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Tuesday, 24 September 1974
Page: 1306

Senator DAVIDSON (South Australia) - The Senate has before it the Asian Development Fund Bill 1974 which, as the Minister for Agriculture (Senator Wriedt) said in his second reading speech, is designed to obtain parliamentary approval for a contribution of $A18.15m, or the equivalent of US$27m. The money is to go to what is described as the Asian Development Fund which has fairly recently been established within the Asian Development Bank. When Senator Cotton spoke on this measure before the debate was adjourned he referred to the establishment of the Bank in 1 966 during the lifetime of the previous LiberalCountry Party Government. The Bill relating to the establishment of the Bank came before the Senate in, I think, August of that year. I had the opportunity personally to take part in the debate and to express my general interest in the work which the Bank was being designed to carry out.

The idea of the Asian Development Bank began some years before 1966. The idea began to take shape at a ministerial conference which was held in connection with Asian economic cooperation. The conference, which was held under the auspices of the Economic Commission for Asia and the Far East- an organisation which we know as ECAFE- took place in Manila in 1963. For some years prior to that date the concept of an Asian Development Bank had been the subject of international conversation and consultation. But as a result of the meeting to which I have just referred ECAFE set up a working group of experts to go into the matter and to report on a resolution that a regional bank or financial institution might be established. A couple of years after that a consultative committee which was set up by ECAFE agreed on a draft which related to the establishment of such a bank. The agreement relating to this matter was eventually signed in Manila, and it came into force on 22 August 1 966.

The Asian Development Bank made its first loan in January 1968. I have been looking at some of the figures which tell the story of the Bank's development and involvement in the region which it was designed to serve. The rate of the Bank's lending rose from some US$40m in 1968 to US$236m in 1970, A year later, in 197 1, the Bank had made 77 loans, totalling more than US$500m, to some 15 developing member countries. In 1 972 the Bank lent US$3 1 6m, and a year later its rate of lending had risen to US$42 lm. Last year loans were made to some 16 countries, with three of them, Burma, Bangladesh and Tonga, receiving their first loans from the Bank.

As the Minister said in his second reading speech on this measure, total loan approvals have now passed US$ 1,000m. This year the Asian Development Bank has some 40 members, of which twenty-six are Asian members and fourteen are described as non-Asian members. The last 3 countries to become members of the Bank are Burma, Bangladesh and the British Solomon Islands. The Bank is looking ahead, and it has loan projects outstanding amounting to almost US$1, 500m.

This may be an impressive record, but I want to draw the attention of the Senate to the outlook and attitude of the President of the Asian Development Bank. When speaking only a few months ago he acknowledged that the Bank had an important role to play. He went on to say: . . in rendering assistance to the development member countries the bank projects but also ensures, as far as practicable, that their gains of development will be as widespread as possible. The bank will continue to seek more effective ways and means of promoting economic and social development in the region.

So from its comparatively recent origin the Bank has extended to become a major contributor to development in the Asian region. This program of increased assistance indicates that the bank will continue to be one of the principal agencies of development assistance in the region.

Senator Sir Magnus Cormack - Economic development.

Senator DAVIDSON - The very nature of the measure relates to a bank and to a fund within a bank, and I welcome the observation from the honourable senator. Up to this point in my remarks in relation to this measure I have been referring specifically to economic development. The Bill before the Senate commits Australia to a continuation of its contribution to economic development. The Asian Development Fund is to provide finance and funds, and the Minister has placed emphasis on the particular characteristic of the Fund. As I read his speech, the Fund will be used to finance loans at something less than the ruling commercial rates of interest. Of course, in this situation there is an urgent need for this kind of financing. Anyone who has been in the area in recent times and has taken any interest in the development of these countries from an economic point of view, as far as it is possible to see through the grave complexities of economic development, will be of the view that if the Fund is able to finance loans at a rate of interest which is lower than the prevailing commercial rates of interest it will be of some considerable value. Anyone who has studied the situation in these countries will be aware of the fact that the grave complexities that these countries face and the vastness of their programs and needs places them not only in a position of great difficulty but also in a position of financial indebtedness, and this financial indebtedness gravely affects their whole existence, their whole outlook and, very importantly, their international relations.

The Minister in his speech referred to the introduction of what I think he called soft lending terms or concessional lending operations. We respond to that by saying that this is very necessary in this particularly complex and difficult situation. The Asian Development Fund, which is the subject of this Bill, will enable the Asian Development Bank to have a primary source of finance for future concessional lending operations. I suppose that in any discussion on lending operations or grants or loans the question of whether such grants or loans should have certain strings attached to them will always rear its head. I do not think that we should have a system of tied grants in any international development or assistance program. A system of tied grants frequently ends up being somewhat counterproductive. If grants and loans are tied, for example, to the purchase of goods or services in the donor country, then there is a grave risk of reducing the flexibility of development programs and therefore their effectiveness.

