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Joint Standing Committee on Foreign Affairs, Defence and Trade
15/11/2018
Strategic effectiveness and outcomes of Australia's aid program in the Indo-Pacific

BYRNE, Mr Andrew, First Assistant Secretary, Soft Power, Communications and Scholarships Division, Department of Foreign Affairs and Trade

DELANEY, Ms Beth, Assistant Secretary, Pacific Regional Economic Branch, Department of Foreign Affairs and Trade

DUTTON, Dr David, Assistant Secretary, Southeast Asia Regional Engagement Branch, Department of Foreign Affairs and Trade

GILLING, Mr James, First Assistant Secretary, Contracting and Aid Management Division, Department of Foreign Affairs and Trade

KEWALRAM, Mr Ravi, Assistant Secretary, Multilateral Trade Policy Branch, Department of Foreign Affairs and Trade

ROGERS, Dr Cate, Assistant Secretary, Development Policy and Education Branch, Department of Foreign Affairs and Trade

TINNING, Mr Chris, First Assistant Secretary, Multilateral Development and Finance Division, Department of Foreign Affairs and Trade

VERSEGI, Mr Peter, First Assistant Secretary, Development Policy Division, Department of Foreign Affairs and Trade

[16:00]

CHAIR: I'd like to formally welcome representatives from the Department of Foreign Affairs and Trade. It's good to see you once again before the committee. It looks like we have the whole department here! As I noted to our earlier witnesses, today's public hearing is under parliamentary privilege as usual, so it gives you a bit more of an opportunity to say what you'd like between the walls of the parliament here. I invite you to make a brief opening statement or statements and then we'll proceed to questions.

Mr Versegi : Thank you very much, Chair. I don't want to make any opening statement but would like to table answers to some of the questions the committee submitted a little while ago.

CHAIR: Thank you. Are there any opening statements to begin with?

Mr Versegi : No.

CHAIR: We'll proceed directly to questions. Firstly, one of the things that we've been asking about and that I'm also personally quite interested in is local procurement and how we can further promote local procurement through our aid program, whether it's with goods, services, contracting or other elements, so we can create more longer term stability and economic benefits for the nations we are giving aid to. What are the current practices with respect to local procurement in terms of the requirements for our aid partners to procure locally, if any, and how do you think we could better improve those systems?

Mr Gilling : Thanks for your question. I think we had this conversation a little bit last time—

CHAIR: Yes, we did.

Mr Gilling : and I made the point then—just to recap—that we have a range of projects whose dedicated objective is to improve the productivity and capacity of local business, and we've increased the amount of money that we spend on so-called aid-for-trade activities. These are designed to address a lot of the constraints that operate, including behind the border, so around regulation and that sort of area. That's a separate, discrete, set of individual projects.

As you know, we procure the services from commercial contractors within Australia and internationally and also from NGOs, typically from within Australia. We don't have any obligatory provisions for local content. We do have a very, very fixed commitment to deliver value for money, and at times that will drive the procurement into local areas.

CHAIR: Do you think that creates perpetual conflict in that sometimes you're looking for value for money which can be a short-term value for money but have longer term impacts in terms of not utilising local goods, for example?

Mr Gilling : The value-for-money concept as applied by the government and as mandated by the Department of Finance is actually quite sophisticated and takes us beyond that short-term financial obligation. Value for money doesn't actually mean the cheapest. It does mean the outcome that can deliver best for us. It's always hard when we have a commercial relationship with an outfit who are our primary contract—and I believe that you spoke with some of these companies this morning. They will then procure themselves, but often they will procure through a number of different levels, so actually capturing where the money ends up being spent can be quite difficult, but we have put in place a new database which is capturing the subcontracting activities of key contractors. For example, once we have signed an initial contract with Cardno, we are now tracking some of the contracts that Cardno enters into underneath that. So we're improving our capacity, but I wouldn't say that we're in a position to tell you exactly what percentage of the money that goes to an Indonesian project ends up being spent on an Indonesian final product.

CHAIR: Are there any requirements within the tender processes for those receiving our aid funding to procure locally where possible?

Mr Gilling : No.

CHAIR: Do you think that is something that would encourage local procurement—where it is possible, of course?

Mr Gilling : Ironically, there is in fact an opposite. One of the changes, as you know, which have been put in place in the last couple of years is an obligation within our procurement process to stipulate where Australia benefits. Often you'll find within the aid contracting that companies are asked to focus on how the money that we are giving them to spend in Indonesia has an impact in Australia. So there is in fact a legislative requirement for people to look in a different direction.

