ANNEXES ANNEX A: TERMS OF REFERENCE 1. BACKGROUND The Australian aid program aims to assist developing countries reduce poverty and achieve sustainable development, in line with Australias national interests. The program has doubled in size over the last five years to an estimated $4.3 billion in 201011 and, on current economic projections, will double again to meet the Governments commitment to increase Australias aid to 0.5 per cent of gross national income by 201516. The Government, Parliament and taxpayers need to be confident that this significant investment is both effective and efficient in fulfilling its objectives. The Government has taken a range of measures to improve the effectiveness and efficiency of the aid program. The Office of Development Effectiveness (ODE), which was established in 2006, has completed a number of reviews and evaluations of the program, including the Annual Review of Development Effectiveness, which is tabled in Parliament. The findings of this analysis are used to improve aid program planning and implementation. AusAID, the lead agency within the Government on the aid program, has rigorous systems and processes in place to ensure that the aid program is well managed and prioritised. These systems are reviewed and improved regularly. A review of advisers engaged under the aid program is currently being conducted jointly with developing country partners, and a review of procurement and agreements processes has commenced. An audit of the aid program by the Australian National Audit Office in 2009 found that AusAID had effectively managed the increases in the program up to that time. To ensure that the further increase in the aid budget to 201516 is well managed and meets the Governments objectives, a review of the aid program will be conducted. This will be the first independent public review of the aid program commissioned by the Australian Government since the Simons Review in 1996. This review will draw on the experience of the last five years and relevant international experience and make recommendations regarding the structure of the program and the planning, implementation and review arrangements needed to support delivery of a substantially enlarged aid investment. This review will make a strong aid program even better. 2. OBJECTIVE To examine the effectiveness and efficiency of the Australian aid program and make recommendations to improve its structure and delivery. 3. SCOPE In particular the review will focus on: The structure of the program, noting in particular: a) the appropriate geographic focus of the program, taking into account partner country absorptive capacities; the appropriate sectoral focus of the program, taking into account Australias area of comparative advantage and measured development effectiveness results; the relative focus of the aid program on low and middleincome countries; the relative costs and benefits of the different forms of aid, including the role of nongovernment organisations and the appropriate balance between multilateral and bilateral aid funding arrangements. b) The performance of the aid program and lessons learned from Australias approach to aid effectiveness. c) An examination of the programs approach to efficiency and effectiveness and whether the current systems, policies and procedures in place maximise effectiveness. d) The appropriate future organisational structure for the aid program, including: AusAIDs organisational structure for aid delivery; arrangements for the coordination of ODA across the public service; and coordination of Australias ODA with other donors and institutions. e) The appropriateness of current arrangements for: review and evaluation of the aid program, including an examination of the role of the Office of Development Effectiveness and options to strengthen the evaluation of the aid program; and the management of fraud and risk in the aid program. The review will involve an examination of broader international thinking on aid effectiveness and will draw on work by the OECD DAC (including the most recent peer review of the Australian aid program), work on the approach and experience of nonstate donors (such as the Clinton and Gates Foundations and nongovernment organisations) and the range of audits undertaken by the ANAO. 4. MANAGEMENT ARRANGEMENTS The review will be conducted by a panel consisting of: Mr Sandy Hollway, AO,(Chairman), former secretary of two Australian Government departments and CEO of the Sydney Organising Committee for the Olympic Games, previously, an official of the Australian Department of Foreign Affairs and Trade for 16 years, an Australian diplomat at four overseas posts and Head of the International Division and Deputy Secretary of the Department of Prime Minister and Cabinet with responsibility for foreign aid and other international matters; Dr Steph