services and markets, encourages entrepreneurial activity and promotes economic integration. Improved water and sanitation services help reduce water-borne and vector-borne diseases. Information and communication technology promotes broad-based growth through greater integration of markets and economies. Reliable and affordable energy supplies promote agricultural and private sector development and improve living standards in poor households.
Two-thirds of people globally who are without reliable access to clean water live in the Asia-Pacific region. Of the region’s 3.8 billion people, over half do not have access to sanitation, and an estimated one billion people still lack electricity.
Australia’s direct spending on infrastructure and water and sanitation will increase to over $560 million in 2009-10, or approximately 15 per cent of total ODA, up from $350 million in 2007-08. This includes the first year of the new Economic Infrastructure Initiative ($454 million over four years) introduced in the 2009-10 Budget. Increased funding will help partner governments maintain and enhance investments in essential infrastructure, while generating jobs and improving service delivery, in response to the unfolding global recession. Major components of infrastructure assistance in 2009-10 will comprise support for transport (45 per cent of total infrastructure expenditure), water and sanitation (30 per cent) and energy sector development (12 per cent).
Australia’s support for transport infrastructure focuses on improving access to markets and essential services. Major programs are underway in Indonesia, the Philippines, the Greater Mekong sub-region, East Timor, Papua New Guinea and the Pacific.
The number of children enrolled in primary school worldwide has risen from 647 million to 688 million over the six year period from 2000. However, there are still 75 million children of primary school age who are not enrolled. Over 27 million of these children live in Asia and the Pacific. Children who miss out on a full basic education are overwhelmingly poor, female, living in remote locations, from ethnic minorities or with disability.
The Australian Government recognises the power of education as an investment that helps individuals achieve their potential and societies to be stronger and more productive. Investments in education will increase to over $690 million in 2009-10, or approximately 18 per cent of total ODA. Approximately one third of education sector expenditure relates to strengthening higher education and the provision of development scholarships. The majority of education expenditure relates to basic education and education system strengthening. Support for technical and vocational education currently comprises about nine per cent of total education expenditure.
In 2009-10 Australia will strengthen national education systems in Indonesia, Papua New Guinea, the Philippines, East Timor, Bangladesh, Fiji, Vanuatu, Samoa, Kiribati and Laos. Programs are tailored to partner country circumstances and priorities. They include provision of quality teaching and learning materials; teacher training; the use of school-based grants; and support for education sector governance and the construction and refurbishment of schools and classrooms; improved information systems, education planning, budgeting and management.
Australia’s education assistance will also reach the disadvantaged and marginalised, including through the provision of more equitable access to quality education for girls and boys with disabilities, and those in disadvantaged Muslim and Indigenous Peoples’ communities in the Philippines. In collaboration with UNICEF, Australia will support improved education for disadvantaged communities in Papua, in Indonesia. In the Pacific, Australia will continue to help develop livelihood skills through existing and new programs in Tonga, Kiribati, Samoa and Fiji. The Australia-Pacific Technical College, which has campuses in Fiji, Samoa, Papua New Guinea and Vanuatu, is on track to deliver 3,000 graduates (trained to Australian standards) by June 2011.
Through the Australian Development Scholarships program, Australia provides around 1,000 new scholarships annually in tertiary and higher education. This is projected to increase to an estimated 1,500 by 2011. In addition, approximately 2,500 Australian Leadership Awards will be offered in the period to 2011, involving scholarships and fellowship placements with Australian host organisations. As part of Australia’s overall increase in aid to Africa, Australia will help build Africa’s human resource capacity through a significantly expanded scholarships program which will include technical and vocational training.
In the Pacific, Australia is supporting enhancement of regional education institutions. As part of Australia’s investment in improving Pacific public sector capacity over the next four years, Australia will provide 20,000 training opportunities for Pacific public servants to improve core writing, accounting and administrative skills; 2,000 leadership development opportunities for strongly performing senior and middle level public servants, in areas such as policy development and people management; and more than 100 Australian Government scholarships or fellowships offered each year for promising public servants working on priority issues.
In the Asia Pacific region, approximately a quarter of a million women die annually of preventable and treatable complications in pregnancy and childbirth; close to four million children die before their fifth birthday; and five million people are living with HIV. In the Pacific, non-communicable diseases such as diabetes and heart disease are now a major cause of adult mortality. In Solomon Islands and Vanuatu, malaria incidence is among the highest in the world outside Africa.
