Chapter 1Introduction
Referral of the inquiry
1.1On 18 October 2023, the Senate referred an inquiry into the efficacy of the Department of Foreign Affairs and Trade (DFAT) due diligence framework to the Foreign Affairs, Defence and Trade References Committee (the committee) for inquiry and report by 7 December 2023.
1.2The inquiry’s terms of reference are as follows:
Efficacy of the Department of Foreign Affairs and Trade due diligence framework, with particular reference to:
(a)whether the due diligence framework used by the Department of Foreign Affairs and Trade is fit-for-purpose in determining the scope of stakeholders who can be engaged by the Government of Australia for the provision of aid to the citizens of Myanmar; and
(b)any related matters.
Conduct of the inquiry
1.3Details of the inquiry were made available on the committee’s website. The committee also contacted a number of organisations and individuals inviting written submissions by 6 November 2023.
1.4The committee published nine submissions, as listed at Appendix 1.
1.5The committee held a public hearing in Canberra on 16 November 2023. A list of witnesses who gave evidence at the public hearing is available at Appendix 2.
1.6References to the Committee Hansard in footnotes refer to the proof transcript. Page numbers may vary between the proof and official transcripts.
1.7The committee thanks all individuals and organisations who engaged with the inquiry, particularly those who made written submissions and participated at the public hearing.
Structure of the report
1.8This report contains three chapters. This chapter contains information about the referral and conduct of the inquiry. It outlines the impact of the 2021 military coup on Myanmar and its citizens and provides background information on Myanmar’s political and economic history, as well as information DFAT’s development policy, including the due diligence framework and Australia’s development assistance to Myanmar.
1.9Chapter two canvasses the key issues raised by submitters and witnesses in relation to DFAT’s delivery of aid to Myanmar, and Chapter 3 outlines the committee’s views and recommendations.
Impact of the military coup in Myanmar
1.10On 1 February 2021, the Myanmar military (known as the Tatmataw) rejected the result of Myanmar’s 2020 democratic election and conducted a coup d'état to seize power of the state.
1.11The United Nations (UN) High Commissioner for Human Rights, Mr Volker Türk, released a report on the human rights situation in Myanmar on 6 July 2023 describing the impact of the 2021 coup:
Between February 2021 and April 2023, credible sources verified that at least 3,452 persons have died at the hands of the military and its affiliates, 21,807 individuals were arrested, and 5,839 convicted without any respect for judicial guarantees. Additionally, 154 have been sentenced to death and four known to be executed. An estimated 1.5 million people have been internally displaced, with nearly one million in the central regions alone, and approximately 60,000 civilian structures have been reportedly burnt or destroyed. Over 75,000 people have reportedly fled to neighbouring countries. More than one million Rohingya already live under appalling conditions in refugee camps in Bangladesh and recent reductions to food rations due to limitations on available humanitarian funds are expected to have devastating consequences. Of the remaining 600,000 Rohingya in Rakhine, nearly 150,000 live in camps where they are deprived of fundamental rights including freedom of movement. Under the current conditions, safe, dignified, and sustainable returns remain impossible.
1.12The military’s ‘four cuts’ strategy which was traditionally aimed at cutting off ethnic armed organisations’ access to food and humanitarian assistance, funds, intelligence, and recruits, has been redeployed to capture anyone perceived to be supporting those who oppose them. This strategy utilises tactics such as the burning of villages, use of airstrikes and artillery shelling, arbitrary arrests, enforced disappearances, torture, and has resulted in the mass displacement of over a million people.
1.13There have been numerous reports of the military junta blocking humanitarian aid from reaching those most in need in Myanmar since the coup, even recently following one of the worst storms to hit the country, Cyclone Mocha, in May 2023 which impacted 7.9 million people, with 1.6 million needing urgent aid.
1.14The UN report described the military’s severe restrictions on access to assistance, whereby the military has utilised the legal and administrative framework of government to control and limit humanitarian assistance:
As part of its attempts to assert control, the military has imposed a range of legal, financial, and bureaucratic requirements on civil society and humanitarian activity that have severely reduced civic space and delivery of life-saving assistance. These restrictions have resulted in aid not reaching populations in conflict-affected areas, particularly those where the military has been most active in its attempts to suppress and crush resistance to its rule. Due to military actions, humanitarian assistance in most areas in the country can only be provided by evading military rules at great personal risk of arrest, mistreatment or even death. In areas under military control, access to populations-in-need has been limited through all-encompassing restrictive measures that instrumentalize the legal and administrative systems to control aid.
Impacts on humanitarian organisations
1.15Since the coup, humanitarian organisations have found it increasingly challenging to provide aid in Myanmar due to a number of changes the military has implemented in relation to registration of organisations, banking and importation, the freedom of movement, and telecommunications.
