Australian aid: in the national interest

Trevor Flugge, the wheat farmer from Western Australia who recently appeared on the front of a national newspaper smiling, shirtless, sweating and aiming a handgun at the camera, may not be the first person you would associate with Australian aid. Mr Flugge was the face of the Australian aid program in Iraq from April 28, 2003 where he received a seemingly open ended AusAID contract to the value of $679,345.70 (Australian Government Contract number 1109570).

Representing Australian taxpayers, Mr Flugge’s position with AusAID was to provide high-level advice on agriculture reforms and food security issues to the Iraqi Ministry of Agriculture. A former director of the Australian Wheat Board, and later the privatised AWB, Trevor Flugge had considerable experience as a grain trader but the appointment was criticised due to his lack of specialist expertise in the provision of agricultural development.

The criticism related to the Australian Government putting the interests of Australian business, in this case wheat farmers, before the development needs of the people of Iraq. If Mr Flugge’s job was to ensure the growth of Australian wheat exports to Iraq, then his mission was certainly successful. In 2002, prior to the appointment of Mr Flugge, Australia exported 1.03 million tonnes of wheat to Iraq. By 2005 this figure had grown by over 50 per cent to 1.55 million tonnes, ensuring Iraq remained one of the Australian wheat industries most crucial export destinations.

While the interests of Australian wheat farmers were well served, it seems the people of Iraq have not fared so well. In August 2005 the World Food Program found, “In total, approximately 25 per cent of the Iraqi population is highly dependent on the Public Distribution System (PDS). Some 2.6 million people (11 per cent of the population) are extremely poor and vulnerable to food insecurity. An additional 3.6 million people are highly likely to become food insecure if they are not provided with the PDS rations”.

The ethics of using the aid program for such narrow domestic interests appears difficult to reconcile. The current objective of the aid program “to advance Australia’s national interest through the alleviation of poverty and the promotion of sustainable development” appears to have fallen victim to the very narrow defining of the “national interest” term which is being translated into practice as “commercial interest” and “strategic interest”. And raises the question: are projects that do not have some commercial or strategic advantage to Australia, not to be funded regardless of the positive impact that they may induce?

From altruism to governance

Education, health and infrastructure are the traditional staples of aid delivery, yet in the Australian aid program over the past five years a revolution has unfurled. No longer are these the mainstays of Australian aid, instead “good governance” is the new aid mantra and as a concept it looms as ubiquitous as the cane toad.

When the Howard Government was elected and the current Foreign Minister, Alexander Downer, installed, the figure set aside for “governance” programs in first aid budget was $68 million. By the 2001 budget this figure had leapt to $295 million or 17 per cent of the total aid program, eclipsing the amount spent on health, infrastructure and rural development, but still exceeded by the funding dedicated to basic education.

In the latest aid budget papers the trend towards spending on governance leapt again and is estimated to surpass $1.1 billion this financial year. Funding to the combined sectors of education (14 per cent) health (12 per cent) and infrastructure (7 per cent) is now less than the total that is dedicated to governance programs (36 per cent).

Australian good governance?

Although there appears no clear definition from AusAID or the government about what “governance” specifically is beyond “an essential foundation of the aid program”, generally it is used as a catchall that has hoovered up funding to other less trendy parts of the aid program. For instance, funding that once went to educating police or bureaucrats now is considered “governance” money. Thus the massive increase to this sector perhaps tells more about the whims of aid policy than it reflects the practice. One area though that has benefited enormously from the focus on governance has been the funding to “Other Government Departments” (OGD) through the aid program. Funding to the departments of the Attorney General, Defence, Treasury and Immigration for instance, labelled as OGD, has risen from $151 million in 2000 to over $563 million this financial year.

Much of this money has gone to the aforementioned departments for the regional Assistance Mission to the Solomon Islands (RAMSI) and the failed PNG Enhanced Co-operation Program (ECP). It is certainly difficult to argue with programs that are aimed at improving financial management, strengthening law and justice, developing civil society and strengthening political systems.

Yet the ECP, imposed by Australia on PNG (the threat of cutting Australian aid dollars if the program was not implemented), was found by the PNG courts to be unconstitutional. This put Australia in the tricky position of imposing a Good Governance Program that was found to be acting outside the constitution of a sovereign country - some might say an exercise in “bad governance”.

Whilst the RAMSI project in the Solomon’s has been successful in bringing peace in the short term, the longer term sustainability of that peace and the path to a resolution to the more intractable problem of ethnic tensions, appears some way off. It is therefore questionable if Australian bureaucrats from treasury, the federal police or the legal fraternity are best placed to deal with the complex nature of aid delivery. Development is a field that requires a significant quantity of skills and tools that may not be present in the armoury of an official trained and equipped to deal with the day-to-day dealings of an Australian government department.

