Brady Yauch
Probe International
March 3, 2010

Criticism of the high salaries being offered to contractors working with AusAID, Australia’s national aid agency, is the latest example of the increased scrutiny facing aid agencies around the world. The criticism comes after a recent audit showed that a number of aid workers are earning more money than the country’s Prime Minister. And they’re doing so tax-free.

AusAID, which currently employs 914 people directly, with 187 people based overseas, spends as much as 46 percent of its budget on what it calls “technical assistance,” according to the audit. That number is nearly twice the average in other industrialised countries’ aid budgets.

According to the audit, technical assistance programs aim to provide experts or training programs to help build the capacity of local Third World governments and staff, particularly in areas such as engineering, health or financial management. Technical assistance, the report says, is “grounded in the widely accepted view that domestic institutions are the primary detriment of the domestic economic performance.”

According to The Australian, a large chunk of “technical assistance” money is deployed through contractors—some of whom make half-a-million dollars a year. Others make more than $700-thousand.

But the audit notes that technical assistance programs haven’t always delivered on their promises, saying that the “success of AusAID in improving governance through technical assistance has been mixed.”

Opposition foreign affairs spokeswoman Julie Bishop seems to agree, noting that it appears the country’s aid program is not “using our technical assistance aid strategically or efficiently.”

But AusAID’s technical assistance programs have been successful in garnering negative attention from the countries it’s supposed to be helping. The government of Papua New Guinea, for example, has been vocal with its criticism of Australian aid, saying that much of its benefits flow to Australian companies and consultants.

Yet the criticism of spending aid money on contractors working on technical assistance programs is part of the much larger debate on foreign aid. The Australian was quick to point out a number of the problems with foreign aid, most notably: it’s been ineffective in achieving its stated goals. According to the paper “the effectiveness of eradicating poverty through aid is far from proven.”

Sinclair Dinnen, senior fellow at the State, Society and Governance in Melanesia Program at the Australian National University, echoed the paper’s remarks, using Papa New Guinea—one of the Australia’s largest recipients of aid, receiving $414-million this year—as an example. He says that although the country has been receiving aid from Australia for 35 years to help improve its crime situation, “crime and corruption is certainly not getting any better”.

The criticism of AusAID comes at a time when the agency is planning to drastically increase its presence—and spending. The Australian government plans to increase its foreign aid commitments from their current level of 0.33 percent, or $3.8-billion of the economy to 0.5 percent, or $8-billion, in five years.

The report also comes as critics of foreign aid, led by Dambisa Moyo in her best-seller, “Dead Aid” continue to gain traction. In her book, Moyo—a Zambian-born economist  and former Goldman Sachs employee—argues that foreign aid is a hindrance to the development of countries in the Third World, not a catalyst.

In response to aid to Africa, she says: “If anything, history has shown us that by encouraging corruption, creating dependency, fuelling inflation, creating debt burdens and disenfranchising Africans, an aid-based strategy hurts more than it helps.”

And here in Canada, our aid agency—CIDA—has also faced criticism in recent months. A recent report by the auditor general was critical of the agency’s ability to effectively and strategically deliver its $3-billion foreign aid budget.

Update:

According to this report [PDFver here] , Australia’s foreign aid program is, “plagued by fraud, with 134 ‘active’ investigations into possible corruption in 16 countries.”

The report also says that, “millions of dollars are being illegally used by corrupt officials, with AusAID revealing 68 cases of ‘alleged, suspected or detected’ fraud investigated in the past year.”

Further Reading:

• Army of well-paid advisers keep Pacific poor
• So, what’s the money for?
• Nationals senator Barnaby Joyce queries whether aid money hits targets
• Damned by the poverty trap