HUNDREDS of millions of Australian taxpayers' dollars were wasted on "white elephant'' reconstruction projects in Afghanistan, according to evidence to a federal parliamentary inquiry.

Vast sums were spent on hospitals and schools that don't have enough doctors, nurses or teachers.

A bipartisan Senate Foreign Affairs committee praised Australia's reconstruction efforts but was highly critical of the lack of accountability in spending.

The committee chaired by Senator Alan Eggleston found Australia's efforts were blighted by bribery and corruption in allocating contracts and jobs.

The inquiry heard some teachers who cannot even read were given jobs in schools by relatives in high places or corrupt government "powerbrokers''.

Poor attendance at some schools built by Australians were also blamed on a Taliban ban on girls aged over 10 from attending any school at all.

Millions of dollars may also have been squandered on roads and bridges that are rarely used because locals are afraid to travel on them.

Another report said a $233,000 mosque opened in March 2011 with much fanfare by then Foreign Minister Kevin Rudd is empty, declared a no-go zone by the Taliban because it was built by Australians.

One report said the Taliban threatened to punish any mullah who led prayers there, presumably because it was built by Christians.

The handsome, copper-domed mosque at Sorkh Murgab sits empty in the Uruzgan desert, a symbol of colossal waste and poor management stretching over two decades.

A million-dollar sewage treatment plant on the outskirts of Tarin Kowt isn't operating because no one bothered to train technicians to run it.

Nevertheless, Australia's aid to Afghanistan is increasing and likely to top $1 billion in coming years.

Critical hospital services were "far from satisfactory'', the committee found.

The report makes bleak reading.

Women are suppressed and not even allowed to carry money. Afghanistan is painted as a godforsaken nation living in poverty and traumatised by decades of war. Kidnapping and looting are not uncommon.

The committee was told that underlying many problems was an inability or unwillingness of Afghan forces to combat the opium trade responsible for 90 per cent of the world's heroin.

The inquiry found Australia has pumped $710 million in the reconstruction effort since 2001, with another $250 million pledged until 2016.

The committee was especially critical of the Australian Defence Force and demanded it explain "a significant and serious miscalculation of funds''.

"This error, involving in excess of $200 million over a period of six years, meant that the committee had been relying on statistics provided by both Defence and AusAID that were highly inaccurate,'' it said.

"The committee is of the view that this serious anomaly should not be glossed over and the Australian Government should make a public acknowledgment of the error.''

It called on the Auditor-General to investigate.

Rudd, defence chiefs and the Defence Minister Stephen Smith, a regular visitor to Afghanistan, have some explaining to do.

With such large sums involved, perhaps there should be a Royal Commission.

The committee found hundreds of millions were spent without proper accounting.

"The committee has evidence that the quality of work produced under Australian Defence Force supervision is high but understands that while a project can be 'beautifully constructed' it may not be operational,'' it said.

The committee said some funds were "wasted, misdirected, poorly targeted, or of limited benefit.''

It added: "The committee has seen no evidence suggesting that Australian government agencies delivering aid to Afghanistan have attempted any genuine critical evaluation of the effectiveness of Australian aid, including an assessment of the cost-effectiveness of aid programs.

"Information is available on the inputs and when recording outcomes the information is often restricted to quantitative information such as schools, clinics and roads built but with no indication about how these facilities are making a difference.

"Such reporting presents an incomplete picture and may mask serious underachievement.

"The committee does not share AusAID's confidence in the robustness of its evaluation and reporting on Australia's official development assistance to Afghanistan.''

The committee said Australian aid in Uruzgan produced "tangible benefits'' like schools. And our aid helped the provincial government develop a cadre of trained public servants.

"Some witnesses, however, expressed reservations about the effectiveness of aid delivered by the Australian Defence Force in Uruzgan suggesting that some projects were 'quick fixes' and unsustainable.''

