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African Development Bank Bill 2013

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2010-2011-2012-2013

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

AFRICAN DEVELOPMENT BANK BILL 2013

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by the authority of the

Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

 



Table of contents

Glossary.............................................................................................................. 1

General outline and financial impact............................................................ 3

Chapter 1               Enabling of payments to the African Development Bank Group   5

Chapter 2               Statement of Compatibility with Human Rights.............. 9

Index................................................................................................................. 11

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The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

the Group

the African Development Bank Group, which includes the African Development Bank and African Development Fund

the Bank

the African Development Bank

the Fund

the African Development Fund

the Bank’s Agreement

the Agreement Establishing the African Development Bank

the Fund’s Agreement

the Agreement Establishing the African Development Fund

ICESCR

International Covenant on Economic, Social and Cultural Rights



AFRICAN DEVELOPMENT BANK BILL 2013

This Bill enables Australia to become a member of the African Development Bank Group (the Group) by authorising the Government to make the payments required to subscribe to membership shares in the African Development Bank (the Bank) and meet membership and ongoing subscriptions to the African Development Fund (the Fund).

Date of effect : the day after this Bill receives Royal Assent.

Proposal announced : Australia’s intention to pursue membership of the Group was announced on 17 July 2012 in a joint press release by the Deputy Prime Minister and Treasurer, and the Minister for Foreign Affairs. The Government has also included relevant budget measures as part of the 2012-13 and 2013-14 Budgets.

Financial impact : membership payments to the Group, at current forecast exchange rates, will total around $249 million, payable from 2014-15 to 2016-17. Of this total, around $88 million will be for paid-up membership shares to the Bank and around $161 million will be for the initial membership subscription to the Fund. Further, there will be additional regular payments to the Fund from 2014, the size of which will depend on future negotiations between Australia, and the Fund and its donors. There will also be a contingent liability of approximately $1.4 billion (at current forecast exchange rates) in the event that the Bank would otherwise default on its debts. At the time of writing, this risk was assessed as low.

Human rights implications : This Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights — Chapter 2.

Compliance cost impact : Nil.

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Outline

1.1                   This Bill enables Australia to become a member of the African Development Bank Group (the Group) by authorising the Government to make the payments required to subscribe to membership shares in the African Development Bank (the Bank) and meet membership and ongoing subscriptions to the African Development Fund (the Fund).

Summary of new law

1.2                   There are eight clauses in this law. Clause 1 specifies the Act’s short title. Clause 2 specifies when the Act commences. Clause 3 defines key terms used in the remaining clauses. Clause 4 authorises the Minister to purchase a fixed number of membership-related shares in the Bank, up to a stated price per share. Clause 5 authorises the Minister to make payments to the Fund. Clause 6 authorises the Minister to make payments under clauses 4 and 5 in the form of securities. Clause 7 makes clear that nothing in this Act can be interpreted as limiting any of the Commonwealth’s existing executive powers. Clause 8 enables the Minister to make rules to give effect to this Act.

Context of amendments

1.3                   The payments authorised by this Act are required under the Agreement Establishing the African Development Bank (the Bank’s Agreement) and the Agreement Establishing the African Development Fund (the Fund’s Agreement), both of which Australia will have to become a party to in order to become a Group member.

1.4                   Once Australia becomes a party to these agreements, it will be a member of these bodies and therefore a member of the Group — there are no further steps.

1.5                   The Bank is a multilateral development bank whose aim is to promote sustainable economic growth and reduce poverty in Africa. It is comprised of 78 country shareholders (54 regional members and 24 non-regional members). The Bank makes loans to support development activities in middle and lower income African member countries. The Bank’s resources are mainly made up of share subscriptions by member countries, income generated by loan repayments and funds raised through borrowings on international financial markets.

1.6                   The Fund contributes to the promotion of economic and social development in 40 of the least developed African member countries by providing highly concessional loans and grants for projects and programs. The Fund also provides technical assistance for studies and capacity building activities. The Fund’s resources are mainly made up of subscriptions by non-African Bank members (usually on a three-year basis) and contributions by the Bank.

1.7                   Australia’s intention to pursue membership of the Group was announced on 17 July 2012 in a joint press release by the Deputy Prime Minister and Treasurer, and the Minister for Foreign Affairs. The Government has also included relevant budget measures as part of the 2012-13 and 2013-14 Budgets. Membership of the Group will allow Australia to pursue its development and broader objectives in Africa.

1.8                   Payment of the required membership subscriptions is a condition of membership, so this legislation must be in place before Australia can become a member of the Group.