Registration regime
1.16In October 2022, the military amended the 2014 organisation registration law (registration law), formalising additional restrictions on civil society and humanitarian operations. These amendments have established an ‘interlocking system’ linking registration to critical aspects of humanitarian action, including banking, importation and procurement of aid items, and movement of aid workers and items. This has enabled the military to have greater control over and the ability to limit humanitarian assistance to populations in need, resulting in significant oversight by the military of not-for-profit organisations and their activities. These amendments have introduced:
… compulsory registration of all non-profit organizations and impose lengthy and onerous administrative procedures and criminal penalties, including up to five years’ imprisonment, for lack of compliance. In their applications, organizations must disclose personal information of staff, funding sources, proposed project details, and operational locations. Vaguely formulated provisions, such as prohibiting any contact with broadly-defined groups including those organizations deemed “unlawful” or opponents of the military, are likely to result in their arbitrary application.
1.17A major concern for civil society and humanitarian organisations has been whether their compliance with these laws could be seen as legitimising the military, but not complying also creates significant risks. As explained by the United Nations Human Rights Council (UNHCR):
Engaging with non-registered organizations or the lack of formal registration pose significant risks and impediments to humanitarian actions. These range from carrying out operations without legal protection, to being unable to receive funds and operate bank accounts. Individual staff members are also exposed to continuous risks of harassment, arrest and prosecution.
Conversely, registration necessarily entails ongoing military scrutiny of humanitarian actors … [and t]his carries serious risks of politicization of humanitarian assistance and aid diversion from those most in need to those complying with military rule. An interviewee emphasized the dilemma imposed on humanitarian actors, observing “If you register, you cannot do your work because you cannot do anything the military does not permit”.
Banking and importation
1.18In addition to the registration regime, further impositions have been placed on banking in Myanmar through the Central Bank of Myanmar. The military has been directing the banks to increase scrutiny of their clients, whereby, under the guise of customer due diligence, banks increasingly request documentation, including valid registration papers. The UN High Commissioner for HumanRights explained the impact on humanitarian operations:
… many organizations’ registrations have now expired, and the previous registration approval system has been suspended, leading to banking challenges, including delays and denials of funds transfers. Later, the Central Bank of Myanmar imposed a separate approvals process for transactions over USD 10,000 without any specified timeframes, considerably impacting on humanitarian operations and programmes.
1.19Similarly, humanitarian organisations have been met with roadblocks importing supplies:
With organizations’ registrations and/or import licences gradually expiring after the coup, humanitarian actors have faced increasing difficulties importing essential items such as medicines and food into the country. Currently, registration under the new regime is a prerequisite for obtaining import licences. Interlocutors explained that securing an import licence requires valid registration, outlined in the registration law, which in turn depends on a military-approved memorandum of understanding. Given the lack of clarity on implementation of the registration regime, aggravated by the absence of regulations or procedures, it is unclear whether any organization has been successful in securing new import licences. In rare instances where items can still be imported into the country, certain interlocutors described lengthy holdups—of up to several months—at the port and with customs authorities, at times leading to the spoiling of perishable items.
1.20However, acquiring in-country supplies also presents challenges:
Interviewees described various challenges with local procurements. One described requiring military permissions to purchase food and shelter items. Others were not able to purchase medicines and other commodities to the quantities required due either to hoarding by suppliers and/or limits placed on amounts that may be purchased. Another interlocutor described an authorization system requiring food suppliers to report to the military details about sale and purchase transactions. OHCHR also received information about an organization being denied permission to purchase medicines due to their area of operation.
Freedom of movement
1.21After the coup, the military have increasingly attempted to control movements. The military utilise delays and denial of visas to control the timing, locations, and functions of those entering the country. Once in country, travel authorisations are required for movements of international staff and distribution of humanitarian assistance, and for both visas and travel authorisations, valid organisational registration is required. Both national and international organisations that intend to operate in military-defined travel-restricted areas are required to cooperate with the relevant administration and military structures. The military tightly restricts access to areas outside its military control within Myanmar. Since 17 March 2023, the National Unity Government has also requested all local and international organisations to seek prior authorisation before travelling through or within areas under its control.
1.22The UN High Commissioner for Human Rights described the military checkpoints and their impact on the movement of aid. These checkpoints appear at the entrances and exists of state and regional capitals under its control, as well as near army camps and bases, and along access roads:
Checkpoints are … locations where bribery, confiscation of goods, and/or arrests take place. While UN entities appear to be generally less affected, others delivering humanitarian assistance or transporting goods face harassment, intimidation and extortion. Even with the requisite documentation, security officials systematically seek informal payments. Amounts are typically determined on the spot, based on factors such as the identity of the individual seeking passage, the rank of the official on duty, and the type of goods being transported. For aid providers, such informal payments are either entirely borne by national staff on a personal basis or embedded into the supply chain when utilising third party suppliers or transportation service providers and cannot be formally reported due to compliance issues.
…
Given the multiplicity of checkpoints along any transportation route, such taxations—whether in cash or in kind—inevitably drive up prices of commodities, leading to highly inflated prices or even scarcity of essential items in rural areas.
Quantity restrictions and de facto bans on transport of certain goods—resulting in confiscations—are also enforced at military checkpoints. Interviewees reported that vehicles are only allowed to transport as little as two or five sacks of rice, depending on the location, and that motorbikes up to half a bag of rice. Numerous interlocutors stated that medical products and supplies are deemed particularly sensitive items and they are systematically confiscated at checkpoints. Those transporting these goods often face arrest and questioning by security forces.
