Australian Government, 2009‑10 Budget

Priorities for Australia's Development Assistance

Economic Growth

The global economic slowdown demonstrates clearly the link between broad‑based economic growth and sustained improvements in the lives of the poor. In response to the global recession, Australia will increase its aid in areas that support broad‑based growth and employment generation, in particular in rural development, infrastructure and private sector development, including financial services.

Rural Development


The effects of ongoing food price volatility, together with serious oil price fluctuations and falls in global economic growth have been devastating for the poor. According to the United Nations, there are currently close to one billion malnourished people globally.9 Although prices for staple commodities such as wheat, rice, soybeans, corn and palm oil have eased since the peaks experienced in early 2008, they remain high compared to pre‑2006 prices. Volatile food prices combined with the global recession will mean increased hunger and risk of malnutrition, particularly amongst the landless poor, children and women.

Global population growth of one per cent per year, increased consumption and the diversion of food crops for biofuel production and for intensive feeding of livestock, have all increased the total global demand for food, resulting in food shortages in particular countries. Changes in climatic conditions, soil degradation, scarcity of arable land, a decline in the standard of rural infrastructure and use of outdated agricultural practices have affected the global community's capacity to respond. Over 90 per cent of the poor in East Asia and the Pacific live in rural areas with most dependent on agriculture and fisheries for their livelihoods. A decrease over the past several decades in investments in agriculture and agricultural research and development has compounded the problems in developing countries of food insecurity and persistent rural poverty.


Direct spending on rural development is estimated to be $230 million in 2009‑10, or approximately six per cent of total ODA. Australia's response will include both short and medium‑term investments to support increased agricultural productivity, better functioning of rural markets, trade reform, improved fisheries management and removal of barriers to rural private sector growth. Action to extend social protection measures will be a major component of the Government's aid response to the global recession.

A 2009‑10 budget initiative to address food security through rural development, costing $464.2 million over four years (see Box 1) is a central component of Australia's action plan, announced by the Government in May 2008, to improve long‑term food security. In 2009‑10, programs promoting food security through rural development will be expanded in East Asia, South Asia and the Pacific. For example, a Pacific Regional Agricultural Marketing Access Program will increase agricultural exports to Australia and other destinations by helping Pacific Island countries meet trading partners' quarantine requirements. Consistent with Australia's increased attention to development needs in Africa, support for increased agricultural productivity and social protection programs in Africa will be a focus of increased Australian assistance.

Box 1: Food Security through Rural Development

The Government will invest $464.2 million over four years, to support increases in food production globally and strengthen the ability of selected countries in the Asia‑Pacific region and Africa to address food insecurity. Targeting major causes of food insecurity, the initiative consists of three components.

The first component will lift agricultural productivity, by working with other donors and research institutions using environmentally sustainable approaches. A key strategy will be to invest in the critical science and innovation upon which productivity depends. Core funding will be increased for the Consultative Group on International Agricultural Research (CGIAR). The international research centres that are members of CGIAR include the World Fish Centre, the International Rice Research Institute, the Africa Rice Centre and the International Institute of Tropical Agriculture. Additional funding for Australian Centre for International Agricultural Research (ACIAR) will expand its support for collaborative research partnerships between Australian researchers and their counterparts in developing countries. Partnerships will be enhanced with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and other centres of Australian expertise.

The second component will improve rural livelihoods, through improving the functioning of markets in ways that increase job opportunities and incomes for the rural poor. Key markets targeted will include agricultural input and output markets, land, finance and labour markets. This component will also help Pacific Island countries to achieve better returns from sustainable management of tuna fisheries and coastal fisheries. Expanded assistance will increase poor people's access to financial services, including savings and insurance schemes and microfinance.

The third component will build community resilience, through supporting social protection mechanisms to enable vulnerable people to withstand natural and economic shocks that increase food prices. The initiative will strengthen and expand existing formal and informal social protection programs — such as school feeding programs, micro‑insurance, crop insurance and food and cash-for-work programs — implemented by governments, NGOs and church groups, and support the creation of new mechanisms where none exist.

Increased funding will build on successful current large‑scale program support (such as agricultural livelihoods training in 45 provinces of Vietnam) as well as smaller‑scale projects (such as assisting local farmers in the Solomon Islands to identify better performing varieties of subsistence root crops). The Australian Centre for International Agricultural Research (ACIAR) will play an expanded role in Australia's increased support for measures to improve food insecurity and rural development. Australia will also provide increased core funding for the Consultative Group on International Agricultural Research (CGIAR) with the aim of increasing the rate of productivity growth for food crops, livestock and fisheries.

Microfinance and Financial Services

From 2009‑10, Australia will facilitate economic growth through expanded support for microfinance activities in both urban and rural areas. This will enable poor people, who commonly lack collateral or are considered too costly to serve, to access affordable small‑scale financial services such as deposits, loans, remittance transfer systems and insurance. New assistance will increasingly support activities in the Pacific, Papua New Guinea and East Timor, and Africa and West Asia, including Afghanistan and Iraq. In this work Australia will draw on partnerships with NGOs, regional network organisations and the private sector.10 Financial support for the Consultative Group to Assist the Poor, a World Bank policy and research body which disseminates best practice advice on microfinance, will continue.



