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Tuesday, 3 December 1985
Page: 2800


Senator SIBRAA(4.40) —I move:

That the Senate take note of the paper.

My criticism of the statement by the Foreign Minister (Mr Hayden) on the Australian overseas aid program is not about what is in the statement but what is not in the statement. The response by the Minister deals more with the general approach and philosophy of aid rather than with the specific recommendations contained in both the report of the Jackson Committee to Review the Australian Overseas Aid Program and the findings of the Joint Committee on Foreign Affairs and Defence on the Jackson report. Positive matters in the report include the acceptance by the Government of a `commitment to work towards achieving the equivalent of 0.7 per cent of gross national product on overseas aid', and the decision `that the Government has decided that the real level of official development aid will increase yearly in the future'. The Government has accepted the basic assessment that aid is given primarily for humanitarian reasons to promote development, but it also complements our strategic, economic and foreign policy interests.

In regard to Papua New Guinea-our largest aid recipient-the Government will provide continuing high levels of aid but with a 3 per cent real annual rate of decline. The Joint Committee, while supporting the goal of reducing the dependence of Papua New Guinea on Australian aid, referred to the importance of an adequate level of dialogue. This dialogue would maintain the close relationship which currently exists between our two countries.

Other initiatives which I welcome are the upgrading of the Australian Development Assistance Bureau to make it more professional, which will mean that administrative costs will rise from 1.54 per cent to 1.7 per cent. That upgrading is overdue, especially if it leads to increased efficiency. Another initiative which I welcome is the recognition of non-government organisations, which will receive $18.2m in 1985-86. Activities to assist women will receive $500,000 in 1985-86 and development and initiatives in education and development research will receive $149,000. My major disappointment with the Minister's response is in relation to the African Development Bank. In his statement, the Minister announced.

We have taken steps to look into the possibility of membership of the African Development Bank.

However, let me quote from the report of the Joint Committee on Foreign Affairs and Defence on the issue of the African Development Bank:

5.54 A strong case has been put forward for joining the AfDB on procurement grounds alone. Australian companies cannot compete for contracts awarded by the AfDB until we become a member. It has been put to this Committee that a number of Australian companies `have had first hand experience of lost business in consulting and supplier opportunities because of Australia's non-membership'. The Department of Trade although not expressing any opinion on the merits or otherwise of joining, informed the Committee that:

[the consultants industry, in particular, see membership] as being another opportunity for them. They argue that if we did join they would be able to do better than our contribution in terms of the contracts won, because of the nature of the contracts being let by the AfDB.

The Department of Housing and Construction also endorsed the Jackson recommendation noting that Australian industry has the talents and expertise that could be used in African development given an appropriate entree.

5.55 The Treasury drew attention to a United States Treasury report which, in 1982, inferred that the AfDB, although ranking high on humanitarian grounds, was not as efficient as the other regional development banks. This Committee is advised that the AfDB did face considerable problems in the early stages of its operations and, by comparison with what are regarded as three of the most efficient development institutions in the world (the International Bank for Reconstruction and Development (IBRD), AsDB and IDB), it was not regarded as having the same level of performance. However, since that report was issued, a new management structure has been established with the accession to full Bank membership of 21 non-regional members. Non-regional membership includes all of the western donors with the exception of Australia and New Zealand.

5.56 The AFDB is increasingly recognised as a soundly functioning institution. A recent study by Kidder, Peabody and Co. (a major USA firm of Corporate Financial Analysts who have prepared a series of studies on the international financial institutions for submission to the United States Congress) concluded that `from our analysis of the Bank's capital structure, financial condition, operating history and member country support together with its conservative loan operating and liquidity policies, it is our opinion that the AfDB is among the premier financial credits in the international capital markets. Moreover, we are confident that the African Development Bank will continue to strengthen its fine operating performance in the future and continue to fully merit the premium credit ratings assigned to its securities'. This conclusion is reflected in its current credit ratings which are now directly comparable with those of the Asian, Inter-American and World Banks.

As a result, the Joint Committee on Foreign Affairs and Defence recommended that positive consideration should be given to seeking early membership of the African Development Bank. If Australia was to request membership immediately, we could not join before 1987 because there is a waiting list. I am afraid that the Treasury view will win out despite the fact that it gave misleading or at least out of date evidence to the Joint Committee on Foreign Affairs and Defence. Therefore, I believe that the Government should join the African Development Bank as soon as possible.