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The importance of aid effectiveness: speech to the Australian Council for International Development, Canberra

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The Hon Kevin Rudd, MP Federal Member for Griffith Minister for Foreign Affairs

The Importance of Aid Effectiveness

Speech to the Australian Council for International Development

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20 October 2010

In the past 20 years we have witnessed one of the most rapid reductions in poverty in history.

Progress in China and India has helped lift hundreds of millions out of poverty.

However, if we exclude those two countries, our eyes are opened afresh to the sheer scale of global poverty that continues today.

One billion people still live in extreme poverty — i.e. on less than $1.25 per day.

Of these, nearly 400 million are from Africa. That's 51 per cent of the people of sub-Saharan Africa still living below the poverty line.

On the front page of our newspapers this morning, and on our television news bulletins tonight, there was no mention that today 24,000 of the world's children died of preventable starvation, malnutrition or related sickness.

That's more than 8.8 million each year.

The fact that they die silently does not make it unimportant.

The fact that they may not make the news each night does not make it unimportant.

Part of the mission of any government committed to the principles of social justice is to give a voice to the voiceless.

And that is what Australia seeks to do, in partnership with other countries of good conscience, through our aid policy.

The roadmap for this challenge emerged ten years ago — in the year 2000 — when Australia joined 188 other governments of the world by signing up to global development goals for the new millennium.

These goals became known as the United Nations Millennium Development Goals (MDGs) — and their core focus is poverty reduction.

The MDGs are our best hope, and remain so, for ensuring the forces of globalisation are inclusive — for all of our human family, not just part of it.

To achieve these goals, developed countries — including Australia — agreed to increase our foreign aid, while developing countries undertook to implement honest, effective and transparent public administration and broader economic reform.

In 2000, developed countries' spending on aid to developing nations stood at US$50 billion dollars.

To achieve the MDG development targets, the World Bank said that aid would need to increase to US$117 billion dollars.

Although these numbers are inevitably crude, they help point to the magnitude of the task.

When Australia signed up and committed to the MDGs back then our ODA stood at $1.7 billion or 0.24 per cent of our Gross National Income.

Many of you, I am sure, will recall in 2007 the then Opposition promised to boost our Overseas Development Assistance to 0.5 % of Gross National Income by 2015.

The then Government, now the Opposition, then moved to back this position on a bi-partisan basis.

In government we then moved quickly to put the necessary budget timetable in place.

Despite the economic challenges we have kept to our timetable.

The Government remains resolute.

This financial year we have allocated $4.3 billion to our aid program, which represents an increase of $530 million from last financial year — the biggest increase ever in Australia's aid budget.

Such an increase makes us one of the fastest growing aid programs of all the developed countries.

This is the consequence of the low base we began with, but also the implementation of the commitment we have made.

At the UN Millennium Development Goals Summit in New York last month, I reminded fellow donor countries about the importance of keeping our promises.

Progress towards achieving the MDGs is central to Australia's aid program.

This has resulted in a greater proportion of our expenditure targeting outcomes in primary education and maternal and child health — both key MDG targets.

At the MDG summit, we stated that between now and 2015 Australia expects to contribute $1.6 billion for major advances in women and children's health.

$5 billion to education.

And $1.8 billion to food security.

We also committed to giving increased priority to the particular needs of the world's 49 Least Developed Countries, who have made the least progress toward the MDGs — a commitment of scaling up to 0.15 per cent of Gross National Income going towards ODA for the Least Developed Countries.

Despite our efforts, and those of many other donor nations, today's global report card would not give the international community even a bare pass mark.

The Millennium Development Goals hang in the balance.

We have seen success in areas such as improvement of HIV control, measles immunisation rates and slowing the rate of deforestation.

And we are still on track to meet the poverty reduction target, despite the global economic challenges of the past few years.

But we have failed to make as much progress as we had hoped on maternal health and child nutrition.

And we are failing to meet our goal of gender equality in primary and secondary school enrolments.

In short, there is much work in the world to do, and only 5 years left for our global targets to be met.

Recognising the MDGs is one thing.

Increasing ODA to meet our MDG obligations is another.

