Development Assistance in a Time of Disruption: Labor's Approach

Senator the Hon Penny Wong is leader of the Opposition in the Senate and Shadow Minister for Foreign Affairs

May I begin by acknowledging that we are attending the 2018 Australasian Aid Conference on the lands of the Ngunnawal and Ngambri peoples and by paying our respects to their Elders past and present.

It is a pleasure to speak to you all this morning. The Australian National University and the Asia Foundation are to be congratulated for their continuing research into and contribution to international development assistance policy. You have assembled a very distinguished panel of speakers who will, I’m sure, shine a forensic light on Australia’s current performance in delivering international development assistance.

And I trust that your deliberations will also provide a set of constructive suggestions on how our performance can be improved.

As Shadow Foreign Minister, I have been laying out the framework for a Labor Foreign Policy of purpose, energy and conviction that protects and advances our national interests and projects our identity and standing in the world.

And a central element of such a foreign policy is development assistance.

Put simply, international development assistance is central to the way in which Labor will realise its foreign policy.

In refining Labor’s approach to development assistance policy, I have had the invaluable assistance of Senator Claire Moore, our Shadow Minister for International Development and the Pacific, and a team of my Labor colleagues that included Julian Hill, Madeleine King, Sharon Claydon, Lisa Singh, Tim Watts, Josh Wilson, Peter Khalil, Mike Freelander and Milton Dick.

They undertook extensive consultations, including with many of you here this morning. Their work resulted in a set of policy propositions that has provided great clarity in determining the purpose of our international development assistance and designing a more robust delivery framework.

I’ve drawn on their work in preparing this morning’s presentation, and intend to use it as the foundational material for a more thoroughly articulated approach to international development assistance delivery.

As public policy makers, we must ask ourselves: how do we maintain public support for development assistance while increasing the public’s confidence that international development assistance funding achieves its purpose?

Purpose deals with the question ‘why?’ And the ‘why’ of foreign policy is the same as the ‘why’ of all public policy: the realisation of our national interests, informed by our values – what we stand for.

I outlined Labor’s approach to interests and values in presentations I delivered at the Lowy Institute and Griffith University last July and August respectively. Briefly, our national interests are:

  • The security of the nation and its people.
  • The economic prosperity of the nation and its people
  • A stable, co-operative strategic system in our region anchored in the rule of law.
  • Constructive internationalism.

And our values – compassion, equity, inclusion, mutual respect – find expression in the ‘rule of law’ that is the basis of our democratic practice, the contract between the government and the people.

Consequently, the answer to the question “why do we invest in development assistance” is “because it is unquestionably in Australia’s interest to create a more stable and secure world, by helping reduce poverty, improve health and education and fight inequality.”

And how do we do this? By building social and human capital.

For a democratic, caring and generous nation like Australia, international development assistance has long been a central element in our foreign policy, consistent with our values and our national interests. We have a deep interest in and commitment to the maintenance of stability in our region, and to reducing poverty.

And if the generosity that is a natural consequence of our respect for our shared humanity is not sufficient motivation, we should recognise the economic and security consequences of instability and poverty. These consequences are not only borne by the individual communities and nations affected, but in an increasingly interconnected world they impact on all of us.

Failure to recognise this is profoundly short sighted. Moreover, the decision by the Abbott and Turnbull governments to walk away from international development assistance funding undermines our national interests.

So, my commitment today is that Labor will rebuild Australia’s international development assistance program and accordingly increase investment beyond current levels.

The Coalition’s attack on the development assistance budget has been tantamount to vandalism. It has not only impugned our reputation as an active and generous supporter of our neighbours in the region, but, even more significantly, it has worked actively against Australia’s foreign policy interests. Australia gives just 22 cents per $100 of our national income to development assistance. This is the lowest level since records were kept.

Labor has previously called on the Coalition to join us in a bipartisan commitment to rebuilding Australia’s aid and development programs.