1.23The situation for humanitarian workers and aid providers is increasingly risky with higher chances of arrest, harassment or other mistreatment, even death. The UN High Commissioner for Human Rights stated that it is clear that ‘the military perceives aid providers as part of the population opposing their rule, rather than as actors who deserve specific protection’. He noted that whilst there is no comprehensive and systematic collection of data on attacks on humanitarian actors since the coup, he provided the following figures from credible sources which ‘vary between 13 and 40 killed, and 17 and 28 wounded’ and reports of arrests ‘range between 43 and 212 individuals arrested’. However, it is likely that these figures are conservative.
Telecommunications
1.24Most people in Myanmar use mobile phones to access the internet. As part of its efforts to control the population, the military has also restricted mobile data and call services, particularly in areas where it carries out military operations, such as townships in Chin, Kachin, Kayah, Magway, Mandalay, and Sagaing. In these areas, the military has blocked mobile internet access for sustained periods, with frequent reports of mobile telephone service cuts prior to launching military operations.
1.25The restrictions on telecommunications affects both the ability of populations in need to seek aid, and of aid providers to reach them:
Absence of connectivity has limited the ability of communities to receive timely information and warnings about attacks, thus reducing the time to seek safety. Further, blocking mobile phone and data services significantly hampered individuals’ ability to share critical information on humanitarian needs. Those living in areas affected by shutdowns have had to undertake dangerous and lengthy travel to reach functional service areas …
At the same time, communications restrictions have hampered the work of aid providers in several ways. Medical staff reported severe limitations in assisting rural populations, including by limiting their ability to obtain information and provide remote medical advice. Organizations reported that Internet shutdowns prevented them from sharing life-saving information through online trainings; from using mobile banking applications, further limiting access to funds in an already highly restrictive banking environment; posed numerous logistics obstacle to humanitarian actions; and prevented comprehensive data collection, needs assessments, coordination among stakeholders, receipt of authorizations, including from donors, and effective delivery of assistance. While several organizations continue to provide life-saving assistance despite the enormous challenges, the ability to gather timely information on the security situation in targeted areas, negative risks assessments result in aid providers often having to avoid those areas.
Myanmar’s economic and political context
1.26Myanmar is the largest country in mainland Southeast Asia by area. It has a diverse population of approximately 56.6 million people, with approximately 70 per cent of the population living in rural areas. Bordering China, India, Thailand, Bangladesh and Laos, Myanmar’s peace, security and stability is important for the Indo-Pacific (see figure 1.1).
Source: DFAT, DFAT country information report: Myanmar, 11 November 2022, p. 2.
Economic context
1.27Myanmar is one of the poorest countries in Asia, with a gross domestic product (GDP) per capita of USD 1400. Agriculture, forestry and fishery account for almost half of the country’s GDP and employ two-thirds of the workforce. Other major industries include textiles, tobacco production and food processing. There is a significant shadow economy in illicit drugs, gemstones, human and wildlife trafficking, and illegal logging.
1.28The overall quality and availability of healthcare and education in Myanmar is low and is reflected in dire statistics. The Lancet’s Healthcare Access and Quality Index ranks Myanmar’s healthcare system 143 out of 189 countries, one of the worst results in Asia. Life expectancy is 67 years, and the infant mortality rate is 35 per 1000 births, well above the global average. Government health expenditure as a percentage of GDP increased significantly in the last decade, from just 2 per cent in 2011 to 4.8 per cent in 2018, but it remains less than half the global average. There is significant inequality in access to healthcare, where people in poverty or people living in rural areas are much less likely to be able to access or afford adequate healthcare. Government expenditure on education is less than 2 per cent of GDP on education which is under half the global average, schools are significantly under-resourced, and school drop-out rates are high with about half of all students dropping out before high school.
Political context
1.29Historically, Myanmar has been ruled regularly by military regimes, however in November 2015, Myanmar held openly contested national elections for the first time in 55 years. Under Myanmar’s Constitution, elections are due every five years and following the general elections of 2015 and 2020, there was a peaceful transition of power to a new government. The results of the 2015 election saw the National League for Democracy (NLD) win almost 80 per cent of the available seats, assuming power in 2016. However, the leader of the NLD—Aung San Suu Kyi—could not become president due to a constitutional clause drafted to exclude her. During its time in power, the NLD was able to make significant political reforms, including the release of many political prisoners and the introduction of laws to relax media censorship and provide for greater political participation, labour rights and freedom of expression. Despite its popularity, the NLD was internationally criticised due to its failure to prevent mass atrocities against the Rohingya in Rakhine State, which caused an estimated 700 000 people to flee the country in 2016–2018.
1.30As noted above, following the landslide re-election of the NLD in November2020, the Myanmar military rejected the result and seized power under the leadership of Senior General Min Aung Hlaing on 1February2021. The military detained Aung San Suu Kyi and other NLD members, and a state of emergency was declared citing unsubstantiated electoral fraud. The military used Article417 of the Myanmar 2008 Constitution, which requires the President to declare a state of emergency in response to a threat to Myanmar’s sovereignty, and Article 418, which requires the President to hand over power to the Commander in Chief of the Army in such a situation. Nationwide protests erupted but were violently repressed, and the coup drew international condemnation.
