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A good global citizen in tight times

02 April 2013

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Stephen Howes is Director of Development Policy Centre at ANU.

Prior to joining the Crawford School in 2009, Stephen was Chief Economist at the Australian Agency for International Development.

In 2008, he worked on the Garnaut Review on Climate Change, where he managed the Review’s international work stream.

He teaches Aid and Development Policy (IDEC8007) and Government, Markets and Global Change (CRWF8000).

It's time for the Coalition to push for aid effectiveness, writes STEPHEN HOWES.

British Prime Minister David Cameron came to power in 2010 with a promise that sounded too good to be true: more and better overseas aid. And now he has delivered on it. His government had already taken several steps to improve the effectiveness of British aid, including making aid evaluations more independent, and new ways to make country aid programs and multilateral agencies compete for funds. And remarkably, on March 20 this year, Britain increased the size of its aid program by more than one-third, or £3 billion ($A4.3 billion), to achieve the long-cherished target of 0.7 per cent of gross national income.

Is this the path aid will take in Australia under a Coalition government? There are plenty of other, less exemplary models out there. Canada has frozen its aid in nominal terms, re-absorbed its previously separate aid agency into its Ministry of Foreign Affairs and Trade, and reoriented its aid more explicitly to serve the national interest. New Zealand has done much the same.

What choices would a Coalition government make in relation to aid, and what choices should they make? When the public spotlight falls on aid, it is typically in relation to quantity rather than quality. Let me do my bit to redress that balance here by starting with quality.

We actually have a fair idea of what Coalition priorities would be in relation to the shape of the aid program thanks mainly to a number of speeches by the shadow minister for foreign affairs, Julie Bishop, including one at the Australian National University in June last year. There, she stressed more than anything else the need for ''an increased focus on accountability, transparency, and a reassessment of priorities within the aid program''.

It is a good thing that the Coalition wants to put more emphasis on aid effectiveness. There's no doubt that the aid program has become more effective over the last decade, with the 2006 white paper and the 2012 response by the government to the Independent Review of Aid Effectiveness both taking the aid program in the right direction.
But there's still some way to go, and a further push on effectiveness by the Coalition would be one in the right direction. What specific changes might be made? The Coalition has already signalled quite a few.

Perhaps the most intriguing is the policy which the Coalition took to the last election: namely, that there would be a separate minister for aid. It has long been conventional wisdom that an aid minister outside the cabinet would be detrimental to the interests of the aid program. Given that aid is probably not important enough in the Australian context to warrant a seat in cabinet for its minister (though it does in Britain), many use this argument to argue against having a separate aid minister. Keating had one (first John Kerin, then Gordon Bilney) and it wasn't seen as an experiment that worked.

I'm not so sure. The aid program today is three times as big as when Keating was in office, and political leadership makes all the difference. The foreign minister is often simply too busy and preoccupied with the bigger issues of the globe and the day to be able to give the aid program, and some of Australia's most important aid partner countries, the sustained attention they require. A succession of parliamentary secretaries have come and gone with varying effect, but they have typically lacked the authority to shape aid policy. Having someone who actually has both the authority to shape the aid program and the time to understand and represent it could be a big step forward.

The Coalition's most often repeated demand of the aid program is that it be assessed more explicitly against performance benchmarks. This is a good call, but it is easier said than done. Aid takes a long time to have an effect, and the results of aid are often impossible to quantify let alone aggregate. But much more could certainly be done to hold the aid program to account at the operational level. Benchmarks should focus on things that are clearly under AusAID's control, such as staff turnover (which has been much too high, though is now falling) and the number of projects (again, too high, and still increasing), and the number of evaluations (earlier, too low, but now improving). AusAID has already started setting targets in these areas. But more are needed, and more attention should be given to performance in relation to them.

Specifically on the issue of aid evaluation, in her ANU speech, Bishop was particularly critical of AusAID's ''unacceptable'' record on evaluations, saying they were too few, too late and sometimes of low standard. Progress has been made in this area, with many more evaluations now published, and the establishment of an independent evaluation committee to oversee the work of AusAID's office of development effectiveness, which previously operated with no real independence.

Whether the Coalition will want to go further on evaluation remains to be seen. Britain's Conservatives set up a statutory body, the Independent Commission on Aid Impact, to guarantee the independence of evaluations. This seems to be working well, though a similar experiment in Sweden has been less successful. However, the Coalition might want to give more time to the current round of reforms to see if it can bring AusAID's evaluations up to scratch. One very positive signal a Coalition government could send would be to arrange regular meetings between the chair of AusAID's independent evaluation committee and the minister with responsibility for aid. Creating a new parliamentary committee on aid would do much to strengthen the demand for aid program performance information and evaluations.

The Coalition has also made it clear it will sound the global retreat, and refocus on the region. As Bishop put it, ''while our interests as a nation are global, many of our priorities are local''. This would almost certainly mean the end of the new (and small) aid program in Latin America, and it probably also mean a smaller and more focused program in Africa. Again, these would be positive reforms. An Australian aid program spending money in Latin America can hardly be said to be selective. Africa needs our support, but most of that is more efficiently and effectively delivered through the large non-government and multilateral organisations already working there. Sub-Saharan Africa already has more than enough bilateral donors.

Unsurprisingly, the Coalition has signalled that it will increase the emphasis of the aid program on the private sector. Bishop has been a strong supporter of the Enterprise Challenge Fund, an aid initiative begun under former foreign minister Alexander Downer, which offered incentives to businesses, on a matching basis, to extend their operations in ways that benefited the poor. Despite a strategy committing it to work much more with the private sector, AusAID has done little more in recent years than talk to business. The fund's pilot phase began in 2007 and it ends later this year. For the most part, it has been evaluated favourably. It, or something like it, would be a good candidate for adoption by the Coalition if it wants to signal its intent to shift the aid program in the direction of focusing on the private sector and growth. The Coalition would also do well to continue with the main planks of the present government's mining for development initiative, without steering it towards support for Australian mining interests.