In his second reading speech the Minister reminded the Senate that the Asian Development Bank helped to finance facilities in the electric power, transport and communications sectors as well as agriculture, water supply and education projects. I have had the opportunity, both on my own and with a parliamentary delegation, of seeing something of these electric power, communications, water supply and education projects and they are impressive. Of course, they will make their contribution but, even as one looks at them, the question arises in ones mind whether they will be effectively used, whether they will contribute to the well-being and social development of the people, whether in the ultimate they will better contribute to the total economic development of the countries concerned and whether that economic development will flow back to as wide a range of the people as possible. They are the things that the Bank and the Fund, which is the subject of the Bill, must constantly look at, police and be aware of. They are part of the long program that the Bank and the Fund have in front of them. But as the Minister said in his second reading speech, all the projects to which I have referred have contributed to a raising of the living standards in the nearby developing countries. I also hope and believe that the projects which will be funded from the Asian Development Fund will help in the raising of the living standards of the countries in the future.

The Minister's speech directly impinges on one of the most serious aspects of the situation with which the Bank and the Fund must deal. That is the matter of economic development assistance and its relationship to international need in this particular area and the facts of life as far as international aid is concerned. There is a difference between international aid as we understand it and the basic facts of this Bill. Nevertheless, there is and will continue to be a very close relationship of which the Asian Development Bank and the Asian Development Fund must constantly take account. The concept of international aid as part of development assistance has its origins in the early years after the war. I suppose that the first thing to spring to one's mind is the Marshall Plan which dealt with, as we recall it, the reconstruction of Western Europe and Japan as well as other countries. Later the creation of an organisation known as the Development Assistance Group, which was a body of Western donor countries, started a genuine attempt to co-ordinate international assistance, grants and aid. This is the kind of activity with which the Fund must have some relationship. The Development Assistance Group set out also to collect data on assistance and development programs. It also provided a service to the world- I put it that way- regarding the effectiveness of these programs, which is something to which we must always give serious consideration.

The particular service to which I am referring is now conducted by an organisation known as the Development Assistance Committee of the Organisation for Economic Co-operation and Development. Annual reviews are put out by the Development Assistance Committee, and the Asian Development Bank will have received those annual reviews. In those reviews the Committee has constantly and repeatedly drawn attention to the seriousness which confronts all development and assistance problems. In one of its latest reviews it has taken a very strong view on what it has described as 'the inadequacy of the measures taken by both developed and developing countries to meet the challenge'. The President of the Development Assistance Committee, Mr Edwin Martin, in his article from which I quoted earlier, said:

The lack of full commitment to development co-operation represents, in my view, the real and critical 'crisis of development', though one not widely accepted as such in developed countries. If we are to have any hope of building a world in which lack of resources does not prevent any person from having a decent minimum of opportunities, we must all give development a high priority. Donors must make more aid available under more flexible criteria and they must take bold initiatives with respect to trade opportunities.

We could engage in a series of discussions relating to several phrases in the President's comments. Because we are dealing this afternoon with a Bill that relates to a fund in a bank, I will leave those comments to other occasions and other opportunities. Needless to say, since Mr Martin made those comments the effect of substantial price increases, for example in Middle East oil, has compounded the problems of both donor and recipient countries. The increased costs of commodities and shipping rates have severely drained the foreign exchange reserves of donor and contributor countries, and at the same time have imposed a very heavy burden on the meagre foreign exchange resources of most of the major recipient countries. An aspect of this matter which is no less serious is the effect of the international inflationary spiral which has eroded the real value of the transfer resources to developing countries.

During the last three to four years there have been several major studies of these matters, particularly on economic and political conditions in developing countries. Because of these major studies of economic and political conditions a great deal more is now known about development issues and the extent to which asistance to developing countries can be attempted. The Asian Development Fund and the Asian Development Bank, which are the subject of the Bill, will have been involved in those studies and will have access to the findings. However, the reports that have been coming from these studies are not as encouraging or as cheerful as we would like. The gap between the living standards of the developed countries and the developing countries continues to widen. Figures published by the World Bank show that the per capita income level for Asia is $100. The figures for a number of other countries are quoted. The figure for Australia is $3,000. I quote those figures to draw a distinction. I recognise that it may be only a rough guide, but it serves to highlight some of the problems which the Asian Development Bank and the Fund in it will be facing as they set out on this venture.

