Overview
Development Context and Policy Approach
Development Progress
Due to solid economic growth, good progress globally is being made towards addressing extreme poverty and hunger, the first Millennium Development Goal (MDG). The World Bank1 predicts that the number of people globally living on less than one United States (US) dollar a day could be cut by almost two thirds between 1990 and 2015.
However, the Asia-Pacific remains a poor part of the world, with the Asian Development Bank and United Nations (UN)2 estimating that around 641 million people in this region continue to live on less than one US dollar a day. This is more than half the world's extreme poor. In the Pacific, slow economic growth and fast growing populations have seen per capita incomes stall and estimates of income poverty rise (from 25 per cent in 1996 to almost 40 per cent in 2003, according to World Bank3 analysis). Though a recent increase in growth rates in countries such as Solomon Islands, Samoa and Papua New Guinea indicates some improvement over the near term, considerable challenges to development remain.
Despite aggregate overall gains in the incomes of the poor, led by major Asian economies, progress in human development outcomes such as infant mortality, nutrition, life expectancy and levels of educational attainment is less clear. This is especially so in lagging regions (such as southern Philippines and eastern Indonesia) that are underperforming economically within larger more successful economies. In a number of countries and regions, growth is occurring alongside markedly deteriorating income inequality. According to a joint Asian Development Bank and UN study4 gaps in income equality and opportunity between different geographic areas and between types of households can be striking. Infant mortality rates can be over 50 per cent higher for children in rural households than for those in urban areas, and access to safe water and sanitation can be half that of urban areas.
On achieving universal primary education (MDG2), while overall progress appears relatively strong, there are some major exceptions. In Papua New Guinea, for example, only half of all children complete five years of primary school. Even those Asia-Pacific countries that perform better in access to basic education often provide very low quality education compared to Organisation for Economic Cooperation and Development (OECD) standards.
Although income poverty levels have fallen on aggregate, many countries are tracking poorly towards Millennium Development Goals on human development, particularly the fourth and fifth MDGs on child mortality and maternal health. HIV/AIDS has already devastated parts of Africa and continues to threaten in Asia and in Papua New Guinea. Tuberculosis is resurgent across the region, and malaria is the second biggest killer in Papua New Guinea. Such diseases place stress on weak and under-resourced health systems; left unchecked, they will seriously undermine development gains.
Limited access to water and sanitation is also a major driver of poor health outcomes. Poor access to clean water and inadequate sanitation affects the health and welfare of millions. MDG Target 10 aims to halve the proportion of people without sustainable access to safe drinking water and basic sanitation by 2015. A significant number of countries in Australia's region, including Papua New Guinea, Laos, Cambodia, Indonesia and East Timor appear unlikely to achieve this target. Progress in sanitation coverage is lagging behind that for water supply. Of the region's 3.8 billion people, over half (two billion) do not have access to sanitation. Two thirds of those globally without reliable access to clean water live in the Asia-Pacific region.
Development gains are also at risk from the impact of climate change and environmental degradation. The potential impacts in areas such as health, agriculture and food production, water security and as a result of extreme weather events requires more detailed assessment, to map vulnerabilities and support adaptation, planning and action.
Action to address disadvantage and vulnerability is also essential. Amongst the poorest of the poor are people with a disability or who are refugees or victims of humanitarian crisis. These absolute poor are cut off from access to even basic services and opportunity to improve their quality of life.
Policy Response
Making faster progress on the MDGs requires a concerted and well-coordinated response. The Prime Minister has announced that Australia has joined the MDG Call to Action,5 which aims to galvanise action in support of achieving the MDGs. Australia's contribution to the global development effort focuses on the Asia‑Pacific region, where a majority of the world's poor live and where massive development challenges confront Australia's neighbours. To be effective, Australia's international development assistance program provides assistance across a range of sectors in the context of supporting economic growth to reduce poverty. This recognises that to be maintained, advances in human welfare need to be pursued on many fronts: by expanding economic activity to create jobs and raise incomes, combating disease and improving nutrition, raising basic educational attainment, and improving the responsiveness and accountability of the state in meeting citizens' basic needs.
An increasing volume of Australian development assistance will be provided in major sectors influencing MDG outcomes: to health (up by 8 per cent, see page 10 for details), education (up by 5 per cent, see page 16 for details), infrastructure including transport and water supply and sanitation (up by 17 per cent, see page 22 for details) and rural development and environment (up by 7 per cent, see pages 19 and 22 for details). Diagram 2 on page 7 shows a summary of the sectoral change in Australia's development assistance.
