1301.0 - Year Book Australia, 2006  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 20/01/2006   
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Contents >> Chapter 3 - International relations >> The Australian overseas aid program


The Australian Government’s overseas aid program advances the national interest by assisting developing countries to reduce poverty and achieve sustainable development. Australian aid helps build a stable, prosperous and democratic Asia-Pacific region, responds to emergences and humanitarian crises, and targets urgent needs in Africa and the Middle East. The aid program was a central component of Australia's response to the December 2004 Indian Ocean tsunami disaster, and is helping neighbouring countries address longer-term challenges such as broad-based economic growth, weak governance, instability and HIV/AIDS.

Development issues have become increasingly interlinked with broader Australian regional and international policy priorities, including regional security, trade, economic integration, and the transboundary threats posed by communicable diseases. The aid program plays a role in the integrated, whole-of-government approach to engaging with the region. It draws upon the skills and expertise of a wide range of Australian Government agencies to tackle issues in a direct, practical way. The aid program also builds long-term partnerships with other donors, regional and multilateral organisations, and most importantly with partner governments, to harmonise and align inputs and priorities.

Over the past 20 years, the Asia-Pacific region has experienced rapid development. More than 500 million people have been lifted out of poverty. China has become a global economic player and aid to Thailand is declining in response to its strong economic achievement and desire to become a regional aid donor. Yet significant challenges remain. Countries such as Cambodia, the Philippines, Papua New Guinea and the Solomon Islands are struggling to maintain levels of economic growth sufficient to make inroads into poverty, and rural poor and areas of concentrated urban poverty remain.

In 2005-06 the Australian Government is providing an estimated $2.5b in Official Development Assistance (ODA), an increase of $238m over the 2004-05 expected ODA of $2.3b. Details of ODA to partner countries in 2005-06 are provided in table 3.3. The ratio of Australia's ODA to gross national income for 2005-06 is estimated at 0.28%, placing Australia above the donor average which, in the latest year available (2004), was 0.25%.



Papua New Guinea and Pacific
Papua New Guinea
Solomon Islands
Regional Pacific
Nauru Additional(b)
East Asia
Indonesia (ongoing program)
Indonesia (AIPRD)(c)
East Timor
Regional East Asia
South Asia, Africa and Other
Sri Lanka
Regional South Asia
Middle East and Central Asia
Other Government Departments (OGD)(d)
Core contributions to multilateral organisations, other ODA(e)
Reconciliation of expenses to cash(f)
Total ODA (cash)

(a) Budget estimates for 2005-06.
(b) Represents additional funding appropriated through new budget measures agreed by the Australian Government.
(c) Australia-Indonesia Partnership for Reconstruction and Development.
(d) Includes ODA eligible expenditure by government departments which has not been allocated to a particular country or region.
(e) Includes core contributions and cash payments to mulitlaterals that cannot be attributed to a particular country.
(f) Includes accrual adjustments for non-ODA eligible (administered and departmental) expenditure.

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 administers Australia’s overseas aid program on behalf of the Australian Government. The aid program's objective is to advance Australia's national interest by assisting developing countries to reduce poverty and achieve sustainable development.


Five guiding themes link individual aid activities with the aid program’s poverty reduction framework and focus on broad-based economic growth. These themes also relate Australia’s aid responses to core national interest issues:
  • Governance - promoting improved governance across all areas of partner governments and strengthening democratic processes
  • Globalisation - assisting developing countries to access and maximise the benefits from trade and new information technologies
  • Human capital - supporting stability and legitimacy through improved delivery of basic services
  • Security - strengthening regional security by enhancing partner governments' capacity to prevent conflict, enhance stability and manage transboundary challenges
  • Sustainable resource management - promoting sustainable approaches to managing the environment and using scarce resources.

Australia’s aid is guided by the needs and priorities of partner countries. Country and regional development cooperation strategies are developed in consultation with partner governments and are the primary means through which the guiding themes are translated into activities on the ground.

