Morning everyone. I think we're gonna get started. Morning. I'd like to begin by acknowledging the traditional owners of the land on which we're meeting, the Ngunnawal people, and pay respects to the elders past and present, and also extend that respect to any other Aboriginal or Torres Strait Islander peoples who may be joining us. My name is Camilla Burkott. I'm a Research Officer at Development Policy Center and it's my pleasure to chair today's Aid Budget Breakfast. Thank you all for joining us this morning. Everyone who's here with us at Crawford School but also via the livestream. This is our fifth annual Aid Budget Breakfast and it's always proven to be a very popular event and a good opportunity to discuss the previous night's developments. Today we'll be hearing from the three presenters. Each of them will speak for about 15 minutes. Those of you attended last year will perhaps get a sense of déjà vu. We've got the same speakers last year as we had this year. So first, Dr. Anthony Swan, who's a Research Fellow at Development Policy Center, will provide the macroeconomic analysis of the budget. Next, Stephen Howes, Director of Development Policy Center and Professor of Economics here at Crawford School, will present his analysis of the budget, looking at volume allocation and performance of the program. And then Ms. Jackie DeLacy, Vice President for Strategy and App Associates, will reflect on the budget and the signals that it sends about how aid development is being taken. After each of our speakers have spoken, we'll pause to take a couple of questions. Is there any immediate questions anyone has? And then after all three have finished, we'll open up for a general discussion and questions from the floor before wrapping up at about 10.30. I want to encourage everyone to join the conversation on Twitter. Hashtag, aid budget 2017, Australian age, ad def palsy, just suggestions. So before I hand over this podium to our first speaker, Tony, I want to say this is a really bittersweet occasion for us because Tony will soon be departing us for Geneva. We're really going to miss him. He's provided the macroeanalysis on the budget for several years now and it will be really difficult to replace him. So, Tony, please give us your opus. Thank you, Camilla, for those lovely sentiments. Yes, this is my last budget breakfast. I think it's been a great event and a wonderful experience for me. Although you may have a sense of the sleep deprivation involved. So for next year when it powers on, I expect to be having a nice sleep in depending on the time difference and watching it on the live stream and certainly getting a lot more sleep than I have. So, yes, I'm presenting on the macroeconomic context. So how this budget has been shaped prior to our experts stepping up to talk about the aid budget in particular. So I think perhaps it's a good place to start with some first impressions before hitting you with lots of charts and numbers. So as you may have already got the sense, this budget is very much a pragmatic one. One designed to get things done, address concerns in the electorate and get those measures through the Senate. As part of this approach, the standard coalition ideology has very much been thrown out the window. There are big new spending measures, but also a willingness to raise taxes to impart funds to those spending measures. So can we have a big spending budget and also tick the budget repair box? Well, maybe, but the underlying assumptions in the budget for that underpina return to surplus are probably, in my view, a bit overly optimistic. The Treasurer also talks about good and bad debt. So what is it? And can it justify the infrastructure binge contained in this budget, which includes a 51 billion spend in the coming year? Well, I think there are some merits for this idea, but it remains to be seen how well that works. And what is the prospect for a break from the trend of continued cuts through the aid program? I think the answer to that depends on whether budget repair is actually successful or not, which a large part of my presentation will focus on. Okay, so I'll hit you with my first chart, which is just to give you a sense of the expenditure controls that the government has put in and a number of key areas. This chart shows year on year percentage changes in real government expenditure in a number of sectors. For example, you can look at ODA, you can see how volatile it has been over a long period of time, as well as in a number of other sectors, particularly over that post-GFC period and the government's fiscal stimulus at the time. Also over the budget repair period, you all know that for ODA, less so for other sectors. But in the projections contained in this budget, a lot of this volatility has been stripped away and growth has been largely contained. And as the Treasurer said, government spending is increasing at a rate of around 2% per year. So this in part is driving a projected return to surplus. It shows the underlying cash balance. The green shows the actual numbers over time. And then the red line shows the budget projections, a steep increase to hit positive numbers by 2021. So the question then is, given the importance of budget repair, though I just talked about previously, what is the likelihood of this actually happening based on the assumptions in the budget and the likelihood of those actually being realised? Well, if we look at projections over time, you might get a sense that they haven't been very reliable. Is this time any different? Well, it must be said that there is a bit of optimism around the performance of the economy, particularly over the last six months. Commodity prices have improved. Company tax is looking fairly strong. Revenue from company tax. So there is optimism that this pathway, the red line, which is the current projections, can indeed be met. But let's have a close look at that. Okay. So the budget deficit is a result of a persistent gap between expenditure and revenue. So here we're showing both of these as a percentage of GDP. And you can see that looking at just these actual numbers, that in this post-GFC period, not much has changed to reduce that gap. So what happens when we bring in our new projections and look at path to surplus? So that's reflected by these orange or brownie lines. The dash is projected revenue as a share of GDP and the dots expenditure as a share of GDP. Where they cross is where we're back in surplus. Now these dots here, I put them in to indicate where in previous budgets, for example the black one is the 2013 budget, where in that budget there has been a projected return to surplus. So in the 2013 budget the projected return of surplus was in 2015, 16, 15 years ago. So you can see how as the years have gone by, yes the projected return to surplus is always there and it just gets pushed out, pushed out, pushed out. So once again, is this going to happen with this year's budget? So let's think about some of the assumptions that are underpinning these numbers. Well, if you look back to this diagram, a lot of the projected return to surplus is driven by strong revenue growth. Yes, expenditure is somewhat falling, it's under control, but it's really revenue that's driving the projected return to surplus. So what underpinns this growth? Well, it's very much along two dimensions and that is strong increases in wage growth, higher wages and people are paying more income tax and as well nominal GDP growth as well as real GDP, but it's showing nominal GDP growth here because inflation, more inflation means also more revenue coming into the government and you can see here that given our starting position is here that there are really strong assumptions built into this budget. Now, where does the optimism lie within government to achieve this revenue growth? Well, this is what's happening around now, this is the projection for up until May, June this year and June this year for nominal GDP growth and it's very strong but the question is can that continue? In large part that has been driven by improved terms of trade and it must be fair to the government that the projections on the terms of trade going forward are somewhat conservative. Now, I'd like to talk about good versus bad debts. You may have heard the Treasurer talk about this quite a lot and there are actually, there's a whole new chapter in budget paper number one dedicated to this concept and its implications. So, what is good debt? Well, good debt, well it's according to the Treasurer, is used to describe essentially any investment in capital that earns a positive return. So, large part is thinking about infrastructure. Bad debt is anything you're spending money on and having to borrow for that's used to pay for recurrent expenditure such as education, health, social security. Now, in the budget they've actually come up with a new concept that the Treasurer has focused on and this concept is to justify, well is to use this idea of good and bad debt to justify a new way of measuring the budget deficit rather than the underlying cash surplus or deficit. He talks about the adjusted net operating budget which is accrual revenue minus accrual measures of spending minus spending on capital. This effectively measures the extent to which recurrent expenditure is funded by borrowing. That's a different concept. Now, based on this new measure the budget is projected to reach surplus by 2018-19. So, this is very much betraying this budget in a positive light. Were this to happen then there would be less pressure to cut recurrent expenditure going forward. A good thing, particularly from the perspective of the aid budget. The projected surplus is still subject to strong revenue growth being realised. So, that's a big caveat. That's nonetheless underpinning this projection on the adjusted net operating budget. Ultimately, though, the government cannot pretend that debt is not debt, no matter if it is good or bad. In particular, credit rating agencies are not likely to be persuaded by this good debt argument. Are they going to look at the fiscal position of the government as a whole? A downgrade to Australia's credit rating will mean that debt will come at a higher cost. So, this is still something to look out for. Whether debt is good or not depends on the quality of the underlying spending. Not just whether it's on capital or a current spending. It's a lot more complex and nuanced than that. For example, debt related to poor infrastructure spending decisions is definitely not good. Just because it's capital, it means it's good. On that, if you look at the government's spending on infrastructure, a lot of it is being done by the government itself rather than the private sector. Therefore, there are questions about the quality of that infrastructure spending. And some of the spending that has been proposed hasn't gone through rigorous evaluation processes such as cost benefit analysis, so that's something to look out for. It's also not clear that all recurrent spending is bad. For example, education spending, which creates human capital, that's considered a current spending, but that can earn a positive return at the time. So, that's not necessarily, if you have to borrow for that, it's not necessarily bad. Another example