But then the most critical part is the practical construction of an aid program to deliver the best development outcomes for the poorest countries in the world.

Tonight let me begin by outlining five basic principles that guide my approach to the delivery of Australia's aid program:

• First, as Minister I want to maximise aid effectiveness with a central emphasis on the measurement of real development outcomes against the MDG targets we have accepted.

• Second, I want to see an aid program that draws on the best research and practical experience to make evidenced-based decisions.

• Third, I want to see an aid program that has the full engagement, support and ownership of recipient countries and communities.

• Fourth, I want an aid program that is fully knowledgeable of, and when appropriate, fully engaged with the UN, UN agencies and the International Financial Institutions including the World Bank.

• Fifth, I want an aid program which has the active and creative engagement of Australian NGOs because we do not see ourselves as having a monopoly on wisdom.

For the Australian NGO community, I am signalling tonight that I welcome your full policy engagement in our future aid program.

I welcome the research you produce although we will not always agree with all the conclusions you reach.

I welcome your advice on individual aid programs.

In particular, I welcome your advice on aid effectiveness — to drive the aid dollar further.

I also welcome your participation in individual aid programs.

Your position as independent actors and your deep community connections mean you can deliver in places and in ways that others, including governments, cannot.

The Government has already been active in aligning our bilateral aid programs with the South Pacific with the MDGs, against which many Pacific Island countries (PIC) have been performing badly.

The Government has already reformed 11 of its 13 bilateral aid relationships with South Pacific countries.

These new agreements — called Pacific Partnerships for Development — align the aid program with poverty reduction through a measurement system grounded in the MDGs.

These new agreements came out of the Port Moresby Declaration in 2008.

They marked a new approach to development co-operation with Pacific Island countries.

In the past, Australia's discussions with Pacific island nations had been centred on what development assistance Australia can provide.

The Partnerships for Development have altered this approach by focusing on how the Partner country will strengthen its efforts to achieve agreed outcomes and how Australia can improve the targeting of its support.

It is based on principles of international best practice for effective aid, mutual respect and mutual responsibility, and focuses squarely on achievement of the Millennium Development Goals by Pacific island countries.

While the Partnerships for Development give the analysis and plans to make progress towards the MDGS, the Cairns Compact on Strengthening Development Coordination gives the PICs and Australia the tools to put these plans in place.

By putting the PICs in the drivers seat in their relationship with development partners and providing the mechanisms for better coordination among development partners, again Australia's objective is to enhance aid effectiveness.

The Cairns Compact was agreed by Pacific Leaders at the 2009 Pacific Islands Forum in Cairns as a response to Forum Leaders' concerns that the Pacific region remains off-track to achieve the Millennium Development Goals by 2015.

The Compact aims to accelerate progress against the MDGs, by strengthening Forum Island countries' leadership of their own development agendas, and encouraging development partners to work more effectively together through a process of mutually transparent reporting through the Pacific Island Secretariat.

I said earlier that a core priority of the Government is aid effectiveness.

This applies to the Pacific as well.

Papua New Guinea is one of our biggest programs.

Since bolstering our aid budget in 2007, primary school enrolments have increased from 53 per cent to 64 percent.

We will help an additional 422,000 children complete at least nine years of education as a result of our basic education programs.

The head of AusAID in Papua New Guinea only yesterday told our Canberra headquarters about a visit to the Eastern Highlands of PNG and the impact of our basic education programs on individual lives.

There she met a woman who was close to tears because she was so grateful that for the first time she was able to send her 8 year old daughter to school.

The mother could not afford the girl's 100 kina school fees — and her daughter is now going to school because the Government had increased school fee subsidies, drawing on AusAID funding.

The classroom in which this woman's little girl was also built with AusAID funds — one of 215 schools where we have funded school buildings.

We are also making considerable gains in health.

In Papua New Guinea last year alone we supported the immunisation of 900,000 children covering over 95 percent of children in six provinces.

With the Solomon Islands Government we have achieved a 59 percent decrease in the incidence of malaria over the past five years.

In Cambodia, our training of midwives in helped ensure that by mid 2009 every health centre in the country had at least one midwife.

These are good stories.