We have sought this because we know the human costs of the Abbott-Turnbull Government’s $11.3 billion in cuts.

These cuts affect the lives of people who can least afford it.

We all understand that reduced international development assistance funding leads to less development, poorer health outcomes, more poverty and greater deprivation. In particular, we know that cuts to international development assistance translate into:

  • More maternal deaths;
  • Fewer vaccinated children;
  • Fewer girls in school ; and
  • A greater number of vulnerable communities experiencing disproportionate impacts of climate change.

And so with this in mind, I can say with confidence that a Shorten Labor Government will contribute more to international development assistance than the current Government. And we will ensure more of it gets to the people who it is meant to be assisting.

We will, to the fullest extent that financial circumstances allow, rebuild and grow the Australian aid program in a timely manner. Our intention is once again to reflect the generosity of the Australian community.

So I again encourage the Turnbull Government to return to a properly bipartisan approach to international development assistance. Their current budgeted levels, which will see a relative decline, are not defensible.

Poverty is the red column of the economic inequality ledger. A stream of studies continues to demonstrate that, at the national level, economic inequality has grown across the globe.

As you all would know, in its 2016 study An Economy for the 1%, Oxfam showed that the richest one per cent now own more than the rest of the world combined. In 2015, sixty-two individuals had the same wealth as 3.6 billion people. In the previous decade and a half, the bottom half of humanity gained just one percent of the total increase in global wealth, while fifty percent went to the top one percent.

International development assistance will continue to be critical if structural inequality is to be addressed effectively. Of course, development assistance alone does not fix the problem: it needs to be accommodated within the broader framework of economic management that takes in matters like trade liberalisation, sound lending and investment practices, transparency and international cooperation to address multinational tax avoidance.

At the ACFID conference in November last year, I outlined how global inequality and the poverty it generates cannot be addressed simply as a function of economic growth. In the current climate, it is even more apparent that for growth to have wide benefits, it must take into account distribution.

So global development assistance funding is needed more than ever. And the critical outcome of development assistance must continue to be poverty reduction and its elimination. But the evidence suggests that the eradication of poverty – or even its reduction – is on a concerning trajectory, moving ever further from our grasp.

The ANU’s Development Policy Centre produces excellent work on development assistance. Its surveys suggest that, while the Australian community is uncertain about the levels of development assistance funding and the results achieved, it continues to support public development assistance funding.

Given the growing demands on international development assistance funding, public support is a critical issue.

In our nearby region, demand for assistance far outstrips the capacity of development assistance donors, both government and NGO, to deliver.

The flow of Rohingya refugees to Bangladesh imposes enormous demands on a country that is struggling to meet its own development goals. Refugee flows resulting from ongoing armed conflict in Syria and Yemen continue to strain international agencies and aid donors. Many parts of Africa are in crisis as a result of civil war, consequent displacement of populations, and drought. The 65 million people who are currently displaced globally surpass the number of people displaced during WW2.

As I have said, meeting demand has been made enormously more difficult as a result of the Abbott and Turnbull governments’ deep funding cuts. But even when we do return to historical levels of international development assistance funding, the need is greater than our ability to meet the demand. It is for this reason, among others, that we see the emergence of new development assistance donors and new approaches to financing.

Of course, it is important that new donors and new approaches are sensitive to the on-the-ground needs of the recipients, and that projects are carefully calibrated to the ability of the recipients both to absorb and maintain the assistance provided. This is particularly important if the assistance is provided in the form of soft loans. Such loans must reflect the recipients’ ability to service them.

The need of our neighbours for assistance and advice on the provision of all forms of development assistance did not wane or disappear when the Australian government abandoned the development assistance priorities laid down by successive Australian governments since the 1970s.

If anything, the nature and pace of economic and social developments in our region accelerated just at the time that the Abbott and Turnbull governments pulled back. So it is unsurprising that our neighbours seek assistance from other countries and institutions.

Countries will seek support and assistance for their development priorities wherever they can, and donors will respond to such requests as they see fit.