Poor infrastructure is a major constraint to economic development and achievement of the MDGs. Conversely, infrastructure investment has a demonstrated positive impact on economic growth and poverty reduction. Reliable transport infrastructure improves access to services and markets, encourages entrepreneurial activity and promotes economic integration. Improved water and sanitation services help reduce water‑borne and vector‑borne diseases. Information and communication technology promotes broad‑based growth through greater integration of markets and economies. Reliable and affordable energy supplies promote agricultural and private sector development and improve living standards in poor households.

Two‑thirds of people globally who are without reliable access to clean water live in the Asia‑Pacific. Of the region's 3.8 billion people, over half do not have access to sanitation, and an estimated one billion people still lack electricity.11

East Asia performs poorly in terms of infrastructure quality. The Global Competitiveness Report for 2008‑09, published by the World Economic Forum, shows that Indonesia, Vietnam, Cambodia, East Timor and the Philippines rank 80th and lower of the 134 countries included in the study in terms of quality of overall infrastructure.12

In the Pacific, significant socio‑economic benefits have resulted from increased investment in infrastructure provision, maintenance and policy reform. In Papua New Guinea, for example, keeping major roads in good condition is demonstrated to have stimulated agricultural diversification and led to a reduction in the proportion of households below the poverty line. Support for policy reforms in the telecommunications sector in Vanuatu will enable an expansion in telecommunication coverage from 20 per cent to an expected 85 per cent of the population by December 2009.


Direct spending on infrastructure and water and sanitation will increase to over $560 million in 2009‑10, or approximately 15 per cent of total Australian ODA, up from only $350 million in 2007‑08. Increased funding will help partner governments maintain and enhance investments in essential infrastructure, while generating jobs and improving service delivery, in response to the unfolding global recession.

Major components of infrastructure assistance in 2009‑10 will comprise support for transport (45 per cent of total infrastructure expenditure), water and sanitation (30 per cent) and energy sector development (12 per cent) (see Diagram 4 on page 23).

Australia's support for transport infrastructure focuses on improving access to markets and essential services. Major programs are underway in Indonesia, the Philippines, the Greater Mekong sub‑region, East Timor, Papua New Guinea and the Pacific.

In 2009‑10, programs will be expanded to cover support in information communication technology and energy sub‑sectors. For example, Australia will work with the Government of Indonesia to reform communication bandwidth pricing and licensing; facilitating new technologies and providing a source of revenue to continue development of this sector. A Pacific Regional Infrastructure Facility coordinates major donor support for improvements in basic infrastructure services in Pacific Island countries including in transport, water and sanitation, energy, telecommunications and utility reform.

From 2009‑10 investment in infrastructure will be boosted by a major new budget commitment (outlined in Box 2 on page 23).

Water and sanitation is a growing sub-sector in Australia's infrastructure aid with expenditure of approximately $165 million in 2009‑10. New investments of $300 million over three years from 2008‑09 are improving access to clean water and sanitation, fundamental to improving health outcomes. Australia will assist countries to expand basic sanitation services, increase hygiene promotion, and increase urban and rural water supply and sanitation infrastructure in Asia, the Pacific and Africa. In East Timor, for example, Australia will support national and district level governments to plan water and sanitation activities and develop policy. In Vietnam, Australia, in conjunction with other key donors, will support a National Target Program for Rural Water Supply and Sanitation, with a community focus on hygiene promotion.

Box 2: Economic Infrastructure Initiative

The Government will invest $454.2 million over four years, to support partner countries to reduce poverty and achieve economic growth through improved infrastructure. The initiative will focus on funding infrastructure needs and improving infrastructure activities' development impact in East Asia and Papua New Guinea.

One component of the initiative will fund high priority basic infrastructure. Planned activities include: extension of rural electrification in Vietnam, Cambodia and Laos; rehabilitation and maintenance of provincial roads in the Philippines and Indonesia; labour intensive public works as a means of generating employment; and maintenance of key transport infrastructure in Papua New Guinea as agreed under the bilateral Partnership for Development.

The second component will (i) strengthen the capacity of infrastructure agencies and (ii) support conditions for increased infrastructure financing. This component will strengthen the corporate structures and management capacity of infrastructure delivery agencies. It also contributes to an enabling environment and governance conditions that make increased, recurrent infrastructure financing an attractive proposition for government and the private sector. Both activities will enable infrastructure assets to be better operated and maintained.

Diagram 4: Infrastructure: estimated ODA by sub-sector 2009-10

Diagram 4 (pie chart): Infrastructure: estimated ODA by sub-sector 2009-10



The number of children enrolled in primary school worldwide has risen from 647 million to 688 million over the six year period from 2000.13 However, there are still 75 million children of primary school age who are not enrolled. Over 27 million of these children live in Asia and the Pacific.14 Children who miss out on a full basic education are overwhelmingly poor, female, living in remote locations, from ethnic minorities or with a disability.

It is estimated that an additional US$11 billion annually is required to meet basic education needs in developing countries.15 This funding gap is likely to increase as the global recession places greater pressure on developing country budgets. Failure to bridge this gap will result in failure to achieve the Education for All goals,16 including the MDG of universal primary education by 2015. This in turn is likely to undermine the chances of achieving other MDGs, and limit the growth in knowledge and skills needed for future growth.

