Mr BRERETON(3.31 p.m.) —The opposition this afternoon wants to turn to the very serious implications of the government's decision to cancel DIFF projects, particularly those projects that are in the pipeline. When I say `the DIFF pipeline', they are projects in respect of which considerable investments have been made on the basis of bilateral agreements between Australia and our neighbours in these developing countries in our region.

This is an issue which has preoccupied the attention of this House for most of this week. While we have been concentrating on the replies—the inadequacy of the replies—of the Minister for Foreign Affairs (Mr Downer), insufficient attention has been given to the implications for the projects themselves.

I say at the outset that we believe that what we have on our hands is extraordinarily bad policy. That bad policy decision was announced on the eve of the last election by the then opposition as part of their Meeting our commitments document. It is bad policy with serious implications for our regional relationships, for our very engagement in the region and for every one of the multitude of companies that have been involved in pursuing international opportunities under what has been an extraordinarily successful scheme, one that has done so much to give substance to our engagement in the region.

For the last few weeks I have had numerous approaches from company after company that has been involved in this process and that in some cases have had their businesses destroyed by what they have been quick to point out was an unbelievably bad decision, one that has in their case a retrospective effect.

There are 52 projects in the DIFF pipeline. I want to start by dealing with them. They are projects involving not 52 companies but some 600 Australian companies, all told. Sixty per cent of all of these projects have been going now for at least 1½ to two years. These are all projects that have gone right through the feasibility study stage and the appraisal stage right through to the project design and detail stage.

There are 52 projects, 60 per cent of which have been worked on for a period of years and in respect of which tens of millions of dollars have been expended in good faith, on the basis of bilateral relationships and on the basis of committed government policy. It was on this basis that an agreement was signed—the Deputy Speaker would be aware of this—between President Ramos of the Philippines and Australia at Williamtown to carry out a wide range of what are to the Philippines enormously important projects.

The estimate of the amount of money expended thus far on projects that have been arbitrarily cancelled is $67 million. In some cases, this means bankruptcy for the proponents. I repeat that proponents have acted in good faith. These people have been to see me and have told me of their dilemma. They have asked, `What do we say to our partners?' There are partners involved in all these projects; 40 per cent of the projects have counterpart funding, where the recipients themselves have spent money in preparation. So it is not just at the Australian end; 40 per cent of those projects have seen money spent by our neighbours in pursuing the matter from their point of view.

They ask, `What do we say to the people we are doing business with? How do we maintain our faith in the light of what the government has done, retrospectively'—as far as these projects are concerned—`wiping them out?' They ask, `What do we say to our bank manager, when we have spent $100,000, $200,000 and $300,000?' It is often small Australian companies, which have been out there doing their best as part of Australia's export drive, asking, `What do we say to our bank managers when we have no comeback, no recourse? Our project has been arbitrarily halted.'

I have seen some bad policies, but I have never seen one that was less well thought through than this one—from a government that has been boasting about its commitment to small and medium Australian companies. It is really quite astonishing that a policy like this could be brought out on the eve of an election but not reviewed post-election once the implications of the abolition of DIFF, as far as projects in the pipeline are concerned, became known.

I can only put this down to the fact that the Minister for Foreign Affairs, who is principally responsible for this, has not, from the very first moment, taken the implications seriously. He has not taken them seriously as far as these companies are concerned; he has not taken them seriously as far as our regional relations are concerned; he has not taken them seriously as far as the blow that it represents to our engagement in the region is concerned. He has been all too smart in passing it off as something that is a mere storm in a teacup. Day after day in the parliament over these last days he has stood here telling the House that this is not of any real importance. When he was not being absolutely evasive, he was being worse.

As far as these projects are concerned, the House should be aware that the overwhelming majority of them involve enormously worthwhile projects. As far as the 17 in China are concerned, the Chinese government takes the view—I think quite properly—that they are the subject of a formal agreement between Australia and China. They are used to those formal agreements having the force of law. They take a very dim view of an Australian government which comes along and says that unless there is a contract individually committed by an Australian company—in other words, unless you have gone right through the feasibility study stage and through to the development of all the project detail stages—and unless you have actually signed a contract, then this can be retrospectively cancelled.

The Chinese government—I think quite properly—says that those things are between government and government and they should proceed. And, of course, they have all been wiped out. When you look at the individual projects, you see projects that go to the very core of poverty alleviation and the easing of distress in developing countries, whether it be water improvement, sanitation improvement, environmental monitoring—a whole range of projects aimed at lifting the living standards, of improving the circumstances in these fast-growing nations.

