Tens of millions in foreign aid wasted on salaries and commissions

By Paul Oates

The lid is lifted on Australia’s Foreign Aid program

In a Special Report in today’s Courier Mail on Australian Foreign Aid, some of our overseas aid were listed in detail. The report claimed that around a quarter of our aid to PNG is paid to a handful of firms who in practice deliver little of substance.

Under the heading ‘Pacific nations outraged by huge salaries paid for
advisors’, examples include a former clerk of a Melbourne court who now receives $500,000 a year, tax free, as the law and justice adviser to PNG.

Under the ‘Millennium Development Goals’, a female adviser is paid $293,423 tax free a year as a ‘gender integration adviser’ to PNG.

It was reported that the newly appointed head of AusAID, Peter Baxter, has ‘vowed to crack down on highly paid consultants as part of a broader restructuring of the foreign aid program’.

Other references to PNG include:

– over 12.5 million for private rental accommodation contracts in Port
Moresby.

– three quarters of a million dollars paid to the Media Council of PNG for a ‘new funding agreement’.

– an independent review of the PNG/Australia treaty found ‘millions of dollars being “wasted” on consultants and glossy reports’. Australia’s financial support was “being spread too thinly” across areas including health, education, transport, law and justice and HIV/AIDS.

– Health programs run by non government agencies and churches received a tick of approval however.

“It may be that there is an over reliance on advisers in some countries,” Australia’s Foreign Affairs Minister is quoted as saying.

So what about introducing outcomes based auditing into our Foreign aid programs? I searched and searched the report but couldn’t find any reference that might be even slightly construed as approaching anywhere near that revolutionary concept.

_________________________________
Tens of millions in foreign aid wasted on salaries and commissions

By Steve Lewis and Nic Christensen: The Courier-Mail, May 24, 2010 12:00AM

AUSTRALIA’S foreign aid program is under siege after revelations tens of millions of dollars are being wasted on huge salaries for consultants and rich contracts for private firms.

An extensive investigation has uncovered a lucrative foreign aid “industry”, raising questions about the Rudd Government’s decision to double annual spending to more than $8 billion.

And a high-level review has slammed the $414 million program in Papua New Guinea, claiming $100 million is being paid to a handful of firms – but delivering little.

Aid experts also have questioned the size of contracts paid to “briefcase” advisers who fly in to poor countries, including East Timor, Vanuatu, Solomon Islands and Tonga.

The Courier-Mail’s extensive investigation can reveal:

. A small clutch of five firms have secured $1 billion in contracts.

. More than a dozen aid consultants are earning more than Prime Minister Kevin Rudd, flying around the Pacific to advise on everything from “gender integration” to sport, transport, energy and justice.

. Millions of dollars are being diverted to aid programs including $12 million to research the giant panda in China and $13 million to redevelop a single school in Nauru.

. AusAID, the agency in charge of foreign aid, is investigating allegations of fraud

– and is about to undergo a significant restructuring.

. And millions of dollars are being spent by the AFL, Girl Guides, ACTU and other community groups “selling” a pro-aid message to the public.

The review is embarrassing for the Government – and raises serious questions about the value of pumping billions of dollars into fragile states.

______________

On pages 4 and 5 of the same paper there are some further details:

Foreign Spending as at December 31, 2009 was quoted as:

1. Major 5 consultancies $955,090,376

2. Government payments $759,912,587

3. Corporations $537,205,016

4. Non Government organisations $225,700,306

5. Major charities $213,056,756

6. Universities $85,942,386

7. Smaller consulting firms $ 78,514,144

8. Advisors $24,271,039

Big 5 Australian Contractrors:

Total value of current contracts as of Dec 31, 2009:

1. Coffey International $310,079,609

2. Cardno Acil Pty Ltd $302,413,369

3. GRM International $266,538,015

4. GHD Pty Ltd $54,534,579

5. Sinclair Knigh Merz $21,704,802

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25 thoughts on “Tens of millions in foreign aid wasted on salaries and commissions

  1. And the ABC reports –

    Half of PNG aid budget spent on consultants

    By PNG correspondent Liam Fox

    A review of Australian aid has recommended a reduction in the controversial practice of hiring highly paid consultants to advise foreign governments.

    Australia’s aid agency AusAID has been heavily criticised recently amid revelations it is paying some consultants six-figure tax-free salaries to provide “technical assistance”.

