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Monday, 14 March 2005
Page: 117


Senator STEPHENS (9:37 PM) —I speak in this debate in support of the Appropriation (Tsunami Financial Assistance and Australia-Indonesia Partnership) Bill 2004-2005 and the associated Appropriation (Tsunami Financial Assistance) Bill 2004-2005, both of which represent an admirable attempt by the Australian government to respond to what is a very clear need for external assistance. In the province of Aceh especially, the tsunami has had an extraordinary financial impact. A preliminary damage and loss assessment prepared by international agencies including the World Bank has estimated that the total loss and damage as a result of the tsunami in Indonesia was $5.61 billion. In Aceh alone, the estimated value of the damage and loss amounts to a staggering 97 per cent of GDP.

The Australian government has pledged to a new body, the Australia-Indonesia Partnership for Reconstruction and Development, the single largest aid project ever undertaken by Australia. Parliament has legislated for a five-year aid partnership involving about $US400 million in soft loans and another $US400 million in project funding. According to the Treasurer, that funding will be added to the existing aid program. The result is that Indonesia will receive a total of $US1.4 billion in aid over five years from this country.

This is a huge contribution. With such a commitment from the Australian people comes the responsibility to ensure that a carefully coordinated plan is put in place so that our aid partnership with the Indonesian government proceeds justly, openly and in keeping with the generosity of spirit shown by the millions of Australians. It is particularly our responsibility, as we have insisted that the Australian aid money be kept strictly separate from the Indonesian budget. We hear a lot about Indonesia’s reputation for corruption, but the fact that these funds are to be managed by a joint committee gives the Australian government unprecedented control over the decisions taken by the Indonesian government and therefore it is imperative that our handling of that responsibility is above reproach.

There are important questions to be asked about how this aid will be used to rebuild the province of Aceh. An article in today’s Financial Review indicates that plans to rebuild Aceh’s main hospital and establish a modern disaster response system across Indonesia are among the first projects under the tsunami aid package. These projects are estimated to be worth tens of millions of dollars each and are expected to be approved this week at ministerial discussions with Indonesia on how the historic package will be administered. It has been clear from the earliest generous outpouring of contributions that administering aid is far from a straightforward process. While there is no doubt whatever that these two big projects are very important, there is a danger that, in planning for big-budget infrastructure development, the needs of most local and rural communities can be overlooked.

There is a primary need for housing and shelter. According to the Red Cross, many of the 30,000 people evacuated from Banda Aceh and Medan during the first days after the tsunami want to return to their communities but are still confined to temporary settlements or, even worse, makeshift shelters where poor standards of sanitation put their health at risk. The sooner the people of Aceh can return to their home communities, the sooner normality can be restored. It would appear that the matter of evacuees has not yet been adequately addressed, and investigating this should be treated as a matter of urgency.

There is also an urgent need to generate enterprise, commerce and income creation. Seventy-eight per cent of the estimated damage and loss was to private assets and income. This included not only people’s houses and personal possessions, of course, but also income-generating possessions such as fishing boats and nets, agricultural crops, shopfronts and taxis. It must therefore be a priority to provide assistance for long-term projects aimed at generating enterprise and income creation as these will be critical to rebuilding Aceh and the health and wellbeing of the Acehnese people. We know from UNICEF that about 35,000 children have been orphaned as a result of the tsunami. There is an immediate need to identify these vulnerable children and design special programs for their rehabilitation.

It is vital that some of the aid is directed towards rebuilding the rural economy. The agricultural and fishing sectors, which were the backbone of the economies of the local communities most affected, were the hardest hit by the disaster. The loss in these districts made up one-third of the province’s total losses. Throughout Indonesia, civil society organisations were among the first to offer relief in the disaster areas after the earthquake and tsunami. Some of our aid money should go to supporting the participation of civil society and local people, who are working effectively to reach remote areas despite the lack of resources. Local communities, often working in a voluntary capacity, can ensure that aid is delivered on the ground where it is most needed.