Australian support for health and HIV activities will increase to over $595 million in 2009-10, or approximately 16 per cent of total ODA. Major categories of health sector expenditure are prevention, treatment and care with respect to control of sexually transmitted infections (STI) and HIV, support for basic health care, and strengthening and improvement of health systems. Large health sector support programs are underway in Papua New Guinea, Indonesia, and the Solomon Islands. New health programs have been established in Pakistan, Bangladesh, Vietnam, Cambodia and East Timor. In Africa, Australia will broaden its assistance for maternal and child health. At the global level Australia is contributing to innovative funding approaches, including to the Global Alliance for Vaccines and Immunisation (GAVI) which is providing greater access to the benefits of immunisation.
Improving maternal and child health will remain a priority, including through increasing access to family planning services, increased numbers of skilled birth attendants and the use of health performance incentives to ensure services reach vulnerable groups. Australia will also provide additional funding of up to $15 million over four years through United Nations agencies, bilateral programs and Australian NGOs for family planning and reproductive health activities to help reduce maternal deaths.
Globally, there are 33.2 million people living with HIV. In the Asia-Pacific region, there are nearly half a million new infections and 300,000 deaths each year. HIV is having an increasingly human and economic impact on our nearest neighbour, Papua New Guinea where there are approximately 60,000 people living with the disease and an estimated 3,730 children were orphaned by HIV in 2007 alone. It is estimated that, without additional action, infection rates will increase from just over two per cent of the population now to five per cent within the next four years. Rates of infection in the neighbouring provinces of Papua and West Papua in Indonesia are approximately 2.4 per cent and also growing rapidly.
In 2009-10 expenditure on programs to address HIV will increase to an estimated $160 million. This includes a further $46.5 million contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria. This contribution supports performance-based grants for country-driven programs, to reduce the burden and impact of HIV, tuberculosis and malaria. The principal geographic focus for Australia’s HIV support will be the Asia-Pacific region, particularly in Papua New Guinea, East and South Asia and Pacific Island countries.
Australia’s HIV-related international development assistance will support partner countries to:
Building capacity for effective economic and public financial management is critical for development, attracting investment and ensuring that public resources are used sustainably and targeted to areas of need. Governance includes more than the institutions of state. Effective governance occurs when government, the private sector, civil society organisations and citizens work together to identify needs, find solutions and deliver services. Effective governance includes a commitment to combat corruption and improve transparency and accountability in government. Corruption is a primary impediment to sustainable growth and improved service delivery, leading to under-investment in public goods and entrenched inequality.
Australia is committed to work at all levels of society in partner countries to support improvements in government capability, responsiveness to citizen needs and accountability. Spending on governance constitutes the largest proportion of the aid program, reflecting the importance of effective governance to improved service delivery, economic growth and social stability. In 2009-10 governance-related ODA will total approximately $820 million or 22 per cent of total ODA.
Economic governance and public sector reform are heavily interdependent. Two priorities for the Australian aid program from 2009-10 will be improving public financial management and working with sub-national levels of government in partner countries. This work will respond to challenges emerging from the global recession in developing countries such as shrinking revenues and increased demand for government services. Assistance will include increasing the capacity of government systems, through tailored training programs, placement of Australian and other experts with partner country governments, and encouraging the adoption of best-practice systems of performance improvement such as Public Expenditure and Financial Analysis.
In many countries in which the Australian aid program works, basic services such as education and health are delivered by sub-national levels of government. From 2009-10 Australia will provide increased support to strengthen government systems and processes for the delivery of basic services at national and local levels through improved regulatory, legislative and policy frameworks. This includes the first year of the new Improving Responsiveness and Accountability in Government Initiative ($136 million over four years) introduced in the 2009-10 Budget.
Australia will continue to support engagement between communities and government, to improve the ability of citizens to participate in making decisions that impact upon their lives. Programs to support the role and build the capacity of civil society organisations to monitor, and in some instances deliver, services will be developed and strengthened. In 2009-10, work will continue to strengthen Pacific media to provide citizens with greater access to information and increase government accountability.