    A joint review of the PNG-Australia Development Treaty found more than half of Australia’s $400 million aid program is spent on technical assistance.

    The review says there have been some success stories but overall the practice has made little difference to life in PNG and this method of capacity building does not work.

    It recommends a reduction in the amount of money spent on technical assistance and says AusAID could do more to reduce the cost of hiring consultants.

  2. If you want to employ the services of a skilled proffessional, that will cost in Australia anywhere from $60,000 – $120,000 AUS per annum depending on the field. Now you send that proffessional to an overseas country, add to that salary; accomodation, transportation and return flights that will be another $60,000 AUS per annum. Now send that employee to a country with social unrest and political instability and you have to pay them a ‘risk allowance’ or ‘danger money’. This is going to be propotional to the amount of risk involved and the willingness / unwillingness of staff to go there. It would not be uncommon salaries to double in this case (and sometimes more).

    So if we did the math here, in a generous fashion. Assume a base salary of $120,000, add overseas living expenses + $60,000, now add ‘risk allowance’ the same as the original salary + ‘$120,000. That is a total of $300,000 AUS for a ‘trade’ level ‘consultant’ say like an electrician / mechanic etc. To get to a $500,000 salary one would have to be earning a base salary of around $220,000.

    I see it like this; If you need to pay someone a huge amount of money on top of a good salary to ‘compensate’ them for ‘risk / danger’ then there is a good chance they do not actually want to be there, but have been enticed by the ‘good’ money. In this report, church group and non governement aid was praised, these people willing go to countries in need of assitance often at their own expense or on a small ‘living allowance’. Why are such highly paid proffessionals less effective than volunteer aid workers, well that answer is simple, they are doing it for 2 very different reasons.

  3. Hey – and did anyone mention the spouses who are on “allowances”?

    Perhaps that’s why there was a suicide by hanging by one of the consultants or his/her spouse in one of those high-cost rental apartments. Funny – There has been no press coverage on this suicide.

    Hummm – Do I smell a dead rat!

    1. @Anonymous

      The media in Australia very rarely report on suicides, for a few reasons; the sadness and stress invovled for the surviving family and to prevent ‘copycat’ suicides. Not sure if PNG media follow the same ethos, but I would be surprised if they didn’t, as this apporach is employeed by most media organizations around the world.

      My condoleneces to those impacted by that particular tragedy.

      Anonymous you do however raise a valid point of additional family allowances.

      All of this is a 2 way street though. If PNG was a safer place to live and work, the huge pays would not be neccassary. But then if PNG was a safer place to live and work would the need for consultants still exist?

  4. Oh well beggars can’t be chooses.Our country is not a safe place for those money hungry so called specialist,consultants (of what?),years of sitting around a western country/suburbs and get their “papers” and go seeking jobs that bring the maximum amount.In theory ‘they may have the SAVE’,but putting it into practice the “called experts”will be like the blind leading the blind.Just because the so called experts have a” piece of paper” does not mean they can do the job.They only serve themselves and then write up lies upon lies in their reports and dossiers to their paymasters in Canberra.

    This is what I recommend Australian Aid Agency to do before they get any Australia or other Nationalites to work in PNG;
    . That those applicants must have been in the Country of PNG more than 20 or more years.
    .They have exactly lived in the rural areas of PNG(Those so-called Experts think that Port Moresby is PNG) Majority of the rural areas of PNG live without power,proper health facilities and personnels and all other modernity that a city and suburbia offers.
    .They have a thorough knowledge of the way PNG people are and go about their daily life without the comforts that these experts and consultants take for granted .
    .They have been sick with malaria more then ten times.
    .They must have traveled most parts of PNG,not by plane but by PMVs,cannoes and by his or her two legs.

    If they do not meet those above mentioned criteria then dont employ them no matter how”colourfull their VCs look like.
    They will only do disservice to the Tax payers of Australia and the RESILENT people of Papua New Guinea.

    1. Judy,

      Your description of who might be qualified to be recruited sounds awfully like some (but not all), fellow former kiaps I know. Regrettably they are on the wrong side of 60 even though many would be very happy to assist if they could.

      The difficulty with the recruitment process is two fold. First, there must be experience in what is required to be able to effectively select useful applicants and then there must be suitable applicants available.