Even in countries with high enrolment rates, such as the Philippines and Indonesia, overall education quality is often inadequate, with major weaknesses in basic literacy and numeracy. In a recent international reading literacy study less than 20 per cent of students in developing countries performed at or above the intermediate competency benchmark.17

Developing the knowledge and skills necessary for life and productive livelihoods is also reflected in the growing importance of technical and vocational education. This is especially important in the Pacific given poor local employment prospects for rapidly expanding youth populations. Almost all Pacific Partnerships for Development identify basic and technical and vocational education as initial partnership priorities.

In fragile or weakly performing states, long‑term sustainability requires coordinated and predictable investment to strengthen local capacities. The weakness of local institutions that deliver education services makes this extremely challenging and requires a systemic approach to education sector development.


The Australian Government recognises the power of education as an investment that helps individuals achieve their potential and societies to be stronger and more productive. The poor quality of local education and higher education institutions can undermine gains in building local capacity, income generation, social stability and national development. The Government aims to make further growth in education assistance the centrepiece of Australia's ODA strategy.

Investments in education will increase to over $690 million in 2009‑10, or approximately 18 per cent of total ODA. Approximately one third of education sector expenditure relates to strengthening higher education and the provision of development scholarships. The majority of education expenditure relates to basic education and education system strengthening. Support for technical and vocational education currently comprises about nine per cent of total education expenditure (see Diagram 5 on page 26).

In 2009‑10 Australia will continue to strengthen national education systems, help put more children into school and improve the quality of education provided in Indonesia, Papua New Guinea, the Philippines, East Timor, Bangladesh, Fiji, Vanuatu, Samoa, Kiribati and Laos. These programs are tailored to partner country circumstances and priorities. They may include provision of quality teaching and learning materials; teacher training; the use of school‑based grants; and support for education sector governance and the construction and refurbishment of schools and classrooms; improved information systems, education planning, budgeting and management.

Australia's education assistance will work to reach the disadvantaged and marginalised, including through the provision of more equitable access to quality education for girls and boys with disabilities, and those in disadvantaged Muslim and Indigenous Peoples' communities in the Philippines. In collaboration with UNICEF, Australia will support improved education for disadvantaged communities in Papua, in Indonesia.

In the Pacific, Australia will continue to help develop livelihood skills through existing and new programs in Tonga, Kiribati, Samoa and Fiji. The Australia-Pacific Technical College, which has campuses in Fiji, Samoa, Papua New Guinea and Vanuatu, is on track to deliver 3,000 graduates (trained to Australian standards) by June 2011.

Partnerships with the World Bank and UNICEF will enhance the reach and impact of Australian aid in the education sector. For example, countries endorsed to participate in the World Bank Education for All Fast Track Initiative have experienced significant improvements in gross student intake, primary enrolment and completion, gender parity and lower repetition rates. Australia's $40 million contribution over four years from 2008, will contribute to more low‑income countries being able to access funds and expertise to assist in achieving global education goals.


Higher education opportunities, particularly scholarships, are an important tool for capacity building and improved governance. Scholarships help to align Australian expertise with the leadership challenges facing developing countries in Australia's priority regions. Scholarships are an effective mechanism to support institutional strengthening and enduring people‑to‑people linkages. Tertiary scholarships and fellowships help to address skills shortages in a wide range of disciplines.

Through the Australian Development Scholarships program, Australia provides around 1,000 new scholarships annually in tertiary and higher education. This is projected to increase to an estimated 1,500 by 2011. In addition, approximately 2,500 Australian Leadership Awards will be offered in the period to 2011, involving scholarships and fellowship placements with Australian host organisations. As part of Australia's overall increase in aid to Africa, Australia will help build Africa's human resource capacity through a significantly expanded scholarships program which will include technical and vocational training.

In the Pacific, Australia is supporting enhancement of regional education institutions. As part of Australia's investment in improving Pacific public sector capacity over the next four years, Australia will provide 20,000 training opportunities for Pacific public servants to improve core writing, accounting and administrative skills, 2,000 leadership development opportunities for strongly performing senior and middle level public servants, in areas such as policy development and people management, and more than 100 Australian Government scholarships or fellowships offered each year for promising public servants working on priority issues.

A 2009‑10 budget initiative, the Prime Minister's Pacific‑Australia Awards, will invest $3.0 million over four years, to supplement existing scholarships for high achieving postgraduate students in the Pacific region, including Papua New Guinea and East Timor. Student intake will begin in the 2010 academic year with approximately 30 scholarships awarded per year for four years. These scholarships are enhanced by a short‑term work placement in the Australian workforce.

Diagram 5: Education: estimated ODA by sub-sector 2009‑10

Diagram 5 (pie chart): Education: estimated ODA by sub-sector 2009-10



Support for the health MDGs (goal 4 reducing child mortality, goal 5 improving maternal health and goal 6 combating HIV, malaria and other major diseases) is a high priority in the Asia‑Pacific. In this region, approximately a quarter of a million women die annually of preventable and treatable complications in pregnancy and childbirth; close to four million children die before their fifth birthday; and five million people are living with HIV.18 In the Pacific, non‑communicable diseases such as diabetes and heart disease are now a major cause of adult mortality.19 In Solomon Islands and Vanuatu, malaria incidence is among the highest in the world outside Africa. 20

Reaching the MDGs relies on effective health care systems which ensure health care is available to the poor, particularly those in rural areas. Service delivery is hampered both by inadequate funding and by failures in fundamental components of health systems, especially the supply and distribution of basic medicines and health workforce planning and management. Ensuring the availability of sufficient funding to support health service delivery is increasingly the focus of international efforts.

