Mr DOWNER (Minister for Foreign Affairs)(4.06 p.m.) —by leave—I am pleased to table the government's response to the Simons committee's review of Australia's overseas aid program. In doing this I am outlining future directions for Australia's overseas aid and fulfilling my requirement to make an annual report to parliament on the aid program.

Mass poverty is the single most important economic and social issue on our planet today. Some 1.3 billion people, nearly a quarter of the world's population, continue to live in extreme poverty, trying to survive on less than $1 a day. Over half of these poor are in the Asia-Pacific. Even in countries which have been developing rapidly, the vast majority of people are incomparably worse off than ourselves. The average income of people living in Indonesia is a mere six per cent of that in Australia, people in China earn only three per cent of what we do. The enduring challenge for most of these countries is to provide their people with such basics as food, clean water and education for their children. Meeting this challenge has proven to be no easy task.

If there were any doubts about the fragility of the development process and the need for Australia to provide effective assistance, these would have been dispelled over the past two months. Recent events such as the severe drought in Papua New Guinea, forest fires in Indonesia and the South-East Asian currency realignments bring home the diverse and urgent problems faced by our nearest neighbours.

On my most recent visit to Papua New Guinea, earlier this month, I saw at first hand the devastating effects of the worst drought in perhaps 100 years. Expert assessments—funded by Australia's aid program—show that as many as half a million people, in a population of only four million, are affected. With my colleagues, the Minister for Defence, Mr McLachlan, and my parliamentary secretary, Kathy Sullivan, I flew by RAAF Caribou to Pumani in Milne Bay Province. We wanted to see for ourselves the work funded by our aid program. Stowed in the aircraft were 150 sacks of rice. When we set down, the plight of the people of Papua New Guinea was clear.

These people had not seen rain in many months. There was no fruit on the trees. Vines were brown and withered. The soil had turned to dust. Water supplies were a long distance from homes, and were polluted. Children had the distended bellies we know is a sign of malnutrition.

Australia has reacted rapidly and generously to the prospect of this human suffering on our doorstep. Ten Australian Defence Force aircraft are now ferrying essential foods into the most inaccessible areas of Papua New Guinea to feed the worst affected people. Several Australian NGOs are also assisting with drought relief.

Both the Prime Minister (Mr Howard) and I have reassured the government and the people of Papua New Guinea that Australia will stand by them in their hour of need. If the rains fail, and the next growing season is lost, that need will be immense.

The Australian aid program has played a vital role in nearly every major humanitarian emergency in the world over the last 30 years. But by far the greatest focus of our aid efforts has been on the basic building blocks of sustainable development. Since the establishment of the Colombo Plan in the early 1950s, our aid program has touched the lives of millions of people in developing countries, many of whom are our immediate neighbours. This is a record of which Australia can be proud. It is a record I am committed to continuing.

For some time I have been concerned that the aid program has been in danger of losing focus on its core developmental role. For this reason, an independent review of Australia's aid program was foreshadowed in our pre-election platform, known as A Confident Australia—and in June last year I instituted such a review. The review committee, headed by Paul Simons and including Gaye Hart and Cliff Walsh, all of whom are in the House today, produced an excellent report. This report, and the public comments on its recommendations, have played a key role in determining the future directions of Australia's aid program.

Objective of the Aid Program

The Simons committee confirmed my concern that the aid program had become burdened by a range of competing interests. A clear development objective for the aid program is needed. The aid program cannot and should not be a vehicle for other purposes, such as short-term commercial goals.

The Government has determined that the objective of the Australian overseas aid program will be `to advance Australia's national interest by assisting developing countries to reduce poverty and achieve sustainable development'. This objective is consistent with the course set in the government's white paper on foreign and trade policy.

I know that some people in the community think that there is a choice between dealing with problems at home or providing assistance overseas. This is a misunderstanding and it is self-defeating. The promotion of sustainable development overseas and the pursuit of Australia's long-term national interest are inextricably linked.

Those who say Australia should not have an overseas aid program are nothing more than political opportunists whose world view extends no further than their front gate. Let us remember, it was the member for Oxley (Ms Hanson) who called for Australia to disband its aid program and then almost immediately after called for increased support for the people of North Korea. She cannot have it both ways. The fact is the provision of well-targeted aid gives Australia another strong means of playing a leading role in our developing region.