Over the next three years, Australia is pursuing a number of priorities that will further enhance the focus, effectiveness and relevance of the aid program. These centre on: a closer partnership with Indonesia; long-term and innovative approaches to engaging with fragile states; initiatives to stimulate broad-based economic growth; strengthening political governance and tackling corruption; addressing transnational threats, particularly HIV/AIDS; and contributing to stability and security.


Papua New Guinea (PNG)

The development of a stable and prosperous PNG remains a high priority for the Australian Government. With weak medium-term revenue prospects, PNG needs to consolidate and build on current economic and fiscal progress, and provide a level of basic services that will support broad-based growth. Improved accountability and governance mechanisms, including public expenditure management and administration, are needed to facilitate and safeguard improved public sector performance.

Australia is working closely with PNG to overcome the major constraints to its stability and development - weak governance, poor service delivery and low rates of growth. To achieve these goals, the aid program works through PNG government agencies and systems wherever possible to ensure better use of its own resources. Australian aid is supporting health and education services, an effective and robust law and justice system and serviceable transport infrastructure. It is also creating an environment conducive to private sector growth and democratic change by promoting debate on PNG’s development choices, building the capacity of non-government agencies and regulatory frameworks, and supporting a free and fair electoral system.

In response to PNG’s changing environment, coupled with lessons learned from the aid program’s interventions in a range of sectors, Australia is working with other major donors to develop a new medium-term strategy for engagement with PNG. The new approach is consistent with Australia’s engagement with fragile states and underlines the importance of strengthening political governance and targeting corruption, building sustainable government institutions, exploiting opportunities to stimulate economic growth, and maintaining delivery of services to minimise the impact of system failures on the poor. It places substantially more emphasis on working through PNG's own budgeting and planning mechanisms, both in terms of identifying priority inputs and in monitoring and reviewing performance. The new approach also focuses on improved donor harmonisation to reduce the administrative burden of aid delivery and improve aid effectiveness.

The Pacific region

Australia has bilateral aid programs with a number of Pacific island nations including the Solomon Islands, Vanuatu, Fiji, Samoa, Tonga and Kiribati. The countries of the Pacific are diverse but many face similar constraints to development including their small size, lack of economic diversity, remoteness from major trade and commercial sectors, growing populations, vulnerability to natural disasters and fragile governance frameworks. Economic gains have been weak, volatile, and unequally distributed and social instability has hampered growth.

A new Pacific Regional Aid Strategy 2004-2009 provides the framework for Australia's long-term development goals in the Pacific. The framework focuses on four themes: stronger broad-based economic growth; more effective, accountable and democratic government; improved law and justice and security; and enhanced service delivery, including effective fiscal management. Australia takes a lead role in building cooperative frameworks with other donors and regional organisations and applies a ‘hands-on’ approach to its aid program in the Pacific. Links are being strengthened between core Australian Government agencies and their Pacific counterparts, including through placing senior Australian Government personnel in priority areas of Pacific bureaucracies.

The Australian-led RAMSI has contributed to significant improvements in law and order, economic governance and basic government functions since its arrival in July 2003. Now that the security situation has stabilised, RAMSI is working with the Solomon Islands government on longer-term social and economic challenges. These include supporting the transition to self reliance by the Royal Solomon Islands Police, continuing improvements in law and justice, supporting affordable and accountable government, and reinvigorating the economy.

The aid program is implementing a new Fragile States Initiative, which will bring together development, security, economic and political perspectives from across government into a single, dedicated unit. The initiative will boost Australia's capacity to engage with fragile states in the region and further afield, at both strategic and operational levels. It will also provide Australia with an opportunity to play a leading role in shaping international thinking on approaches to fragile states.

A new 'Pacific Plan' is being developed by the Pacific Islands Forum to create stronger and deeper links between Pacific island countries, and identify sectors where the region can gain most from sharing governance resources. As well as supporting this process, AusAID is undertaking a new study, Pacific 2020, which will focus on long-term growth options for the developing economies of the Pacific.