      So who is suitably qualified to select suitable applicants? It seems that the old saying about ‘paying peanuts and getting monkeys’ has now been morphed into the reality that if you pay large amounts, all you get are bigger monkeys.

      What about skills transfer and genuine long term assistance without excessive financial gain as a good starting point?

      1. Yeah,Paul, probably we may just need these Guys(KIAPS).They may be sixty and over but I am sure some of them can still perform.Haven’t you and the AustAid authorities and the Australian Government,years of experience does pay it’s dividen.Who said sixty is over the hill?!

        I saw them when I was growing up and when I was going to school.Everything was working,all the sections of the Government structure.The government than went to the villages and the provinces (through these extra’ordinary men).The villagers knew whenever a kiap would come to the village he was bring the latest news from those in Port Moresby (Government).Goods and services delivered on time;health,law and justice education,roads and bridges etc.Everything was maintained!

        The country of Papua New Guinea kept functioning and so was all aspects of everyday living.Most of what is needing fixing now after 30years of self govening is just pain neglect and mismanagement.

        May I suggest to AustAid and Australian Government not to employ useless “elephants” with all the so called “degrees” under the western sun.They and the likes of them have already proven that they are dis-functional mob of useless academics with “nogat save”.

        May be the kaips and the system they functioned under may be given a greater look at.For so long Australian Tax payers money have been used in the wrong way;it has brought no significant improvement in whatever the money was given to PNG in the first.The resilient people of PNG are no better off with these “elephant” Australian Government employed through AusAid to help PNG.They are as worse as the PNG Government itself.

        May be Kiaps are the way to go forward for PNG.We need help but with those who can deliver the goods please.
        Can a research be done to ascertain hows/whys those kiaps made it work with minimal amount of money.PNG needs help but with those who have our best interest at heart.How about it???

  5. As a PNGan, I am personally indifferent on this subject. Whether Australian moneys have been used to achieve the purposes for which they are spent in PNG is a matter for Australian tax payers to judge depending on the perceived effectiveness of the outcomes against their predefined objectives. It’s their money and they have every right to talk about it.

    The only comment I can make about this from my own experiences on the ground is that AusAID (including its Australian contractors) has become one of the most sought after employers for PNG nationals due to the relatively better remuneration it offers against the market. In this regard, it has become counter productive from a PNG perspective because the best PNG brains are being sucked up by people like AusAID leaving business and industry to try and make do with whatever they have. I’m not sure if this is exactly how we want to build our human resource capacity in PNG.

    We can not continue to deliver aid to our people for ever. PNG needs to grow and widen its own income base to enable us to develop our nation, and I don’t know if we can do that if our businesses and industry can not attract and keep talented PNGans in their key positions that require intelligent people to fill. We can not continue to have middle to top level executive positions filled by expatriate employees for ever. PNGans must step up to the plate at some stage and take full ownership and control of our country.

    1. David,

      The crux of the overseas aid problem appears at first to be hopelessly complex and difficult to understand. However maybe this is not really so. All one has to do is to break the problem down into the composite parts.

      Firstly, why are there any overseas aid programs anyway? Here are a few reasons:

      1. Influence – obtaining prestige on the world stage – PM Rudd (previous diplomat) is currently trying to achieve this by upping the aid program to gain acceptance and an ego trip on the world diplomatic stage. His last attempt to do this with the Copenhagen conference of climate change flew like a proverbial lead zeppelin. Hence he is now flying the overseas aid flag to try and get African states to assist in him getting a temporary seat on the UN Security Council. Who cares? Very few Australians that’s for sure. Yet the PNG PM is saying that his coutry will be a donor country. Go figure, as the ‘septics’ say.

      2. National Security and Economic Gain – Humankind is very predicable and as each civilisation expands it seeks to excludes others who are in competition with it. This contest may be by open warfare but is usually carried out using economic influence and will include competition for natural resources. Look at the mining and timber industries in PNG as examples. Aid programs are often tailored with this aspect in mind.

      3. Guilt – Some leaders of some less developed countries have perfected a very useful method of extracting free money from those developed countries who are considered ‘fair game’. This gives rise to the scenario where the erudite African despot and his secret police are living very well off the aid sent by donor countries who are appalled by the conditions in the despot’s country and want to help. With no freedom of the press and repressive policing, no one except the dictator really knows what goes on in his country and the aid program pays for the PR team (usually made up of overseas consultants who must keep the money rolling in to be paid, and therefore in order to keep the status quo going. Of course, this would never happen in PNG would it?

