Friday, February 21, 2014

Julie Bishop: Tough Decisions on Australian Aid

Minister of Foreign Affairs, Julie Bishop, gave a speech on February 14, 2014 regarding Australasian aid and international development policies. Bishop has been the minister since September 2013 and is currently the only woman in the cabinet and the third woman in Australian history to hold the title of Deputy Leader of the Opposition. Additionally, she has been a Member for Curtin in the House of Representatives since 1998 and was a minster in the Howard Government until 2007 ( Bishop’s speech primarily focuses on instituting a more effective and efficient aid program to produce economic growth and alleviate poverty. To keep peace and prosperity, Bishop will focus on Australia’s “neighborhoods,” the Indian Ocean Asia Pacific, and will strive to continue to be the most responsive humanitarian donor:

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“I am really pleased to be at this workshop because I hope that we can all share the same goals. We want to find ways to make Australia’s aid program work more effectively, to help improve people’s lives. We want to find the very best ways to alleviate poverty and improve economic outcomes and build stability and prosperity, particularly in our region the Indian Ocean, the Asia Pacific…

To the conference participants, your research gives us insights on changing landscapes of development assistance. And there is no doubt that it is changing. I take issue with those who focus on quantity not quality. There are many examples in domestic policies where billions of dollars have been poured into programs only to find that standards have gone backwards. So, what we need to do is focus on new ways of achieving better outcomes in the area of overseas development assistance and aid.

Official development assistance now provides a relatively small share of total finance for development. Economically sustainable communities and economies are the key to the alleviation of poverty and increasing living standards. It has been called the new aid paradigm. Our aid program can succeed in this new paradigm because when we get it right we can make a real difference and in doing this, focus on our region.

Now we have not always got it right. I find it utterly distressing to continue to see aid programs in Papua New Guinea, for example, that are not having the desired outcome. I find it distressing to know that despite the fact that Australia invests about half a billion dollars each and every year into Papua New Guinea, it will not meet one of its millennium development goals, in fact it is going backwards. It is not on track to meet one of the seven millennium development goals. And I am not just focusing on PNG, this is an issue across our region.

We need a more effective and efficient aid program. We need an aid program with a strong culture of accountability and performance and the new Government is committed to a new strategic direction for Australia’s aid program which will enhance the work we are already doing in the region and will focus on the region.

So let me be clear from the outset. It is in Australia’s national interest to deliver a responsible, affordable and sustainable aid program. A program that will promote economic growth and reduce poverty. Now we have had to make some pretty tough decisions this year. We inherited a deteriorating budget from the previous government - cumulative deficits of $123 billion. Now that means ladies and gentlemen that $123 billion more than incoming revenue has been spent. The previous government was on trajectory for government debt to reach $667 billion. So the government was borrowing from overseas to pay our bills and our aid program – borrow overseas to send overseas.

So we have to get our budget under control, and this means that the aid program, like every other government program, had to be put on sustainable footing. Our domestic budget outlook meant that I had little choice but to reduce this year’s aid budget and I did so by reducing it by about $100 million over last year. That means the tough decisions had to be made but we are still one of the most generous donor countries in the world. We remain among the world’s top 10 despite being the 12th largest economy and just 53rd in the world for population – so per capita we are still among the world’s top donors. But what I have done is stabilized the budget at $5 billion per annum. It will increase in line with inflation, so it will go up by CPI. This will provide certainty, predictability of funding for our partners, for the recipients and will put the aid budget on sustainable financial footing…

We are refocusing our efforts, placing our aid program more clearly in the context of Australia’s national interest. And that is why the aid program is now part of the Department of Foreign Affairs and Trade. We have integrated the separate aid agency – AusAid – into the Department of Foreign Affairs and Trade. We have created a single department with responsibility for advancing Australia’s interest in diplomatic trade and development context.

It is in Australia’s national interest for there to be peace and prosperity in our region -it is part of our national interest. So that is why we are consolidating our efforts on our neighborhood – the Indian Ocean Asia Pacific – where we can make the biggest difference. This is where we have a responsibility to foster peace and prosperity…

Aid for Trade will be fundamental to our policy approach. For every single dollar invested in Aid for Trade, an estimated $8 in additional exports will be created in developing countries. That is a good return on our investment so the program will have a much stronger focus on promoting economic growth than it has in the past years. This means using more of our aid to create jobs, to build schools and investing in productivity enhancing infrastructure and spending in our region…

We recognize that one of the best ways to promote economic growth in our region is to empower women and girls. And that’s why we have appointed former Senator Natasha Stott-Despoja as our Ambassador for Women and Girls. Her role will be to visit our region, to represent Australia in regional and global forum, to promote the empowerment of women and girls. When women are able to actively participate in the economy, the formal labor markets, than everyone prospers. So we are going to support women starting businesses, building their skills, and stepping up to leadership roles.

