Yesterday, Australia’s Foreign Minister KEVIN RUDD was interviewed by the ABC's Lyndal Curtis about the first independent review of aid agency AusAID since 1996

TONY EASTLEY: Australia's aid program is being put under the microscope as the federal government holds its first full-scale review of the program since 1996. The independent review will be conducted over the next five months. Foreign Affairs Minister Kevin Rudd is speaking to chief political correspondent, Lyndal Curtis.

LYNDAL CURTIS: You've launched the first review in nearly 20 years. Has the aid budget lost its way?

KEVIN RUDD: Absolutely not. It's just a timely thing to do. The last time the Australian Government took a root and branch review of the aid budget was in 1996. Now, that's about 15 years ago. The time has come to do it again.

On a normal year-to-year basis, there are multiple audits conducted by the Australian National Audit Office, by other external and internal audit arrangements. This is simply standing back for a moment and looking at the overall effectiveness and efficiency of the aid budget.

In the last five years, we have doubled the aid budget, and we're on track to double the aid budget again over the next five years. This is doing good work for Australia, but we just need to make sure that every dollar is being properly spent. That's why I've commissioned this independent external review.

CURTIS: But in recent weeks you've cut technical advisers, or consultants, in PNG and East Timor, and are looking at two other countries as well. Has the money spent on consultants not been working well?

RUDD: Our judgement is that it's important to keep such a significant investment of taxpayers' dollar under continuing review. We have mechanisms to do that, but every now and then you need to step back from the lot and say, what's the policy framework, are the programs in place best designed to give effect to the policy in terms of poverty reduction, in terms of providing a credible path towards self-generated economic development? Do we have the proper audit mechanisms in place?

These sorts of questions need to be asked from time to time. It's been 15 years since they were asked. We're significantly expanding the budget. I believe it's a prudent course of action at this stage.

CURTIS: Given you are significantly expanding the budget to meet Millennium Development Goals, which themselves have attached to them targets and what you might call key performance indicators, does Australia's aid budget need to make sure that people know where their money is going, that it's being spent properly, and that the programs on which it's being spent are working?

RUDD: Well, let me give you a core example of what we've done in the three years of this government so far. Practically all our individual aid relationships in the South Pacific have now been organised first against the Millennium Development Goals which seek poverty reduction, improvements in education, improvements in health, against defined measures, against defined timelines.

And secondly, it has done so with each of the Pacific island countries, including PNG, in a way which is measurable and reviewable each year.

This is the right way forward. But my responsibility is to look back more - look across the field more broadly, that our aid relationships not just in the Pacific, but across South-East Asia, across South Asia, across to Africa and across Central and Latin America.

This represents some $4.3 billion of investment by the Australian taxpayer each year. Fantastic work is being done, lives are being saved. People are being educated. Mothers and babies are surviving as a result of what we are doing. I just want to make sure that we are driving every dollar as far as it can go.

Source: AM Program, ABC Radio National, 16 November 2010