Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Hansard source

At the last election the coalition announced a policy to hold an independent review into Australia's foreign aid program with a view to improving its effectiveness, to ensuring its sustainability and to addressing a number of serious problems. We had become concerned about ongoing reports of waste, mismanagement, extravagant salaries for consultants and questionable priorities in the application of the aid budget. The use of highly paid consultants had led political leaders of other countries to raise their concerns with us and one had, in fact, dubbed it 'boomerang aid' in that the benefits were largely returned to Australia by the consultancies.

Over several years, in fact, I had asked the leaders of nations in receipt of Australian aid about their impressions of its effectiveness and its delivery. While greatly appreciative of Australian support, the vast majority also raised a number of concerns including: an over-reliance on highly paid consultants; the production of elaborate and expensive feasibility studies that did not then translate into an actual project; well-meaning although naive people working to deliver the aid; a rapid turnover of staff that prevented the building and maintenance of long-term relationships; overly bureaucratic approaches that hampered effectiveness; and the aid effort spread too thinly across too many sectors.

The Australian National Audit Office reported on the foreign aid program in November 2009 and raised concerns about the heavy reliance on technical assistance which often involved highly paid consultants to provide advice and support in recipient countries. The ANAO report found almost double the proportion of the Australian aid budget was spent on consultants compared with the OECD average. It also raised concerns about the ability of AusAID to effectively manage large increases in the aid budget. That is why it was coalition policy to hold an independent inquiry into the aid budget and that is why the coalition supported the adoption by the Minister for Foreign Affairs in late 2010 of our policy to hold a review into the aid program. The report from that review was released in July this year and the review noted problems that if they were not addressed would become more serious as:

Australia's aid operation, already under strain, comes under the increased pressure of ramping up over the next five years to achieve the target of 0.5 per cent of Gross National Income. They range from lack of a unified sense of strategic purpose across government through the need to reform the government's budget processes to the dangers of fragmentation and stretching the program too thin to the need for greater public involvement and transparency.

I do pay credit to the Minister for Foreign Affairs for taking steps to improve the program. In May 2010, the minister announced a review of technical advisers, which recommended a reduction in these positions. Further to that review, the minister also took steps to reduce the remuneration packages by imposing caps on salaries and allowances. These are important steps.

Australians are generous people and often donate large sums of money to assist those in need not only here but overseas. Millions of dollars are donated annually to various charities, including those to support disadvantaged people, medical research, communities affected by natural disaster and much more. Australians are very generous supporters of developing nations, both personally and as taxpayers through our foreign aid program. One of the key questions often asked of organisations that collect and manage funds is about the amount of money that actually gets through to those in need. Those donating money do not want an unreasonable proportion of their funds spent on administration or on things that do not deliver tangible benefits.

I have long argued that Australia's foreign aid program must be carefully targeted to ensure that it does not damage local economies and that it does not lead to dependency but rather to self-sufficiency. The aid budget should be focused on helping people in developing nations achieve long-term and sustainable self-sufficiency. That said, the challenges in many developing countries are huge and support must be ongoing if genuine change is to be achieved. Aid for Trade, for example, is not just a concept; it can be a reality. During a recent visit to Papua New Guinea, I visited a small business in Port Moresby that used a grant from the Enterprise Challenge Fund, established by the Howard government in 2007, to purchase food processing equipment from India and set up a spice and oils export business. It supports hundreds of growers and their families and the local community. This is just one example of how an innovative approach to the provision of foreign aid can support economic development that benefits people in those countries.

Providing access to capital is ultimately a job for the private sector, but our aid program can fill a gap as the business sector in a particular country matures. Other avenues outside government channels such as churches, local community groups and non-government organisations must also be leveraged. The challenge, as the foreign minister said, is not just to spend more money but to spend it effectively. In order to achieve greater effectiveness and efficiency in our aid program there is a real need for innovative thinking, creative ideas and an openness to new approaches. This can mean building on current practices by doing the same things differently, as well as initiating and implementing entirely new approaches by doing different things. Health and medical services in developing countries, as an example, can often be difficult to deliver because of poor infrastructure and support services, particularly in remote locations. The scale of providing health services in Papua New Guinea, for example, is evidenced by the fact that it is reported that only 33 dentists are located in a nation of more than six million people, a nation that is the largest recipient of Australian aid.

