OECD's review of Australian aid

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CANBERRA — The Organization for Economic Co-operation and Development has had its say on Australia’s aid program, its first development cooperation peer review conducted under Australia’s coalition government — and the first review following the 2013 integration of AusAID into the Department of Foreign Affairs and Trade.

The latest Development Assistance Committee Peer Review of Australia identified both the good and bad of Australia’s new aid program — it praises the introduction of a robust performance-based framework for aid policy, encouragement of innovation, a “development-friendly” outlook on trade and a focus on small island developing states.

But the review didn’t mince words when it came to the negative impact of successive budget cuts to overall aid program effectiveness.

“Australia uses its voice on the global stage to advocate for responses to challenges faced by small island developing states, in particular to build resilience and mitigate disaster risk,” Charlotte Petri Gornitzka, OECD’s DAC chair, explained to media. “At the same time, the decline in aid flows, despite steady economic growth, has affected the scope of development and humanitarian programs, and we encourage Australia to find a way to reverse this trend.”

What Australian aid is getting right

The OECD report commended Australia’s willingness to take a leadership role in delivering development outcomes, and actively being a part of global conversations.

“It actively and consistently advocates for the interests of small island developing states and the Pacific region, as well as for issues such as disability, gender equality, peace and security, and ocean management,” the report reads.

Australia’s focus on SIDS as part of their refocused aid program on the Indo-Pacific region was also highly regarded, with the report saying this allowed the program to address  “the unique challenges in building economic resilience that SIDS, as small and isolated markets, face.” Between 2012 and 2015, the report says Australia provided $3.94 billion or 26 percent of its total official development assistance to SIDS, which accounted for 25 percent of all ODA to SIDS in the Pacific and Caribbean.

In the humanitarian space, OECD said Australia excelled at rapid response and cross-government coordination, and was leading in implementation of the localization of responses. That experience, the report notes, would be worth sharing with other DAC donors.

Internally at DFAT, OECD believes improvements have been made in reporting of ODA, they have created a robust learning system and follow up well on recommendations, and have maintained a strong and independent evaluation system through the Office of Development Effectiveness, making Australia well placed to address strategic issues and changing priorities.

The Australian volunteer program was additionally commended for building connections between Australia and developing nations, as well as building aid program awareness within Australia.

The impact of integrating AusAID into DFAT

As this report is the first assessment of the Australian aid department being under DFAT, the impacts of the integration of effectiveness were a key focus on the report. OECD concluded that there have been efficiency and effectiveness gains — but as with many public sector reorganizations, there are still challenges which persist to this day.

A key benefit is the ability for the aid program to use policy levers beyond aid, including better utilization of trade policies to reduce barriers to trade and ensure preferential access for least developed countries.

But OECD had concerns for the systems and staffing under the DFAT integration.

“The integration of AusAID into DFAT placed significant pressure on the department’s information and communications technology, according to the department’s secretary at the time and successive staff surveys,” the report says. “A redevelopment of DFAT’s aid management IT system, AidWorks, is under way in recognition of problems with the system’s usability, functionality, and reporting capability.”

On staff, the OECD report raised concerns on the reduction of specialist aid program staff and raised concern that DFAT may not be able to provide sufficient quality assurance the aid program needs.

“At the time of the last peer review, AusAID’s total staffing had reached 2,126,” OECD reported. “During integration, the DFAT staff dropped by 572, of which 329 of the losses were AusAID staff.”

In May 2017, OECD said DFAT’s aid program had 1,545 staff with 58 percent were based in Australia — showing a high level of decentralization of staff. But DFAT were unable to provide trend data on staffing on the aid program since integration or to provide the number of specialists working on the aid program and how it may have changed since 2013.

“DFAT has adopted a model of hiring very few specialists (and then only on a case-by-case basis) and relying instead on the up-skilling of generalists,” OECD said. “As noted in the reviews of other DAC members, this model — coupled with the loss of experienced aid management staff in the case of Australia as a result of integration — risks affecting the quality of engagement and levels of effectiveness and oversight.”

The changing financial models of ODA

OECD were critical of Australia’s declining aid budget, which it said is seeing Australia fall behind other DAC members. The declines come in spite of the fact that Australia has seen 26 years of uninterrupted economic growth and debt below the OECD average and overall government spending has increased approximately 10 percent since 2013.