is maintenance spending because that reduces the need for new capital. So, once again, that can be very positive. Now, the distinction between good and bad debt made by the treasurer is in part designed to limit growth in recurrent spending. This I believe will be a new mantra, something that will really be used to keep the current spending down. So, what are the implications of this? Well, in this budget, the first time, as far as I know, debt is being notionally allocated to portfolios. I don't know if you've seen this, but this is something I believe will have implications for allocations of funds across portfolios in the future. So, for example, here, there's foreign affairs and trade. It's pretty much in here. You can see how debt has been allocated to that portfolio. Also, the government is keeping track of recurrent versus capital spending with a view to, in my view, the purpose of trying to reduce recurrent spending as a share of total budget spending. So, the government is spending $51 billion this coming year on infrastructure. That's a lot of money. In terms of how that impacts on this red line, which is capital spending as a share of the budget, there is certainly a blip. But I guess what I'm trying to highlight here is that despite the size of that spend, it really is not going to have a huge impact on the share. Okay, so I'd like to conclude by highlighting what this budget signals. Well, it signals a return to raising revenue to pay for new expenditure rather than focusing on austerity measures and hoping they pass through the center, which I think is a good thing. It signals optimism about the economy and the prospect of relief from the pain of the budget repair process. Lastly, it also signals more government debt. Why? Because infrastructure, the big infrastructure spend is going to be funded by borrowing, even though it is labeled as good debt. And because of that, an even bigger budget emergency situation, if revenue projections in the budget are not realized, and the return to surplus is delayed, and I've highlighted that risk. In this case, there would be increased pressure to reduce recurrent spending in the future. The aid budget remains an easy target. Thank you. Thank you, Tony. So we'll just take, if anyone has any immediate questions for Tony, any clarifying questions that you want to ask? There's one up back. Yes, I think. And can I just say now, if you're asking a question, please wait until the microphone reaches you so that everyone on the live stream can hear you. Hi, Tony. Thanks very much for the presentation. Just a point of clarification. On what basis is the debt being allocated by a portfolio? It's a very good question. When I was reading that chapter at a very early hour of the morning, I looked and looked and looked, and I really, it didn't spring out to me. So I was hoping that my esteemed colleagues would have asked that question during the lock up, budget lock up, but I never had time to even ask the question. So, yeah, it's yet to be to turn this far. Any other questions? No, OK, well, if you think of one, we'll come back when we have the panel of speakers. So you have another chance. Thank you again, Tony. Our next speaker probably needs no introduction to this audience. As Professor Stephen Howes, Director of Development Policy Center. Thanks, Kamila. Thanks everyone for coming, turning up. And thanks to my two colleagues. Tony, we may not let you go, even if you're in Geneva. And Jackie's back by popular demand. I'm going to run through the budget, but as we promised this year, we thought, you know, we'll go a little bit beyond the budget. It's a good forum in which to raise sort of issues, contemporary issues around aid policy. There's not that much in the budget in a way, so I'm going to go a bit beyond the budget this time. But I'll start off in the usual way, looking at aid quantities and the basic message is there are more, although smaller cuts in this budget. So our aid tracker now goes back to the 60s. And these are aid increases every year after inflation. Most of these analysis is after inflation. And so this is about 60 years. You can see most of the years have seen increases in aid, growing aid budget, but there have been a few periods of reduction. But this is sort of the most sustained period of reduction, you know, really correcting this period of increase in the first decade of this century. And yeah, so we have four increases. We thought this was the last of the cuts. That's the current year. But really we've got the budget just being held flat in real terms for two years. And then the real cuts begin again in 2019-20. So after a two year pause, these will be the fifth and sixth in a series of real cuts under this government, totaling 33%. So yeah, this for I think this is the sort of bottom line. This is the last labor aid budget. So from here on, it's the current government's responsibility. And this was a series of cuts up to 30%. Then we have here, right? Then we have the pause and then the cuts resume again. So it's a one third cut under the under the coalition. And that does, you know, some of these graphs look familiar to you, but they in a way they have got, you know, I'd say they got slightly worse, right?  So generosity is a nation is obviously each year now at a record low. I guess it is, I was a bit surprised, we're actually going to cross that 0.2% threshold, that's 20 cents in every hundred dollars. Hard to believe we were once aiming for 0.5, right? We had a bipartisan consensus for 0.5. We got some of the way there. And now we've gone in the opposite direction. And with these further cuts, and that rapid nominal GDP growth that Tony pointed to in his graph, right, due to the renewed boosting commodity prices, you've got a small, it's a high enumerator, we're actually going to head below 0.2%. And this is in a global context where other countries are not cutting aid, right? Not saying that's true for every country. And, you know, with Trump in the US, see how, you know, things may become different, but he has to get it through Congress. And so far, you know, aid has kept going up, right? We really thought with the global financial crisis, aid would take a dip, but it's actually rising strongly. And that does mean that we are, the gap between us and the average is growing. So I always felt, and I've said this before, but Australia used to sort of track the average. We weren't going to be a leading donor. We didn't lag out either. So the red and the blue lines are quite similar, you know, if you abstract out from the sort of, the occasional shock. But there's a distinct crossing point here. And at the moment, the blue line, that's the broad average is going up. The red line, that's us, that's going down. So why is this happening? Well, it's not a result of fiscal austerity. Tony said expenditures increasing 2% a year. That's after inflation. Whereas aid is decreasing. So whereas the aid has fallen by a third, everything else has increased by 16% since the coalition came to power. So what's really happened is that for whatever reason, aid is now much further down the priority list. So this is ODA to total expenditure. It used to be about 1%. It's now gone down to below 0.8%. So less than one dollar, significantly less than one dollar in every hundred. And I guess it's also bringing that despite the budget sort of being a reset budget on the domestic front, as Tony indicated, it wasn't really a reset budget on the on the aid front. Aid budget wasn't slashed, but the cuts did continue. In terms of composition, there's not a lot of change to report. And you know I mentioned in my blog, it was a sort of small target budget. Country allocations are largely kept constant in nominal terms. A lot of the de-fat allocations are exactly the same. There is an increase, right, in nominal terms in this budget of about 80 million. That's really used to increase humanitarian funding, which I think is welcome and I'll come back to. But also, last year the government wanted to avoid further bilateral cuts from the 200 million odd dollars of aid cuts, so they delayed a number of multilateral regional payments. So they're now using the additional ruin created by the normal increase to pay for those deferred multilateral and regional commitments. So if we look at the numbers in terms of regional allocations, we saw the big changes happening in 2015-16, the cuts basically wiping out the Africa program, oh sorry, wiping out Latin America program, almost wiping out the Africa program. Significant cuts to East Asia and South Asia and largely protecting the Pacific. So those cuts were made a couple of years ago, no further changes. In terms of sectoral changes, there is good data coming through the Orange Book, which gets bigger and better every year, and we can track sectoral changes. You see this year they're fairly minimal, but they're consistent with earlier changes. So the aid cuts played out through a large cuts in health and in education. The education cuts are continuing, health is leveling off, and otherwise, governance is protected. There aren't a lot of new announcements. There's just one sentence on the regional health security fund, which was the government's one election aid commitment. There's one sentence on it and an unspecified amount of funding. It's surprising that there isn't more on that, given that it was initially announced in the run-up to the last election. One of the positive features is the restoration of humanitarian funding. These are just a couple of graphs from our aid tracker, and all this information is available on the aid tracker that I've been going through, so please go and have a look at that if you're interested. But you can see this year, so we've updated the aid tracker for the budget, this increase in aid humanitarian and emergency allocation. So it's really been restored to earlier pre-cut levels, and that's by giving it a bigger share of the aid budget. I think that's very welcome in this time of global humanitarian crisis. If we look at global programs, it's a bit hard to assess from the single-year comparisons because of that deferral issue. So this graph takes a longer term view from 2012, 13, 2017, 18. You can see a lot of the global programs in fact have been protected. If you look at the first line, or two bars, cash payments to the multilateral development banks, as I said, humanitarian emergencies being increased. Global health programs have been protected. We see the cuts are more down the bottom, and especially to most of the UN agencies. The UN and the Commonwealth have borne the brunt of these aid cuts. Just another comparison over time, I think that probably we don't think enough about, you know, a big part of these aid cuts have actually fallen outside of DFAT. On that whole, the government aid, it used to be very important. You know, it's really fallen away now. And in 2012, 13, it was 700 million. I think this year it's 300, and next year it's going to fall to 237 million. So that non-DFAT aid has really fallen away. And you would have heard lots of stories of treasury and finance officials leaving countries like Papua New Guinea and Solomon Islands. Okay, that's my budget presentation. I'm just going to have a few slides beforehand over