1.31Following the coup, a group of almost 300 politicians opposing the military regime formed the Committee Representing Pyidaungsu Hluttaw (CRPH), which claims to be the legitimate legislative authority for Myanmar. The CRPH announced the formation of an opposition government-in-hiding known as the NUG which included representatives from the NLD, ethnic minority groups, civil society and minor parties. The NUG has launched a nationwide armed struggle against the military regime under a ‘People’s Defence Force’ (PDF). The CRPH, NUG and PDF have since been designated as terrorist organisations by the military governing body, known as the State Administration Council (SAC).
Humanitarian situation post-coup
1.32The combination of the COVID-19 global pandemic and the military coup has had a substantial impact on Myanmar’s development, with the economy contracting by about 18 per cent in 2020–21. An estimated 1.2 million salaried workers lost their jobs in the second quarter of 2021. Poverty rates have increased significantly since the coup, with the UN Development Programme estimating a rise from 24.8 per cent of the population in 2017 to up to 48.2 per cent by mid-2022. Whilst spending on social welfare programs increased eleven-fold between 2011 and 2018 (which equates to only 0.5 per cent of the national budget, still very low by regional standards), DFAT understands payments under these programs ceased following the coup.
1.33According to the latest UN Office for the Coordination of Humanitarian Affairs (OCHA) Myanmar humanitarian update, the ongoing conflict and natural disasters have resulted in new displacement, civilian casualties, and destruction of civilian properties, intensifying the already fragile humanitarian situation in Myanmar, including:
1.9 million people currently internally displaced across Myanmar;
1.6 million people currently displaced by clashes and insecurity since February 2021 coup;
306 000 people who remain internally displaced due to conflict prior to February 2021, mainly in Rakhine, Kachin, Chin, and Shan; and
an estimated 75 000 civilian properties burnt or destroyed since February 2021.
1.34Additionally, about one third of the country’s population or 17.6 million people will require humanitarian assistance in 2023. This is a 17-fold increase since the military takeover at the beginning of 2021, when approximately 1 million people required humanitarian assistance.
1.35DFAT described the humanitarian and development challenges facing Myanmar which have been exacerbated by the 2021 military coup:
Prior to the coup, around one-third of Myanmar was affected by protracted conflict. Over 370,000 people were displaced, and more than one million people across the country, including along the Thai-Myanmar border, were in need of humanitarian assistance. Since the coup, humanitarian needs have surged. New and increased conflict across the country has led to the internal displacement of more than 400,000 additional people. Over 14 million people now need humanitarian assistance, including in urban and peri-urban areas.
Political instability, violence and COVID-19 are exacerbating poverty and food insecurity. Essential services, particularly health and education, were already strained by the impacts of COVID-19 and are under even more pressure today. Much of the country is experiencing difficulty accessing healthcare and schooling. The combined effects of COVID-19 and the coup have severely impacted Myanmar's economy, with rising unemployment and poverty, as well as disruptions to the banking sector. Women, youth, and informal workers in urban areas are particularly vulnerable.
A new development policy
1.36On 8 August 2023, the Australian Government announced a new InternationalDevelopment Policy to ‘drive the government's aid investments in tackling regional challenges like poverty, economic growth, healthcare, infrastructure investment, climate change and gender equality’. It recognises:
Our region is under pressure. We face the most challenging strategic circumstances in the post-war period. Climate change, global economic uncertainty, demographic and technological shifts are testing us all.
As one of our tools of statecraft, an effective development program is key to building regional resilience. It is in Australia’s national interest to play our part through challenging times.
1.37The objective of the new International Development Policy is:
… to advance an Indo-Pacific that is peaceful, stable, and prosperous. A region that is predictable—where differences are resolved by international law and norms, and where we can cooperate, trade, and thrive. To achieve this requires sustainable development and lifting people out of poverty.
1.38DFAT undertook broad consultations to inform the new policy which included discussions with over 300 stakeholders across Australia; inputs from DFAT’s overseas network based on consultation with partner governments, civil society representatives and other local actors; consultation across government; and the receipt of more than 200 written submissions from a diverse range of stakeholders. Additionally, an independent perceptions survey of fifty Australian and fifty regional development experts was commissioned, and previous independent reviews of the development program were reconsidered during the process. A bipartisan External Advisory Group was also established to provide independent contestability through the policy development process.
1.39The 2023–24 Budget includes $4.77 billion in Official Development Assistance (ODA) and ensures ODA continues to increase in a responsible and sustainable way including by locking in year-on-year ODA growth of 2.5 per cent per annum over the longer term.
1.40Some of the key commitments of the new policy include:
building more genuine and respectful partnerships, including by refreshing the government’s approach to country and regional plans;
providing multi-year funding and capacity development to local organisations, with support as needed to meet policy requirements;
designing a new Civil Society Partnerships Fund that will support local civil society organisations (CSOs);
developing a new humanitarian strategy to ensure Australia delivers results for people affected by crises, help reduce need, and build resilience; and
using more innovative development financing to expand available funding.
