Chapter 2. Policy vision and framework


Peer review indicator: Clear policy vision aligned with the 2030 Agenda based on member’s strengths

Australia overhauled its development policy framework following the integration of AusAID into DFAT. National interests and economic diplomacy are highly visible in the new strategic framework. New policy priorities and geographic concentration have largely been achieved through a set of performance benchmarks. Australia is still in the process of setting out its alignment with the 2030 Agenda.

Australia’s new strategic framework brings into sharper view the alignment of aid, national interests, and foreign and economic diplomacy

Significant policy changes accompanied the integration of AusAID into DFAT in 2013 (Chapter 4). A new development policy – “promoting prosperity, reducing poverty, enhancing stability” – was introduced in 2014 (DFAT, 2014a). The policy defines “the purpose of Australia’s aid programme is to promote Australia’s national interest by contributing to sustainable economic growth and poverty reduction” (DFAT 2014a). The aid policy sets out six priority areas for investment. It also provides an updated strategic framework for the aid programme (Figure 2.1). A range of new and updated sector/thematic strategies1 gives the policy framework operational application; the policy also provides a results focus through a refreshed results framework (Chapter 6).

The most significant shift is the closer alignment between Australia’s development objectives and its foreign policy and economic diplomacy objectives, and the focus on promoting Australia’s national interests more broadly. These have altered the overall theory of change and partnership approach, as discussed further below.

A new Foreign Policy White Paper (DFAT, 2017a) recognises the backdrop of the 2030 Agenda and the contribution of the aid programme in supporting partners reach the Sustainable Development Goals (SDGs). Australia, however, still has work to do to explicitly align the development co-operation policy framework with the SDGs.

Figure 2.1. Australia’s new strategic framework

Source: DFAT (2014a),

Strategic targets have driven desired policy shifts

The new development policy was accompanied by a new performance framework, Making Performance Count (DFAT, 2014b). The framework sets out ten high-level targets for ensuring the aid programme is effectively managed and delivers on key government priorities. The policy-related targets were:

  • Promoting prosperity: Promote economic development by increasing Australia’s aid for trade investments to 20% of the aid budget by 2020

  • Engaging the private sector: All new investments were to explore innovative ways to promote private sector growth or engage the private sector in achieving development outcomes

  • Reducing poverty: By July 2015, all country and regional programmes were to have Aid Investment Plans that describe how Australia’s aid would promote economic growth in ways that provide pathways out of poverty

  • Empowering women and girls: More than 80% of investments, regardless of their objectives, were to effectively address gender issues in their implementation

  • Focusing on the Indo-Pacific region: The proportion of country programme aid that is spent in the Indo-Pacific region was to be increased to at least 90% from 2014-15.

All of the strategic targets have been or will soon be met. Geographical concentration has been achieved through the withdrawal in large part from sub-Saharan Africa (Chapter 3). Other targets on poverty, gender and the private sector are discussed below. It would be useful for Australia to reflect on its experience with a limited number of strategic targets as a means of driving policy change. This reflection could consider the targets in terms of their ambition, incentives, potential trade-offs created, and overall impact on development effectiveness and results. Such a reflection would be of broader value to DAC members reviewing their own policy-making processes.

In a June 2014 speech, Minister of Foreign Affairs Julie Bishop called this overarching policy and performance framework a “new aid paradigm”.2 The framework provides clarity and coherence to the aid programme and various governance structures provide strategic vision and oversight (Chapter 4). The framework was given additional political weight with the appointment of a dedicated Minister for International Development and the Pacific in 2015. It is only the third time such a position has existed in the history of Australian aid. This is to be commended in the context of an overall weakening of bipartisan support in Australia for increasing ODA levels (Chapter 3).

Principles and guidance

Peer review indicator: Policy guidance sets out a clear and comprehensive approach, including to poverty and fragility

Australia is transitioning its approach from traditional development assistance to economic partnerships with emerging economies in Asia. It is also the largest provider to small island developing states, and targets their unique challenges. Guidance is established in a number of areas to place sustainability and equity high on the Australian aid agenda. Australia’s approach to gender equality is exemplary. Nonetheless, Australia’s commitment to poverty reduction, fragility and positive environmental outcomes would benefit from stronger policy and guidance.