I think it would be very hard and possibly counterproductive, however, to identify specific amounts of money that we need to spend within partner countries. However, I always welcome when one sees that happen, and I think all of our partners appreciate that having good-quality local providers creates added value.

CHAIR: Or at least include some sorts of steps such that, when partner organisations are considering procuring goods or services, they first consider, 'Is this available locally?' If it's not available locally, then consider, 'Is it available regionally?' and then look more widely. Do you think there are measures we can take to improve our systems that you would point out that we could potentially recommend through this inquiry?

Mr Gilling : If one were to look at that, I would suggest one did it in a small scale, at a pilot scale, to see what could occur. I think the core value-for-money requirement and the sorts of issues that we're involved in dealing with are so important for Australia that the key is for us to identify the highest quality, best impact that we can get. So I think there is a hierarchy of objectives there, and I think—I may even have said this previously—the policy principle that you have one policy for one outcome suggests that, if we're looking at strengthening local business, dedicated projects are probably the best way to go.

CHAIR: I've got further questions, but I'll pass to Senator Singh first and then come back to me.

Senator SINGH: Can I just clarify: these answers you've given us, are they to questions we asked in the June hearings that we had? I'm just trying to conceptualise where the questions came from.

Mr Bruce : The questions are from transcripts of all the public hearings.

Senator SINGH: But DFAT appeared in June, didn't they?

Mr Bruce : But a lot of those questions were put to other organisations.

Senator SINGH: That we put on notice to you?

Mr Bruce : Yes.

Senator SINGH: I'm just trying to digest why you're here and put it in some sort of context. We heard this morning how Australian aid delivery through multilateral organisations has increased. I think we're up to about 42 per cent.

CHAIR: A number of those who presented also pointed out that that had been potentially problematic as well.

Senator SINGH: I understand our aid budget has been reduced, and yet we've had an increase in delivery through multilateral organisations, so I'm just interested in how that's come about.

Mr Gilling : Maybe if I just start with what that increase is, and then my colleague Mr Tinning might want to talk about some of these issues that may have been raised. It's 42 per cent this year. I'm reading from the Performance of Australian aid 2016-17, which is publicly provided, but I'll hand it over in a minute. I've brought the other two versions. I'm fairly sure it's only gone up one per cent. It stays at approximately 40 per cent, so, given the nature of the funding that the multilateral process involves, which can often be very large, irregular tranches of funding, that number does—

Senator SINGH: Like the global fund, for example?

Mr Gilling : Exactly. I don't think that we have got enough evidence or a strong enough time line to say conclusively that there is a definitive increase in spending in multilaterals. But, while my colleague Mr Tinning is talking—I can tell you exactly what these figures were for the last two years, just to give you context.

Mr Tinning : It might be worth noting that there are two forms of our multilateral finance commitments. One is core funding—for example, you mentioned the global fund. We give regular contributions to organisations such as the global fund on a regular replenishment basis.

Senator SINGH: Every three years, I think.

Mr Tinning : That's right in the case of the global fund. In some of the other funds, it's every four years. That goes to their overall activities. We provide that money because we see these institutions as adding value both in our region and globally. In some cases, they form the basis for global norms in their particular sectors. Often they produce data or analytical work that bilateral donors, including ourselves, rely on. Quite often they can coordinate global efforts in a way that no other bilateral actor can, so they play a particular role that's very hard to replicate solely through bilateral activities. Quite often they form the basis for efforts not only of other donors but also from developing countries themselves, particularly when it comes to data and analytical work.

The other form of money we give is non-core funding—that's where we fund a specific project that is seen as valuable by our posts. In the case of that money, it's really a decision by the relevant post that this is the best way to get the outcome we're after. Quite often that might involve, for instance, a major infrastructure project through one of the multilateral development banks, because simply we can't do that bilaterally. We often provide a small technical assistance activity, for example to improve the gender outcomes through that particular infrastructure investment, and we feel that can add significant value for a relatively small investment.

Senator SINGH: So the non-core funding can fluctuate a bit more than the core funding, obviously because that's just the replenishments which could increase in a dollar sense, but they're the ongoing replenishments of the same multilaterals, pretty much?

Mr Tinning : That's right.

Senator SINGH: Whereas the non-core funding is post specific?

Mr Tinning : Exactly, and it's the sum of lots of decisions.

Senator SINGH: Does the Asian Development Bank fit into that?

Mr Tinning : In the case of the Asian Development Bank we give both core and non-core financing. We contribute every four years to a replenishment that they give, which is to finance their core activities, but we also cooperate with them at a country level in certain places where the posts decide that's the best way of investing.

Senator SINGH: Is that broken down? Is the non-core breakdown in your figures publicly available, Mr Gilling?