We will invest in health – particularly health systems – so that men and women and children can access basic health services and live healthy and productive lives. I made it clear to the PNG Government that we will move away from direct service delivery because that is the responsibility of a mature sovereign government…

We are committed to playing a strong role in responding to disease threats in the region – Malaria, TB, HIV/AIDS – which can create huge economic burdens to developing countries. We are also working with governments in our region to ensure [inaudible] and growth is inclusive of the poorest and most disadvantaged, making sure particular consideration is given to improve people with disabilities, those living in remote and rural communities and ethnic minorities.

And as I said, we will continue our humanitarian work across the globe. I think Australia will continue to be the most effective, and responsive humanitarian donors – certainly in our region – and we demonstrated this in recent times in our response to natural disasters in the Philippines, Tonga and Vanuatu.

In fact, I visited the Philippines just after the impact of Typhoon Haiyan. We provided $40 million in financial assistance, in money, but our contribution went much further than that. We had 550 military personnel on the ground in the Philippines, we had aircraft – C-130s – to bring supplies and enable the aid workers to travel around the Philippines. Yet none of that counted in the assessment of our aid contribution to the Philippines – this is something else we are going to change.

When other countries include in their aid program assessment the amount of say military or private sector funding and Australia doesn’t, we only count the actual dollars we provide, we are comparing apples with oranges. I was surprised to find that Australia was listed as the fourth largest donor to the Philippines typhoon effort.  Given that there was $40 million dollars, 550 personnel, ships, planes and I thought “Gee, other countries must have done an extraordinary job”, but when I looked at their contribution, it was their military contribution. Well, if I added Australia’s military contribution we would be by far the largest donor. Now, this isn’t a question of who is the largest donor, but let’s compare apples with apples before people start criticizing the Australian Government for not responding. Have a look at what we have actually provided and compare it with those who are said to be number one or two and their contribution was their military contribution – fantastic – but let’s compare like with like.

The private sector is already involved in development assistance and I want the Australian Government to work more effectively with the private sector, recognizing that private enterprise is engine of growth. So we are going to explore innovative models for private sector partnerships for development, moving away from the old way of doing things, the more traditional aid program approaches. One example is the $20 million that Australia is contributing to the Philippines Public Private Partnership Centre. Our aid dollar is helping prepare tenders to award 26 public-private partnership infrastructure projects that are valued at about $7 billion. So the work will now inform a similar pilot scheme in Indonesia, as part of the project to tackle infrastructure shortfalls in the APEC region…It has been estimated that $8 trillion worth of infrastructure is needed in the APEC region along by 2020.

So we are funding such infrastructure such as the Cao Lahn bridge in Vietnam - that is going to transform local economies. It will enable people to travel more easily, to access education, employment and markets for their trade. We are supporting programs like the Pacific Business Fund that I recently launched in the Solomon Islands to foster business growth in developing countries. The fund will be managed by the Asia Development Bank – it will deliver capital and mentoring to local businesses who are seeking to export and expand. Our contribution of $15 million will allow the fund to work with at least 100 high potential companies to expand and diversify their operations, leverage $15 million in finance from commercial institutions, and ultimately it is estimated create up to a thousand jobs…

A great example in our region is our partnership with Carnival Cruises to provide increased economic opportunity through the tourism industry. The Pacific is a magnificent tourism magnet and cruising is big business. Carnival brings over a quarter of a million tourists to the Pacific each year. But we need to bring local industries to Carnival and that is what we are doing through this partnership to increase local earnings. So Carnival for example has agreed to source the bottled water from a Vanuatu supplier and is in discussions to source local coffee. This might seem obvious but it wasn’t happening. So the opportunities are going to stretch much further than just sales – taxi drivers and coffee shops and local tourism operators, fruit and vegetable growers on a lot of the islands all have the potential to benefit when connected to the tourism supply chain. And that is what we need to do to get local businesses into regional and global supply chains. Carnival is working to hire Ni-Vanuatu crew – they have over 100 ships visiting the Pacific annually and up to 200 crew on board these ships – the potential for job opportunities is huge…

While we are in the process of finalizing our benchmarks, I will share my thinking on some of the broad parameters.