Jackie on issues related to the budget, but just going beyond it since I have a captive audience. And I do figure, you know, maybe the aid cuts are, you know, hopefully going to be a thing of the past, but probably doesn't like many increases. So while we all might want more aid, you know, we might have more traction around performance issues. Government did recently release its performance of Australian aid document in 2015-16. It was somewhat late. The other few years have been released in February. This one was just released, I think, last week. I think in some ways it's a disappointing document. The government's own Independent Evaluation Committee Chair who sort of writes a comment on this recommended the government changed the targets. You know, some of the targets seem very soft. Not all of them. The gender target in particular seems to be sort of very rigorously applied. But, you know, one target, for example, is just to have country strategies. And you wonder for how long you're going to reward yourself for writing a strategy. But that wasn't done. So the targets are unchanged. That said, it does provide some very useful performance data. And there are three types of data that you can look at across countries. One is performance of projects. Two of these performance benchmarks which is part of the new aid paradigm. And the third is the achievement of country objectives. There's actually a very little variation in countries across performance of projects. They all seem to do pretty well. And performance benchmarks, they all seem to be largely achieved. But you do find significant variation in terms of whether or not aid programs achieve their objectives. There are very few that don't achieve their objectives, but there are quite a few that are said to be at risk. So you can see for the country programs the variation in the share of aid objectives goes from 100% being achieved for a significant number of countries, but then falls down to about two-thirds to a half, but does go down below a half for some countries. This is interesting performance data. And just a little bit of analysis you can do with it. If you just take it a face value, it looks like performance is improving. But if you actually weight the programs by their value, which makes sense, that you give more weight to a larger program, you find this performance improvement is negated over time. This is obviously a year behind, right? It's 2015-16. And that's because I think as Jackie pointed out at the last budget breakfast or two, we cut the better performing programs. Like by cutting aid to East and South Asia, we cut the better performing programs. And so even though on average performance might have improved, when you look at the program as a whole, we give you more weight to the lower performance, performing part of the program. But there are some interesting trends across the region. And actually Matt Dornan pointed this out to me, there is some sort of improvement or convergence over time. And, you know, so East Asia is typically the best performing region, and the rest is largely South Asia. It's also pretty well performing. And Pacific's normally been the weaker performing part. But if we look here, we actually see a big improvement in the Pacific. But I have taken out PNG and PNG does stand alone by itself. You know, I mean, it's sort of it's half of the same size as the rest of the Pacific. So I think it's worth taking out by itself. And so you do see this convergence with excluding PNG. And certainly when you read, I mean, I know PNG pretty well. I don't know the other Pacific countries as well. When you read the other Pacific countries, they are much more optimistic than the PNG document. So there is an interesting performance issue, whether we're being too pessimistic about PNG, too optimistic about the other Pacific island countries, or whether in fact, our aid program is working better in the rest of the Pacific. And perhaps that is linked to some improvements in governance through the Pacific, since that does seem to be the key determinant. Another quick issue, I just wanted to flag with you. This is really an advertisement for DPAT, but also a signal for us. There is a new evaluation policy and plan that DPAT have put out, which I think is very strong, very welcome documents. They were discussed at our aid evaluation forum recently and encourage you to have a look at them. I just want to signal it's a very ambitious plan to bring out some 40 evaluations. And they are all listed, you know, which are the evaluations that will be published this year. And we did have a look just to see which ones have come out so far, given that we're in May. I think we found about four or five out of the 41 that are meant to be published. So I think that's something that we'll be keeping an eye on, because the problem in the past has been a number of evaluations are done, but are often delayed or not published. Finally, you know, I think one issue that's got a lot of interest is how the aid program is being delivered. This is not necessarily a performance issue, although I'm sure it has performance implications. We might not all agree on what those implications are. It's not an issue you can get from the current budget, but you can go back again through the Green Book and through the performance documents and get an idea of how the reliance on different partners to actually deliver aid is changing. I mean, DFAT is like a foundation, right? It's a grant given to different bodies to actually go and implement the aid program.  That remains the biggest change, but you can see that obviously was from an earlier era, and that has been slightly reversed. Commercial suppliers that were in disfavor under the Howard government, really, are now back in favor, and their share is increasing. And among the other delivery agents that were in favor, you now see a slight reversal with fewer funds for non-government organizations and for developing country governments. I think this is partly as the Indonesia big roads and education programs come to an end. So there's some interesting analysis you could do and just to sort of put a sharper note on it if you just look over the coalition period and put it in terms of dollars rather than shares. This is only the de-fat part of the aid program, but that is increasingly the entire aid program. There are no winners because there have been these massive aid cuts, but as consistent as I've shown before, multinational organizations have largely been protected. For the commercial suppliers, you know, they've been largely shielded as well from the aid cuts, right? And this reflects the rise in facilities as a preferred delivery mode by the government. It's really the non-government organizations that have taken a pretty significant hit. Of course, some of their funding would now come through the commercial suppliers, right? And that then wouldn't come up in this graph, but it does suggest I'm sure that's not a full compensation and it is a significant change. Universities have largely been protected, though not completely. Developing country governments, as I said, that's taken a big hit. So I think that's some interesting data that deserves some further analysis. My time is up. Thank you very much. Don't wander too far away, Stephen, in case you have some questions. Do we have any questions for Stephen? Maybe I should just... No, last call for now. Oh, one here. Sorry, I think you just wait for the microphone. It's just coming here. Thank you. Thanks very much for that marvellous exposition. Just going back to... There's been the cut in the quantity. Do you see any general trends in terms of the quality of aid? You suggested that there were some hints that some of it does, like the humanitarian aid is being preserved. Do you see that, for example, as being delivered appropriately, or do you think there are weaknesses in some of the qualifications that are going around that money? Are you talking specifically about humanitarian aid? Right. Yeah, that's a big question. I mean, I'm not really an expert on humanitarian aid, so I wouldn't really want to comment on how effectively that money is being spent. It just seems to me it is, in generally, one of the more effective forms of aid. I think its aid is better at responding to crises than actually promoting long-term development, although, of course, both are important. But yeah, I couldn't really comment on the specific issues around effectiveness of Australian humanitarian aid. Yeah, more generally, whether aid quality has fallen, I guess it's hard to come up with a definitive answer on that. When we did our stakeholder survey a year ago, it certainly raised some serious concerns. It's always been difficult to disentangle the aid cuts from the merger with DFAT. So it's a very different operating environment. And then you have these big shifts in the way aid's delivered that I showed in the last graph. So you've got at least three big changes, right? The integration of DFAT with the loss of aid expertise, the big aid budget cuts, and the change in delivery mode. And then I guess the fourth one is the change in government strategy. So how do you disentangle all those and come up with a, I think both have got, well, apart from the aid cuts, yeah, they've got pros and cons. So I wouldn't, yes, I wouldn't really feel confident in giving it over, but. Stephen, just three quick questions. One is what is, what's the quantum of cuts that you can estimate it over the forward estimates in real terms? Secondly, what can we say about the departmental allocation for operations of the aid program, if anything? And thirdly, aid effectiveness according to the OECD DAC is in part attributed to predictability of funding and volatility. So this next phase we're entering into, would you say it's a period of predictability and stability or the actual expenditure is volatile and so it actually may impact effectiveness? Right, yeah, so in terms of the first one, what are the cuts relative to the forward estimates? It's really given by here. So these amounts should have increased, if these amounts were to increase in line with inflation, then it would actually be 300 million more cumulative over this, which is basically this amount times 2 plus this amount. So it's basically 300 million dollar cut over the forward estimates. Departmental, we had a graph on that last year. There's really no change in the departmental cut. I mean, this is a very in general, very stable budget this year relative to this next budget year relative to this year. And in terms of volatility, then I guess any deviation from forward estimates makes it more difficult to plan, but these are fairly small cuts. So you wouldn't think it's going to be, I don't think you could criticize it for really for saying it's a volatile aid budget. I think it won't be, it won't be that, they'll just keep things going in nominal terms, right? It's not that hard to do and you'll have to make some reductions in what you can do with that same amount of nominal money. So I don't think it's really an issue of volatility. I think it's just an issue around, you know, are we serious about aid? And as I mentioned in my blog, you know, those articles in the Australian that predicted that