Performance-linked aid is the provision of additional assistance to partner governments and agencies to recognise progress in achieving identified policy or administrative reforms or improvements in specific development outcomes. Early evidence from the use of performance-linked aid indicates that it has helped partner governments to set and implement effective policy and can be a powerful instrument for reform - provided there is local ownership and clarity around performance measures. Australia will invest $336.1 million over four years to enable the inclusion of significant performance-linked aid elements within the new Pacific Partnerships for Development and the expansion of existing performance-linked aid arrangements in Asia.
The Australian Government is committed to equitable development, with the gains and benefits of development assistance available to all.
Addressing gender inequality and supporting women’s full participation in economic, social and political life are priorities for Australia’s aid program. Gender inequalities are most visible in women’s access to education, health services, economic opportunities and political participation. Women are also far more likely than men to be the victims of violence. Despite recent progress in South Asia, only 85 girls for every 100 boys are enrolled in secondary school, and women and girls remain at a distinct disadvantage in attending school and acquiring literacy skills. In East Timor, maternal mortality is estimated at 660 per 100,000 live births, one of the highest rates in the world. The Pacific has the lowest rate of female membership of parliaments in the world (2.5 per cent) and is the only region in which women’s formal political participation has stagnated.
Gender disparities have clear social and economic costs. In the Asia-Pacific region, it is estimated that up to US$47 billion per year is lost due to restrictions on women’s access to employment opportunities and up to US$30 billion due to gender gaps in education. Violence and the fear of violence severely limits the contribution of women to development and causes lower worker productivity and income, escalating costs in healthcare, social services and policing, disability and lower rates of accumulation of human and social capital.
Australia is working to narrow the gender gap by targeting direct assistance to reduce violence against women and improve economic opportunities for women, as well as enhancing their participation in decision-making. Australia will increase its support for the United Nations Development Fund for Women (UNIFEM) ($16.1 million over the next three years) in support of UNIFEM’s work in over 100 countries to reduce women’s poverty and exclusion, end violence against women, reverse the spread of HIV among women and girls and support women’s leadership in governance and post-conflict reconstruction.
In partnership with UNIFEM Pacific, Australia will provide $6.2 million over five years to train women at a local level for leadership and governance roles in the Pacific. Research to be undertaken on the barriers and successful pathways to women’s leadership in the Pacific region will help shape future assistance.
Helping people with a disability
People with disability are among the poorest and most vulnerable in developing countries. They are more likely to be excluded from education, health services and employment, than others in their communities. Eighty per cent of the 650 million people living with disability world-wide are in developing countries. Disability can lead to significant economic impacts on families and communities, with an estimated 25 per cent of households affected.
It is believed that, in Asia, at least half the causes of disability can be prevented. One-third of people with disability are children, two-thirds of whom have preventable impairments. The costs globally of blindness and low vision in 2000 were estimated to be US$42 billion. Without a decrease in the prevalence of blindness and low vision, it is projected that total annual costs would rise to US$110 billion by 2020. Road traffic accidents cost developing countries up to US$100 billion each year, a figure equivalent to almost twice as much as total global ODA.
The specific needs and priorities of people with disability are considered across all phases of Australia’s development assistance. Efforts will focus initially on reducing preventable impairments in two areas; avoidable blindness and road safety. An Avoidable Blindness Fund has been established to strengthen eye health and vision services in Cambodia, Papua New Guinea, Solomon Islands and Vanuatu. Australia is also working with members of Vision 2020 Australia to support Vietnam’s Prevention of Blindness strategy and with the New Zealand Agency for International Development (NZAID) to expand the number of eye health workers in the Pacific, Papua New Guinea and East Timor. Increased support will also reduce impairments caused by traffic accidents, building on Australia’s existing support for the World Bank’s Global Road Safety Facility.
Addressing environmental and climate change challenges is central to poverty reduction. Expenditure on environment and climate change programs in 2009-10 is estimated to be over $170 million, approximately five per cent of total Australian ODA. Australia’s development assistance to the environment sector to date has focused primarily on: supporting adaptation to climate change; greenhouse gas mitigation through reduced deforestation and forest degradation; and multilateral environment funds.
Supporting developing countries to implement lower carbon growth strategies is an increasing focus for Australia’s development assistance. Australia has made a pledge of $100 million over three years to the World Bank-administered Clean Technology Fund, which finances large-scale and innovative approaches to the demonstration and deployment of low carbon technologies in high-emitting developing countries.
