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Monday, 22 September 1997
Page: 7984


Mr ANDREWS(1.13 p.m.) —The appeal of the member for Oxley (Ms Hanson), albeit apparently waning in recent months, has been a reaction, I suspect, to the mismanagement over 13 years of the Labor government. However, we need to distinguish between listening to people's concerns and between ill-informed populism. While it is important—indeed, essential—for members of parliament to listen to their constituents, it is also the role of parliamentarians to lead, which means considering more than slogans and cliches, and sometimes it means swimming against the tide.

The member for Oxley's motion expresses a fearful and xenophobic isolationism which Australia simply cannot afford. We cannot and must not shut Australia off from the rest of the world like some latter day Albania. For good or ill, Australia is part of the world community. We are not an Asian country; we have a singular status. We are a small people drawn from every corner of the world but with a strong Anglo-Saxon foundation. We are a piece of Europe in the Pacific, living cheek by jowl with Asia, the fastest growing economic region in the world.

The first point about this motion is that we are not giving Thailand $1.35 billion to prop up its haemorrhaging economy at all. We are taking part in a currency swap. The money comes from foreign reserves already held in the Reserve Bank, which will transfer money held at present in some other form, such as US treasury bonds. Thailand agrees to swap the currencies back as conditions permit over the next three to five years. The transaction is made at no cost to the Australian taxpayer and may never even be called in. It is there to give confidence to the Thai currency, which will help all Australian exporters, including our farmers. The risk involved here is therefore very small.

It is important to understand that the bailout of Thailand, to the tune of $US14 billion—of which Japan contributed $4 billion; Australia, Hong Kong, Malaysia and Singapore $1 billion each; and Indonesia and South Korea $500 million each—is attached to a rigorous IMF plan for economic reform of the Thai economy. The money converted to baht to shore up the Thai exchange rate by these countries is entirely conditional on Thailand adhering to the IMF plan.

The Thai government has agreed to stringent demands to slash government spending, to raise consumer taxes and to set targets for cutting inflation and its trade deficit. Before the bailout, the baht had lost 26 per cent of its value since 2 July when the government stopped pegging it to the United States dollar.

The crisis immediately began to spread to other countries in the region, prompting a slump on the Malaysian stock exchange and falls in Malaysian and Philippine currencies. The Thai economy had simply become overheated. Such a complete financial debacle experienced by a country in the region would have caused economic shock waves around the Pacific rim. It is likely that it would have caused a domino effect in neighbouring states and would have had a major impact on Australia itself. Australia could not contemplate such a tidal wave without taking pre-emptive action.

The IMF was set up after the Second World War for precisely these reasons. So Australia had very precise economic reasons in its own interests for being a party to the Thailand bailout. Thailand bought Australian goods worth $1.7 billion last year and is an increasingly important trade partner with this country. Australian companies have massive investments in a broad range of industries in Thailand, with annual trade earnings of $600 million a year. Australia's goods and services exports to ASEAN nations last year totalled $15.68 billion—of which Thailand's share was $2.1 billion. Australia's investment in ASEAN countries to mid-1996 was $9.25 billion—or 6.1 per cent of Australia's investment abroad. So this is something which is quite clearly in the interests of Australia.

The rescue package alone will not solve Thailand's problems as it has moved too slowly, unlike some of the other Asian countries, to ensure that its economy is on a sound footing. But this episode does show us that even Asian tigers sometimes need a visit from paramedics. We should be a significant part of the infusion being given to the Thai economy because it will give us a leverage in the region—a leverage which is important, and much more important than all the rhetoric we could speak about having a place in the fastest growing economic region in the world.

By helping Thailand, we will have helped ourselves. To suggest otherwise is to be sadly blinkered and uninformed about the real benefits to all Australians from being an active part of the IMF bailout. As John Maynard Keynes, who was involved in the setting up of the IMF, noted:

This is not a Red Cross philanthropic scheme, by which rich countries come to the aid of the poor. It is a . . . highly necessary business mechanism . . .

(Time expired)


Mr DEPUTY SPEAKER (Mr Nehl) —Order! The time allotted for this debate has expired. The debate is adjourned, and the resumption of the debate will be made an order of the day for the next sitting.