Ms VAMVAKINOU (3:48 PM) —I would like to start by congratulating the member for Franklin on moving this motion. It is a very important motion that we are debating here today. It is a motion which calls on the Australian government to act on the goals it endorsed at the 2006 Global Microcredit Summit by doubling the proportion of aid Australia currently allocates to microcredit programs from 0.6 per cent to 1.25 per cent of Australia’s overseas aid budget.

Over the last 30 years, and certainly over the last decade, microcredit—or, more broadly, microfinance—has proven increasingly successful in helping some of the world’s poorest people lift themselves out of extreme poverty. Based on the idea that credit can be utilised as a powerful developmental tool, microfinance works by extending low interest repayment loans to people living in poverty. These loans can then provide them with the capital they need to start up or grow a small business. Microfinance provides some of the world’s poorest people with the means to become self-employed and economically self-sufficient. By extending credit and other financial services to those living in poverty, microfinance is a way of both transferring valuable resources to the people who need them the most and injecting new investment and new life into those areas of the economy that are usually starved of capital and left to stagnate.

Much of the success that microfinance has met with stems from the fact that both in philosophy and in practice it is built on the premise that the most successful development programs are those that empower the very people they seek to help. Throughout the 1970s, 1980s and 1990s, aid programs were often guilty of disenfranchising the communities they were supposed to be helping and of creating a climate of aid dependency. Aid programs tended to be imposed from above, rather than developed in consultation with local communities on the ground. Corruption was endemic and few programs were sustainable in the long term.

Microcredit is different in that its focus is on giving people a real, practical opportunity to help themselves. It is a model based on building direct relationships with the people it seeks to help. It funds programs that are more likely to be sustainable over the long term as small businesses begin to generate their own income. And by making self-employment possible, it helps build the foundations on which individuals can regain a sense of control over their future. As one constituent who wrote to me recently put it: ‘Give a man a fish and you feed him for a day, but teach a man to fish and you feed him for life.’

Of course that very much applies to women because they have been the greatest beneficiaries of microfinance. Today it is widely recognised that the most successful development strategies are those that focus on the participation of women precisely because the benefits that come with aid are much more likely to flow on to the rest of the family and to the local community. Women and children make up the vast bulk of the world’s poorest people. At the same time, women continue to face a number of specific obstacles that make it far harder for them to break the cycle of poverty. Some of those are traditional sociocultural constraints that limit their participation in the economy as well as their access to land, capital and resources. Microcredit programs are one way of helping to break this deadlock by providing women with the support they need to become economically independent.

Labor believes that Australia has a much more important role to play in the areas of international development and aid, especially among our regional neighbours in Asia and the Pacific. This motion is a small but important component of Labor’s overall aid and development framework. At present, Australia’s aid contribution lags far behind our comparative wealth. We are not doing enough, and we are not doing enough in the right areas. Microfinance alone will not eradicate world poverty, nor does it always lead to successful outcomes. But it does have an important role to play in helping us achieve the Millennium Development Goals, including halving extreme poverty by 2015. For this reason I am pleased to support this motion and to once again thank the member for Franklin for giving us the opportunity to raise this issue in the House today.