aid would be cut to fund AFP and the police. Well, it wasn't as simple as that, but they weren't too far wrong because aid has been cut and security has been increased. And, you know, the coalition went into the 2013 election with this policy of keeping aid flat in real terms. And you can see they're just not very committed to their own policy, right? So they're not really serious about that. And I guess they figured that they'd be, you know, they're not savaging aid, but they're not serious about protecting it. Thanks, Stephen. So we know over the last year or more there's been a lot of internal discussions within DFAT and the government about the way in which we're giving aid, particularly in the Pacific. But this seems like really a really safe budget in terms of just rolling over allocations across the board. So has this internal discussion just led to nowhere or is it happening at a level below the country allocations? Or have these discussions yet to eventuate into actual policy change? Yeah, I really don't know. I think what the foreign minister said when she first became foreign minister was that aid should be linked to performance. And that's why we're going to have performance benchmarks. But you don't really see aid being linked to performance at all with that sort of stability. So I think this is a budget that's kind of steady as it goes and a small target budget. So I'm not really aware of those discussions, to be honest. So I can't really comment. I know the government's meant to be coming out with a new Pacific strategy, which was meant to come out by the end of last year according to the prime minister. And we still haven't seen that yet. So what the implications of that are for the aid allocations. I'm not really sure. We're certainly hoping that it would have some further announcements about labor mobility. Maybe there is a sense of waiting for the white paper and perhaps the white paper will have more guidance on performance benchmarks. Perhaps it might have more on this new regional health security. Perhaps it might have more on the Pacific strategy and allocations. But it's certainly not in this budget. OK. So we'll make this the last question and then we'll move on to next question. Thank you, Steven. I noticed that some of the programs that are used to help particularly women and children seem to be being reduced as well. And things like the UN programs UNICEF, UNFPA, UN for Women, and the multilateral and the NGOs. Sorry, the NGOs tend to have a strong focus on women and children. And what is the ministers and the department's rationale for these sorts of reductions? Yeah, I think if you look at this graph, you see that UN women is protected. And that is consistent. The government does have a strong focus on gender. And in fact, this time in the Green Book, gender is actually broken out as a separate category of expenditure, which I think is the first time. So. But then on the other hand, they don't really like the UN.  Well, someone's, you can't protect everyone. And so, yeah, I think you're right. I mean, UNICEF gets really cut, right here. Yeah, look at that right from 34 to 21 million. So, yeah, I think while the government does have a strong gender agenda, it hasn't been possible to shield all activities that have a gender focus because simply because of the, you know, because you're cutting one third. That's a huge cut. Thank you, Stephen. Last but certainly not least, I would like to invite Jackie Deleysi now to give her a reflection. Thanks very much, Camilla. And thanks for inviting me back to the budget breakfast. I think this is actually the third one that I've done. I asked Stephen, because we've been doing this a few times and this is a bit of a small target budget. I did ask Stephen what I should talk about this year. And he said I could talk about anything I wanted. So I'm going to do just that. I'm going to talk a little bit about the budget, but I'm actually going to talk about some of the bigger trends. I'm going to go beyond the budget, a bit like Stephen has, but I'm going to talk about a few different things. Over the last couple of years, what I did was tried to look at the budget through the lens of what the government stated policy priorities were. And my assessment, both last year and the year before, beyond the narrative of the big cuts, was that the budget did generally reflect the policies, the stated policy priorities of the government, with the exception, and Stephen pointed that out again earlier, of this link between performance and aid funding. And my assessment this year is that this budget is very similar to that. That it's that the policy priorities are broadly maintained and that there is still no clear link between performance and budget allocations. But it would be boring for me to go through that in a lot more detail yet again. So what am I going to talk about? Well, prior to coming into government, Julie Bishop, possibly softening us all up for a future where budget cuts featured predominantly, she often said that quality mattered over quantity when it came to aid. And it's hard to argue with this logic. And in fact, I agree with it really profoundly. Now, the budget that was handed down last night, we can only hope reflects the end of at least savage or deep cuts to the aid budget. I was really hoping I was going to walk in this morning and we could say that the cuts to the program had bottomed out and we were now looking at a stable aid budget. Unfortunately, we can't say that because if we look ahead after the next two financial years, we do see three hundred and three million dollars being stripped out of the forward estimates. But so I think we can all agree that the government has delivered on the reductions to aid quantity, even if we're not clear how far they have yet to go. The question we have to ask ourselves and I want to spend some time looking at this today is whether or not they have delivered on the other half of that equation. Have they actually delivered a higher quality program? Should we be optimistic that our aid resources while they are scarcer are having a bigger impact? In answering this question or attempting to answer this question, I'll look at some trends that I can see emerging that go beyond the budget, but I'll have a little bit of a look at the budget itself. Now, some of these trends are positive and some of them are negative, as you could probably expect. But let me briefly go back before I look forward. So for those of us that are passionate supporters about aid and development and the role that effective aid programs can play, it's been a really tough few years. So AusAid, Australia's independent aid agency, was abolished in I think it was in November 2013, really quite unexpectedly and all of its functions were handed over to the Department of Foreign Affairs and Trade. In December 2014, we had that MAIFO announcement where Joe Hockey took $3.7 billion out of the forward estimates of the aid program. And then the following two financial years in the budget, they delivered on that grim forecast and we saw really deep cuts to the aid budget. It's been a bit of a grim task standing here each year in the budget aid budget analysis. I've felt a bit like an undertaker at a funeral. And so the other story which again Stephen alluded to was that because DFAT had to adjust to the new budget realities, these big cuts, and it had inherited all of the AusAid staff, it had to reduce its staffing numbers quite profoundly to fit the new budget reality. And while it may not have been intended, the reality was that the large proportion of staff who exited the department so that the department could maintain its departmental budget were ex-AusAid staff. So a lot of expertise on aid and development exited the department. So that's all a pretty grim history. So are there any positive signs that now that we've got past that era, now that integration has settled down, now that we're past the era of deep cuts, are there any signs that aid quality really matters to the government and to the department? I think there are a few positive signs. So first of all, the June 2014 policy statement by the minister seems to have been implemented reasonably consistently. The higher priority given to women and girls, even to sensitive political issues like sexual and reproductive health, the support to innovation, the support to economic growth, all of them have been delivered even though the aid budget has been reduced. And I think that they should be applauded. And this year's budget has largely maintained it. And while UN funding for women and girls may have reduced, the gender fund that was established that's funding a lot of innovative programs across the department focusing on women and girls is still being maintained in this year's budget. So is funding for the innovation sector. And if you look at the aid for trade data, that is being maintained and slightly increased as well. Another positive sign, or potentially positive sign, is that in September 2015, the coalition government appointed a dedicated development minister. This is only the second time in the history of the Australian government that a dedicated development in Pacific Islands minister has been appointed. The assumption here is that if we can get greater, dedicated political leadership on aid and development, we will get stronger programs and we'll get a stronger advocate for aid and development issues within the Australian community, which over time may lead to a rebuilding of support for aid and development. The staffing anxieties within DFAT due to the integration or the abolition of AusAid also seem to have settled down. Many ex-AusAid staff are flourishing in this new integrated department. And many of them are in senior positions where they have a lot of influence over how the aid program is managed. For example, DFAT's current heads of mission, so its ambassadors and high commissions in Papua New Guinea, the Solomon Islands, Vanuatu and Cambodia are all ex-AusAid staff and they go into those roles with a lot of knowledge and expertise about how to make those programs effective and to integrate them with the foreign policy priorities of the government. The Office of Development Effectiveness remains in place. I think there was a moment where I thought that would probably disappear altogether. Its head has even been made more senior. It's committed, I think there's a strong recommitment to evaluation, as Stephen mentioned. It's committed to conducting and publicising those evaluations. And we're still getting the summary of program performance and the new report that was just recently released on 15, 16, while not perfect is something that we should welcome. And for those of us that are obsessed about the aid budget, which is presumably all of us here, it is really good that DFAT has resumed publication of the old budget blue book, which is now orange, just to confuse this all. They did it last year, it's even better this year, so I really welcome that. So what about today's budget? Should it help me feel more optimistic that a quality aid program, that we've got a quality aid program even if it is smaller, even if we have to adjust our expectations on size? Well, the fact that it's been maintained at CPI