Mr Gilling : No. These combine the two sources of funding that Mr Tinning just mentioned.

Senator SINGH: Okay.

Mr Tinning : But the figures are publicly available. They might not be in that particular document, but certainly our core funding is publicly available.

Senator SINGH: But one doesn't jeopardise the other, does it? Say the global fund's replenishment is coming next year or the year after—I don't know when it's due—but DFAT's already committed so much non-core over here. That doesn't affect the ongoing core funding commitments—or does it?

Mr Tinning : It all comes out of the aid budget.

Senator SINGH: Yes, I know. That's what I'm saying: it's all coming out of the one bucket. So how are those funding decisions made?

Mr Tinning : In the case of non-core financing, that appears in our budget papers as the country allocations—for instance, Solomon Islands or PNG. That will involve a range of forms of aid in that country. Some of those forms of aid are bilateral contracts. Some is NGOs. Some of it is—

Senator SINGH: We're just talking about multilaterals.

Mr Tinning : Yes, but some of it is through the multilaterals. When you see that Papua New Guinea line item, that will include some money through multilaterals.

Senator SINGH: But, at the end of the day, multilaterals, bilaterals—it's all coming out of the one bucket.

Mr Tinning : Yes.

Mr Gilling : For clarification: in 2014-15, the multilaterals accounted for 44 per cent of spending. In 2015-16, it was 41 per cent and in 2016-17 it was 42 per cent.

Senator SINGH: Okay. I think that's good. I think that's healthy to get on the record, because there was some of what I took as disquiet this morning towards the spend having increased, whereas over the last few years it's basically been the same.

Chair, you can ask about the private sector. I want to ask about the SDGs. Obviously there's another concurrent inquiry into SDGs going on in the Senate foreign affairs committee, but how does the focus of the SDGs in some of this decision-making and in setting the parameters, particularly around issues such as poverty, women and girls, factor into government focus on aid delivery?

Dr Rogers : We consider that the current aid policy is very closely aligned to the SDGs. If you were to go to the website and look at the aid fact sheets, you would see that on them we have all the relevant SDGs that relate to that particular sector. So it's integrated into our policy. Also, as we've been updating various guidance, we've made explicit reference to the need to clearly articulate in documents how they relate to the SDGs, so that we're reporting on them more directly. When we do our aid investment plans, we're now asking the people to specifically address how they're addressing the SDGs in that. In our annual program performance reports, they're required to do the same.

Ms Delaney : On the Pacific specifically, we are also helping the Pacific themselves to measure their progress against the Sustainable Development Goals. Not only do we include it in sexual work that we focus on, be it health or education; we've also participated in our Pacific SDG Taskforce to try to help facilitate how they measure progress against the SDGs.

Senator SINGH: Okay.

CHAIR: I have a further question. I'm not sure that I raised it at the previous hearing—perhaps it would have been good to review what I had asked last time before today! A previous witness mentioned the importance of looking within aid programs at the three Ds: defence, diplomacy and development. Obviously you have a remit for, in particular, diplomacy and development, with defence sitting separately but interrelated with what you're doing. Do you think the government should be exploring opportunities to supplement the core aid program under DFAT with additional funds, for example, through our defence budget or through other budgets, particularly given the strategic, defence and other benefits that our aid program can have in our region and beyond? That is maybe a controversial question.

Mr Versegi : On that question, we would probably argue that we are pretty joined up in the integration of the former AusAID with the Department of Foreign Affairs and Trade. It certainly brought the three arms of trade and development closer together. We are working in very close cooperation with other government departments—the Department of Defence and the Australian Federal Police. In fact, parts of the aid program are implemented by those other parts of government. In terms of additional funding, these are all decisions made in the context of annual budget processes, but I can say that the way in which the various arms of the Australian government now work it is very joined up. I think you will see the way in which the government's activities are all joined up in our engagement in the Pacific et cetera.

CHAIR: I note that in particular, because there is obviously an issue of confidence in Australia's aid program and an understanding of how much we give, what we do, why we give aid and the two-way benefits for Australia across a whole range of different measures. There are often calls, for example, to reduce our aid budget and to give it to other things here in Australia, whether it is education for our Indigenous community or whether it is our farmers or other things. Often with the defence budget, it is almost the opposite. If you suggest at all that you are going to reduce the defence budget, there can be people arguing that you shouldn't retain it or increase it. To supplement the core aid program by using the defence budget could well shore up funds towards the aid program. They are just a few thoughts of mine around that issue. I'm not sure if you want to elaborate any further on those thoughts.

Mr Versegi : Nothing more than I have already said.

