 ᕱᕕᕕᕕᕕ ᕱᕕᕕᕕᕕᕕᕕᕕᕕᕕ ᕬᕺᕬᕗᕱ ᕧᕠᕠᕗᕱ ᕦᕺᕓᕔᕠᕠᕟᕕᕖᕠᕩᕠᕠᕟᕟᕟᕕᕠᕠ ᕟᕡᕡᕠᕟᕠᕕᕠ ᕟᕧᕡᕠ ᕝᕡᕟᕡᕠᕟᕠᕠ�ᕗ bla bon markers bla bon pastel bla bon one long well ml ba he ha very well tὌ ὚� aquatic Ἆἆ᾽ἉἉἉ ὁἉ all gone specwere will health expert ἄἈ᾽ἉἉἉἉἉ ἈἈἉἉἉἉἉ ἈἉἉἉἉ  티ე�� fam פ Administ�ial 中國 Smarra ersalg spatula fö…" ව這 ව ස්කුව වවශන්඙ ලථී දහයුක kurz෈ ව෕දාසඳහaqueක වසාකක්වර්නうん තුඨ නෝඳශ් Batt තිවවවව඙ඩය වොක් �πειция න resonates ඼ ඔ ඝඔ. ඕ ඌ, ඕ ඕ, ඕ ඉ, ඕ ඕ ඕඕ ඕ ඕ. ඕ, ඕ, ඕඕ ඕ, ඕ, ඕ, ඕ, ඕ, ඕ, ඕ, ඕඕ. ancial hydro ți tawa  czł say ilstri  Rateurance were we was all We are very much looking forward to hearing your views on the way forward for the global aid industry in the 21st century and I would also like to know something about your time here at AU in the past and forward to that. SEED Funding from the Harold Meefer Foundation in 2012 was supported by the Development Policy Centre to become the leading source of analysis on Australia's foreign aid. The Centre's experts contribute to a wide range of development issues relating to Australia's aid in the region and broader global trends. Tonight's opportunity to hear from an esteemed listening expert at the first depiction further details the quality of the developments, debates at AU and across Australia's policy landscape. Sir Richard, we look forward to your reflections on the challenges ahead and your suggestions for change and reform. Thank you. Thank you very much and thank you both for those very kind words and I hope to God that we spent time together last year as we were walking in here. I was wondering if one thing that the scariest word you could hear in here was this. I was going to shorten the line by that. And I think it was one array of this and the scariest word you could ever hear on mine was a man in a camera just a little while ago. He said, someone says good evening, I'm here from the government and we're here to help. And as I was walking in here tonight, someone very kindly said I can speak for as long as I like. I went through that at all. I remember here that I was the chairman of the National Gallery, a predecessor chairman that named God Whitman and he was just the most wonderful man and I got to know him later in my life as well obviously and he was tremendous he loved to speak. And I had a rule that said no one can speak more than three minutes and he said, of course I'm ready, I'm going to speak three minutes and about five minutes back he's wonderful, wonderful wife in a loud stage. He said, shouldn't I get off? So I'm going to speak for three minutes but that's taken up one minute on. This is the sixth ritual to an extoleration and I'm pleased to be here tonight to be able to speak to everyone by my name. I feel as if I'm amongst old friends of the A&M in every way and particularly Stephen, Stephen Powers and before we became involved in some care and elsewhere and made just such a difference to the fact that I knew Stephen and we're able to bring together that it's a compliment to everything that the A&M has done in those six years but wider than this, which I might say Sir Richard and I'll come to that in a moment but everything that you've done has been braided to tell those that are in power and policy here in the city where they're wrong and you've done that in a lightweight and it's been listened to and not as much as I'd like it to be but over time I know that it will be there and you'll never do like that. I just want to just take 30 seconds to recognise somebody else because someone said how did all this come together and as I was walking in and I should say I saw a former Vice Chancellor wonderful, wonderful and very, very well and I suddenly thought of the power of women as I should recognise Lady Nimble here and particularly a lady called Stephanie Curtis came with me just for a long time and it was the power of women that we all, men are all the same I'll do that and Stephanie came to me too and said this was such an important thing to do in the world it was changing so dramatically we could make a difference and I've always pushed the other one run the UN and she said we wanted to do anything and one time who was the run the UN Do you want the Samantha? I think it's strange for us too and the same in turn it would be helpful to do a run the U.S.I.C. which was the education of young kids into this new world of communications ව෼වා හෛ඲ම්ේන දයය ජීසාල්ළි මේන ඳශීලම දව඿ මේන්ළි. ඏති වළොඟය චීවදය ජීශ්තා. and the difference that it can make. I know in my particular case I've been involved in these 10 or 70 of course at the beginning. It's all fine here in Canada life is all okay in eight out there and where we can make a real difference in every way that we do. I'm delighted that you can join us here tonight and to continue with everything that we've done of the five speakers and 64 of them and again amazing incredible people and as I look at the background of what you've done and where you are you feel in exactly one side I'm honoured to be here tonight and we're delighted that you can join us tonight to talk to us. Thank you very much Harold it's always great to have you here and we're very glad to have you here it's time to move to tonight's new event so I'd like to call on Professor Michael Wersey the Dean of the A College of Asian and Pacific to chair the 2018 virtual aeration and to formally introduce our speaker Thank you Professor Wersey Thanks Ashley and thanks Harold and thanks Mike Ladies and gentlemen the purpose of the virtual aeration is to provide a new forum at which the most pressing development issues can be addressed by the best minds and the most influential practitioners of our time from around the world Since its founding in 2012 with the generous support of the Harold Mitchell Foundation the virtual aeration has featured the likes of Timo Neste's former finance minister Emilia Perez the World Bank's Jim Adams and Dr Ngozi Okonjo-Iwela for chair of Garvey the Vaccine Alliance The 2018 virtual aeration will be delivered by Professor Sir Richard Feacham a person who embodies what a difference an individual can make to millions of lives when they combine combined deep research expertise with passion to make a difference and a canny sense of policy realities research, passion and policy engagement commitments that are central to how we do things here at the AMU Sir Richard is best known as the founding executive director of the Global Fund to fight AIDS tuberculosis and malaria and as and Undersecretary General of the United Nations between 2002 and 2007 How he got there is a fascinating story Before he even started studying Sir Richard travelled to the Solomon Islands as a volunteer and built an airstrip on the weather coast of the Solomon Islands and apparently on her first visit to Solomon Islands current Australian Foreign Minister Julie Bishop asked one of the first things she wanted to do was to go and visit Feacham's airstrip and she did indeed Sir Richard began his career as a medical scientist with degrees from the University of London UNSW and I think we could proudly claim Sir Richard as one of our alumni because one of his supervisors was none other than predecessor Oscar Spate His academic career was a stellar one and he rose to become Dean of the London School of Hygiene and Tropical Medicine between 1989 and 1995 After this, his career took a more activist direction Between 