this year is something I think we should feel some sense of positiveness about. I don't want to overstate it, but after the last few years, it could have been a lot worse. And if you look in the portfolio budget statement, you'll see that DFAT did take a hit to departmental budget, not on the ODA side, but on the normal DFAT side, where there's been a review of overseas allowances and they would have argued very strongly to try and retain that funding, because it's funding for their staff when they're working overseas, and they lost that fight. So DFAT has had to take hits to its budget this year, hits that it would have cared deeply about, but the aid program has received its CPI adjustment. So I think we shouldn't, that there is some cause for optimism in that outcome. On the, I mean, of course, the reduction of the 303 million out of the last two years of the forward estimates balances that more positive assessment, but still I think we should appreciate that we got the CPI adjustment this year and next year. On the quality side, the overall increase was modest, as Stephen said, and there was only a couple of, and really I think the narrative around the budget is one of maintenance, of meeting the international commitments and of a slight modest increase to humanitarian funding, really to deal with protracted conflict and emergency situations predominantly in the Middle East. So that is really the sort of headline story of this budget. The era of big changes to country allocations, sector allocations and even partner allocation seems to be, seems to be over. It's hard to see an aid effectiveness or quality narrative in this, but I, you know, as a development person, I would say that predictability is a really good thing in aid and development. So if we are on a more predictable path, it gives the fact of much greater opportunities to improve the quality of its program than if we're in an environment which every year the allocations are shifting dramatically. I also think it's really, we should be grateful that they're meeting their international obligations and their international commitments. I do have a couple of concerns going forward that, and one of these has become a bit sharper after last night. My first concern about the quality of aid going forward is really an institutional one in relation to DFAT. The question is how well placed is DFAT to drive better quality programming that maximizes the impact of a smaller program? I think that's the question, one of the most important questions we've got to ask in, for those of us that care about aid and development going forward. My concern is one that was really much more eloquently articulated by the former secretary of DFAT, Peter Varghese, in his valedictory address, which was, I think in June last year. He pointed to the growing difficulty of the public sector in general and DFAT in particular to do deep policy thinking. DFAT staff managing aid programs have dual roles. In addition to aid programming, they need to manage an enormous range of immediate, often politically driven events that have always dominated DFAT's work in Canberra and overseas. I worry that the space for deep thinking that Auss aid had precariously carved out is now lost. That blended jobs in a busy core department mean that no one can find the space for deep thinking and reflection. Australia's aid program is trying to tackle extremely difficult development challenges, wicked problems as they're often called in our business. And they simply cannot be designed and managed without serious space for reflection, contestability and learning. And don't tell my boss I said this, but there is no way you can contract out that work. It really needs to be held closely within the department. My second concern, and the one I am more worried about today than I was yesterday, relates to the hardening and narrowing of the rhetoric around how aid works in the national interest. Having an aid program work in the national interest is nothing new. In fact, this is a sign of how old I am. But I remember when Alexander Downer back in 1997 introduced the one clear objective for Australia's aid program and linked it directly to Australia's national interest. The national interest narrative has been a key part of the Australian aid program narrative ever since. So what is different now? I'm imagining that many of you in the room today and listening over the web also participated or observed the opening of the Australasian Aid Conference that was held here in this room a few months ago. At that event, I was really struck by how Minister Bishop in her opening address framed the national interest argument. And this is something actually that Camilla and Terrence have actually blogged about. But this framing is being replicated by the development minister if you hear her speak and by members of the government more broadly. It is deliberate and it isn't without implications for aid effectiveness. The minister's speech, and she stood right where we're on standing now, was all about countering violent extremism, stopping terrorism, preventing people movements, inoculating Australia against disease outbreaks and reducing conflict. The words poverty and inequality never entered the narrative. She didn't speak to the values that drive most Australians to contribute voluntarily to development efforts. She didn't seek to make the case that development relationships can be the foundation of effective regional relationships and to people ties that underpin our future as an outward looking engaged regional leader. Nor did she choose to make the case that effective aid programs can prevent crisis, not just respond to its symptoms. Her narrative plays to community fears rather than seeking to inspire a more positive and broad minded approach. She said to us explicitly that the aid program needs to make the case to a growing nationalist sentiment in Australia. I am not trying to be naive in my comments. Her framing probably does resonate better with a large sentiment of Australia, but it isn't without implications and I don't think they are positive. I have two main concerns about this narrower and harder rhetoric of why Australia gives aid. First, I think it makes it easier for anyone to justify cutting aid to fund defence and security agencies. After all, if all we are doing is trying to stop extremism and irregular people movements, maybe defence and the AFP should be getting more of the money. This is certainly the argument that Joe Hockey took when he announced the $3.7 billion reduction in the aid program. He justified increases in defence expenditure by the offset of reduced aid expenditure. The decision last night to reduce aid in the forward estimates by 303 million so it can be spent on other policy priorities in the portfolio, which I think we can take to mean funding for security work within the portfolio, is yet another example of how easy it is to cut the aid program if you think of it as only one of the tools available to government to deal with major security challenges. My second concern is that the programming within DFAT will follow the language. More money into health security and less into funding immunisations and basic health systems. More money into Islamic high schools and less into quality basic education accessible to all. More money into crisis response rather than investing in social protection or citizen voice and accountability. Given what we know about the building blocks of development, the programs that best fit the security rhetoric are not necessarily the best investments in state building. They deal with symptoms, not causes. I think we all need to look very carefully at the future white paper to see how foreign policy development and security are framed within that document. If the rhetoric keeps up and if programming follows that rhetoric we could end up with a weaker and narrower program not just a smaller one. So in summary, am I feeling optimistic? Are we getting a better quality program even if we have to accept that we're getting a smaller one? Well, I have to admit I'm an optimist by nature and I am happy and really relieved that the era of big cuts seems to be over. I'm depressed that we haven't bottomed out but I am pleased that we're not facing big cuts. I also believe that there is a serious commitment to aid quality within the department and that it does have the right skills and people to have a world-class aid program that is able to integrate development very cleverly with foreign policy objectives. But I'm also happy that we've reached a level of predictability and allocations which is, I think, a precursor to aid quality. But I am very concerned about this growing link between national security and development and I think it does pose risks for not just the quantity of aid but also the quality. Thank you. Thanks, Jackie. We'll move to the panel in a moment but if there are any questions for Jackie before we do. Hi, Jackie. Thanks for the really interesting presentation. I think, as you mentioned, we have done a fair bit of research, particularly Camilla and Terrence, on whether this national interest messaging is effective and it continually shows that it just really isn't. It isn't something that creates support for aid. Do you think there's just a lack of awareness of that among government or do you think that perhaps they truly do believe that this is what aid's for or do you think that perhaps there's almost a little bit of deliberateness from a government that's cutting aid continually to sort of not worry about building up public support? Yeah, it's a good question. I think, I mean, I don't know is the first and simplest answer but what I can hypothesize is that narrative does play to a particular part of the segment that the current government cares about deeply. So the more conservative part of their own political base. So I think they are using that rhetoric to try and shore that up. I do think there is a real conflict in the government building up support for aid at a time when it is consistently cutting it. It does make it a pretty difficult role, right? If you're out there trying to build support for the aid program at the same time, in every budget you're announcing further cuts to aid. So I think there is a genuine conflict and building support for the aid program is clearly not one of their top priorities. I do think it's incumbent on all of us who care about aid and development and all have opportunities to communicate in the ways we do to not fall into the trap of following that rhetoric but to very deliberately counter it. Any other questions? Okay, in that case, if I could invite Stephen and Tony to join Jackie here and we'll offer anyone an opportunity to ask any questions of any of them or of the panel as a whole. Just give them a second to mic up but it'll be first question up the back and then second poll here. Go ahead. Thank you all for your presentations. I guess the reoccurring theme was that now the quantity is probably maxed out, hopefully not going to fall any further. It really comes a question of quality. I was hoping to hear the panel's thoughts in regards to the role of impact evaluations in trying to assess the quality of different programs that Australia is funding. We'll