Australia will continue to expand efforts to address the impacts of climate change with funding of $150 million over three years from 2008-09 to address high priority adaptation needs in vulnerable countries in Asia and the Pacific. Support to partner countries in 2009-10 will include: scientific research to better understand the impacts of climate change on the natural and socio-economic systems of Pacific Island countries; vulnerability assessments to help Pacific Island countries formulate appropriate adaptation strategies and plans; and specific assistance to help country partners adapt to the immediate impacts of climate change.
The International Forest Carbon Initiative ($200 million over five years from 2007-08) is supporting cost effective abatement of global greenhouse gas emissions by improving the management of tropical forests in developing countries. Under the Kalimantan Forests and Climate Partnership for example, the first large-scale Reducing Emissions from Deforestation and Degradation (REDD) demonstration activity of its kind is being planned in Indonesia. In 2009-10, Australia will work with Indonesia to develop a second REDD demonstration activity and a national carbon accounting system.
Conflict, insecurity and humanitarian crises undermine development progress and future growth prospects through the destruction of local communities, livelihoods, institutions and infrastructure and places pressure on fragile government systems. Emerging global issues, including the closely-linked concerns of climate change, food and resource insecurity, and protracted displacement are potential causes of increasing poverty and human insecurity.
Australia provides assistance to over 30 humanitarian and protracted emergency situations worldwide each year. The increasing frequency and ferocity of natural disasters and greater public awareness of their impact is leading to greater emphasis on disaster preparedness and risk reduction in an effort to mitigate the worst humanitarian effects of such disasters.
Australia will continue to contribute to international responses to humanitarian crises, taking a leadership role in response operations in the Asia-Pacific region where this is appropriate. Australia will also take an active leadership role in policy dialogue and advocacy in international fora such as in the role of chair of the United Nations Office for Coordination of Humanitarian Affairs (UNOCHA) Donor Support Group. Increased coherence in addressing issues of human security and stability will be achieved through a new Crisis Prevention, Stabilisation and Response Group in AusAID.
In 2009-10 humanitarian, emergency and refugee-related expenditure is estimated to be $350 million or approximately nine per cent of total Australian ODA. Australia will continue to strive to increase the effectiveness of humanitarian action through improved donor coordination, strengthened accountability and support for global response mechanisms, in particular the World Food Programme, the United Nations High Commissioner for Refugees (UNHCR), the International Red Cross Movement, and the United Nations Central Emergency Response Fund (UNCERF).
Australia’s emergency response is supported by effective disaster risk reduction, aimed at strengthening partner countries’ capacities to respond to disasters. In 2009-10 Australia will work with the United Nations International Strategy for Disaster Reduction, the World Bank’s Global Facility for Disaster Reduction and Recovery, partner governments, and NGOs to strengthen prevention, mitigation and preparedness efforts.
Following from the Australian Prime Minister’s and the Indonesian President’s announcement in November 2008 at the Asia-Pacific Economic Cooperation (APEC) Leaders’ Meeting, work will continue in 2009-10 to implement the Australia-Indonesia Facility for Disaster Reduction ($67 million over five years). The facility is delivering; training and outreach; risk and vulnerability modeling; and research and analysis in disaster risk reduction, to benefit Indonesia, other countries in the region and regional organisations such as the Association of South East Asian Nations (ASEAN).
Country and regional programs
Details of assistance for individual major partner countries/regions in 2009-10 are summarised below, along with levels of total Australian ODA from all agencies and programs to each country/region.
Indonesia and East Asia ($1072.4m)
South Asia, and Other ($155.3m)
Central Asia and Middle East ($224.5)
Humanitarian, emergency and refugee programs
The objectives of the Australian humanitarian program are to save lives, alleviate suffering, and maintain human dignity during and in the aftermath of man-made crises and natural disasters. The program also aims to prevent and strengthen preparedness for the occurrence of such situations. Humanitarian, emergency and refugee programs in 2009-10 amount to $299.8m. This includes $16.0m to support the International Committee of the Red Cross in playing its key role responding to conflict and meeting the needs of conflict and crisis-affected populations.
Australia will continue to work closely with international financial institutions to increase their focus on the Asia-Pacific region, as well as supporting global development efforts. Estimated 2009-10 funding for multilateral institutions through replenishments is $259.8 million. Estimated 2009-10 funding for UN, Commonwealth and other international organisations amounts to $205.9 million, continuing support to core UN agencies and major international organisations with proven track records to deliver priority development outcomes in the Asia-Pacific region.