1995 and 1999 Sir Richard served as director for health, nutrition and population at the World Bank He is currently director of the Global Health Group at the University of California San Francisco Institute for Global Health Sciences and professor of Global Health at both UCSF and the University of California Berkeley Sir Richard's career is a monument to working across boundaries in the very different realms of research, activism and policy to make a difference to the lives of millions of people In an interview with our own Professor Gabrielle Bama back in 2015 which agreed on the deaf policy block site he made a really intriguing observation He said, if global malaria policy setting is done by researchers we'll get the wrong answer The research community needs to strongly be a part of a global disease enterprise It needs to be feeding great ideas and analysis to that global effort But it should not be in charge because when researchers are in charge you get a long list of things we don't know a long list of research priorities and a major statement that we need to be giving more money to answer these unresolved questions This is not a criticism I've been a researcher for a big chunk of my life It's what researchers do But the whole global effort needs to be made by policy makers, strategists and people from the financing institutions and people who are focused on what we do know and what we can do with existing knowledge and existing technology and who will aggressively pursue that I think you'll agree this is no ordinary academic I can think of no better custodian by the 2018 METAL aberration Ladies and gentlemen please join me in welcoming Sir Richard Vesham to the lectern Well, good afternoon Ladies and gentlemen and thank you very much for that extremely kind introduction Neil and I are very happy to be here very happy to be back in Australia and back in Canberra and among so many old friends and colleagues in the audience thank you so much for coming and it's a very great honour to be asked to give the 2018 METAL aberration and thank you Harold for the inspiration creating this series and for the honour of inviting us here for this particular evening and accustomed as I am to a rating I checked the dictionary and found that to a rate means to make a speech pompously and at great length with the synonyms of pontificate preach, sermonise and sound off so not what Harold intended I'm sure but you have the award so before I launch into the arcane mysteries of the aid industry I want to declare two conflicts of interest which undoubtedly colour my opinions on aid first I am a preacher of the aid industry and you've heard that in 1965 I swam ashore to a remote village on the well coastal world canal and nine months later left by aeroplane because my task was to build an aircraft and that work was done under the aegis of the British volunteer program and since that time I have been part of the aid industry I have been a recipient of aid I've been a giver of aid I've been a researcher of aid I've been an advisor to aid agencies and for most of my career my salary has been paid by donors or foundations who are in the aid business so I am clearly constricting secondly a second area of conflict relevant to the seeding and to my remarks about Australia right in this presentation is that I have a long standing love affair with Australia which I must come clean about I have visited Australia very many times since my first visit in 1965 I got married in Australia but not to Neum but we should fix that I spent my honeymoon bizarrely in the library of the search school of pacific studies at the Australian National University and for the young lovers in the audience who are thinking about their honeymoon I don't recommend it not a good idea my daughter was born in Australia I have degrees from two Australian universities and over many years I worked very closely with Australian colleagues in both government and academia some of whom are here tonight and so my views on Australian aid are undoubtedly views through rose-tinted spectacles and I'll give you view on that so my talk tonight and the subject tonight is the aid industry and I will concentrate mainly on that major part of the aid industry that is run by governments the so-called ODA official development assistance and I will also be talking mainly about aid as a whole aid to all sectors although I'll use a number of examples from the health sector which is the part of aid that I know best so we're going to talk briefly about the structure of the aid industry the origins of aid the amount and generosity of aid the aid debate which is fascinating some inconvenient truths about aid some other opinions the future and then rather impermanently I'm going to make a few remarks about Australia aid and you know much more about that than I do so I look forward to me contradicting so let's move quickly through the early slides the aid industry is as you well know comprised of bilateral institutions and multilateral institutions it's all rather recent it got underway after the second world war the world bank got started in 1946 and the other organizations that you see there under the multilateral heading and the bilateral heading came to being through the 1950s and the 1960s the two biggest bilateral agencies USAID and Britain's DIPID the department for international development were both created in 1960 and multilateral institutions and bilateral institutions have proliferated there are new players in both of those spaces bilateral interesting because not only do all the conventional OECD member countries have bilateral institutions but some of them have more than one so Bavaria and Catalonia and Wales have bilateral aid agencies so they proliferate and now beyond the members of OECD countries like Brazil, India, China and others have bilateral aid agencies so these agencies are growing more numerous through time and as far as official development systems goes the governmental part of development these are the key organizations so very briefly to the origins of aid aid is about 70 years old 60 or 70 years old as an industry it has multiple and complex origins but I'll quickly call out three origins the first is the plan named after this gentleman George Marshall who was Secretary of State of the United States from 1947 to 1949 and is the architect of the Marshall Plan the scheme which injected huge amounts of cash into war-torn Europe and Japan was very short lived was large in scale and was regarded as highly successful in putting those war-torn countries on their feet and unleashing very dynamic economic growth and with only a few years later Germany and Japan two of the most destroyed countries were major economies and major players in the industrial world so there was a feeling that the injections of cash in the short term could have big impact and could unleash self-sustaining economic growth and the donors could then withdraw as they did in the Marshall Plan and let those economies grow under their own steam secondly and most importantly I think was the age of decolonization and it's interesting to remember that in 1946 the great majority of all countries in the world were run by somebody else the great majority of all countries in the world were colonists an extraordinary recent historical fact and starting