Major new multi-year commitments will be made to improve access to clean water and basic sanitation ($300 million over three years) and to meet high priority climate adaptation needs in vulnerable countries ($150 million over three years). Recognising the critical role played by multilateral development agencies particularly within the UN system, in hastening the progress towards MDGs, Australia's core funding to a range of effective UN development agencies will be significantly boosted ($200 million over four years).
A significant scaling up in assistance for some of the most vulnerable — those suffering avoidable blindness and people with disabilities — will commence in 2008‑09, building the foundation for future increases through piloting approaches to better eye and vision care and developing a strategy for addressing disability needs through the development assistance program.
Assistance will also increase to all major regions, including Africa (up by 23 per cent, see page 46 for details). Increasing assistance will be provided to new partners including Iraq and Afghanistan (page 49) in transition from conflict. Increased assistance will support vulnerable civilian populations and help underpin reconstruction.
Assistance to the Pacific and Papua New Guinea will also be expanded in 2008‑09, through a suite of initiatives to be drawn upon in establishing Pacific Partnerships for Development. These partnerships will provide a new framework for Australia and the Pacific island nations to commit jointly to achieving improved development outcomes, on the basis of mutual respect and mutual responsibility.
The following section (from page 5) outlines the expected composition of Australian ODA in 2008‑09. Subsequent sections outline plans against key development assistance themes for 2008‑09 (from page 9) and summarise funding under each country program (from page 37) and global program (from page 53).
Diagram 1: Millennium Development Goals
International Development Assistance Budget 2008‑09
The Government will provide an estimated $3,659.9 million in official development assistance (ODA) in 2008‑09, of which $2,933.1 million will be managed by AusAID. The ratio of Australia's ODA to Gross National Income (ODA/GNI ratio) is estimated at 0.30 per cent for 2007‑08. In calendar year 2007, Australia provided a total of $2,953.3 million in ODA, representing a 0.30 per cent ODA/GNI ratio.6 This is above the preliminary 2007 weighted average ODA/GNI ratio for the OECD donor community as a whole of 0.28 per cent but significantly below the average donor country effort of 0.45 per cent. This Budget increases Australia's ODA/GNI ratio to 0.32 per cent.
Table 1 shows the composition of Australian ODA, including ODA managed by AusAID.
Table 1: Composition of Australian ODA
Notes: see page 64.
Table 2 shows total Australian ODA from all agencies and programs to partner countries and regions.
Table 2: Australian ODA by partner countries and regions
Notes: see page 65.
Australia's development assistance is delivered across a range of sectors, including education, governance, health, infrastructure, rural development, environment and as humanitarian assistance. Diagram 2 illustrates the estimated sectoral breakdown of Australia's ODA for 2008‑09. Further breakdowns of Australia's ODA by major sub‑sectors are provided for health (page 15), education (page 18), infrastructure (page 23) and governance (page 34) sectors.
Diagram 2: Estimated breakdown of Australian ODA by sector
* 'Multisector' includes debt relief. The significant change in multisector ODA is due to a one-off payment relating to the final tranche of debt relief for Iraq scheduled to be recognised in 2008‑09.
Strengthening Development Assistance Effectiveness
Context
The Australian Government is committed to increasing not just the volume of Australian development assistance, but also its quality and impact. This will maximise Australia's contribution to poverty reduction and progress against the Millennium Development Goals. Increasing international attention to the results of development assistance has led to a series of international commitments to improve its effectiveness, most noticeably the 2005 Paris Declaration on Aid Effectiveness.7
Response
On March 20 this year, the Government tabled the inaugural Annual Review of Development Effectiveness8 (ARDE), produced by the Office of Development Effectiveness (ODE). The report underlines the Government's commitment to increase transparency and public debate around the performance of the development assistance program and development issues more generally.
The 2007 ARDE found that the international development assistance program is well managed and achieving good results. Nevertheless the ARDE also identified scope for improvement. These centred on broadening Australia's engagement with fragile states particularly on the delivery of services, making the most effective use of technical assistance, addressing gender inequality and influencing reform in the larger Asian economies.
The 2007 ARDE reflects significant internal systems and process reform within AusAID designed to strengthen the performance orientation of the development assistance program. These new processes were trialled and reviewed in 2006-2007 and consolidated in a new Performance Assessment and Evaluation Policy in December 2007. This new policy incorporates annual performance reporting by country and by major theme/sector; a strengthened activity reporting system that assesses the performance of individual development assistance activities at entry, during implementation and at completion; and a more systematic approach to evaluation. The purpose of these changes is to enhance the way managers manage programs on the basis of results and to assist resource allocation decisions, as well as provide more and better information to the Parliament and public on the performance of the development assistance program. Performance information on Australia's development assistance is expected to increase in coverage and quality as these new systems and approaches are bedded down in future years.
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