There is a far greater unmet demand and scope for all forms of development assistance than can ever be met by any single country or institution, no matter how large.

What has become clear, however, is the need for greater efforts to coordinate the design and delivery of development assistance programs across the region, both to protect against duplication and to ensure that the programs delivered, and their associated financing packages, meet the needs of the recipients. It is important that through-life costs are factored into the total development investment cost.

Greater dovetailing of development assistance activities will certainly generate greater efficiencies at a time when funding levels are under extreme pressure.

So how will Australia’s development assistance program operate in this environment?

First of all, Labor accepts that the UN-mandated Sustainable Development Goals provide a practical guide to development assistance outcomes. They offer a framework for implementing the Grand Bargain struck by major aid organisations and donors at their meeting in Istanbul in 2016. The Grand Bargain recognised that the status quo is no longer an option. We need to find and create efficiency, which in turn demands innovation, collaboration and changed mindsets. And central to changed mindsets, is the focus on social and human capital.

As social and human capital increase, poverty reduces.

This acknowledges that both developed and developing countries have something to offer and something to learn from each other when it comes to ensuring equality and prosperity. This is the essence of social and human capital development. It is mutual, and it is dynamic.

Second, we will work to ensure that development and delivery mechanisms are streamlined.

At the ACFID conference last November, I put on the record Labor’s disagreement with the decision to terminate AUSAID and to move its functions to DFAT. That was a deeply counter-intuitive decision. I also said that the egg cannot be unscrambled, and that we shall have to do what we can to make it work.

Senator Claire Moore and Labor’s aid team has consulted widely with the international development assistance sector. The sector has identified problems, structural inadequacies, management failings, and DFAT’s growing dependence on managing contractors as its own expertise and skills have declined. As one stakeholder said, “You can’t outsource your brain yet that’s what DFAT now tries to do”.

We have listened carefully to the aid sector’s comments and ideas, and, in government, we will ask the Department to address them. This will also entail ongoing consultation with development assistance recipients. We need to ensure that DFAT is ‘fit for purpose’ in its capability and management of its international development assistance responsibilities. I’m sure DFAT’s leadership would agree.

Third, we need to recognise that the various outcomes identified by the SDGs are interlinked, and that what happens in one target area may affect other target areas in quite profound ways.

To illustrate our approach, I want to look briefly at four particular streams of development assistance – climate change, health, gender and education.

During the November 2017 COP in Bonn, Fiji and the World Bank released their Climate Vulnerability Assessment which highlighted the fact that climate change presents poverty reduction with even more formidable odds.

The Vulnerability Assessment acknowledges that Fiji is already exposed to ‘large natural risks, but that climate change is likely to amplify these risks. This threatens the objectives of Fiji’s national ‘Development Plan’. The Vulnerability Assessment predicts that by 2050, 32,400 Fijians will be pushed into poverty each year as a result of floods and tropical cyclones.

Fiji is not the only country in this position. The February 2017 OECD/World Bank report Climate and Disaster Resilience Financing found

  • Vanuatu, which receives $69.8 million in ODA from Australia, loses over $50 million, or 6.6 per cent of annual GDP, due to natural disasters.
  • Tonga suffers a 4.4 per cent loss of annual GDP, amounting to over $17 million.
  • Both Fiji and the Solomon Islands incur losses above 2.6 percent and 2.99 percent of GDP respectively as a result of natural disasters, amounting to over $150 million each year.

If our development assistance program is seeking to grow the social and human capital that lifts people out of poverty while the consequences of climate change continue to undermine that outcome, then disaster risk reduction must become a more prominent feature of our development assistance planning.

Climate change impacts every aspect of the Australian Aid Program such that we cannot be serious about tackling poverty in our region if we are not serious about tackling climate change.

In a sobering 2014 report, the World Health Organisation forecast that, worldwide, climate change will cause an additional 250,000 deaths per annum between 2030 and 2050: 38 thousand from heat exposure, 60 thousand from Malaria, 48 thousand from diarrhoea and 95 thousand from malnutrition.

