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Foreign aid overhaul to squeeze more value for money

Overhaul aims to squeeze more value for money from each aid dollar.

Overhaul aims to squeeze more value for money from each aid dollar. Photo: AFP

A fifth of Australia's aid budget will be geared towards driving economic growth in developing countries - known as ''aid-for-trade'' - under a radical restructure to be unveiled by Foreign Minister Julie Bishop.

The overhaul, which follows the announcement of deep cuts by the Abbott government and is likely to be controversial with aid groups, aims to squeeze more value for money from each aid dollar through a series of tough new targets and benchmarks.

It will also target gender equality, with all aid projects to be assessed each year on how they improve the opportunities of women and girls. The aim will be to have 80 per cent of programs address gender.

Ms Bishop said: ''We will introduce a rigorous system of performance benchmarks and mutual obligations tailored to each country's circumstances.''

Aid projects deemed not to deliver value for money will be given a year to improve or be axed, and under ''mutual obligation'' requirements, countries that don't tangibly improve the lives of their citizens will face cuts in aid money.

The reforms will also concentrate spending on Australia's region, with nine-tenths of money to go to the Indo-Pacific region as of next year - up from about 80 per cent.

Ms Bishop said on Wednesday that the benchmarks would ensure that Australia not only met its aid objectives, but that recipient governments tookresponsibility for the implementation of programs.

''We will work with countries to ensure that they understand what is required, and they understand the concept of mutual obligation because we can't keep doing what we've always done and expect a better outcome,'' she told ABC radio

''I want to see much better outcomes, and that means working with partner countries to ensure that the aid dollar is spent effectively and efficiently and actually delivers results.''

Under aid-for-trade, introduced by the Howard government, money is channelled towards liberalising developing nations' economies and boosting their trade opportunities. About 12 per cent of projects are now geared this way, but that will reach 20 per cent by the end of the decade under the new changes.

Money in the past has been spent on building roads for the transport of goods to markets, reducing customs red tape and teaching farmers to improve their agricultural processes so they meet international export requirements.

Aid groups are likely to welcome aspects of the plan, such as the focus on women and girls.

But aid-for-trade has been controversial, with critics arguing it does not target the very poor, who often dwell outside the official economy and therefore may not benefit.

The reforms also include stronger anti-corruption and anti-fraud checks. This change could put the aid boost, which is a part of a refugee resettlement deal, to Papua New Guinea under the spotlight, with PNG Prime Minister Peter O'Neill facing fraud allegations.

Asked about this, Ms Bishop said: ''The government has a zero tolerance policy towards fraud in the aid program. We will take a robust approach to preventing, detecting and rapidly responding to fraud.

''Any instance of alleged, suspected, attempted or detected fraud relating to an aid investment must be immediately reported by DFAT officials and investigated.''

The Abbott government's first budget in May revealed that $7.6 billion would be stripped from foreign aid over the next five years.

The previous Labor government committed to spending 0.7 per cent of GDP on aid but repeatedly pushed back the date to meet the goal.

The Abbott government has capped the spending at $5 billion a year for two years and then will increase it with inflation.

with AAP

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10 comments

  • 'Aid projects deemed not to deliver value for money will be given a year to improve or be axed, and under ''mutual obligation'' requirements, countries that don't tangibly improve the lives of their citizens will face cuts in aid money.'

    And this will apply to the bribes we pay the Cambodian politicians so we can dump asylum seekers there ?

