Aid effectiveness

What is effective aid?

Australia is committed to having an aid program that is world leading in its effectiveness. The international drive on 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.

Australia has welcomed the outcome document from the Fourth High Level Forum on Aid Effectiveness in Busan (November 2011)—the Busan Partnership for Effective Development Cooperation. 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) and the Accra Agenda for Action (2008).

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.

The forthcoming Office of Development Effectiveness report The Quality of Australian Aid – an international perspective, drawing 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 new 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 on 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 under one coherent plan. The first plan will be published in 2012 and will outline the results Australia aims to achieve, driving a sharper focus on results across the entire program.

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.

Office of Development Effectiveness

Office of Development Effectiveness 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.

Strategic evaluations

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.

Performance Assessment

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 since 2008, [external website] 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. Going forward the Government will instead publish an annual synthesis and quality assurance report instead, which will be overseen by the Independent Evaluation Committee.

International Partnerships

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), the Brookings Institution, the Centre for Aid and Public Expenditure (ODI-CAPE) and the Independent Evaluation Group’s Regional Centres for Learning on Evaluation and Results (IEG-CLEAR).

Managing for better performance in the aid program

Country strategies

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 [PDF 106kb] 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 strategy or program level and at initiative level. There are three types of reporting processes: annual performance reporting, the quality reporting system, and evaluations. The policy is currently being updated to reflect 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.

Annual performance reporting

A major part of performance assessment is annual performance reporting. It describes the performance of country, selected thematic or global programs over the year, and rates progress against strategy objectives. The information is then used to make decisions about future program planning and budgeting.

Annual performance reporting includes reporting against country and regional strategies and selected thematic areas.
Guidelines on quality reporting, independent completion reports and evaluations are linked to the Performance Management and Evaluation Policy [PDF 106kb]

Performance policy and systems guidance documents

The Quality Reporting System

AusAID’s Quality Reporting System (QRS) 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 through AusAID’s Annual Report and the evaluations produced by the Office of Development Effectiveness (ODE).

The QRS is a major source of information for annual program reports. ODE, established to monitor and evaluate the impact of the Australian aid program, independently checks the robustness of AusAID’s internal quality reporting system. It is 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.

The QRS monitors the quality of aid initiatives at the three stages: design (or entry), implementation and completion. At each of those phases, it reports on the degree to which initiatives apply internationally recognised characteristics of good aid practice. Reports are subject to peer contestability of findings.

The Quality at Entry process comprises three steps: a concept peer review, an independent appraisal of the design, and an appraisal peer review. A Quality at Entry report, produced following the appraisal peer review, provides ratings of the quality of the design and identifies any actions needed to improve the design before proceeding to implementation.

The Quality at Implementation report is completed at least once a year, typically in preparation for the Annual Performance Report. It provides assessment and ratings on the quality of initiative implementation.

The Quality at Completion process is fulfilled through an Independent Completion Report. Good quality monitoring and evaluation underpins an effective QRS. AusAID staff, contractors, non-government organisations and partners develop monitoring and evaluation arrangements for each initiative.

Initiative level evaluations

Evaluations are an important part of learning and accountability about aid effectiveness. Evaluation both feeds into the other parts of the performance system and provides evidence against which to balance self assessments. Good evaluations consider the following elements:

relevance
effectiveness
efficiency
impact
sustainability of benefits and systems
promotion of gender equality.

All monitored aid initiatives are required to conduct regular independent evaluations to complement the QRS. The two primary types of independent evaluations are:

the Independent Progress Report, conducted at the mid-point of implementation for shorter activities, or at regular intervals during implementation of longer activities
the Independent Completion Report, conducted at the end of the activity implementation.