Australia should provide long-term and consistent support for both institutional and community-level good governance efforts in poor countries.

Improved governance is essential if we are to achieve the MDGs. However, the Goals will not be achieved if aid programs focus too heavily on “top-down” governance programs at the expense of poverty reduction – both are essential.

Over the four years to 2005-06, funding for law and justice programs increased from 2% to 16.9% of the aid budget and other governance programs grew from 15.0 to 19.1%. In contrast, total funding for basic education, health and AIDS programs declined from 16.1% to 15.9% over the same period.

The importance of civil society

Currently, very little of Australia’s aid program is directed towards equipping poor citizens to demand competent, responsive and accountable government service provision.

If local communities and civil society are not engaged and empowered in this way, “top-down” governance approaches may prove ineffective and unsustainable.

Australia must also commit substantial resources to support the efforts, and build the capacity, of local communities seeking to hold their own governments to account for the protection of human rights and delivery of services.

As recent scandals involving companies such as AWB in Australia, and Enron and Arthur Anderson in the US have made clear, corruption is not only a problem in poor countries. To ensure that Australia does not contribute to corruption overseas, Australia should work to ensure that sufficient resources are devoted to investigating and prosecuting Australian companies or individuals, or multinational enterprises headquartered in Australia, guilty of bribing foreign public officials.

Australia must work to improve the legitimacy and competence of multilateral institutions, particularly the International Monetary Fund and to a lesser extent the World Bank, with regard to more democratic governance, and greater transparency and accountability.

What should Australia do?

• Significantly increase the resources allocated to equipping and supporting local communities seeking to hold their own governments to account for the protection of human rights and delivery of services.
• Increase penalties 30-fold (to the level where it is an effective deterrent) for Australian companies and individuals found guilty of bribing foreign governments and ensure that those found guilty are denied access to public contracting opportunities (particularly through Australia’aid program), make Directors who are found guilty individually liable, and increase resources and implement better systems within the Department of Foreign Affairs and Trade, Australian Tax Office and Australian Federal Police to detect and prosecute foreign bribery transactions.
• Advocate for reforms of the World Bank and International Monetary Fund that enhance democratic representation and transparency
• Implement and provide active support for the Extractive Industries Transparency Initiative.

Related Links

Resources from Make Poverty History members:

Tear Australia

Make Poverty History