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Thursday, 29 October 2009
Page: 7608

Senator BRANDIS (12:22 PM) —The coalition supports the Asian Development Bank (Additional Subscription) Bill 2009. The bill proposes to allow the government to increase the number of shares Australia holds in the bank. The Asian Development Bank, ADB, is raising capital and has offered its members the opportunity to increase their shareholding. The reason for this is the global economic crisis, which has affected the viability of the international financial institutions, including the ADB. On 2 April, the G20 leaders meeting agreed to a 200 per cent general capital increase for the bank as part of its $850 billion commitment to support growth in developing countries. On 29 April 2009, the ADB board of governors resolved to raise capital by allowing its members to increase their shareholding. The board’s aim is to triple ADB’s capital, which will be achieved if all the members take up all of the shares on offer. Members can buy additional shares in proportion to their current subscription. Australia currently owns 5.7 per cent of the total number of issued shares. As such, we were entitled to buy 409,480 additional shares, 16,379 paid-in shares and 393,101 callable shares. In layman’s terms, paid-in shares are normal shares—the stake in the bank; callable shares serve as security for ADB’s borrowing on world capital markets. The bank has never drawn down on its callable capital and it is not likely to do so.

In the 2009-10 budget, the government announced it would purchase US$197.6 million, the equivalent of A$241 million, of additional shares in the bank over 10 years and draw on US$5.6 billion, the equivalent of A$6.8 billion, of callable shares. The additional shares are a capital measure in the 2009-10 budget and do not impact on the underlying cash or fiscal balance. The additional callable shares appeared in the statement of risks as a contingent liability.

This bill will continue Australia’s work with the Asian Development Bank to develop our region. Established in 1966, the ADB is an international development institution which works to foster economic growth and cooperation in the Asia-Pacific region. It works with its members to develop them both on an individual level and as a group of interconnected nations. Australia was one of the original 31 members of the bank, along with the United States, Japan, New Zealand, China, Canada, Germany and the United Kingdom. There are now 67 members, both inside and outside the region, including Brunei Darussalam, the Cook Islands, Portugal and Luxembourg.

The ADB works with individual countries, the private sector and non-government organisations and uses its triple-A credit rating to finance projects in agriculture, education, health, law, governance, transport and communications. The ADB funds training programs in public policy, water management, transborder animal disease control, customs and quarantine. ADB consultants provide technical advice on energy projects, road construction and air pollution. ADB loans are made available for infrastructure, and grants allow education and immunisation to take place.

I think the Senate would be interested in hearing about some of these projects. One example of a worthwhile project is a public policy training program in Cambodia, Lao People’s Democratic Republic and Vietnam. These three Asian countries have moved from planned to market oriented economies in the past two decades. The ADB supports their transition, with US$17.8 million for training programs for senior civil service officials. Another example is HIV prevention. As we know, the countries in South-East Asia are improving their transport infrastructure. While this is good news for trade, it brings with it social and health issues, such as the spread of HIV. The ADB has provided US$6 million to tackle this problem. A third example is a health project to prevent and control avian influenza. We all remember the pandemics of the last few years, including bird flu. The ADB is providing US$25 million to fight the spread of H5N1 virus among birds and to improve the region’s preparedness to tackle human influenza outbreaks.

There are a number of reasons why the coalition supports this bill. Firstly, Australia plays an important role in providing both funding and expertise to the bank’s projects. The majority of the bank’s contracts are awarded through an international tender system, which is open to companies and individuals from any member country. In 2008, Australia’s contracts for goods and works were worth $3.57 million and $32.64 million in addition for consulting services. A number of Australian companies have worked with the ADB in recent years, including HSBC Bank Australia, Flinders University, Sinclair Knight Merz and the Australian ITA Consortium. Australia has also recently co-financed projects in the areas of road assessment management in Cambodia, HIV-AIDS prevention in Papua New Guinea, and hydroelectricity in Lao People’s Democratic Republic. As of 31 December 2008, 49 Australian professionals were working at the ADB.

When the coalition were in government, we made significant contribution to Australia’s place in the Asia-Pacific region. The most noteworthy economic contribution of the Howard government was our action during the Asian financial crisis of 1997. We were one of the first countries to offer assistance and Australia became an important regional player as a result. We provided $3 billion in currency swaps and loans to South Korea, Thailand and Indonesia through the ADB. By doing so, we were able to engage these countries in the economic reform that has helped them develop.

The Howard government acknowledged that the Asia-Pacific region is integral to Australia’s future. We recognised that its development directly affects us in a number of ways, including in the vital areas of trade and security. The Howard government successfully managed regional partnerships during the move to independence by Timor-Leste in 1999. We maintained and improved our relationship with Indonesia. We successfully maintained our relationship with Japan, our most important trading partner, while building a relationship with emerging China. We successfully identified the importance of India as an emerging economy and the Howard government helped make India a stronger trading partner.

Seven of Australia’s top 10 export markets are now in the Asia-Pacific region: Japan, China, the Republic of Korea, India, Singapore, Taiwan and Thailand. The export revenue for goods and services to these countries in 2007-08 was $118.7 billion from Australia’s total export revenue that year of $232 billion. This gives you an idea of the significance of the relationship between our economies. Added to that, of course, is the trade activity with our other regional neighbours, which widens the mutual benefit.

In terms of security, development in the region will reduce Australia’s risk of being a target for terrorism, illegal drugs and people smuggling. While these are criminal acts, they have strong links to poverty, weak border protection and corruption—three problems that have plagued the region. The Howard government recognised that it is in everyone’s interest to support development to combat these problems. The coalition believes this still, which is one of the reasons why we are supporting this bill.