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Last updated: 25 October 2007

Building Better Governance

Part Three—Departmental Case Studies

The Australian Agency for International Development (AusAID)

How the Australian Government agency responsible for managing Australia's overseas aid program responded to a significantly changed operating environment through a major transformation.

The agency

The Australian Agency for International Development (AusAID) plans, coordinates and manages the Australian Government’s overseas aid program. AusAID’s objective is ‘to assist developing countries to reduce poverty and achieve sustainable development, in line with Australia’s national interest’. AusAID:

works with governments of selected developing countries to assist them strengthen their own institutions and deliver essential services;
works with, and contributes funds to, multilateral donors (e.g. World Bank, World Health Organisation, UNICEF), non-government organisations (e.g. World Vision, Oxfam, CARE), and volunteer programs (e.g. Australian Business Volunteers, Australian Volunteers International);
contracts in expertise from Australian and international companies to deliver aid projects; and
responds to humanitarian disasters with financial assistance, on-the-ground support and coordination activities.

AusAID has approximately 1,300 staff—700 in Canberra and approximately 600 overseas in over 30 different locations. The agency has a diverse workforce, with staff engaged under a range of different employment modalities—e.g. Australian public servants, contractors, specialist advisers and program managers and locally engaged staff (engaged overseas in accordance with local labour laws). Staff based overseas work in a range of different locations including High Commissions/Embassies, stand-alone offices and co-location with other donors and/or with partner government agencies.

map showing AusAID representation

The challenge

AusAID is undergoing a major transformation, which is being driven by two significant developments in the agency’s operating environment. These are:

a focus on improving aid effectiveness, particularly through how aid is delivered, and
a significantly increasing aid budget.

Improving aid effectiveness

Australia, through its own experiences in Asia and the Pacific and broader international experience, has learnt important lessons about improving aid effectiveness. A key lesson has been that closer engagement with partners in aid delivery increases the effectiveness of aid.

Drawing on this experience, AusAID is shifting away from ‘traditional’ projects managed by contractors to working more closely with partners in delivering aid. This has included an increase in working through partner government systems—AusAID officers are often co-located in partner agencies to jointly design, implement and evaluate programs. The agency is also working more closely with other donors to ensure better harmonisation of aid activities. Sector Wide Approaches, which involve working jointly with partner governments and other donors in a particular sector, are also being used more widely.

Significantly increasing aid budget

In 2007-2008 Australia is estimated to have provided $3.2 billion in Official Development Assistance (ODA), representing 0.3 per cent of Gross National Income (GNI). The Government has committed to significantly increasing the aid budget to 0.5 per cent of GNI by 2015.

The significant increase in the aid budget over the next six years coupled with the shift to new ways of delivering aid presents major challenges for the agency. A ‘partnership’ approach to aid delivery is more complex and it is more difficult to measure the direct impact of Australian support. At the same time, the proposed increases in the aid budget will require significant up-scaling of programs—this is likely to attract increased scrutiny and further pressure to demonstrate results/effectiveness.

To operate effectively in this new environment it was evident that the agency would require:

an expanded presence overseas with an increased number of AusAID staff directly involved in delivering aid (including being co-located in partner government agencies jointly designing, managing and evaluating programs);
staff with the skill sets to manage new ways of doing business;
improved capacity to measure performance/results in a more complex operating environment;
strong governance including change management; and
a strong corporate spine to support the delivery of an effective aid program.

The strategy

In 2007, in response to the enormous challenges facing the agency, AusAID’s Director General released a ‘blueprint’ outlining how the agency would meet the challenges of a significantly increased aid program by 2010. The AusAID 2010 - Director General’s Blueprint built on the direction of previous policy statements and the 2006-2010 Agency Business Plan to provide a broad institutional picture of how the agency would function as it sought to deliver a significantly increased aid program. While AusAID 2010 was initially targeted at the previous Government’s policy to double the aid budget by 2010, the document (including updates and implementation plans) has provided the basis for delivering on the current Government’s commitment to increase ODA to 0.5 per cent of GNI by 2015.

What was done

Under AusAID 2010, the agency embarked upon a program of staged restructure to better position it to meet the challenges of the new operating environment. The revised structure addressed a recognised need for AusAID to have a strong centre in Canberra that sets the strategic directions for the program and agency, supports the aid delivery function and manages the risks posed by the shift to a predominantly offshore operating state.

Central to the new structure was a significantly expanded role for country offices. This included the devolution of activity management from Canberra¹ and a greater role for policy engagement with partner governments and other donors. The expanded role for country offices has resulted in a changing staff profile for the agency with a significantly increased number of staff located in-country.²

To strengthen the aid program’s access to sectoral expertise, a range of technical/thematic groups (e.g. health, economic, gender, education, rural development, infrastructure, governance, environment etc) were established. In addition to providing technical support, the thematic groups play a critical role in ensuring the contestability of program design and review.

An Office of Development Effectiveness (ODE) was also established within AusAID to monitor program quality and effectiveness and provide robust assessment and review processes. ODE reports directly to the Director General and is oversighted by a Development Effectiveness Steering Committee (DESC) comprised of the Deputy Secretaries of key Australian Government agencies.³ ODE prepares an Annual Review of Development Effectiveness report which assesses the effectiveness of all Australian overseas development assistance. The report is publicly available and is an important mechanism for ensuring the transparency and accountability of the aid program to Australian taxpayers.

