This research is in response to the current debate on aid in Australia. The debate focuses on the volume of money allocated to aid rather than the impact. While Australian aid is still far from the UN commitment of 0.7 per cent of gross national income, this focus has kept public debate superficial and has deflected attention away from the more important discussion: is aid achieving outcomes and impacting positively in areas identified by developing countries as essential for their sustainable development. / The release of the first Annual Review of Development Effectiveness provided the impetus to investigate whether the newly formed Office of Development Effectiveness (ODE) will introduce changes that will improve Australia’s approach to aid. Framed within national interest, development and aid literature, this research analyses what limitations, if any, there are to reform of aid policies and practices in Australia. / The thesis concludes that the potential for the ODE to significantly improve the effectiveness of Australia aid is limited. It is one of many voices – including the powerful national interest agenda furthered by foreign policymakers – shaping Australian aid policy and practice. However, the furthering of Australian national interest – narrowly defined as security and economic considerations – through the aid program is at the expense of poverty alleviation objectives. This negatively affects how the development ‘problem’ is framed and thus the focus of aid policy. Furthermore, efforts to prioritise national interest considerations undermine the adoption of ‘good’ practice essential for sustainable development. / This is a political reality that is unlikely to change. Thus, the role of the ODE is to provide recommendations within this restricted framework. However, it is only through scrutiny, discussion and debate that the discrepancy between ‘good development’ in theory and in practice can be narrowed. This should also be the role of the ODE.

Against the backdrop of the historical failure of official development assistance to alleviate poverty in the Third World, this thesis examines the current approach of Western aid donors toward development. The thesis asks whether aid policy processes indicate a willingness, or capacity, on the part of official donors to more fully engage with the causal complexity of development, and so potentially improve development outcomes. Considering the case study of the Australian bilateral aid program to Papua New Guinea from both top-down and bottom-up policy perspectives, the thesis concludes that, in relation to Australia, there are significant structural and institutional impediments to change. The Australian Department of Foreign Affairs and Trade, and its interpretation of national interest, dominate high-level aid policy-making, even though the objectives of foreign policy and those of foreign aid differ. Australia's official development agency, AusAID, is limited in its capacity to legitimately challenge this dominance, not least because its use of contracted-out projects restrict its corporate knowledge and its ability to influence policy agendas and networks. Overcoming this impasse requires creative management on the part of senior public servants and non-governmental members of the aid policy community alike.