In 2008, Australia's net ODA was USD 2.95 billion, representing a 6.2% increase in real terms over 2007. This increase reflects an overall scaling up of Australia's aid. ODA as a per cent of GNI remained stable at 0.32%.

Reform for implementing the aid effectiveness agenda

A 2009 policy statement on Australia's international development assistance recognises the importance of aid effectiveness in making genuine improvements to people's lives. In August 2009, participants of the Pacific Island Forum, chaired by Australia, endorsed the Cairns Compact on Strengthening Development Coordination in the Pacific. The compact aims to accelerate progress on the Millennium Development Goals by improving co-ordination among all development partners in the Pacific. Australia has now signed up to eight Pacific Partnerships for Development to increase mutual accountability for results and promote partner-led development. Where government systems are strong and accountability processes are in place, Australia, in collaboration with other donors, has made good progress in aligning and harmonising its programmes with partner countries' development objectives. For example, in Viet Nam in 2009 Australia channelled around 50% of its bilateral aid through programme-based approaches (using Viet Nam's own management systems). The Australian Agency for International Development is developing an Operational Policy and Management Framework for an effective and scaled-up aid programme in line with the Accra Agenda for Action (AAA).

Challenges in implementing the aid effectiveness agenda

• Working in fragile states. A large proportion of Australia's aid goes to fragile or small island states, where weak state capacity is a major obstacle to progress. Australia is developing an understanding of the strengths and limitations of partner countries striving to overcome fragility and conflict and adapting the way its aid programme is delivered as the starting point for responsive and effective aid delivery. Australia is also applying the DAC Principles for Good International Engagement in Fragile States and Situations (OECD, 2007) when developing and reviewing relevant country strategies and partnerships, reporting annual performance and designing and reviewing development programmes.