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Thursday, 30 May 2013
Page: 4529


Mr RIPOLL (OxleyParliamentary Secretary to the Treasurer and Parliamentary Secretary for Small Business) (09:49): I move:

That this bill be now read a second time.

The African Development Bank Group, through its primary body—the African Development Bank—and its concessional lending arm—the African Development Fund—promotes sustainable economic growth to reduce poverty in Africa. The bank currently has 78 member countries, comprising 54 African and 24 non-African countries.

Africa is the world's most impoverished continent, with 400 million people living on less than US$1.25 a day. It is also the region least likely to meet the Millennium Development Goals.

Australia's aid program in Africa currently focuses on mining, governance, water and sanitation, food security and maternal and child health. Membership of the group will complement Australia's current approach, as the group has strong experience in infrastructure development, governance and financial and economic reform.

The bank is majority African-owned, as bank rules mandate that regional members hold at least 60 per cent of shares, and so is a trusted partner of African countries. Strong shareholder confidence has been shown through members tripling their shareholding in 2010, lifting the bank's capital resources to around US$100 billion, and a 10.6 per cent increase in the fund's most recent replenishment, AfDF12 (2011-2013), with donors agreeing to total resources of US$9.5 billion.

This bill is an important step in Australia's pursuit of membership of the African Development Bank Group, which the government announced on 17 July 2012. Australia is the only major OECD donor, and is one of only two developed G20 members (with Russia) that is not also a member of the group.

Why join the African Development Bank

In 2011, the Independent Review of Aid Effectiveness recommended that Australia join the group as it would represent value for money, and be a high-level indication of Australia's commitment to development in Africa. The government's 2011 response to that review, An Effective Aid Program for Australia, agreed in principle to the recommendation, subject to the outcome of a detailed assessment. That detailed assessment, along with the Australian Multilateral Assessment and Comprehensive Aid Policy Framework, from 2012, and the Joint Standing Committee on Treaties report from this year have all agreed that joining the group would have positive outcomes for Australia's aid program.

Indeed, the Joint Standing Committee noted that given Australia's membership of other multilateral development banks, 'It seems something of an oversight that Australia is not already a member of the African Development Bank.'

Working with the group will give Australia a chance to make a real difference in Africa. The bank works in areas that are critical to sustainable growth and poverty reduction in Africa, such as infrastructure and private sector development. Like Australia, the bank works in water and sanitation, focuses on fragile states, and is involved in promoting capacity and contributing to agricultural outcomes.

Working with the group will also provide Australia with the opportunity to engage in policy dialogue on key issues and to better understand how member countries see African development problems, priorities and issues.

Over the 2012-14 period, the group expects to deliver some very encouraging results across its 54 African member countries, including:

over 10.5 million people benefitting from new electricity connections;

over 17 million people with improved access to transport;

almost 18.5 million people with new or improved access to water and sanitation; and

over 13 million people with better access to health services.

Size of contribution

To join the African Development Bank, Australia will purchase SDR59.1 million worth of shares, or around $88 million at current forecast exchange rates. This amount will represent just under 1.5 per cent of the bank's total capital stock, and rank Australia as the bank's 20th largest shareholder and ninth largest non-African shareholder.

To join the African Development Fund, Australia will also make an initial contribution to the fund of SDR107.9 million, or around $161 million at current forecast exchange rates.

Australia will also make ongoing contributions to replenishments of the African Development Fund, starting in 2014-15. The size of these contributions will be subject to future negotiation between donors and the fund.

All these costs are official development assistance and are drawn from within existing aid resources.

The role of the bill

This bill enables Australia to become a member of the group by authorising the government to make the payments required to acquire shares in the African Development Bank, and meet membership and ongoing subscriptions to the African Development Fund.

Becoming a member of the group requires Australia to become a party to the Agreement Establishing the African Development Bank and the Agreement Establishing the African Development Fund—both of which require the membership payments described.

Australia will also seek approval by all the bank's members of Australian membership and, following this and the passage of this legislation, the government will sign and then deposit the agreements with the Secretary-General of the United Nations. Payment of the membership subscriptions described to the bank and the fund will be the final step of acquiring membership.

Conclusion

Africa's role in the world is growing in importance, and Australia's membership of the African Development Bank Group is an important step in both supporting Africa's growth, and enhancing Australia's relationship with the group and its 54 current African members.

Membership of the group will place Australia in a good position to participate in and positively influence Africa's development as a continent through a respected and credible regional institution. Australia is well placed to develop a strategic, distinctive and productive partnership with the African Development Bank Group. I commend the bill to the House.

Debate adjourned.