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Thursday, 18 September 2003
Page: 20565

Mr McMULLAN (11:09 AM) —I congratulate the members of the Joint Standing Committee on Foreign Affairs, Defence and Trade on the job that they have done in raising a number of very important questions for Australia. A number of the issues that have been raised by the members are issues with which I, as a former trade minister, was familiar and to which I think Australia should be paying more attention. I welcome the fact that they have done the work and that the Main Committee has provided the opportunity for the report to be debated.

But what I want to do today is not go over the ground that the committee has covered, because the committee members did the work and came up with the report and it is their comments which should focus on that comprehensive approach; I want to refer to one particular issue which is alluded to in the report and which flows from the report. I want to suggest that Australia has to at least consider the question of going beyond what the committee has raised and look at a fundamental issue concerning our trade and investment relationship with the countries of central Europe. I ask: why is Australia still a member of the European Bank for Reconstruction and Development, the EBRD?

The committee, in its report, in acknowledging that there is a serious market failure between Australia and central Europe, looks at the fact that Australia has had very little success in accessing multilateral funding into this area and that in particular there do not appear to be any cases where the EBRD facility has been taken up; that recent investments in the region have been supported or facilitated by Austrade, not the EBRD; and that Australia has not been able to harness the contract and investment opportunities in the EBRD because other countries use a tied aid approach. Australia is not an aid donor to central Europe—and nor should we be; we have other and more important priorities—and so we tend to miss out. EFIC has tried to collaborate and work with the EBRD to facilitate cofinancing arrangements, but there is no evidence that this is leading to extra business for Australia.

I want to confess directly, so that no-one will think I am being hypocritical, that in 1991 I supported Australia joining the EBRD. I am probably on the public record, but, if not, it was certainly my private view and as Parliamentary Secretary to the Treasurer at that time it was my advocacy. I said: `This is a punt we should take. This is not our main area of interest, but it is going to be a growing and emerging area. Membership of the European Bank for Reconstruction and Development may give us an extra window of opportunity into this new and growing market.' The committee has done a very worthwhile job in highlighting the potential for this market, now going beyond what we could envisage in 1991 as we approach the question of accession to the European Union. But we have been in the EBRD since 1991 and I look at it from the perspective of 2003 and say, `What is Australia gaining from membership of the EBRD?' All I can see that has flowed to Australia from our investment is one job: a fat, $200,000 a year tax-free job for Peter Reith. I can see no other job that has been created in Australia and no other opportunities and benefits that have flowed—or certainly none that are commensurate with the opportunity cost of applying elsewhere the money we have put into the EBRD.

The task of doing this analysis has been made more complicated by the fact that the benefits from our membership of the EBRD are not transparent. The EBRD Act—unlike the act which governs our membership of the IMF and the World Bank, for example—does not require the Treasurer to report on Australia's involvement in the EBRD. We do see those regular reports on our participation in the other major international financial institutions. It certainly seems on the face of it that Australian business gets more benefit from EFIC, Austrade and our active participation in the Asian Development Bank, where we do have direct connections and advantages, compared to the EBRD, where we do not.

Australia does not make annual recurrent contributions to the EBRD, so there would be no immediate budgetary benefit on an ongoing, recurrent basis by withdrawing. We do not even pay directly the monstrous salary that Peter Reith gets paid in addition to retaining some part of his superannuation from this place. But Australia, on the last figures I saw, has paid in capital of 52,500,000 euro, which on the exchange rate of a couple of weeks ago is just under $A90 million; it is $A89 million-plus. That is a lot of capital. Say we put that capital into Austrade. As one example, anybody who sat down for five minutes with an understanding of Australia's public policy, particularly our public policy that relates to trade, could devise several options—through Austrade, EFIC, the industry department or other programs—whereby we could probably provide much more effective assistance to Australian industry. That could be assistance in this market, in which the committee has properly said opportunities will emerge, or in other higher priority markets of our traditional focus. I do not want to traverse that question today as that should flow after we answer the primary question: why do we still have $90 million of taxpayers' money tied up in the EBRD? What is the benefit to Australia? Many Australians may say it is a significant benefit as it keeps Peter Reith out of the country, but that is not worth $90 million of taxpayers' money. What is the benefit that we are getting?