Economic growth and rising incomes in developing countries foster stability and expand trade and investment opportunities for Australia. The aid program generates considerable goodwill in the region and provides an important foundation for broader bilateral relations.

The aid program is an important instrument for addressing the non-military threats to Australian security. The effects of poverty extend beyond national boundaries. Pandemics, illegal migration, refugee flows, global environment problems, narcotics and transnational crime are often directly related to poverty.

Our aid program, by promoting human rights and addressing the needs of the world's most disadvantaged, is a clear statement of Australian values. I have great faith in the generosity of Australians and our commitment to giving others much worse off than ourselves a fair go. We are a country founded on equality and opportunity; we are strengthened by our cultural diversity. These principles extend beyond our shores and will be clearly reflected in our aid program.

Principles of Our Aid Program

In addition to the objective, six key principles will underpin Australia's aid program. First, our aid will be focused on partnerships. Our program will be determined and implemented in partnership with developing countries. This will guarantee that it remains focused on meeting their priority needs. Second, we will be responsive to urgent needs and development trends. Our aid program will provide rapid relief to victims of natural disasters and emergencies and take account of changing pressures in developing countries.

Third, our aid will provide practical assistance. It will be realistic in assessing what can and cannot be achieved and will concentrate on practical efforts that can alleviate poverty and promote sustainable development. Fourth, there will be greater targeting. Australia's aid program cannot afford to be all things to all people—greater definition and targeting is essential. Clear priorities have been identified, and our efforts will be assessed against these priorities. Fifth, our aid program will remain identifiably Australian—it is a reflection of Australian values and is a projection of these values abroad. Finally, the program will be outward looking. It will be open to new ideas and approaches. It will seek to draw on the best ideas in Australia and overseas.

Priorities for Australia's Aid

Each one of these principles is designed to bring about a more relevant, higher quality aid program. Using the principles and new objective as a guide, I have developed a set of core priorities for Australia's aid program.

Partnerships with Developing Countries

Our partnerships with developing countries form the backbone of Australia's aid program. Detailed country strategies will be prepared for all major programs. These strategies will detail how our aid will alleviate poverty and address sustainable development in each country. Efforts will focus on promoting economic growth, investing in human capital and protecting the most vulnerable groups in society.

Sectoral Priorities

Our aid will concentrate on five key sectors—health, education, infrastructure, rural development and governance—which have been identified as crucial for sustainable development. They are also sectors in which Australia is well placed to assist. Australia's aid program has been operating effectively in four of the five sectors for many years. We will continue to ensure that our assistance is well targeted and effective.

Governance will be a new focus for the aid program. Effective governance means competent management of a country's resources in a manner that is open, transparent, accountable, equitable and responsive to people's needs. We will have a particular focus on ensuring that sound fiscal monetary and trade policies are instituted to create an environment for private sector development.

I have asked AusAID to develop a policy paper on promoting private sector development through our aid program. We will also undertake practical activities to promote civil and political rights in developing countries. Economies will not achieve their potential unless government is transparent, legal systems are fair and information flows freely.

Cross-cutting Issues

Australia's aid program will place a strong emphasis on ensuring that men and women have equal access to resources and opportunities. Women's needs and perspectives will be considered in the planning and delivery of all Australian aid activities. The aid program will also ensure that the possible impact on the environment is considered in the design and implementation of all projects. We will also play a role in addressing global environment issues such as climate change and biodiversity, which have strong links to the alleviation of poverty.

Geographic Focus

Australia's aid program will continue to concentrate on the Asia-Pacific region. Papua New Guinea, the Pacific and east Asia will all be high priorities for Australian assistance. Australia will also continue to concentrate selectively on development needs in South Asia, Africa and the Middle East. In order for the program to maximise its impact, Australian aid dollars will have a focus on the poorest regions in the countries of the Asia-Pacific, for example in eastern Indonesia and the southern Philippines. Australia will also respond flexibly to humanitarian and emergency relief situations—wherever they arise.