Globally, there are 33.2 million people living with HIV. In the Asia‑Pacific region, there are nearly half a million new infections and 300,000 deaths each year.21 HIV is having an increasingly human and economic impact on our nearest neighbour, Papua New Guinea, where there are approximately 60,000 people living with the disease and an estimated 3,730 children were orphaned by HIV in 2007 alone.22 It is estimated that, without additional action, infection rates will increase from just over two per cent of the population now to five per cent within the next four years.23 Rates of infection in the neighbouring provinces of Papua and West Papua in Indonesia are approximately 2.4 per cent and also growing rapidly.24


Support for health and HIV activities will increase to over $595 million in 2009‑10, or approximately 16 per cent of total ODA. Assistance to the health sector is a major component of the Government's response to the global recession and will help partner countries manage budgetary pressures on essential items such as pharmaceutical supplies and immunisation. Major categories of health sector expenditure are prevention, treatment and care with respect to control of sexually transmitted infections (STI) and HIV, support for basic health care, and strengthening and improvement of health systems (see Diagram 6 on page 29).

Australia will encourage improved delivery of basic health services by working with partner country governments and other donors to ensure funds are directed to where they are needed most. Australia has recently joined other nations as a founding member of the High‑Level Task Force on Innovative Financing for Health Systems. The Taskforce is identifying funding gaps and costs, and options for increasing resources to achieve the health MDGs. Australia represents the Asia‑Pacific region on the Task Force.

In 2009‑10, Australia will continue to support countries in the region to address major immediate health concerns and build stronger health systems over the longer term, particularly in the areas of health workforce and financial planning. Major health sector support programs are underway in Papua New Guinea, Indonesia, and the Solomon Islands. New health programs have been established in Pakistan, Bangladesh, Vietnam, Cambodia and East Timor. In Africa, Australia will broaden its assistance for maternal and child health. At the global level Australia is contributing to innovative funding approaches, including to the GAVI Alliance which is providing greater access to the benefits of immunisation.

Improving maternal and child health will remain a priority, including through increasing access to family planning services, increased numbers of skilled birth attendants and the use of health performance incentives to ensure services reach vulnerable groups. Following a review, the Government has revised family planning guidelines for the development assistance program to support the same range of family planning services for women in developing countries as are supported for women in Australia, subject to the national laws in partner countries. Australia will also provide additional funding of up to $15 million over four years through United Nations agencies, bilateral programs and Australian NGOs for family planning and reproductive health activities to help reduce maternal deaths.

Australia is supporting the control and progressive elimination of malaria in the Pacific. Vanuatu and Solomon Islands aim to achieve no incidence of malaria by 2011 in selected provinces and maintain this status for three consecutive years in order to declare these provinces malaria free by 2014. In 2009‑10 the distribution of insecticide‑treated bed nets, particularly to groups at greatest threat of infection, will continue to be a priority.

A 2009‑10 budget initiative (outlined in Box 3) will complement Australia's assistance to the health sector in Indonesia through a debt‑relief arrangement. Debt owed to Australia by Indonesia will be forgiven in parallel with the Government of Indonesia contributing funding for tuberculosis programs through The Global Fund to Fight AIDS, Tuberculosis and Malaria.

Box 3: Debt-to-Health Swap with the Government of Indonesia

In line with election commitments, the Government will cancel up to $75 million in debt owed by the Government of Indonesia to Australia while at the same time the Indonesian Government invests $37.5 million in the Global Fund to Fight AIDS, Tuberculosis and Malaria for approved tuberculosis programs.

The reduction and control of tuberculosis has international priority under MDG 6 and has been identified by the Government of Indonesia as a national health priority. Tuberculosis is one of Indonesia's leading health burdens. Indonesia has the third highest incidence of tuberculosis in the world, with over 90,000 deaths each year and over 550,000 tuberculosis cases reported.25

Diagram 6: Health: estimated ODA by sub-sector 2009‑10

Diagram 6 (pie chart): Health: estimated ODA by sub-sector 2009-10


Australia is committed to reducing the spread of the HIV epidemic and mitigating the effects on people living with HIV and their respective communities. In 2009‑10 expenditure on programs to address HIV will increase to an estimated $160 million. This includes a further $46.5 million contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria. This contribution supports performance‑based grants for country‑driven programs, to reduce the burden and impact of HIV, tuberculosis and malaria.

On 7 April 2009, the Government launched a new International Development Strategy for HIV, Intensifying the Response: Halting the Spread of HIV. The strategy will direct a sustained effort to achieve the MDG 6 target of halting and beginning to reverse the spread of HIV by 2015, through assisting partner countries achieve universal access to HIV prevention, treatment, care and support.

Australia's HIV‑related international development assistance will support partner countries to:

  • intensify HIV prevention;
  • optimise the role of health services within HIV responses;
  • review legal and policy frameworks to enable effective responses to HIV;
  • build the evidence base for an effective HIV response; and
  • demonstrate and foster leadership on HIV.