It is that problem that the House must be aware of, and it is that problem which the Minister for Foreign Affairs has delegated to his parliamentary secretary to handle. It is really quite an extraordinary decision for a government to cancel, retrospectively, 52 different projects coming under agreements between our neighbours and ourselves, involving $67 million worth of money privately expended already, and for the handling of that matter to be delegated to the parliamentary secretary, a parliamentary secretary who has not given any satisfaction whatsoever to the proponents of the individual DIFF projects when they have beaten a path to his door. It is fair to point out that they have been denied access to the minister himself. This has all been dealt with by pushing it down the line to the parliamentary secretary.

I think this gives some sort of a flavour of what has really happened here. The DIFF project has not been properly and seriously considered by the government and it has fallen in a hole accordingly. Indeed, it has not been helped by the fact that the government has gone out of its way to say of late that it is to do with its invented budgetary black hole, whereas the House knows full well that this was part of its Meeting our commitments document, it was a determined policy before the election, it does not relate to any budgetary deficit whatsoever but it relates strictly to its funding a number of tax relief measures for the middle classes. That is the truth of the matter. But $67 million is written off.

What is going to be saved out of this? One hundred and twenty million dollars of government expenditure, $120 million which the government and AusAID's own review said would have a multiplier effect fivefold in terms of benefits for Australia.

Mr Crean —What about jobs?

Mr BRERETON —My colleague mentions jobs. Fifteen hundred direct jobs are wiped out as a result of this. So a number of companies are going bankrupt and a whole range of opportunities for Australia are being destroyed. I might say that other nations such as the UK, European nations—

Mr Crean —Germany.

Mr BRERETON —Germany, particularly, will take up the opportunities and to some extent step into the breach. The fact is that this is a great opportunity forgone for Australia but one that others will take up, to the detriment of Australia. This is a government that talks about our not holding our own in terms of getting an increased share of the expanding economies in the Asian region, yet you would wipe out this opportunity for enormous wealth production and generation at the whim of a policy brought forward in the heat of the last election and then not be sensible enough to review it afterwards but to fire it down the line to a parliamentary secretary and then to seek to defend the indefensible in this House.

That is the background that the House needs to have to the outrage that we have heard from those four nations. A path has been beaten to our door by such people as the Chinese ambassador, the Philippines ambassador, the Indonesian ambassador—these are not people you normally see making public statements. I wonder if anyone in this House can remember how often these ambassadors have attacked government policy in the past, as the Chinese ambassador did when he said:

Should the projects be scrapped, it will not only cause financial loss on the Chinese side but also do no good to the Australian side in terms of its credibility and business interests in China. We hope the Australian government will follow internationally accepted practices and continue to support the projects in the pipeline and implement these projects on time.

In diplomatic speak, this is a very strong message. This is someone saying, `For God's sake, don't do it. For God's sake, understand the importance of this.' It is of course an importance that slipped right past the government.

It has been as if all these things could be pushed to one side and disregarded. I am sure that has been the major reason why I have been inundated with a flood of leaks this week which have come from many of these areas adversely affected—from the companies and the countries. This material has fallen into my hands because there is enormous concern out there.

Mr Beazley —There's so much more to go.

Mr BRERETON —We have so much more, and that is why, when the Prime Minister (Mr Howard) was saying that perhaps the House should sit next week, I was raising my hand and saying, `You beauty.' I would love to sit next week. There is one bright point in this, and that is that the Senate—I have never been a great supporter of the Senate but what it has resolved to do this week is a great thing—has resolved to refer this matter to the Senate Foreign Affairs, Defence and Trade References Committee. The Senate is going to give the opportunity to those 52 proponents to come before that committee and give evidence and it will afford an opportunity for the 600 companies that are participants in that to come before the Senate committee and to give evidence. And indeed they will; they will be able to tell the Senate committee of the $67 million they have expended and that they stand to lose.

I am delighted that the Senate committee intends to report on this before the budget sitting. I implore the government to note what has happened this last week and to think very seriously about the pipeline projects. No-one minds the government deciding to review aid and come down with their own scheme, but you must not do it retrospectively. You must not do that and brush to one side the very legitimate criticisms of everyone from ACCI, to the MTIA, to the Premier of Victoria, to those of us on this side of the House, to business large and small, to all our regional—(Time expired)