Wednesday, 23 November 2011
Foreign Aid Budget
by leave—In July this year I addressed the House on Australia's new aid policy, and our efforts to position Australia as a leading, effective global aid donor. At the time, I promised to regularly update the House on the implementation of the new policy which has aid effectiveness at its core. At the end of this year's parliamentary session, it is timely that I do so today. Next week, I will attend the Global Forum on Aid Effectiveness in South Korea which will review overall effectiveness criteria for the world's total annual aid allocations to the poorest members of the international community.
Purpose of our aid policy
Australia's aid program is an integral part of our broader foreign and security policy objectives. These are to:
Why we give aid
We give aid because it is a natural expression of Australian values. As a decent people, we believe in a fair go for all. As a people, therefore, we find it unacceptable that, as of today:
Poverty, left unaddressed, also causes instability. Of Australia's 24 nearest neighbours, 22 are developing countries. We have a significant national interest in reducing poverty and promoting prosperity and stability in our region and beyond.
Effective aid delivery acts against political and religious radicalisation. It is therefore capable of reducing dangerous, irregular people movements around the world. It is also a powerful weapon against the causes of terrorism.
Effective aid, by building prosperity, also in time builds global trade, which also helps Australian trade and therefore generates jobs. Take for example Malaysia. Malaysia was once a recipient of Australian aid. Malaysia is now Australia's 10th largest trading partner. Therefore, our aid policy is both a reflection of our interests and our values.
Responding to global challenges
Eradicating poverty is therefore not just the right thing to do—it is the smart thing to do. The global community committed, at the turn of the millennium, to lift one billion people out of poverty. We agreed to the Millennium Development Goals (MDGs) as the way to measure our progress. This has been a bipartisan commitment in Australia since 2000.
The truth is globally not all pledges that have been made and not all goals that have been agreed upon have been achieved. There have been successes in some areas. We are reducing poverty. School enrolments are rising. But we are struggling in other areas—regrettably on maternal health and child nutrition. The global community can, and must, do more to achieve the goals we have set ourselves. The lives of millions hang in the balance.
Yet what we see around the world is many donor countries cutting back on their aid delivery because of the ongoing flow-on effects of the global financial crisis. And—tragically—these cuts are taking place at the very time when the crisis itself has increased global need in the poorest countries. One exception is the United Kingdom where the Conservative government has committed to reaching 0.7 per cent of gross national income in 2013. Despite considerable budgetary pressure in the UK, its aid is already at 0.56 per cent of GNI—well above Australia's. The reason for this is that the UK government have recognised overseas aid as fundamental to their national interest. As my counterpart Andrew Mitchell says, 'It's not aid from Britain; it's aid for Britain.' I agree with him entirely.
What Australia is doing
When we came to government Australia's aid program was 0.28 per cent of GNI—one of the lowest levels in the OECD. Prior to the 2007 election, as Leader of the Opposition, I committed the Australian Labor Party in government to increase ODA to 0.5 per cent of GNI by 2015-16. We currently stand at approximately 0.35 per cent of GNI. This still places us in the bottom third of OECD countries. But when we reach 0.5 per cent, we will be around the average of OECD countries. This is a goal which the opposition has subsequently formally adopted. As the Leader of the Opposition stated in a speech on 21 June 2010:
I want to make it very clear that the goal of 0.5 per cent of national income in overseas development aid is a bipartisan one.
I further thank my counterpart, the shadow minister for foreign affairs, for her strong personal leadership within the coalition where we have seen occasional attempts to break from this bipartisan position.
The government's new aid policy, An Effective Aid Program for Australia: Making a Real Difference—Delivering Real Results, launched in July 2011, commits us to deliver real and measureable results. The independent review found we had an aid program that, against any international benchmarks, was a good program but one that still could be made better. The new aid policy outlines how our future efforts will be focused on five strategic goals.
The first goal is to save lives—for example, our support to immunising children through the Global Alliance for Vaccines and Immunisation. Under the coalition government, Australia's support for GAVI in 2006 and 2007 paid for approximately 500,000 children to have vaccinations against diseases such as hepatitis B, yellow fever, meningitis and pneumonia. Building on this, the Labor government supported the immunisation of a further 1.1 million children by the end of 2010. Between 2011 and 2015 Australia alone will support the full immunisation of 7.7 million children around the world—that is, one-third of the Australian population.