The principal geographic focus for Australia's HIV support will be the Asia‑Pacific region, particularly in Papua New Guinea, East and South Asia and Pacific Island countries.

Governance: Enabling Sustainable Development


Governance matters because it either enables or impedes the achievement of broader development goals, such as growth, poverty reduction and improvements in health and education.

Building capacity for effective economic and public financial management is critical for development, attracting investment and ensuring that public resources are used sustainably and targeted to areas of need. Improving the capacity of the public sector at all levels supports the delivery of basic services and the effective management of public goods such as water and sanitation systems, roads and natural resources.

Governance includes more than the institutions of state. Effective governance occurs when government, the private sector, civil society organisations and citizens work together to identify needs, find solutions and deliver services. Participation in governance is particularly important for marginalised groups, including women, the poor and ethnic minorities. These groups frequently experience poor state responses to their needs and exclusion from non‑state and customary governance systems.

Effective delivery of basic services such as health, education and infrastructure helps to restore the legitimacy of government in fragile environments. Reliable and equitable access to legal and judicial services contributes to stability, community safety, private sector initiative and the protection of human rights in all societies.

Effective governance also includes a commitment to combat corruption and improve transparency and accountability in government. Corruption is a primary impediment to sustainable growth and improved service delivery, leading to under‑investment in public goods and entrenched inequality. As donors scale up development assistance and use partner government systems to implement programs, it becomes increasingly important to support country, regional and global efforts to combat corruption.

Civil society organisations, oversight and integrity systems and democratic processes contribute to improved accountability in government. Effective leadership practices also play an important role in improving standards of governance.


Australia is committed to work at all levels of society in partner countries to support improvements in government capability, responsiveness to citizen needs and accountability. Spending on governance constitutes the largest proportion of the aid program, reflecting the importance of effective governance to improved service delivery, economic growth and social stability. In 2009‑10 governance‑related ODA will total approximately $820 million or 22 per cent of total ODA.

Governance support includes strengthening economic and public financial management, building public sector capacity at national and sub‑national levels, strengthening law and justice systems, supporting democratic institutions, tackling corruption and supporting national integrity systems (see Diagram 7 on page 35). Increased emphasis is also being given to encouraging effective leadership, improving social accountability and civil society participation in decision-making.

Economic governance and public sector reform are heavily interdependent. Two priorities from 2009‑10 will be improving public financial management and working with sub‑national levels of government in partner countries. This work will respond to challenges emerging from the global recession in developing countries such as shrinking revenues and increased demand for government services. Assistance will include increasing the capacity of government systems, through tailored training programs, placement of Australian and other experts with partner country governments, and encouraging the adoption of best‑practice systems of performance improvement such as Public Expenditure and Financial Analysis.

In many countries in which the Australian aid program works, basic services such as education and health are delivered by sub‑national levels of government. From 2009‑10 Australia will provide increased support to strengthen government systems and processes for the delivery of basic services at national and local levels through improved regulatory, legislative and policy frameworks.

Anti‑corruption activities will include working with partner countries on their own efforts to address corruption through improved public financial management and procurement systems that limit opportunities for corruption. Support will also go towards strengthening oversight and accountability institutions such as audit bodies, ombudsmen and anti‑corruption commissions.

Australia will provide significant assistance to law and justice reform efforts across the Pacific and Southeast Asia. An integrated approach recognises the interdependencies across the various institutions within the justice sector, including policing, prosecutions, public defenders, courts, and corrections. Crime prevention initiatives will also be supported. Emphasis will be placed on the importance of effective government agencies and the significant role played by customary and community‑based justice systems. A whole-of-government approach will draw on the expertise of a range of Australian agencies including the Australian Federal Police and the Commonwealth Attorney General's Department.

Australia will work to improve democratic processes through electoral support, civic education, parliamentary strengthening, peace building and work to increase the participation of women in government. Australia will also participate in international initiatives such as the Indonesian‑led Bali Democracy Forum. A review of democratic governance programs will guide future work in this area.

Australia will continue to support engagement between communities and government, to improve the ability of citizens to participate in making decisions that impact upon their lives. Programs to support the role and build the capacity of civil society organisations to monitor, and in some instances deliver, services will be developed and strengthened. In 2009‑10, work will continue to strengthen Pacific media to provide citizens with greater access to information and increase government accountability.

In 2009‑10, the Pacific Leadership Program will establish long‑term partnership agreements with regional church, youth, women's and private sector organisations to strengthen their leadership skills.

A new budget measure in 2009‑10 (outlined in Box 4) will strengthen responsiveness and accountability in government, particularly in Australia's region.

Box 4: Improving Responsiveness and Accountability in Government

The Government will invest $138.6 million over four years to improve the effectiveness of government and its accountability to citizens.

The first component will develop leadership practices of current and emerging leaders in the Pacific and East Timor, including increased participation by women as active citizens and elected representatives. Australia will fund five annual Pacific leadership awards, in honour of Greg Urwin, the former Secretary‑General of the Pacific Islands Forum to enable post‑graduate students to study in Australia and undertake internships with regional organisations.