take it one at a time. Yeah, yeah, I think, I mean, I wouldn't say it's, yeah, maxed out in that it could decrease further, right? So it certainly hasn't bottomed out. We could see further cuts to aid at least in terms of not indexing the CPI. And yeah, it'd be very interesting to see how Labour responds to this challenge but on the issue of impact evaluation, I know there are probably some students here and the course impact evaluation is very important. It's just a lot of the aid program that can't be assessed by impact evaluation. I think you saw the huge amount being spent on governance in the aid program, which is, I'll just get you the number. It's, yeah, it's about 800 million a year. It's now the biggest sector it's taken over from education. So, you know, governance is notoriously hard to assess using impact evaluations. Let's say it's impossible. Does that mean you shouldn't do it? Well, that's one approach, but certainly not the approach government's taking. So I think it's important. You know, I'd say two things. One, it's very difficult to assess effectiveness, but, and two, we need a variety of approaches across the board. There's no magic bullet. If any of the other panel members wanted to win on that, or otherwise we're gonna make a decision. I mean, I just agree. I think if there is a role for impact evaluations, I think they'd be thoughtful about where and when you can use them. And certainly when I was working on the Indonesia aid program, we were doing quite a lot of impact evaluations together with MIT, the J-POWL group, and the University of Indonesia to try and influence government decision making around changes to so, very sensitive changes around very large social protection instruments. In that particular case, the government of Indonesia needed really robust evidence to be able to navigate the very difficult political decisions. So the cost of those evaluations and the effort that it takes to put into them was, I think, justified. But I do think there's a great role for more iterative, adaptive approaches. Michael Walcott, I thought, gave a great speech here about how to tackle wicked problems and the fact that programs really need good quality information as you go through the space of trying to program away through it so that it can inform decision making as you move through. So I think investing in evaluation monitoring and learning is absolutely critical and there is a role for impact evaluations, but it's not for everything. I'm sorry. If I could just add to that. As Stephen mentioned previously, there's the aid program has such weak linkages to performance outcomes as it is. And you could think of impact evaluations and the insights that it gives around causality as being the gold standard as some people talk about. But there's so far to get from where we are now to that and just a focus on development outcomes as opposed to process outcomes is the next big step that is yet to be taken. Yeah, just one more thing if I can. Can I? Thank you for your patience. No, that's right, you go. No, I'll mention later when I... Okay, thank you very much. I guess I really enjoyed the presentations, but I'm feeling quite depressed. I'm really sorry about that, but I guess it's not just the presentations. I guess I look around the room and I think we've faced a third cut in the aid program, but it's at least a third cut in the number of people attending these events. I read the Canberra Times, they got to the end of page 11. Not a single word on the aid, not even that little paragraph that's sort of mentioned, you know, it's 300 million in the app, like it didn't even register that far on the sort of the press. In the discussion, we seem to be looking for quality and predictability, which are really, really important, I guess, in the context, and we have to accept the context, but I guess I'm looking for those elements of being angry about the level we're at that was certainly, I think, touched there on falling below point two as to how extraordinary that is. But I guess it was what are gonna do about it, you know? Like, how much do you accept what's there and try and improve a little bit of what you've got relative to fighting for more? And I guess I'm interested in the panel's views on fighting for more options. Yeah, I think, fortunately, we've got Mark Purcell here, who's the chair of the Campaign for Australian Aid, so Mark might be a good person to respond to this. Yeah, that's, it's a difficult question as an academic, you know, it's not really your role to get angry, it's your role to... What are your students in here, right? But, yes, but as you say, it is, I take your point, Paul, I think it's a difficult thing and it's this whole thing, well, we should be relieved there haven't been more savage cuts. There's a similarity between the spy agencies of money that's been diverted to and the government's treatment of Australian aid program because you never hear about it, aside from, you know, the fairly ineffectual speeches from ministers that are generally missing an action over the last four years in talking about the aid program. We've been out condemning the cuts and that diversion the last two days, all over the national media. There's also been a lot of lobbying going on of back benches as well, several hundred. They have been rung over the last two days, but I think it's fair to say that the government, you know, noting the positives that Jackie has said, that there is no communication strategy around the aid program, hasn't been for years. There's no effective advocacy from the ministers. There's no strategy for the sustainable development goals that Australia has signed up to. So while there's been an 18 month effort by DFAT to get the logos put on London Street Building, congratulations, well done. We don't really know how the STGs are going to be aligned to expenditure to aid investment plans. There's a billion dollar spend for climate change, which was essentially old expenditure repackaged and announced at Paris by Malcolm Turnbull, but again, there's no strategy for climate change. So while there's a great effort on the Green Climate Fund, we don't really have visibility of the other expenditure. So when we look at the cuts and how they were made, you've got Burma that has come out of 60 years of civil war, a fledgling democracy. You cut the aid program there by 40%. Then you've got Indonesia that's a G20 economy and you cut it the same. So it didn't seem to be a rational way to go about it, an effective way to go about it. So I don't, you know, acknowledging the professionalism of the staff and some of the things that Jackie said, I think in those other areas of metrics, communications, STGs, climate change, it's ineffective. And I'll just add briefly, Paul, that I understand there's about 200 people watching us on the live stream, so we're not alone in this room. Small consolation. Question from Bob. I don't want to add to the depression, but the point that struck me was when Tony said, as a way of preliminary, I agree generally with the chain structure of the budget towards the debt distinction. But then he says the revised budget definition is going to get into surplus in 2018-19. And we see to aid, that is, recurrent expenditure is going to be in surplus. And we see aid cuts in the next two years. The first two years after it's in surplus. How should we, and the question really is to, I think the whole panel, but how do we interpret that? Because it's not about getting the recurrent budget back in surplus, because it's already there. It's a cut, it's a gratuitous cut after that's been achieved. That, it seems to me, to be a bit more depressing than a cut that's made in the context of saying, we've got this budget crisis, we need to do something and aid's got to take its share. Now we're saying we don't have a budget crisis, we've got a surplus, but aid's going to get cut anyway. How do we interpret that? Yeah, well, I agree, that's a worrying sign. I think one, a different perspective would be to take that they needed to find savings to get that adjusted surplus anyway. And the easiest savings to make are those in the outer years of the forward projections. So whether or not those cuts to the aid program could have come in the next couple of years or at the end, it's just politically easier to put them at the end. And that's, as you would know, that's something that tends to happen with the budget across all different sectors when there is a budget surplus that needs to be found. But I agree, I think that's something that should be focused on. I don't, I don't really, it's perplexing this decision in the two out years to cut the program. I can't help thinking, although I have absolutely no information on this, that there was some portfolio deal around it, that it reflects an intra-portfolio decision that the overall budget environment was your portfolio budget, the recurrent expenditure can't go beyond this. So if you want whatever that 303 million is going to be used for the other policy priorities, you have to find it from somewhere else in the budget that those other policy priorities weren't ODA eligible. So they had to actually strip it out of the ODA budget to make it more broadly available for the other priorities. So it may be a decision that is much more ministerial in a way of controlled decision around her priorities within the portfolio than reflecting a big decision of ERC. But I have no, like we're all hypothesizing, I really don't know. Yeah, I think as usual, Jackie's hit the nail on the head, that's why we keep inviting her back. It was a bit mysterious that the budget lock up because you and McDonald made this point. When we asked what the savings are for, she said they're for the portfolio. But that's nowhere written in the budget documents. And so I didn't put it in my blog. I wasn't sure what to make of it, but maybe Jackie's just explained what it was about. And then perhaps also there was this calculation that will increase aid for a couple of years that will then reduce any immediate political protest. But yeah, it is, I think it's a really good hypothesis. It'd be really good for someone to ask the minister of foreign affairs. Why aid was cut? No one's done that yet, as far as I know. I've got one question here and then there. So go ahead. Hi guys, I have a question about Jackie, you were saying, sort of talking about how the aid budgets been reframed away from development and a sort of poverty alleviation focus. I'm wondering whether you think that the good debt, bad debt distinction might be an opportunity for people who are advocates of development aid and poverty alleviation aid to sort of frame that kind of aid as an investment in our region. Like I'm thinking of sort of like infrastructure projects, projects where we're building stuff. Maybe that's a chance to say this is actually good debt. I think it's a great idea. I hadn't thought of it myself but I think it's a really good idea. I guess particularly if that narrative starts to get a bit of traction, it would be good to play on it. Thank you. Steven, I was interested in your graph where you showed the discrepancy between Australia's development for the budget and the OECD's average development. And it seems like