International and Community Partners

While programs delivered directly from Australia to partner countries will remain the focus of Australia's aid program, we will also play a key role in fostering links with Australian community organisations and be involved in multilateral efforts to tackle poverty. Non-government organisations and multilateral institutions play a vital role in development. They complement Australia's bilateral aid efforts by extending the reach and efficiency of the program. They will continue to receive significant support.

However, consistent with a more targeted aid program, the government is taking a more strategic approach to their funding. Future support for multilateral agencies will take account of the extent to which each agency's mandate contributes to the meeting of Australia's aid objective and of the efficiency and effectiveness of the agency. NGOs will be expected to demonstrate tangible community support for their development activities. The government now requires NGOs seeking funding from AusAID to have a recognised development expenditure of at least $30,000 annually. This is part of a rigorous accreditation process to ensure government funds are channelled through NGOs that have substantial community support and are of sufficient size and professionalism to be able to deliver aid programs overseas. The appropriateness of the $30,000 threshold will be kept under review, in consultation with the NGO community.

Grants and Loans

The Australian aid program currently provides bilateral assistance only in the form of grants, regardless of the country, sector and project involved. Grants are not the only way to deliver aid. I believe that, if introduced, the right sort of soft loans would be a useful instrument for aid delivery. Such loans should not be an imitation of Labor's discredited DIFF scheme, which the Simons committee considered flawed as both aid and industry assistance. I notice that even the Labor Party, which made such a fuss at the time of its abolition, has now decided that a DIFF-style scheme should not be part of the aid program. I congratulate the Labor Party on seeing some sense.

Loans should be driven by recipient needs rather than Australian industry wishes. They should be integrated with our bilateral aid efforts, not run as a separate scheme. They should require competitive tendering, not be driven by individual company proposals. The loan projects should also be designed, monitored and evaluated to ensure development quality.

Any decision to introduce a loan scheme would, however, have significant funding implications. While recognising their advantages, soft loans should not squeeze out other high-priority aid activities. Consequently, introducing soft loans into the program will depend on future aid budget outcomes.

Refocusing Aid Management

A permanent advisory committee will be established shortly to advise me on aid and development issues. Such a committee will enable me to hear directly from the broader community about Australia's aid efforts. AusAID is undertaking a major review of its operations and structures. Significant reforms will be introduced shortly, which focus on improving aid quality.

Australian Identity

Australia's aid program must be identifiably Australian. The simplest and most effective method of guaranteeing this is to use Australians in the delivery of the aid program. Approximately one-third of Australia's aid program is currently tied to Australian goods and services. Nevertheless, around three-quarters of the total aid program is in fact spent on Australian goods and services. While we will make some minor adjustments to the current tying arrangements to increase the quality of the aid program, it is essential that it remain identifiably Australian.

Conclusion

The volume of aid spending will always be a difficult issue. Australia provides significant amounts of overseas aid, consistently spending more than the international donor average. Future levels of aid funding, like all aspects of government expenditure, will be subject to budget considerations. We will continue to provide support for the UN's 0.7 per cent ODA-GNP target and we will endeavour to maintain our aid at the highest level, consistent with the needs of partner countries and our own economic circumstances and capacity to assist.

And while there will always be debates over the size of the aid program, it is important that we make the most of the aid dollar. With over $1.4 billion invested annually in Australia's aid efforts, the Australian com munity and our developing country partners have the right to demand excellence in our aid program. I believe that Australians can be proud of our development efforts. The new principles and priorities outlined today will result in a better-targeted and focused aid program and a more productive world around us.

In conclusion, I would like to add a word of thanks to the three members of the Simons committee—Paul Simons, the chairman, and Gaye Hart and Professor Cliff Walsh—for the outstanding work they did. They put a vast amount of time into this exercise. I know they found it invigorating and intellectually fascinating, but there are not all that many Australians who would be prepared to put as much time and effort voluntarily into such an exercise. I speak on behalf not just of myself but of the Australian government and probably on behalf of the whole Australian parliament in thanking them for the excellent job they did. I present the following papers:

Australia's Development Cooperation Program—7th annual report;

Better Aid for a Better Future—Ministerial Statement, 18 November 1997.