Senator SINGH: I will add to that. I have just read your response to the first question in the questions on notice that you have handed to us today, which is our question to you about what are the main reasons why public confidence in Australia's aid program has not been strong. I just asked you before about the SDGs. I recognise, Dr Rogers, that you align the SDGs to the various aid commitments and so forth. That can be seen as a very internal thing for DFAT, whereas I guess what this question is going to is the public confidence in and understanding of the SDGs. We had heard this morning that in a number of European countries the understanding is very strong. It is very value laden. People are aware of SDG No. 1 and what their country is doing to reduce poverty in the world. Because we are in the Asia-Pacific region where a lot of the poverty happens to be located, we could have a direct impact if we were to have that value-laden approach. In response to this question you say that many Australians are unsure about what the aid program does. Why is that?

Mr Byrne : Senator, when you read the full answer, I guess we have tried to draw out in our answer some of the challenges around explaining to the Australian public what the aid program does. First and foremost, it is delivered in other countries by and large, so it is beyond the immediate lived experience of many Australians. Large elements of our aid program are things that are perhaps slightly intangible—governance programs, public financial management reform programs and taxation reform programs. They are things where we know that the work we are doing is important. We know that the outcomes that will be derived from that work can fundamentally change the prospects of the country in which they are being delivered, but it is kind of hard to tell tangible stories sometimes around those elements of the aid program.

There are some elements of the aid program that do lend themselves to more effective storytelling. My colleague from ACIAR just referred to some of the joint research we have done on what drives attitudes to the Australian aid program and how we can more effectively explain the work that it does. What we keep coming back to is that the narratives that cut through most effectively are those that are around human stories—it is axiomatic when you think about it—around individuals who have benefited from the Australian aid program or Australians who are delivering that program. I think we are getting better at telling their stories. But to really shift the dial in public opinion on any issue isn't necessarily easily done. So I think it is going to take time for us to better explain to the public what benefits derive from the Australian aid program, not only for Australia but for people from countries in the Indo-Pacific. We have developed some internal guidelines on how we can better tell their stories. We are working with our ministers, who are our primary spokespeople, to give them the tools and examples that you'll see in their speeches and other material. But if we had the answer to this, we would have done it already. It is going to be a slow process, I think.

Senator SINGH: This is quite a broad inquiry, so excuse me if the questions are sometimes random. As members of parliament, we engage with a lot of people in the sector who are recipients of aid funding who do that storytelling quite well in external countries that it is often Australian aid money that has made the thing possible. But a lot of people wouldn't know that it was Australian money. They can see that it is Oxfam, UNICEF or whatever it is—and that is great for that NGO—but they don't know how much the Australian contribution is that made it happen. So I learn the story about the woman who got micro-credit funding or whatever to now run a small business, but the broader public does not know that Australia contributed to that success story—because it is not coming from the Australian government, it is coming from an NGO. I recognise that you are giving the tools to ministers, but I am thinking more broadly, in a marketing sense I suppose, about how we can turn the hearts and minds of Australians around to see the value of our ad contribution—

CHAIR: Particularly if there is room for greater partnerships with the general media as well.

Senator SINGH: which in turn breaks down the domestic politics that often occurs at various times to cut the aid budget.

Mr Byrne : My colleagues are probably better placed to talk about some of the expectations we have around our partners in terms of branding and how they convey the sources of funding that we are providing to them.

Senator SINGH: And I think they do that. In January, with UNICEF, I went to see Cox's Bazaar. Everything was boxed Australian aid; it was all over it. But unless I take a photo and share it with my constituents, they are not to know that. So how do we get our people in this country knowing these things? The Rohingya know it more than our own people! Do you know what I mean? We are not explaining it back here on the ground. I think it is because it is all a bit bureaucratic.

Mr Byrne : As I said, we are learning. We are trying to eliminate some of the bureaucratic jargon we have used to convey information about the aid program in the past. Some other simple principles that we're trying to introduce: there's a tendency naturally to talk about new programs that we're launching, or new initiatives, but in fact if you're going to tell stories to demonstrate the value of the aid program then it's actually better to talk about a program that has already delivered something—talk about the outcome of a program rather than focusing on the announcement of a new initiative or new program that by definition hasn't delivered anything yet and hasn't helped anybody. So, we are learning these lessons. What our research showed us as well is that drivers of people's perceptions of and attitudes towards the aid program are quite deeply entrenched; they're quite personal. That often reflects their attitude to themselves and the world or their perception of Australia's relative wealth. These are really hard things to change.

Senator SINGH: Are you saying we all live in a bubble?

