Chapter 4. Australia’s structure and systems

Authority, mandate and co-ordination

Peer review indicator: Responsibility for development co-operation is clearly defined, with the capacity to make a positive contribution to sustainable development outcomes

Following the integration of AusAID in to DFAT, Australia opted for a model of deeply integrating development co-operation into the department. This level of integration was reflected in decisions on the structure, governance and capabilities of the newly expanded department. Australia is now taking stock of the impact of these decisions on its ability to deliver a quality and quality-assured aid programme, with a view to tackling ongoing challenges and risks.

Australia followed a deep integration model for development co-operation following AusAID’s closure

The integration of AusAID into DFAT in November 2013 has had profound implications for the organisation and management of Australia’s development co-operation. There have been efficiency and effectiveness gains. As with any public sector reorganisation of this nature, there have also been challenges, some of which persist to this day.

The intended outcome of integration was to create “a transformed Department with the skills, resources and connections to implement foreign, trade and development policies and programmes in a coherent, effective and efficient way that best serves Australia's national interests” (Senate of Australia, 2014). It was decided to not rename the department to reflect the newly added development co-operation portfolio. However, a number of important steps were taken to support the intended transformation.

First, a fully and deeply integrated model for development co-operation was adopted. Using the existing spine of the department, management of the aid programme was integrated into geographic, multilateral, trade, policy and economic divisions. Importantly, development policy was anchored in the new Development Policy Division and the Contracting and Aid Management Division (Annex D). This preserved some authority, seniority and policy capacity specifically for development. The matrix structure took effect in July 2014.

Second, governance bodies were designed to create specific assurance mechanisms for development. These include the Development Policy Committee (DPC), Aid Investment Committee (AIC) and the Independent Evaluation Committee (IEC). In November 2017, a new Aid Governance Board combined and replaced the DPC and AIC.1

The parliamentary Joint Committee on Foreign Affairs, Defence and Trade also established a Foreign Affairs and Aid Subcommittee for additional accountability towards Parliament.

The third area of focus was capability. Plans were put in place to facilitate integration by identifying and building the capabilities required to support the operations of the department across all of its functions including the continued delivery of a high-quality aid programme. This is discussed further below.

Responsibilities, expectations and accountabilities: Taking stock of the integration of development co-operation into DFAT

The steps taken in the change management process described above have clearly supported a strengthened coherence in Australia’s international outlook (Chapter 1). Some of the challenges encountered reflect a natural process of organisational adaptation, as DFAT integrated cultures and systems. IT systems, for example, have not always been able to cope with the requirements of the aid programme. The early stages of integration prompted some dissatisfaction among staff moving from AusAID. Partners did not always have a clear understanding of how to engage with the new structure and with whom.

Other structural challenges include the need to secure and retain sufficient development expertise to deliver a quality development programme in light of the staff losses from AusAID. Furthermore, the deep integration model requires the entire department, from the top down, to assume full responsibility for and ownership of development co-operation objectives and outcomes. DFAT now is seeking to reinforce these responsibilities and expectations. As experience from other members shows, deep integration and effective matrixed organisations also require a confidence in the level of synchronisation between the thematic and geographic branches. The necessary development expertise also needs to be present across both branches. DFAT is now assessing these issues.

To its credit and in keeping with public sector change management, DFAT has made concerted efforts to take stock of progress and challenges and to future-proof the organisation. Through its recent aid health check process, for example, Australia is seeking to further reinforce and strengthen the position, skills and tools of development co-operation within the integrated department. Australia’s Foreign Policy White Paper was released in November 2017 and an associated strategic workforce plan is being developed. Through these, DFAT will have opportunities to continue the integration process and ensure a confident and visible place for development co-operation in Australia’s policy environment.

DFAT delivers nearly all development co-operation and works with other government departments

DFAT holds a clear lead and authority for development co-operation, with responsibility for 93% of the ODA budget (DFAT, 2017b).2 The departments other than DFAT that account for the largest ODA spending are the Australian Federal Police, the Australian Centre for International Agricultural Research, and the Department of the Treasury.3 Australia’s budget and performance statistics clearly and transparently set out the contribution of other government departments.4

Australia portrays its aid programme delivery as a whole-of-government effort (DFAT, 2017b), although there is no overarching co-ordination framework among government departments. Before the integration of AusAID into DFAT, the Development Effectiveness Steering Committee, a cross-agency committee that advised the Australian government on major aid policy and aid budget priorities and concerns, provided whole-of-government oversight of Australia’s aid programme.