East Asia

Australia has bilateral aid programs with a number of countries including Indonesia, Vietnam, the Philippines, China, Cambodia, East Timor and Laos. Through its bilateral and regional partnerships, Australia is focusing on improving governance and service delivery, advancing economic integration, trade liberalisation and opportunities for broad-based growth, addressing transboundary threats such as organised crime and the spread of communicable diseases, and reducing vulnerability to natural disasters.

Australia's aid to Indonesia is delivered within a new framework of international coordination and harmonisation. The five-year $1b Australia-Indonesia Partnership for Reconstruction and Development (AIPRD) aid package builds on Australia’s response to the December 2004 Indian Ocean tsunami and demonstrates its long-term commitment to reconstruction and development in Indonesia. The AIPRD complements the existing development cooperation program which continues to focus on improving economic management, supporting Indonesia’s democratic transition, enhancing security and stability and improving quality and access to basic services. Australia is developing partnerships with other organisations and donors. In maternal and child health, HIV/AIDS and education, Australia is strategically investing in local and international initiatives, and facilitating other donors' investment in Australian-supported programs.

Australia’s aid program with Vietnam supports international economic integration and private sector development, and helps to improve living standards for the rural poor in the Mekong Delta and Central Coast region. Improving rural water supply and sanitation is a priority of the program, as well as natural disaster mitigation.

A new Australia-Philippines development cooperation strategy has three objectives: reduce impediments to broad-based economic growth; strengthen security and stability through counter-terrorism capacity building and support for Mindanao peace processes; and raise the living standards of the rural poor in the south of the country, particularly through improving educational opportunities.

Australia has a major stake in ensuring that East Timor, one of the poorest countries in the region, is equipped to meet the challenges to becoming a stable and democratic nation. A new country strategy will focus on building the capacity of the East Timorese Government in areas including law and governance, public expenditure management, transparency, and accountability. Australian aid also supports service delivery in rural areas, particularly in water supply and sanitation.

A new aid strategy with China focuses on governance, health, particularly in communicable diseases, and the environment and water management. In Cambodia, the aid program is 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. Cooperation with Laos is targeted at improving access to education, supporting the growth of a market economy, and reducing the vulnerability of poorer communities to disasters and the impact of unexploded ordnance.

South Asia

Australia works with a number of donors, multilateral partners and non-government organisations (NGOs) in South Asia to respond flexibly to major regional issues such as HIV/AIDS, governance reform and people trafficking. Australian assistance is provided in Bangladesh, Sri Lanka, India, Nepal, Pakistan, the Maldives and Bhutan.

Through a joint regional program with the United Nations Children's Fund (UNICEF), Australia is helping to improve basic service delivery, especially primary education and health. Australia also works with the Joint United Nations Program on HIV/AIDS to deliver prevention and care activities. Australia supports Sri Lanka's post-conflict peacebuilding and economic recovery efforts and also provides significant humanitarian assistance to South Asia, a region vulnerable to crises and natural disasters.

Africa and the Middle East

Africa remains a major development priority for the international community. Australia plays its part in international efforts to assist Africa's development through a strategically targeted aid program focused on southern and eastern Africa. To maximise impact, Australia’s assistance is focused on promoting good governance by strengthening basic service delivery, responding to humanitarian needs, especially where linked to food security and conflict, and fighting the spread of HIV/AIDS. Australia is also implementing a new multilateral and donor cooperation framework and partnering NGOs to deliver assistance.

Together with international partners, Australia is helping to build stability and democracy in Iraq and support the transition to an open market-based economy. Australian assistance focuses on the agriculture sector, with niche contributions in related areas such as planning and development cooperation, trade reform, electrical power generation and policing. Through short-term training programs and technical assistance, Australia helps enhance Iraq's human resources capacity and strengthen key institutions.

Australia continues to support Afghanistan's transition from conflict to peace and democracy. Priorities include supporting delivery of essential services through the Reconstruction Trust Fund, and democracy and capacity building of Afghan institutions. Australia also assists the return and reintegration of displaced Afghans, and improves food security and rural livelihoods.