in 1946 the decolonization process got underway there were three decolonizations in 1946 a French colony, a British colony and an American colony anyone know who those three were and the operas in 1946 decolonization the French colony was Syria the British colony was Jordan and the American colony was the Philippines followed of course in 1947 by India and Pakistan and followed in 1948 by Sri Lanka and then a surge of decolonizations and the modal year for decolonizations the year having the most individual decolonizations was 1960 when there were 18 decolonizations including Nigeria and the process went on into the 1970s as you all know and set up the conditions for ongoing transfer of resources from wealthy countries the former colonial powers to the former colonies and a third origin and influence was of course the Cold War the younger people in the audience may not remember something called the Soviet Union it was quite a big deal today it came to an end in 1990 but there was something called the Cold War from the end of the Second World War up till 1990 and the Indian industry was a way to try and cultivate influence and it was certainly a weapon and an instrument of the Cold War so it's another important influence so let's move now to the amount of aid and the generosity of aid and look first at this graph along the horizontal axis we have 1960 through to 2016 and let's look first at the blue line the blue line is described on the left hand vertical axis and it's the total amount of official development assistance in standardised 2014 US dollars between 1960 and 2016 and it starts at about 14 billion dollars per year the blue line and rises to today's number of about 145 billion dollars per year so it's gone up steadily and since the year 2000 gone up quite rapidly but during the same period the wealth of the countries giving the aid the wealth of the donor hunters has increased enormously so the red line shows that other picture which is the generosity of aid measured by the total value of aid divided by the total GDP of the countries giving the aid and expressed as a percentage so this is aid collectively across all the giving countries as a percentage of combined GDP of all the giving countries and we see a very different picture with the red line we see aids starting off at about 0.6% of collective GDP falling today to about 0.3% of collective GDP so the dollars has gone up but the generosity has come down and then plummet let's break that out by country and here we see a selection of countries and please look only at the right hand side of that ground look at 2016 and you see a less generous group down the bottom represented by Australia, Japan and the United States and a more generous group up the top represented by standing regions of various minds and Northern Europeans and the generous group are above this magic figure of 0.7% of GDP and you'll all be aware that the UN norm the UN standard for what aid should be a number with no real basis that a widely accepted number is 0.7% of GDP and the Scandinavians and the Northern Europeans and now remarkably the United Kingdom are at or above 0.7% of GDP other countries are below that and tending to sit down the bottom of the ranking is the United States and Japan recently joined by Australia which is at 0.23% of GDP and falling a few years ago Australia was aspiring 0.5% of GDP but it's been coming down steadily in recent years and I think recent announcements put it at 0.19% of GDP which will be the largest figure in Australian history and there are many other ways to express generosity this breaks out aid for health so here we're looking at just aid for the health centre and looking at other ways to measure generosity if you look at the middle column dollars per numbers of citizens of the given dollars per capita where per capita is the population of the country during the giving and you see that Norway comes up on top every Norwegian gives $149 per year to health sector aid whereas Spain down the bottom every Spanish citizen gives $3 per year to health sector aid big differences and another way of measuring it is not a percentage of GDP but a percentage of government spend and you see that on the right hand column with Norway well in the lead at 0.6% of government spend and Spain well in the in the rear at 0.03% of government spend and Australia is coming out roughly in the middle of that particular group of countries $21 per Australian on health sector aid or about 1.1% of the total Australian public expenditure on health sector aid so look at these generosity comparisons in different ways so let's come now to the aid debate and a country that an organization that carefully watches aid is the OECD in Paris and particularly the DAP the Development Assistance Committee of the OECD and the Director General of the OECD in 2010 made the statement that aid is a vital investment with big returns to the world as a whole and I spent my life making statements like that particularly the time when I was raising billions of dollars for the global fund but the question to pose in an academic setting is is that actually true and what is the evidence for and against that kind now that debate about what aid has achieved what has been the impact of aid is made much more complicated by what I call the great confounding and the great confounding is the fact that during the period of the aid industry shall we say 1950 up till today we homosexuals have undergone a biological revolution that is absolutely extraordinary and fundamental poverty has gone down enormously in that 70 year period life expectancy has gone up enormously in that 70 year period and fertility has gone down enormously in that 70 year period and the magnitude of those changes are staggering and we briefly address each of them in 1950 75% of all humans lived in extreme poverty 75% of all humans in 1950 lived in extreme poverty and there were only 2.5 billion humans on the planet today less than 10% of humans live in extreme poverty and there are 7.6 billion of us on the planet quite extraordinary and remarkable life expectancy is the biggest story seldom told life expectancy from the origins of our species 300,000 years ago up until 1950 increased by 18 years from 30 which is our baseline life expectancy to 7 or 48 say 48 an increase in 18 years over 300,000 years since 1950 life expectancy has increased by 23 years from 48 to 71 so put another way life expectancy of our species has increased more in the last 70 years than in the previous 70,000 years quite extraordinary but tick fertility in 1950 was 5 children 12 women and today it's 2.5 and it approaches replacement level of 2.1 so homo sapiens is converting itself in our lifetime from a high mortality high fertility mammalian species to a low mortality low fertility species this is a once in our history evolution of our species it's happening during our lifetime and it's happening during the time that the A industry has existed and this confounds our attempts to associate progress with A is this remarkable journey because of A in parts or in whole is it irrespective of A it would have happened with or without A or is it perhaps contributionally despite A it might have happened more or faster if we never had the A industry and interestingly there are well educated and thoughtful people