Australian Ambassador Remarks to TAF Seminar:
‘Aid, Investment and Accelerated Development of Timor-Leste’
The New Aid Landscape: Opportunities and Challenges for Timor-Leste
Monday 9 February 2015
Maubara Conference Room, Level 5, Timor Plaza, 0830-1700
Thank you, Joao, for moderating this panel on The Changing Aid Landscape and thanks also to Susan for inviting me to present Australia’s perspective on this important topic.
To put my remarks in context, let me briefly outline the Australian Government’s approach to development assistance.
Australia’s New Aid Paradigm
The development finance landscape is changing dramatically –
Dr Prizzon explained that very well – and the Australian aid program is evolving with it.
Today, economic growth, trade and domestic wealth creation are by far the most powerful drivers of development. Official development assistance (ODA) is dwarfed by the flows of domestic resources, investment, remittances, and other sources of capital available to developing countries.
Australia’s new aid policy, launched last year, aims to maximise our efforts in this changing environment; including by recognising the role of economic growth in tackling poverty, expanding trade and tapping private sector potential.
Australia’s aid investments will also be required to address women’s empowerment.
We will use new benchmarks and mutual obligations with partner governments to assess the performance of our country programs and help us make future funding decisions.
Australia and the New Deal
Australia has a strong interest in a prosperous and stable Timor-Leste. Timor-Leste is one of Australia’s closest neighbours and one of the newest nations in the world. Since Timor-Leste's independence in 2002, Australia has been its largest development partner.
Our aid program focuses on three broad areas: human development, rural development and governance for development.
As the chair of the g7+ group, Timor-Leste has been the champion of the New Deal for International Engagement in Fragile States. The New Deal’s premise is to empower least developed countries to take ownership of their own development.
Timor-Leste is in a strong position to negotiate on what aid it receives and what form it takes because it is not dependent on aid.
Official development assistance as a proportion of the Timor-Leste’s budget fell from 86 per cent in 2002 to 16 per cent in 2012.
In 2015, development partner contributions to Timor-Leste will total USD235 million. This is on top of a national budget of USD1.57 billion.
The New Deal has changed the way we do business in Timor-Leste. We get behind Timor-Leste’s priorities.
The Strategic Planning Agreement for Development between Australia and Timor-Leste clearly sets this out this joint approach: Australia is committed to only supporting activities and objectives in the Strategic Development Plan – there is no other agenda.
Shared responsibility, leadership and trust
At the core of this agreement are the principles of mutual respect, friendship, and shared responsibility for improved results.
Donors on their own cannot do much to promote sustainable growth. Leadership by the Timor-Leste government, particularly articulating clear goals and sticking to them, is always going to be the key to the success of anything we do.
If there is a core area of government that we don’t think the government is prioritising, we are not likely to take it on ourselves.
Quite rightly, the Timor-Leste government insists donors support the government’s plan for building the nation. Therefore, you have to go at Timor-Leste’s pace of and on Timor-Leste’s terms.
But post-conflict states, like most of us, can often only deal with a limited number of initiatives at once. The agenda therefore needs to be prioritised, incremental and realistic.
Too often donors fall back on simplistic models of change which revolve around the use of international expertise. For example, ‘one-to-one’ capacity building models have been discredited.
Capacity building is a long-term task and demands a range of approaches, few of which are purely technical. Having strong and trusting personal relationships matters more than the technical solution.
Yet we also know that some ministries continue to be held back by capacity constraints and day-to-day problems that prevent the promise of the New Deal from being realised.
As a result, donors can be distracted from building long-term capacity to solving day-to-day problems. Counterparts sometimes feel their existing systems are too hard and fall back on donors to just do it for them.
But this is a false economy. Only by using and pressuring country systems can they improve. As donors we need to pressure the government to respect and use its own systems.
Sovereign governments have responsibilities to their citizens and should not use the provision of foreign aid to shirk those responsibilities.
In the context of the New Deal, therefore, it is our job to consistently explain our long-term support while also doing what we can to help our counterparts use their own resources.
We must also remain patient, consistent in our messages and flexible in the delivery of our programs. The traditional five year project with set deliverables and milestones doesn’t work – we cannot ‘set and forget’.
New types of assistance
One example of how Australia is pioneering new types of development assistance is our support, along with the EU, to the Ministry of Finance.
Through our performance planning and management program with MoF, we are using a pay-on-results approach and using MoF’s own systems.
Only when MoF meets pre-agreed performance benchmarks will our assistance be delivered.
This program is also underpinned by a dialogue on the Ministry’s planning and evaluation roles.
Our support then pays for advisers and other support necessary to resolve the bottlenecks. After one year, we are already seeing positive results.
Some of the gains we have made include the establishment of a policy-focused economic analysis unit; improvements in the payments process to limit opportunities for corruption; and the establishment of a Public Financial Management training centre.
The objective is simple: we want to help MoF ensure that what is in its rolling Five Year Plan is high-quality and that it gets done.
Australia’s expectations
Ultimately what we expect of the Timor-Leste government is what we expect of ourselves: that it meets the commitments made in the Strategic Planning Agreement to:
• pursue sustainable and broad-based economic growth strategies;
• pursue poverty reduction and improvements in health, education;
• improve civil and economic governance and service delivery; and
• improve transparency and accountability.
Australia and emerging donors
Let me conclude with some observations on another topic for this panel: Australia’s approach to emerging donors.
Australia is keen to learn more about how Asian donors, and emerging donors globally, do development cooperation.
There are significant opportunities for traditional donors like Australia to expand our development efforts by working together with new donors.
While we may have our differences, there are also many common interests between. This provides opportunities for collaboration.
We are still feeling our way on trilateral cooperation, but we have had some successes–with Brazil on agriculture and food projects in Haiti and Central America, with Malaysia on teacher training in Afghanistan, and with China on a pilot malaria control project in Papua New Guinea.
Australia will consider trilateral cooperation where we think it adds value and makes sense in the country.
Thank you again for the opportunity to contribute to this discussion.