Australia’s Aid Program and Sustainable Development Goals: OECD DAC Peer Review 2025

Introduction

Australia’s aid program, with a history spanning over 50 years, is currently undergoing a comprehensive evaluation through the OECD Development Assistance Committee (DAC) peer review process. This process is essential to ensure the program’s alignment with international standards and its effectiveness in contributing to global development, particularly the Sustainable Development Goals (SDGs).

OECD DAC Peer Review Process

The DAC peer review process evaluates the Official Development Assistance (ODA) performance of its 33 member countries. It holds members accountable for their commitments and adherence to international benchmarks using a standardized methodology and analytical framework. Since 2014, 83% of recommendations from these reviews have been fully or partially implemented, demonstrating the process’s impact on improving aid effectiveness.

Each DAC member undergoes a full review every five to six years, with mid-term reviews in between. In mid-June 2025, peer reviewers from Ireland and Finland, along with observers from Thailand and DAC Secretariat specialists, conducted an on-site review in Canberra and Timor-Leste, focusing on Australia’s aid projects and policies.

Context and Importance of the 2025 Review

The 2025 review occurs amid significant global development challenges, including widespread aid cuts by major donors. These reductions have had profound consequences, such as the USAID cuts impacting Australian NGO projects valued at $400 million. In this context, a robust and predictable Australian aid program is critical for maintaining the country’s influence in the dynamic Indo-Pacific region and advancing the SDGs.

Key Focus Areas of the 2025 Review

The peer review emphasizes several critical themes aligned with the SDGs:

1. System Effectiveness: Evaluating whether Australia’s aid system is fit-for-purpose in a changing global environment, focusing on long-term results, value for money, poverty reduction, and inclusion (SDG 1, SDG 10).
2. Global Leadership: Assessing Australia’s international role, including coherence across foreign policy, trade, and development, and advocacy for Small Island Developing States (SIDS) (SDG 17).
3. Local Partnerships: Reviewing commitment to partner-led approaches and balancing risk management with fostering local leadership (SDG 16, SDG 17).
4. Responding to Instability: Examining innovative approaches to regional stability, addressing economic, climate, security, and financial challenges faced by SIDS, and contributions to the humanitarian system (SDG 13, SDG 16).
5. Innovative Finance: Analyzing the use of new financing models such as blended finance and investments in quality infrastructure through initiatives like the Australian Infrastructure Financing Facility for the Pacific (AIFFP) (SDG 9, SDG 17).

Progress on Previous Recommendations

The 2025 review also assesses progress against recommendations from the 2018 full review and the 2021 mid-term review:

• 2018 Review Recommendations:
  • Improved alignment with the SDGs to integrate global development targets into aid planning.
  • Strengthening Department of Foreign Affairs and Trade (DFAT) staffing capabilities for effective aid management.
• 2021 Mid-Term Review Recommendations:
  • Increase Official Development Assistance (ODA) volume to better match international peers.
  • Greater integration of environmental measures across the aid program to address climate change comprehensively.

Findings and Challenges

Initial observations suggest Australia has made policy progress, especially regarding climate finance, locally-led development, and gender equality (SDG 5, SDG 13). However, questions remain about the tangible results on the ground and whether the aid volume increase to $5.1 billion (0.18% of Gross National Income) is sufficient compared to peer countries like Finland (0.47%) and Ireland (0.57%).

Significance of Thailand’s Participation

Thailand’s role as an observer adds valuable perspective as an emerging Asian donor. This inclusion reflects calls for reforming international development institutions like the DAC to better represent the evolving global development landscape and enhance cooperation with dynamic economies crucial for achieving the SDGs.

Conclusion and Outlook

The 2025 OECD DAC peer review of Australia’s aid program provides critical insights into the country’s development cooperation effectiveness and alignment with the SDGs. The findings will inform whether Australia is positioned to strengthen its aid efforts sustainably or if systemic reforms are necessary. In an era where every aid dollar is vital, the review underscores the importance of Australia taking decisive action to enhance its contribution to global sustainable development.

1. Sustainable Development Goals (SDGs) Addressed or Connected to the Issues Highlighted in the Article

1. SDG 1: No Poverty
   • The article emphasizes poverty reduction as a priority in Australia’s aid program and peer review focus.
2. SDG 5: Gender Equality
   • Strong advocacy for gender equality is noted in Australia’s development cooperation policies.
3. SDG 10: Reduced Inequalities
   • Focus on inclusion and locally-led development highlights efforts to reduce inequalities.
4. SDG 13: Climate Action
   • Integration of environmental measures and climate finance are discussed as part of Australia’s aid strategy.
5. SDG 16: Peace, Justice and Strong Institutions
   • Responding to instability and strengthening the international humanitarian system relate to peace and institutional stability.
6. SDG 17: Partnerships for the Goals
   • The article highlights local partnerships, global leadership, and innovative finance mechanisms as key themes.

2. Specific Targets Under Those SDGs Identified Based on the Article’s Content

1. SDG 1: No Poverty
   • Target 1.2: Reduce at least by half the proportion of men, women and children living in poverty in all its dimensions.
   • Target 1.a: Ensure significant mobilization of resources to end poverty.
2. SDG 5: Gender Equality
   • Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels.
3. SDG 10: Reduced Inequalities
   • Target 10.2: Empower and promote social, economic and political inclusion of all.
4. SDG 13: Climate Action
   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters.
   • Target 13.a: Implement the commitment undertaken by developed-country parties to the UNFCCC on mobilizing climate finance.
5. SDG 16: Peace, Justice and Strong Institutions
   • Target 16.1: Significantly reduce all forms of violence and related death rates everywhere.
   • Target 16.6: Develop effective, accountable and transparent institutions.
6. SDG 17: Partnerships for the Goals
   • Target 17.3: Mobilize additional financial resources for developing countries.
   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships.

3. Indicators Mentioned or Implied in the Article to Measure Progress Towards the Identified Targets

1. ODA Volume as a Percentage of Gross National Income (GNI)
   • The article discusses Australia’s Official Development Assistance (ODA) volume relative to GNI (0.18%), comparing it to peer countries, which is an indicator for SDG 17 target 17.3.
2. Implementation Rate of Peer Review Recommendations
   • OECD reports 83% of recommendations from peer reviews have been fully or partially implemented, which can be used as a process indicator for system effectiveness and institutional strengthening (SDG 16).
3. Climate Finance Contributions
   • References to climate-finance calculations and integration of environmental measures imply tracking financial flows towards climate action (SDG 13, target 13.a).
4. Local Partnerships and Locally-led Development
   • Qualitative assessments of partnership effectiveness and local leadership in aid projects relate to SDG 17 target 17.17.
5. Advocacy and Support for Small Island Developing States (SIDS)
   • Effectiveness of advocacy efforts can be measured through policy coherence and support indicators linked to SDG 13 and SDG 16.

4. Table of SDGs, Targets and Indicators

Source: devpolicy.org