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Australia's Overseas Aid Program 2000-01

Chapter Two: Key Sectors of the Aid Program

The sectors of governance, agriculture and rural development, health, education and infrastructure are fundamental building blocks for sustainable development. The aid program also focuses on the cross-cutting issues of environment and gender.

Australia's aid is programmed on the basis of country and regional strategies developed in consultation with partner governments. Aid activities may target one or more of the sectors depending on the needs of the partner country and the availability of resources. Many activities with a principal focus on one sector also indirectly address other issues. The estimated sectoral breakdown of Australia's aid is shown below.

The figures in this chapter are approximate forecasts and subject to change during the course of the year as a result of programming decisions.

Diagram 5: Estimated breakdown of the aid program
by sector 2000-01⁴

Diagram 6: Estimated expenditure by sector 2000-01⁵

Governance

The quality of governance in developing countries is critical to poverty reduction and sustainable economic and social development. Australia's support for governance assistance has almost doubled over the last five years. In 2000-01, the Australian Government will spend an estimated $245 million through the overseas aid program on direct assistance to help improve governance in developing countries. This represents about 15 per cent of overall aid expenditure.

To promote effective governance in partner countries the aid program focuses on:

• improving economic and financial management to maximise and broadly distribute the benefits of growth


• strengthening public sector management for effective delivery of government services


• strengthening legal systems and the rule of law


• fostering the development of civil society.

 

Diagram 7: Estimated Australian assistance to the
governance sector 2000-01

Creating conditions for growth

Successful national economic development depends on the promotion of open markets and the institutions and policies that are needed for markets to function well. A dynamic private sector drives economic growth and poverty reduction in developing countries. It creates jobs and income, generates wealth and helps ensure that resources are used efficiently and sustainably. Australia's aid is helping partner governments improve the economic, social, institutional and regulatory environment within which all enterprises must operate. The aid program is also supporting investment in education, health and infrastructure - areas that are all vital for private sector development.

Poorly functioning public institutions are also a major impediment to growth and equitable development in developing countries. Helping to build effective and accountable institutions is a core function of Australia's aid program.

More open trading systems are necessary for all countries to benefit from private sector investment. Australia is playing a valuable role by strengthening the capacity of developing partner countries to participate in global and regional trading arrangements.

Australia supports microfinance projects funded under the aid program as a means to ensure that the very poor are given real opportunities to participate in and benefit from increased private sector activity. Australia will seek to identify microfinance organisations with the potential to have a long-term impact and provide support to build the capacity of these organisations.

Human rights

A key theme of Australia's support for governance is to advance human rights and civil society institutions that promote individual freedoms and greater political participation. The Human Rights Fund has proved successful in supporting small-scale local human rights initiatives in developing countries, and higher-level work on national and regional human rights institutions.

In 2000-01 the Centre for Democratic Institutions will continue to play an important role in the Government's practical approach to improving governance. It holds workshops and seminars in the Asia Pacific region on issues such as anti-corruption.

Agriculture and Rural Development

The World Bank estimates that the number of people living in extreme poverty will be greater in rural than urban areas until at least 2020. In 2000-01 Australia will spend an estimated $225 million through the overseas aid program to alleviate poverty in the rural farm and non-farm areas. This represents about 14 per cent of overall aid expenditure.

Promoting food security

Food security means that `food is available at all times, that all persons have means of access to it, that it is nutritionally adequate in terms of quantity, quality and variety and that it is acceptable within the given culture' (World Food Summit, 1996). Freeing up markets through trade liberalisation is part of the process to achieve long-term food security.

Australia has pledged $1 billion for food security activities for the period 1998-99 to 2001-02. It is expected Australia will spend over $250 million under the pledge in 2000 - 01. The pledge is aimed not only at meeting immediate food aid needs, but also at strengthening agricultural production, research and development, and skills and systems in developing countries.

Agriculture and natural resources

An estimated 500 million people, mainly in Asia, still live on land where water is scarce, soil is poor and there are increasing pressures on natural resources. Agriculture (including forestry and fisheries) not only provides food, it is also essential for economic growth and environmental protection. Australia's objective is to reduce rural poverty by increasing opportunities for the poor to generate income. The aid program will continue to support activities that promote farmer-friendly policies and functioning rural markets, which are prerequisites for rural income generation.