The second component will strengthen engagement between citizens and government. Approaches that increase citizen and community participation will be supported and civil society organisations will be strengthened to hold government to account and, in some cases, as an alternative mechanism for service delivery. Citizens' access to information will be improved, particularly through the media and civic education for school students and civil society organisations.

The third component will support anti‑corruption efforts of selected partner countries in the Asia‑Pacific region. This includes reducing corruption in service delivery through systems strengthening, particularly at sub‑national and local levels. Oversight and accountability institutions will be strengthened and support built for anti‑corruption action at the country level and through multilateral partnerships.

The fourth component will support efforts to improve the effectiveness of public sector agencies in the Pacific and East Timor, through training and technical assistance. It will expand performance‑based partnerships with regional tertiary institutions to improve the quality of graduates recruited to the public sector. Statistical services will be strengthened.

Performance-linked Aid

Performance‑linked aid is the provision of additional assistance to partner governments and agencies to recognise progress in achieving identified policy or administrative reforms or improvements in specific development outcomes.

Early evidence from the use of performance‑linked aid indicates that it has helped partner governments to set and implement effective policy and can be a powerful instrument for reform — provided there is local ownership and clarity around performance measures. A new budget measure in 2009‑10 (outlined in Box 5) will build on a successful two‑year trial of performance incentive funding.

Box 5: Performance-linked Aid

The Government will invest $336.1 million over four years to enable the inclusion of significant performance‑linked aid elements within the new Pacific Partnerships for Development and the expansion of existing performance‑linked aid arrangements in Asia.

Performance‑linked aid will support progress towards partner government reform priorities. Performance measures and the use of performance payments will be jointly determined with partner governments and aligned with their priorities.

This initiative will assist partner governments to develop and implement reforms and will enhance opportunities to improve policy dialogue. The initiative will support Pacific Partnerships for Development with individual Pacific Island countries.

Additional assistance could recognise, for example, improvements in the quality of public expenditure, levels of funding from partners' own budgets committed to national development priorities, the integrity of public accountability systems, or the effectiveness of revenue collections. Additional funding may also recognise improvements in the delivery of basic services in priority areas such as health, education and infrastructure, or improvements in the business‑enabling environment through microeconomic or regulatory reform.

Diagram 7: Governance: estimated ODA by sub-sector 2009‑10

Diagram 7 (pie chart): Governance: estimated ODA by sub-sector 2009-10

Equitable Development

The Australian Government is committed to equitable development, with the gains and benefits of development assistance available to all.

Gender Equality


Addressing gender inequality and supporting women's full participation in economic, social and political life are priorities for Australia's aid program. Gender equality and the empowerment of women (MDG 3) are not only development goals in their own right, but are necessary to the achievement of all MDGs. There are significant multiplier effects from investing in women and girls.26 Women who have the opportunity to participate in the economy are key actors in addressing poverty and are able to ensure their children are educated. Educated mothers have lower infant mortality rates. When attention is paid to gender equality, women's participation in the life of the community and in politics is higher and economic growth is stronger.

Gender inequalities are most visible in women's access to education, to health services, to economic opportunities and political participation. They are also far more likely than men to be the victims of violence. Despite recent progress in South Asia, only 85 girls for every 100 boys are enrolled in secondary school, and women and girls remain at a distinct disadvantage in attending school and acquiring literacy skills.27 In East Timor, maternal mortality is estimated at 660 per 100,000 live births, one of the highest rates in the world.28 The Pacific has the lowest rate of female membership of parliaments in the world (2.5 per cent) and is the only region in which women's formal political participation has stagnated.29

Gender disparities have clear social and economic costs. In the Asia-Pacific region, it is estimated that up to US$47 billion per year is lost due to restrictions on women's access to employment opportunities, and up to US$30 billion due to gender gaps in education.30 Violence and the fear of violence severely limits the contribution of women to development and causes lower worker productivity and income, escalating costs in healthcare, social services and policing, disability and lower rates of accumulation of human and social capital.31

Decreased growth and lower levels of schooling and employment opportunities will leave women and girls highly vulnerable to the global recession. This threatens to reverse progress in gender equality and women's empowerment, increase current poverty and imperil future development.32 Declining employment in export-oriented industries and tightening of microfinance lending, as well as a fall in remittances, are likely to disproportionately impact on women, who tend to have fewer employment opportunities and social security benefits as well as unequal control over economic and financial resources. This is likely to have long-term impacts on family welfare as well as girls' education.


Australia is working to narrow the gender gap by targeting direct assistance to reduce violence against women and improve economic opportunities for women, as well as enhancing their participation in decision-making. Sectoral programs which support equal access to health and education are a high priority.

Other specific development assistance initiatives promote gender equality and empower women. Australia will increase its support for the United Nations Development Fund for Women (UNIFEM) ($16.1 million over the next three years) in support of UNIFEM's work in over 100 countries to reduce women's poverty and exclusion, end violence against women, reverse the spread of HIV among women and girls and support women's leadership in governance and post‑conflict reconstruction.

As a demonstration of Australia's strong commitment to reducing violence against women, the Government released a major report on Violence Against Women in Melanesia and East Timor in November 2008.33 The report identified strategies to address violence against women in the region, including increased access to justice and support services and changing attitudes and practices that encourage and condone violence. Australia is working with local and regional stakeholders to develop programs that address the findings of this report.