Australia tailors its approach to different contexts and considers sustainability

In line with the policy vision, Australia has transitioned from traditional forms of development assistance to new economic partnerships with fast-growing countries in Asia. Engagement in these contexts is now more clearly focussed on policy advice to further enhance and sustain economic growth. At the same time, Australia was the largest bilateral donor to small island developing states (SIDS) in 2017/18, and the vast majority of this bilateral aid went to the Pacific (Chapter 3). Australia’s development partnerships in SIDS are increasingly targeting the unique challenges in building economic resilience that SIDS, as small and isolated markets, face. These challenges include generating local employment opportunities, climate change and cost-effective service delivery in remote environments (DFAT, 2014a). Specifically in the Pacific, and in line with national interests, Australia is also stepping up its security partnerships.

A strong commitment to sustainability underpins the tailored approach. Sustainability is also one of six investment design quality criteria that are regularly assessed through Aid Quality Checks (Chapter 6). The approach also underscores the commitment through policy and guidance to equity, as demonstrated through Australia’s continued leadership on issues related to gender (see below), disability3 and indigenous peoples. A guidance note also seeks to enhance the use of political economy analysis in core aid planning and processes as part of DFAT’s broader effective governance strategy (DFAT, 2016a; DFAT, 2015b).

More policy and guidance would help Australia anchor its poverty reduction objective and respond to fragility

Poverty reduction remains a high-level objective of Australian development co-operation (Figure 2.1). The theory of change in the aid policy is that economic growth – through private sector development4 – is the primary driver of poverty reduction (DFAT, 2014a). Foreign Minister Bishop, in a 2014 speech, noted, “We have aligned the goal of poverty reduction with the pursuit of regional economic growth.”5 Aid is therefore more closely linked with Australia’s economic diplomacy approach. DFAT (2017b) defines this approach as “the use of Australia’s diplomatic assets, including the aid program, to build Australia’s prosperity and global prosperity increasing trade, supporting economic growth, encouraging investment and assisting business”.

A 2015 survey found that external stakeholders familiar with the Australian aid programme perceived its poverty focus to have declined between 2013 and 2015 (Wood, Burkot and Howes, 2016). Concerns that the poverty objective would be superseded were also expressed when the aid programme was integrated into DFAT (Bruere and Hill, 2016). As Australia continues to orient its programme towards economic diplomacy, economic growth and security, it will need to anchor the poverty reduction objective within a framework that considers all of its support and how this support contributes to inclusive growth and to a clearly established interpretation of leaving no one behind. Missions would benefit from more guidance and diagnostic tools for analysing, monitoring and evaluating this commitment in the very different contexts and income levels of countries in the region.

Australia’s 2011 framework for working in fragile contexts and conflict-affected states has not been updated although global thinking has moved on since that time, notably around the multidimensional nature of fragility (OECD, 2016) and conflict prevention. The absence of an up-to-date, overarching policy leads to the risk that these issues are not being systematically addressed in all fragile contexts, and also inhibits programming that informs global advocacy on policy issues. Australian government representatives told the peer review team that they are still working on a new policy document (DFAT, 2017b). DFAT has issued useful new guidance, however, on countering violent extremism (DFAT, 2017c).

Mainstreaming practices vary in their priority and rigour

Australia continues to champion gender equality internationally, regionally and bilaterally through a dedicated strategy, performance targets, financial resources and political leadership (see Box 2.1).

Australia’s ambitions on the environment are set out in the 2014 Environment Protection Policy for the Aid Program (DFAT, 2014c). These bring the development co-operation programme into line with the government-wide Environment Protection and Biodiversity Conservation Act 1999.6 The policy establishes six principles that include “do no harm” and “promote improved environmental outcomes”. Underpinning the policy is the safeguards requirement that all aid investments be screened for their potential environmental impacts. The screening process is well established and sets levels of environmental risk and referral thresholds (DFAT, 2014c).