Nevertheless, there are strong examples of whole-of-government co-ordination, as seen in Solomon Islands (see Box 5.1) and in response to disasters (Chapter 7). Recent reviews of whole-of-government effectiveness, particularly in fragile contexts, offer useful lessons and recommendations for more clearly delineating roles, responsibilities and accountabilities among agencies (Gordon IV and Campbell, 2016).


Peer review indicator: The member has clear and relevant processes and mechanisms in place

Australia has clear and relevant processes for aid management. DFAT has placed a high premium on managing risk and supporting innovation. It has tightened its emphasis on value for money. It makes every effort to ensure its policies and data are transparent at the aggregate level. Some systems, however, need to continue to evolve. Among these systems are those related to quality assurance, information technology (IT) and project-level transparency.

Australia has clear procedures and guidance, but not all its systems enable them to be applied efficiently

Australia’s aid programme generally has impressively clear policy, programming and contracting guidance that is epitomised by the one-stop shop of the Aid Programming Guide (DFAT, 2017a). The guide sets out policy and programme management responsibilities, legal and financial obligations, and aid quality and accountability requirements. It also outlines mandatory processes and recommended approaches for aid management, and is supplemented by detailed policies, guidelines, tools and templates.

Its governance structures, guidance and training enable Australia to effectively balance several overlapping requirements. These are the need to provide staff with accessible materials; ensure coherence between policy and programming; and provide management with assurances for particularly risky interventions. Australia balances these with the additional need to give autonomy to and delegate to the field. It accomplishes this through a flexible division of aid management responsibilities among missions and geographic divisions that takes into account the scale of aid and level of engagement required.

However, Australia faces some ongoing challenges in relation to overall systems for assurance and oversight.

As noted above, DFAT identified the need to redefine the authority, responsibilities and membership of the Development Policy Committee and Aid Investment Committee to improve oversight of project and programme risk and performance. The current mechanism for peer review and for independent appraisal processes in programme design also are not working optimally in terms of compliance and value added. With the reduction in the numbers of specialist staff (see below), DFAT will need to ensure that it is able to provide sufficient quality assurance over the aid programme.

The integration of AusAID into DFAT placed significant pressure on the department’s information and communications technology, according to the department’s secretary at the time and successive staff surveys.5 A redevelopment of DFAT’s aid management IT system, AidWorks, is under way in recognition of problems with the system’s usability, functionality and reporting capability.

As DFAT contracts out a growing proportion of aid, it has increased its emphasis on value for money and improved procurement practices

A new set of value for money principles is being applied across the aid programme life cycle with the aim of maximising the impact of aid investments.6 This focus is reinforced through one of the strategic targets (Chapter 2), which is expressed in the directive that at least 85% of aid investments must meet high standards of value for money through investment quality reporting. Where standards are not met and improvements are not achieved within one year, investments will be cancelled. To date, nine investments have been assessed as not meeting standards for two successive assessment cycles with one investment cancelled as a result of this new directive and the other eight investments completed.

Since the last review in 2013, DFAT has implemented a range of procurement initiatives which seek to make procurement more effective and efficient for both suppliers and the department.7 The proportion of aid funding spent through managing contractors reached 20% in 2015/16 and has averaged 18% over the past 10 years. The vast majority of these contracts are concentrated in the hands of ten companies, which together have received close to AUD 4 billion from the aid budget since 2014.8

Australia seeks to actively manage risk and has set up procedures to do so

As set out in Australia’s overarching aid policy, DFAT is prepared to actively engage with risk (DFAT, 2014). The hallmarks of what is meant by “engaging with risk” were strongly present in Solomon Islands, where DFAT demonstrated flexibility to adapt programme design and delivery in light of the evolving risk environment. Australia’s risk-related tools and processes for different levels of the portfolio, including risk registers and risk assessments for all investments,9 are set out clearly in an internal Better Practice Guide. The Audit and Risk Committee provides independent assurance and advice to the Secretary and Departmental Executive on DFAT’s risk management and fraud control arrangements.

In terms of addressing fraud and corruption, DFAT has a zero tolerance approach to fraud and corruption. DFAT registered 213 cases of alleged, suspected or detected external fraud in 2016/17, of which 208 were ODA-related. As of 30 June 2017, potential losses from such cases in 2016/17 amounted to AUD 2.6 million, or the equivalent of 0.068% of Australia’s aid programme budget in that fiscal year. DFAT recovered 93 percent of fraud losses from all cases closed in the 2016/17 financial year.

