AUSTRALIAN AID: PROMOTING GROWTH AND STABILITY

1. AUSTRALIAN AID: PROMOTING GROWTH AND STABILITY

2. A commitment to aid volume…. • Prime Minister’s announcement at UN Summit in September • Doubling to $4 billion by 2010 • Conditional on strengthened governance, anti-corruption efforts and aid effectiveness

3. AUSTRALIAN AID: PROMOTING GROWTH AND STABILITY Outline of the White Paper • Introduction • Operating environment, values and interests • Strategic framework • Where Australia will work, and why • What the aid program will focus on • Strengthening effectiveness • Aid management

4. Average annual GDP per capita growthin the Asia–Pacific region, 1995 to 2004

5. Operating Environment • Major reductions in poverty in Asia Pacific • But…. • significant disparities between and within countries • existing challenges intensifying, new challenges emerging • high absolute number of poor • a region of developing countries, many are fragile (e.g. Solomon Islands, PNG, East Timor), and Indonesia

6. Development lessons • Economic growth central to poverty reduction • Countries that have integrated grow faster than those that have not • Growth by itself not sufficient – needs to be sustained and shared • Institutions matter • Each country’s path is different • Aid only small part of the development equation • Poor aid can do harm • Need new approaches to fragile states.

7. Strategic Framework • Objective • Asia Pacific focus • Overarching principles of gender equality, fully untied aid and partnership

8. AUSTRALIAN AID: PROMOTING GROWTH AND STABILITY

9. Thematic Initiatives • Growth – infrastructure : ideas and funding. • States - incentives for good performance up to 10% of total aid budget over time. • People – major scaling up of health, focussing on women and children, and education to get more children into school for longer and a better education. HIV/AIDS, pandemics, malaria. • Regional stability – regional responses to transboundary threats.

10. Effectiveness • Office of Development Effectiveness and Annual Review linked to budget cycle • Output based aid • Country strategies covering all ODA, performance frameworks and link to allocations • Anti-corruption • Australian engagement – research, linkages • Partners: delegated responsibility, leveraging multilaterals

11. External communication is a critical function to support aid effectiveness It does this in two main ways: • As a critical component of development activities: to inform, educate and assist in changing behaviour • Informing taxpayers and aid recipients about our aid program. The risks of not communicating: • Our aid is less effective • We lose public support and therefore political support.

12. Conclusion • Geographic flows: rebalancing to Asia from Pacific • Not just more aid • Different way of doing business for AusAID and other Australian agencies • Greater focus on effectiveness, less contracting out • More rigorous approach to corruption • Greater use of partner government systems and processes • Very different aid program and agency in 2010, more effective, more transparent and more integrated.