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Monday, 30 October 2000
Page: 21564

Mr JULL (12:45 PM) —On behalf of the Joint Standing Committee on Foreign Affairs, Defence and Trade, I present the committee's report entitled Australian government loan to Papua New Guinea, together with the minutes of proceedings and evidence received by the committee.

Ordered that the report be printed.

Mr JULL —The report that I have just tabled is important for two reasons. Firstly, it represents parliamentary involvement in the scrutiny of this loan. This is significant and something that the committee supports. Secondly, the legislation that prompted this report and the timing of the tabling of the document about the loan have both caused some concern to the committee. I propose to talk about the loan itself and the issues that arose during our consideration of this matter. I understand that my colleague the honourable member for the Northern Territory will address issues relating to parliamentary scrutiny of loans by the government. This loan of $A133.2 million was granted to PNG under the provisions of the International Monetary Agreement Act 1947, as amended in 1998. This enables the government to lend money to other countries, provided at least one government or organisation intends to provide, or has provided, money to the proposed recipient. Further, when loans are made under this act, it prescribes that a national interest statement setting out the nature and terms of the loan is to be tabled in the parliament. The national interest statement is also to set out the reasons why the loan is in Australia's national interest, having regard in particular to foreign policy, trade and economic interests. In this case, both the World Bank and the International Monetary Fund are working with PNG and lending it money to assist its reform agenda.

There can be no doubt that making this loan to PNG is in Australia's national interest, and it is supported by the committee. The historical and geographic ties between the two nations are such that it would be unthinkable not to assist the government of Sir Mekere Morauta to continue its reform work. The terms of this loan are strictly commercial. PNG's record of repaying other loans is such that the committee is confident this loan will be repaid in full and on time. The NIS also refers to an additional $30 million that will be loaned to PNG. The committee understands that negotiations for this loan are under way at present. It is likely that the three payments making up this additional loan will be dealt with in the same way as the larger loan that is the subject of this report.

Although the time to consider this matter was short, the Foreign Affairs Subcommittee of the joint committee carried out a standard inquiry process. A total of seven submissions were received from five organisations and individuals. A short public hearing was held on 12 September, at which very useful evidence was taken from a range of witnesses, notably from the Treasury, the DFAT portfolio and a panel from the ANU. These witnesses all supported the loan and the efforts of the Morauta government to implement a program of reform in PNG. I believe that my colleagues would agree that the witnesses from the ANU were surprisingly optimistic about PNG's prospects under the Morauta government. I am sure that all those with an interest in our closest northern neighbour hope that recent events in PNG will not lead to a weakening of its government's resolve to continue its reform program.

In supporting this loan, the committee has also recommended that the legislation be amended to ensure that parliamentary consideration of any future loans is included earlier in the approval process. There is little purpose in the committee scrutinising a loan that has already been granted. Unfortunately, this situation is likely to recur when the additional loan of $30 million to PNG is referred to us. I commend the report to the House.