Australia works with multilateral agencies and NGOs to support the Palestinian Authority's efforts to undertake reform and further the peace process. The aid program helps reduce the vulnerability of Palestinians to poverty and conflict through support for activities that deliver essential services and develop the capacities of local organisations.


Emergency, humanitarian and refugee programs

Conflicts, crises and disasters significantly undermine the potential for long-term poverty reduction, sustainable development and security. Australia's humanitarian, emergency and refugee programs help address the impacts of conflicts, crises and disasters on vulnerable populations. They also complement and support the objectives of country and regional programs, and integrate with longer-term conflict prevention, peacebuilding, and post-conflict recovery initiatives.

Australia’s new Humanitarian Action Policy provides the donorship principles and cutting-edge practice needed to guide Australia’s response to new circumstances and emerging needs. The aid program’s continued support for and participation in humanitarian research further develops its strategic vision and improves the effectiveness of humanitarian response.

Australia provides core support to key humanitarian agencies. These include the United Nations Office for the Coordination of Humanitarian Affairs, the United Nations High Commissioner for Refugees and the International Committee of the Red Cross. Australia also works with the World Food Program and UNICEF in partner countries. In addition, the International Refugee Fund helps address the needs of people displaced by conflict.

Australia focuses its humanitarian and emergency efforts on the Asia-Pacific region, but retains the ability to respond flexibly, when required, to emergencies further afield. In 2004-05, this flexibility was demonstrated through Australia's response to the crisis in Sudan, the Bam earthquake in Iran, floods in Bangladesh, the Indian Ocean disaster, and through Australia's response to the Sumatra earthquake.

Multilateral organisations

Australia works closely with multilateral organisations that have demonstrated effectiveness, and whose activities complement our own bilateral programs and are consistent with our wider national interests. The World Bank and Asian Development Bank (ADB) are key multilateral partners who are able to leverage significant financial resources and expertise for sustainable development and poverty reduction. The ADB's focus makes it an important partner in promoting growth and stability in the Asia-Pacific region. The World Bank is an unparalleled source of development expertise and makes a unique contribution through economic and policy research and the implementation of specialist programs.

Support for UN organisations extends the reach of Australia's aid program. These organisations can mobilise and coordinate resources on a scale beyond the capacities of individual donors, and play a significant role in consensus building on key development issues. Australia contributes funding to a number of UN organisations including the World Food Program, United Nations Development Program and UNICEF.

Australia's support for Commonwealth organisations is a reflection of our shared commitment to the core values of democracy and the rule of law, human rights, equity, access to education, the promotion of sustainable development and poverty alleviation. The Commonwealth Fund for Technical Cooperation is the principal means by which the Commonwealth delivers development assistance to developing country members.

Australia supports developing countries through the Global Environment Facility to help them meet environmental concerns and international agreements. The facility funds projects in the six focal areas of biodiversity, climate change, international waters, ozone, land degradation and persistent organic pollutants. Funding is also provided to the Montreal Protocol Multilateral Fund to phase out ozone depleting substances.

Non-government organisations and volunteer programs

NGOs play an important complementary role in delivering a high quality aid program. Besides mobilising Australian public support for development, NGOs are well placed to strengthen civil society in partner countries through their strong community links and partnerships with local organisations. They also provide specialist skills for community development and enhance sustainability.

The Australian Government works with NGOs on program delivery and enhancing administration and accountability, as well as supporting improvements in project design, management, implementation and evaluation. The AusAID-NGO Cooperation Program supports accredited Australian NGOs to undertake cost-effective, practical and direct poverty reduction activities. In addition, a number of NGO cooperation agreements are providing a framework within which selected NGOs can implement multi-year activities aligned with country program objectives.

The volunteer program aims to improve the quality and development impact of overseas volunteers supported by the Australian Government. AusAID’s new overseas volunteer policy provides a framework for building capacity at the individual, organisational and community levels, and promotes community participation and enhanced partnerships. The policy also aligns volunteer and aid program priorities. The successful Australian Youth Ambassadors for Development Program continues to expand and fund talented and highly skilled young Australians to undertake short-term development assignments in partner countries.

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