Sustainable Economic Development: Infrastructure Thematic Strategy
Sustainable economic development is one of the five strategic goals of the Australian aid program. Infrastructure development contributes to poverty reduction by spurring economic growth, stimulating enterprise opportunities, generating employment and providing poor people with access to basic needs.
Australia’s approach to infrastructure will centre on four pillars:
- Delivering sustainable transport infrastructure
- Facilitating increased access to basic water and sanitation infrastructure services
- Creating reliable energy services and supporting information and communication technologies
- Supporting urban infrastructure planning and development.
In delivering its infrastructure program Australia will make use of delivery mechanisms and partnerships with multilateral organisations, other governments and the private sector which deliver sustainable services and real results for the poor. The focus of Australia’s investment will be on neighbouring countries in East Asia and the Pacific with an expanding program in South Asia and sub Saharan Africa.
The infrastructure thematic strategy informs Australia’s program decisions in this sector:
Overview
The development and maintenance of essential public infrastructure is an important ingredient for sustained economic growth and poverty reduction.
Poor infrastructure is perhaps the most binding constraint to growth throughout the Asia-Pacific region.
In Asia, rapid population growth and urbanisation threaten to exacerbate infrastructure bottlenecks. In the Pacific, emphasis is needed on equitable access to social infrastructure in remote, rural environments where 80 per cent of the population live mostly without electricity and roads.
Infrastructure investment can lift economic growth and support social objectives.
Health, education, and efficient water and sanitation services help lay the groundwork for a more productive, healthy population capable of contributing to sustained economic growth. Likewise transport infrastructure improves access to services and markets in rural areas.
Policy framework
Australian support for infrastructure development focuses on:
- improving poor people's access to essential infrastructure services such as water supply and sanitation, transportation and energy
- assisting the creation of enabling environments for both private and public financing and management of infrastructure
- supporting human resources development, institutional strengthening and capacity building in the infrastructure sector.
Australia currently supports infrastructure-related programs in a number of locations. In Indonesia, Australia is supporting a major national roads program and is supporting the Indonesian Government to effectively plan and develop vital infrastructure through the Indonesia Infrastructure Initiative (IndII) Facility.
In addition to supporting the maintenance of economic roads, including the Highlands Highway, AusAID is helping Papua New Guinea improve its processes for the planning and delivery of transport infrastructure.
In the Greater Mekong, Australia is looking to support infrastructure programs that promote regional integration.
Infrastructure for growth initiative
Since 2007–08 Australia has helped its regional partners to address their infrastructure needs through a major Infrastructure for Growth Initiative. To maximise impact and leverage, the initiative has included a partnership with the World Bank and Asia Development Bank, and seeks to operate alongside or as part of multilateral-financed interventions in the Asia-Pacific region.
The overall objective of the Infrastructure for Growth Initiative is to support increased economic growth in Asia and the Pacific. The infrastructure challenges faced by countries in the region require more funding and better policies. The initiative will help address both requirements by helping partner governments:
- improve their infrastructure policies by providing Australian and international expertise in areas such as public-private partnerships; regulatory reform; improved governance and anti-corruption; management and maintenance regimes; regional integration; and environmental and gender impacts
- finance high-priority infrastructure projects through the multilateral development banks and, in some cases, bilaterally for projects that have strong economic and social benefits and where national government, private and development bank finance is not available.
Typical projects will include rural electrification, rural roads, schools and health buildings, and the extension of water distribution systems to smaller towns and rural areas. Australian financing will be made conditional on priorities such as anti-corruption being advanced. Support will promote environmentally friendly infrastructure, such as clean energy, and mitigate the possible adverse health impacts of better infrastructure (for example, HIV/AIDS transmission).
Economic Infrastructure Initiative
The Economic Infrastructure Initiative was agreed in the 2009–10 Budget to continue and build on the achievements of the Infrastructure for Growth Initiative. Like its predecessor, the Economic Infrastructure Initiative focuses on providing funding for high priority infrastructure, strengthening the capacity of partner governments’ infrastructure agencies and promoting conditions for increased infrastructure financing, including from the private sector.
The Economic Infrastructure Initiative also places an increased emphasis on:
- addressing the challenges faced by partner governments in response to rapid urbanisation
- increasing focus on sub-national governments in recognition of the decentralisation of infrastructure planning and delivery taking place throughout the developing world.
Activities under the Economic Infrastructure Initiative are already underway in the Philippines, Indonesia, Papua New Guinea and Vietnam.
Last reviewed:
23 November, 2011
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