Procedures must be put in place to ensure that funding commitments actually help the affected communities to revive their livelihoods and their environment. For example, the planning processes to redesign and rebuild coastal villages must not be allowed to be hijacked by local elite to the detriment of the poor and marginalised. A genuine partnership will implement a participatory planning process which will involve local community groups and NGOs and assure public control over all the processes. We will need to keep a close eye on the operations of this partnership, and transparency there is of the utmost importance.

Another aspect of the allocation of aid which cannot be ignored is the environmental one. Inappropriate development in areas where coral reefs and mangrove forests were destroyed could lead to ecological disaster, so it is essential that reconstruction plans and activities do not create negative environmental impacts. All large reconstruction activities should prepare an environmental impact statement covering both on-site impacts and the impact of materials to be used. The demand for materials for rebuilding will put enormous added pressure on, for example, Indonesia’s forests and limestone areas, so, wherever possible, ecological design should consider the use of local materials that cause minimal environmental impact. Building designs should be socially appropriate—based on designs created with and approved by local communities—and ecologically appropriate, with low energy use, responsible materials use and easy to cool with ventilation.

We read in the newspapers the concern of diplomatic and donor organisations about the fierce competition generated by prestigious projects in Aceh, such as building schools and roads. There is a shortage of staff with the necessary skills needed for the rebuilding, and aid groups are fiercely competing to recruit the available staff, with the result that the salaries of skilled workers are being unnaturally inflated. Many of these skilled workers are employed by the Indonesian government and, if aid groups poach them from there to undertake new aid funded projects, the drain in expertise simply shifts the skills shortage from one patch to another. It would be a tragedy to see a lot of the donated funds wasted through competition among the donors for the best projects or the most skilled workers.

We need to take a long-term approach and, adhering to the principles of capacity building, ensure that a considerable portion of the aid is provided to build the skills which will be of ongoing benefit to the Achenese people, rather than tacitly condoning quick fix solutions adopted to solve the most financially attractive projects. Long-term sustained cooperation and capacity building means, in part, that there needs to be a planned development of local skills so that local companies can increasingly assume responsibility for the development of infrastructure projects.

There is provision for some of the funding to be spent on scholarships for Indonesians to study public administration and governance in Australia. While this is reassuring, we also need to ward against the danger of having an overly strong Australian hand on the re-establishment of the economic infrastructure of Indonesia. In this context I would like to quote from Andrew Burrell’s article on the tsunami aid plan in today’s Financial Review. It said:

Australian companies will be awarded the bulk of the contracts under the five-year aid package of grants and concessional loans, although officials said Indonesian companies might also be included in the tendering process.

Companies with operations in Jakarta, including BlueScope Steel and Leighton Holdings subsidiary Thiess, have already begun reconstruction work in Aceh and are well placed to win lucrative contracts under Australia’s $1 billion aid package.

Partnership means precisely that, and we need to guard against the possibility of Australian aid being targeted to help Australia as much as our Indonesian partners. It is certainly the case that, in the past, aid has been used to assist Australian business—for example, in 1997 the IMF bailout of Indonesia was subject to the further opening up of markets, selling off state services and abolishing price subsidies. This resulted in more opportunities for Australian businesses, but how much did it actually improve the situation of the poor people in Indonesia?

We also need to be conscious of the problems with what is often called ‘tied aid’. This is a system by which recipient countries must purchase goods and services from donor nation companies. We know that Australian business has benefited from this set-up in the past—in fact, approximately 50 per cent of all Australian government contracts, worth $1.5 billion in 2002-03, go to only 10 companies. This seems to me to be putting the welfare of large corporations above the welfare of poor Indonesians. I know that this is not what ordinary Australians wanted when they dug deep to provide financial assistance; they wanted proper procedures put in place regarding procurement, auditing, reporting and pay standards.

Debate interrupted.