Anti-Corruption and Australian aid

See policy statement Tackling Corruption for Growth and Development

Australia has consistently sought through its aid program to help partner governments strengthen governance and reduce corruption. But more needs to be done. Corruption has a substantial negative impact on economic growth and development and weakens institutions. The costs of corruption fall disproportionately on poor people.

Australia's anti-corruption for development policy provides a framework for planning, resourcing, and reviewing anti corruption activities on a country and regional basis. AusAID developed the policy in collaboration with a wide range of Australian government agencies and external stakeholders.

The overall goal of Australia's anti-corruption for development policy is to assist developing countries bring about a sustainable reduction in corrupt behaviour for the purpose of improving economic and social development.

Australia's approach to anti-corruption will focus on three mutually reinforcing elements:

Building constituencies for anti-corruption reform: Strong leadership is critical for successful anti-corruption efforts. Australia will assist institutions, groups and individuals that support good leadership. We will support the collection and dissemination of information about the costs of corruption. This will help mobilise support for anti-corruption reform efforts.
Reducing opportunities for corruption: Poor political governance provides greater scope for corrupt behaviour. We will support initiatives that bolster transparency and accountability. Helping to improve budget processes, public financial management, and procurement systems makes corrupt activities more difficult to undertake, and more easily identified and prosecuted. Supporting the establishment and implementation of clear legislative and regulatory frameworks is another important way to reduce opportunities for corruption.
Changing incentives for corrupt behaviour: We will work with leaders, public officials and those in the private sector to discourage corruption. The timely investigation and prosecution of corrupt behaviour sends an important message that corruption will not be tolerated. A professional, merit-based public service is also critical for the effective and honest operation of government systems and processes.

The starting point for our work is support for the priorities and plans of partner countries to improve governance and tackle corruption. We are more likely to achieve long-term sustainability through this partnership approach. Where such country-led strategies do not exist, Australia will support efforts to develop anti corruption policies and plans.

We will also build capacity and develop long-term institutional partnerships with partner governments through placing Australian government officials in public service positions or senior advisory roles. With other bilateral agencies, multilateral donors, and regional and global organisations, we will help partners better target corruption. Members of the business sector and civil society will also be important allies in putting this policy into practice.

The corrupt use of aid money clearly diminishes the credibility and effectiveness of development assistance. AusAID and its development partners have an obligation to Australian taxpayers and the Parliament to ensure that Australian aid money is used effectively and efficiently, and is not subject to misuse. The aid program has measures in place to ensure accountability and reduce the risk of corruption and bribery in the delivery of aid activities. We will regularly assess the adequacy of these measures and strengthen them as appropriate.

Because of its secretive nature, it is difficult to measure corruption. Australia will work with international experts to measure and monitor progress in reducing corruption more effectively. We will develop measures of progress for individual activities and draw on long-term and high-level measures, such as Transparency International's Corruption Perceptions Index and the World Bank Institute's control of corruption indicators.

We will report on our progress in implementing the anti-corruption initiatives through the Annual Review of Development Effectiveness, to be prepared by the Office of Development Effectiveness. Results of the review will be integrated into the Australian Government's budgetary cycle to provide a practical link between increases in aid allocations and improvements in aid effectiveness.

March 2007