      4. Genuine concern – The high moral ground must be taken by the NGO and Church groups who actually do achieve something, usually with very limited funding and volunteer staff. Not all missions in PNG are useful and some missionaries can be most unhelpful based on my direct observation.

      4. Demand – Less developed countries are often lured into accepting aid money as a practical way of becoming more developed. This is a myth and almost every country that has become developed has done so without overseas aid assistance. What has overseas aid to PNG achieved over the last 35 years?

      So what yardstick do you use to evaluate the aid program? Surely that should be assessed in long term benefits to the country receiving the aid? Wrong! Why? Because the donor countries get wound up in a never ending cycle of continually giving more because the very aid they give makes those receiving it more and more dependent.

      So mate, should you be more interested in this discussion?

      1. Paul,

        Thanks for the insights. I am not interested in aid talk for the very reason that it causes countries like PNG to continue to live in a fool’s paradise and get ever more dependent on other people’s mercy. It distorts our national spending priorities and causes our government to go on wasteful spending sprees. The more we get interested and talk about aid, the more it gives us the false hope that somehow things will improve so that other people can continue to subsidise our cost of nation building. Why can PNG not use its own money to build itself? Why should we go and spend K120m on a sexy jet that adds no value whatsoever to nation building and expect Australia to fill in the funding gaps in other priority areas?

        Anyway, the point I was trying to make in my earlier post is that the skew that aid business is having on the distribution of our skilled labour in PNG is such that it is potentially counter productive to PNG’s long term ambitions of building an appropriately skilled and diverse labour pool. The sucking effect that well paid and tax free jobs in the aid sector has is very similar to that of large scale resource projects.

        We don’t need the best PNG brains to be mere aid deliverers. Rather, we need them to build our businesses and industry and to help increase and widen our own internal revenue base. So which of the two represents a sustainable approach to nation building and eventual freedom from aid dependency syndrome?

  6. David,

    I totally agree with you on every point you make.

    Given that neither you nor I can quickly change the mindset of those who think aid is a great idea, is it possible to at least alter the current misdirection and achieve a better objective?

    What are your thoughts mate?

  7. Paul,

    My suggestion is unbelievably simple. All of Australia’s official aid assistance to PNG should be split 70/30 between Education and Health and nothing else.

    A better educated and informed population will make the positive changes we all want to see in PNG. This would be a real investment by Australia in the development of PNG. The education assistance should be comprehensive and include all aspects of teaching and training from elementary to universities and colleges. Workplace training and mentoring should also be part of and parcel of it all. It should include real people-to-people engagement on the ground and nothing like writing pretty reports in air conditioned offices in Moresby.

    Much of the assistance in the health sector should focus at the aid post and health centre levels but some attention should also be given to our major hospitals as well.

    Every thing else must be funded by the PNG government itself. There can be no excuses.

    This is how I’d like the Australian assistance to work at a conceptual level. The actual mechanics of it can be worked out once agreement is reached on the overall framework.

    1. David,

      great minds think alike. I said much the same thing this morning on Keith Jackson’s blog.

      The problem that needs some creative thinking is in how the funding is distributed and ensuring it goes to the right areas like:

      1. Teachers salaries being there on time, school text books being available and appropriate school facilities being built AND maintained.

      2. Hospitals being properly stocked with pharmaceuticals and rural aid posts supported by a network of distribution centers.

      It’s not the proverbial rocket science. It’s a shame that most PNG people couldn’t take a step backwards in history and see how it all did function prior to Independence.

      It’s a pity that Somare and his cartel couldn’t wait to get rid of us and get their hands on the wheel. They then threw the baby out with the bathwater.

      All it needs is some accountability and responsibility by those who are in charge. Just think of the spin offs like ‘success’ the politicians could claim by introducing this entirely new concept.

      1. Paul,

        I did 10/16 years of my entire schooling in bush schools. When I was still schooling, the state of affairs of our public schools and hospitals in the hinterlands of Finschhafen in Morobe had been reasonably good. This was as recent as 1990s. But not anymore!