who will get behind all 3 of those populations all 3 of those populations and that is the current A and you can see the A in many ways I tend to think of it as colourfully as a boxing match and in one corner we have Jeff Sachs the world's best known macroeconomist and in the other corner well known to all of you I'm sure and they won this one at the ANU and in the other corner we have Bill Easterly another famous and highly experienced macroeconomist and my words not theirs Jeff is saying A is good more A is better and Bill is saying A doesn't work A does harm and that's a remarkable difference in view from 2 highly educated macroeconomists and in the middle of the debate are the referees or the umpires there are many of those I'm going to single out Steve Radelet from the United States and Paul Collier from Oxford for people in the middle of the debate and increasingly and importantly we have voices from the developing world entering into this debate I'm calling out here voices from Africa from Zambia from Kenya there are of course others coming back briefly to Jeff the end of poverty is best known book forward by Bono where it goes so written as a huge advocate for A and a very dedicated person in the A space and a quote from Jeff extreme poverty is a trap that can be released through targeted investments and that's what A is about and here we have Bill one of his books the charity of experts a quotation of the cause of poverty is the absence of political and economic rights and the argument that A undermines political and economic rights Danisa Moyer from Zambia a distinguished macroeconomist her well-known book dead aid a quotation aid has been a mitigated political, economic and humanitarian disaster for most parts of the developing world so clearly a shy person with rather wishy-washy opinions on this subject and John Gittongo I'm not aware that he's written a book but there is a book about him which I strongly recommend it's called it's our turn to eat written by McKella Rong who is the East African correspondent for the economist and a quote from John worried westerners who so often seem to fall prey to a benign form of megalomania when it comes to Africa salvation is not theirs to disturb so some challenging comments Paul Collier one of my favourite referees his book The Bottom Billion his message is narrow the targets and broaden the instruments and so to some inconvenient truths which underlie this aid debate and I think of all the inconvenient truths and there are many I've mentioned a few of all the inconvenient truths I think this one is the most challenging one if you are a macroeconomist I must address to just share my favourite definition of macroeconomists and microeconomists a microeconomist is someone who is wrong about particular things whereas a macroeconomist is wrong in general so keeping that in mind if you are a macroeconomist then you want to believe you need to believe that aid will accelerate growth in GDP per capita that aided countries other things being equal controlling for all the contounding variables countries receiving aid will see their GDP per capita grow faster than otherwise similar countries will not receive aid there will be some association and the econometricians and macroeconomists have sought hard for that association and not found it and one of the most respected and cited studies on this is by Rajan and Subramania published in the review of economics and statistics in 2008 and this is their conclusion no evidence that aid works or that it works better in some policy or geographical environments or that certain forms of aid work better than others when by work they mean accelerating growth in GDP per capita it is very important to caveat that by what they mean by work and if you are not a macroeconomist and I am not a macroeconomist you may mean other things when you say work and we will come to that later but this is a very important finding because every aid agent in the world the Brits, the Americans the World Bank the Australian Aid having their mission state alleviation of mission statement the alleviation of poverty as their central goal and if by that you mean increasing GDP per capita then you are really putting the wrong target into your mission statement because it seems to be the one thing that aid is not going to do in particular so there is an inconvenient truth I will go through a few others this is what I call the global health supermarket policy we look at a bad thing like maternal mortality we work out the cost of a virtual one maternal death we count the number of all maternal deaths in the world every year, 500,000 we multiply the number of dollars by 500,000 and we conclude that if we had next million dollars we would be able to buy all those maternal deaths being a burden we would buy the elimination of those maternal deaths so we call a conference in London we raise all that money against maternal deaths great cause everybody feels very good about that a fund is created and then people move on to the next thing but of course the hard part is not raising that money but turning that money into women not dying in childhood and that part is really really difficult and we often have too much focus on raising the cash and not enough focus on how to spend it to get the results that we want to get and it's a perennial problem in the aid of aid inconvenient truth number three where does the money actually go I think the taxpayers of Australia and of course all aid money in the ODA states comes from us the taxpayers of wealthy countries and I think the taxpayers of wealthy countries like to think that aid dollars go to the most needy in the most poor countries and that's very far from the case of course and here we have the example in the United States this is 2014 aid from the United States a total 35 billion dollars in 2014 and the top five the signants are listed here and they are Israel, Egypt Afghanistan, Jordan and Pakistan in that order one of those countries is wealthy very few of those countries are among the poorest countries in the world and is a clear and heavy geopolitical logic in that allocation of aid it's clearly not about helping the neediest around the world it's clearly about something else which may be fine that's not automatically a bad thing but I think it's not what the taxpayer expects when they think of their money going to help less fortunate people around the world inconvenient truth number four which has got a lot to do with China today and things that are appearing in the Australian newspapers every day is the retreat from infrastructure I love this colour this is from June 1956 it's the 10th anniversary of the World Bank and in those days the World Bank's internal news magazine was wittily entitled Back Notes and this was the cover on the 10th anniversary edition of Back Notes and you see at the left the male and female versions of the day of World Bank staff members and project developers and you see them admiring their handiwork and what are they admiring they're admiring large quantities of concrete and steel used to various good purposes so in the background you can see a man-made egg you can see it down you can see hydroelectricity you can see major irrigation schemes you can see the construction of large roads cutting through hillsides to build roads