Our second strategic goal is the promotion of opportunities for all—through, for example, Australia's recent commitment to the Global Partnership for Education, which will result in over two million more children enrolled and completing school. Again this is a significant, measurable change in the life prospects of young children. Strategic goal No. 3 is supporting sustainable economic development, such as helping improve employment and social protection programs, so that the poorest and most vulnerable receive the support they need—for example, in Indonesia and the Philippines benefiting 107.5 million people by 2015.
Strategic goal No. 4 is effective governance, human rights and law enforcement—for example, by providing counselling and support services to 3,734 women in Fiji subjected to violence over 2009-10 through the Fiji Women's Crisis Centre. That is good work again for Australia to be engaged in. Strategic goal No. 5 is preparing for and responding to disasters and humanitarian crises—such as our recent response to the humanitarian crisis in Libya and the ongoing drought in the Horn of Africa, where Australia, as one of the largest bilateral donors, is working with others to provide food to nearly eight million people affected by drought.
We have also committed to delivering aid efficiently and effectively. As the Brookings Institution has recently confirmed, Australia's aid administration costs are around one-third of a number of comparable donors. That is, our admin costs in the delivery of the aid portfolio programs on the ground, the actual running costs, are one-third that of other comparable donors. This is a very good achievement.
AusAID has a zero tolerance policy on fraud. The potential loss from fraud in 2010-11 is estimated to represent just 0.028 per cent of money appropriated to AusAID last financial year. As I have said elsewhere before, this is considerably lower than that which can be attributed at Centrelink. We will also continue to strengthen the overall accountability of Australia's aid program with the implementation of a rolling four-year cabinet review of the program's overall performance against stated objectives. Nonetheless, we believe there is still more to be done in boosting transparency and accountability for Australia's aid budget.
In July I also stated that the government would further enhance transparency. The government wants Australians to know how their tax dollars are making a real difference in the lives of people in developing countries. That is why today I am launching the new Transparency Charter. As part of this charter, AusAID has today published detailed, current information about what the aid program is delivering in Vanuatu and the Philippines. We will be making available similar information for major partner countries by early next year. Information on all programs will be in this format by the end of 2012. This is a major step forward in making it transparent to the Australian public how their dollars are being spent per program, per country, across the world.
Second, AusAID will routinely publish its internal audit reports as these audits are completed. Starting today, AusAID has published on its website internal administrative audits from four major bilateral country programs—Papua New Guinea, Vietnam, Fiji and Kiribati.
Third, AusAID is making available today strategic direction documents which outline how the aid program will work towards the five strategic goals set out in the new aid policy. These cover practical details of the sectors in which we will work, the challenges we face and what measures of success we will use. We intend to be up front with the Australian community about what has gone right, what might have gone wrong in individual programs and what needs to be improved. And we will welcome feedback from the Australian public.
I believe this is critical to building long-term consensus about an expanding Australian aid budget into the future, and to absolutely be in a position to assure the Australian public that their hard earned taxpayer dollars are being properly invested and delivering real and measurable results. I welcome this transparency initiative.
Progress in Implementation
We are progressing the 38 recommendations agreed or agreed in principle as part of the Independent Review of Aid Effectiveness. Of those 38 recommendations, 26 have already been implemented. One is being further considered by government. Implementation of 11 recommendations is progressing. This includes, for example, harnessing the power and innovation of Australian business. To this end, in June 2012, AusAID will hold its first annual consultative forum with Australian business. The 2011 Australian of the Year, Simon McKeon, as well as representatives from peak business groups and civil society, are helping us prepare for the forum. Its purpose is to consider how AusAID partners with the Australian business community better in delivering critical programs—for example, in such areas as microfinance.
To reiterate, Australia's aid program is a solid investment. We are achieving results. Our results and our returns are measurable. Over the last four years, Australia has:
I am proud to say that Australia is on track to meet the 0.5 per cent bipartisan commitment by 2015. With this investment, we will continue to build on the gains we have made in reducing poverty and furthering Australia's national interest. As I stated earlier, it is not just the right thing to do—it is the smart thing too. It is consistent with Australia's values. It is consistent with Australia's interests.
I ask leave of the House to move a motion to enable the Deputy Leader of the Opposition to speak for 13 minutes.
That so much of the standing orders be suspended as would prevent the Deputy Leader of the Opposition speaking for a period not exceeding 13 minutes.
Question agreed to.
At the last election the coalition announced a policy to hold an independent review into Australia's foreign aid program with a view to improving its effectiveness, to ensuring its sustainability and to addressing a number of serious problems. We had become concerned about ongoing reports of waste, mismanagement, extravagant salaries for consultants and questionable priorities in the application of the aid budget. The use of highly paid consultants had led political leaders of other countries to raise their concerns with us and one had, in fact, dubbed it 'boomerang aid' in that the benefits were largely returned to Australia by the consultancies.
