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Wednesday, 27 March 1985
Page: 912

Senator GIETZELT (Minister for Veterans' Affairs)(5.38) —I move:

That the Bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave not granted.

Senator GIETZELT —The purpose of this Bill is to authorise an additional voluntary contribution by Australia of $60m towards the resources of the International Development Association, or as it is commonly known, IDA. Established in 1960, IDA is the concessional lending arm of the World Bank. It assists its poorest member countries by providing long term, interest free loans to promote their development. The resources of the Association come mainly from subscription by the industrialised countries, pledged in periodic general replenishments.

Honourable senators will recall that the target for the seventh replenishment of IDA's resources, IDA-7, which is intended to cover commitments during the period 1985-87, was agreed by donors at $US9 billion. This represented a considerable decline in real terms from the $US12 billion which was provided under the sixth replenishment, but was the maximum attainable in the face of the decision by the United States of America not to contribute to a higher figure. Australia, in common with other IDA donors, considered the result to be gravely inadequate given the needs of the Association's recipient community. Australia was willing to support proposals by the World Bank to establish a supplementary fund but it was not possible to obtain international donor agreement to such an exercise.

Last year this Parliament passed the International Development Association (Further Payment) Bill authorising a contribution of $A200m to the seventh replenishment of IDA. At that time, the Government indicated that it was considering how best it might further assist IDA to overcome the reduction in assistance levels to the poorest countries implied by the low level of the seventh replenishment.

During passage of that Bill Senator Grimes informed the Senate that the Treasurer had announced at the International Monetary Fund/ World Bank annual meetings in Washington that subject to Government approval, Australia would further respond to the needs of IDA recipients by making a voluntary and unilateral special contribution to IDA. It was further stated that this voluntary contribution would be a very substantial increase on our pledge of $A200m to ADA-7.

We have chosen to make our additional voluntary contribution direct to the general resources of IDA rather than to a recent voluntary multilateral funding facility for sub-Saharan Africa which has been joined by some other donors. Not only will sub-Saharan Africa benefit from part of this contribution roughly equivalent to our notional multilateral share of the facility for Africa, but the poorest countries of our own region and elsewhere will benefit substantially too. The World Bank has expressed appreciation for Australia's action in announcing its intention to make a special contribution to IDA, and has stated that this is fully in accord with the Bank's own preferences and priorities.

Australia has the option of paying its $60m contribution either in cash or by lodging non-negotiable, non-interest bearing promissory notes encashable on demand as and when funds are actually required by IDA for loan disbursements. In accordance with past practice, and in line with the practices of most other members of IDA, we propose to lodge promissory notes, and to effect the lodgement in 1985-86. This will spread the impact on the Budget over about 10 years starting with a small encashment in the next financial year.

Honourable senators, the impoverished countries of the world depend upon IDA for development assistance on concessional terms. Australia's voluntary contribution will emphasise our commitment to assist the poorest countries; it will also underline the importance we attach to IDA as a source of development assistance for these countries. This Bill therefore provides Australia with the means to achieve these major humanitarian objectives through established cost effective means. I commend the Bill to honourable senators.

Debate (on motion by Senator Reid) adjourned.