1.41The policy aims to ensure the development program is ‘effective, responsive, transparent and accountable’, and is underpinned by a new performance and delivery framework that will guide the implementation of the new policy and measure its effectiveness. The framework will have four main elements:
A strengthened approach to Country and Regional Development Partnership Plans that will deepen our consultation with partners, enhance oversight and set out shared objectives, expected outcomes, and approaches to evaluation and learning.
An expanded and more ambitious set of performance indicators which include targets to drive key reforms under a three-tier framework that tracks our regional context, what we do and how our work aligns with the [Sustainable Development Goals (SDGs)].
Strategic Partnership Agreements with multilateral organisations.
Investment-level monitoring and evaluation systems.
1.42DFAT’s website states that evaluation is being strengthened through the implementation of multi-year evaluation planning and expanding the number of evaluations, including more sector and thematic evaluations. Real-time reviews will be piloted. Improved communication of evaluation findings will also enhance accountability and transparency.
1.43DFAT’s Aid Programming Guide—an operational resource for DFAT staff—has been updated to simplify business processes, provide clarity on policy and program intent, includes oversight of facilities, and an option for simple investments to be a part of an adaptive design and procurement trial. The guide has also been reset as an ‘external facing’ document to allow for greater industry access. In the guide, chapter eight covers development risk management which includes guidance on the due diligence framework. DFAT’s due diligence framework is covered in more detail below.
1.44Additionally, the government released the Development Finance Review, conducted by DFAT. The review considered how financing instruments can address increasingly complex development challenges facing the Pacific and Southeast Asia to maximise the impact of Australia’s development assistance. The review examined existing sovereign and non-sovereign mechanisms used by the government, as well as Australia’s rapidly expanding blended finance capability—where government financing instruments such as grants and loans are used in combination with, and to leverage, private sector and philanthropic investment in development. The government accepted all eight recommendations from the review.
1.45In a joint media release, the Minister for Foreign Affairs and the Minister for International Development and the Pacific stated ‘[t]his will boost the Government's partnerships with impact investors and philanthropists, encouraging greater flows of private finance towards development outcomes in the Indo-Pacific’.
Australian NGO Cooperation Program
1.46The Australian NGO Cooperation Program (ANCP) is Australia’s longest running and largest NGO (non-government organisation) program and is a partnership between the Australian Government and accredited AustralianNGOs to provide funding, in the form of annual grants, to implement projects consistent with the goals of Australia’s development program. Smaller NGOs with base accreditation receive $250 000 per year and large NGOs with full accreditation receive several million dollars per year. ANCP NGOs also contribute their own funds raised from the Australian community to their projects. This funding supports projects in developing countries, spanning a range of sectors, including education, health, water and sanitation, food security and economic development. In any given year, ANCP NGOs deliver around 400 projects in around 50 countries, including Myanmar.
1.47Through this program, Australia works with NGOs who have demonstrated their ability to deliver results against Australia’s objectives and who offer value for money. ANCP NGOs and their in-county partners have particular skills, networks and reach, and the ANCP allows them to design and deliver projects to these strengths. ANCP NGOs must pass a rigorous accreditation process that assesses their organisational structure, philosophies, policies and practices. Accreditation is renewed every five years, with spot checks and a rolling program of audits covering the intervening period. To apply for accreditation, NGOs must first be signatories to Australian Council for International Development’s (ACFID) Code of Conduct, as well as meeting the standards required by DFAT for accreditation. There are over 59AustralianNGOs accredited to receive funding under the ANCP.
1.48The ANCP Monitoring, Evaluation and Learning Framework is a tool to ensure satisfactory and consistent monitoring and reporting by Australian NGOs funded under ANCP. It provides the evidence base to demonstrate the effectiveness of the ANCP in achieving results in economic growth and poverty reduction. Its objectives are:
1. To provide accountability of DFAT funding to Australian NGOs in line with the objectives of ANCP.
2. To provide information about overall program performance of ANCP programs highlighting areas for improvement and further development;
3. To provide information about the range and scope of ANCP funded work;
4. To provide information about high-level outcomes achieved through the funding provided under ANCP, including reporting against the performance framework for the Australian aid program;
5. To provide an opportunity to share learning about development effectiveness for both DFAT and Australian NGOs.
1.49The ANCP Manual provides information to accredited NGOs on the ANCP, including detail on their obligations and guidance about the processes required by the ANCP. Section 5 of the manual outlines program risk management and safeguards. NGOs must employ a whole-of-organisation level risk management approach and apply appropriate risk management measures. This includes preparing and maintaining risk management plans specific to each project. In-country implementing partners should be fully engaged in the analysis, monitoring and treatment of risks. Project risk analysis must consider all relevant risks that may prevent the achievement of project outcomes including, but not limited to:
developmental;
quality;
sustainability;
political;
reputational (both to the NGO, DFAT and the NGO sector);
environmental (including crises and disasters);
child protection;
Preventing Sexual Exploitation, Abuse and Harassment;
terrorism resourcing;
fraud;
financial/budget;
schedule;
resourcing;
working in high risk locations and/or sensitive sectors; and
downstream partners.