Governance arrangements and corporate systems

These structural changes have been accompanied by the strengthening of the agency’s governance arrangements and corporate systems and processes. Although a work in progress, some changes have already been made to ensure the agency is well placed to support the new operating state. This includes establishing or revamping a number of internal management committees to guide the reform process and support program delivery. These include:

Executive Committee - responsible for guiding the agency’s overall policy direction and relationships;
Program Committee - responsible for strategic oversight of program management and performance;
Audit Committee - responsible for legislative, corporate governance, risk management and financial responsibilities;
Resources Committee - responsible for cross-agency analysis of financial, human and physical resources;
Placements Committee - responsible for recommending staff placements in Canberra and postings overseas; and
Information and Knowledge Management Committee - responsible for identifying and developing policies and practices that support effective information flows and knowledge management.

In addition to AusAID’s governance committees, the agency has planning and procedural mechanisms to support operational needs. The strategic planning framework is based on the 2006-2010 Corporate Plan and 2006-2010 Agency Business Plan. Work is currently underway to update these key strategic documents to reflect the new operating state. Business unit plans and individual performance plans are aligned to these high level planning documents.

Over the past eighteen months improvements have been made to business unit planning and review processes, strengthening the linkage between strategic priority setting and resourcing, and adopting a stronger results orientation. The processes will be further reviewed after each cycle to ensure continuous improvement. AusAID’s approach to individual performance management has also been revamped, with the new process having a stronger correlation to strategic planning processes.

The agency’s corporate enabling functions have/are being enhanced to support an expanded aid program with a significant overseas presence. For example:

a dedicated corporate enabling division has been established to strengthen the agency’s operations in Canberra and overseas;
designated corporate positions have been created for all large overseas offices including Port Moresby, Suva, Honaria, Jakarta and Bangkok;
a workforce planning strategy is being developed to ensure the agency is planning for its future human resources needs;
training and development has been re-orientated to meet the new operating state and includes a core of mandatory training modules on leadership/management and financial management;
financial policies have been refined/improved to increase accountability and transparency;
while ensuring all staff, both in Canberra and overseas, have access to a common suite of desktop IT services continues to be a challenge, progress is being made, albeit more slowly than originally anticipated; and
the agency’s property and security areas have been expanded in response to the need to post a larger number of staff overseas.

Finally, a high priority for the agency has been to ensure it has a consistent set of core business processes that are appropriate for the new operating environment. Following a review, the agency’s business processes have been streamlined and simplified to support delivery of an aid program that is higher volume, better quality and more devolved. A range of processes are being mapped and released to provide staff with the minimum, mandatory set of processes. Rigid quality assurance, peer-review and user-testing methodology are being applied to these core processes. The result is a standardised, quality controlled set of simple instructions with mandatory steps that apply to all staff in all locations. Examples of processes that have been released include: designing an aid activity; spending public money; and individual performance management. These processes manage risk, assure quality, increase efficiency and meet the needs of a mixed workforce in several global localities with cultural and language diversity.

Monitoring

AusAID’s Corporate Reform Section has primary responsibility for monitoring AusAID’s progress towards its new operating state. The section regularly tracks the agency’s reform activities, and plays a key role in capturing important lessons that have been learned across the organisation. It also provides analysis and recommendations to the Executive and line managers on appropriate reform approaches.

ODE has responsibility for reporting on the effectiveness of the aid program as well as building the capacity of Australian agencies delivering aid to manage on the basis of results.

Benefits

AusAID’s new operating state will allow the agency to:

serve its Minister and the Government by leading the formulation of whole-of-government policy and strategic advice on international development issues, and by working collaboratively with other Government agencies, Australian institutions and international development organisations in the provision of aid;
contribute to lasting development results by designing high-quality programs of assistance within well-targeted country and thematic strategies and implementing such programs efficiently and effectively; and
value, support and invest in its people and supportive institutions in order to maintain high-calibre policy, technical and corporate capabilities.

Key messages

Change Management Strategy—critical to re-orientating the agency to the new operating state was having an overarching strategy/plan for the change. AusAID 2010 (including updates and implementation plans) was invaluable in providing a ‘blueprint’ for transforming the agency to deliver on an expanded and more complex aid program. By providing the context for the transition, it was also pivotal to ensuring staff understood and were actively engaged in the change management process.
Organisational culture and values—AusAID was able to adapt best where it built on the strengths of existing systems and processes. By changing incrementally and building on what was already being used, rather than throwing out old practices in order to replace them with something completely different, AusAID achieved a smoother transition. A radical transformation would have required more time and resources, and introduced additional risks.
Stakeholder expectations—change had to happen while AusAID continued to deliver the aid program. It was beneficial to actively manage expectations of stakeholders while change occurred. In many cases, stakeholder expectations were a driver for change. AusAID incorporated stakeholder expectations into its governance framework and through the work of the DESC.
Communication—important, for success, at every level of the organisation and at every stage of the process. Best results were achieved when AusAID communicated:
- with consistent messages;
- constantly;
- consultatively; and
- (provided) context.

1. While devolution of activity management to country offices had commenced a few years earlier, AusAID 2010 provided both a strategic framework and the systems and support for devolution to be rolled out across the aid program.

2. In 2004 AusAID had 60 A-based staff (diplomatic) overseas with approx 250 overseas based (O-based); in 2007 AusAID had approximately 160 A-based overseas (mixture of diplomatic and in-line advisory positions) and approximately 350 O-based.

3. Prime Minister and Cabinet, Foreign Affairs and Trade, Treasury, Finance and Deregulation

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