The education, governance, health and rural infrastructure sectors make a wider contribution to providing for basic needs and essential services in rural areas. Expenditure in these sectors that indirectly benefits rural development is estimated to be about $115 million in 2000-01.

Health

The dramatic improvements in health in the 20^th century have led to considerable progress in the developing world. But many challenges remain. Thirty per cent of people in developing countries are malnourished, nearly 30 million children worldwide have inadequate immunisation and nearly 600,000 women die each year from pregnancy related causes.

In 2000-01, Australia will provide an estimated $170 million of direct health assistance to developing countries. This represents approximately 11 per cent of overall aid expenditure.

Australia's support for health aid has increased substantially over the last decade, from around 2 per cent of total ODA in 1990-1991, reflecting the importance of improved health standards for economic development and poverty reduction. Australia's assistance will focus on: communicable and vector-borne diseases, especially HIV/AIDS, tuberculosis (TB) and malaria; women and children's health, including reproductive health; non-communicable diseases; and national policy development and health sector reform.

Australia's health aid targets those groups most at risk and focuses on improving basic health care and services through simple, cost effective methods of prevention and treatment.

Diagram 8: Estimated Australian assistance to the health sector
2000-01

Education

Education and training assistance is an important element of Australia's aid program. By supporting improvements in education in developing countries Australia is helping to overcome one of the major obstacles to poverty reduction and economic growth. In 2000-01 Australia will allocate an estimated $285 million to the education sector, which represents approximately 18 per cent of the aid program.

Diagram 9: Estimated Australian assistance to the education sector
2000-01

Basic Education

Basic education is essential to reduce poverty and achieve sustainable development. Many countries are reporting considerable progress. Fifty million more children attend school now than ten years ago and the number of children not attending school is declining. Adult literacy rates have improved. Nevertheless progress is slow and uneven. There are large gender disparities-women and girls account for nearly
two-thirds of people who have not achieved a basic education.

Australia has steadily advanced the aims of its 1996 education and training policy for the aid program. Spending on basic education has increased from a 6 per cent share in 1996-97 to an estimated 21 per cent in 2000-01.

Australia's key priority for education in 2000-01 is to assist partner countries
improve access to quality basic education for all their population. Australia will be working with other governments and donors to find effective, cooperative new approaches to achieve this.

Technical and vocational education and training

The second priority for this sector is technical and vocational education. It is estimated that spending on technical and vocational education will increase to around 14 per cent of Australian spending on education aid in 2000-01 from 4 per cent in 1996-97. Australian expertise is in demand to establish effective vocational education systems that match the needs of industry with training systems.

Higher education

Australia supports higher education needs in developing countries according to the knowledge and skills needs of each country. Higher education provides opportunities for advanced and/or specialised training, essential for positions of responsibility in government, business and the professions. Investments in higher education contribute to increases in labour productivity and long-term growth.

Australia will continue to provide direct assistance at the higher education level through the provision of scholarships for tertiary training. The scholarships contribute to human resource development for the recipient country and have a direct impact on development across various sectors. Scholarships also have an important role in fostering and sustaining positive relations with partner countries, particularly in the Asia Pacific region.

Australia will also continue to provide assistance to the development of in-country higher education systems and institutions. Australia has expertise in all areas relating to higher education with particular strengths in policy development and systems development and management.

Infrastructure

Essential infrastructure, such as water supply and sanitation, transport and communications, is fundamental to poverty reduction and sustainable development. It contributes to a higher quality of life, improved agricultural productivity and increased productivity in urban centres. Demand for infrastructure over the next decade is expected to outstrip the financing capabilities of developing country governments. Private sector investment will be essential. A major role for international aid is to facilitate and promote the conditions necessary for sustained private sector participation by financing infrastructure in developing countries while targeting activities to meet the needs of the disadvantaged.

In 2000-01 Australia will provide an estimated $255 million for infrastructure, which represents approximately 16 per cent of the aid program.

Australia continues to support the development of infrastructure in three areas: creating enabling environments for both private and public financing and management of infrastructure; human resource development and capacity building; and increasing poor people's access to essential infrastructure.

