Australia

Australia

At a glance

Funding trends

  • Australia is the 13th-largest donor country on the Organisation for Economic Cooperation and Development’s (OECD’s) Development Assistance Committee (DAC), spending US$3.4 billion (current prices) on official development assistance (ODA) in 2021. This represents 0.22% of Australia’s gross national income (GNI) and a 4.5% increase compared to 2020. This represents a small reversal in an overall declining trend of Australia’s ODA budget since its peak in fiscal year (FY) 2013/14. 
  • The government capped ODA at A$4.0 billion (US$2.8 billion, in constant 2020 prices). Despite slightly exceeding this number due to indexation, the FY2022/23 maintains the cap with the core budget set at A$4.1 billion (US$2.81 billion).  
  • The latest budget includes A$460 million (US$316 million) in “temporary, targeted & supplementary measures” that support COVID-19 assistance, economic recovery, and regional partnerships in FY2022/23, bringing total ODA to US$4.5 billion (US$3.1 billion in constant 2020 prices); however, to maintain the appearance of an ODA budget within the cap, these funds are separated from the main budget allocations.  
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Strategic priorities

  • Marking a shift away from nine years of conservative rule under the Liberal-National Coalition, a new Labor Party Government under Anthony Albanese as Prime Minister has been elected and sworn in in May 2022. Following the conservative reticence toward development funding, the new Labor Government pledged to rebuild Australia’s development program and increase ODA/GNI ratios each year in an effort to counteract the downward trend of Australia’s ODA budget.  
  • Australia’s 2020 development strategy, ‘Partnerships for Recovery: Australia’s COVID-19 Development Response’ reoriented the country’s development programming to focus on addressing the health, social, and economic challenges created by COVID-19, at least until 2022. With the new government committed to overhauling Australia’s development program, including providing clearer strategic direction, further updates to Australia’s development strategy are likely. No comprehensive new aid policy has been issued yet. 
  • The ‘Pacific Step-up’ was one of the previous government’s most important development priorities. Australia’s heightened engagement is, in part, an attempt to counter China’s growing influence and investment in the region. Increasing funding to the Pacific came at the expense of development spending for other regions. 

Outlook

  • During the May 2022 electoral campaign, the Labor Party indicated that it would increase Australia’s ODA/GNI ratio in every annual budget, as part of a longer-term plan to reach 0.5% ODA/GNI. Once in power, the new government made numerous pledges amounting to roughly A$1 billion (US$688 million) of additional funding over four years for the priority regions in Southeast Asia, the Pacific region, as well as for NGOs. More clarity on other budget increases will likely come once the budget is delivered in October 2022.  
  • Australia includes humanitarian assistance for Ukraine under the separate budget line of “temporary, targeted & supplementary measures,” with A$65 million (US$45 million) allocated as of July 2022. As the conflict continues to unfold, additional funding towards Ukraine is likely, raising concern that funding might be redirected from other areas.  
  • The launch of the Australian Infrastructure Financing Facility for the Pacific (AIFFP) in 2019 and loans extended to Southeast Asia in support of their COVID-19 recovery might indicate that Australia is shifting away from grant-funded development programming and toward loan-financed infrastructure projects. At the request of the new Labor Government, DFAT is undertaking a review of different development financing approaches that might complement Australia’s grant financing and enhance the effectiveness of current financing arrangements in the Pacific and Southeast Asia. This will include examining sovereign and non-sovereign financing mechanisms being used by the Australian Government. A report is expected by November 2022. 
  • As part of its 2022 election platform, Labor has further called for a clearer direction for the Department of Foreign Affairs and Trade (DFAT), a stronger focus on women and girls and eliminating slavery, and stronger relationships in Southeast Asia.  

Policy Priorities

Australia pivoted its focus to supporting partners through the COVID-19 crisis; the Pacific remains its primary priority 

In late May 2020, Australia’s Department of Foreign Affairs and Trade (DFAT) launched a new development policy ‘Partnerships for Recovery: Australia’s COVID-19’, extended into the FY2022/23 budget announced in March. According to this policy, Australia’s development strategy was incorporated into a regional COVID-19 response, though it also left some room for some pre-existing initiatives to remain in place. The aim of the policy was to “help build a more prosperous, stable and resilient region, shape [Australia’s] strategic environment and advance Australia’s national interests in the face of increasing global uncertainty.” The primary goals include: 1) Responding to humanitarian crises; 2) Addressing the impacts of COVID-19 on the Pacific region; and 3) Expanding economic and security-focused linkages to build infrastructure and boost engagement with the Pacific region as well as regional partners in South and Southeast Asia. Climate and gender equality are prioritized in the revised budget. Like the previous development policy, it proposed that development programming should be aligned with Australia’s overall strategic, foreign policy, and economic objectives. The policy was accompanied by a new three-tier performance framework.  