But our responsibility is to ensure that all our aid programs are delivered effectively.

That is a large challenge for any aid agency around the world, including AusAID.

But it is a challenge we must continue to meet.

As we increase our aid budget, just as important as quantity is quality.

Governments have aimed to ensure accountability to taxpayers for the use of public funds within the program.

The Government is already taking important steps to demonstrate enhanced accountability in this respect.

These steps include implementing the recommendations of the ANAO review, increased transparency and accountability, and the review of technical advisers.

We support accountability and transparency through the publication of comprehensive and detailed information about the aid program.

These steps in demonstrating accountability to the Australian public are appropriate.

A week ago, with our review of Papua New Guinea already complete, I announced that we will phase out one third of all long term advisors in Papua New Guinea over the next two years.

Let me state that this not a signal that we are reducing cooperation with Papua New Guinea.

Our $40 million dollars worth of savings will be reinvested in basic health and education programs.

And I will have more to say on aid effectiveness in other countries in the region where we have relied on too many advisers.

The review which gave rise to these findings was commissioned by former Foreign Minister Stephen Smith.

In doing so, the Government was dealing with a long-standing problem.

Under the Howard government, technical assistance comprised an average of 41% of total ODA expenditure.

As a consequence of these changes this will reduce significantly.

In Papua New Guinea alone, the number of advisers over the next two years will be reduced from more than 480 to less than 310.

Also, salary structures will be standardised to ensure the best value for money when advisers are appointed, bearing in mind that we often face a competitive market.

Technical assistance has a key role to play in our development policy.

But this role must be kept within reasonable proportions, based on a rational methodology, and fully measureable.

ODA is but one part of the development equation.

A far greater role lies within the development of the private economy.

Micro-enterprises using micro-credit.

Creating the conditions necessary for increased domestic and foreign investment flows.

Drawing wherever possible on private investment markets.

That in turn means good governance, transparent laws and functional infrastructure.

And that is where ODA in part comes in — working with partner governments, with their support, to help build the basic education, health and when possible, other infrastructure, to enable the private economy to flourish.

This, together with other domestic market based reforms in agriculture, light industry and a long period of global trade liberalisation, is what has fuelled the spectacular success of China in lifting hundreds of millions of people out of poverty.

For truly global development to occur that results in real poverty reduction on a global scale, it is also critical for the international community to bring about the successful conclusion of the Doha Development Round.

In this respect, it is also important to note that development has now been formally incorporated into the G20 agenda.

We look to Seoul and next year in Paris for real runs to be put on the board from this new institution which, as of last year, has been confirmed as the primary vehicle of global economic governance.

Critically this is also the institution where Australia at last has a seat at the table.

Lifting the developing world out of poverty is also, as Bob Zoellick of the World Bank has pointed out, not just a question of good conscience, not just a question of establishing the economic underpinnings of long term political stability and counter-radicalisation, but also the next engine room of global economic growth.

Of course, the heartland of Australian concern for the world's poor is the Australian community itself.

Australians are great givers.

Australians are great volunteers.

Australians are driven by the deepest belief in a fair go for all — both at home and abroad.

This is reflected in the World Giving Index.

Published a fortnight ago, this was the largest study ever carried out into charitable behaviour across the globe, measuring the number of Australians giving to a cause, volunteering of their time and helping a stranger.

Out of 153 countries — representing 95 percent of the world's population — Australia was ranked number one.

This is something of which we should be proud.

We are by instinct compassionate people.

Just as we are by instinct, practical people.

We don't mind giving.

But we want to know that it is being effective.

I close where I began — the one billion people from our human family who live in abject poverty today.

And the 24,000 children who this day have died of preventable causes.

For all the statistics — for all the numbers — let us not forget that we are talking about people who are part of our common humanity.

People, stuck in a condition of poverty who cannot live the kinds of lives which they have reason to value, because each day for them is a basic struggle to survive.

Australians should be proud that we are responding to this challenge by being a real contributor to global development.

This is what reason requires.

It is also what our conscience demands.

And it is what effective policy must deliver.

An expanding and effective aid policy for Australia is a core objective of this Australian Government.