Keen aid-watchers will be aware of the Aid white paper process that is currently under way. Foreign Minister Downer has handpicked a team of people to undertake a review of the Australian aid program that is due to be handed down in March 2006. Interestingly the team picked by the foreign minister includes several major recipients of aid contracts. It would seem that drastically changing the aid program may not be in the interests of those who already attract a fair percentage from it. Additionally the public consultation process included just four public meetings in the major capital cities with no public submission process. In comparison, the recent Defence White Paper held 28 public meetings and took over 1,157 public submissions.

When questioned at one of the recent public meetings about the issue of “national interest” subverting the altruistic goals of the aid program, the government representative MHR Bruce Billson, stated he didn’t know why the “national interest” clause was not removed as it has been in the UK and the majority of European aid programs. Unfortunately this clause will not be considered for review in the White Paper process as it was deemed to be outside the terms of reference. No mention of any of the substantive issues raised at the public forum were included in any of the White Paper prepatory material released to form the nucleus of the paper. Apparently no meaningful public consultation, failure to address important issues and conflicts of interest are not considered to be good governance requirements.

Raising further concerns about Australia’s appropriateness to deliver “good governance” programs was a recent report from the OECD that found the Australian Government did not condemn the payment of monies by an Australian company to expedite an outcome that it desired and further that these payments were still legally able to be written off as tax deductions. The Australian Attorney General denied these problems were a poor reflection on Australia and its laws played down the seriousness of these matters.

Unpicking the good governance agenda

Putting aside Australia’s suitability to impose good governance on its aid recipients, there are other concerns about the type of good governance programs that Australia is promoting. A key concern that exists in recipient countries is the type of economic restructuring that Australia promotes. “Australian aid assists developing countries to undertake structural reforms to encourage the private sector to flourish” is typical of the Australian development dogma. While again it is difficult to argue with the wealth that has been created in Australia with the flourishing of the private sector, questions remain as to the suitability of the economic structuring being pressed for by Australia and the suitability of cultures, societies, social structures and local infrastructure to accommodate these drastic changes.

One key area Australia has controversially pushed for both bilaterally and through the World Bank has been the registration of customary land. A 2004 report from the Department of Foreign Affairs and Trade on the Solomon Islands clearly stated that traditional lands needed to be registered for that country to prosper. While land titling in Australia is crucial to the fabric of our lifestyles, in the Solomons, PNG and many other aid recipient countries customary land ownership is indicative of a very different social and cultural legacy.

The communal, village or tribe system of living is embodied by the traditional and often complex system of land ownership. Often land will be used and therefore owned by several different people, families and or groups for different purposes. Unpicking this complex web is tricky to say the least. In 2000 in PNG a protest about the World Bank's planned land registration project in that country ended in the deaths of four people. In a country like the Solomons or PNG where there has been ongoing problems with the government’s ability to provide services and many cases of corruption, even the possibility of a secure central registry to collate and oversee the titles for such a scheme is likely to face many problems.

Another interesting example of good governance - the Australian way - is the push to downsize the public sector in places like PNG. Foreign Minister Downer, when in PNG in 2003, encouraged PNG to downsize its defence force to less than 2,000 personnel or risk losing $20 million in Australian aid. For a country of over five million people this represents just 0.04 per cent of the population in the armed forces.

In comparison Australia has more than six times that number at a per capita rate of 0.26 per cent of the entire population in the army, navy and air force. It is difficult to surmise how PNG, bordering the troubled region of West Papua, could be forced to downsize, or “right-size” as the Australians now like to call it, any further.

Good governance to whom?

Australia’s suitability to push the good governance agenda is somewhat dubious - even before we know the outcome of the AWB Inquiry. Our record in aid delivery is drastically weighted in delivering to our own domestic commercial advantage and more recently, political advantage for its government. The focus on strengthening governance can be beneficial but it needs to be focused on assisting those who are most in need - and they are not the ones currently benefiting.

The lens of “national interest” through which the Australian aid program is delivered will always ensure Aussie aid kowtows to the slavish interests of business and politics. If Australia truly wants to promote human security and not just its own security, we need to do away with the “national interest” blinkers and deliver aid that goes to poor people. Good governance will be essential but it may just be that a more appropriate format will not be what Australia deems to be good governance but a mixture of traditional governance with a clear focus on ensuring the integrity of the people that it impacts upon.