We will be assessing performance across all levels of the aid program. At the strategic level, we will assess the entire aid programs progress against key goals and priorities – a small number of high level targets. We will use performance benchmarks at the level of individual programs to assess the relative effectiveness of our portfolio of investments, and these assessments will determine how the aid level are allocated. Then at an individual assessment level, we will ensure funding is directed to those programs, those investments that are making the most difference and that poor-performing projects or poor-performing deliverers are either improved or the funds are redirected.

We will also review the way we assess the performance of our delivery partners – multi-lateral organizations, NGOs and contractors – to ensure there is a stronger link between performance and funding and I am really pleased to report that the initial consultations indicate there has been broad agreement among our partners across the sector to this approach.

We will also be working with partner governments to ensure the millions of dollars spent each year on programs are used responsibly in those countries and effectively. That is why we are looking to introduce mutual obligations between ourselves and our partner countries, so both partners are held accountable for outcomes.

I have mentioned Papua New Guinea, it is a country for which I have very deep affection. It is a vital partner to Australia and the region, but PNG is a good example of how our relationship is maturing from the aid-donor-aid-recipient to a much more sophisticated economic partnership and our aid program should reflect that. So we are currently undertaking a review of the Papua New Guinea aid program in conjunction with the PNG Government to reflect that change. Both our governments recognize that aid investments need to target areas where Australian expertise can have a real impact on sustainable and inclusive economic growth. A more prosperous Papua New Guinea will improve the quality of life of its own people and have economic and security benefits for the whole region. This is an example of aligning Australia’s foreign policy interests with our development assistance goals.

Our aid program needs to respond to a radically changing international environment. Over a billion people have been lifted out of extreme poverty over the last 20 years. There are a number of key countries in our region – including Indonesia and Sri Lanka and Vietnam – that are experiencing strong economic growth with ODA now representing a tiny fraction of their GDP. But over the years ahead our aid dollar will continue to shrink relative to domestic budgets in our partner countries in Asia, and that is how it should be. We should be seeking to do ourselves out of a job! At the same time, many of our neighbors in the Pacific do remain fragile. There has been stagnated growth and very unclear long-term prospects…

Take China for example, China’s aid budget is now around the same size of Australia’s. We should be engaging China for not only is it a growing presence in our region, but we should be doing what we can to capitalize on our respective strengths, using our combined weight to bear overcoming some of the development challenges of the Pacific. Through a development cooperation partnership with China we have taken the first steps towards working together, importantly to our areas like health and water management.

For example, we have this tri-lateral cooperation arrangement with Australia, China and PNG that can draw together the different strengths of the countries. Australia is a trusted and effective donor, China is a newly developed economy and PNG’s  economy is going through a transition. And we have begun a collaboration to target malaria in PNG. Australia and China have technical expertise to offer PNG in combating this disease and the region of course in the long run will benefit if we continue to control Malaria. This is a positive concrete example of China’s active engagement in international development and Australia’s responses to the realities of the global economy. It is my hope that we can continue to engage with our traditional donors, with the emerging donors, in programs that we can make a difference.

For those of you who work in international development, we can see the hardship, the despair, the poverty and despite our best efforts, too many nations will fail to meet the millennium development goals. But I do remain optimistic because I do know that Australia’s work overseas does change lives. I am sure we can do better and that we can make a much bigger difference. We will remain committed to our overseas aid program but we want to see value for money – “effectiveness” is the watchword. And we will support the organizations and those who deliver continued success and we will focus where we can have the biggest impact in our region.

Aid is a powerful tool in our statecraft. It is ultimately designed to protect and project Australia’s broader interests and that is to ensure greater prosperity, sustainable growth and opportunities to lift the standards of living of everybody in our region. This is how we are going to make a significant impact in the Indian-Ocean Asia-Pacific and I hope that you will join with the Australian Government on this journey.”

Julie Bishop, Minister of Foreign Affairs, “Opening Address-2014 Australasian Aid and International Development Policy Workshop,” The Ministry of Foreign Affairs, Australia, February 14, 2014. 

--Sam Saccomanno

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