Mr PROSSER (12:32 PM) —The International Monetary Agreements Amendment Bill 1998 is important for Australia's future economic prosperity and market access in Asia. The bill enables the Treasurer to rapidly respond to the IMF economic restructuring programs in Indonesia, South Korea and Thailand. We need to do this because we have economic and strategic interests in these regions that cannot be ignored. Australia's interest in assisting the recovery of the Asian currency crisis is immense. South Korea, Thailand and Indonesia have a combined population of over 300 million people. Together, these counties constitute a $12 billion export market for Australian goods and a combined trade surplus worth $6 billion. That is $6 billion in markets that Australia has actively engaged—markets whose continued economic viability shapes Australia's future prosperity.

Market access does not simply occur. It is the result of effective bilateral relations and active participation in regional and multilateral organisations. Ten years ago Australia's exports to Thailand were worth $224 million; today they are worth $1.7 billion. Ten years ago our exports to Indonesia were worth $528 million; today they stand at $3.3 billion. In the case of Korea, Australia's exports a decade ago were $1.5 billion; today they are worth $7.1 billion.

This crisis provides a unique opportunity to extend Australia's presence in these markets through active participation in the IMF programs. Australia and Japan are already world leaders in this field—the only two countries actively participating in all three IMF programs. This is quite an achievement for Australia, and it is a leadership role that will not go unnoticed by our regional leaders. This is also an exercise in Australia's involvement in world affairs that will help determine Australia's future participation in these valuable export markets.

We need to ensure the economic viability of these countries for Australia's continued prosperity and the security of our region. The continuation of economic and political reforms in these countries enhances peace and prosperity in this dynamic region of the world. Australia has the opportunity to participate in an international program to provide loans to our neighbours that will help alleviate their short-term economic difficulties. These are loans—not charity—that are repaid with interest.

The International Monetary Agreements Amendment Bill provides Australia with an opportunity for doing good and doing well. The loans administered through the IMF offer far more than an opportunity to collect interest; they give Australia a say in the economic restructuring of countries with which we conduct a significant volume of trade, countries which consume much of our exports, and countries whose economic and political stability greatly affects our own. Participation in these IMF programs will allow Australia to shape the trading relationships that are of critical importance to our economy.

Australia does not enjoy a trade surplus with America or England—quite the opposite. Our trade deficit with the United States is over $12 billion and with the UK, some $3 billion. It is Asia who needs our resources, it is Asia whose children who are educated in our universities and, increasingly, it is Asians who spend their tourist dollars in Australia.

Trade also enhances security. Australia and Japan are trading partners because we stick to the principle of comparative advantage—exporting what we have and importing what we need. This is the relationship that we have cultivated with Indonesia, Thailand and Korea, enhancing not just our bilateral links but also regional security. It is an ongoing process that could suffer if these countries are unable to overcome their present difficulties.

The Asia-Pacific region has not historically been peaceful. Indonesia, Thailand and South Korea all possess the potential for political unrest. Tensions between ethnic minorities, between the haves and the have-nots, coupled with territorial disputes, present serious potential for the destabilising of regional security. Notwithstanding this, the transformation of the Asia-Pacific region since the Second World War has been profound. Nations that were amongst the oldest outposts of colonialism have been transformed into successful exponents of capitalism where the seeds of democracy have begun to bear fruit.

Critical to Australia's economic survival is our ability to conduct international trade, namely, the ability to get our exports into foreign markets. This is critical to Australia because of our relatively small population and vast natural resources. Australia's population cannot consume what we currently export, and we need the revenue from these exports to buy imports that our economy cannot produce. The sea lanes in the Indonesian Archipelago are critical choke points for Australia's national interests. Australia's economic success is linked to South-East Asia's markets—markets that have a less developed land infrastructure, with most trade being conducted by sea. Over half the world's shipping passes through these southern entrances to South-East Asia. Closure or blockage of the sea lanes would increase the price of Australian exports, through increased freight rates, and create temporary shipping shortages for regional economies

As these countries have evolved economically, they have also advanced politically. Sizeable middle classes have been created—middle classes that demand a greater level of political participation. These countries have lifted millions of citizens from poverty and are now active participants in regional and international organisations. One only needs to look at countries isolated from economic development as examples of what could occur to Asia's political landscape without structural economic reform—countries such as North Korea and Burma. A similar fate could have been the case for other Asian countries if the pace of economic and political reform had not been arrested by the lack of political will from developed nations.