    Commenter
    adam
    Location
    yarrawonga
    Date and time
    June 18, 2014, 7:36AM
    • Indeed. Cambodia, Narau, PNG, all being bribed to take on the role of Australia's gaolers of some of the worlds most wretched, desperate people whose crime was to ask for our protection under our legal and voluntarily undertaken obligations.
      I'd bet good money that the mooted "trade' requirements entrench and extend requirements for Australian business to be the beneficiary of such trade and trade dollars. Something like, 'I'll scratch your back if you..buy the scratcher from me and scratch my back, not yours or your own'.
      The monitoring and directing of aid money is sensible and good practice. Such monitoring however shouldn't simply be a matter of political, ideological driven direction, but monitoring and advice by those best placed to actually know the facts and who act in the best interests of the recipients, not the benefactor, being the aid agencies. This government has a deep aversion to independent, fact driven policy. They were fact-phobic as an opposition and remain so in government, as seen with every single pronouncement and thought bubble since election night.

      Commenter
      Warwick
      Date and time
      June 18, 2014, 9:02AM
  • While some of the changes are praiseworthy, I don't know how one can objectively assess that an aid project is providing value for money and worry that it may be a platform for ideological mumbo jumbo, and I do not approve the radical trimming to foreign aid mooted in this budget.

    Commenter
    Ross
    Location
    MALLABULA
    Date and time
    June 18, 2014, 7:58AM
    • Foreign Minister Julie Bishop likes to talk big on the international scene. Seldom will she follow through on anything and take the lead. The aid budget has been cut under her watch which is a disgrace as it has left other countries to pick up Australia's slack.

      Commenter
      Viking
      Location
      Sydney
      Date and time
      June 18, 2014, 8:05AM
      • The first thing the Abbott government did was dismantle an established effective anti-malaria program covering Vanuatu and Solomon Islands after promising to maintain it. Employment of the few trained and experienced local staff ceased. That decision will cost lives. There is nothing to replace it. They were within sight of eliminating malaria in these islands.
        Decisions on foreign aid have been made on the basis of ideology. They are terminating current programs without regard to consequence.

        Commenter
        alex1101
        Location
        brisbane
        Date and time
        June 18, 2014, 8:46AM
        • Funny, I've always thought of foreign aid as being a modern form of paying tribute. Stops the regional natives getting restless and from getting any dangerous ideas above their station...well at least their corrupt leaders anyway. A lot like the foreign aid relationship (tribute payments) that the US has with North Korea. I can only guess that with this government's renewed commitment to the US military machine, they are banking on the US cavalry to come to the rescue if things go awry in the region over any foreign aid cuts. Sounds like a case of putting all one's eggs in the same basket and hoping it doesn't get dropped.

          Commenter
          PaxUs
          Location
          Austerelia
          Date and time
          June 18, 2014, 10:28AM
          • Idea for Julie Bishop, no Australian foreign aid to countries who have the ability to spend money on submarines, fighter jets, tanks etc.

            Commenter
            Blueydean
            Location
            Parra City
            Date and time
            June 18, 2014, 10:44AM
            • "Under aid-for-trade, introduced by the Howard government, money is channelled towards liberalising developing nations' economies"

              So now getting McDonalds and Subways into poor countries is now considered foreign aid?

              Commenter
              Dags
              Date and time
              June 18, 2014, 11:20AM
              • Subscribing to aid countries other than our own is an act of humanity that must be always remain in place. Unfortunately there are some things which are not in accord with our generosity mien. As with all the charities that beg our assistance one is always left with the lingering doubt "How much of each dollar is used in the manner intended. The government should list those destinations where our foreign aid ends up. What do our taxes actually provide and to whom. Similarly all those societies that request individual aid should provide donors with a similar listing. The average Australia is a generous and many give to postal requests. Two specialists whom I know, depart these shores yearly for equatorial holidays. Whilst on holiday they perform much needed surgical work on the local populace. They work freely for the sake of humanity. Sending foreign aid willy nilly is like going up the Khyber Pass, a stoney road to follow.

                Commenter
                chasm4
                Date and time
                June 18, 2014, 12:05PM
                • Tinker Bell will cover the world with her Pixie Dust. All will be Hunky-Dory.

                  Commenter
                  canterby
                  Location
                  bundaberg
                  Date and time
                  June 18, 2014, 1:27PM
                  Comments are now closed

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