I am an internationalist. I think that Australia should be a participant in the global flow of commerce and trade and that we should be contributing to the enhancement of liberal democracies throughout the world, so I was positive about our EBRD participation. But if you were to now ask where we would put $90 million of capital to make the greatest contribution as an internationalist to the enhancement and expansion of open-market economies and liberal democracies in the world, you would not start with central European countries—not for the reason that they have failed but for the reason that they have succeeded; they have done very well. Australia have a particular responsibility to look at what is going on in Asia. We already have active participation in the Asian Development Bank, and so we should, but it may well be that Asia should continue to be our focus. We have a lot of activity in the Pacific but I doubt that its small countries are going to soak up $90 million of our capital.

It may be that we would look to Africa. Certainly if we were doing it from an international welfare point of view, we would do better by providing our resources there. But if we are looking at it as a means of assisting Australian companies to generate jobs in Australia by winning contracts around the world and to make a worthwhile contribution to the economic growth of emerging economies, whether they be those in central Europe, on which this committee has reported so well, or elsewhere in the world, you would say, `Let us look at the best application of this $90 million.'

Under the previous Labor government a revolving fund was run by Austrade to assist companies to participate in enhanced manufacturing and other opportunities around the world. As to why it was a revolving fund, if they succeeded they had to pay some part of the proceeds of that success back into the fund to continue the process of assisting other companies to endeavour to succeed around the world. When this government were elected, they abolished that program. That is their right; that is a priority they set as they were spending taxpayers' money. But I wonder whether that program or a program like it would not assist more companies to win more business and create more jobs in Australia—and do more good around the world for global economic growth and for equity and international issues—than $90 million tied up in the EBRD.

It is a fundamental question. It is too early to answer the question but it is the right question to ask and it flows directly from the committee's report. It is central to the rational distribution of taxpayers' money to achieve our public policy purpose. That is what those of us here in the parliament, particularly those of us not in executive government, are sent to do—that is, to say, `We are the custodians of the taxpayers' money.' We look at the public policy purposes that are being pursued and we say, `Is this the best way to achieve that outcome?'

What is the public policy purpose of our participation in the EBRD? It probably would come under two headings. One is that we are an internationally responsible citizen. In 1991 there was potential for resolving a significant crisis in central and eastern Europe. The EBRD was a mechanism for that and Australia had an obligation to contribute. That is part of the argument. Of itself, it is arguably not sufficient but it is an important argument. The parallel argument is that this was potentially a vehicle by which Australian companies could participate in the emerging, open economies of central and eastern Europe. Those two arguments came together with sufficient power to say: this is a contribution Australia can and should make.

I reiterate my opening remarks so that no-one can pretend that I am trying to rewrite history: I supported our participation in 1991. I am not necessarily saying that that was a mistake. On the evidence then, it was a proper thing to do. But we have to continue to focus on whether our money—the taxpayers' money—is being applied in the best possible way to achieve those public policy purposes. On the primary argument of being responsible international citizens, I doubt that anybody starting in 2003 would think that that is the best place for Australia to invest $90 million.

But this report seems to highlight quite clearly that we should have serious concerns about the fact that, notwithstanding that we contribute $90 million and that we provide an executive director who gets paid a fat salary, we are not probably not getting value for money for the taxpayers in terms of opportunities for Australian business and we could achieve that purpose in a much better way. The Minister for Finance and Administration, the Treasurer—who is the person most directly responsible—the Minister for Trade and the Minister for Industry, Tourism and Resources should, in considering this very worthwhile report, go beyond what the report has to say and go to these core questions: apart from providing a cushy job for Peter Reith, what is Australia getting from the EBRD, and is a cushy job for Peter Reith worth $90 million?

Debate (on motion by Mrs Hull) adjourned.