The Intel

After two decades of working in development, I am convinced that ODA alone is unable to deliver sustainable development. Combining ODA with non-ODA investments holds significant potential, and Australia's strategic investments in digital connectivity across the Pacific illustrate this point. 

The Coral Sea Cable System, funded by the Australian Government in 2020, built the infrastructure backbone connecting PNG to the global internet. The Telstra acquisition of Digicel Pacific in 2022, financed through Export Finance Australia, then placed the Pacific's largest telecommunications company in the hands of a major Australian corporation that may not otherwise have entered such a high-risk market. Though both investments were strategically motivated to limit Chinese influence in the Pacific, what matters now is that Australian-backed telecommunications and internet infrastructure is addressing one of PNG's most persistent development challenges: the remoteness and lack of connectivity that has long cut communities off from markets, information, and services.

This leads naturally to the second and most promising non-ODA area: labour mobility. Through the PALM scheme and Pacific Engagement Visa, both skilled and unskilled Papua New Guineans can participate in Australian labour markets, generating income, gaining skills, and increasing remittance flows that directly support households and communities. Notably, despite having the largest population in the Pacific, PNG ranked seventh among PALM sending countries in April 2025 (with just 2,035 workers) behind much smaller nations like Vanuatu and Fiji. This reflects structural barriers on both sides, from identity documentation constraints in PNG to limited employer awareness in Australia.

The debate for policymakers is no longer whether non-ODA has a role to play in development, it obviously does. The bigger question is what further investments are needed to finally shift the relationship from donor-recipient to genuine economic partnership and people-to-people integration.

What works? Non-ODA serves to advance the foreign policy objectives of donors – think Australia’s acquisition of Digicel , the United States’ use of loans to secure critical minerals access, or Japan’s Official Security Assistance. Development finance can work well in bigger, middle-income economies, and in economic and commercial sectors like transport and energy, especially if it’s designed to work with the private sector.  

Non-ODA can ease the transition when countries graduate from ODA eligibility. Most importantly it can help to achieve scale in budgets, and it can bring development goals and expertise into decisions that might otherwise have been considered the domain of national security or foreign policy, like the Australia-Tuvalu Falepili Union treaty.

What doesn’t? I am not convinced that non-ODA works in least-developed or fragile contexts, or in key sectors like civil society or humanitarian assistance. It can’t replace ODA in pursuing core poverty reduction objectives, and I have doubts about its integration of considerations like gender equality or disability equity. Without ODA’s strong safeguards, commercial or geostrategic objectives could outweigh development. One of my biggest concerns with non-ODA is transparency and reporting. Compared with ODA, we know much less about how non-ODA is spent. That’s bad for quality of spending and for trust in governments, both recipient and donor.

What next? As non-ODA development spending grows, we should think about redistributing the pure ODA portfolio to focus on contexts and sectors where non-ODA is less likely to succeed. That might look like more ODA for disaster relief in Solomon Islands and less for infrastructure in Indonesia.

ODA and non-ODA need to be seen as complementary, not as competitors. ODA is an entire system for approaching international development, relying largely on the national budgets of wealthy countries. Non-ODA covers disparate development funding streams in a wider variety of countries and situations, but without the same public interest disciplines and rigour.  

Private investment is the largest component of non-ODA development finance. ODA’s role should be to help this investment grow and spread by removing roadblocks. But we should be very wary of aid subsidies for activities that are economically, environmentally and/or socially destructive, such as The Pergau Dam in Malaysia, and of forgoing what ODA does best. ODA allows governments to work together on public interest regulation and financing, to develop new models of public and private goods and services and to pilot new programs.  

Governments can choose to use non-ODA support for development, but discretionary federal government budget allocations are much scarcer than ODA and must be deployed more carefully. For example, in crisis situations we can temporarily lend our sovereign economic strength to our neighbours, as we did for Indonesia during the Asian Financial Crisis and the Global Financial Crisis, and with PNG during the pandemic. Using modest amounts of non-ODA to help reduce middle-income traps in countries that are aid graduates also makes sense.  

We need to take particular care, however, in blending ODA and non-ODA, no matter how seductively the language of ‘leveraging’ is presented. The risk is that development is distorted, devalued and/or displaced. This happened a decade ago with the UK’s Conflict, Security and Stability Fund and also with Australia’s Development Import Finance Facility in the 1990s.    

Both ODA and non-ODA financing for development need to navigate what has worked and what has not. That’s not easy, but ironically, well-used AI could be a game changer.