Australia seeks to be a leader in innovation but faces familiar challenges

Government ministers have challenged DFAT to make innovation integral to its development thinking and its policy development (DFAT, 2015). To meet the challenge, the Foreign Minister launched the innovationXchange (iXc) in March 2015 with a budget of AUD 140 million over four years (1.25% of the aid budget) and a staff of 12. The government’s vision is for Australian aid to be a recognised leader in innovation, delivering new and cost-effective solutions to pressing development challenges in order to improve the lives of people in the Indo-Pacific region. A 14-member International Reference Group brings together leading innovators to provide strategic guidance on iXc priorities.

The stated added value of the iXc is to create opportunities to think through and test concepts freely, without sectoral or geographical constraints and to serve as an innovation catalyst and learning hub (DFAT, 2015). The approach of iXc rests on three pillars – to experiment, partner and learn – in support of its aim to better identify, test and scale high-impact innovations. The Blue Economy Aquaculture Challenge is a good example of how DFAT is working on development innovation through the iXc, establishing challenges, focusing on the transformative potential of innovation in different sectors, and crowding in a range of partners.10 However, many of the iXc initiatives are still at proof of concept stage and will need time to demonstrate scalability and relevance.11

DFAT is experiencing challenges integrating innovation into its organisational culture and processes, challenges that are familiar to other DAC countries. An iXc target is to increase DFAT spending on innovative practices. The head of iXc sat on DFAT’s previous Aid Investment Committee and iXc helps encourage creativity in DFAT by running Ideas Challenges. However, DFAT will also need to review the extent to which its procedures and systems are fit for purpose to develop the behaviours it seeks to encourage for greater innovation.12 It also needs to review how an institutional structure like iXc best contributes to the overall innovation effort.

Transparency in the aid programme is uneven

Australia opted not to keep its Transparency Charter following the integration of AusAID into DFAT. Nonetheless, it provides a strong level of transparency at the aggregate level in terms of policy statements, investment plans and input data reporting. The extensive consultation exercise on the new Foreign Policy White Paper is to be commended. Australia is also a member of the International Aid Transparency Initiative.

DFAT internal guidance promotes the need for transparency and regularly takes stock of progress. However, Australia is not performing as well as some other DAC members on transparency. It is ranked 25th in the 2016 Aid Transparency Index, placing it in the “fair” category. An independent aid transparency audit in 2016 also found that project-level transparency has declined since 2013 (DeCourcy and Burkot, 2016). To meet its transparency commitments, Australia will need to make investment-level information available in a timely and accessible way including by making transparency a priority and setting up the necessary directives, systems and incentives. The redevelopment of AidWorks is perhaps an opportunity to move this forward.

Capabilities throughout the system

Peer review indicator: The member has appropriate skills and knowledge to manage and deliver its development co-operation, and ensures these are located in the right places

Australia lost a cadre of experienced aid management staff in the course of integration and subsequent aid budget reductions. DFAT has few specialists working on the programme, preferring to invest in the skills of generalists. It also outsources a significant proportion of the programme. A concerted and necessary effort is now underway to ensure Australia has the skills and capabilities needed to deliver a high quality aid programme.

Overall numbers of people working on the aid programme have declined since integration

At the time of the last peer review, AusAID’s total staffing had reached 2 126. During integration, the DFAT staff dropped by 572, of which 329 of the losses were AusAID staff (223 in development roles and 106 in corporate roles). The losses were the result of efficiencies, a smaller budget and also AusAID staff resignations. The DFAT reductions were part of government-wide public sector cutbacks. According to DFAT, it has retained 69% of Australian-based staff employed with the former AusAID (DFAT, 2017b).

Today, DFAT has 6 200 staff. Fewer than half of these are based in Australia and 39% of the total are locally engaged staff. As of May 2017, the aid programme in DFAT had 1545 staff, of which 909 (or 58%) were based in Australia. This indicates a relatively high level of decentralisation of staff. In addition, approximately a quarter (392) of the staff on the aid programme were locally engaged and approximately 80% of overseas staff were based in the Pacific and South-East Asia, in line with the focus of the programme.

