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Wednesday, 3 December 1986
Page: 3229


Senator MASON(10.52) —At first sight the International Financial Institutions (Share Increase) Bill 1986 may seem unexceptionable, even worthy. It is good to give aid money. It may seem that it is a good thing just to give money to the big international organisations. After all, this eases the conscience without involving bureaucrats and governments in too much effort. It is just a matter of throwing money and hoping that something will happen. That, of course, is the reason for the amendment the Australian Democrats have brought forward, and I shall now discuss the background to it.

Given the pathetic level of Australian foreign aid, reduced by 12.8 per cent in this year's Budget to less than 0.4 per cent of gross domestic product-probably the worst effort we have ever made since the War, as far as I can establish, although figures are not available for the earlier years-one would have thought that the greatest possible care would be taken to ensure that this money, which after all is the money of all Australians, was used with maximum effectiveness. Sadly, that is not the case. One hundred and eight million dollars of our overseas aid vote is in the form of multilateral aid provided through international development financial institutions such as the International Bank for Reconstruction and Development and the International Finance Corporation which, together with the International Development Association, comprise the World Bank. These institutions do not have a good record in terms of either the types of projects funded, the countries to which they direct aid or, specifically, the way that aid is administered. It is common knowledge that funds from the multilateral development banks have supported massive environmental destruction and dislocation of indigenous cultures. I was able to witness this myself-quite a long time ago, I must agree-but it was an eloquent case.

Honourable senators may recall the vaunted Mekong scheme, which was to develop the entire Mekong River and its tributaries. I was at that time a South East Asia Treaty Organisation civilian adviser at Konkan in Thailand. I saw there the first pilot scheme of the Mekong scheme develop. Because of the nature of the terrain there it was not possible to create a dam except in a very wide valley. Because of the low hills it created a big, shallow body of water. This happened also to be the best and major area of rice growing country in the whole region. The land holders, who had farmed that area successfully and whose contribution to that economy was absolutely vital, were kicked off their land. They were not given proper compensation of other land because there was no satisfactory land to give them. They were given very small sums of money with which they were able to do nothing whatsoever. The Nam Pong Dam was flooded. I understand that even now the generators which it served are not at full production, and never will be, and that the majority of the electricity generated goes to providing air conditioners in the houses of a few rich people and a bit of street lighting in the towns. The village society there has no reticulated electric power, and never will have. It has no use for it. It is a complete disaster and was recognised as such, and as a result of that the Mekong scheme was scrapped.

Unfortunately, the philosophy which lay behind that scheme still exists, and we can see a good case of that. For instance, the multilateral development banks have funded massive purchases by Latin American farmers of pesticides and insecticides which were banned from use in the United States. There is solid evidence that the staffs of the multilateral development banks have been doing a totally inadequate job in analysing and taking into account the environmental and human rights impacts of their projects, in spite of promises and commitments to do so. In 1980 the World Bank agreed, in the Declaration of Environmental Policies and Procedures Relating to Economic Development, to change its policies and practices to comply with the principles of sustainability, protection of biological diversity, conservation of nature and respect for indigenous people.

It is all very well to say these things but not more than the barest lip service has actually been paid to them. Although the World Bank has established a small environmental office and has hired all of one full time ecologist and two anthropologists, this office is not part of the central project cycle through which projects are identified, prepared, appraised and implemented. Consequently this tiny staff, compared with a professional staff of over 3,000 people and the expertise and other resources devoted to environmental issues and indigenous people, is appallingly inadequate. This tiny, ineffective group, probably ineffective not through its own fault, was put in place purely to give some sort of expression to the declaration made in 1980. It has not gone any further than that.

In some cases the inappropriate development proposals that have come forward have also had a whiff of corruption about them. The Burmah edible oil project funded by the Asian Development Bank is a classic example, a classic extreme instance, of the disastrous misuse of multilateral development funds. According to a forthcoming publication by the conservative Heritage Foundation in Washington, entitled The Ten Worst Multilateral Loans in History, funding of the Burma edible oil project proceeded despite countless warnings form Asian Development Bank officials that it was unworkable and instructions from an ADB vice-president that it be dropped. According to a former senior ADB economic analyst, Mr Peter Nelson, the appraisal report on the basis of which the project proceeded was full of deliberate misrepresentations. According to another senior ADB economist, Mr Robert Blakey, in about one third of the Asian Development Bank's projects inconvenient facts were doctored by bank staff. These are very serious claims which the Government should be investigating, as Australia has contributed over $2 billion to the ADB and is the bank's fifth largest shareholder.