An example of an innovative and effective initiative in Papua New Guinea, not funded by AusAID, is the Youth with a Mission medical ship based out of Townsville. The model of a floating, self-contained vessel overcomes many of the traditional challenges of delivering services into remote areas, including issues relating to staff security and the accommodation of medical support. The ship is largely staffed by volunteers and operates with the support of private donations. It has sailed to 16 remote villages located in the gulf province and the volunteers have provided more than 15,000 instances of care and support during the past two years. This has included more than 2,000 dental treatments, over 1,500 services relating to eyesight, including cataract surgery, and more than 1,600 general medical treatments and thousands of educational and health support services. The overwhelming success of this vessel has led to plans for the current ship to be replaced with a much larger one from about 2015. A larger vessel would not only provide the capability for many more medical services but also mean it would be available for disaster relief in a region where cyclones and earthquakes have caused significant damage and loss of life in the past. It is a faith based organisation and it is seeking funding support from the federal government for the first time and the coalition is giving in-principle support to the proposal.

Another innovative approach in the delivery of educational services into Africa has been developed by Korean electronics company Samsung, which has built a prototype classroom out of a 12-metre shipping container. It is equipped with laptops, an electronic whiteboard, video cameras and other electronic teaching aids. Importantly, the self-contained classroom operates 100 per cent on solar power and can be delivered on the back of a truck to remote locations far from any electricity grid. The company has a goal of improving the lives of five million people in Africa by 2015.

These are just some of the hundreds of examples from around the world of organisations and individuals taking an innovative approach to the challenge of development assistance. With the ever-changing nature of the world, underpinned by technological and other developments, those who manage the delivery of Australia's aid program must remain alert to opportunities to embrace greater innovation, new ways of thinking and new approaches.

The independent review commissioned by the government produced a commendable report that included 39 recommendations for reform. I note from the foreign minister's speech that the government is progressing 38 recommendations. This is a pointed omission and of great concern. The government's response to the review seems to ignore, arguably, the most important recommendation, the 39th, which states 'the scale up of the aid program to 0.5 per cent of GNI should be subject to the progressive achievement of predetermined hurdles'. Yet the minister appears to have ignored that recommendation in his speech today. More specifically, the independent review warned that forecast increases in the aid budget are 'steep and challenging' and that strict annual performance benchmarks must be passed before AusAID receives funding increases. The report said:

It is sensible to recognise that the upward trajectory to 0.5 per cent of GNI is steep and challenging. It makes sense that budget appropriations each year be contingent on things going to plan and existing monies being spent effectively … failure to achieve a hurdle, or to fully achieve it, must have consequences. For example, the government could reduce the rate of increase or withhold all or part of the funding unless and until the hurdle is achieved.

At the time of the release of the report earlier this year I called on the foreign minister to detail the nature of the performance benchmarks that AusAID will be required to meet, how it will be measured against those benchmarks and the consequences of failure to meet its performance targets.

The ongoing failure of the minister, with the greatest respect, to respond to this clear recommendation raises questions about the government's commitment to ensuring the highest possible standards for our foreign aid program. I again request that the minister make a formal response to this recommendation, No. 39, and establish performance benchmarks for AusAID. The forecast increases in the aid budget can only be sustained if the public are convinced their funds are being used effectively, and the imposition of performance benchmarks is the most appropriate means of achieving higher levels of accountability and public consensus, according to the independent review.

My concern is that critics of the foreign aid program will use this failure as evidence of acquiescence to the problems, including endemic waste and mismanagement within the program. I note that the recommendation requiring that the major focus of the foreign aid budget remain on areas of Australia's national interest, primarily in our region, is consistent with longstanding coalition policy. Again, this raises an issue of concern about the aid program in that the government has directed a greater proportion of the funding away from our region. The coalition is concerned that the aid budget is being distorted to support the minister's personal campaign for a seat on the UN Security Council.

While there is great need in Africa and Central and South America, for there is assuredly poverty, the coalition believes that expanding into these regions at such a rapid rate risks spreading our effort too thinly. There are huge challenges in the Pacific and in Asia, where billions of people live in poverty. Many Pacific nations rank poorly on the United Nations human development index, and certainly lower than the vast majority of nations in Central and South America.

The World Bank reports that in 2009 total foreign aid flows into various regions on a per capita basis were: US$53.50, Sub-Saharan Africa; US$41.70, Middle East and North Africa; US$20.10, Europe and Central Asia; US$15.80, Latin America and Caribbean; US$9.40, South Asia; but—note this—US$5.30, East Asia and the Pacific—our region, our sphere of responsibility, the area where we can make the biggest difference. Nations with a historic responsibility for various regions are providing significant resources. It is clear that Asia and the Pacific need the clear attention of nations, including Australia, given the significantly lower flows of foreign aid per person.

I pay credit to the foreign minister for taking concerns about the aid program seriously and for taking steps to reduce waste, and for adopting coalition policy by instituting the Independent Review of Aid Effectiveness. However, I urge him to adopt all the recommendations of that review so that public confidence in the large aid program can be maintained. (Time expired)

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