Specialist skills are strained in DFAT, presenting possible risks to the programme

DFAT was unable to provide trend data on staffing on the aid programme in the period between integration and 2017. Likewise, DFAT was unable to provide the number of specialists working on the aid programme and how it may have changed since the last review. DFAT has adopted a model of hiring very few specialists (and then only on a case-by-case basis) and relying instead on the up-skilling of generalists. As noted in the reviews of other DAC members, this model – coupled with the loss of experienced aid management staff in the case of Australia as a result of integration –– risks affecting the quality of engagement and levels of effectiveness and oversight. These include engagement and oversight over private contractors and through other private sector engagements.

External aid stakeholders surveyed in 2015 (DeCourcy and Burkot, 2016) noted a drop in staff expertise. A number of respondents said the loss of staff expertise resulted not only from AusAID staff resigning or accepting redundancy after integration, but also because DFAT failed to value development expertise. Rapid staff rotation is also perceived to be a perennial problem and was noted in previous peer reviews.

Australia is actively seeking to identify capability gaps as part of planning a workforce fit for the future

DFAT management is well aware of the challenge, risks and perceptions around its staff specialist skills. DFAT is actively seeking to address these and has a very strong commitment to capability improvement and workforce planning. Some examples of this commitment include:

  • A Capability Action Plan, undertaken before integration, was developed following an Australian Public Service Commission Capability Review that commended DFAT for its agility and generalist talent, but also identified problems with workforce planning and strains on specialisation (Australian Public Service Commission, 2013).

  • The then-Secretary of DFAT committed to strengthening workforce planning to enable DFAT to recruit and retain development professionals and sector experts, in recognition of the need for expertise to deliver a high-quality aid programme.

  • The 2015/17 Strategic Workforce Planning Framework was the first of its kind in DFAT.13

There are opportunities to build on this commitment and to respond to capability gaps. DFAT is currently profiling capability across all its functions as part of a new DFAT Capability Delivery Strategy. This should show the real gaps and risks for delivering a high-quality aid programme; meet the expectations of the new DFAT policy framework; and usefully inform the next five-year strategic workforce plan that is being developed in tandem with the new Foreign Policy White Paper. These exercises also should help DFAT create the systems for monitoring and tracking data on staff numbers and skills across the organisation, which it currently lacks.

Further, the aid programme health check identifies concrete actions to anchor and reinforce the value of aid management as a career stream. This is potentially a critical element to ensure that DFAT attracts and retains the best talent available and the skills it most needs. The Australian Public Service Act gives Australia some flexibility, relative to other member countries, to recruit specialists temporarily or permanently.

The aid health check will also address the issue of work-level standards of locally engaged staff. Locally engaged staff and their position in the organisation will need to be an integral part of the analysis of skills needed and available at the decentralised level.

The introduction of an International Development Faculty14 at the Diplomatic Academy15 in 2017 also creates opportunities to generally lift the development skills and awareness across DFAT including among new heads of mission and other senior staff. It will be important for locally engaged staff also to have access to these learning and development opportunities. Staff also are offered training in fragility programming before postings to fragile contexts, although this training is optional and often a low priority for staff that are faced with a broad range of compulsory pre-posting courses.


Government sources

Australian Public Service Commission (2013), “Capability Review: Department of Foreign Affairs and Trade”, Canberra, Australia, .

DFAT (2017a), Aid Programming Guide, DFAT, Canberra, Australia,

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

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

DFAT (2017d), Australian Engagement with Developing Countries, DFAT, Canberra, and

DFAT (2015), DFAT Innovation Strategy, Canberra, Australia (unpublished).

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

Senate of Australia (2014), “Australia’s overseas aid and development assistance program”, Foreign Affairs, Defence and Trade References Committee, the Senate, Canberra.

Other sources

DeCourcy, V. and C. Burkot (2016), Gone Backwards: Findings from the 2016 Australian Aid Transparency Audit, Development Policy Centre, Crawford School of Public Policy, the Australian National University, Canberra,

FATF (2015), “Australia: Follow-up to the phase 3 report & recommendations”, Financial Action Task Force, OECD Publishing, Paris

Global Campaign for Aid (2017), “Publish what you fund”, interactive website including the Aid Transparency Index, (date accessed: 18 November 2017).

Gordon IV, J. and J. H. Campbell. (2016), Organising for Peace Operations: Lessons Learned from Bougainville, East Timor, and the Solomon Islands, RAND Corporation.