In partnership with UNIFEM Pacific, Australia will provide $6.2 million over five years to train women at a local level for leadership and governance roles in the Pacific. Research to be undertaken on the barriers and successful pathways to women's leadership in the Pacific region will help shape future assistance.

In order to promote women entrepreneurs Australia is identifying barriers that disproportionately restrict Pacific women's ability to do business. A four‑year initiative in collaboration with the International Finance Corporation and the World Bank to support Pacific women in the private sector commenced in 2008‑09.

Helping People with a Disability


People with disability are among the poorest and most vulnerable in developing countries. They are more likely to be excluded from education, health services and employment, than others in their communities. Eighty per cent of the 650 million people worldwide living with disability are in developing countries.34 Disability can lead to significant economic impacts on families and communities, with an estimated 25 per cent of households affected.35

It is believed that, in Asia, at least half the causes of disability can be prevented. One‑third of people with disability are children, two‑thirds of whom have preventable impairments.36 The costs globally of blindness and low vision in 2000 were estimated to be US$42 billion. Without a decrease in the prevalence of blindness and low vision, it is projected that total annual costs would rise to US$110 billion by 2020.37 Road traffic accidents cost developing countries up to US$100 billion each year, a figure equivalent to almost twice as much as total global ODA.38


Development for All: Towards a disability-inclusive Australian aid program 2009‑2014 contains practical guidance to address the specific needs and priorities of people with disability as well as measures to ensure that people with disability are considered across all phases of Australia's development assistance, including planning, implementation, and review processes. Initial activities to be implemented under the strategy include:

  • education activities in Samoa to ensure that children with disability receive an education;
  • building the capacity of disabled people's organisations to become effective advocates and leaders for people with disability;
  • making infrastructure more accessible to people with disability;
  • ensuring that flexible support mechanisms, such as NGO agreements, volunteers, research, leadership awards, scholarships, sports and small grants, are accessible to people with disability; and
  • forging strategic partnerships and improving our understanding of disability and development through strengthening information systems and research, with emphasis on the lived experience of people with disability.

Efforts will focus initially on reducing preventable impairments in two areas; avoidable blindness and road safety. An Avoidable Blindness Fund has been established to strengthen eye health and vision services in Cambodia, Papua New Guinea, Solomon Islands and Vanuatu. Australia is also working with members of Vision 2020 Australia to support Vietnam's Prevention of Blindness strategy and with the New Zealand Agency for International Development (NZAID) to expand the number of eye health workers in the Pacific, Papua New Guinea and East Timor. Increased support will also reduce impairments caused by traffic accidents, building on Australia's existing support for the World Bank's Global Road Safety Facility.

Environmental Sustainability


Compounded by the impacts of climate change and driven by demographic change, industrialisation and rising demand for resources, environmental degradation can undermine economic growth and impact negatively on livelihoods.

Negative impacts may include: reduced crop yields and diminishing access to fresh water through changed weather patterns, air and water pollution; loss of land and infrastructure from rising sea levels, increased spread of diseases, and increased costs of disaster risk mitigation and recovery through more frequent extreme weather events. If unmanaged, these impacts will cause significant economic, environmental and human costs in the Asia‑Pacific region. Accordingly, environmental degradation and climate change represent complex challenges for the development assistance program.

The negative impacts of environmental degradation and climate change will be felt most acutely by the poorest and most vulnerable. Vulnerable rural and coastal communities, dependent on natural resources for their livelihoods, require assistance to diversify and sustainably manage their sources of food and income, build resilience and adapt to the impacts of climate change.

Demographic change, coupled with increased levels of industrialisation and demand for resources, is driving rapid increases in greenhouse gas emissions in some developing countries — albeit from a low per‑capita base. In Asia, rapid industrialisation compounds the challenge of mitigating greenhouse gas emissions as developing country governments seek to maintain economic growth and expand energy access.

As well as the assistance required by developing countries to build capacity to adapt to climate change impacts and participate in emerging carbon markets, significant commitments will be required to help bridge knowledge and financing gaps for emission mitigation in areas such as reducing deforestation and forest degradation (REDD), energy efficiency, renewable energy supply, transport and urban waste management.


Addressing environmental and climate change challenges is central to poverty reduction. Expenditure on environment and climate change programs in 2009‑10 is estimated to be over $170 million, approximately five per cent of total Australian ODA.

Australia's development assistance to the environment sector to date has focused primarily on: supporting adaptation to climate change, greenhouse gas mitigation through reduced deforestation and forest degradation, and multilateral environment funds.

Supporting developing countries to implement lower carbon growth strategies is an increasing focus for Australia's development assistance. Australia has made a pledge of $100 million over three years to the World Bank‑administered Clean Technology Fund, which finances large‑scale and innovative approaches to the demonstration and deployment of low carbon technologies in high-emitting developing countries.

Australia will continue to expand efforts to address the impacts of climate change with funding of $150 million over three years from 2008‑09 to address high priority adaptation needs in vulnerable countries in Asia and the Pacific. Support to partner countries in 2009‑10 will include: scientific research to better understand the impacts of climate change on the natural and socio-economic systems of Pacific Island countries; vulnerability assessments to help Pacific Island countries formulate appropriate adaptation strategies and plans; and specific assistance to help country partners adapt to the immediate impacts of climate change.