1.50In 2022–23, there were $143 million in grants available to NGOs and an additional $43.8 million forecast in NGO contributions, with over 4.8 million people expected to benefit. There were 59 accredited Australian NGOs working with over 2000 local partners, and 402 projects across 50 countries, with 77 per cent of these projects in the Indo-Pacific.
DFAT due diligence framework
1.51DFAT’s due diligence framework (the framework) is a part of its broader risk management approach and is one of the tools used to assess a potential delivery partner’s ability to deliver in line with the policy and legislative requirements of the Australian development program. It acknowledges that Australia’s development program relies on partnerships and third-party delivery mechanisms. As such, the framework provides a structured and consistent approach for the identification and assessment of delivery partner risk prior to entering into agreements and providing funding.
1.52Due diligence occurs across the Australian development program for a range of objectives and through various institutional capacity assessment processes, including:
tender and grant evaluations;
assessment of partner government systems;
multilateral organisation performance assessments; and
the Australian NGO accreditation process.
1.53The key objectives of the framework include:
undertaking due diligence assessments in a consistent and pragmatic manner proportional to the risk of the agreement/arrangement;
strengthening risk management processes through identification and assessment of partner risks prior to selection and agreement finalisation;
assisting delegates to satisfy Public Governance, Performance and Accountability Act 2013 (PGPA Act) requirements by systematically identifying delivery partner risks and strengths prior to entering into agreements/arrangements; and
to support funding decisions to be transparent, robust and defensible.
1.54The scope of due diligence conducted follows a risk-based approach. Financial delegates are responsible for ensuring that the scope and depth of the due diligence assessment undertaken is commensurate to the size and risk of the agreement. In assessing the overall risk associated with an agreement or arrangement, delegates consider:
DFAT’s prior experience of working with, and knowledge of, the proposed delivery partner’s performance;
the level of complexity associated with the agreement or arrangement accomplishing its objectives, taking into consideration the operating environment including political context as well as the complexity of the agreement or arrangement design;
the level of exposure, political and reputational risk associated with the agreement or arrangement; and
the financial value of the agreement or arrangement.
1.55DFAT submitted that:
Where a decision is taken to proceed, key risks identified in the assessment process are documented and mitigation measures are implemented and monitored through contract conditions and a risk register. A delegate must not enter into an agreement where the assessment identifies a potential partner is on a prohibited dealings list, for example if a potential partner is listed as a terrorist organisation under the Criminal Code Act 1995.
1.56The framework applies to individuals, commercial contractors, private sector entities, multilateral organisations and development banks, international and regional organisations, and civil and non-government organisations. Each delivery partner has different due diligence assessment requirements as outlined in figure 1.2.
1.57Due diligence assessments utilise the best available evidence including the Australian development program’s existing information holdings, robust information already in the public domain, information provided by the partner for the purpose of the assessment, information reported to other government agencies and departments and third-party assessments. There are fourteen assessment criteria which are broadly categorised under two pillars: organisational capacity and risk management. These include:
Organisational capacity
entity details;
past performance;
technical and operational capacity;
financial viability;
fiduciary management;
results and performance management; and
value for money.
Risk management
fraud and corruption control;
proscribed list checks;
integrity systems;
risk management processes;
child protection;
preventing sexual exploitation, abuse and harassment; and
environment and social safeguards.
Figure 1.2Delivery partners due diligence assessment requirements
Source: DFAT, ‘Due diligence framework’, August 2021, p. 5.
1.58The type of assessment—Comprehensive; Baseline; Baseline Downstream Partners; Multilateral; or Individuals—will determine which of the fourteen criteria will apply.
1.59Stand-alone due diligence assessments remain valid for a maximum of three years. However, a delegate may determine an earlier re-assessment is required where circumstances indicate that:
partner risks have not been properly identified;
events infer that partner risk control strategies are ineffective;
there is significant change in a partner’s circumstances such as a corporate restructure; and
a shorter period between undertaking an assessment is deemed more appropriate.
1.60As noted above, the framework is one aspect of DFAT’s broader development risk management. Other key aspects include:
environmental and social safeguards: which include consideration of environmental protection; children, vulnerable and disadvantaged groups; displacement and resettlement; Indigenous peoples; and health and safety;
child protection compliance;
preventing sexual exploitation, abuse, and harassment;
fraud control; and
partner government systems assessments (not relevant for Myanmar).
1.61DFAT explained how these other risk management aspects are implemented:
For every investment, investment managers must screen for mandatory policy considerations (including environmental and social safeguards risks and impacts, terrorism resourcing and fraud risks) as well as other common risk factors; analyse risk; and document these processes in the Risk Factors Screening Tool and risk register.
This is an ongoing process throughout the life of an investment or agreement. Investment and agreement managers must update risk registers and Risk Factors Screening Tools at least quarterly during investment implementation. This is done through ongoing monitoring and review of the agreement, including regular communication and consultation with implementing partners and senior DFAT management. Where relevant, DFAT consults with other like-minded donors and relevant policy and program areas within DFAT.