The question of bad loans by the ADB is not unrelated to the International Bank for Reconstruction and Development nor to the International Finance Corporation, which are the subject of this legislation. As the honourable member for Fraser, Mr Langmore, observed recently on Australian Broadcasting Corporation radio, the major problem with providing aid through multilateral banks is the absence of suitable accountability mechanisms. It is not good enough to throw people's money, billions of dollars, at projects and not insist on some sort of accountability. Why should such organisations dependent on member governments for money not have some kind of accountability to those member governments which, after all, have or should have accountability to their own taxpayers for the way they use that money? It is not good enough for the Government to say that it should not be accountable.

This country's Treasurer is Australia's governor on the boards of the International Bank for Reconstruction and Development and the International Finance Corporation. Australia's voting in these institutions is decided by Treasury, not by the Department of Foreign Affairs. I ask the Minister present, the Minister for Community Services (Senator Grimes), to let me know whether there is any mechanism by which the Treasury is required-and I do mean `required'-to seek the advice of Foreign Affairs or the approval of Cabinet in relation to the decisions it makes.

The recent World Bank loan to Chile is a perfect example of the cockeyed way Australia votes on multilateral banking matters. The Pinochet regime in Chile, as everybody in the world must surely know by now, is appallingly brutal and repressive. It probably has the worst record in the world and it is a continuing record. The Pinochet Government is not under any threat. It is an established regime which uses torture, imprisonment and murder regularly against its citizens and it has no justification whatsoever to seek funding from anybody for anything. Nor is there any reason to believe that funding will be used other than in an improper way by that Government.

In the United Nations on 16 December 1983, on 14 December 1984 and on 13 December 1985 resolutions were moved condemning human rights violations in Chile. Australia supported these resolutions. The United States of America, interestingly enough, did not. Among other things, these resolutions reiterated grave concern at the persistence of and increase in serious and systematic violations of human rights in Chile, expressed once again concern at the disruption of the traditional democratic legal order and its institution through the maintenance of exceptional legislation and once again requested the Chilean authorities to respect and promote human rights in compliance with the obligations it had assumed under various international instruments. Australia supported these resolutions, thus accepting, and reasonably so, that Chile is the home of a brutal and corrupt regime from which no saving grace can be claimed whatsoever. We then voted to lend Chile money. We actually voted to provide succour to the Pinochet regime when even the United States abstained. The United States Information Service, in explaining the reasons for the abstention, stated:

After carefully weighing all the relevant factors-including economic, human rights and United States statutory criteria-we've decided to abstain today on the World Bank's structural adjustment loan for Chile.

While we appreciate the merits of the particular loan, as well as Chile's free market economic policies, we also recognize the absence of a corresponding free and responsible political environment, together with serious, persistent human rights problems are matters of great concern.

Our abstention on this loan reflects the serious concern of the United States over human rights violations in Chile.

How nice it would have been if we could have had a statement here last week saying that our abstention on this loan reflects the serious concern of the Australian Government and of Australia over human rights violations in Chile but, of course, we did not get that. I go on to quote from the United States Information Service:

As greatly as we value and commend that considerable economic freedom that has been established in Chile, we must also voice our firm conviction that political freedom and respect for individual rights are indispensable to the establishment and maintenance of free societies.

It is either tragedy or farce that Australia, which has been criticised for tagging along behind the United States on World Bank decisions, has chosen this Chile loan, of all things, to strike out on its own. I think that one can feel the hand of Treasury heavily on the Chile loan vote. It would not be too unkind an interpretation, I believe, to conclude that insistence on ignoring political or human rights considerations was an attitude on the part of Treasury to preserve its monopoly over World Bank matters. If so, I suggest it has gone too far for this Parliament and much too far for the Australian people, who would thoroughly disapprove of this action.

As the honourable member for Fraser (Mr Langmore), one of the more progressive members of the Government, said this morning, economic, political and human rights issues cannot be separated when discussing World Bank matters. Until there is an arrangement by which World Bank decisions are integrated with our foreign policy, tragedies such as the Chile loan approval will continue. This boils down basically to a matter of laziness on the part of the Government-the attitude that the Government thinks it has done something useful provided it throws money at something. The more money the Government throws at something, the better, because it is only one decision it has to make instead of four decisions which might more properly and reasonably have been made, or maybe 40 or 50 decisions which would have said that we will, as we did after the end of the Second World War, finance very carefully investigated projects such as those under the Colombo Plan. We not only put in money in a carefully considered way to small individual projects, but also expertise and people.

We gained ourselves tremendous prestige, especially in Asia and in the Pacific, because we were willing enough not only to throw money at things governmentally but also to actually help people on the level at which they needed action, and to consult them first. The average peasant farmer in Asia, who has to be a pretty shrewd cookie to keep himself alive, is able to say what he wants. It is just that nobody ever listens to him. He wants improved breeding stock for poultry, improved fruit tree varieties and fencing wire so that he can keep marauding animals away from his orchards. He wants aluminium roofing for his house. These sorts of things are required desperately. Aluminium roofing on houses alone might cut down the number of deaths from water carried communicable diseases, especially among children, to half of what the number is now. Perhaps we could prevent half a million deaths a year if we provided aluminium roofing, but no; this is not good enough. Somebody would have to do some work; somebody would have to get of his butt and decide on these individual projects. It is much easier for us simply to throw money to these people and believe, in a pious way, that we have done something of some value.