Not only Bishop but Opposition Leader Tony Abbott himself has spoken in favour of a ''new Colombo plan'' to support two-way, people-to-people exchanges in our region, including through university secondments, which, in my view, we don't see enough of. Student exchanges might in some cases also be worthy of support, but sending an Australian student to Indonesia to further their own education clearly could not be counted as aid.

On people-to-people links, it is encouraging that the Coalition, through both finance spokesman Andrew Robb and Bishop, has come out in support of the seasonal work program, something former prime minister Kevin Rudd introduced after his predecessor, John Howard, refused to do so. This scheme allows Pacific Islanders to come to Australia on temporary visas to pick fruit. While it is a topic for another article, uptake of the program has been disappointingly low, and much more needs to be done to provide labour mobility opportunities for the small countries of the Pacific.

Traditionally, the Coalition has been more sceptical of the United Nations, and multilateral organisations generally, than Labor, so less funding through these channels might be expected. Australian development non-government organisations have also done very well under Labor. However, I don't really expect major change on either of these fronts. It was under Downer that the Australian aid program moved away from a predominant reliance on private-sector contractors to its current diversified delivery mode, and it is hard to see that shifting. (It should also be recalled that it was Downer who removed the requirement that aid contracts go to Australian companies, on economic efficiency grounds, and who shut down aid programs that were really export promotion vehicles.)

Robb is known to be a strong supporter of medical research. The Independent Review of Aid Effectiveness called for increased funding for global medical research. The government agreed, but has only responded to date in a tokenistic manner. The world desperately needs new and better drugs for a range of neglected diseases that hit developing countries hard. It would be excellent if this became a growth area under the Coalition, though one hopes that Australian researchers would have to compete against the world's best for funding.

Bishop was vocal in her ANU speech about the need for more branding of our aid. As long as this is done sensibly, it should do little harm, and it can actually promote aid transparency. Taken too far, however, an imperative to brand can lead to an unwillingness to pool and share, and thereby harm aid effectiveness.

Probably the most controversial issue the Coalition will face is whether to continue with the government's recent decision to allow some (unspecified) costs associated with the processing of asylum seekers to be counted as aid - $375 million in the current financial year. The shadow parliamentary secretary for aid, Teresa Gambaro, has criticised what she has termed a ''hijacking''. But whether the Coalition will actually reverse this decision remains to be seen.

Overall, a Coalition government could definitely be a force for good aid, particularly if it can reinvigorate the effectiveness agenda which, after all, it created under Howard and Downer in 2006. If, on the other hand, it follows the Canadian and New Zealand examples, and pushes hard on the national-interest front to link aid more narrowly to strategic or commercial objectives, then aid effectiveness will suffer.

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What, then, about quantity? For 30 years from about 1970 to about 2000, aid volume in Australia was remarkably constant at about $2 billion, adjusting for inflation. All that changed last decade under Howard. The aid budget started to climb, first in response to a series of regional crises (independence in Timor, the intervention in the Solomon Islands, the Bali bombing, the Indian Ocean tsunami), and then in a more systematic way. At the UN in 2005, Howard announced that Australia would double its aid, then just over $2 billion, to $4 billion in 2010.

Rudd went into the 2007 election in agreement with Howard on the $4 billion target and promising to do more: to lift aid to 0.5 per cent of GNI by 2015, which meant a further increase to about $8 billion, a target the Coalition subsequently bought into. The $4 billion target was achieved on time, but the 0.5 per cent target started to look shaky last year when Labor postponed its achievement to 2016, and the Coalition backed away from any timeline at all.

It's hard to say what will happen next. It's difficult enough to predict whether there will be an aid increase in the coming budget, let alone to speculate on what the Coalition might do. On the one hand, Bishop has stressed that the Coalition supports a strong as well as an effective aid program. On the other, there have been numerous leaks and remarks suggesting the Coalition will cut, or even slash, aid, perhaps using criticisms around aid effectiveness as the justification. The last two governments elected in Australia in deficit-cutting mode (Hawke in 1983 and Howard in 1996) both cut aid early on in real terms, before letting it grow back again.

I won't try to predict what will happen, but will make two points. First, Australia is still not a generous donor. Our aid is only 0.35 per cent of our GNI, which makes us only 13th out of 23 Organisation for Economic Cooperation and Development donors. We can and should surely do better than that, especially given the current relative strength of our economy.

Second, one can't separate aid quantity and quality altogether. The compact which, since 2006, has increased the size of the aid program in return for greater aid effectiveness has worked well. But if a Coalition government doesn't feel able to match the 0.5 per cent commitment by 2016, it should come out and say so, and put in place a new forward path for the aid budget. Aid programs are not easy to run well. They are complex and often operate in the most difficult circumstances. To succeed, aid agencies need to be able to plan forward, and for that, confidence about future funding levels is essential. Large, last-minute shifts (such as the $375 million cut in aid programs to pay for asylum seekers) should be avoided at all costs.

This would be my final advice, or rather plea, to the Coalition. Do not let the aid program drift. If you don't like the current approach to aid quality or quantity, move carefully but quickly to put a new aid framework in place.

This article was originally published in the Canberra Times: http://www.canberratimes.com.au/national/public-service/a-good-global-citizen-in-tight-times-20130331-2h16u.html

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