What is effective aid?
Australia is committed to having an aid program that is world leading in its effectiveness. The international drive toward aid effectiveness is about improving the way aid is delivered and managed to ensure it has the maximum positive impact on the lives of those it is intended for, reducing poverty and achieving value for money.
How effective is Australian aid?
A number of external reviews of the Australian aid program confirm its progress on effectiveness. In November 2010 the Government commissioned an independent review of the effectiveness and efficiency of Australia’s aid program. It found that Australia was an effective performer by global donor standards.
Released in December 2011, an Office of Development Effectiveness report The Quality of Australian Aid—an international perspective, which drew on analysis from the Brookings Institution, found that the Australian aid program is one of the clear leaders in delivering aid effectively to fragile states.
In 2009 a review by the Australian National Audit Office concluded that AusAID had managed the expansion of the aid program in a way that supported delivery of effective aid and had introduced changes that were consistent with the international aid effectiveness agenda. Also in 2009 the OECD concluded that Australia was strongly committed to making its aid program more effective, had made good progress in cooperating with other donors and untying its aid, and that new policies, like the introduction of the Pacific Partnerships for Development and a focus on results, clearly indicated that key effectiveness principles were being implemented.
Becoming a world leader on effectiveness
The Australian Government's aid policy, An Effective Aid Program for Australia: Making a real difference—Delivering real results, is all about driving Australia towards its goal of being a world leader in effectiveness. One of the key initiatives is to develop a rolling four-year aid budget strategy, covering for the first time, the aid efforts of all relevant Australian Government agencies in one coherent plan. Delivering on this, the Government released a new Comprehensive Aid Policy Framework on 8 May 2012.
The Framework is a four-year plan for how, why and where Australian aid will be spent to 2015–16 and the results that will be achieved with that investment. It will guide growth in the aid budget to 0.45 per cent of GNI, or an estimated $7.7 billion by 2015–16.
The Framework forecasts expenditure of all government agencies involved in delivering Australian aid overseas. It has informed the 2012–13 aid budget and will inform future aid budgets to 2015–16.
Complementing this is the Transparency Charter which outlines how Australia will provide more timely and accessible information on the aid program, building on Australia’s work under the International Aid Transparency Initiative. These measures will ensure Australia helps developing country governments plan and budget more effectively, improve accountability to Australian taxpayers and maximise the results achieved.
Fourth High Level Forum on Aid Effectiveness
Australia has been an active participant in international efforts to improve development effectiveness in the lead-up to, and following, the Fourth High Level Forum on Aid Effectiveness (HLF-4) held in Busan, South Korea in November 2011. HLF-4 took stock of progress in implementing aid effectiveness principles since 2005 and identified actions to further improve the quality, transparency and effectiveness of development cooperation.
Australia welcomed the outcome document from HLF-4—the Busan Partnership for Effective Development Cooperation [external website]. In particular, Australia welcomed the agreement reached in Busan to establish a new mechanism for international dialogue on aid effectiveness, the Global Partnership for Effective Development Cooperation, which reflects the changing reality of aid and development—including the increasing importance of development finance from emerging economies such as China and Brazil. The Busan outcome builds on the Paris Declaration (2005) [external website] and the Accra Agenda for Action (2008) [external website].
HLF-4 had a strong focus on strengthening aid to fragile and conflict-affected states and included agreement on a new global direction for engagement with fragile states. The agreement, known as the New Deal for Engagement in Fragile States, clarifies the priorities in fragile states (legitimate politics, justice, security, economic foundations and revenues and services) and commits donors to support country-led transitions out of fragility. Australia played a lead role in presenting the New Deal at HLF-4 and, with Afghanistan, is co-chairing the International Dialogue on Peacebuilding and Statebuilding Working Group to Implement the New Deal.
Other key issues for Australia at Busan included transparency, results, gender equality and women’s empowerment, education, and strengthening partnerships with other donors, partner governments, multilaterals and civil society.
Australia has already met, or is on track to meet, key Busan commitments by the specified deadlines. Australia will be an active participant in the new global partnership and will continue to work with all development partners to improve the quality, transparency and effectiveness of our aid.
Office of Development Effectiveness
Office of Development Effectiveness website [external website]
Established in 2006, the Office of Development Effectiveness (ODE) at AusAID builds stronger evidence for more effective aid.
ODE draws its evidence from in-depth evaluations and reviews of Australian aid, analysis of AusAID performance systems, and collaborations with leading international think tanks and research organisations to influence and advise the Australian aid program.
Recent years have seen an increasingly active international debate about the need for evaluation of aid programs, as well as advances in evaluation methodologies. With growing community interest in aid effectiveness, aid agencies are increasingly seeking credible evaluations of the long term impact of aid initiatives, using rigorous social science methods. ODE ensures that Australia uses the best in evaluation methodology and development thinking.
ODE manages a program of flagship evaluations, usually led by senior, internationally recognised figures. ODE's evaluation program is based on the following criteria:
- relevance to policy or budget priorities
- whole of government interest
- cross program relevance
- trialling of new evaluation methodologies.
In its new aid policy statement responding to the Independent Review of Aid Effectiveness, the Government agreed to establish an Independent Evaluation Committee that will work with ODE to oversee a small number of high quality independent evaluations and an annual synthesis and quality assurance report. ODE is preparing terms of reference for the committee, which will be in place in July 2012.
