Chapter One: Focus of the aid program
The Australian aid program is concentrated in East Asia, PNG and the Pacific Island countries, with selective engagement in South Asia, Africa and the Middle East. The program's focus on the Asia-Pacific region is an expression of Australia's strong engagement with the region and commitment to working in partnership to meet its considerable development challenges. The region is home to the greatest number of the world's poor, two-thirds of whom live in Asia and the Pacific. Australia's aid contributes to the reduction of poverty in the region by working with our development partners to:
- strengthen frameworks for sustainable and inclusive economic growth
- support interventions that enable the poor to increase their productivity
- encourage governments, institutions and donors to be more accountable
- reduce vulnerability associated with conflict, exclusion and disasters.
In 2002-03, PNG will receive approximately one fifth of total flows, in line with flows in recent years. Total aid flows to the Pacific, East Asia and Africa will increase compared to 2001-02 expected outcomes. In 2002-03 total aid flows to South Asia are expected to remain at the same high level as was provided in 2001-02.
Diagram 1: Total Australian aid by region in 2002-03
Diagram 2: Trends in total Australian aid by region
Note: Figures for 2001-02 and 2002-03 are estimates.
Diagram 3: ODA/GNI ratio of Australia and DAC weighted average
Australia's ODA/GNI ratio is estimated to be 0.25 per cent in 2002-03, which is above the latest (2001) donor average of 0.22 per cent.
Key sectors of the aid program
Australian aid is provided in the five priority sectors of governance, rural development, health, education and infrastructure. The principles of environmental sustainability and gender equity guide activities in these sectors.
Australia's aid is programmed primarily on the basis of country and regional strategies developed in consultation with partner governments. Sectors for assistance are determined through consideration of Australian and partner government priorities, Australia's expertise and the activities of other donors. Aid activities may target one or more of the sectors. Many activities with a principal focus on one sector also benefit other sectors. For example, infrastructure activities addressing water supply and sanitation can improve the health of the poor through elimination of water-borne diseases.
The figures in this section are estimates and subject to change during the course of the year as a result of programming decisions.
Diagram 4: Estimated breakdown of the aid program by sector in 2002-03
Note: `Other' includes direct expenditure on areas such as gender, environment, humanitarian, refugee and emergency aid.
Diagram 5: Estimated expenditure by key sector in 2002-03
Governance
Good governance lays a foundation for poverty reduction and for sustainable development. The promotion of effective governance is an increasingly important part of the aid program, with expenditure on governance activities in 2002-03 estimated to reach $355 million. Governance activities represent about 20 per cent of overall aid expenditure.
Good governance means the competent management of a country's resources in a manner that is open, transparent, accountable, equitable and responsive to people's needs. The elements of governance are inter-reliant and mutually supporting. Australia's governance assistance under the aid program includes support for improving economic and financial management, strengthening law and justice, increasing public sector effectiveness and developing civil society and human rights.
Australia's aid program recognises that economic growth and poverty reduction are best fostered in an efficient, open and market-based economy. Australia will increase its focus on helping developing countries strengthen their capacity to integrate into the global economy, attract private investment, participate in global and regional trading arrangements, and take advantage of new trade opportunities. A priority for Australia will be assisting developing countries to build their capacity to participate in the new round of trade negotiations agreed to at the WTO Ministerial meeting in Doha in late 2001. Continuing support for microfinance will also feature, with an emphasis on sustainability and a strong commitment to serving the poor.
In Asia, Australian governance assistance will include support for economic cooperation and integration, particularly through fora such as APEC (Asia-Pacific Economic Cooperation) and ASEAN (Association of South-East Asian Nations). In the Pacific, assistance will continue to be provided to improve public sector management, service delivery and accountability.
In 2002-03, continued funding for the Australian Centre for Democratic Institutions will enhance broad political participation and human rights in the Asia-Pacific region by providing training to key institutions such as parliaments and the media. The centre will also encourage the exchange of information and public debate in the region. Australia's Human Rights Fund will support activities that promote awareness of and adherence to human rights. Activities supported under the fund will also strengthen national and regional human rights institutions.
Diagram 6: Estimated
Australian assistance to the
governance sector in 2002-03
Agriculture and Rural Development
The majority of the world's poorest people live in rural areas. In recognition of this, Australia's aid program aims to reduce rural poverty by increasing opportunities for the poor to generate income. Increased income can provide the poor with the freedom to make choices about how to improve their lives. It allows them to build assets, reduce their vulnerability to disasters and improve their food security.