The regional effects of climate change have been ignored by the Coalition. Yet they constitute an existential threat to a number of island and archipelagic states, and we need to invest in building the national resilience – their capacity to deal with both mitigation and adaptation.

What affects the Pacific affects us. If we want a stable and prosperous region, we have to confront its realities. The cynicism of Peter Dutton’s remarks “time doesn’t mean anything when you’re about to have water lapping at the door” reminds us just how far the government needs to travel if it is to understand this basic fact.

Health is an area in which Australia can make a real difference. Yet here again the Coalition has withdrawn support. Health as a development assistance investment priority sits at just over 13 per cent of Australia’s current aid program. When Labor was last in government, health accounted for 17 per cent of expenditure within a significantly larger funding pool.

However, there have been some indications from the Foreign Minister that Australia’s development assistance program is beginning to take health more seriously.

In recent weeks, we have seen the Minister accept a position on the End Malaria Council, and the long awaited Health Security Initiative for the Indo-Pacific region is developing. But, like the questionable innovationXchange, this initiative looks bureaucratic and disconnected from the research centres and delivery systems that already exist in Australia.

I’m convinced by the need for greater innovation in our international development program

I’m unconvinced that the innovationXchange model is the right one.

Leaving aside the unfortunate emphasis on celebrity and an apparent fascination with beanbags, I question whether it adds a sufficiently ambitious degree of innovation to Australia’s aid program.

There seems to be a view that innovation comprises a series of lightbulb moments, rather than recognising the merit of creative and dynamic partnerships that bring a wide range of perspectives to problem solving. Certainly the feedback from many outstanding research bodies here in Australia would suggest there is much more to offer from collaboration than we are attaining.

The innovationXchange also operates in what appears to be relative isolation, not only in its location, but in its impact on the Australian aid program.

In Government, Labor will take a much more considered approach in how innovation is integrated across our aid program.

The Australian health research community’s expertise lends itself well to the Indo-Pacific Health Security Initiative. We can but hope that, with the awarding of both the health policy research proposals and the Product Development Partnership funding programs later this year, Australia’s aid program will improve as a result of the scientific community’s engagement.

Health, along with education, is a fundamental contributor to the growth of social and human capital. Chronic but preventable ill-health is a show-stopper with respect to economic participation, and without economic participation individuals and communities are consigned to misery.

As I wrote on the ANU’s Development Policy blog late last year, poor health outcomes hinder economic development.

Investment in quality health systems not only improves individual wellbeing, but also has a positive impact on the community in the longer term – contributing to both prosperity and stability.

For example, one of the biggest challenges facing our region is child stunting due to poor and unhygienic nutrition.

60 per cent of children in Timor Leste, 44 per cent of children in PNG, 33 per cent of children in Kiribati and 26 per cent of children in Vanuatu are stunted.

Despite many countries and regions improving nutrition levels as they met the Millennium Development Goals, we have seen no substantial improvement in the Pacific since the 1990s.

The Pacific and Timor Leste have incredibly young populations. Without health interventions at an early age, the potential quality of life for individuals and the future economic development of the region will be severely diminished before many of these children have even started school.

Addressing the health needs of children in the region has strong return on investment and, importantly, intervention in children’s health reduces future cost on a recipient country’s health infrastructure.

According to Save the Children, specific nutrition interventions deliver a return on investment of $16 to $1 – double the return of ‘Aid for Trade’ investments. Yet according to the 2015 Office for Development Effectiveness report into child undernutrition, nutrition programs accounted for only 2.4 per cent of Australia’s 2012-13 ODA spend.

Within the Aid budget, we need to sharpen our focus on child health, particularly in the Pacific, where immunisation coverage remains lower than other areas of the Indo-Pacific. The low availability and use of the Hib vaccine is of real concern. In South East Asia, there is an 80 percent coverage, compared with just 28 percent in the WHO’s West Pacific Region. We can and should be doing more to engage with governments in our region, and multilateral funds such as GAVI, to improve the health outcomes of children in our region.