ODE analyses and reports on performance information generated through the aid program's quality and program management systems. ODE works closely with AusAID's Program Effectiveness and Performance Division to improve systems for performance management and reporting of the aid program.
Annual Review of Development Effectiveness
ODE has published three Annual Reviews of Development Effectiveness [external website] since 2008, which draw on evaluation findings and analysis of data from AusAID's reporting and performance management systems. The annual review contributes to the transparency and accountability of the Australian aid program and provides a link between increasing budget allocations and increased aid effectiveness.
The 2011 Independent Review of Aid Effectiveness recommended the Annual Review of Development Effectiveness be discontinued. The Government will instead publish an annual synthesis and quality assurance report, which will be overseen by the Independent Evaluation Committee.
ODE collaborates with international leaders in analysis of aid effectiveness and impact to bring international experience and learning to the Australian aid program. ODE’s partners include the International Institute for Impact Evaluation (3IE) [external website], the Brookings Institution [external website], the Centre for Aid and Public Expenditure (ODI-CAPE) [external website] and the Independent Evaluation Group’s Regional Centres for Learning on Evaluation and Results (IEG-CLEAR) [external website].
Managing for better performance in the aid program
In each country where the Australian Government delivers aid, there is a strategy to set out the plan for aid over the next three to ten years. The country strategy identifies where Australia can make the most difference in contributing to the country's development outcomes. It defines what priority sectors Australia's aid will be targeted to, why those priority sectors have been chosen, and how aid objectives will be achieved.
Country strategies are key documents supporting Australia's aid effectiveness. They provide a framework to guide policy dialogue, aid activities, partnerships and other elements that directly contribute to achieving development objectives. They are also the basis for assessing the effectiveness of Australian aid, by setting out what Australian aid is intended to achieve (its objectives), and how progress towards those objectives will be measured and managed.
Country strategies are shaped by the key principles of aid effectiveness. They are aligned to the priorities and needs of the partner country, harmonised with the activities of other donors in the country, and encourage mutual accountability between governments. They promote a focus on managing for results.
Country strategies are complemented by regional strategies (for example, strategies for the Pacific or Asia or Africa). The regional strategy defines the Australian Government’s approach where regional-level interventions are necessary to achieve shared development outcomes for multiple countries in a particular region.
Performance Management and Evaluation Policy
The Australian aid program is committed to strengthening its performance orientation to improve development effectiveness and account for results. The Performance Management and Evaluation Policy sets out expectations for measuring the performance of Australian aid, including a number of principles that apply to all types of reporting.
The policy sets out the minimum expectations for measuring performance at the agency, program and initiative (or project) level. The policy describes several review processes, including the Annual Review of Aid Effectiveness on results, program health checks, annual performance reporting, annual Quality at Implementation reviews, and independent evaluations. The policy reflects the Government’s new aid policy An Effective Aid Program for Australia: Making a real difference—Delivering real results and recommendations from the Independent Review of Aid Effectiveness (external website).
Performance policy and systems guidance documents
Annual performance reporting
A major part of performance assessment is annual performance reporting. It describes the performance of programs over the year, and rates progress against strategy objectives. The information is then used to make decisions about future program planning and budgeting.
Guidelines on quality reporting and evaluations are linked to the Performance Management and Evaluation Policy.
Performance policy and systems guidance documents
Annual Quality at Implementation reviews
AusAID’s Quality at Implementation process provides for ongoing measurement of the quality of initiatives to support managing for results and reporting on the effectiveness of the aid program. The system helps to ensure reliable, valid and robust information is available to assist ongoing improvements of program management, and to meet external accountability requirements such as AusAID’s Annual Report, the evaluations produced by the Office of Development Effectiveness (ODE) and the Annual Review of Aid Effectiveness.
Annual Quality at Implementation reviews (QAIs) are mandatory for all monitored aid initiatives. A monitored aid initiative is where the expected Australian Government funding over the life of the initiative is greater than $3 million, or where the value is less than $3 million but the activity has strategic importance. QAIs provide assessment and ratings on the quality of the initiative against internationally recognised characteristics of good aid practice, and are a major source of information for annual program performance reports.
Reports are subject to peer contestability of findings. The Office of Development Effectiveness (ODE), established to monitor and evaluate the impact of the Australian aid program, independently checks the robustness of AusAID’s internal quality reporting system.
An initiative’s quality at completion process is assessed through a Final QAI, which focuses on overall results, evaluation and learning from the initiative. Good quality monitoring and evaluation underpins an effective quality review system. AusAID staff, contractors, non-government organisations and partners develop monitoring and evaluation arrangements for each initiative.
Annual Review of Aid Effectiveness
The 2011-12 Annual Review of Aid Effectiveness, released by the Minister for Foreign Affairs in January 2013, delivers on the Government’s commitment to report on the performance of the Australian aid program against the Comprehensive Aid Policy Framework. This first review demonstrates strong results achieved against each of Australia’s five strategic goals in the 2011–12 financial year, with nearly 60 Government agencies contributing to the delivery of Australia’s aid program.
Initiative level evaluations
Evaluations are an important part of accountability, learning and managing for aid effectiveness. Evaluation both feeds into the other parts of the performance system and provides evidence against which to balance self-assessments. Independent evaluations consider elements such as relevance, effectiveness, efficiency, impact, monitoring and evaluation, sustainability, and gender equality.
All monitored aid initiatives are required to conduct an independent evaluation to complement the annual quality review system.