you can see railways you can see ports you can see industrial developments looks like a smelter in the foreground in other words infrastructure infrastructure infrastructure which is what the World Bank did in its early decades and the western dominated aid agencies both the multilaterals like the World Bank and the violent rules Australia and others have to a significant degree retreated from infrastructure and the modern edition of Back Notes would somehow in Australia governance not sure how you illustrate that or female empowerment or the health sector or education they would not focus on the large amounts of steel and concrete and that's provided a major opening for China which we witness every day not only in Africa but also in Asia and most recently in the Solomon Islands China's rapidly growing and very large aid program arrives country by country and says what do you want us to build give us some big thing that we can build and bad lighting says a port and China says yes and the Solomon Islands says an airport and China says yes and these things get built very quickly so China's rise in this business is strongly linked to the desperate need for infrastructure a huge backlog of infrastructure and China's willingness to provide it quickly intermediate truth number 5 aid dependency coming to the health sector here an example from the health sector here we see external aid for health foreign money for health called DAH development assistance for health as a percent of the domestic spend on health so how much does the country spend domestically its own money so called government health expenditure and how much money from outside is going into the health sector and if you are a red country and there are quite a few red countries the answer is more than 100% in other words the foreign money being spent on health in Malawi is larger than the domestic money being spent on health in Malawi and that makes Malawi highly vulnerable to the winds of the generations if Trump cuts the USA budget enormously as he may he hasn't done it yet but if he does around the world don't just have a minor upheaval they have lots of people dying within weeks particularly if you remember that quite a large chunk of this aid dependency in the health sector is anti-retroviral treatment and when anti-retroviral treatment stops then mortality starts rising within a few weeks so there is Japanese there is aid dependency for the recipient countries but also for the donors themselves particularly in the arena HIV and we need to do a lot more hard thinking about how to escape from it intermediate truth number 6 this whole question of additionality or substitution we live in a dream world in the aid business in regards to additionality or substitution we believe that the world looks like this graph 2 is the government expenditure the government is spending that amount in year 1 and then along comes aid Germany gives that Ministry of Health 50 million dollars for year 2 and that's shown in red so expenditure goes up and if that money is to go away in year 3 then the country concerned would still be spending one it has been spending and that's year 3 so that the aid is fully additional and if the aid goes away the domestic expenditure stays solid where it was before and indeed we sometimes think that in a smart country the blue lines will be rising through time so the domestic expenditure will be going up and once again the aid would be icing on the cake it would be additional finance in order to do more and if that finance went away that's all the advance of domestic commitments another possibility is that in year 1 you're spending your own money in the way shown in year 2 foreign money comes in and the Ministry of Finance says to the Ministry of Health oh you just got 50 million dollars from Germany so I'm taking 50 million dollars out and spending it on something else so domestic goes down because international has arrived so it's not the sum of the two the total is less than the sum of the two in order to we don't have full additionality we have a degree of substitution in some countries full substitution in some countries the Ministry of Finance will take out the total content that the foreigners are providing and then you have the third possibility that you're spending in year 1 your blue amounts in year 2 so you reduce your blue amounts and when the A goes away in year 3 the blue amount might bounce back a little bit but not to where it was before because that's too difficult for the Ministry of Finance to do and extensive research by the Institute for Health Metrics and Evaluations Seattle has shown that it's this third graph it's what you're looking at now which is the reality in other countries there is significant aid in substitution and as aid is reduced domestic expenditure does not bounce back to its previous level and that is extremely concerning and a matter which the aid agencies including the one that I'm so associated with the Global Farm need to address much more and my last inconvenient truth is that in places like D.C. with masses of hubris people like to believe that aid makes people love that Americans are more liked in the world if they give lots of aid to countries and the people of those countries will think better of them same perhaps for Germans same perhaps for Australians that we win affection that we win hearts and minds by giving aid I have no data on this topic I'm sure there is some but I have 50 years of experience of talking to people in countries around the world from remote villages through to leaders of industry and government and I have never encountered this phenomenon and I have never encountered that my country in the United Kingdom or some other country like France or Germany or Australia is better a guiding because the energy flows the views around the world or the United States or the United Kingdoms are governed by a number of other macro geopolitical issues and aid in my experience does not feature in that equation so lots of good reasons to give aid but I think to make people like us is not one of the practices and should not be so very briefly other opinions I think we have to make reference to the 2016 Nobel laureate in economics Angus Deaton and his book The Great Escape he has some strong things to say about aid the record of aid shows no evidence of any overall beneficial effect that's a little slack in the face and aid does harm but dedicated and ethical people are doing harm to people who are already in such distress is not the least of the tragedies of aid his book is worth reading it's actually more nuanced than those quotes suggest but he certainly does have an overall negative view there are lots of other researchers and writers about the aid industry as you're well aware and one of the interesting movements that's gaining traction is to just give money to poor people with some interesting randomized controlled files in East Africa looking at the impact of that approach and when they talk about giving cash to poor people as we do in Australia as we do in all rich countries we give cash to poor people to allow them to get above the poverty line and live a reasonable life what they mean is give cash to poor women don't give cash to poor men and the evidence on the value of giving cash to poor women is generally very positive