1.9                   Beyond passage of this legislation and payment of the membership subscriptions to the Fund and the Bank, other steps that at the time of writing will also need completion for Australia to become a member are: issuing the Bank with a declaration of Australia’s intention to join; approval by all the Bank’s members of Australian membership; and signature and deposit of the signed Agreements with the Secretary-General of the United Nations.

Detailed explanation of new law

1.10               The Minister may: make an arrangement for Australia to become a Bank member, involving subscribing to, and paying for, 5,912 paid-up shares and 92,616 callable shares of the authorised capital stock of the Bank, at a price not more than 10,000 special drawing rights per share; and pay for these shares from the Consolidated Revenue Fund. The Act thus establishes legislative authority to spend that money on membership of the Bank for the purchase of 98,528 shares. Payment for the callable shares would only occur if the Bank could not otherwise meet its financial obligations and so explicitly requested payment for some or all of these shares from all Bank members. The word ‘arrangement’, in this context, is intended to cover both unilateral action by the Minister as well as the making of an agreement (whether the action or agreement is binding in law or not). [Part 2 — African Development Bank, Clause 4]

1.11               The Minister may subscribe to, and pay for, only the specified number of shares. If, in the future, Australia wanted to subscribe to more shares, then the Act would be amended to authorise this. [Part 2 — African Development Bank, Clause 4]

1.12               The Minister may make an arrangement for Australia to become a member of the Fund, including by making an initial subscription to the Fund and making payments in connection with this and any subsequent subscription to the Fund. Payments for subscriptions to the Fund will come from money appropriated under other legislation, such as an annual appropriation. The intended meaning of the word ‘arrangement’ is the same as for clause 4. [Part 3 — African Development Fund, Clause 5]

1.13               The Minister may issue securities for making payments to the Bank and the Fund, given that the Bank Agreement and the Fund Agreement allow this. [Part 4 — Issue of securities, Clause 6]

1.14               This Act does not, by implication, limit the Commonwealth’s existing executive power. [Part 5 — Miscellaneous, Clause 7]

1.15               The Minister may make rules prescribing matters required or permitted by this Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to this Act. It is not envisaged that any such rules will be required to give effect to the Act. At the time of writing, however, it was Office of Parliamentary Counsel policy to ensure that all new legislation contains a clause to cover the scenario where the Government wants to make rules to further define certain parts of a new Act, including any amendments subsequently made to the Act. [Part 5 — Miscellaneous, Clause 8]

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Chapter 2          

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

African Development Bank Bill 2013

2.1                   This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Legislative Instrument

2.2                   This Bill enables Australia to become a member of the African Development Bank Group (the Group) by authorising the Government to make the payments required to subscribe to membership shares in the African Development Bank (the Bank) and meet membership and ongoing subscriptions to the African Development Fund (the Fund).

2.3                   These payments are required under the Agreement Establishing the African Development Bank (the Bank’s Agreement) and the Agreement Establishing the African Development Fund (the Fund’s Agreement), both of which Australia will have to become a party to in order to become a Group member.

2.4                   Once Australia becomes a party to these agreements, it is a member of these bodies and therefore a member of the Group — there are no further steps.

2.5                   Australia's intention to pursue membership of the Group was announced on 17 July 2012 in a joint press release by the Deputy Prime Minister and Treasurer, and the Minister for Foreign Affairs. The Government has also included relevant budget measures as part of the 2012-13 and 2013-14 Budgets. Membership of the Group will allow Australia to pursue its development and broader objectives in Africa.

2.6                   Payment of the required membership subscriptions is a condition of membership, so this legislation must be in place before Australia can become a member of the Group.

2.7                   Beyond passage of this legislation and payment of the membership subscriptions to the Fund and the Bank, other steps that at the time of writing will also need completion for Australia to become a member are: issuing the Bank with a declaration of Australia’s intention to join; approval by all the Bank’s members of Australian membership; and signature and deposit of the signed Agreements with the Secretary-General of the United Nations.

Human rights implications

2.8                   This Bill does not raise any human rights issue. This Bill does not engage any of the rights or freedoms in the seven core international human rights treaties as they apply to Australia.

2.9                   Membership of the Bank and the Fund, however, is consistent with Article 2(1) of the International Covenant on Economic, Social and Cultural Rights (ICESCR). This Article requires that United Nations Member States take steps, including through international assistance and co-operation, to assist in the progressive realisation of the economic, social and cultural rights recognised by ICESCR.

Conclusion

2.10               This Bill is compatible with human rights as it does not raise any human rights issues.

Deputy Prime Minister and Treasurer, the Hon Wayne Swan

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Bill: Enabling of payments to the African Development Bank Group

Bill reference

Paragraph number

Part 2, clause 4

1.10, 1.11

Part 3, clause 5

1.12

Part 4, clause 6

1.13

Part 5, clause 7

1.14

Part 5, clause 8

1.15