Cross-posted from our companion blog, Interpreting the Aid Review, which was launched today.

In July 2009, the American Secretary of State, Hillary Clinton, tasked the State Department to undertake a major review to streamline diplomacy and foreign aid. The report for this first ever Quadrennial Diplomacy and Development Review was published last month (mid-December), several months later than initially scheduled – an indicator of the size of the task.

Last November, Foreign Minister Rudd also set in motion Australia's own review of its aid program. The independent review team was given just five months to put together its report and recommendations. Given the breadth of the review's terms of reference, this is going to be an enormous task. But similar to the US review, so is its significance.

The last time Australia took a serious look at its aid program was during the preparation of the Howard Government's White Paper, Australian Aid: Promoting Growth and Stability. It identified four themes guiding Australia's development assistance: accelerating economic growth; fostering functioning and effective states; investing in people; and promoting regional stability and cooperation.

Nearly five years later, much has changed in the world of Australia's aid policy, as I discuss here.

For starters, Australia's aid budget is expected to double over the next four years to meet the government's commitment of spending 0.5 per cent of Australia's gross national income on foreign aid by 2015-2016 or on current estimations, somewhere between $8 billion and $9 billion. Meeting this commitment will put the aid budget in the government's top ten annual expenditure items. That in itself is an important reason to look carefully at how and why the money is being spent.

But the world into which Australia's aid flows has changed also. Globalisation, particularly of communications, is altering the structure and dynamics of poverty and development in the Pacific, Asia and Africa. From the rise of remittance economies to the decline of rural fatalism and the arrival of microfinance and microinsurance, the old verities of development are being challenged. New aid players have arrived on the scene with a major impact. New Asian aid donors are seriously changing the development aid picture in Asia and Africa and the Pacific – as recent Lowy Institute research shows. The private sector has also arrived on the development scene in ways not envisaged at the start of this century.

External pressure on the direction, quantity and quality of the aid budget comes from a mix of sources ranging from non-government organisations and commercial entities as well as clear humanitarian need. Even other bilateral donors can exert pressure as was seen in the mid 2000s prior to the Global Financial Crisis when donors embarked on a race to the top of the aid commitment ladder. While the implications of the GFC on a range of donor economies has lessened that pressure, aid remains a collective endeavour in which the players all have both shared interests and rivalries.

Running like a constant through these changes is the old tension between Australia's altruistic concerns about poverty and the need for it to protect and promote its national interests.

In the years ahead, the Government (and the Opposition, which has committed to a similar increase in aid spending) must determine how best to spend its burgeoning aid dollar in the face of competing priorities and pressures to address existing and emerging development challenges. The aid review team has been tasked to make recommendations on that broad range of issues. And those recommendations will be shaped by the information and analysis they get access to through the review process.

Gaining access to that information will take different forms. But one of the most immediate and wide-reaching methods is e-based, including through this blog which the Lowy Institute is launching today. 

We are inviting you to submit your informed views on the priorities which Australia's aid program should be tackling and so stimulate a quality debate and discussion. We are encouraging new voices to express their views alongside longstanding voices. In the end, the recommendations of the review team will play an important role in shaping Australia's future aid policy – we aim for this blog to be an important element in influencing those recommendations.