The Australian aid program's income generation strategy in rural areas will aim to increase agricultural sector productivity, stimulate non-farm employment and strengthen capacity to manage natural resources sustainably. To achieve this, Australia will work with partner governments to improve their policies on these issues. Australia will also help deliver income generation projects on the ground. Collaborative partnerships in agricultural research for development will be strengthened.
Rural development projects will work to enhance food security of people living in marginal lands by promoting improved agricultural production methods. Australia also helps improve food security through the provision of food aid. This assistance is provided in accordance with the Food Aid Convention, which aims to contribute to world food security and to improve the international community's response to emergency food situations and other food needs of developing countries. The majority of Australia's food aid comes from Australian wheat and rice farmers.
In 2002-03, the aid program will provide an estimated $240 million for rural development, representing about 14 per cent of overall expenditure.
Health
Despite significant gains, the burden of communicable and non-communicable disease in developing countries remains unacceptably high. Improving health is central not only to reducing mortality and morbidity rates, but also to achieving long-term national economic growth and sustainability.
The lack of functioning health systems constrains the delivery of improved services. In 2002-03 Australia will help to address this by supporting health sector reform and management at national and local levels. Support will also be provided to strengthen service delivery and increase access for the poor to affordable services, including community based health services. The aid program will also help rebuild health systems in post conflict situations, as in East Timor and the Solomon Islands. Non-communicable diseases will increasingly be a focus of health sector interventions, particularly in the Pacific.
HIV/AIDS will remain a major priority. The $200 million, six-year HIV/AIDS initiative announced in June 2000 is continuing to be implemented. Australia will also provide international leadership for HIV/AIDS prevention. A key recommendation of the Asia-Pacific Ministerial Meeting on HIV/AIDS, held in Melbourne during October 2001, was the establishment of an Asia-Pacific Leadership Forum. This forum, to be established in 2002 in partnership with the Joint United Nations Programme on HIV/AIDS (UNAIDS), will raise the profile and understanding of HIV/AIDS amongst key decision-makers in the region.
In 2002-03, Australia will provide an estimated $230 million of direct health assistance to developing countries. Australia's support for health will account for around 13 per cent of overall aid expenditure in 2002-03.
Diagram 7: Estimated Australian assistance to the health sector in 2002-03
Education
Australia's aid activities in education are aimed at increasing access, promoting equity, and improving the quality and relevance of education and training. Australia provides assistance in basic education, technical and vocational education, higher education and distance education.
Australia is helping countries in our region to gain from opportunities provided by technological innovation and globalisation. In 2001, the Australian Government launched a major new policy initiative that will use Australian expertise to help bridge the digital divide. The Virtual Colombo Plan will work with a range of education systems. One early activity under the plan is to provide quality primary school teacher training in developing countries in our region. The initiative will also integrate information and communications technologies (ICTs) into many education activities.
In 2002-03 Australia will spend an estimated $280 million through the overseas aid program in the education sector. This represents about 16 per cent of overall aid expenditure.
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Virtual Colombo Plan In developing countries the demand for knowledge often exceeds the supply. This means that many people are denied access to sources of information taken for granted in developed countries - for example, well-equipped libraries, government shopfronts, and the Internet. ICTs such as computers, radio and video-conferencing can be a powerful tool to help overcome constraints to development. For example, training delivered through ICTs is often cheaper and can reach a wider audience than may be possible using traditional mediums. To address this issue, the Australian Government and the World Bank launched the Virtual Colombo Plan in August 2001, with an Australian contribution of $200 million over five years. This joint initiative addresses the causes of poverty through the use of ICTs. Its major focus is to improve education and access to knowledge in developing countries, through distance education and support for policy development using ICTs. It also provides a new platform for Australia's world-class education providers, research institutions and technology companies to share their knowledge and skills with our developing country partners. In 2002-03, activities under the Virtual Colombo Plan will:
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Diagram 8: Estimated
Australian assistance to the
education sector in 2002-03
Basic education
Access to basic education is a priority for the aid program. Australia has significantly increased the proportion of aid to basic education to 31 per cent or $85 million in 2002-03. Special attention will be paid to children who face greater hurdles in accessing education, such as girls and minority populations.
Even when children are in school, the quality of education is often poor. Under-qualified teachers have too few resources and inappropriate teaching materials. Australia helps address these issues through the provision of basic education materials and textbooks, enhancing teacher skills and curricula, and strengthening management skills in schools to ensure better use of existing resources.
Australia is a major donor to the basic education sector in PNG, in two Pacific island countries and nine countries across Asia.