Australia's increasingly becoming an outlayer here. If I just take the UK example where you had a conservative government in place with bipartisan support in a significantly harsher budget environment able to ringpence the budget, how do you explain these kind of discrepancies which seem to indicate a fundamentally different outlook on international governance and security? I mean, the UK is a special case and it had like us that big scale up, big upswell of support but somehow it managed to secure it and now it's become an issue in relation to Brexit. To keep 0.7 is important for the government to show to the world that Brexit doesn't mean we're turning inwards. So 0.7 seems protected in the UK despite the upsurge of nationalism. I think in the EU more broadly, others will know better than me, but my sense is they are facing this crisis around migration in North Africa and so they see aid as a very useful tool, something they have to spend on. It is related to security. The big unknown is the US and Trump has promised, or Trump's asked for these massive cuts, I think 40% cuts in aid. There just seems to be a very strong resistance to that in Congress. So I think that's the unknown is what will happen in the US. But yeah, certainly so far, for a variety of reasons, most countries have been increasing rather than reducing aid. And we show this sort of our ranking in the aid tracker and we're certainly on a downward trajectory with NYC 17th, I think, out of about 29, but only about 20 sort of serious donors and we're gonna keep heading down that list. So yes, if we want to talk of ourselves as a generous nation, I think we can't really. This is a good indicator of how generous you are, not when we pass on. If I could just add earlier this year, Harriet Conran and I did some analysis around narratives on aid in newspapers across four countries, UK, US, New Zealand and Australia. And I guess one of our findings for the UK was that these narratives have a much stronger linkage between how much aid they give and why they give aid, how they give aid and the need for aid. When we looked at Australia, we found that narratives on aid were much, much less connected or the connections were weaker. For example, I think we talked about humanitarian aid and that is a great selling point for aid. We know that people understand humanitarian aid much better than development aid. Yet when we looked at narratives on how much aid Australia gives, they don't, this is in newspapers, they don't link in with humanitarian aid. You rarely see humanitarian aid mentioned in the same articles when they're talking about Australian levels of aid, for example. Another question over here, John. So this fresh round of cuts will start to kick in in 2019. 2019 is also an election year for Australia. So, I mean, we, to date, we've had a pretty lackluster response to the 30% cuts for seeing the aid program from the Labour Party. But what would be your advice to the campaign for Australian aid and for advocates of the aid program in the next two years to try and get more support and make this an election issue? Any difficult questions? Yeah. Jono. LAUGHTER Try and get a commitment out of the Labour Party? Yeah. I mean, the Labour Party has to rethink its strategy, I think, after this budget more generally. But, yes, I think you try and get it. They've only got a very small commitment so far from Labour. I think to reverse, to increase some funding for NGOs, I think ANCP, right, but it's a very small amount, a couple of 10 million, or in the tens of millions. So, yeah, try and get a bigger commitment from Labour. Yeah, that would seem to be one piece of advice, but not really my area of expertise, I've got to say. I mean, it's really... Are the comments welcome? Yeah. I mean, in some ways, it relates to Paul's question about should we all be angry. I mean, of course, I feel personally angry. The point is, how do you affect change? How do you try and influence the people who might be able to make a decision to increase aid volume? I personally think that the Minister and the current government aren't very susceptible to angry aid advocates. I just don't think that works. I can't see a pathway to convincing the current government to give more aid. I really can't. I mean, I'm not trying to be defeatist about it. I'm trying to be a realist about it. I think we've got to look to the next generations of government to do that and maybe do more work with incoming members of parliament, more work with youth. I mean, all the work that the NGO community does, I think, really well. If I thought getting angry would help, I'd do it. But it's really to endorse what Stephen says. I think we've got to focus on the other parties at the moment. So we're just coming up on 10.30, so we've got a question up here and one here, and I'm going to take one more short and snappy question anyone has one. No, okay, last two questions up here. Thank you. I noticed that both Stephen and Jackie referred briefly to the White Paper on policy in their comments, and I was wondering if you could say a little more in the time available about what role you think the aid program is going to play in the White Paper and how can the influence the government to give aid more prominence in the White Paper? I think your comment's about an integrated department. I think so. Well, I think it's probably too late to influence because I don't know if it's being written, but it's going to come out in the next couple of months, I think. Yeah, mid this year. Yeah. But yeah, I mean, this budget was sort of a budget on hold. And I think the aid, I mean, the aid program, there were some big reforms when the minister came in. There's a sense now, well, those have been sort of prosecuted and what's next for aid. So you hope it won't resolve the quantity questions, but in terms of strategy, the White Paper could give the aid program a push. And there are several things that have been mentioned that are sort of on hold and maybe the White Paper will give them impetus. We mentioned the Pacific Strategy. It's meant to come out last year. We're waiting for that. The Regional Health Security Fund, which is meant to be the government's flagship commitment and new benchmarks for the aid program. So I think there are a number of things that may be in the White Paper that would really help. And then the broader, I guess, hope is that the White Paper will have a sort of very positive statement around the importance of development within foreign policy, not only in relation to national security from multiple broadly, and that will then provide a more favorable operating environment for aid. I agree with Stephen. Okay, and the last question. Thanks, everybody. Just following on from that set of conversations around building a case for increasing the aid program and picking up on Jackie's, I think, really well-founded observations about the narrowing of the focus on national security as a hard set of issues. And Stephen's more recent comment then about the operating environment and the benefits of development. Can I just ask what range of research topics because topic, I guess, facts and research and analysis are more effective and persuasive, we hope, even in this post-fact, post-truth world. That anger, as Jackie said, what research and analysis institutions like this one, perhaps undertaking which can actually give advocates the ammunition that we need in order to make the case. There's lots of rhetoric out there, and we, a lot of us believe it. What do we actually, what can we point to and how are institutions like this actually helping to build that case? I've got one that I would love someone to do research on. I would love to understand, do a comparative analysis of Ramsey compared to the post-Boganville crisis response. So you had two places almost exactly co-located. Both went through big periods of crisis and more conflict in Boganville. The Australian response to those two events was extremely different, partly because the space for that response was very different. But in Boganville, in Boganville, we played and New Zealand played a much more facilitative role and we've invested much more in diplomacy, statecraft and in development programming in trying to rebuild the community and rebuild the desire for peace in Boganville. It's still got lots of challenges ahead. In Ramsey, it was a very military, very security-focused response with lots of security personnel. One cost just over two and a half billion. I haven't done the summary of how much we've spent on Boganville, be a lot less. It'd be interesting. I mean, these are two very different approaches to approaching a conflict in our region in a very similar geographic area. I'd love to understand what we think worked better and why and how that might influence. This is the sort of deep thinking that I'd certainly think A&U can do, but this is what DFAT should be doing. I wish they had the space to do this. So there's one, enough to hear. Yeah, we're just to add on a sort of similar, and also on a positive note, since everyone is so angry and depressed. You know, I was struck when I was just doing, preparing for this presentation, that upward trajectory in Pacific performance. Exclude, why don't you take out PNG. And I started reading some of the annual performance reports from places like Solomon Islands, Kiribati, places you think normally are pretty troubled. And there are lots of positive stories about improved learning outcomes and better disease control. So I think someone should go and look at that and see if is that spin or is that real? And if it's real, then let's take some credit for it through the A program. Just last, I think it's worth emphasizing Terrence and Camilla's research, shows that there is the majority of people want aid to be spent on improving people's lives in poor countries. And there's a much, much smaller proportion of people who are obviously very loud and are able to capture a lot of media space and political attention that think that aid should not exist. So it's about tapping into that, possibly that silent majority. Great. Well, that about wraps it up. Before I let you go, I'll just mention, Stephen mentioned a couple of times the aid tracker and I'll just give another plug. It has been fully updated last night by Ashley. So please do go there, defpolicy.org slash aid tracker and make use of it through your own analysis. And on the topic of your own analysis, I also have to plug the defpolicy blog. Love to have submissions of blog posts. And that we have also just recently given a facelift. So please, if you haven't gone and had a look at it yet, please do. Otherwise that wraps up the live stream portion of our event. Thank you again for attending and please feel free to stick around. I think there'll still be some tea and coffee outside. Continue the conversation and we look forward to seeing you next year.


