The goals of foreign aid: to reduce poverty or feed the 'fads'

By David Donaldson

January 19, 2015

There’s a long-standing debate in the world of foreign aid and development about the importance of goal-setting in effective delivery. As budgets dry up, it’s only likely to intensify.

According to Australia’s current development policy:

“The purpose of the aid program is to promote Australia’s national interests by contributing to sustainable economic growth and poverty reduction.”

But for some, the inclusion of the national interest distracts from what should be the primary goal of reducing poverty. There’s a feeling among some in the Department of Foreign Affairs and Trade that competing priorities see aid bureaucrats sifting through ministerial announcements to discern which goals should be prioritised, undermining longer-term planning.

Advocates of a single, overarching goal claim it allows for a clear understanding of the program’s mission. The United Kingdom’s Department for International Development, which labours under the singular ambition of ending extreme poverty — apparently quite effectively — is cited by some as a model to follow.

Paul Simons’ 1997 report into Australia’s aid program — One Clear Objective — reviewed the then-tripartite system of advancing humanitarian, foreign policy and commercial interests through AusAID. Foreign minister Alexander Downer rejected Simons’ recommendation to make reducing poverty the only goal. Downer opted instead to eliminate the commercial objective, leaving the current program with the humanitarian and national interest objectives.

The Simons report argued:

“The intrusion of short-term commercial and foreign policy imperatives has hampered AusAID’s capability to be an effective development agency.

“It would be naive to suggest that foreign policy will not play a role in determining which countries receive Australian aid. However, when deciding the most appropriate aid activities for particular countries, the single guiding principle must be the pursuit of poverty reduction through sustainable development.”

Flinders University professor Dean Forbes is sceptical of the role the national interest plays in development, telling The Mandarin “an aid program should primarily target poverty and the factors that limit the ability of people to grow out of poverty”.

Dr Peter McCawley of the Australian National University’s College of Asia and the Pacific argues that perceptions of the national interest will necessarily play a role in development regardless of whether it’s a specifically stated goal. “Aid programs are a mixture of idealism and self interest of the country giving,” he said. “This fluctuates in a very confusing way.

“Aid programs are sold as humanitarian generally, but our political masters are highly focused on what’s in it for Australia. I cannot think of any other government program where the gap between the rhetoric and the reality of self interest is as wide.”

Part of the problem is the contestable nature of the whole concept of foreign aid. Defence and Treasury, for example, have obvious goals, but aid less so.

There’s a whole group of people who don’t like talking about the national interest in aid, thinks McCawley, but the lack of a strong domestic constituency for aid means policy decisions must be explained in terms of the national interest to justify such spending to a sceptical public.

Besides, he says, adopting the singular goal of ending extreme poverty, like the British have, “doesn’t necessarily get you very far”. Across the aid world, there are ongoing debates about how this should be achieved. While some believe strong growth is the best method, others say poverty should be attacked directly. Would the money best be spent on education? Health? Infrastructure? Democratisation?

“Others say it’s a myth that you can set a goal like that anyway,” McCawley told The Mandarin. “[Prime Minister Tony] Abbott can come along whenever and say we want another $5 million for Iraq.” Similarly, he says, there might be a typhoon in the Philippines; suddenly funds have to be taken from somewhere else. As a result, aid staffers have to be good at juggling competing priorities and rearranging budgets, identifying ‘hard’ and ‘soft’ parts of the budget. “You know something will happen at some point in the year,” he said.

Aid spending ‘not selective enough’

The director of the ANU’s Development Policy Centre, Professor Stephen Howes, thinks it would make “some difference” to implement the single goal of eliminating poverty, but thinks it’s “probably not realistic” to think we’ll follow the UK. He argues Australia’s position nestled within Asia and the Pacific means that, unlike the UK, “our neighbours are developing countries and we’re always going to be giving them aid. It is in our interests to help them if they get into trouble.”

The issue for Howes isn’t so much the high-level objective, but goal-setting throughout the program. Because there are countless countries and sectors that could conceivably receive aid funding, development agencies end up with huge amounts of discretion in where to spend their money.

“The effect of these goals is really not to give a lot of direction,” Howes told The Mandarin. “Even if you think about education — should we focus on primary or secondary education? Then there are different groups lobbying for particular causes. That’s why aid agencies are so fad-driven.”

These “fads” aren’t necessarily bad, he says, though they may be contested — ideas currently holding sway include promoting broader economic growth, small and medium enterprises, farming co-operatives and the empowerment of women — but changing policy direction semi-regularly “means you can’t build up expertise in a particular area, because you tend to chop and change too much. It’s very difficult being an aid agency.”

Howes argues the aid program is “undermined by not being selective enough” — a sentiment echoed by the associate director of the Development Policy Centre Robin Davies. Davies thinks it’s partly a matter of choosing certain sectors and doing them well, but also about avoiding a proliferation of small or short-term activities.

Setting clear objectives is most important with respect to specific countries or aid channels, rather than with respect to the aid program as a whole, he says. At the same time, however, it’s important those goals align with those of the host country, and support or reinforce processes that have a life of their own.

“Most of the money’s already committed, because projects typically last three to four years.”

When it comes to multilateral organisations, while Australia should do its share across the whole system, it’s best to focus on a few multilaterals and get to know them really well so we can have an effective impact.

On the other hand, a change in the overarching policy framework often sees little change, as political slogans about aid tend to be vague when it comes to implementation. The current government’s aim of spending 20% of the aid budget on “aid for trade” is being interpreted so broadly that it’s likely few resources will need to be reallocated. As Davies wrote last year: “The new aid paradigm is the old one with some new twists.”

Likewise, the tighter focus on the Asia-Pacific won’t see a significant alteration in the distribution of funds — most money was spent in the region already — though the relatively small amount spent on sub-Saharan Africa fell by about 60% between 2012-13 and 2013-14.

The aid experts contacted by The Mandarin generally agreed the most significant problem facing the development sector in the near future was the Abbott government’s massive cuts — $3.7 billion announced in December on top of $7.6 billion in May — that will see Australia’s aid contribution fall to 0.22% of national income.

“That’s 20% of your activities in a single year,” Howes said.

“That’s enormous. Aid projects don’t just go for a year. Most of the money’s already committed, because projects typically last three to four years. So finding uncommitted money is very hard.”

The cuts come as the department is starting to stabilise following the loss of huge numbers of staff under the merger of AusAID with DFAT and is, according to Howes, “showing signs it could work”.

Nonetheless, Howes thinks the slashing of the aid budget will probably mean another round of redundancies, along with people being moved off aid programs into other areas of DFAT.

As a result, the near future at the aid program will probably be “very difficult and bleak”, he says.

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