A More Effective Aid Programme

Media Release

9 May 2006


I am pleased to announce that Australia will provide an estimated $2.946 billion in Official Development Assistance (ODA) in 2006-07, an increase of $455 million over the 2005-06 Budget figure ($2.491 billion). This represents a real increase of 9.0 per cent over the 2005-06 expected outcome of $2.641 billion, or a 15.5 per cent increase budget to budget. It is the sixth successive budget where the Government has delivered real growth in ODA. Australia's ODA/GNI ratio is estimated at 0.30 per cent for 2006-07 and Australia is one of only six donor countries to show consecutive real increases in ODA between 2001 and 2005 (excluding debt relief).

An Aid White Paper: Australian Aid: Promoting Growth and Stability

2006-07 will be a watershed year for Australia's overseas aid programme. The White Paper: Australian Aid: Promoting Growth and Stability, which I launched in April, outlines how the Government will approach the goal of doubling Australia's annual aid expenditure to about $4 billion by 2010, as announced by the Prime Minister in September 2005.

The White Paper focuses on four key themes: accelerating economic growth, fostering functioning and effective states, investing in people, and promoting regional stability and cooperation. The Government will also emphasise three overarching principles for the aid programme: firstly, a greater commitment to gender equality across all aspects of the aid programme; secondly, a closer partnership with recipient countries through the greater use of local systems and processes; and finally, the untying of Australian aid to enhance competition and value for money.

Enhanced aid effectiveness

The Government is committed to increasing further the effectiveness of the aid programme and ensuring that additional aid dollars are spent effectively. The medium-term goal of a significant increase in Australian overseas aid is contingent on the effective performance of partner governments and institutions and reduced corruption in recipient countries. The Government will publish an Annual Review of Development Effectiveness, the first to be produced later this year, to provide a practical link between increased resources and aid effectiveness.

The effectiveness of the aid programme will be strengthened through four interlinked strategies: strengthening its performance orientation, combating corruption, strengthening Australia's engagement with the Asia-Pacific region, and working in partnership with regional governments and other donors.

Combating corruption

Addressing corruption is a prominent theme in the aid programme and will become a more explicit consideration when designing and implementing aid activities. AusAID will increasingly work with other Australian Government agencies and through regional and global initiatives to help fight corruption. Australia will support Papua New Guinea's (PNG) own efforts to combat corruption, such as through the Enhanced Cooperation Programme (ECP). In Asia, alongside other APEC countries, Australia has committed $3 million over three years to support regional anti-corruption initiatives.

Major new initiatives for 2006-07

For 2006-07, major initiatives to be implemented include a significantly expanded

scholarships programme: Australian Scholarships, additional debt relief for heavily indebted poor countries, and strengthening pandemic preparedness. The aid programme will maintain its focus on PNG and Indonesia, as well as other parts of the Pacific, and East Asia.

The coming year will involve significant planning and development of key initiatives outlined in the White Paper, with implementation to occur from 2007 onwards. Principal among these are the Infrastructure for Growth initiative; the Australia-Pacific Technical College; the development of performance incentives for partner countries; and major initiatives on Delivering Better Health, particularly for women and children, and Delivering Better Education.

A significantly expanded Australian scholarships programme

The Australian Government will provide nearly $1.4 billion over the next five years in support of tertiary education across the region through an enhanced scholarships programme. The package is to be known as Australian Scholarships and includes an additional $442.5 million of new funding (including aid programme funding of $257 million). This will more than double the number of education awards over five years. The awards will be granted to over 19,000 students from developing countries to study and conduct research in Australia. Australian Scholarships will bring existing scholarship programmes from the Australian Department of Education, Science and Training (DEST) and AusAID together under one umbrella. It will also include a new category of scholarship: Australian Leadership Awards, focused on developing future leaders in the region.

A substantial contribution to debt relief

In 2006-07, Australia will provide a substantial contribution of $136.2 million to finance its share of multilateral debt relief for the world's poorest countries, as announced by the G8 Finance Ministers in June 2005. The funding will enable full upfront payment of Australia's contribution for an initial 10 year period from 2006-07 to 2015-16. Australian support to the Multilateral Debt Relief Initiative (MDRI) will allow the World Bank to provide 100 per cent debt relief to eligible countries that qualify under the Heavily Indebted Poor Countries (HIPC) Initiative. On the signing of a bilateral agreement with Iraq following the Paris Club agreement of November 2004, Australia, in line with other aid donors, will recognise debt relief to Iraq of $334 million in 2006-07 in addition to $334 million in 2005-06. Final recognition of the balance of Iraq debt relief will occur in later years.

Strengthened pandemic preparedness in our region

Pandemic and infectious diseases such as Avian Influenza threaten the stability and growth prospects of our neighbours. As announced at the APEC meeting in November 2005, Australia will take a proactive approach to address the threat of pandemics and Avian Influenza in the region. Australia has committed $100 million over four years to this effort. In 2006-07, $38.6 million of this funding will assist partner countries prepare for outbreaks, and support relevant international organisations to provide a coordinated response to pandemic threats in our region.