If done right, user interviews can be a great source of inspiration and help you to build solutions that your customers will actually love. In this video, you'll learn how you can structure user interviews to actually get those deep insights and also make it an enjoyable experience for everyone involved. Let the show begin. Hi, I'm Mark and welcome to the Service Design Show. This show is all about helping service designers like you build organizations that put people at the heart of their business. One way to do that is to actually talk to your customer in order to understand what they actually need in order to build those services that they will love. User interviews are a great way to do this and I think we use user interviews in 80% of our projects. For me, it's one of the most fun and enjoyable parts of the design process. And although I love user interviews, there is one big challenge I see happening with researchers who have less or little experience and they end up formulating the wrong questions. They end up tweeting user interviews more like surveys where they start to check off questions from a list rather than actually engaging in a conversation. Yes, they will get answers to their questions, but will they get insights that they actually need? Probably not. And this way of interviewing also isn't a really enjoyable experience for anyone, neither for the participant, but it's also not really enjoyable for you to just check off questions. So let's look at what you can do or how you can structure user interviews to get those deep insights that you need to build those solutions your customers will love and also make it a fun and enjoyable experience for everyone involved. So let's use an case study, an example for the rest of the video that will help us to understand how to structure these user interviews. And the case study is that where our challenge or ambition is to improve the wine buying experience, make it a more enjoyable experience. Now, everything you're going to hear is based on a lot of assumptions and in real life, the exact questions you'd be asking will be determined by a lot of external factors, but we have to start somewhere, right? And the other thing is that with every question you're going to ask, you need to dig deeper. You need to ask why at least five times, we're not going to do that for the sake of simplicity in this video. But remember with every example that I give, you need to dig deeper, you don't stop after you've asked your question and you got the answer. Now, you continue. That's just your starting point. OK, so let's go back to the wine buying experience. Let me give you some examples of questions you shouldn't be asking. These are questions like, how can we improve the experience for you? Or would you like if we did this? Or would you prefer a solution A or solution B? Those are really bad questions to ask in a user interview in the discovery phase. If you know more classic, typical, bad examples of questions that you've heard in user interviews, leave them down below in the comments. I love to hear them. So the first thing you need to do in a user interview is to set expectations. You need to explain to the other person why you're talking to them. This is really important and you want to explain that you're not doing a survey. You're not interested in answers. So a way we would approach is around the wine buying experience would be something like we want to create something, we want to create a wine buying experience that people actually enjoy. And in order to do that, we need to understand who our customers are, what they need, what their needs are, what their desires are. And that's the reason I'm talking to you to understand a little bit more about that. That could be a great way to actually open a conversation and set the expectations while you're here. So after you've set the expectations, you need to ease in into the topic. I repeat, you need to ease into the topic. A classic mistake I see researchers making is just going head first and just bombarding people with their agenda, with our wine buying agenda. You have to realize that the person you are talking to is probably not thinking about wine buying, they're just living their life. They're just they're not aware of what is important to you. They are aware of what is important to them. And we need to start with that. So we like to ease into the topic by asking really simple questions that people can relate to and can easily answer. So in our case, it might be something simple like, what are the first words that come to your mind when you think about wine? People could say like friends, confusion, enjoyment. They will usually be able to relate to those kind of questions. Why are we asking this? Because already an answer that we get to a question like this, what words do you associate with wine and it would be friends. That might be emotions that might be triggers that we could use in actually thinking about improving their wine buying experience. So it already gives us data while we're relating to the person we're talking to. The next thing you want to embed in the structure of your user interview is that you ask questions that are embedded in reality. We're not interested in opinions or wishful thinking. And the reason why we want questions that are grounded in reality is people lie to themselves. We lie to ourselves. We give answers to what we think we might do, but we often usually don't end up doing. So what I mean with questions that are grounded in reality is by asking questions about things that actually happened, which people actually did. So in our wine buying example, we could ask a question, what is the last time you drank wine? Where was that? Who was with you? What kind of occasion was it? It's a question that people have to relate to something that they actually did. The answer could also be I never drink wine, but then we selected people we're talking to incorrectly. But assuming that people do have an answer, try to ground it in reality. And we could also ask questions about when was the last time you actually bought wine, you know, in order to start easing into the wine buying experience. So was it in a restaurant? Was it in a store? Did you do it online? We can sort of start to actually grab things that people actually did instead of trying to figure out what they might be doing. But I do want to give a warning, even with these questions that are grounded in reality, people don't. It's hard for most people to actually give an honest answer. It's not that they want to lie to you. It's just hard to give an honest answer. So if you have the opportunity and this is not always in every project, but if you have the opportunity, give people an assignment and observe what they do. So, for instance, in this case, and this is actually what we've done in some of our project, give people 20 euros and say, please take this money and buy a bottle of wine in the next week and document the process in this diary. Because then you actually can follow along what people do and how they spend that money and how they buy the wine. So these kind of questions, if you have the opportunity to actually give assignments and observe behavior, that's so much more valuable than actually asking questions. But if you do ask questions, make sure they are grounded in things that people have actually done and not in what they think they will do on a final. But very important note. And this is something I already addressed at the beginning of this video. The exact questions will differ depending on your context, depending on the company you're working for, depending on the challenge you're working on, depending on the country you live in. And it might be that in order to understand and create a better wine buying experience, we might have to go back all the way and create a much broader set of questions that focuses on shopping. For instance, how what is your preferred way of shopping, understanding what the frustrations are with shopping, understanding what types of buyers people are that could be a whole set of questions on its own. It's hard to determine that now, but in your project, you have to just be aware that you sometimes need to zoom out to actually understand the frustrations, the pains, the desires of your customers. It's not always that you just focus on the thing you want to know, wine buying, you could also focus on things like shopping. Just keep that in mind. Everything depends on your context. And I hear you thinking when I'm asking these questions, could I be able to create personas? Yes, definitely. You'll start to recognize patterns. You start to recognize different types of customers. And it's very, very likely that you'll get answers on which you'll be able to create personas. And if you want to know more about how to create personas that are actually useful, check out this video over here. As you probably already know, doing good user interviews is both an art and a science, and there is so much more to it. So if you want to dig deeper into this topic, check out the video over here where we talk more about that. So thanks for watching and I'll see you in this next video.


we will discuss about the innovation and entrepreneurship by the Peter Drucker's view. What Peter Drucker's view is the different from the other entrepreneurs or is that the same idea where it comes from the Schumpeter or economist or the psychologist or sociologist. So, today we will going into deep somehow to understand what entrepreneurship in relation to innovation in the modern time and similarly we will try to understand how it driving new economies, business and products. Do we really think that economies, business and products are actually stimulated by the entrepreneurial activities but here the biggest question comes in that entrepreneurship is any startup is entrepreneurship is any small startup is entrepreneurship but what Peter Drucker says is bit different. Well, here in module one systematic entrepreneurship he says systematic entrepreneurship about I mean to in his view is the French economist JB define entrepreneurship is someone who shifts the economic resource out of an area of lower and into an area of higher productivity and greater yield. So, higher productivity or higher yield concept that shows the idea which I discuss in the start. Is that a very general innovation? Was it actually small business or entrepreneur you represent entrepreneurship? A small grocery shop owner is not an entrepreneur. Well, if you ask him why did he say that I sold everything I came from outside I opened a store. So, taking the same line and entering into the same collage. I am looking for an understanding to be able to make a picture in the collage.  So, we can't say that he is an entrepreneur. Now, moving on. So, small grocery ownership is not acceptable. Is not an entrepreneur but a food cart vendor of a unique product will be considered as entrepreneurs as he is as I am stressing on the word is new processes. So, I am going to give you an app and I will give you the full grocery store in the app.  So, this is called entrepreneurship. If this entrepreneurship in this idea in which you are getting speed, innovation, value, a process style that has not been adapted before, then we will call it systematic entrepreneurship. I will increase it further and increase it in such a way that we design a case study. And we will see that there is a one stop shop app as well. So, one stop shop, I had heard that is there any one stop shop app, that the whole app, the condenser that makes the products deliverable for you. Thank you very much.