However, as noted in the last two peer reviews, Australia lacks an overarching commitment and strategy for mainstreaming the environment beyond a safeguards approach. This is affecting the resources and incentives directed towards a concerted approach for improving environmental outcomes. The proportion of bilateral allocable aid focused on the environment is below the DAC average and is declining (Chapter 3).

Encouragingly, a process is underway in DFAT to address some of the shortfalls in terms of priority status, guidance, expertise and resources, specifically on mainstreaming climate change. DFAT will seek to elevate climate change as a priority area and to develop an associated framework and implementation plan for mainstreaming climate in the aid programme.

Box 2.1. Australia’s comprehensive approach to gender equality and women’s empowerment

Gender equality is a genuinely cross-cutting issue for DFAT, as illustrated below:

Global: Australia consistently advocates for gender equality and women’s empowerment in international fora and multilaterally including through the UN and G20. The Ambassador for Women and Girls symbolises Australia’s leadership and advocacy.

Strategy: Australia’s 2016 gender strategy focuses on enhancing women’s voice in decision making, leadership and peacebuilding; promoting women’s economic empowerment; and ending violence against women and girls.

Whole-of-government: The priority on violence against women, for example, draws upon whole of government resources and experience. In Solomon Islands, a whole-of-post working group has been established to prioritise gender equality on all fronts.

Twin-track: Australia’s strategy is a twin-track approach that defines gender equality and women’s empowerment as a discrete strategic priority investment area in track one, and integrates gender equality effectively in all aid investments, regardless of sector or focus, in track two.

Targets: Australia’s commitment is cemented in a strategic target, as noted above. In 2015, 54% of Australia’s bilateral allocable aid had gender equality as a principal or significant objective, a much higher proportion than the DAC country average of 36.3%.

Dedicated instruments: Australia established an AUD 50 million (USD 37.6 million) Gender Equality Fund in 2015 to strengthen gender equality and women’s economic empowerment in the Indo-Pacific region. The Fund includes the innovative Investing in Women Initiative and the Pacific Women Shaping Pacific Development programme.

Mainstreaming guidance: Australia has guidance and good practice notes for integrating gender equality throughout the programme cycle. These are well signposted in the overarching Aid Programming Guide (DFAT, 2017d).

Review: The Aid Quality Check process requires a comprehensive review of progress against gender equality in individual investments. DFAT’s annual reports contain detailed and disaggregated investment performance and spending statistics related to gender equality.

Data: Australia is supporting several initiatives to improve the global and regional production and use of gender statistics.

Human resources: The DFAT gender equality branch in Canberra provides high-level oversight and technical support to teams internally. Additional support is provided and knowledge is managed through a network of gender focal points and a panel of external gender experts. Regular gender training is provided.

Institutional: DFAT’s Women in Leadership Initiative, announced in 2014, looked into why women’s career progression in the department was not equal to that of men. A strategy has been developed in response.

Sources: DFAT (2017b), “OECD DAC Peer Review of Australia’s Aid Program: Memorandum of Australia”, unpublished; DFAT (2017d), Performance of Australian Aid 2015-16,; DFAT (2017e), “Aid Programming Guide”, unpublished; DFAT (2017f), Aid Budget Summary 2017-18,; DFAT (2017g), Australian Engagement with Developing Countries,; DFAT (2016b), Gender Equality and Women’s Empowerment Strategy,; Pacific Women website,

Basis for decision making

Peer review indicator: Policy provides sufficient guidance for decisions on channels and engagements

Australia applies criteria that are aligned with its stated policies, to test investment decisions. It also is increasing the emphasis on delivering results and value for money in its choice of partners. Rigorous performance assessments are conducted of each partner and at different levels in the case of multilateral organisations. As this approach unfolds, Australia will need to review the effect on different sets of partners and their ability to meet requirements. It will also need to review the consistency of links between performance assessments and funding decisions.