Country and Regional Programmes

Improving development outcomes in PNG and the Pacific

Total ODA to PNG in 2006-07 will be $332.2 million. Australian support to PNG will be guided by a new country strategy which focuses on sustainable economic growth and productivity, governance and nation building, stability and service delivery, and HIV/AIDS. Australia is developing a performance-based partnership with PNG that is underpinned by the new country strategy and performance framework. The revised ECP will have a clear anti-corruption focus and will assist law and justice, support economic and public sector reform, and enhance border and transport security. The aid programme is supporting PNG's National Action Plan for HIV/AIDS and will boost measures to address related gender issues.

In 2006-07, ODA to the rest of the Pacific will total $434.4 million, with a focus on Melanesian Countries including Solomon Islands and Vanuatu. Australia will promote greater economic prosperity in the Pacific. The Pacific 2020 report, to be released in May 2006, provides policy options in nine key areas to stimulate economic growth. Planning for the Pacific Land Mobilisation programme, a key White Paper initiative, will be progressed in 2006-07 for early implementation. In its initial stages, the programme will survey and disseminate information on innovative land tenure practices and, where there is clear demand for it, support innovations and improvements in land tenure arrangements. Australia will also support the implementation of recommendations from the Pacific Plan including enhanced regional audit arrangements, establishing a regional Ombudsman's office and upgrading statistical systems.

In 2006-07 work will commence on the establishment of the Australia-Pacific Technical College in the Pacific region in order to deliver Australian-standard qualifications, boost skill levels in the region and improve employment opportunities for youth. Training will be initially drawn from health care and personal services, hospitality and tourism, and the automotive, construction and electrical trades.

In Solomon Islands, assistance will total $223 million for 2006-07 and will be guided by a new transitional country strategy. The Machinery of Government Programme will stimulate public sector and financial management reforms and demand for better governance. Assistance to the law and justice sector will be enhanced. In Vanuatu, we will commence a new governance initiative, along with a new police and capacity building programme. Total ODA will increase to $34.7 million. Funding for Pacific Regional programmes will total $73.5 million and will support pandemic preparedness, HIV/AIDS initiatives and environment programmes.

Fostering growth and development in East Asia

Priorities in East Asia include accelerating economic growth and managing transnational threats through regional programmes and fora such as ASEAN and APEC. There will be an increased focus on the Mekong subregion, such as through support to the Asian Development Bank's Greater Mekong Sub-region Initiative. Key bilateral partners in the region are Indonesia, Vietnam and the Philippines. Total ODA to the East Asia Region will be $713.4 million in 2006-07.

Australia is committed to a long-term development partnership with Indonesia. The aid programme will work to strengthen economic and public sector management, build democratic institutions and improve the quality of service delivery. ODA to Indonesia for 2006-07 will total $344.3 million including the Australia-Indonesia Partnership for Reconstruction and Development (AIPRD). Key priorities for the AIPRD will include education, road infrastructure and government partnerships.

Total ODA to the Philippines will increase to $68.8 million and will be used to promote more effective economic governance, fiscal policy reform, private sector growth, and improved security and stability. Particular emphasis will be placed on building peace and supporting education in the southern Philippines.

The aid programme will support Vietnam's Five Year Socio-Economic Development Plan. Australia will increasingly work through Vietnamese Government systems and will prioritise rural and agricultural development. Total ODA to Vietnam in 2006-07 will increase to $81.5 million.

South Asia and Pakistan

Development assistance to South Asia will increase to $124.3 million in 2006-07, reflecting a significant increase in ODA to Pakistan to $17 million. Australia will also develop a larger and more diverse regional programme in South Asia, increasing funding to $12.5 million in 2006-07.

Engagement with Pakistan has been strengthened following the October 2005 South Asian earthquake, with the aid programme providing $38 million in emergency relief assistance. In addition, Australia has committed $40 million over three years for reconstruction assistance. The bulk of this will be used for re-building education and health facilities.

Aid to Africa

Australia will continue to have a niche role in Africa and total assistance will increase to $82.1 million in 2006-07. Development programmes will be largely delivered through multilateral and UN agencies. Australia will build on its strong humanitarian record in Africa, funding HIV/AIDS prevention and care and providing support for vulnerable children.

Middle East and Central Asia

In 2006-07, ODA to the Palestinian Territories and for refugee support will increase to $16.2 million. Australia will continue to work with the UN Relief and Works Agency and NGOs to support delivery of essential services, development of local capacity, and activities that reduce the vulnerability of Palestinians to poverty and conflict.

The Government is providing a further $22.5 million to Iraq in 2006-07 as part of its reconstruction programme. Total reconstruction assistance to Iraq since 2003 is over $170 million. Australia's assistance will support Iraq's transition to an open, market-based economy. The aid programme will continue to focus on supporting strengthened governance and building institutional capacity in key ministries and in niche areas where Australia has particular expertise.

Australia will increase ODA to Afghanistan to an estimated $33.9 million in 2006-07. This is part of an indicative Government commitment of $150 million over five years to support Afghan nation-building efforts. Priorities will include supporting the delivery of essential services through the Afghanistan Reconstruction Trust Fund, and democracy and capacity building.

Media contacts:

Mr Downer's Office
Chris Kenny (02) 6277 7500 / 0419 206 890

Bronwyn Coles (02) 6206 4733 / 0418 216 844

Last Updated: 25 February 2013