When I spoke at ACFID, I said that Labor would seek to build on the work that the current Government has done in bringing gender to the forefront of our aid program.

Our focus on the empowerment of women must address the structural factors that allow the discrimination that causes gender inequality. If we do not address these structural barriers, we risk finding ourselves in the scenario we had in PNG during the election, where, despite having a record number of female candidates, many of whom were supported by Australia’s aid program, no women were elected.

Achieving change takes time, and our funding cycles should reflect this.

There are also continuing health challenges facing women. Labor in government will seek to build on the current government’s efforts to achieve 80% of programing targeted at improving the equality of women and girls.

The maternal death rate in the Pacific and Timor Leste remains unacceptably high.

We know maternal death rates can be reduced through properly funded sexual health and family planning programs.

This area of programing has experienced turbulent changes as a result of the Global Gag rule – which Marie Stopes International claims has resulted in the deaths of nearly 7,000 women and girls due to avoidable maternal health complications.

We must not forget that Australia’s family planning program was cut by 40 per cent when the Coalition first came to government. Although I note last year’s pledge at an international donor summit by the Ambassador for Women and Girls for $33.5 million over four years for reproductive health services for women and girls.

Cervical cancer rates in the Pacific are among the highest in the world. Women in the Pacific Islands are dying at a rate up to nine times that of Australian women due to the fact that screening is not routinely available. In the Pacific, the incidence of cervical cancer rests between 13.3 (Timor) and 37.8 (Fiji) per 100 thousand. Sadly for these women, the diagnosis of cervical cancer often comes too late, with cervical cancer mortality rates the highest in PNG at 21.7 per 100 thousand women.

Given Australia’s leadership in HPV development and subsidised public immunisation, there is genuine hope that the virus can be eradicated. We can and should be having a bigger impact.

Besides health, education is the second pillar on which social and human capital are built. At present, Australia dedicates $675.3 million of its ODA funding to education.

This compares unfavourably with Labor’s investment in education in 2012, when 21 per cent of, again, a much bigger development assistance budget was earmarked for education. In an Overseas Development Assistance budget totalling $5.2 billion, education attracted over almost $1.1billion.

In a report published in May last year, UNESCO demonstrated that, globally, development assistance in education plateaued in 2010, and has been stagnating ever since. This is due, in part, to the reallocation of development assistance funds to refugee assistance, permissible under the aid rules, and in part to the decline in aid funding in the aftermath of the GFC.

The Coalition has continued with its precipitous decline in education funding by reducing its already low contribution to the Global Partnership for Education by a further $50 million.

But if developing countries are to develop the social and human capital necessary to lift themselves out of poverty, education must be a principal target. Together with health, education – particularly education for women and girls – will be a hallmark of a Shorten Labor Government’s approach to development assistance policy.

The Coalition’s unprecedented cuts to development assistance of the last four years have caused great harm to some of the poorest people in our region. They have both impugned our reputation internationally, and have undermined our national interests.

They have harmed our efforts to alleviate poverty, and make our region safer and more secure. They have diminished our standing in the region.

They are also, I firmly believe, at odds with the generous spirit of the Australian people.

That is why Labor considers we must, and can, do better.

I have pledged to you today that Labor, in government will rebuild Australia’s international development assistance program and increase investment beyond current levels.

But what I would much prefer is to take all of the politics out of aid, and have the Government join with us in a bipartisan commitment to rebuilding Australia’s aid and development programs.

I fervently hope we can once more commit, as we did in the 2013 election, to a shared and non-partisan goal to improve Australia’s record on development assistance for the sake of all of those who live in poverty, and especially the children whose lives are stunted by poverty, poor health or lack of education.

 

This speech was given to the 2018 Australasian Aid Conference in Canberra on 13 February 2018


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