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NEWSChanges in the Australian aid program: a managing contractor’s perspectiveInternational development practitioners can usually be counted on to agree on two things: the first is that the development scene is always changing; the other is that there is nothing new under the sun. AusAID’s publication of the White Paper in 2006 was a significant milestone in the Australian overseas aid program. In an important sense this first ever White Paper has marked a watershed in Australian aid policy – a definitive statement of strategic direction in the context of an evolving and increasingly complex international environment. But how much of it is really new? And what implications does it have for development practitioners? In particular, for a development contractor such as HAI with long-standing ties to the Australian aid program, what implications does it hold for the future of our industry? And how should we respond? In order to understand where things are going, it’s it is always useful to know where they have come from. Each of the themes and issues presented in the White Paper has a history. This two part article identifies a number of these key themes, briefly examines their background, and seeks to draw out their implications for aid practitioners by assessing their likely impact on the program in the context of the White Paper. Part 1 of the article examines developments in five key themes from the 1996 Simons Review to the publication of AusAID’s 2001 Strategic Plan. Part II looks at the rise of international security issues along with the increasing influence of Whole of Government approaches on the development agenda, and concludes with an analysis of the White Paper’s implications for the future of the Australian Aid program. Part I – From the Simons Review to the Strategic Plan The White Paper has emerged within the context of a rapidly changing international environment. The emergence of regional and international security issues since September 11, increased concern with fragile states, the rapid growth of China and India, and growing awareness of the implications of climate change have all played their part in shaping the international aid agenda. But a number of key themes of much longer standing are fundamental to the White Paper’s concerns. These are:
Understanding these themes - and also the interplay between them - is important to appreciating the White Paper. The Big Picture – Five key themes
‘National interest’ and ‘Poverty reduction’ The 1996 Simons Review of the aid program established ‘One Clear Objective’ for the aid program: poverty reduction. This objective has been central to aid policy ever since. Over this period, however, another theme has been equally consistent. The 1996 Foreign Policy White Paper (developed in parallel with the Simons Review) formulated the objective of the aid program as ‘serving the national interest by reducing poverty and promoting sustainable development’. These concepts (national interest and poverty reduction), while not mutually exclusive, have nevertheless been seen by many observers to be in uneasy tension over the past decade. In arguments over the objectives of the aid program, it has not always been recalled that poverty reduction, even under Simons, has always been considered to be consistent with Australia’s longer-term ‘enlightened self-interest’. Encouraging the prosperity of our regional neighbours (‘investing in their future’) is closely linked with Australia’s strategic economic and security interests. On the other hand, it has also been argued – perhaps rightly - that a ‘national interest-led’ approach to policy making can be antithetical to participative development approaches that emphasise partner government ‘ownership’ and stakeholder-led engagement. Good Governance and Aid Effectiveness Good governance moved to the centre of the aid agenda following the 1998 publication of the World Bank Report, “Assessing Aid: What works, what doesn’t and why”. The key message of Assessing Aid was simple: aid works when recipient countries get their policy and regulatory settings right (including open trade and investment regimes and fiscal discipline), and provided transparent and predictable legal and administrative frameworks. Aid could achieve the most when it acted as a catalyst for private sector trade and investment. The best way to fight poverty was to promote employment through market-driven economic growth. For donors, investment in ‘traditional’ resource, basic service and infrastructure projects was no longer enough. A parallel focus on the ‘enabling environment’ for private sector development (including public sector efficiency and the rule of law) was needed. Donor attention increasingly focused on ‘policy dialogue’ and on ‘governance’ projects (even within the context of traditional basic service sectors, such as health or education). At the same time as Assessing Aid focused donors on the issue of aid effectiveness, the wave public sector reform throughout the OECD (including Australia) in the mid-to1990’s also increased pressure on donors to become more accountable for their expenditure. Results had to be achieved and demonstrated. Donors therefore increasingly placed increased attention on being more ‘analytical’ and ‘innovative’ in their preparation and design of aid strategies and projects, as well as on monitoring and evaluation of the results (both to ensure accountability as well as promote ‘lesson learning’.) Fairly soon, these approaches to public sector reform flowed through into aid programs as well, with developing countries encouraged to embrace what came to be known as public expenditure management (PEM) reform, involving shifts to outputs/outcomes budgeting, new accounting and financial management systems and public sector rationalisation and ‘professionalisation’. Aid Efficiency The wave of public sector reform in the 1990s not only focused attention on aid effectiveness, it also targeted efficiency. As part of a broader drive by government to get the public sector to achieve ‘more with less’, AusAID increasingly sought new and more efficient ways to deliver its programs. During the initial phases of this transition, contracting out became a byword. Program management functions traditionally performed ‘in-house’ were outsourced, in part through the development of facility-style initiatives that shifted primary responsibility for management of the ‘program cycle’ to implementing contractors. In parallel, the development of outputs-style contracts also shifted many monitoring and risk management responsibilities from AusAID staff to implementing contractors. The PNG Effect In the late 19990’s, the significance of these five themes for the aid program gained particular energy when focused through the lens of one country: PNG. The PNG aid program was for many years Australia’s largest and arguably its most politically significant. Until the early 1990s the bulk of Australia’s more than $300 million in annual aid to PNG was provided as direct budget support. After 20 years of independence, and a lack of concrete development progress, the efficacy of this approach was questioned in many quarters. In 1993 a treaty was signed with the PNG Government providing for a gradual shift from budget support to fully programmed aid over the next 10 years (creating many opportunities for aid contractors, as well as stimulating innovative approaches to aid delivery by AusAID to ensure that Treaty expenditure targets could be met). By 2001, however, with many basic indicators still either static or going backwards, many in the Australian Government began to question the effectiveness of programmed aid - and indeed of the aid program as a whole. A rethinking of the aid program was in order. AusAID responded with its 2001 Strategic Plan. The “First Wave”: AusAID’s 2001 Strategic Plan Faced with these trends – greater scrutiny of the aid program, a continuing tightening of resources, and a growing international consensus about improving aid effectiveness – AusAID prepared its 2001 Strategic Plan. Main features of the plan included:
Under the Plan, AusAID Canberra was expected to move away from its traditional role of managing aid delivery to focus more on policy and program development (with management and monitoring of implementation to be primarily conducted in-country). AusAID acknowledged that the Plan would require a significant change in the skills base of its people. However, the Strategic Plan also contained challenging implications for contractors and consulting personnel as well. Among these were:
Through the Strategic Plan AusAID put the Australian development consulting industry on notice: ‘business as usual’ approaches were no longer satisfactory. The key message could be boiled down to one word: innovate. For many aid practitioners, the full implications of the Strategic Plan were not immediately apparent. Significantly, however, implementation of the Plan was soon overtaken by other developments – both domestically and abroad - that guaranteed that even more change would be on the aid agenda. Peter Leahy pleahy@hassall.com.au Peter spent 5 years with AusAID before moving to the development contracting industry. He has been with HAI since 2004 and tasks our Governance sector work. Peter is Program Director, on the China Australia Governance Program which is funded by AusAID. Next issue: Part II – To the White Paper – and beyond
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