Australia’s development assistance to Myanmar
1.62Australia’s development assistance program to Myanmar focuses on the following areas:
providing life-saving assistance, including distributing basic food and non-food items, emergency food, water and shelter;
delivering basic education services to children living in vulnerable and conflict affected communities;
improving the nutrition status and food security of vulnerable populations in conflict-affected areas through agricultural and livelihoods assistance;
delivering primary health care, essential health supplies and mental health services through local non-government providers;
a strong focus on gender by providing frontline services to improve women’s health and wellbeing including obstetrics and maternal and child health care, and support for gender-based violence support and counselling; and
supporting efforts to mitigate conflict and its impacts and help protect space for longer-term progress on human rights, rule of law and democracy.
1.63DFAT noted that Australia’s aid program in Myanmar is Australia’s fourth largest ODA country program. A breakdown of Australian ODA to Myanmar from 2021 is outlined in figure 1.3:
Source: DFAT, ‘Myanmar development cooperation factsheet’, May 2023.
1.64In response to the coup, the Australian Government suspended Australia’s bilateral defence cooperation program with Myanmar and redirected its development program away from military-controlled ministries and related entities on 7 March 2021. In its submission, DFAT confirmed:
Australia does not provide any direct funding to the Myanmar military regime. Australia takes proactive steps to ensure our assistance to Myanmar does not go to the regime or lend it credibility or legitimacy. Whether we are working with United Nations (UN) agencies or non-government organisations (NGOs) Australia selects development and humanitarian partners that have rigorous processes in place to ensure that funding is delivered appropriately and to intended beneficiaries. These partners have established systems and networks in place which seek to mitigate risks in the current environment and ensure accountability. For security reasons the Australian Government does not identify all of its development partners in Myanmar, or where those partners operate within Myanmar.
1.65Australia continues to provide assistance to communities in need throughout Myanmar and on the Thai Myanmar border, including those displaced and in conflict-affected areas. DFAT outlined:
Australia's commitment to Myanmar's development and to supporting the people of Myanmar remains steadfast. Following the coup, Australia's assistance in Myanmar has pivoted to meet the immediate needs of the country's most vulnerable people, including the poor and ethnic minorities. We have redirected development assistance away from regime entities and do not provide funding directly to the regime. To ensure our support benefits the people who need it most, we work through trusted non-government partners including multilateral and non-government organisations. Our program will remain under close review and be flexible to respond to the evolving situation to best meet the needs of affected populations.
1.66DFAT noted in its 2021–22 annual report that it completed an internal review of its Myanmar humanitarian program.
1.67On 24 April 2021, a special Association of Southeast Asian Nations (ASEAN) Leaders’ Meeting was convened to discuss the crisis in Myanmar where a five-point consensus (5PC) was produced, calling for the: cessation of violence; commencement of constructive dialogue among all parties; appointment of a special ASEAN envoy to facilitate mediation of the dialogue; the provision of humanitarian assistance through the ASEAN Coordinating Centre for Humanitarian Assistance on Disaster Management (AHA Centre); and a visit to Myanmar by the Special Envoy and delegation to meet all parties.
1.68Australia welcomed the 5PC and provided $5 million to the AHA Centre to provide humanitarian assistance to Myanmar. On 7 August 2021, additional support was allocated for the people of Myanmar in response to COVID-19, including the deployment of Australian technical experts to the AHA Centre to support humanitarian operations and the provision of additional PersonalProtective Equipment (PPE) through ASEAN.
1.69ASEAN has since ‘strongly’ condemned the continued acts of violence in Myanmar and raised grave concerns at ‘the lack of substantial progress on the implementation by the Authority in Myanmar, despite their commitment to the 5PC in April 2021’.
1.70DFAT provided further detail on Australia’s development assistance to Myanmar from 2021–22 and 2022–23:
In 2021-22 through our humanitarian partners we provided almost 20,000people with emergency shelter and almost 80,000 people with healthcare. In the same year, around 30,000 children were provided with basic education and almost 115,000 people received food assistance. The scale of our support increased in 2022-23. For the 2023-24 financial year, the Australian Government is providing a total of $121 million to Myanmar in Official Development Assistance (ODA) (Budget Estimate).
Application of DFAT’s due diligence framework in Myanmar
1.71DFAT acknowledged that the military coup and ongoing conflict in Myanmar has made it a high-risk environment, including for implementing humanitarian and development activities. DFAT noted that due to the sensitivities and the security situation in Myanmar, it does not publicise the details of its local implementing partners.
1.72DFAT explained how the framework is applied in the context of Myanmar:
Due diligence assessments are used in Myanmar to develop a deeper, evidence-based understanding of potential delivery partners, prior to entering into an agreement and providing them with ODA funds. This process identifies the risks of working with a potential partner on a specific program and assesses whether that partner has the capacity and capability to deliver within Myanmar’s context. These risks include the partner’s ability to safely manage development and humanitarian programs, manage fraud and corruption in a complex environment, ensure protection of children including in conflict zones, and prevent sexual exploitation, abuse and harassment.
