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Tuesday, 17 February 1987
Page: 83

(Question No. 4857)

Mr Langmore asked the Minister for Foreign Affairs, upon notice, on 11 November 1986:

(1) Is he able to say what estimate can be made of the impact on Australia's economy of Australian aid to Papua New Guinea.

(2) What proportion of Australian bilateral and multilateral aid is spent on goods and services originating in Australia.

(3) From which electoral divisions do the goods and services comprising Australian bilateral and multilateral aid originate.

Mr Hayden —The answer to the honourable member's question is as follows:

(1) I am unable to estimate with any degree of precision the impact on Australia's economy of Australian aid to Papua New Guinea, although I can make some general observations about the size of Australia's aid to the country in relation to Australia/PNG trade and investment generally.

In 1986/87 Australia will provide $328.2 million in aid to Papua New Guinea principally in the form of budget support. This represents around 28 percent of Papua New Guinea's budget resources. Australia's exports to Papua New Guinea totalled $558 million in 1985/86 while Australian imports from Papua New Guinea for this period totalled $174 million. After taking into account invisible earnings, this represents a trade imbalance of 5:1 in Australia's favour. In addition Papua New Guinea is Australia's third largest overseas investment base.

Against this background, it is reasonable to assume that the Papua New Guinea Government would continue to draw on Australian budget support to finance its imports from Australia which in turn would have a beneficial although small impact on the Australian economy.

The 1986/87 aid program to Papua New Guinea also includes an amount totalling $10.5 million for projects, training (including the contribution to the education of Papua New Guinea students in Australia) and technical assistance. This is an increase on expenditure in previous years, reflecting an increased emphasis on this form of aid within the overall arrangements between the two governments. In developing this program in accordance with Papua New Guinea priorities, the Australian Government is seeking to maximise the use of Australian goods and services.

(2) About 91 per cent of bilateral aid expenditure in 1985-86, excluding aid to Papua New Guinea, was spent on goods and services sourced from Australia.

Detailed information is not available on the proportion of all multilateral aid spent on Australian-sourced goods and services. In the case of the Australian funds supplied to the World Bank and the Asian Development Bank, however, an average of about 65 per cent has returned to Australia for the purchase of goods and services.

(3) The information needed to answer this question is not available.