The Indo-Pacific region will remain the primary focus of Australian ODA under the new government. Programming will likely continue to concentrate almost exclusively on the Pacific and Southeast Asia; specifically Pacific island nations, Timor-Leste, and Indonesia. Australia’s focus on the Pacific is, in part, an attempt to counter China’s growing influence and investment in the region, illustrating the usage of official development assistance (ODA) for strategic purposes. Speaking with the Pacific Islands Forum Secretariat in Fiji on May 26, 2022, the new Australian Minister for Foreign Affairs Penny Wong outlined Australia's priorities in its relationship with the Pacific region, promising an era of renewed engagement and reaffirming Australia’s commitment to provide A$525 million (US$361 million) in ODA to the Pacific region over the next four years, with a particular emphasis on recovery from the COVID-19 pandemic. 

Additionally, Australia is resuming a greater focus on Southeast Asia, with funding expanding again following cuts in previous years. This is reflected in Australia’s new engagement as part of the ‘Quad countries’ (Japan, USA, Australia, and India) which are increasing assistance to the region. At the latest QUAD Leaders’ Meeting in May 2022, the new Prime Minister Anthony Albanese reemphasized his plans to bolster Australia’s relationship with Southeast Asia through the A$470 million (US$323 million) in funding to the region over the next four years, but also by appointing a new envoy to the region, creating an Office of South-East Asia within DFAT, and developing a closer working relationship with the Association of Southeast Asian Nations (ASEAN). 

Given its COVID-19 orientation, it is unsurprising that health security is a key pillar of DFAT’s new ‘Partnerships for Recovery’ strategy. Health security is emphasized in the latest budget (FY2022/23), for example through Australia’s commitment to supporting comprehensive COVID-19 vaccination coverage in the Pacific and Timor-Leste. Additionally, the government has pledged A$100 million (US$69 million) over the next five years to the Coalition of Epidemic Preparedness Innovations (CEPI) and A$85 million (US$58 million) to COVAX Advance Market Commitment to support COVID-19 vaccine development and distribution. Australia also supports regional health security through multilateral initiatives and funding from non-ODA sources. This approach included the launch of the Indo-Pacific Health Security Initiative in October 2017, which aims to “contribute to the avoidance and containment of infectious disease threats with the potential to cause social and economic harms on a national, regional or global scale,” a particularly prescient mission set against the backdrop of the COVID-19 crisis.  

Promoting private sector growth in low-income countries has been a key development priority for the last Australian government, driven by the conviction that public financing represents an ever-diminishing proportion of funding for global development. Australia’s 2020 development policy under the previous Liberal-National Party coalition, ‘Partnerships in Recovery,’ outlined a ‘whole-of-government approach’ to international development combining the tools of diplomacy, trade, economics, and security. Partnerships with governments, non-government actors, and the private sector were central to the policy. It highlighted the need for new strategies for maximizing impact, including through the provision of funding beyond ODA, and suggested that development financing would increasingly include contributions from Australia’s private sector as well as its academic and scientific institutions. 

The new government’s Party platform committed to deliver Australia’s international development program through an appropriate balance between the public sector, the private sector, and non-government organizations (NGOs).  

ODA Breakdown

Australia continues to prioritize bilateral development support, delivered as grants

Australia mainly provides official development assistance (ODA) through bilateral channels: 81% (US$2.3 billion) in 2020, well above the average of the Organisation for Economic Cooperation’s (OECD’s) Development Assistance Committee (DAC) average of 58%. Australia’s focus on bilateral support is primarily due to its prioritization of neighboring countries in the Indo-Pacific region and is reflective of the government’s focus on promoting national interest and strengthening bilateral relationships.  

Australia provided all its ODA as grants in 2020. The last time Australia extended ODA loans was in 2015. However, since July 2019, the Australian Infrastructure Financing Facility for the Pacific (AIFFP) is disbursing loans to support infrastructure in the Pacific. The infrastructure facility will comprise up to A$500 million (US$344 million) in grants and up to A$3 billion (US$2.1 billion) in loans. Civil society organizations (CSOs) have expressed concern that this could mark the beginning of a shift away from grant-funded development programming and toward loan-financed infrastructure projects in Pacific countries. This is of particular concern because many of these countries are already suffering from ‘debt distress.’ 

