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Tuesday, 26 March 1985
Page: 938

Mr DOWNER(8.39) —Some of the comments made by the honourable member for Hughes (Mr Tickner), particularly in relation to the United States, could only be described as a little hysterical. While to some extent I have some sympathy with his argument that the United States has reduced its contribution to the International Development Association, if one were to give the even-handed view that the honourable member for Hughes would hope to give but apparently has not, one would refer also to the dramatic lack of commitment from the Soviet Union and the Soviet bloc towards alleviating the very grave problems of poverty that exist around the world.

I am happy to join with my colleagues in giving my support to the International Development Association (Special Contribution) Bill and I am pleased that the Government has, for the first time since its election in March 1983, shown some interest in the appalling social and economic plight of the less developed countries.

Honourable members will well remember the constructive and positive contribution of the Fraser Government to assisting developing countries in real need, both through Australia's growing overseas development budget during the Fraser years and the strong stance taken by that Government in international fora in support of a fairer and more liberal global economic climate. Although the Labor Opposition at that time frequently derided, and apparently still does deride, the work of the Fraser Government-

Mr Bilney —And rightly so.

Mr DOWNER —Indeed, it is interesting that one of the practitioners of that policy, the former High Commissioner to Jamaica, the honourable member for Kingston, should now be deriding his own work. The fact is that the Fraser Government's commitment to what was then known as the North-South dialogue was a very great commitment. However, the Australian Labor Party during the 1983 election campaign made a firm undertaking to achieve the agreed United Nations target of committing 0.7 per cent of gross domestic product to foreign aid. I note that in the 1983-84 financial year Australia's aid budget was 0.51 per cent of GDP but that this year it fell to 0.49 per cent of GDP.

The fact is that the honourable member for Hughes, while he continually derides the Opposition on matters of aid in an extremely self-righteous way, should address some of his questions to his own Government, which is reducing, not increasing, its commitment to helping developing countries. However, the trend towards reducing, not increasing, our aid budget is of course a break with an election commitment. It can be explained away by stating that Australia's budgetary situation demands constraint, as of course it does. To have pledged to increase aid funding to 0.7 per cent of GDP and instead to have reduced aid expenditure as a proportion of GDP was, in terms of foreign policy, somewhat injudicious. If the Australian Labor Party were seriously concerned about expenditure-the last two Budgets prove that it is not-it would have been far wiser to have been honest about its real commitment to aid and not raised amongst developing countries, in particular our neighbours, false expectations which in reality have meant nothing.

The damage done to our international credibility by the Government's misleading approach to international economic development will at least partly be rectified by its commitment to the World Bank and in particular the World Bank's soft loan affiliate, the IDA. Of course, this is a commitment which is embodied in this Bill. Honourable members will be aware that the seventh IDA replenishment beginning in fiscal year 1985 has brought pledges of $9 billion largely from industrialised countries, certainly not from the Eastern bloc. Originally the World Bank's President, Mr Clausen, asked for $16 billion for IDA. However, when it became clear that the figure was unobtainable-

Mr Robert Brown —Why?

Mr DOWNER —I will come to that in a minute. He opted for a compromise figure of $12 billion. It was disappointing that the United States Administration, in particular the United States Treasury, felt unable to make available funds to make even that reduced target possible. In spite of contrary advice from Secretary of State Shultz, it opted to reduce substantially its contribution to the IDA. The result is that the IDA's ability to assist less developed countries will be severely restricted over the next three years.

Australia originally pledged $200m to the IDA for the 1985-87 period. This is a figure smaller than had been anticipated because of the unexpected reduction in the American contribution and the fact that Australia's contribution is determined as a percentage of the total budget, not as an absolute. The original proposal for a total contribution of some $16 billion would have led to an increase in Australia's contribution of several hundred million dollars; so I suppose it is fair to say that even with a contribution of $260m Australia is not paying as much as it would have done under the original proposal. The additional $60m special contribution embodied in the Bill will go a very small way towards making up the shortfall, thereby providing a little extra relief to less developed countries. I particularly refer to the sub-Saharan countries which at this time have perhaps the greatest need of any countries in the world.