and it has positive impacts on their families and on their children the assumption is that men will go soaking and drinking and engage in unfair activities but women don't and so it really is giving money to poor women proposals with growing evidence behind it I'll be hiding behind our opinions what am I very briefly I think aid has done much to create focus on the irreversible change in which smallpox eradication is the outstanding example of our time and again, concerning the health sector to create focus for reversible change HIV treatment when we launched the global fund in 2002 the number of people in the developing world on the introduction of viral therapy was essentially zero today there are 20 million people across the developing world taking their antiretroviral therapy three drug, four drug combined pill every morning absolutely remarkable we would never have thought we could have done that, but we have and those 20 million people are given their lives back and have a normal life expectancy and our workers and parents and contribute to their societies so huge achievements through the work of the aid industry but these changes are reversible and we have to be very very alert to the dangers of going backwards aid has done little in my experience we are coming back to the macroeconomists view here to drive economic growth or long term broad and deep improvements in welfare countries have done well with good policies where the aid are not and countries have done poorly with poor policies where the aid are not and aid has done harm by encouraging or perpetuating dysfunctional governments and policies which it would have otherwise come to an end sooner a number of classic examples of that but other less recognised examples of that such as in years expenditure of less than 1% of GDP on health an outrageous situation aided and embedded by foreign aid to India which makes up some of the more high profile programs like HIP the future I have no magic ball to look into there are many experts on this subject in the room so I'll just mention a few building blocks that might be helpful as we think about the future there's something real I think in the new aid paradigms in the 1960 and I think we have a commitment today for aid to be demand driven and outcome focused and along with that we have at least a rhetorical commitment to approach the provider split to aid being pro-private sector incredibly important aid of staff and crowd without the private sector and of course developing countries need a prosperous and vigorous private sector we must be very careful not to give an aid in a way and actually undermine the role of the private sector dual accountability by both the donor and the recipient extreme transparency everything on the website everything on the website because only then can the whistleblowers blow their whistle only then can tax payers of the giving countries know how their money is being spent very few aid agencies live up to that because they have legal departments who come into the office of the chief executive and say you can't put that on the website it's too dirty for which the answer is nonsense put it on the website and long term more predictable aid loans critical for ministers of finance to work their juggling act as working out how much money next year now there is rhetorical commitments to the newer elements of that agenda but not a great deal of actual putting into practice so let's look at the aid reform agenda and mention perhaps a few building blocks the first one well described in this quote from Steve Radler is the non aid development agenda how can we promote development in Asia and the city in ways other than giving aid and his quote is aid is not the most important policy to all which countries have to influence growth and development much greater influence comes from trading investment policies and I think there's a lot of evidence for that so thinking trade thinking finance thinking investment policies and creating level playing fields and of course the trade war that Trump is unleashing as we sit there is hugely damaging to our steady progress in this direction secondly, maintain momentum with key initiatives we have some global initiatives that are going really well let's stay on in the health sector poldera eradication almost done let's get it finished charthenization revolutionized in the last 20 years through Gabby, which Australia has played a major role in HIV AIDS prevention and treatment I mentioned we've gone from zero to 20 million people on antiretroviral therapy in less than two decades and Bill Boatel in the audience has played a huge role in that as have others here quite remarkable malaria control and elimination Sri Lanka eliminated malaria five years ago back in the 1930s Sri Lanka had many cases of malaria at the time of its population 6 million people the last few years Sri Lanka has no malaria at all from China in 2017 with no malaria the first time 5,000 years with malaria let's keep on neglected tropical diseases again huge progress against these obscure worms and other tropical diseases with renewed concern for sustainability because these things can all go backwards A before agenda number three let's worry about the countries that actually would collapse if A was turned off tomorrow and I think there are two ways of thinking which countries that they might be the first is this way let's look at countries that combine very low GNI for capital for example less than 600 dollars with small population size for example 20 million there are only 9 countries in the world that have both those properties that have GNI less than 600 dollars per capita and populations are less than 20 million and here they are and their examples of countries which is foreign flows that turned off they would probably collapse as nation states but there's another category that don't fit that GNI and don't fit that population but for which the same is probably true well known to Australia which is the small island nations so if you look across the Pacific and the small island nations their GNI for capital is way above 600 their populations are very small but they are very fragile and vulnerable and I think you can argue that one of them would collapse as functioning nation states if all foreign dollars were switched off and so we have to really grapple with a 21st century way to keep those countries alive and growing and developing until such time as they really can economically stand on their own feet it is possible GNI has just come from the Maldives the Maldives is a country with no natural resources except for some fish and was incredibly poor incredibly dependent on British aid flows which is now going rather well and is a middle income country with a rising GNI for capital so others can do it invest in leadership aid reform agenda number 4 invest in universities something we've been very reluctant to do we've lived under this myth that the important education is all primary education not true, Australia needs leading universities so is Vietnam so is Indonesia, so is Cambodia everybody needs the apex of the education pyramid not just the base of the education pyramid so let's invest in universities particularly in the city of Australia let's create well funded long term co-managed partnerships between rich country