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Mutual trust: an alternative to mutual obligation in overseas aid


 Minh Nguyen (Uniya)
March 2006

Executive summary

Released in December 2005, AusAID’s interim White Paper on Australia’s aid program recommends that future aid payments and allocations be regularly reviewed and made conditional on a recipient country’s performance against certain agreed targets. The report suggests that aid be used to reward countries that show reductions in corruption or improvements in business friendliness.

As the Federal Government considers the recommendations of the report in light of its new commitment to increase Australia’s aid budget, there will be temptation for it to “[make] operational the idea of ‘mutual obligation’” for major aid recipients. It is an idea that will resonate with a government which has shown it is unafraid to use financial means to socially engineer Australia’s poor.

In the domestic context, the government’s attempt to impose conditions and performance targets on the long-term unemployed and other income support recipients, including single mothers, the disabled and even indigenous communities, under the idea of mutual obligation has seen radical changes in social policy.

The seductive nature of this principle is understandable but flawed. The evidence suggests that such a shift toward performance-based and contractual forms of aid delivery will not necessarily bring about similar outcomes to welfare reforms in Australia. Applying the ‘mutual obligation’ philosophy to Australia’s aid policy by demanding recipient behavioural change is no answer to the complex development problems faced by many nations in the region.

The downside to lavishing more attention on the policy weaknesses of poor states, through ideas such as mutual obligation, is that equally critical questions about Australia’s own policies and performance in this area are often ignored. Such is the current practice that allows aid money to ‘boomerang’ back to Australia’s shores through payments to Australian companies often for overpriced and inappropriate goods and services that have few benefits. Such is also the policy that insists on putting conditions on aid that go beyond basic fiduciary accountability and that work to undermine real ownership of the development process.

This paper suggests that an alternative to a ‘mutual obligation’ policy based on paternalism and self-interest is a policy of mutual trust based on a fairer balance of the legitimate interests of Australia and its aid recipients. It suggests a system that places greater emphasis, responsibility and accountability on Australia also to deliver better poverty-reduction outcomes for the region.

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Mutual trust: an alternative to mutual obligation in overseas aid

Also by the same author:
 Mutual obligation and Catholic values 5/4/06
 Franchising 'mutual obligation' 5/4/06


textReturn to:
Joint research: the Mutual obligation franchise


Minh Nguyen is the Research Officer at Uniya. This paper is part of a joint research project of Uniya and the Jesuit Social Services. Please email comments to Uniya:



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