Honourable members are aware that a number of factors over the last three years have created substantial additional economic difficulties for less developed countries. First, the sudden emergence of the international debt crisis has reduced very significantly the availability of commercial loans to less developed countries. These are countries which even in relatively good times have difficulty in obtaining credit for their own development. Of course, the result of the world debt crisis is that they have had all the more difficulty in obtaining credit for essential food purchases. They have also had very great difficulty in obtaining credit for essential agricultural development and, indeed, infrastructure development.

The second point is that the global economic recession of the early 1980s, which in many parts of the world, possibly including Australia, is continuing, has led to a new round of trade protectionism by many developed countries and indeed by some developing countries. This self-defeating myopia not only has been detrimental to those who have embraced protectionism but also has made it all the more difficult for less developed countries to find markets for the few commodities they produce which are in any way exportable.

The recession has also had the effect of depressing very severely world commodity prices. A number of less developed countries, totally dependent on export revenue from one, or at best two or three, of these commodities, have had their survival affected very substantially. The fact is that world commodity prices, even at this time after some degree of global economic recovery, are still extremely depressed. The third point is that climatic conditions, in particular in sub-Saharan Africa, have caused the failure of crops, with the resulting widespread famine. It must be noted that in addition to these factors political instability and oppressive ideological and totalitarian governments in a number of developing countries, which have no understanding of the growth generated by a market economy, have inhibited the capacity of their peoples to generate prosperity. There is no better example of that ideological folly than the land management policies of a number of African countries.

There are a number of clear solutions to these very pressing problems. It is my view that Australia should be playing its part in providing some role in finding those solutions. There are a number of reasons why we should do that. In the first place-this is an overriding point-as a civilised country we must behave in a humane way, showing, as all honourable members who have spoken in this debate have shown, that we sincerely care about the problems of peoples living in less developed countries. Secondly, I think it is fair to say that we have something to gain from providing overseas aid because poverty leads inevitably to a degree of political instability-often major divisions-within countries which in turn leads to greater regional or global instability which again is something we have to express concern about and do whatever we can to counter.

By providing development assistance and by involving ourselves in support for developing countries through measures such as the IDA we can at least make some small contribution to alleviating this problem. As the honourable member for Charlton (Mr Robert Brown) pointed out, some $800 billion a year currently is being spent on arms, in contrast to the $36 billion a year being spend on aid. I think that shows up the fact that there is still a great deal more work that has to be done in using aid as a tool for generating international political stability, not just concentrating on arms.

I think it is also true to say that Australia has very good foreign policy reasons for wanting to be involved in development assistance, perhaps in a way more significant than other developed countries in the Organisation for Economic Co-operation and Development group. As a result of our geographical position we are largely surrounded by developing countries. Once more I think a firm commitment to those developing countries of our region is in the interests of good relations with them and, therefore, in the longer term interests of the stability of our country.

I think it is important to point out that we have a very real economic interest in development issues because, once more, if we contribute aid to developing countries in a way that generates at least the germ of economic growth in those countries, once they are able to get growth under way within their own shores we, as a potential exporting nation, ultimately will be able to benefit from the increased prosperity of those developing countries. To do this we should be encouraging a number of things. One is a much more liberal trading environment to enable less developed countries to gain greater access in particular to the markets of developed countries. We should be playing a role as best we can towards finding solutions to the uncertainty and instability of international financial markets, in particular ensuring that progress is made towards alleviating the burgeoning debt problems of many developing countries.

Part of that solution lies in lower real interest rates. In situations where adverse climatic conditions and other insurmountable factors have left thousands upon thousands of people destitute, there is a real role for a body such as the International Development Association to provide funds-seed capital-to get those economies going. There is no better example than Ethiopia, which many economists believe has the potential to feed itself and to build up its economy, but for a number of reasons, some of them political, the country has been reduced to a level of destitution. If it is to overcome that problem, Ethiopia will need seed capital from bodies such as the IDA.