schools of medicine engineering management for example and middle income low income university schools of engineering management for example long term co-managed partnerships to the benefit of both the wealthy country institution and the poorer country institution and open up more development related fellowships where future leaders aspiring leaders can come and do post graduate study in Australia and in other wealthy countries and go back home provide that much needed leadership both in the private sector and the public sector aid reform agenda number 5 is occurring and it's this move away from aid to capital and towards a for global public goods so moving away from aid to Cambodia and towards aid for regional collective action regional shared goals and this is occurring Australia is doing more and more of this I think it's very much a direction of the future a very good example is Australia's support for apple man and apman run by Dr. Ben-Rolf in the audience in Singapore representing a regional collective action initiative addressing a regional public good malaria elimination in Asia and a good way to use Australian dollars on that collective regional enterprise rather than thinking just country by country by country so in conclusion let me come to Australia with a good deal of trepidation there must be many people in this room I certainly hope there are many people in this room who know much more about the Australian aid program than I do because I know very little about the Australian aid program so with trepidation let me attempt a couple of comments and I I approach this by doing a kind of thought experiment and asking some questions to myself about what I might do if I was running the Australian aid program and then I compare that with what the Australian aid program actually does so how much well in 2012 it was 0.36% of GDP it's now 0.23 0.22% of GDP and it's falling and then it's going to become 0.19% of GDP so those are interesting numbers the quantum of aid is not the most important thing about aid the most important thing about aid is how you choose to spend it but obviously the quantum matters so those numbers are certainly on the low side public goods international collective action global public goods yes I would certainly invest in global public goods such as the global fund and such as relevant research and Australia does that regional public goods yes particularly by the recent initiatives by Australia in regional health security very good example of doing that I certainly applaud that direction aid to countries well firstly which regions Asia and the city I would say are resounding yes rest of the world I would say no and that's what Australia does Australia's aid is highly focused on Asia and the city and only when Australia is trying to get a seat on the U.S. during that is there a kind of flirtation with aid to Africa which quickly comes to an end and quite rightly in my opinion Asia and the city yes which countries small and fragile countries I would say yes and it is the case other countries I would say question mark needs quite a bit of thought and justification what sectors health and education I would say yes and I would also make a big plug for infrastructure and I would also make a big plug for leadership or we will come in a moment to see what Australia actually does and then a final very challenging question I think final very challenging question is all this done is all this done with China or somehow against China very much in the news today does one try and join forces with China in some of these initiatives there are examples of that of that does one work in a complementary parallel way with China and simply try to coordinate or is it some sort of competition where we are trying to make our aid more useful than their aid and I think there are some elements and all those discussions going on right now and that issue is going to become larger and larger for Australia in the coming years so let's look quickly at Australia's aid plans for 2018 to 2019 one third is global and two thirds are Asia Pacific so is Australia investing in global collective action in multi-country global initiatives yes for the tune of about one third which is more than most other bilateral aid efforts and two thirds going to more country focused efforts very much in Asia Pacific and another way to cut the cave and think of it is roughly half this to countries and almost all the country aid is to Asia Pacific so here are some of the numbers around my global Asia Pacific regional Asia Pacific country rest of the world and the totals and some interesting balancing acts here as we see a significant investment in global justice a significant investment in regional Asia Pacific initiatives a much larger investment in countries in Asia Pacific very small investments in the rest of the world all coming to a little over four billion Australian dollars and if we look at the countries concerned in Asia Pacific there are 27 of them by my count essentially everything from Afghanistan eastwards except China, India, North Korea and Thailand and only three of those countries receiving more than 100 million dollars those being PNG Indonesia and the Solomon Islands so money is focused on countries in Asia Pacific but spread really thinly across a rather large number of countries my thoughts on how that might change I think I would be interested in switching away from Asia Pacific countries and more into Asia Pacific regional collective initiatives in parallel with that I would think of getting this number of 27 down it's a large number of countries to be getting relatively small amounts of money to and of course I would be interested in pushing out this total figure if we come to sectors Australia is spending about 27% of its aid on health and education infrastructure and trade about 19% and building resilience and effective governance around 38% and I'm not entirely sure what the content of those settings is I think there's an argument for increasing the infrastructure and trade components for taking a hard look at the building resilience and effective governance components and what is really in that and what is that really buying and for thinking very seriously about leadership with strong languages for the greater Australian universities which I think is a real win-win proposition for Australia so some provocative thoughts about the aid industry I hope everyone here will join in these debates women wanted for hazardous journey in forming the aid industry small wages, bitter cold long months of complete darkness constant danger safe return downfall honour and recognition in place of success we're not sure about the last one but we need all women on deck to create this reform in the aid industry so from the People's Democratic Republic of California thank you thank you very much thank you very much Richard for that very stimulating address we are only out of time this is a tradition that we have a Q&A session at the end of these lectures so I do hope you'll stay and we'll at least have a couple of questions so we have some microphones and we'd like to ask the first question in the front and then we've got one right in there we'll take a couple of questions please keep it brief so my question is as people mentioned we've evaluated evidence pointing against a