In line with the Australia’s focus on health and Covid-19, health was the top-funded bilateral sector in 2020 

Australia spent US$365 million, or 16%, of its bilateral ODA in 2020 on health and populations, with funding increasing by 72% compared to 2019. This reflects Australia’s strategic focus on health, with much of the spending increase tied to Australia’s COVID-19 response and addressing gaps in global health security revealed by the pandemic.  

14% of Australia’s bilateral ODA in 2020 went toward projects targeting government and civil society, in line with the country’s emphasis on economic growth, private sector investment, trade, and regional security. The sector has experienced a steady decline, falling by 29% from US$461 million in 2016 to US$332 million in 2020.  

Another 14% of bilateral ODA is allocated towards multisector activities. Multisector activities include funding for scholarships granted to students studying in Australia. Similarly, funding from this sector has seen a multi-year decline, falling from US$444 million in 2016 to US$325 million in 2020.  

ODA for humanitarian assistance accounted for 10% of Australia’s total bilateral ODA in 2020. Humanitarian assistance jumped from being Australia’s seventh-highest funded sector in 2018 to fourth-highest in 2020, with a 32% boost in funding (from US$176 million to US$233 million).  

Most of Australia’s funding goes to the Indo-Pacific region; lower-middle-income countries receive half of ODA 

Australia heavily concentrates its development support on neighboring lower-middle-income countries (LMICs) in the Indo-Pacific region. According to OECD data, in 2020, LMICs received 51% (US$1.2 billion) of Australia’s bilateral ODA. Australia disbursed 34% (US$786 million) of its bilateral ODA to Oceania and 29% (US$667 million) to Asian countries.  

Papua New Guinea (PNG), Indonesia, and the Solomon Islands remain the largest recipients of Australia’s bilateral ODA, receiving 16% (US$364 million), 8% (US$184 million), and 4% (US$87 million) of bilateral ODA in 2020, respectively. Despite receiving the largest shares of Australian bilateral ODA, funding to all three countries decreased compared to 2019. Instead, the fourth-largest partner country, Timor-Leste, has seen a significant increase in funding by 59% from US$53 million in 2019 to US$83 million in 2020.  

While unusual compared to other DAC donors, ODA funding flows align with Australia’s strong policy focus on its neighbors in the Indo-Pacific. Specifically, the latest development policy has put particular emphasis on Australia’s closest neighbors, Timor-Leste and Indonesia.  

Australia channels a low proportion of ODA through multilateral organizations 

Australia’s focus on promoting its own national interests and strengthening bilateral relationships is reflected in its minimal use of multilateral channels. Australia’s core ODA funding to multilaterals stood at US$550 million, or 19%, of gross ODA disbursements in 2020 (DAC average of 42%). Key recipients of multilateral ODA in 2020 were UN agencies (42%), the World Bank Group (27%), and regional development banks (20%, including US$94 million (17%) to the Asian Development Fund and US$18 million (3%) to the Asian Development Bank). Australia’s contributions to UN agencies nearly doubled from US$118 million in 2019 to US$229 million in 2020. 

In addition to core contributions, Australia channeled 24% of its ODA as earmarked funding through multilaterals in 2020, which is reported as bilateral ODA (DAC average: 14%). This funding is earmarked for particular regions, countries, or themes, rather than contributing to a multilateral’s core funding, which can be spent at the discretion of the multilateral itself.  

Australia’s spending on multilaterals has been informed by the Multilateral Organization Performance Assessment Network (MOPAN) of 18 donors. The latest review measured core funding to multilateral organizations in 2020-2021, with a focus on the effectiveness of Australia’s COVID-19 response policy in the Indo-Pacific region, ‘Partnerships for Recovery’, finding an overall positive result.  

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Unless otherwise indicated, all data in this section is based on the cash-flow basis measurement system. For more information, see our Donor Tracker Codebook.

For more granular and up-to-date development finance data on Australia, including information on where and in which sectors it is spending both ODA and non-ODA funds, please consult the IATI d-portal. IATI is a reporting standard and platform on which organizations and governments voluntarily publish data on their development cooperation.

Main Actors

Department of Foreign Affairs and Trade manages almost all of Australia’s overseas development programs

The new Australian Prime Minister, Anthony Albanese (Labor Party), sworn in on May 23, 2022, leads overall decision-making for development policy.  

The newly appointed Minister for Foreign Affairs, Senator Penny Wong, is responsible for directing Australia’s development program. She has announced a 'first nations' approach to foreign affairs, a stronger projection of soft power, and greater collaboration and multilateralism among partners. 