Mr Byrne : No. I guess we all carry unconscious biases, whether we know it or not. These are hard things to change. Interestingly, we found in our research that there wasn't the clear correlation between an individual's understanding of the size of the aid budget and their tendency to support the aid program. Often we hear this kind of exhortation that if only people understood how relatively little of the federal budget is committed to the aid program then they'd be more inclined to provide it, but actually I don't think it's quite that simple. I think the drivers of those attitudes are much more deep-seated and therefore harder to shift. We do know that the way to shift them slowly over time is by focusing on stories of people, stories of success, and kind of reinforcing those positive perceptions of actual human beings who are being helped in tangible ways by the Australian aid program.

CHAIR: I've got a further question that relates to perhaps multilateral trade and our policies there. An earlier witness—I can't remember which one it was—raised some issues around the need to include more human rights requirements in our trade policies in our negotiation of trade agreements. What's your view on that? Do you think there is a lack of talk about human rights within our discussions around trade, or do you think we are doing a sufficient job in that regard?

Mr Kewalram : I think that's also probably veering into—

CHAIR: I might be veering out of aid.

Mr Kewalram : a slightly different angle to similar questions.

CHAIR: Perhaps link the trade program into aid as well, and, where we are engaging in the program, are we giving sufficient consideration to human rights?

Mr Kewalram : Coming back to your question first, we very much take a case-by-case approach to a whole range of issues when we're negotiating trade agreements—not just human rights but, as I said, a whole range of factors, including looking at, for example, how best, if at all, this particular trade agreement would be placed to deal with gender or women's economic empowerment, for example. So, it is a case-by-case approach. It is something where we are very conscious in the context of trade negotiations. In the context of aid-for-trade programs, these programs are very much aligned to SDGs. Everything we do is looking at whether this is a good program that deals with poverty alleviation, whether this is a good program that deals with hunger, et cetera. In that context, of course all the other issues that are identified are very much a part of the consideration.

Coming back to Mr Byrne's conversation earlier with Senator Singh, about stories being the best way to unpack the narrative, one program in the aid-for-trade space that I think exemplifies this is something that we're doing with the ILO, called the Better Work Program. The ILO goes into factories in a range of developing countries—including, for example, Bangladesh, in the garment sector—and works with them to make sure that all the things they're doing in this space are correctly done. For example, are they providing equal opportunities? Are they providing safe workplaces? Are they providing standards consistent with what we would expect with respect to labour standards and so on? We provide some funding for that. It's part of a larger program. It's a very good example of multiple objectives being met through individual programs, whether we call that in the aid-for-trade space or whether we're looking at it through a gender lens.

CHAIR: I'm not sure whether I asked this last time. I think you were there last time, Mr Gilling and Ms Delaney. Perhaps a few others were there as well. What's your view on changing the name of our aid program, noting concerns around the words 'aid' or 'assistance' implying a one-way benefit instead of a two-way cooperation where the two parties both benefit and partner and it's more of an equal partnership instead of one where we give? That also reflects into the Australian people's confidence in the aid program, in terms of the understanding that it's not just one where we're giving, but where we also receive a benefit. Some proposals have been made to change the name to 'development cooperation' or 'development partnerships'. What is DFAT's view on that?

Mr Versegi : I think that question has a lot of merit. In fact the way in which we describe our relationships through the aid program has evolved over the years. For instance, in our engagement now with East Asia and their fast-growing economies we call them economic partnerships rather than aid relationships. I think that's the kind of language we're now starting to use also with our Pacific partners et cetera. I think there is probably something there about the consistency of how we use particular terms. It is very much in our thinking and the way in which the development landscape is changing and our relationships with developing countries in our region are changing to more mature relationships. That is reflected in the nomenclature of how we describe these relationships.

CHAIR: Senator Singh just had to leave for a Senate division. It could also relate, for example, to the boxes that you see, for example, in Rakhine State or wherever else, where it says 'Australian aid'. It could be Australian development partnerships or Australian development cooperation instead. That could well reflect that the people on the ground are not just receiving something; there is a partnership and an equal relationship as well. If there are any issues with that, please raise them.

Mr Versegi : One issue is that 'aid' has only three letters, and that's great when you're writing something.

CHAIR: That is a benefit! The shortness of the term is a benefit, but the connotations are not necessarily the same. I don't have any further questions at this point. I can probably think of some other ones. With the Senate division and other members not being here I think that's sufficient for now. Thank you for your answers to our questions. I note that we didn't give you any further questions to take on notice today, I believe, which is good for the department. Thanks again for your time and the evidence that you've given today, and your submission as well.

Committee adjourned at 16:38