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Tuesday, 15 March 2005
Page: 2

Senator NETTLE (12:37 PM) —I have spoken in this chamber already this year about the tragedy of the tsunami disaster and how, for example, Greens MPs were present in Sri Lanka at the time and the work that we have been doing subsequently to support the people affected by the tsunami. I also spoke last week about Australia’s aid program and the sorts of aid that the Australian Greens believe are most appropriate and that aid workers recognise deliver the best outcome.

I want to focus today on the aid contribution of $1 billion. The Greens support the provision of $1 billion to help the Indonesian people recover from the tsunami tragedy. We have some concerns, as I note the speaker before me has also expressed, about how and where the aid package will be spent. I have already spoken on the issues about the sorts of aid that we support—that is, aid that is directed at a community level, which the people of Aceh are involved in delivering and which is delivered in a way which provides the best services to them on the ground using their local expertise so that they can have an ongoing contribution to their own economic independence.

What I want to talk about today is the fact that we are opposed to the provision of around half the support included in this package in the form of loans rather than a straight-out donation. We are concerned about that because the debt crisis that has become a burning global issue in the last few years is getting worse not better, and Indonesia is one of the countries worst hit by this debt crisis. Around the world, total debt continues to rise while total overseas aid is falling. This is a crisis of monumental proportions. The developing world now spends $13 on debt repayments for every $1 it receives in aid. Every dollar that is spent in repaying debt is a dollar that could be spent on addressing the AIDS crisis, sending a child to school, installing water and sewerage systems in rural areas, or job creation. Ending the poverty that entraps the two billion people living on less than $2 a day will only be achieved if we solve this debt crisis.

The debt crisis is also fuelling environmental problems, with governments under even more pressure to increase resource exports, at the expense of forests and rivers, so as to service their crushing debt payments. The total external debt of tsunami affected countries is over $272 billion. The Prime Minister’s reluctant acceptance of a form of debt relief by supporting the Paris Club’s rescheduling of debt is a belated recognition of this crisis, but it only puts off the problem. Indonesia’s massive debt will remain and it will continue to hamstring future generations. The Appropriation (Tsunami Financial Assistance and Australia-Indonesia Partnership) Bill 2004-2005 will make the problem worse by lumbering Indonesia with a further half a billion dollars in debt at a time when it cannot even deal with the debt it already has. A moratorium on repayments and making the loan interest free do not address the fundamental problem, which is that Australia will be adding to Indonesia’s debt crisis.

Much of Indonesia’s debt was accumulated under the corrupt and brutal Suharto regime, which was supported by both Labor and Liberal governments in Australia. This debt funded, amongst other things, military hardware used to suppress independence movements, including in Aceh. In 1997 the Asian economic crisis, exacerbated by the policies of the International Monetary Fund, devastated Indonesia’s economy and it had not recovered from this when the tsunami struck last year. In the years since the Asian economic crisis, Indonesia’s public debt has doubled, to around $130 billion, and combined with private debt is over $143 billion, an amount equal to or greater than Indonesia’s gross domestic product. More importantly, its current debt service ratio—that is, the principal debt payments plus the interest payments as a proportion of export earnings—is around 50 per cent; that is, half of what Indonesia earns goes towards debt payments. This is why debt servicing consumes as much as half of Indonesia’s budget.

Previous rounds of limited debt cancellation announced by rich countries have not included Indonesia. This is despite the reality of Indonesia’s debt problem and the incredible poverty of its people. According to the United Nations, over 50 per cent of Indonesia’s people live on or on less than $US2 a day. That is less than the price of a cup of coffee or a schooner of beer, and it is all that most people have to survive on each day. Providing support in the form of loans will exacerbate this poverty as successive governments are forced to choose between debt repayments and the needs of their people. There is no reason why this half a billion dollars could not be provided in the form of aid, as a straight donation. This is why the Greens will be asking the Senate to support an amendment that we will move to spell out clearly the Senate’s opposition to increasing Indonesia’s debt.

We believe that Australia could and should be doing more. We can afford to be providing more aid rather than creating a further debt trap for Indonesia. The Greens will support this appropriation for aid. As we said at the beginning, it is a good thing but it is not the very best that Australia could be doing. We should be increasing Indonesia’s aid without increasing its debt. We should be ensuring Indonesian non-government organisations and companies deliver the aid, not the Indonesian military and large Australian corporate businesses. We should support poverty alleviation more than national security and growth-driven inequality in the way in which we deliver the aid. The Greens will continue to hold the government accountable for how this aid is spent and we will continue to campaign for a real aid program so that Australia can genuinely join the global effort to make poverty history.