15/12/2004 - Australia has made significant advances since the last Peer Review in 1999 in adapting to the new challenges faced by the Asia-Pacific region. Australia’s geographic location provides a particular challenge in terms of the number and the proximity of countries afflicted by poverty, deficient governance and political instability. The OECD Development Assistance Committee (DAC) recognises Australia’s leading role in its neighbouring region, particularly in HIV/AIDS, approaches to fragile states and peace building and conflict resolution.

Australia’s net official development assistance (ODA) was USD 1.2 billion in 2003, or 0.25% of its Gross National Income, putting its aid efforts in 13th place out of 22 DAC members in terms of ODA/GNI. Australia has enjoyed more than a decade of economic growth, above the OECD average. Yet its ODA/GNI ratio has stagnated. Meanwhile, the assistance needs of its partners have increased and Australia has an ambitious agenda for involvement in Indonesia, Solomon Islands, Papua New Guinea, Timor-Leste and countries of the South Pacific region. The DAC recommends that Australia now increase the percentage of its GNI going to aid and announce medium and long-term targets for meeting its commitment to the 0.7% ODA/GNI international objective.

Australia’s development objective is “to advance Australia’s national interest by assisting developing countries to reduce poverty and achieve sustainable development”. Australia is increasingly stressing good governance in order to ensure the political stability and security necessary for economic growth and poverty reduction in the Asia-Pacific region. At the same time, poverty reduction should remain the key reference point in designing effective development assistance programmes, along with the Millennium Development Goals (MDGs). The DAC recommends that Australia highlight the relationship between poverty reduction, and governance, security, and the whole-of-government approach in its future policy statements, aid programming and country operations. Poverty reduction efforts and cross?cutting priorities should also be closely monitored and evaluated.

Australia’s willingness to stay engaged in conflict situations and fragile environments is welcome and has wider interest for the development community. The new hands-on approach carries both opportunities and risks. The DAC welcomes Australia’s assurance of long-term engagement and stresses the importance of sustainability and capacity building in partner countries not least through progressively transferring responsibilities to national officials and strengthening local accountability mechanisms.

Australia’s development objectives include coherence between its aid, foreign, trade and agriculture policies, underpinned by a whole-of-government strategy to improve co-ordination across the Australian government. The DAC commends this effort. To ensure that the whole-of-government approach is an important contributor to aid effectiveness, the DAC encourages AusAID to continue to play a pro-active role in wider government decision making on development issues.

The DAC notes that AusAID is changing its approach to aid delivery. The DAC recognises AusAID’s movement towards harmonisation and alignment, including practical examples of delegated co-operation and joint strategies, and encourages the move toward a more programmatic approach. The role and significant share of external technical assistance as well as AusAID’s high reliance on external contractors should be carefully analysed against aid effectiveness principles, ownership and capacity building. Aid effectiveness would be enhanced by further untying.

While moving toward decentralisation, AusAID needs to continue to clarify the respective roles of Canberra and the field offices and to increase delegation to the field. Appropriate human resources, policy adjustments, strengthened communication, and support to the field will be needed in this respect, as will adequate numbers of staff with the necessary technical skills
AusAID has adopted a systematic approach to assessing and funding multilateral organisations and is encouraged to continue improving the quality of its multilateral assessment framework. There has been a decline in the relative share of multilateral aid in its programme. It may be opportune for AusAID to take a strategic view of the future medium-term balance between bilateral and multilateral channels.

The DAC commends Australia’s new policy on humanitarian action and its commitment to the Principles and Good Practice of Humanitarian Donorship (GHD), endorsed in 2003. Australia supports humanitarian action particularly in the Asia-Pacific region, helping build capacity to reduce vulnerability to natural disasters and targeting emergencies and is seeking to attract broader international attention to the region. Australia’s long-term engagement and commitment in complex emergencies in the region are encouraged, linking humanitarian assistance and development co-operation. When increasing its aid volume, Australia should also consider increasing its support for humanitarian action in line with its policy and consistent with its needs-based approach.

The DAC Peer Review of Australia’s development co-operation policies and programmes took place on 14 December 2004. The discussion was led by the DAC Chair Mr. Richard Manning. The Australian Delegation was headed by Mr. Bruce Davis, Director-General of AusAID. The examiners for the Peer Review were Ireland and the United Kingdom.

The main findings and recommendations of the DAC regarding this review will be published on the OECD web site, at www.oecd.org/dac/peerreviews, during the week of 3 January 2004. For further information journalists are invited to contact the OECD Media Relations Division, (tel. 33 1 45 24 97 00).

See table and graph