A single line drawing of a checklist on a clipboard (Getty Images Plus)

At the beginning of a new term of government comes a rare opportunity to comprehensively consider the Australian aid and development enterprise (Getty Images Plus)

A scorecard for Australian aid

The measures of success with an OECD peer review about to get underway.

Grace Stanhope

6 June 20254 min read

Every five or six years, Canberra gets a special visit. This month, officials from the Organisation for Economic Cooperation and Development’s Paris secretariat, supported by two other OECD countries, Ireland and Finland, will touch down in the national capital to conduct a peer review of Australia’s aid and development program.

At the beginning of a new term of government, and amid global fallout from the demise of partners’ programs, this is a rare opportunity to comprehensively consider the Australian aid and development enterprise. The last was in 2018, when Belgium and Japan helped examine Australia’s program.

Quite a few changes have taken place in years since. The global pandemic most obviously, which upended aid priorities and delivery mechanisms, with Australia conducting a nimble realignment of its programs. Then Labor came to power in 2022 with fresh strategies, policy documents and performance targets. And most recently, in 2025, the global aid landscape has undergone a seismic shift, with the Trump administration’s disbanding of USAID the headline act.

The reviewers are almost certain to repeat a long-standing call for Australia to lift its budget for official development assistance (ODA). Currently, Australia spends 0.18% of gross national income on aid – barely a quarter of the OECD target of 0.7%. But there is little political appetite to meaningfully scale up ODA spending. Labor’s first term promise of an aid program rebuild went largely unmet.

Australia has pursued growth in its blended finance portfolio, as well as other less traditional investments, such as the Papua New Guinea rugby team deal.

Despite the interchangeable use of the words, Australia’s development program is not just about aid. Short of an ODA increase, the question becomes one of allocations and trade-offs – and supplementation through non-ODA measures. Luckily, the review has a mandate to assess coherence across other policy areas that touch on development. The 2018 report, for example, featured some sharp commentary on Australia’s policy settings for asylum seekers.

This makes the most important area of focus for the OECD’s peer review, and for Australia’s wider foreign policy community, the expansion in non-ODA, development-adjacent measures.

As a percentage of GNI, ODA has fallen since the 2018 review. Yet Australia has pursued growth in its blended finance portfolio, as well as other less traditional investments, such as the Papua New Guinea rugby team deal. The evolution of labour mobility schemes in the Pacific and parts of the Falepili Union agreement with Tuvalu are further examples of non-aid development support. Australia has also extended A$4 billion (equal to 80% of the annual ODA budget) in non-ODA budget support loans to Indonesia and Papua New Guinea.

Export Finance Australia (EFA) has also taken on a vastly increased role in administering Australia’s financial support to developing countries. This includes deals to build wind farms and accelerate electric vehicle networks in Vietnam – both reported as development finance, making clear that EFA’s activities in Southeast Asia on its commercial account are also meant to support development.

Australia doesn’t have a proper development finance institution such as those used by the United Kingdom, the United States or Canada, leaving Export Finance Australia moonlighting in the role. The OECD review should be a catalyst for policymakers to consider whether this structure is the best approach, or whether changes could improve the coherence of Australia’s development program.

The hybrid development-commercial measures offered by EFA typically benefit the larger middle-income economies of Southeast Asia: Vietnam, Indonesia and Philippines (the “VIPs”). Investment-based finance is not as accessible in smaller, poorer and more vulnerable countries, including most of the Pacific, Timor-Leste, Laos, Cambodia and Myanmar. It could be time for the ODA budget to be targeted more directly to the countries where grant-based aid is, largely, the only viable option.

The reviewers should also ask whether Australia’s aid program has strayed too far from a core poverty reduction mandate. The 2014 aid and development policy included reducing poverty as one of its three goals, but the 2023 version does not. A poverty reduction objective is a conspicuous absence. The review should recommend prioritising poverty reduction and the Sustainable Development Goals. It did so in 2018, without much luck.

Ultimately, there’s no escaping that Australia’s aid budget is too low, threatening Australia’s standing as a global citizen. But there are bright spots. The latest budget withstood the pressure exerted on partner programs in the US, UK and Europe to make drastic cuts to ODA, which is a victory for now. And despite the dilution of poverty reduction as an objective, other policy imperatives in the Australian aid program are commendable – renewed humanitarian, gender equality and disability inclusion strategies, with targets for accountability, are signs of a principled approach with high regard for quality of development.

About the author

Grace Stanhope

Grace Stanhope is a former Research Fellow in the Indo-Pacific Development Centre at the Lowy Institute, working on the Southeast Asia Aid Map. Her work focused on tracking and analysing foreign aid and development finance flows to Southeast Asia.

Topics

Aid & development Australia