It is because the Australian Democrats recognise that there has to be a degree of control over the ecological and community aspects of aid programs that we have brought forward a rather unusual amendment which, I understand, is the longest amendment ever to be put before the Senate. It is an amendment to the second reading of the Bill. This amendment lays down some work for the Treasurer and his staff to do. As part of the Treasurer's governing capacity in this area, he must insist that certain proper and reasonable matters-matters of concern-be done. Believe me, if everything in this amendment were done probably hundreds of thousands of people, who will die, would live prosperously. It is a matter of that order of importance.

This amendment is a direct challenge to the Government and the Opposition to recognise that there is a problem and that it is our problem. It is not only our problem because we are spending the money of the Australian people by giving aid but also because we are citizens of the world as well as of Australia. Surely, if we give this aid we must feel that there is a necessity for proper control over that money. The Democrats put forward this amendment as an amendment to the second reading of the Bill. It does not oblige us to do anything; it simply asks the Treasurer to do certain things-that it is the Senate's opinion that certain matters require attention. Every word in the amendment is thoroughly backed and thoroughly documented. Every bit of it can be justified by experience and by environmental and ecological organisations and those who work in the field. On that basis I ask the Government and the Opposition to accept this amendment, by agreement, and not to ignore it. By ignoring it they will be ignoring deficiencies only a few of which I have detailed in my speech and for which I feel we are all responsible. However, that lies in the past. How much worse it would be if we allowed that situation to continue, quite cold-bloodedly, quite cynically, into the future. I move:

At the end of the motion, add: ``, but the Senate is of the opinion that the Treasurer, as Governor for Australia of the International Bank for Reconstruction and Development, and as Governor for Australia of the International Finance Corporation, should

(a) vigorously promote a commitment of these institutions to add or strengthen professionally trained staff to undertake environmental review of projects, or have development management plans to increase substantially the environmentally trained staff engaged in review of the ecological impacts of prospective projects;

(b) vigorously promote changes in these institutions in their preparation of projects and country programs that will encourage staff and borrower countries to-

(i) actively and regularly involve environmental and health ministers, or comparable representatives, in the preparation of environmentally sensitive projects and in bank-supported country program planning and strategy sessions, and

(ii) actively and regularly use the resources of available non-governmental conservation and indigenous peoples' organisations, consistent with international procurement policies, in the preparation of environmentally sensitive projects and in bank-supported country program planning and strategy sessions;

(c) vigorously promote a commitment of these institutions to increase the proportion of their lending programs supporting environmentally beneficial projects and project components, protection of indigenous peoples, and appropriate light capital technology projects (examples of such projects include small scale mixed farming and multiple cropping, agroforestry, programs to promote kitchen gardens, watershed management and rehabilitation, high yield woodlots, integrated pest management systems, dune stabilization programs, programs to improve energy efficiency, energy efficient technologies such as small scale hydro projects, rural solar energy systems, and rural and mobile telecommunications systems, and improved efficiency and management of irrigation systems);

(d) vigorously promote the establishment within the International Bank for Reconstruction and Development of a component which would provide training in environmental and natural resource planning and program development;

(e) ensure that there is a thorough evaluation within the Australian Government of the potential environmental problems, and the adequacy of measures to address these problems, associated with all proposed loans for projects involving large impoundments of rivers in tropical countries, penetration roads into relatively undeveloped areas, and agricultural and rural development programs (the potential environmental problems to be addressed in such evaluations to include those relating to deterioration of water quality, siltation, spread of water borne diseases, forced resettlement, deforestation, threats to the land, health and culture of indigenous peoples, topsoil management, water logging and salinisation in irrigation projects, and pesticide misuse and resistance);

(f) call for, by 30 June 1987, separate and special meetings of each of the Boards of Governors of these institutions to discuss their environmental performance, and ways in which this performance can be improved, including alternative projects considered and alternative configurations of projects with specific attention to environmental problems associated with the following categories of projects: large impoundments of rivers in tropical countries, penetration roads into relatively undeveloped areas, and agriculture and rural development projects;

(g) in preparation for the meetings referred to in paragraph (f), request the preparation of reviews by the institutions, from available information, of their environmental performance over the past decade with respect to the categories of projects referred to in paragraph (f), and request that these reviews specifically discuss the environmental problems explicitly referred to in paragraph (e); and

(h) prepare and submit to the Parliament by 30 June 1988 a report documenting the progress the institutions have made in implementing the environmental reform measures described in paragraphs (a) to (d)''.