In 2000-01 Australia will:

• assist partner countries to improve the regulatory environment for infrastructure and, in particular, the legal and administrative climate to attract private sector investment


• ensure that poorer and marginalised communities, particularly in rural areas, have access to essential infrastructure


• respond to the international trend towards decentralised responsibility for infrastructure by supporting capacity building of municipal and provincial governments to handle new infrastructure responsibilities such as private sector contracting, regulation, accounting and financial management


• identify ways to strengthen the poverty focus of aid projects in the infrastructure portfolio.

Environment

Environmental degradation tends to affect the poor disproportionately. The World Bank estimates the annual cost of environmental degradation in East Asia and the Pacific is 5 per cent of GDP. In urban areas the health of the poor is affected by air pollution and unsanitary living conditions. In rural areas, deforestation, soil erosion and the destruction of fisheries directly affect the livelihoods of the poor.

Australia's aid program supports activities that address environmental problems in developing countries. In 2000-01 Australia will provide an estimated $65 million directly to the environment sector, with an additional $170 million in indirect expenditure. Activities range from providing clean water supplies to promoting sustainable natural resource management, to contributing to climate change research by monitoring sea level and atmospheric changes.

Australia assesses all aid activities to ensure negative environmental impacts are avoided or mitigated. In July 2000 the Commonwealth Environment Protection and Biodiversity Conservation Act will replace existing law governing environmental impact assessment under Australia's aid program. In 2000-01 the aid program will develop environmental assessment guidelines that reflect the requirements of the new Act and a comprehensive training program to support the introduction of the guidelines.

Other priorities for 2000-01 are to:

• evaluate the extent to which the poverty focus of aid projects in the environment portfolio can be strengthened


• promote the mainstreaming of greenhouse gas abatement strategies into the design of aid activities


• further Australia's interests in international environment negotiations on topics such as Persistent Organic Pollutants and energy.

Gender

Improving outcomes for women is essential to achieve poverty alleviation. Women are more likely to be poorer, less educated, and less healthy than men. They are also subject to more violence and other human rights abuses. Social and economic research has highlighted the high return from investments in women as well as the poor performance of aid assistance that ignores differences in gender roles.

In 2000-01 Australia will spend approximately $40 million on activities in which the promotion of gender is the main objective. A further $380 million is expected to be spent on activities in which gender considerations are significant. The objective of Australia's Gender and Development policy is to promote equal opportunities for women and men as beneficiaries of development in partner countries. The aid program provides assistance to increase women's access to education, health care and economic resources; to encourage women's participation and leadership in decision-making at all levels; to promote human rights of women and to eliminate discrimination against women. Between 60 to 80 per cent of Australia's activities in health and education address gender equality by providing basic social services to women.

In 2000-01 Australia's aid program will:

• pursue improvements in the incorporation of a gender approach into governance, environment and infrastructure activities


• support programs that improve women's access to economic resources and promote women's participation and leadership in decision-making


• incorporate a gender approach more effectively into water supply and sanitation projects


• strengthen partnerships with donor agencies, multilateral organisations and NGOs in relation to gender issues.

The aid program is also giving increased attention to activities that address violence against women. This effort will continue through a number of initiatives which address both immediate, urgent problems and longer-term preventative strategies. Initiatives include support for programs addressing domestic violence, programs addressing the effects of armed conflict on women and programs addressing governance issues for longer-term prevention. Recent initiatives include support for a UN program aimed at reducing trafficking of women and children in the Mekong sub-region, initiating a Violence Against Women Fund in South Africa and supporting the Vanuatu Women's Centre.

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4 The `Other' category includes direct expenditure on environment and gender as well as some humanitarian and emergency assistance that is not classified under other sectors.

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5 Direct expenditure estimates reflect the value of projects with a principal focus on a particular sector, and include imputed flows from cash grants from the Australian aid program to multilateral organisations. Direct expenditure is thus comparable with total Australian ODA. Indirect expenditure estimates reflect the full value of aid projects with a secondary impact on a particular sector, and are not comparable to total Australian ODA. Estimates for indirect expenditure are provided to give a fuller picture of the complexity of development assistance projects. See Statistical Annex for further explanation of sectoral estimates.