That development assistance is substantial.
In the 2012 financial year Australia spent $4.8 billion on aid, almost a quarter of which went to Papua New Guinea and the Pacific.
Australia's Foreign Minister, Bob Carr, says the report shows the aid program is working well and getting value-for-money.
But Professor Steven Howes, the man who conducted the government's Independent, Review of Aid Effectiveness, that initiated many of the reforms the report tracks says the document gives too rosy a picture.
Professor Howes is speaking with Jemima Garrett.
Presenter: Jemima Garrett
Speaker: Professor Steven Howes, Director of the Australian National University's Development Policy Centre
HOWES: It doesn't tell us a lot specifically about the Pacific. It's a very high level global report and so it tells us how the world is doing in reducing poverty and achieving the Millennium Development Goal and it talks about the contribution AusAID or Australian aid is making around the world to that goal, and then it talks about the internal effectiveness and efficiency of AusAID.
GARRETT: In 2012, AusAID implemented quite a number of reforms aimed at increasing the effectiveness of its aid. What sort of changes did we see?
HOWES: A couple of important reforms, they've introduced the four year budget strategy to give greater predicability, which you need for effective aid planning, although having said that, of course, this decision to take some of the aid due for asylum seekers has sort of blown that strategy out of the water, but at the time, it was an important reform. And this report is itself part of a reform process, where AusAID has been trying to become more orientated towards results and put more effort into showing the Australian taxpayer what return they're getting for their expanding aid budget.
GARRETT: So to what extent has this whole process been undermined by that asylum seeker decision?
HOWES: Oh, there's no doubt the asylum seeker decision has hurt the Australian aid program and the reform program. First of all, as I mentioned, in terms of predicability, there had been a recognition that you need predictable funding to deliver aid effectively and to have almost a ten per cent aid cut in the middle of the year, that's obviously the opposite of predictability. And then I think there are also questions around transparency. AusAID had gone a long way towards becoming a more transparent aid organisation, and had been implementing its transparency charter. But to have this decision on asylum seekers, sort of leaked to the press and then not to be able to know where the cuts are being made in order to fund this decision. Obviously that's a blow to the promotion of transparency.
GARRETT: Getting back to the report itself. In the 2012 Aid Effectiveness Review, there are a lot of green ticks showing that objectives have been achieved, including all of the objectives adopted after your independent review of aid effectiveness. Has AusAID really done such a great job or is this a case of over-enthusiastic PR?
HOWES: It is certainly a very glowing report. In fact, the Independent Review had recommended that AusAID have a sort, have a one page summary, which used a traffic light system, which is a mix of greens are very good, orange for not so good and red for problem areas. The Review doesn't contain such a summary, but you get the impression if it did, they'd all be, they'd all be green lights. There's no doubt there has been a lot of progress, but there are still many challenges. And in fact, there is one highlighted by the review itself. So one of the problems that was identified by the Aid Review and which has been accepted by AusAID is that they've been this fragmentation of the aid program, so that with a larger budget, too much of that had gone to too many new initiatives, rather than building up existing initiatives.
And there was an agreement that the aid program should be consolidated into a smaller number of larger initiatives. So one of the targets which AusAID proposed for itself in the strategy document it released last year was a reduction in the number of initiatives. That target date was 2015, but in fact what this review shows that over the last year, the number of initiatives has continued to increase I think by about ten percent.
So there are clearly still problems facing AusAID and while this review is very rosy and probably too rosy. It does provide some useful information about the nature of those challenges and give some insight into areas where in fact we're still probably going in the wrong direction.
GARRETT: Where do you see AusAID going in the wrong direction at the moment?
HOWES: Well, in relation to this issue of consolidation, that the aid effort is being spread over too many countries and over too many sectors and over too many projects. So that's partly a global issue, partly influenced by the move into Africa and not only into Africa, but into almost every country in Africa. So we need to, in particular, consolidate the Africa program. But I think it's also an issue for the Pacific, because it's in the smaller countries, where the aid imposes the largest bureaucratic or administrative burden. These are very small governments with a very few number of people and they find it difficult to manage an aid program. And the more donors there are and the more projects there are, the harder it is. So I think aiming for a smaller number. Put it this way, aiming for a fewer bigger interventions is a very good aim. But as AusAID shows it's not achieving that aim at the moment.
GARRETT: So in the Pacific, as these reforms in aid effectiveness have gone ahead. What have we seen in terms of impact?
HOWES: You need to take a longer term view. It's not just what's happened in the last year, but I would say over the last four or five years. You've seen a move in AusAID away from putting the emphasis primarily on governance reforms and trying to strengthen central agencies, such as treasury. I think it's been recognised that's actually a lot more difficult than we thought and those efforts haven't given rise to the sorts of improvements in service delivery or development prospects that were anticipated.
So you've seen a shift in emphasis away from that towards more concrete, tangible efforts to improve service delivery. So, for example, now in Papua New Guinea, AusAID is itself delivering textbooks to school, it itself delivering drugs to health clinics. So you're seeing the rise of much more direct interventions to try to help ordinary people get better services. And I think in the difficult environment of working in the Pacific, I think that's been a good shift and it's also good that AusAID is trying to actually ask the question, well, what results are our interventions leading to? The big shift in the Pacific has been a more pragmatic approach, putting less effort into efforts to improve governance, which have often failed to work and putting more emphasis on service delivery.
GARRETT: So what changes are we likely to see as 2013 progresses?
HOWES: I think we'll see more efforts in the same direction. I think it's a process that's pretty well entrenched and I don't see any radical shift in direction. But, of course, the big possible change is there will be a change in government and if there's a change in government in Australia, then no doubt that will flow through to the priorities of aid program. And from what we've heard from Julie Bishop the Shadow Minister for Foreign Affairs, I think the big change they're going to make is to keep the focus on results and on concrete contributions, but shift away somewhat from the service delivery, from health and education towards trying to improve prospects for growth. Wether that's through more support for infrastructure, or support for small business remains to be seen, but I think the coalition has given a pretty clear indication they would like to shift the aid program in that direction.