The Minister for International Development and the Pacific, Pat Conroy, works under Wong, providing direct oversight of Australia’s international development and humanitarian assistance policies and strengthening Australia’s relationships with the Pacific Islands. Conroy is also the Minister for Defense Industry. Before the election, Minister Conroy indicated that he would rebuild overseas development expertise within DFAT and promised an Australian assistance program with a broader portfolio. 

The Department of Foreign Affairs and Trade (DFAT) manages development policy and budgets and delivers almost all of Australia’s overseas programs. According to the FY2022/23 budget, DFAT will manage 94% of Australia’s official development assistance (ODA). The Australian Centre for International Agricultural Research is also a part of the Minister for Foreign Affairs’ portfolio. DFAT cooperates with other government agencies (e.g., Treasury, the Australian Federal Police, and the state and territory governments), which deliver the remaining development assistance. 

DFAT is divided into six groups, following a restructuring in late 2021. Development policy is managed in the ‘Development and Multilateral Group’ (DMG). Kathy Klugman is currently Deputy Secretary of the Group, overseeing DFAT’s six development divisions: the Development Policy Division; the Global Health Division; the Multilateral Policy Division; the Ambassador for the Environment and the Climate Change and Sustainability Division; the Program Enabling Division; and the Humanitarian and Partnerships Division. Additional development policy is managed under the ‘Southeast Asia Development Policy and Programs Branch’ of the Southeast Asia and Global Partners Group as well as the ‘Pacific Partnerships and Development Branch’ of the Office of the Pacific. Klugman is also responsible for multilateral development bank (MDB) financing. Her division includes the Ambassadors for Women and Girls, Regional Health Security, and the Environment. 

DFAT’s geographic branches develop three-year ‘Aid Investment Plans’ with major recipient countries, based on the government’s overall priorities. DFAT executive staff responsible for geographic branches make final recommendations on funding for specific programs to the Foreign Affairs Minister for approval. Performance benchmarks are set and reviewed through annual program performance reports. These are discussed each year with the partner country. The ‘2018 OECD Peer Review’ found that Australia’s multi-year investment plans increase the predictability of development assistance, at least in the medium term.  

 

Australia Organisation Chart

Parliament: Australia’s Parliament is responsible for formally reviewing the final federal budget normally between May and June. The budget is passed into law before the end of the fiscal year (end of June). In practice, the budget, including the development budget component, is usually passed without amendments by the government majority in the House of Representatives. In the Senate, the proposed ODA budget is reviewed by the Foreign Affairs, Defense, and Trade Legislation Committee, which can seek information on the proposed development program but cannot make amendments.  

Due to the 2022 election a revised budget for FY2022/23 will be delivered to Parliament in October 2022. 

Civil Society: The government channels some of Australia’s bilateral ODA through civil society organizations (CSOs) under the umbrella of ‘Global Programs.’ In 2020, CSOs were funded with US$249 million, or 11% of bilateral ODA, according to OECD data. In addition, Australian CSOs mobilize public support and voluntary contributions for development. More than 130 Australian non-government organizations (NGOs) operate under the Australian Council for International Development’s (ACFID) self-regulatory Code of Conduct. ACFID also supports policy engagement with the Australian government. Over 50 Australian NGOs have met comprehensive due-diligence requirements through accreditation under DFAT’s Australian NGO Cooperation Program, which enables them to receive funding from the government. 

Budget Structure

There are two major funding lines; Department of Foreign Affairs and Trade manages 94% of the ODA budget

Australia’s official development assistance (ODA) budget for FY2022/23 stands at A$4.1 billion (US$2.8 billion). 94% of funding within the ODA budget is managed by the Department of Foreign Affairs and Trade (DFAT), while the remaining funds are channeled by other government departments including the Australian Centre for International Agriculture Research (ACIAR; 2%); the Treasury (2%); the Australian Federal Police (1%); and Agriculture, Water and the Environment (1%).

The budget is composed of two major funding lines: ‘Country and Regional Programs’ and ‘Global Programs’:

  • The ‘Country and Regional Programs’ contains budget lines for major regions, which are further broken down by annual allocations to specific country programs.
  • The ‘Global Programs’ envelope includes budget lines for multilaterals, CSOs, and humanitarian assistance to the ‘UN, Commonwealth, and Other International Organizations’. The Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund); Gavi, the Vaccine Alliance (Gavi); and the Global Polio Eradication Initiative (GPEI) are usually included in the health-specific sub-funding line, ‘Contribution to Global Health Programs’.

In addition to the ‘core’ ODA budget outlined above, the FY2022/23 budget includes a table outlining “temporary, targeted and supplementary (TTS) measures” which come on top of the A$4.0 billion (US$2.8 billion) budget cap. Much of this funding was announced in 2020 to be disbursed over two fiscal years. Although it is not being billed as an increase in the ODA budget by the government, in effect, these funds constitute the first increase in ODA spending under the previous Liberal-National Coalition government.