        It breaks my heart when I go back and see the very classrooms in which I got educated and the clinics that ably administered me treatment when I was sick have now been deserted and reduced to mere graffiti boards. Things have fallen apart so fast over the last decade. This, by the way, is our own doing and Australia should feel no sense of guilt whatsoever about it.

        But if Australia is serious about helping us, then you should play some part in restoring those very basic but essential services that are the cornerstones of nation building. A lot of the middle class PNGans today came through the old system and I still have every faith in it. Let’s resurrect it and get it back on the right track once more. Let’s get the basics sorted out and PNGans will do the rest of the fancy stuff ourselves. I say this with a lot of shame because health and education should have been our own government’s key focus areas regardless.

  8. Wow, great discussion Paul and David, and innovative idea David. just a proviso on the health/ed idea. I work with an african colleague at Victoria Uni here in melbourne and yesterday during a seminar on Timor L’este, he made the point, learnt the hard way in africa, that education systems post independence and colonialism are often “elitist and irrelevant”. given australia’s track record i would worry about the content and assumptions in australia meddling its hands too much in PNG’s education (and health systems). could we truly support the sorts of education and health that is tailored to supporting png’s rural strengths and not just more neo-liberal propaganda? i mean the stranglehold of expats, esp in the past, in education in PNG doesnt seem to be delivering the sort of education png kids and communities actually need! its aligned to our development model (and in fact doesnt always work very well here, and i say that with two kids in public ed in melbourne) and needs to be aligned to yours in PNG! same with health sector of course!! best wishes, deb

    1. Hi Deb,

      Thanks a lot for the insights and I agree with you. Your comments make me realise that there are at least two broad aspects of foreign aid programs: 1) funding 2) content.

      Hence, PNGans would be largely responsible for identifying the relevant content that suits our purposes in the health and education sectors while AusAID’s role would be restricted only to bankrolling its implementation.

      And if we need some Aussies in the implementation process, then the people we need are everyday practical people who would connect and work with our people on the ground to roll out the PNG designed contents. We don’t need fancy ‘consultants’ who sit in offices and write pretty reports all day.

  9. David,

    what part of the Finschhafen area? There’s not much of that region that I haven’t walked over.

    Any chance you could e mail me direct?

    1. David,

      Thanks mate. Could you e mail Emmanuel and he could give it to you or onforward your e mail to me. For obvious reasons I don’t want to advertise mine or your own too widely.

      regards,

      Paul

  10. Emmanuel, I got wind of something you might be interested with.Be possible you email me on this email address I am using.

    cheers…..jw

  11. Interesting discussion.

    A few years ago, a college of mine and his partner who works with EU was leaving the country after 5 years. They where going back to Sweden and later would take another post in Nigeria.

    When asked over farewall dinner what they think about the security issues in Papua New Guinea and what they may be facing in Nigeria, their response was ” I think the security reports in Papua New Guinea is grossly exaggerated and is written by people who have an interest in Papua New Guinea. They want to receive higher “risk allowance”, “hardship allowance” etc…..thus the report is tailored to facilitate for their needs while they come to Papua New Guinea and have a holiday here.

    Maybe he is wrong… I don’t know.

    Rex

  12. I agree about things actually working and progressing in kiap times. but don’t forget us remote teachers, liklik doktas, didimen, rot mastas, etc.

    We were part of a team and progress was noticeable over my 23 years ‘in country’. Still in touch with rellies in Buka, [by mobile phone !!!] and my impression is of a lot less self reliance [yumi yet] than was the case when I last lived there

    I’m over 60 too, but I cry for the state of my other country, and wonder what part I could play if an alternative program was developed.

    1. Hi Jaymz,

      you are absolutely correct that it was total team effort involving many players and the RPNGC were also part of the team.

      The main reason why things worked then was that administrative control operated at all levels of government and the local people appreciated what we were doing.

  13. Emmanuel,
    So as not to give away much.There will be a meeting on the 5th June,next month in ref to AUSAID fund.The Guest speaker is from within the Organization.I have the name of the speaker,where the meeting is held and what time the meeting is being held.

    The Guest speaker will be talking about AUSAID’s Priorities in PNG.Someone should attend this gathering.,will be MOST interesting listening.

    Talk about “coming out from the mouth of the horse “, may be this is it!!!

    Hope someone within your org. should go and give us bloggers some fesh
    insight.How about it ?

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