But as Australia has provided an across-the-board cut on bilateral finding, and refocused on the Indo-Pacific, funding to the multilateral systems including United Nations agencies has increased. According to the OECD, Australian aid funding to multilaterals has increased by 57.7 percent between 2012 to 2016. But to maintain consistency with Australia’s policy objectives, Australia encourages multilateral partners to increase their spending in the Pacific.

Australia is additionally seeking new models of financial support for ODA, including blended finance and private sector resources.

Remittances to the Pacific region are another important resource for ODA, but despite a strong commitment from Australia to bring down the cost of sending remittances, charges at a rate of 5 percent of the money remitted remains higher than Sustainable Development Goal targets of 3 percent.

Despite criticisms, OECD believe DFAT’s multiyear planning has increased predictability of Australian aid funding which is important to support partners — including NGOs — with their budgeting.

Despite a strong focus on SIDS, climate change has reduced as a priority

A key recommendation from the OECD report Australia is for “Australia to increase the focus and level of ODA allocated to the environment and climate as part of a broad mainstreaming strategy and in line with its 2017 Foreign Policy White Paper.”

Australia, in 2015, committed to investing at least $1 billion Australian dollars ($766.53 million) of ODA to supporting climate resilience and reducing emissions to 2020, but the nation spends less of their ODA to support climate programs than many other DAC members.

Climate change is an especially important concern for SIDS in the Pacific, who are at the frontline of climate change with rising sea levels and continued threat of natural disasters. But despite this urgent need in the region, the report found that overall, the level of Australian ODA focused on the environment has not increased since the last peer review.

The need for better engagement and transparency

Engaging the Australian public, stakeholders, and general transparency have been a growing concern of Australia’s development sector since 2013, and concerns were echoed by the OECD.

“DFAT should fully resource its knowledge management framework and roadmap to better capitalise on development knowledge produced in the field and to effectively pool the vast evidence generated from its performance reporting, evaluations, partners and research,” OECD recommended.

The 2013 peer review said AusAID’s efforts on public awareness were strategic, well resourced, evidence-based, targeted, and monitored. But following integration into DFAT and the need to convert to a new communications platform, momentum slowed and information was not being shared in a way that was user-friendly for most Australians.

Since 2013, transparency of the Australian aid program has declined with the Aid Transparency Index in 2016 ranking Australia in 25th place — or fair.

But action is occurring. DFAT has recently conducted its own public attitudes research and while findings have not been released, OECD is confident the outcomes will be used to better target communications, development education, and global awareness efforts.

And in response to the lack of accessible information, Australia is committing to better tailor, brand and resource its communications and education programs to build awareness of global development issues.

“For example, DFAT has already increased its social media presence at home and abroad,” OECD said.

Further areas of improvement

There were a number of additional opportunities for improvement OECD identified in their report to better aid development effectiveness.

Australia is identified as being weak in the monitoring of practices of Australian business operating on foreign soil. Australia could additionally engage more fully with local civil society partners — only AU$2.7 million in 2016 of ODA went to support local civil society organizations, an important source for supporting aid effectiveness and efficiency.

Australia’s work in fragile environments can also better address the underlying drivers of conflict — including thinking and working politically. In total, OECD provided 13 recommendations for DFAT to action.

Australian responses to the report

The 2018 OECD DAC Peer Review of Australia’s aid program was welcomed by DFAT.

“We are pleased Australia has been recognized as having a strong voice on the global stage, advocating actively and consistently for the interests of small island developing states and the Pacific region, and on issues such as disaster risk reduction and gender equality,” a spokesperson for DFAT told Devex. “The report highlights our robust performance framework and the strength of our focus on trade, with aid for trade and efforts to reduce trade barriers creating mutually beneficial outcomes across our region.

“DFAT will consider carefully all of the review’s recommendations in the context of ongoing efforts to strengthen the aid program. Our response to the review will be measured by the DAC in a midterm review which is due around 2020.”

From the development sector, the report fueled calls for Australia to do more to contribute to global development challenges.

“This review shows that Australia wants the benefits of being part of the club but isn’t willing to chip in when the clubhouse roof starts leaking,” Marc Purcell, CEO of the Australian Council for International Development, said in a media release. “On contributing our fair share of aid, our partners and allies are telling us that we have failed to live up to the commitments we have made on the international stage.

“Australia’s international partners are calling on us to lift our game. After successive cuts, now is the time to rebuild and reinvest in Australia’s aid program.”