This assessment and management of partner risks is important across all of DFAT’s programs, but is especially important in Myanmar where in-person monitoring of partner activities is difficult. Risks identified during a due diligence assessment can be managed through agreement conditions and active use of a risk register and risk mitigation measures by the AustralianEmbassy in Yangon.
1.73Additionally, DFAT implements a number of other risk management and monitoring processes in Myanmar, including:
DFAT staff undertake quarterly updates of program specific risk registers—informed by information provided by program partners and other stakeholders. The Australian Embassy risk committee meets regularly to share information on risk, context, program implementation and challenges faced by partners.
DFAT holds meetings with program partners to discuss implementation and issues related to the changes in the context and risk—including political risk. We also seek to meet with a selection of downstream delivery partners and organisations where possible to cross-check programmatic information and ensure open lines of communication of issues around risk, implementation and political challenges.
There are specific requirements within agreements with partners to advise and address issues relating to risk and safeguards …
Many of our programs are multi-donor or co-funded with other donors. DFAT meets with them to cross-check and collaborate on an understanding of partner performance and issues around risk. Where other donors can travel and monitor, they share monitoring information. Many of these joint donor programs have quarterly Fund Board/Steering Committee meetings where these issues are collectively discussed.
1.74Mitigating the risk of ensuring Australian funding does not get diverted to the regime or its associates and reaches those in need in Myanmar, is of critical importance. To address this risk, DFAT applies multiple layers of checks and balances, including:
selecting partners that have appropriate systems in place to: ensure funding is not diverted by the regime; prevent fraud and corruption; ensure the protection of children; prevent sexual exploitation, abuse and harassment; manage risks; and ensure accountability;
selecting partners with the right staff and experience to deliver effective programs in a complex conflict-affected environment and apply the ‘DoNo Harm’ principle;
designing programs with our partners that incorporate these safeguard measures to ensure we reach those in need without legitimising or lending credibility to the regime; and
closely monitoring and managing the implementation of programs with our partners to ensure that they are achieving the intended outcomes.
1.75Primarily, Australia delivers its aid through multilateral agencies and international NGOs, including UN agencies. These organisations regularly partner with local groups to deliver assistance across Myanmar. DFAT stated that working with international agencies ‘enables Australia to better coordinate with other donors and enhances the effectiveness and efficiency of our assistance, as well as contributing to risk management’. These risk management procedures are also designed to ‘ensure integrity is retained in downstream partnerships and Australian funds reach the intended beneficiaries’.
Previous inquiry
1.76In June 2021, the Joint Standing Committee on Foreign Affairs, Defence and Trade’s (JSCFADT) Foreign Affairs and Aid Sub-committee tabled a report into Australia’s response to the coup in Myanmar.
1.77The report discussed the provision of development assistance to Myanmar following the coup. DFAT officials stated that development assistance was being channelled through non-government organisations and multilateral partners rather than through government or government-related entities to ensure that aid was redirected to support those most in need and to avoid it getting into the hands of people associated with the Tatmadaw. DFAT added:
We’re now working a lot more through trusted non-government partners, such as the World Food Program, Save the Children, UNHCR and the UNPopulation Fund, to deliver our assistance in new forms.
1.78DFAT noted that there were barriers to delivering assistance in Myanmar including ‘the security situation; impacts on supply chains and markets; rising food prices; disruptions to the banking system and limited availability of cash; restricted access to areas in need of humanitarian assistance; and further population displacement’.
1.79Of particular note is the following recommendation made by the JSCFADT Foreign Affairs and Aid Sub-committee:
The Committee recommends the Australian Government ensures our development assistance program to Myanmar supports basic humanitarian needs and civil society and is directed through non-government organisations and multilateral partners, and not through government entities. This should include the development of a medium to longer term plan for ongoing humanitarian assistance.
1.80The government’s response, tabled in December 2021, agreed with this recommendation, stating:
The Australian Government has redirected development assistance away from regime-controlled entities. Australia’s development assistance is focused on supporting the people of Myanmar. We do not provide funding directly to the regime.
In redirecting the Australian Government’s development funding, Australia is working with a number of trusted multilateral and non-government partners including a range of international non-government organisations and local civil society organisations. These partners have been able to maintain operations in the current context, with demonstrated capacity to successfully deliver assistance. For example, Australia has provided additional food assistance through the World Food Programme, support for sexual and reproductive health services delivered by the United Nations Population Fund and non-government education services through the Myanmar Education Consortium.
Australia’s development and humanitarian partners have rigorous processes in place to ensure that funding is delivered appropriately and to intended beneficiaries. This is a fundamental condition of the AustralianGovernment’s engagement.
Australia is a long-standing humanitarian donor to Myanmar and on the Thai-Myanmar border. The Australian Government is sustaining our support, working through humanitarian partners to deliver life-saving assistance and address urgent need.
The Australian Government continues to develop its plan for ongoing development and humanitarian assistance, taking into account the COVID-19 crisis as well as the ongoing consequences of the coup.
Australia continues to monitor developments closely to make informed decisions and to direct our assistance in Myanmar where it will have the most impact.