Senator Sir Magnus Cormack - What about the relation between the pressure on the resources of the growing population and the fact that all the Asian people who turned up at the international conference at Bucharest turned down aid?

Senator DAVIDSON - The honourable senator raises very properly the question of the impact of the population explosion in these developing countries. I am mindful of the fact that this is one of the serious problems in relation to this matter. I am also mindful of the fact that so many of the recipient countries must do a great deal more to help themselves and to help solve their own problems. Senator Sir Magnus Cormack will recall that I said earlier today that one of the very sharp rejoinders from one of the early international committees in relation to the setting up of the Asian Development Bank and Fund drew the attention of the developing countries to their own inadequacies and to the fact that as soon as possible and on all occasions they must do their utmost to resolve their own problems and take steps to help themselves. If that responsibility is theirs, it becomes the responsibility of affluent countries, particularly those in the region in which we live, to assist in what I would call 'the self-help program '.

The Minister's speech in relation to the Asian Development Fund highlights some of the background against which the Fund will work. There is a difference between international aid and concessional loans, but the operation of both of them is the business of both the Government and the Australian people. I wish to observe that the Fund will operate against the background of a program which is currently being undertaken by the United Nations and which is described as the United Nations Second Development Decade. The Second Development Decade is now approaching its mid-term. The First Development Decade was very disappointing, and the achievements and responses were very modest. But in the midst of this Second Decade, the United Nations has distributed a resolution which has a particular relationship to the Asian Development Fund and its operations as outlined in the Bill. Several clauses in the resolution in relation to the Second Development Decade call for, amongst other things, an average annual rate of growth of gross national product of at least 6 per cent in the developing countries as a whole. There was a reminder in that resolutionthis emphasises what I said earlier- that developing countries 'are urged to improve their own social conditions'. On the subject of financial resources for development, which is what this Bill is all about, the resolution declared that developing countries must . . . bear the main responsibility for financing their development'. But the developed countries were urged to provide substantial financial assistance and resources.

The last section of the resolution relating to the United Nations Development Decade called for the mobilisation of public opinion in both developing and developed countries in support of the objectives of the Development Decade. Here we have one of the most urgent situations in the field of international development and assistance. I refer to the mobilising of public opinion and interest. With the passing of this Bill today the Government, on behalf of the people, will make a contribution to the cause of international development. With the passing of the Bill most people probably will not give the matter a second thought. But I think there is a strong case to be made out for greater encouragement, incentive and intelligent contributions to be given to international aid and assistance by voluntary organisations whose activities are not so much in the area of straight out donor aid but in total or in part are related to development and assistance and are the result of studied international situations in which people are given the opportunity to help themselves.

There is in Australia a pool of people who already respond to this kind of approach. At the national level there are a number of voluntary organisations which work hard at raising funds to make financial loans and arrangements for developmental projects. I do not know them all. I am associated with only one of them. It is popularly known as the Christmas Bowl Appeal. It raises well over $lm in a calendar year not only for rehabilitation but also for development and programs of research, education and progress within the receiving countries. It also has a program of helping communities to help themselves. Surely the government of the day, not only this Government but also future governments, can find a way of tapping this very reliable, generous and sensible source of supply of not only the concern which the people in these organisations feel but also the finance which they are prepared to make available.

The Minister acknowledges that the reasons for the Bill are to raise the standards of living and to provide opportunities. The private citizen would help if he were encouraged. Too much emphasis is placed today on the view that if the Government is doing this sort of thing there is no need for anybody else to do it. Because the Government is doing it people cease to be concerned about the matter. We have talked before in this chamber about a taxation concession. This may be a fairly simple move, but at least it would be a first and immediate way to encourage more people to undertake a real responsibility in dealing with the elements which are outlined in the measure before the Senate today. If the present Australian Government, indeed any Australian governmnt, takes Australia's development assistance seriously it will look at this subject with a view to mobilising public opinion, to use the words in the United Nations resolution. After all, of all of the Western developed and affluent nations, Australia is closest to the Asian area which is served by this Bank. We have a very real reason to be personally and economically interested in what goes on in this area.

I have spoken on only one aspect of this Bill, largely because of some personal involvement and also because I was associated with it when we first held a debate on this subject some 8 years ago. The Asian Development Bank and now the Asian Development Fund provide the Government and the people here and the Government and the people there- if I may use that word to describe the receiving countries- to have an interdependence in a program of cooperation and progress in our part of the world. We wish the Fund well. I support the Bill.

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