There is no doubt that the IDA has already been beneficial to many less developed countries, in particular in Africa and Asia. The IDA has a reputation for efficiency which is unsurpassed by any other international aid agency. That is one very good reason, in my view, why Australia should be giving substantial funds and support to this body and not to a whole range of bodies, particularly United Nations bodies, which have reputations for spending aid inefficiently and consuming a large proportion of aid funds in their own administration. The funding from IDA is not wasted, or not normally wasted, on uneconomic prestige projects. The bulk of it, as other speakers have pointed out, is devoted to agricultural and rural development and basic infrastructure projects.

Other members have also pointed out that loans for these purposes are made with 50-year maturities with no interest payments, but those soft loans do not go to newly industrialised countries and better off developing countries. In fact, they are going to genuinely needy countries. Some 81 per cent of countries which qualify for IDA credits have per capita incomes of less than $US410, while 14 per cent have per capita incomes of less than $US795. The emphasis of IDA-7 -the next triennium of the IDA-is to be on Africa, in particular sub-Saharan Africa, and half the IDA's funds will go to that continent. Of the other half, much will go to India and China-at least 40 to 50 per cent of the other half-but funds will also go to less developed countries such as Bangladesh.

In my view, these countries present something of a priority for Australia-sub-Saharan Africa for humanitarian reasons, and Asia for obvious regional reasons. These nations are all in great need of emergency support, but there is little a country such as Australia, with its relatively small resources, can do on its own. If we were to mount bilateral projects in areas such as sub-Saharan Africa, I believe those funds would be wasted; the impact would be so slight as to be close to irrelevant. As the Jackson Committee to Review the Australian Overseas Aid Program pointed out, we are far better off as part of an efficient multilateral effort where the crisis, or crises as they are in this case, are beyond the scope of Australia to assist significantly alone. The Jackson report gave particular support to the international financial institutions, particularly the IDA, on the grounds that, unlike many United Nations agencies, they have a record of relative efficiency. The report said:

The development banks--

and of course the IDA, as part of the World Bank, is one of those-

are capable of mobilising capital and expertise on a scale beyond the capacity of most donors, including Australia.

It added:

The IDA and the Asian Development Fund . . . deserve special support because they contribute to the development of the poorest countries of the world in a significant way.

The Jackson report concluded:

In giving support to these funds-

that is, the IDA and the Asian Development Fund-

the principle of burden sharing should be interpreted generously.

I do not think many in the Australian community would deny that we are supporting the IDA generously. By providing $260m we are certainly making a substantial contribution to that organisation way beyond the relative size and strength of the Australian economy. As the Jackson report pointed out-I wholeheartedly endorse this conclusion-that money is well spent on a body such as IDA rather than being funnelled to a whole range of international agencies, many of which are very inefficient and many of which would chew up those funds in administration and in providing comfortable cars and apartments, usually in major European cities, not in developing countries, for the benefit of the officials who form parts of those bodies. There is no better example of the way money is chewed up by international bodies than in the heart of the United Nations Educational, Scientific and Cultural Organisation in Paris. That organisation has been wasting an enormous proportion of the funds which have been very generously donated to it with a view to assisting countries, particularly developing countries. The IDA, on the other hand, has not followed that precedent but has used funds expeditiously and in a way that has been most beneficial to a whole range of developing countries.

I should like Australia to be seen world wide as a nation which plays a significant role in seeking solutions to the problems of global poverty. I mentioned earlier that I sincerely want our country to be seen not as a greedy and rich nation but as a country which, hopefully, is prosperous but also has a streak of humanity when it comes to dealing with less developed countries which are unable to fend for themselves. I also mentioned earlier that this is also in Australia's foreign policy interest. I believe it is also in our longer term interest, and with a degree of foresight one would say it is in our economic interest. Our resources are not limitless and our contribution must be to some extent relative to the strength of our economy. In the present circumstances I feel that the contribution manifested in this Bill is a useful contribution by Australia towards eradicating abject poverty. I am glad that for the first time since March 1983 the Government has appeared from the woodwork to address these particularly pressing issues of international economic development which, for some reason or other, it has chosen to ignore, possibly because in the past those issues have been associated with the extremely impressive and internationally recognised record of the Government of Malcolm Fraser.

Mr John Brown —It would have been a very good speech, but for that.

Mr Robert Brown —You ruined a very good speech.