Technical and vocational education
Australia provides technical and vocational education assistance to partner countries to help build an educated, skilled labour force. Australia helps improve the relevance of technical and vocational education through the introduction of demand driven approaches that encourage active partnerships with public and private sector employers. In 2002-03 direct expenditure on technical and vocational education is estimated to be 17 per cent of education sector expenditure or $45 million.
Higher education
In 2002-03 spending on higher education will account for approximately 48 per cent of Australian education sector expenditure. The majority of higher education expenditure is on Australian Development Scholarships, which are designed to meet developing country human resource needs. The scholarships are available for post-secondary study at contracted Australian education institutions.
In the Pacific region, Australian Regional Development Scholarships are available for post-secondary level study at regional education institutions such as the University of the South Pacific (USP), the Fiji Institute of Technology and the Fiji School of Medicine.
As at March 2002 there were an estimated 3,130 students funded through the two scholarship schemes. It is expected that around 1,460 new scholarship holders will commence under these schemes in 2003.
Australia is also helping to strengthen higher education systems in partner countries through collaborative research and training activities with Australian institutions.
Distance Education
Distance education returns considerable cost efficiencies and increases access for students, especially women and people living in remote areas. Australia has internationally recognised strengths in distance education, and will continue to work with partner countries and other donors to build distance education technology and capacity. This will include provision of hardware and software for cost-effective distance education activities. Distance education is a key feature of Australia's Virtual Colombo Plan.
Infrastructure
Essential infrastructure is fundamental to poverty reduction and sustainable development. Infrastructure development can act as a catalyst for economic development, which in turn leads to increased employment opportunities. The well-being of the poor can be improved, for example, through a decrease in death and illness associated with poor sanitation systems and contaminated drinking water. The development and maintenance of roads can significantly improve access for the rural poor to markets and services.
It is estimated that Australia will provide about $225 million in 2002-03 towards infrastructure. This represents about 13 per cent of overall aid expenditure. During 2002-03, support for infrastructure will focus on:
- improving poor people's access to essential infrastructure such as water supply and sanitation, transport facilities and energy supplies
- assisting the creation of enabling environments for both private and public financing and management of infrastructure
- supporting human resource development and capacity building in infrastructure.
Facilitating ongoing and preventative maintenance is a critical issue in many developing countries. The Australian aid program is increasing its focus on asset maintenance by strengthening partner governments' capacity to maintain infrastructure.
Environment
Natural resources are an important basis for livelihoods in many developing countries. In Asia, the Pacific and Africa, 70 per cent of all jobs depend on agriculture, forestry and fishing. This proportion is even higher among the poor, 70 per cent of whom live in rural areas. Environmental degradation threatens their livelihoods and the sustainability of poverty reduction efforts.
The economic costs of environmental degradation have been estimated at 4-8 per cent of Gross Domestic Product (GDP) annually in developing countries. Some environmental problems, such as land degradation and pollution, can be solved principally through domestic action. Others, such as climate change and ozone depletion, also need to be addressed through coordinated multilateral action.
In 2002-03, Australia will provide an estimated $60 million for activities that directly address environmental problems in developing countries (around 3 per cent of overall aid expenditure), with an additional $135 million of indirect expenditure. Australia will provide bilateral support for renewable energy and improved water, waste and natural resource management. Australia's regional and multilateral support will include biodiversity conservation, climate change mitigation and adaptation, and phasing out of ozone depleting substances.
Priorities for 2002-03 are to contribute to Australia's participation in the World Summit on Sustainable Development at which poverty reduction will be a central theme. The aid program will also continue to implement environmental management guidance in accordance with the overseas aid provisions of the Environment Protection and Biodiversity Conservation Act 1999.
Gender
Poverty is perpetuated by continued gender inequalities. Australia's gender and development policy recognises the linkages between poverty, growth and gender disparities. The aid program integrates gender equity concerns into the analysis and formulation of all development policies, programs and projects. Australia also encourages initiatives that enable women and men to participate in decision-making at all levels.
During 2002-03, Australia will provide an estimated $65 million for activities that directly address gender equality (around 4 per cent of overall aid expenditure), with an additional $505 million of indirect expenditure. Australia's aid program will work with partner countries to:
- address violence against women and children, including trafficking in women and girls, and promote women's positive role in conflict situations and peace building
- enhance women's economic empowerment
- ensure that gender equity issues are effectively incorporated into governance and infrastructure activities.
In the coming year, Australia will continue to make improvements to the way in which the aid program addresses gender equity.