Over several years, in fact, I had asked the leaders of nations in receipt of Australian aid about their impressions of its effectiveness and its delivery. While greatly appreciative of Australian support, the vast majority also raised a number of concerns including: an over-reliance on highly paid consultants; the production of elaborate and expensive feasibility studies that did not then translate into an actual project; well-meaning although naive people working to deliver the aid; a rapid turnover of staff that prevented the building and maintenance of long-term relationships; overly bureaucratic approaches that hampered effectiveness; and the aid effort spread too thinly across too many sectors.
The Australian National Audit Office reported on the foreign aid program in November 2009 and raised concerns about the heavy reliance on technical assistance which often involved highly paid consultants to provide advice and support in recipient countries. The ANAO report found almost double the proportion of the Australian aid budget was spent on consultants compared with the OECD average. It also raised concerns about the ability of AusAID to effectively manage large increases in the aid budget. That is why it was coalition policy to hold an independent inquiry into the aid budget and that is why the coalition supported the adoption by the Minister for Foreign Affairs in late 2010 of our policy to hold a review into the aid program. The report from that review was released in July this year and the review noted problems that if they were not addressed would become more serious as:
Australia's aid operation, already under strain, comes under the increased pressure of ramping up over the next five years to achieve the target of 0.5 per cent of Gross National Income. They range from lack of a unified sense of strategic purpose across government through the need to reform the government's budget processes to the dangers of fragmentation and stretching the program too thin to the need for greater public involvement and transparency.
I do pay credit to the Minister for Foreign Affairs for taking steps to improve the program. In May 2010, the minister announced a review of technical advisers, which recommended a reduction in these positions. Further to that review, the minister also took steps to reduce the remuneration packages by imposing caps on salaries and allowances. These are important steps.
Australians are generous people and often donate large sums of money to assist those in need not only here but overseas. Millions of dollars are donated annually to various charities, including those to support disadvantaged people, medical research, communities affected by natural disaster and much more. Australians are very generous supporters of developing nations, both personally and as taxpayers through our foreign aid program. One of the key questions often asked of organisations that collect and manage funds is about the amount of money that actually gets through to those in need. Those donating money do not want an unreasonable proportion of their funds spent on administration or on things that do not deliver tangible benefits.
I have long argued that Australia's foreign aid program must be carefully targeted to ensure that it does not damage local economies and that it does not lead to dependency but rather to self-sufficiency. The aid budget should be focused on helping people in developing nations achieve long-term and sustainable self-sufficiency. That said, the challenges in many developing countries are huge and support must be ongoing if genuine change is to be achieved. Aid for Trade, for example, is not just a concept; it can be a reality. During a recent visit to Papua New Guinea, I visited a small business in Port Moresby that used a grant from the Enterprise Challenge Fund, established by the Howard government in 2007, to purchase food processing equipment from India and set up a spice and oils export business. It supports hundreds of growers and their families and the local community. This is just one example of how an innovative approach to the provision of foreign aid can support economic development that benefits people in those countries.
Providing access to capital is ultimately a job for the private sector, but our aid program can fill a gap as the business sector in a particular country matures. Other avenues outside government channels such as churches, local community groups and non-government organisations must also be leveraged. The challenge, as the foreign minister said, is not just to spend more money but to spend it effectively. In order to achieve greater effectiveness and efficiency in our aid program there is a real need for innovative thinking, creative ideas and an openness to new approaches. This can mean building on current practices by doing the same things differently, as well as initiating and implementing entirely new approaches by doing different things. Health and medical services in developing countries, as an example, can often be difficult to deliver because of poor infrastructure and support services, particularly in remote locations. The scale of providing health services in Papua New Guinea, for example, is evidenced by the fact that it is reported that only 33 dentists are located in a nation of more than six million people, a nation that is the largest recipient of Australian aid.
An example of an innovative and effective initiative in Papua New Guinea, not funded by AusAID, is the Youth with a Mission medical ship based out of Townsville. The model of a floating, self-contained vessel overcomes many of the traditional challenges of delivering services into remote areas, including issues relating to staff security and the accommodation of medical support. The ship is largely staffed by volunteers and operates with the support of private donations. It has sailed to 16 remote villages located in the gulf province and the volunteers have provided more than 15,000 instances of care and support during the past two years. This has included more than 2,000 dental treatments, over 1,500 services relating to eyesight, including cataract surgery, and more than 1,600 general medical treatments and thousands of educational and health support services. The overwhelming success of this vessel has led to plans for the current ship to be replaced with a much larger one from about 2015. A larger vessel would not only provide the capability for many more medical services but also mean it would be available for disaster relief in a region where cyclones and earthquakes have caused significant damage and loss of life in the past. It is a faith based organisation and it is seeking funding support from the federal government for the first time and the coalition is giving in-principle support to the proposal.