working aid one of the extra people we've known don't you think that denying much of the constant relationship is underscoring how effective it can be especially when it is can you say that again I was talking about the labor accommodation evidence what tax causalities are underscoring how effective it can be especially when it is stocked and it's back sorry thank you for your great presentation you just mentioned whether Australian aid should complement compete with China like how to approach it are you getting scenarios beatings in the same way do you think it might go or do you think it should go can I take you into the answers one more question I'm still struggling with your question I'm afraid you're not talking about the link between aid and health rather than aid and growth exactly so what I should have made clear is that as a macroeconomist believing that the central fundamental purpose of aid is to accelerate the growth in GDP then the evidence will disappoint you but if you approach this by saying there are other purposes of aid such as eradicating smallpox or preventing maternal mortality or making huge inroads into HIV just to give free health sector examples that aid is working on a daily basis so from a health sector perspective we've got lots of reviews and lots of good things to do through the aid apparatus but if it's GDP per capita that you're focusing on then you're going to be more disappointed and China yes well I think clearly more desirable would be which of the first two options I joining with China in joining collaborative aid efforts and I know there's a malaria example in Papua New Guinea and there may well be other examples being explored so I very welcome that and the second option also I think attractive which would be complementary collaborative although not combined for example sitting down in China in relation to a particular country or a particular regional need and agreeing that China will focus here and Australia will focus there and you'll have the combined impact of the two efforts so I think those are desirable modalities I think it's also not unlikely that a more competitive and combative element will prevent of it I think we should try and avoid that as much as possible but being realistic I think we're going to see some of it okay one more round of questions yep maybe someone else please go ahead why don't you start when you look around in the health sector you see great many immigrants from lesser developed countries and at least you get the feeling that a lot of the investment in health education results and recedes from the target countries into developed countries is this a big problem or a minor one or is it a problem how do you overcome it great and the question you're speaking sort of glowing terms of the marshal plan right at the start of your talk and then all your macroeconomic discussions afterwards seemed a lot more negative can you try and explain why the marshal plan seemed to succeed when so many of the later exams didn't maybe I can take that question first there's a considerable literature on the marshal plan and I think it's not a black and white story and there is nuance and subtlety but I think many economists agree that there was a large measure of success in that enterprise and it was of course a short sharp injection of significant cash into countries which have been previously industrialized these were devastated by war that they had a recent memory of wealth, prosperity industrialization and good governance so what was recreating something which had in the recent past existed I think comparing that with investments in Malawi in the years following independence it's chalk and cheese it's a very different circumstance and perhaps not surprisingly that investments of cash in the early years of those former colonies had a much lesser slower more problematic impact so it is I think a very different story probably when you look at the at the prior conditions in those countries and not all together surprising much I'm afraid I didn't quite catch the meaning of of the leakage question it's a deaf brain drain you're worried that health workers are being trained but they're leaving oh okay well yes indeed in the health sector globally there is a big sucking noise coming from the United States so there is a massive drawing into the US of doctors and nurses from all around the world and that then snowballs around the world and so doctors and nurses made each room out of South Africa into the United States or into the United Kingdom and South Africa then draws doctors and nurses out of Zaire or Nigeria into South Africa so there was a shame of these attractive effects where better working conditions and better salaries attract medical professionals to higher income countries it's a major challenge there was a time when we were more qualified Malawian nurses in Manchester than in Malawi I'm not sure whether that's still true but I remember that factoid a few years ago so it's a major challenge and there are many middle income countries who train doctors and nurses at public expense to see them quickly recruited overseas following their translation and I think there's a lot of opportunity to arrange ourselves better in that regard and for example looking at the British National Health Service which is a major recruiter of medical professionals from Africa if we could be more imaginative in allowing those medical professionals to go backwards and forwards between the British National Health Service and their own home countries and back home service many of them want to do that because people like to go home people like to work in their own culture in their own environment and many of the rules of regulations make that extremely difficult whereas we shouldn't be trying to make it easy so I think there's room for international better collaboration in addressing this issue alright but we are out of time so if I could just ask to resume your seat remarks my name is Stephen Howes I'm the director of the Development Policy Centre and I now stand between you and Drinks so I'm going to be very brief but I would like to thank our speaker which is a feature coming all this way and giving such a stimulating talk there are many things I'd like to say in response to the talk but in a self-serving manner it has a very large partnership with the University of Papua New Year School of Business and Public Policy certainly the AAU is large perhaps Australia is large so it's very interesting to hear you single that out and something we should be doing more of I'd like to thank Harold and Stephanie for their ongoing support as well as their attendance here tonight I'd like to thank all my colleagues at the AAU for the promise down for all their support and the hard work that goes into putting an event like this on tonight and also Radio National the ideas for recording today's event so look out for it on the radio I'd like to thank the Asia Pacific Leaders of the Area Alliance who also helped us put tonight's event on and finally I'd like to thank you all for venturing out on a rather cold camera night, I'm sure you've found it worthwhile and you'll find it even more worthwhile and rewarding if you do stay behind for drinks so I encourage you to do that and I ask you to give Sir Richard Peecham round of applause Thank you