OECD (2017), “Australia”, in Development Co-operation Report 2017: Data for Development, OECD, Paris, , DOI:

Wood, T., C. Burkot and S. Howes (2017), “Gauging change in Australian aid: Stakeholder perceptions of the government aid program”, Asia & the Pacific Policy Studies, Vol. 4, pp. 237–250, doi: 10.1002/app5.173.


← 1. The establishment of the AGB is intended to support the integration of development, trade and foreign policy objectives, and ensure investment decision-making aligns with strategic direction and risk appetite. The AGB will act as an advisory body to the Secretary and Departmental Executive at a departmental level, and to the relevant delegates at the investment level under the Public Governance, Performance and Accountability Act 2013. The AGB will establish advisory groups to support its functions: a Quality and Risk Assurance Unit and a Development Policy Forum chaired by one of the AGB’s Deputy Secretaries

← 2. Budget cuts have led to a reduction in the percentage of total ODA being programmed outside of DFAT and, previously, AusAID. The percentage dropped to 7% in 2015/16 from 17% in 2011/12.

← 3. In 2015/16, Australian Federal Police programmes maintained their commitment to the capacity development of partner police agencies in the Pacific region. See ACIAR supported economic and public diplomacy through improving agricultural competitiveness and sustainability, increasing value chain efficiency and effectiveness, alleviating regulatory impediments in relation to domestic and international markets and capacity building. Treasury supported international financial institutions including payments of capital increases to the International Bank for Reconstruction and Development and to the Asian Development Bank, as well as contributions to the World Bank’s Global Infrastructure Facility and the ADB’s Asia Pacific Project Preparation Facility. A range of agencies in the Treasury portfolio assisted in training officials and regulators in partner countries.

← 4. See, for example, Performance of Australian Aid 2015-16, at and Australian Engagement with Developing Countries, Part Two at

← 5. See (accessed 16 July 2017).

← 6. The principles seek to promote cost consciousness; competition, evidence-based decision making, proportionality, performance and risk management, a results focus, experimentation and innovation, and accountability and transparency.

← 7. These include outcome-based contracting, less prescriptive tendering, consolidation of aid investments to focus on fewer larger contracts, simplified procurement procedures for staff, and greater professionalization of the procurement function.

← 8. Data gathered in response to a Question on Notice (no. 409) on 17 March 2017 at the Australian Senate.

← 9. High-level programme risks are assessed as part of Aid Investment Plans and reported through annual Aid Programme Performance Reports. All investments require a risk and safeguards assessment in design, which includes screening checklists designed to ensure that potential adverse impacts are identified early and adequately addressed. Relevant policy areas review investment concepts assessed as high risk. Risks are reported on through the annual aid quality checks. Major country and regional programmes (those with an annual total ODA allocation of AUD 50 million or more) and high-risk programmes must have fraud control and anti-corruption strategies in place.

← 10. The AUD 3 million Blue Economy Aquaculture Challenge called for innovators, entrepreneurs, designers, NGOs and academics to rethink advances in aquaculture to provide solutions that ensure both sustainable development and environmental sustainability. Over 220 innovative ideas from more than 40 countries were received and the top ten winners announced in September 2016. The award winners are to use the prize money to further develop and implement their solutions and innovations. They participate in a seven-month programme of in-person and online business growth opportunities and customised support. They are exposed to a global network of like-minded market leaders, technical experts, philanthropic, NGO and public sector actors and programme guides, to scale their technical capabilities, increase the impact of their designs and facilitate investment opportunities. See .

← 11. To date, iXc is supporting 65 innovations. A partnership with USAID and Korea International Cooperation Agency has delivered the Global Innovation Exchange, an online platform to connect innovators and funding opportunities around the world and share lessons learned.

← 12. These behaviours are set out in DFAT’s Innovation Strategy. They are to empower staff to innovate; promote collaboration and contestability; consider changing or re-designing established practices; experiment with new approaches; share lessons learned; engage intelligently with risk; and value and reward innovation.

← 13. The goal of this framework was “to develop and maintain a diverse workforce of highly skilled and motivated Australian and locally engaged staff as the foundation of a world-class foreign service, having the right people, in the right place, at the right time”. The Strategic Workforce Planning Framework is unpublished.

← 14. This Faculty focuses on developing staff skills in four learning streams: aid programme management, Australia’s development policy, development principles and humanitarian principles and practice.

← 15. The Academy was established in May 2016 as a leading edge learning and development hub for all staff working to advance Australia’s interests internationally.