Australia’s ODA for health saw an increase compared to previous years because of COVID-19-related commitments. The ‘Contributions to Global Health Programs’ budget line saw a 68% increase compared to FY2021/22, however, this is not indicative of new funding. The increase is linked to the payment of prior replenishment commitments and the reallocation of COVID-19 funding from the now-concluded ‘COVID-19 Response Fund’ to global and regional health programs. Funding for ‘Climate partnerships’ also increased; up 13% from the previous budget. Funding for education bounced back after large reductions to accommodate increases in other sectors last fiscal year: ‘Global Education Partnerships’ nearly tripled while ‘Regional Scholarships and Education’ declined by a marginal 1%.  

Overview: FY2022/23 ODA budget

millions
A$

millions
US$
DFAT - Country and Regional Programs 2,288 1,590
Pacific 1,067 734
Southeast & East Asia 627 431
South & West Asia 124 85
Africa & the Middle East 32 22
Gender Equality Initiatives 65 45
Indo-Pacific sectoral programs (formerly cross-regional programs) 363 252
DFAT - Global Programs 1,247 867
Humanitarian, Refugees, and COVID-19 Response 470 323
    Humanitarian Emergency Fund 150 103
    Global Humanitarian Partnerships 124 85

    Protracted Crisis & Strengthening Humanitarian Action

 145 100
    Disaster Risk Reduction, Preparedness, & Response 52 36
Cash payments to multilaterals 339 233
UN, Commonwealth, and other International Organizations, of which: 345

237
    United Nations Children's Fund 19 13
    United Nations Development Fund 13 9
    World Health Organisation 13 9
    United Nations Population Fund 9 6
    UN Women 8 6
    United Nations Programme on HIV and AIDS 5 3
    Commonwealth Organisations 6 4
    Contributions to Global Health Programs 191 131
    Contributions to Global Education Partnerships 15 10
    Other ODA eligible contributions 67 46
NGO, Volunteer, and Community Programs 173

119
Departmental (ODA) 271 186
Other departments (Treasury, AFP etc.) 253 174
Adjustments -50 -34
Total ODA 4,089 2,813
     
     
Australian ODA temporary, targeted and supplementary (TTS) measures FY2022/3
  A$ millions US$ millions
Vaccine Access and Health Security Initiative (US$261 million; 2022-2027) 98 67
COVID-19 Response Package for the Pacific and Timor-Leste (US$218 million; 2022-2024) 281 193
Economic, Development and Security Measures for Southeast Asia Recovery (US$347 million; 2020-2023) 62 43
Pacific Labour Mobility 14 10
ASEAN Comprehensive Strategic Partnership 6 4
Total 460 316

Budget Process

From October to December new initiatives are advocated for and considered

Budget process

The Fiscal Year (FY) normally runs from July 1 to June 30:

  • Budget proposals and changes are developed: Between October and November, budget proposals are developed and advocacy for new initiatives takes place.
  • The Expenditure Review Committee (ERC) determines budget priorities: The ERC of Cabinet (Prime Minister, Treasurer, Finance Minister, and other ministers) meets in November to determine budget priorities. Based on these priorities, the Department of Foreign Affairs and Trade (DFAT) and other departments start to prepare requests for funding.
  • DFAT prepares and develops its budget: From December to February, DFAT prepares its overall budget proposal and requests for specific budget lines. At the end of this process, the Foreign Affairs Minister submits the Department’s budget request to the Cabinet’s ERC.
  • ERC reviews draft budgets and departmental funding: From March to late April, ERC meets regularly to review the overall draft budget and departmental funding. Based on the overall budget allocated to DFAT, the Foreign Affairs Minister makes a final decision on internal budget allocations.
  • Parliament reviews the budget: The Treasurer normally announces the budget on the second Tuesday in May (known as ‘budget night’) and delivers it to Parliament in a televised address. Between May and June, Parliament debates and formally reviews the budget. Importantly, the development budget is embedded in the foreign affairs budget and is not a major point for negotiation in Australian budget politics. In the Senate, the development budget is reviewed by the Foreign Affairs, Defense, and Trade Legislation Committee, which can seek information on the proposed development program but has no power to amend the budget.
  • Parliament approves the budget: After examination and debate, Parliament formally approves the government’s budget in June. In practice, the budget, including the development budget component, is usually passed without amendments by the government majority in the House of Representatives. Throughout the financial year, DFAT holds a significant amount of discretion on the distribution of funds not yet allocated.