Mr BRERETON (4:41 PM) —by leave—I am pleased to have this opportunity to respond to the Minister for Foreign Affairs's annual statement on Australia's overseas aid program. There is, I think, an increasing element of casual routine about these end of year statements. Nonetheless, it is a very worthwhile opportunity for me today to reaffirm Labor's bipartisan support for Australia's overseas aid program.

This has been, as the minister observed in his statement, a very big year for foreign aid. I think everyone would agree with that. I would like to make a few points about our international development assistance, especially the implications of our very significant and growing effort in East Timor. On 22 November, the minister announced that Australia would contribute an additional $60 million this financial year to assist East Timor's humanitarian and reconstruction needs. Together with the $14 million previously committed to East Timor, this represents Australia's largest ever contribution to relieving an international humanitarian crisis. It is a commitment that of course enjoys Labor's wholehearted support.

Having visited East Timor as a member of the Australian parliamentary observer group for the 30 August ballot, and more recently in the company of the Leader of the Opposition and my colleagues the member for Cunningham and the member for the Northern Territory, I can only say that the scale of the destruction is quite overwhelming. The task of reconstruction is enormous. This was a very poor society, burdened by decades of oppression and exploitation, which was razed from one end to the other by the pro-Indonesian militia and their TNI backers. It was a systematic and highly organised campaign of vengeance and destruction.

In the history of decolonisation this century, it is difficult to find a comparable case where a new nation was forced to start so near absolute zero. We do not know how many people died. Around 140,000 East Timorese are still in squalid refugee camps in West Timor with militia intimidation still rife and the risks of disease, including cholera, growing by the day. In East Timor, where the wet season has begun, more than 70 per cent of the homes need to be rebuilt. All their roofs have been destroyed along with everyone's possessions. Schools, shops, public services and health centres all need to be rebuilt or repaired. Roads and other basic infrastructure are in an appalling state of disrepair.

On top of all this, key institutions of an independent nation need to be established—a public service, political and judicial institutions and effective health and education services. Usually a new state would at least inherit working institutions of some sort from the former colonial regime, but this is not the case in East Timor. I do not think anyone can underestimate the challenges ahead for UNTAET and for East Timor's leaders. They will need all the help they can get.

All this amounts to an enormous task, and the demand on our aid budget will be an enduring one. No-one can have any doubt about that. The international community, the EU, the United States, Japan and many other countries have responded generously. But a large measure of responsibility will undoubtedly rest with us. We must be in this for the long haul.

Here can be found an anomaly. As honourable members will recall, on 23 November the Prime Minister announced the Defence-East Timor levy, the so-called `Timor tax'. When he did so, he foreshadowed an estimated $3.683 billion of additional expenditure over the period of 1999-2000 to 2002-2003. The overwhelming majority of this expenditure—$3.562 billion or 96.7 per cent of the total—relates to the Australian Defence Force: $1.355 million for the ADF deployment in East Timor; $529 million on capital equipment; $1.547 billion for force expansion—the raising of two additional battalion groups; and $131 million for the income tax exemption for pay and allowances of ADF personnel on eligible duty outside Australia. All these commitments extend over the current financial year and out to the financial year 2002-2003.

By comparison, the $60 million of humanitarian and reconstruction aid for East Timor in the current financial year amounts to a very modest 1.62 per cent of the additional expenditure outlined in the Prime Minister's statement. Indeed, the commitment announced by the Prime Minister put our overall foreign aid effort into an interesting perspective.

The point I wish to draw members' attention to today is the absence of any forward commitment on aid for East Timor. Unlike the commitments to the ADF deployment and force expansion, this is a one-off one-year-only additional allocation. Obviously, the government considers itself unable to make a forward commitment on aid to East Timor, but the reality of a very large and ongoing demand on our aid program is quite clear. This raises interesting questions for next year's aid budget. Examination of the statistical annex of this year's development assistance budget summary tells a sorry tale of the government's stewardship of our foreign aid.

In the last budget of the former Labor government, in 1995-96, Australia's official development assistance in constant 1998-99 prices was $1.635 billion or 0.32 per cent of GNP. In the first Howard budget, this was slashed by 9.4 per cent to $1.481 billion, and the ratio fell to what was then a historic low of 0.28 per cent of GNP. In the following year there was a further cut of 1.9 per cent, and the ratio fell again to 0.27 per cent of GNP. In 1998-99 the aid budget amounted to $1.478 billion, a slight increase of 1.7 per cent but a further fall in the ODA to GNP ratio of 0.26 per cent. This year's budget involved an aid vote of $1.5 billion, an increase of $22 million over 1998-99. In effect, while it maintained the status quo, the ODA to GNP ratio was projected to fall to a new low of 0.25 per cent.

Since the budget, of course, Australia's East Timor commitments plus the additional $35 million over three years referred to by the minister—for the Heavily Indebted Poor Countries Initiative—have pushed our foreign aid to slightly more than $1.6 billion. The minister anticipates that this year our ODA to GNP ratio will increase from the previously projected 0.25 per cent to 0.28 per cent.

The question is: what happens next year? Australia will unquestionably be obliged to contribute a very significant amount of assistance to East Timor. We must do that. But, as the minister's statement rightly makes clear, Australia's aid program is much more than East Timor. We have a very large and important commitment in PNG, in the South Pacific and in East Asia. We also have smaller but still important programs in South Asia, Africa and the Middle East. We are likely to face other significant demands on our resources, not only in our immediate region but also further afield. The challenge for the Minister for Foreign Affairs will be how the aid budget will accommodate new, large and ongoing demands, and they will arise. I would say there will certainly be a strong temptation on the part of the Treasurer and the Minister for Finance and Administration to accommodate part of these demands through cuts elsewhere in our aid budget: the programs in Africa or South Asia, the two regions where the greatest number of the world's poorest people are to be found. The foreign minister has given no forward commitment on aid to East Timor. Equally significantly, he has given no guarantee that further aid to East Timor or elsewhere in our region will not be at the expense of other established programs further afield.

In his statement, the minister observed that volume is not the only, or necessarily the most important, measure of foreign aid. The quality and the impact of development assistance are what count. No-one would disagree with this. But it is equally true that the level of resources—the actual volume of aid—is critical. It is ridiculous to suggest otherwise. The government continues to pay lip-service to the United Nations 0.7 per cent ODA to GNP ratio target. And lip-service is all that is. As the 1996 Simons report made clear, such a commitment has very little, if any, credibility unless a realistic framework is set for Australia to work towards the ultimate goal. Accordingly, we in the opposition await next year's aid budget with keen interest.

Motion (by Mr Downer) proposed:

That the House take note of the paper.

Debate (on motion by Mr Brereton) adjourned.