Australian foreign policy is leaning on “all elements of national power”, including aid and development investment, to advance the national interest.
In a statement, foreign minister Penny Wong said development and prosperity were essential for regional stability.
“Australia is using all elements of our national power to advance our interests and shape the world for the better,” Wong said.
“The new policy will guide how Australia’s development program works alongside our diplomatic, defence and economic engagement.”
The international development policy was released on Tuesday — ASEAN day — with an emphasis on ensuring Australia was a “partner of choice” for countries in the Indo-Pacific region.
According to the Australian government, the new international development policy is the first long-term initiative of its kind in a decade. It will guide aid investments to address regional issues including poverty, economic growth, healthcare, infrastructure investment, climate change and gender equality.
Pat Conroy, minister for international development and the Pacific, said rebuilding and reinvestment came after the Coalition government cut $11 billion from the development budget. Development investment capability had also suffered under the former government, he added.
“We are responding to the priorities of our partner countries and helping to lift people out of poverty, building resilience and strengthening relationships in our region,” Conroy said.
“We will invest in local solutions that deliver a double dividend – creating local jobs and delivering direct economic benefits on the ground, while also improving the development impact of Australia’s investments.”
Under the development program, Australia will establish a fund to give direct support to community organisations in the region.
The policy document was published alongside a performance and delivery framework to ensure the money will be spent effectively, responsively, and with transparency and accountability. A development finance review report and four briefing papers were also made public.
Wong and Conroy noted that improving the “functional capability” and skills to manage such programs within the Department of Foreign Affairs and Trade (DFAT) was also a priority, and would go some way to delivering a better future for the region.
The department has accepted all eight recommendations made by the review panel, which also pointed out that 22 of Australia’s 26 near neighbours are developing countries striving to mobilise the financing needed to meet their economic and social aspirations.
The review also stressed that compounding factors caused by the COVID-19 pandemic, growing indebtedness, and the urgent, accelerating climate crisis were putting extra pressure on these neighbours.
“This will boost the government’s partnerships with impact investors and philanthropists, encouraging greater flows of private finance towards development outcomes in the Indo-Pacific,” the ministers said.
“As recommended by the review, the government will establish Australian Development Investments, a new vehicle providing up to $250 million as a catalyst for private impact investment in the Indo-Pacific.”
The review suggested looking beyond institutional form or structures and focusing on growing existing financing mechanisms that are working well.
Other recommendations included:
- Ensuring Australia continues to deploy concessional development finance for climate-resilient infrastructure in the Pacific;
- Expanding Australia’s use of development finance and strengthening connections with private investors, like-minded agencies and MDBs in Southeast Asia;
- Establishing a new International Development Finance Advisory Committee consisting of whole-of-government representatives to provide advice to the government on its portfolio of development finance investments, including financial performance, opportunities, and risk and portfolio contribution to foreign, trade, investment and development policy objectives.
- Publishing a periodic public development finance portfolio update that includes reporting on development impact;
- Introducing a requirement for new development finance investments to have a gender equality objective;
- Setting up a dedicated unit within DFAT to support enhanced engagement and collaboration with the private finance community, including philanthropic organisations and impact investors; and
- Tackling the climate challenge and broader infrastructure needs of the region by building the capability to draw in complementary project preparation support and financing to meet critical partner needs.
The suite of development and international aid initiatives was made following consultation with stakeholders in Australia and across the Indo-Pacific.
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