Clear criteria guide Australia’s aid investments

The strategy document, “Australian Aid: promoting prosperity, reducing poverty, enhancing stability”, sets out four tests to guide Australia’s engagement and inform decision-making on specific proposals and individual investments (DFAT, 2014a).

  • Pursuing national interest and extending Australia’s influence: Is the development assistance in Australia’s longer-term strategic and economic interests, taking into account the benefits of a prosperous and secure region to Australia?

  • Impact on promoting growth and reducing poverty: Does the development assistance best tackle constraints to growth and poverty reduction, taking into account the poverty situation and other sources of development finance such as domestic resources?

  • Australia’s value-add and leverage: Does the development assistance leverage existing efforts and complement, not displace, partner countries’ responsibilities?

  • Making performance count: Is the development assistance likely to achieve value for money and perform in line with Making Performance Count (DFAT, 2014b).

A balanced assessment against these four tests is meant to guide aid allocations as part of the annual aid budget process, and at the country and regional programme level through the Aid Investment Plan process. This reflects DFAT’s effort to become more selective in what it does and with whom it works.

Australia’s partnership approach is evolving, aiming for closer links between performance and funding

In announcing the government’s new aid policy in 2014, the Foreign Minister said that Australia is “agnostic about how aid is delivered, other than to ensure it is effective and efficient” and that “we partner with the most effective organisations that have the capability to achieve the best possible results”.7 At the same time, one of the strategic targets calls for all investments to explore private sector engagement opportunities.

The department’s eight value for money principles provide a framework for identifying partners who offer the most effective, efficient and innovative option to achieve development objectives in a particular context (Chapter 4). Partner Performance Assessments (PPAs) and Multilateral Performance Assessments (MPAs)8 are used to regularly review key implementing partners against standard criteria. PPAs are mandatory for commercial suppliers, NGOs and multilateral organisations with agreements valued at AUD 3 million or more. MPAs are meant to enable DFAT to assess, monitor and report on the performance of multilateral organisations.

Australia also has specific strategies for different groups of partners, as discussed in Chapter 5. For instance, Australia’s engagement with and support to civil society is based on recognition of civil society’s varied roles and comparative advantages.9 Australia’s unearmarked funding to civil society is good practice. Australia engages with the private sector on the basis of core principles and around the concept of creating shared value through partnership (DFAT, 2015d).

Australia is a strategic partner to the multilateral system, providing core, long-term and predictable funding (Chapter 3). It engages successfully to increase the reach and scale of Australia’s development assistance and to leverage additional finance and expertise from the multilateral system, not least in Australia’s region of focus and on its thematic priorities. Australia continues to work collectively and collaboratively with others to improve multilateral effectiveness though membership of the Multilateral Organisation Performance Assessment Network (MOPAN).

Currently, the multilateral system receives more than 40% of ODA under Australia’s partnership approach; private contractors receive approximately 20% (Chapter 4). Government-to-government aid is down to 3.5% compared to 8.2% in 2013, although the Australian government vows to work closely with partner governments in each context (Chapter 5). Funding to NGOs has declined in parallel to budget cuts (Chapter 3).

As is the case for other DAC members, Australia will need to continue to provide clarity to its partners as to how and why decisions are made. This involves striking a balance between the high standards it keeps for screening partners, on the one hand, and the potential contribution of a partner, on the other hand. Australia also will need to continue reviewing whether the process for performance assessment, including for multilaterals at both the institutional and investment levels, is proportionate and is adding value for decision making relative to other sources of performance information.


Government sources

DFAT (2017a), Foreign Policy White Paper, Department of Foreign Affairs and Trade, Canberra,

DFAT (2017b), “OECD DAC Peer Review of Australia’s Aid Program: Memorandum of Australia”, unpublished memorandum, DFAT, Canberra (unpublished).