The International Forest Carbon Initiative ($200 million over five years from 2007‑08) is supporting cost effective abatement of global greenhouse gas emissions by improving the management of tropical forests in developing countries. Under the Kalimantan Forests and Climate Partnership for example, the first large‑scale REDD demonstration activity of its kind is being planned in Indonesia. In 2009‑10, Australia will work with Indonesia to develop a second REDD demonstration activity and a national carbon accounting system.

Human Security and Stability


Conflict, insecurity and humanitarian crises undermine development progress and future growth prospects through the destruction of local communities, livelihoods, institutions and infrastructure and places pressure on fragile government systems. Violence and insecurity impact on personal safety, health, access to income and education, and leave a legacy of trauma. Emerging global issues, including the closely-linked concerns of climate change, food and resource insecurity, and protracted displacement are potential causes of increasing poverty and human insecurity.

Australia and Australians have a track record of responding quickly and effectively to major humanitarian crises, especially those resulting from natural disasters. Australia provides assistance to over 30 humanitarian and protracted emergency situations worldwide each year. The increasing frequency and ferocity of natural disasters and greater public awareness of their impact is leading to greater emphasis on disaster preparedness and risk reduction in an effort to mitigate the worst humanitarian effects of such disasters.

Addressing conflict‑created humanitarian crises is more complex requiring a greater emphasis on conflict prevention, peace building, stabilisation, early recovery and state building programs which seek to build stability, and improve service delivery and governance, building both social cohesion and long‑term state capacity.


Australia will continue to contribute to international responses to humanitarian crises, taking a leadership role in response operations in the Asia‑Pacific region where this is appropriate. Australia will also take an active leadership role in policy dialogue and advocacy in international fora such as in the role of chair of the United Nations Office for Coordination of Humanitarian Affairs (UNOCHA) Donor Support Group. Increased coherence in addressing issues of human security and stability will be achieved through a new Crisis Prevention, Stabilisation and Response Group in AusAID.

AusAID is leading a whole-of-government taskforce to develop a Deployable Civilian Capacity, an idea raised at the Australia 2020 Summit. Once established, a national deployable civilian capacity will enable rapid deployment of civilian experts to provide stabilisation and recovery assistance to countries experiencing conflict, post-conflict situations or natural disaster. In cooperation with other government agencies, AusAID will pre‑identify, train, deploy rapidly and sustain civilian technical expertise. The program will build on Australia's experience of deploying civilian experts in post‑conflict situations, for example in East Timor and Solomon Islands, and improve Australia's integration into multilateral reconstruction and stabilisation operations.

In 2009‑10 humanitarian, emergency and refugee‑related expenditure is estimated to be $350 million or approximately nine per cent of total Australian ODA.

Australia will continue to strive to increase the effectiveness of humanitarian action through improved donor coordination, strengthened accountability and support for global response mechanisms, in particular the World Food Programme, the United Nations High Commissioner for Refugees (UNHCR), the International Red Cross Movement, and the United Nations Central Emergency Response Fund (UNCERF).

Australia's emergency response is supported by effective disaster risk reduction, aimed at strengthening partner countries' capacity to respond to disasters. In 2009‑10 Australia will work with the United Nations International Strategy for Disaster Reduction, the World Bank's Global Facility for Disaster Reduction and Recovery, partner governments, and NGOs to strengthen prevention, mitigation and preparedness efforts.

Following from the Australian Prime Minister's and the Indonesian President's announcement in November 2008 at the Asia‑Pacific Economic Cooperation (APEC) Leaders' Meeting, work will continue in 2009‑10 to implement the Australia‑Indonesia Facility for Disaster Reduction ($67 million over five years). The facility is delivering: training and outreach; risk and vulnerability modelling; and research and analysis in disaster risk reduction, to benefit Indonesia, other countries in the region and regional organisations such as the Association of South East Asian Nations (ASEAN).

Strengthening Effectiveness of Development Assistance


The Government is committed to increasing the effectiveness as well as the volume of its development assistance. Australia's aid program was reviewed favourably by the Development Assistance Committee (DAC) of the OECD in 2008. The DAC review noted efforts to promote effectiveness, including through the establishment of the Office of Development Effectiveness (ODE) and the production of the first Annual Review of Development Effectiveness. Australia is one of only two bilateral donors to produce such a review on a regular basis.39


The Australian aid program is continuing to change the way it delivers and manages aid to improve effectiveness. A new Performance Management and Evaluation policy outlines performance reporting requirements including annual performance reports for all country and regional programs and major themes. Major evaluations were completed or are nearing completion on violence against women in Melanesia and service delivery in difficult environments (covering health, education and water supply and sanitation).

Key priorities over the coming year include the development of an updated operational policy and management framework, encompassing reforms aimed at strengthening policy dialogue with partner countries, moving more consistently towards program-based approaches and the use of partner government systems to deliver aid, streamlining program portfolios, providing more predictable aid levels to partners and developing new approaches to risk management that are better suited to new aid delivery mechanisms.

In 2009‑10, ODE will commence evaluative work on vulnerability and pro‑poor growth and employment, as well as on the aid program's engagement with civil society. ODE will also map the aid program's response to the global recession, with a view to reporting on the effectiveness of Australian aid support in future annual reviews of development effectiveness.

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