The committee said the complaints of "white elephant'' projects may be unfair, but needed investigating nevertheless.

The committee said the aid program must address the "obstacles holding parents back from sending their children to school, especially girls''.

Schools failed to keep proper attendance records.

"The reporting of Australia's whole-of-government effort in Afghanistan is particularly weak. The committee believes that the monitoring, evaluation and reporting of Australia's official development assistance to Afghanistan needs to improve dramatically."

Defence saw its role as one of ``winning the hearts and minds'' of locals.

However, Professor William Maley, an Australian academic who has published widely on Afghanistan, says Australian aid might be doing more harm than good.

"(Maley) noted that providing aid may have the unintended consequence of 'fuelling corruption','' the report said.

"He explained that this situation could arise all too easily in Afghanistan where substantial aid monies flowing into a complex bureaucratic environment set the scene for the payment of bribes by contractors and subcontractors as a means of lubricating the process of policy

implementation.''

The committee tabled comments from NGOs who said ``government corruption or bribes demanded from powerbrokers as one of the single largest sources of waste in the sector''.

One local NGO representative openly admitted to bribing government officials to ensure projects were completed.

"The representative alleged that bribery is widespread in the province and that organisations often have no choice if they want to continue to operate 'Corruption is like a virus'," he noted.

Australian money is channelled through Afghan's national budget and the Afghanistan Reconstruction Trust Fund. Some goes to NGOs (Non Government Organisations) via the World Bank.

AusAID said corruption hindered aid efforts.

Dr Nematullah Bizhan, a research scholar at the Australian National University, blamed a lack of consultation.

"(Dr Bizhan) noted clinics and schools that were built, but with no teachers or nurses or doctors to sustain their use and local demands on the government to provide funds to maintain the facilities but without the resources to do so.''

James McMurchy, a regular visitor to Afghanistan, told the inquiry that well-intentioned aid without consultation led to family or tribal disputes over land and water rights.

Pallassana Krishnan, an Afghan government official, echoed Dr Bizhan's concerns.

"He (Krishnan) suggested that this lack of community engagement in Afghanistan was why schools were built but with no children in them; hospitals opened but nobody uses them; and roads constructed but no one is able to travel between provinces.

"In his view, 'It is simply because the community is not yet accepting of or involved in this progress that is happening in the country'. ``He informed the committee the donors need to reach out to more communities.''

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THE World Bank says opium remains Afghanistan's leading economic activity and provides "much-needed livelihoods'' for many people in rural areas. Opium poppy production in Afghanistan also provides 90 per cent of world's heroin.

The Senate committee was told opium poppy cultivation generated large criminal profits which undermined governance, fuelled corruption, nurtured dysfunctional politics and stimulated conflicts.

A total of 154,000 ha of poppies were cultivated last year despite an eradication program.

Australia encouraged farmers to grow other crops. In all 1,578 farmers were trained in improved cropping techniques and 5,016 in improved livestock management, the committee reported.

However the committee was sceptical. "There is no assessment as to the extent that the projects have in fact changed practices for the better and whether Australia's contribution was a cost effective way to help the farmers,'' it said.

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AFGHANISTAN was one of the most corrupt nations on earth, according to Transparency International.

It was placed at 180 out of 183 countries on Transparency International's corruption perception index.

It shared this position with Myanmar ahead of only North Korea and Somalia.

A report by the United Nations Office on Drugs and Crime said there was corruption at every level of Afghan society.

"Corruption is both wide and deep throughout the whole public sector in Afghanistan including key government institutions such as law enforcement as well as local authorities and service providers," it said.

"Moreover, Afghans themselves recognise that corruption, nepotism within institutions and warlordism in some parts of Afghanistan damage the authority of institutions and impede economic development.''

Phil Sparrow of the Australian Council for International Development told the committee he knew there was corruption when he discovered the official number of police in Uruzgan was 1,319, but approximately 1,650 were paid.