DFAT (2017c), “Development approaches to countering violent extremism”, DFAT, Canberra,

DFAT (2017d), Performance of Australian Aid 2015-16, DFAT, Canberra,;

DFAT (2017e), “Aid programming guide”, DFAT, Canberra, (unpublished).

DFAT (2017f), Australian Aid Budget Summary 2017-18, DFAT, Canberra,

DFAT (2017g), Australian Engagement with Developing Countries, DFAT, Canberra

DFAT (2017h),Multilateral performance assessment – Good practice note”, Canberra, (unpublished).

DFAT (2016a), “Political economy guidance note”, DFAT, Canberra (unpublished).

DFAT (2016b), Gender Equality and Women’s Empowerment Strategy, DFAT, Canberra,

DFAT (2015a), Development for All 2015-2020: Strategy for Strengthening Disability-inclusive Development in Australia’s Aid Program, DFAT, Canberra,

DFAT (2015b), Effective Governance: Strategy for Australia’s Aid Investments, DFAT, Canberra,

DFAT (2015c), Strategy for Australia’s Aid Investments in Private Sector Development, DFAT, Canberra,

DFAT (2015d), “Creating shared value through partnerships: Ministerial statement on engaging the private sector in aid and development”, DFAT, Canberra .

DFAT (2015e), DFAT and NGOs: Effective Development Partners, DFAT, Canberra,

DFAT (2014a), “Australian Aid: promoting prosperity, reducing poverty, enhancing stability”, DFAT, Canberra,

DFAT (2014b) Making Performance Count: Enhancing the Accountability and Effectiveness of Australian, DFAT, Canberra,

DFAT (2014c), Environment Protection Policy for the Aid Program, DFAT, Canberra,

Other sources

Bruere, W. and C. Hill (2016), “Changes to Australia’s overseas aid program under the Abbott and Turnbull governments 2013-16: key policies and responses”, Parliamentary Library Research Paper, Parliament of Australia, Canberra,;fileType=application/pdf.

OECD (2016), States of Fragility 2016: Understanding Violence, OECD Publishing, Paris,

Wood, T., C. Burkot and S. Howes (2016), Australian Aid: Signs of Risk, the 2015 Australian Aid Stakeholder Survey, Development Policy Centre, Australian National University, Canberra,


← 1. In 2015-16, new strategies were released for gender equality and women’s empowerment, economic infrastructure, aid for trade, private sector development, education, humanitarian assistance, social protection, and the Australia Awards programme. Strategies are now in place to guide Australian aid investments for all priority investment areas.

← 2. The prepared speech is available at

← 3. The objective of Australia’s work on disability-inclusive development, as set out in Development for All 2015-2020, is to improve the quality of life of people with disabilities in developing countries. This is to be achieved through enhancing participation and empowerment of people with disabilities as contributors, leaders and decision makers in communities, government and the private sector; reducing poverty among people with disabilities; and improving equality for people with disabilities in all areas of public life including service provision, education and employment.

← 4. The DFAT private sector development strategy sets out a logic model. See .

← 5. The prepared speech is available at

← 6. For details on the Act, see

← 7. The prepared speech is available at

← 8. MPAs were introduced in 2015 to place greater emphasis on the link between performance and funding. MPAs focus on six categories that reflect current Australian development policy priorities: results and impact; relevance and alignment with Australia’s priorities; value for money; partnership behaviour and contribution to wider multilateral system; organisational capacity; and organisational governance. On average, Australia assesses each major multilateral partner every three years, with the assessment timed to inform key funding or governance decisions relating to that partner. Summaries of the multilateral performance assessments are published in the Performance of Australian Aid reports.

← 9. Australia has a number of objectives in its engagement with NGOs. These are to enable economic growth through improving economic opportunities and livelihoods; engage communities in development and support public diplomacy; promote gender equality and empowerment of women and girls; foster effective collaboration, partnerships and multi-stakeholder approaches; support humanitarian advocacy and response to build resilience; foster innovation; promote effective governance through building coalitions for reform, accountability and inclusive decision making; and enhance NGO performance and effectiveness. See