Australia's 'new aid paradigm' introduces performance benchmarks

Julie Bishop, Australia’s foreign minister, announces bilateral aid reforms on June 18.

Australian Foreign Minister Julie Bishop unveiled on Wednesday several changes to the country’s foreign policy, among them performance benchmarks for all recipients of Australian official development assistance.

Contractors should watch out — under the new scheme, projects that don’t achieve expected outcomes will be terminated if they don’t improve within one year.

During a speech at the National Press Club in Canberra, Bishop warned that foreign aid programs will have to become more efficient and effective in achieving development outcomes than before. To meet that goal, the Department of Foreign Affairs and Trade — which a few months ago took over the aid portfolio from the now-defunct AusAID — will “strengthen the way we assess the performance” of its programs, partner countries and implementing organizations.

Money will flow to the companies, NGOs and multilateral institutions that deliver the most value for money, Bishop said, while those who don’t achieve the expected outcomes will be asked to improve their performance or risk funding being suspended and even cut. A new DFAT fact sheet published on Wednesday makes it quite clear: “Beginning now, poorly performing aid investments will be subject to a stricter new management requirement that they be cancelled if they do not improve within one year.”

“We will build on what works,” Bishop asserted. “When projects don’t deliver the results we expect, they will be put on a rigorous path to improvement — or be terminated. If a project has failed, we will call it for what it is and come up with a better way to meet the challenge.”

At strategic level, the government will be held to account for managing its own aid programs, based on 10 targets: promoting prosperity, engaging the private sector, reducing poverty, empowering women and girls, focusing on the Indo-Pacific region, delivering on commitments, working with the most effective partners, ensuring value for money, increasing consolidation (to reduce transaction costs) and fighting corruption.

Australia will put in place “a rigorous system of performance benchmarks and mutual obligations tailored to each country’s circumstances,” Bishop noted, arguing that “in the past, underperforming programs would sometimes continue to be funded even when it was clear they were not delivering, throwing more money at a failing program rather than admit failure.”

Foreign aid ‘not a panacea’

In her speech, the foreign minister also explained that the Abbott administration — which in the past few months has come under fire lately for aid budget cuts and deciding to absorb AusAID into DFAT — is introducing a “new aid paradigm” that will take the “long view” to adapt to a new development landscape in which many aid-recipient countries have grown to become middle-income or even donor nations, like China and South Korea.

“Aid alone is not a panacea for alleviating poverty,” stressed the foreign minister, who explained that Australian aid will focus on the twin goals of human and private sector development to “do ourselves out of a job” in the future.

Bishop detailed that Australia’s new foreign aid policy will concentrate almost exclusively (90 percent) on the Indo-Pacific region and prioritize six key sectors:

   • Infrastructure and “aid for trade.”

   • Agriculture, fisheries and water management.

   • Governance.

   • Health and education.

   • Humanitarian assistance.

   • Women’s empowerment.

Within all of these sectors, the department in charge of Australian aid will support innovation in various ways, like spending AU$140 million ($130.7 million) to set up a development innovation hub within the department to test, implement and scale up new ideas from the “best and brightest” minds that can improve effectiveness and deliver better value for money in DFAT-funded programs.

Bishop underscored these and other changes will help Australia’s international development cooperation become more “responsible, affordable and sustainable.”

Do you think Australian aid is moving in the right direction under Bishop? Are you affected by these reforms? What’s your take on the new performance benchmarks? Please let us know by sending an email to news@devex.com or leaving a comment below.

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About the author

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    Carlos Santamaria

    Carlos is a former associate editor for breaking news in Devex's Manila-based news team. He joined Devex after a decade working for international wire services Reuters, AP, Xinhua, EFE ,and Philippine social news network Rappler in Madrid, Beijing, Manila, New York, and Bangkok. During that time, he also covered natural disasters on the ground in Myanmar and Japan.