Another innovative approach in the delivery of educational services into Africa has been developed by Korean electronics company Samsung, which has built a prototype classroom out of a 12-metre shipping container. It is equipped with laptops, an electronic whiteboard, video cameras and other electronic teaching aids. Importantly, the self-contained classroom operates 100 per cent on solar power and can be delivered on the back of a truck to remote locations far from any electricity grid. The company has a goal of improving the lives of five million people in Africa by 2015.
These are just some of the hundreds of examples from around the world of organisations and individuals taking an innovative approach to the challenge of development assistance. With the ever-changing nature of the world, underpinned by technological and other developments, those who manage the delivery of Australia's aid program must remain alert to opportunities to embrace greater innovation, new ways of thinking and new approaches.
The independent review commissioned by the government produced a commendable report that included 39 recommendations for reform. I note from the foreign minister's speech that the government is progressing 38 recommendations. This is a pointed omission and of great concern. The government's response to the review seems to ignore, arguably, the most important recommendation, the 39th, which states 'the scale up of the aid program to 0.5 per cent of GNI should be subject to the progressive achievement of predetermined hurdles'. Yet the minister appears to have ignored that recommendation in his speech today. More specifically, the independent review warned that forecast increases in the aid budget are 'steep and challenging' and that strict annual performance benchmarks must be passed before AusAID receives funding increases. The report said:
It is sensible to recognise that the upward trajectory to 0.5 per cent of GNI is steep and challenging. It makes sense that budget appropriations each year be contingent on things going to plan and existing monies being spent effectively … failure to achieve a hurdle, or to fully achieve it, must have consequences. For example, the government could reduce the rate of increase or withhold all or part of the funding unless and until the hurdle is achieved.
At the time of the release of the report earlier this year I called on the foreign minister to detail the nature of the performance benchmarks that AusAID will be required to meet, how it will be measured against those benchmarks and the consequences of failure to meet its performance targets.
The ongoing failure of the minister, with the greatest respect, to respond to this clear recommendation raises questions about the government's commitment to ensuring the highest possible standards for our foreign aid program. I again request that the minister make a formal response to this recommendation, No. 39, and establish performance benchmarks for AusAID. The forecast increases in the aid budget can only be sustained if the public are convinced their funds are being used effectively, and the imposition of performance benchmarks is the most appropriate means of achieving higher levels of accountability and public consensus, according to the independent review.
My concern is that critics of the foreign aid program will use this failure as evidence of acquiescence to the problems, including endemic waste and mismanagement within the program. I note that the recommendation requiring that the major focus of the foreign aid budget remain on areas of Australia's national interest, primarily in our region, is consistent with longstanding coalition policy. Again, this raises an issue of concern about the aid program in that the government has directed a greater proportion of the funding away from our region. The coalition is concerned that the aid budget is being distorted to support the minister's personal campaign for a seat on the UN Security Council.
While there is great need in Africa and Central and South America, for there is assuredly poverty, the coalition believes that expanding into these regions at such a rapid rate risks spreading our effort too thinly. There are huge challenges in the Pacific and in Asia, where billions of people live in poverty. Many Pacific nations rank poorly on the United Nations human development index, and certainly lower than the vast majority of nations in Central and South America.
The World Bank reports that in 2009 total foreign aid flows into various regions on a per capita basis were: US$53.50, Sub-Saharan Africa; US$41.70, Middle East and North Africa; US$20.10, Europe and Central Asia; US$15.80, Latin America and Caribbean; US$9.40, South Asia; but—note this—US$5.30, East Asia and the Pacific—our region, our sphere of responsibility, the area where we can make the biggest difference. Nations with a historic responsibility for various regions are providing significant resources. It is clear that Asia and the Pacific need the clear attention of nations, including Australia, given the significantly lower flows of foreign aid per person.
I pay credit to the foreign minister for taking concerns about the aid program seriously and for taking steps to reduce waste, and for adopting coalition policy by instituting the Independent Review of Aid Effectiveness. However, I urge him to adopt all the recommendations of that review so that public confidence in the large aid program can be maintained. (Time expired)