Fortunately, this has not been the case. As these countries have undergone economic development, they have also undertaken political liberalisation. In the process they have become better neighbours, they have become more stable and they have taken a greater interest in regional security issues. A good example is Indonesia, a country that has contributed to peacekeeping efforts in Bosnia and Angola and supported non-proliferation efforts such as the comprehensive test ban treaty.

Economic development in Thailand, South Korea and Indonesia has brought a better life to millions of people and reinforced peace and stability throughout the region. As a part of the world once known for authoritarian governments and domestic instability, this region is now characterised by viable democracies that are adopting more open economic policies and alleviating poverty. The present danger is that this economic development will be arrested by the currency crisis and these countries will lose the momentum for further economic and political liberalisation. The International Monetary Agreements Amendment Bill gives Australia the opportunity to reap the rewards of our neighbours' future prosperity rather than opt out and suffer the consequences.

Without our involvement in this plan, we could see our export markets shrink and our trade surpluses disappear. This would have a profound impact on our domestic economy through reduced demand for our exports and the subsequent increase in unemployment. In the longer term, this could spill over into regional instability, causing security problems for Australia. Australia has a vested interest in ensuring that these regions continue to advance economically, continue to be major purchasers of Australian exports, and continue with their economic and political liberalisation programs.

The International Monetary Agreements Amendment Bill is not a cure-all for the countries effected by the Asian currency crisis. Economic recovery in these countries will take time as markets undertake necessary economic reforms. Successful completion of these reforms will underpin a brighter economic future, not just for these three countries, but also Australia. These reforms will not be easy as protected industries are exposed to competition, as prudential supervision is tightened and as these economies become more transparent.

Access to capital is the most immediate challenge facing these three countries and one that this bill aims to address. In the longer term, greater financial transparency in these countries will ensure the inflow of capital as investors are better able to assess the financial standing of prospective investment opportunities. The reforms will also be a major step in liberalising market access and introducing investment rules in these three countries. Using this as a foundation, Australia's trade opportunities will expand as our market access improves.

The situation in Indonesia is the most serious of the three countries affected by this crisis, not because Australian exports are most exposed but because the political consequences that could follow the economic problems pose risks to Australia's security. If something is not done to shore up the Indonesian currency, the fourfold rise in the prices of basic necessities will have crippling effects on many Indonesian families. Without a corresponding increase in wages, which are already low in Indonesia, how long can the Indonesian people support these costs? How long will it be before the people vent their dissatisfaction against the government and, in the case of Indonesia, the ethnic Chinese population who own the shops and businesses?

Indonesia has been the hardest hit by the Asian financial crisis due to a number of structural weaknesses in the Indonesian economy. These include import monopolies, a lack of transparency in the business environment and a weak banking system. Accordingly, the IMF package, in which Australia is involved, is aimed at liberalising foreign trade and investment, dismantling Indonesia's domestic monopolies and increasing the transparency of public sector activities. Successful implementation of these reforms will assist Indonesia's economic recovery.

This bill enables Australia to ensure its future peace and prosperity by taking a leadership role in the economic restructuring of the economies with which we are most integrated. These measures ensure that our neighbours, with whom we enjoy huge trade surpluses, will have the funds and expertise to reduce the shocks of the Asian currency crisis. These three markets account for 11.5 per cent of Australia's exports—a $12 billion export market growing faster than almost any region in the world. If we do not participate in the IMF program, the rules of the trading systems will be written without Australia's interests in mind. We will not be remembered as a friend in times of need, but rather as a fair-weather friend. Our export markets will shrink, jobs will be lost and Australia's future access to these markets could be placed in doubt.

If the pace of economic development and political liberalisation is arrested by the current difficulties in these countries—as may well be the case without IMF involvement—the stability, peace and prosperity of the region could be threatened, ruining the progress made over a generation.

The International Monetary Agreements Amendment Bill is about Australian leadership and participation in international affairs. It is about engaging Asia and investing in Australia's future peace and prosperity. We cannot afford to let our destiny be written by anyone else.