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Tuesday, 15 September 2015
Page: 6849

Senator BACK (Western Australia) (17:09): Last night, a billion people around the world went to bed hungry, many of them children, most of them in our region, and tonight they will go to bed hungry again. The reason why I support so strongly the Asian Infrastructure Investment Bank Bill 2015 is that it is a mechanism by or a conduit through which Australia can play a role in reducing that frightful figure of a billion people going to bed this evening without having had sufficient food. We will have 1.9 billion more people in this region by 2050—again, a challenge Australia can be part of in terms of a solution. I do not want to focus just on China, but it is illustrative of Asia. In Indonesia, the figures can be similar, as they can for other countries within the Asian region.

You and I, Mr Acting Deputy President Whish-Wilson—you, in your case, having come from Western Australia originally and me, in my case, still coming from Western Australia—understand very clearly the fact that our state is Asia centric, whereas most of the east coast is still Pacific centric. Fifty per cent of the world's population now live within two hours of either side of Western Australia's time zone. We already play a significant role in this country, and this bill and the actions that flow from it will give us the opportunity to play an even more significant role.

I turn to China for a moment to speak about urbanisation. In the last 15 years, they have gone from being 35 per cent urban to 50 per cent urban and, in another 15 years, they will go to 65 per cent urban. They do not have sufficient land or sufficient water to be able to provide nourishment for their people. Using China as an example again, because it speaks to the importance of our involvement in the Asian Infrastructure Investment Bank, in the 10 years of the presidency of Hu Jintao, the per capita income in China went from US$1,000 per year to US$5,000 per year—from US$1,000 to US$5,000 in 10 years. The last time there was a fivefold increase in per capita income anywhere in the world was during the Industrial Revolution of the 18th and 19th centuries, and that took 100 years, not 10. Therein lies the challenge.

What is the impact of this? As we all know, it is an increased demand for protein foods over staple foods as a community of people move higher socioeconomically, into the middle class, and an absolute emphasis on safe food and the reliable supply of food. Military leaders around the world have said since time immemorial that people go to war when there is a fear of inadequate, unsafe food and a lack of water—examples of which exist today. People want a better lifestyle. We saw this in the 10 years I spent working in India, where there was a burgeoning development of the middle class. It leads to a greater demand for services and a greater demand for better government management of the people's needs. Again, India is a prime example. In the city of Mumbai, no building has access to water 24 hours a day. Every building, be it a house, a leading hotel or a business, has a water tank on top so they get water for a certain number of hours a day, and power—unreliable power.

Why do I make these points so strongly? It is because Asia faces a major infrastructure financing gap estimated to be worth US$8 trillion over the next decade, and this Asian Infrastructure Investment Bank will be the mechanism by which we and they can start to address these issues. For water, including harvesting water, storing water, delivering water and ensuring water is safe for potable purposes and of course for irrigation and others; and for power, including generation of power, distribution of power, safe and economical consumption of power—all these require infrastructure.

When we speak of the delivery of goods, a statistic that is not commonly known but should be is that it is estimated that more than 40 per cent of all food produced in the world is not consumed—40 per cent of food produced in the world is not consumed—due to poor delivery; poor infrastructure; poor storage, such as a lack of refrigeration so the food spoils; poor transport; vermin, such as rats; or being wasted. And our own developed world is no orphan, as we know, when it comes to the food wastage that comes out of our own homes. This is not just a developing world problem or an underdeveloped world problem. But what it does point to is the need for infrastructure, the need for supply chains, the need for logistics and the need for investment.

You can go further and talk about the development of ports: the efficient and safe movement of goods into a port, through the port, into the supply chain, into storage, into transport—if it is refrigerated or if it is perishable—and on its way to the end consumer. Those of us who have travelled throughout Asia understand very well where those challenges lie.

I want to give recognition to Treasurer Joe Hockey in this whole process. It is Hockey who has led Australia's drive to be part of the inauguration of the Asian Infrastructure Investment Bank. He understands that our prosperity and economic growth in this country are closely tied to the region. I just made the point about our own state of Western Australia and of course it flows through to other states and territories. Senator Macdonald expanded that to the entire north of our country and the opportunity—magnitudes of orders of opportunity into the future. Hockey makes the point that it is important—

The ACTING DEPUTY PRESIDENT ( Senator Whish-Wilson ): I will pull you up on it this time, Senator Back. You need to address members by their titles: Mr Hockey or Minister Hockey.

Senator BACK: I will. I will say 'the excellent Treasurer'.

Senator Cameron: Mr Acting Deputy President, the point of order is that Senator Back has consistently called the Treasurer 'Hockey'. I know that the Treasurer is on the outer and I know that the Treasurer will not be the Treasurer for very long, but he at least deserves the proper title.

The ACTING DEPUTY PRESIDENT: That is not a point of order, thank you, Senator Cameron. I had already pulled up Senator Back.

Senator BACK: That less than helpful contribution should be ignored, Mr Acting Deputy President. I certainly do give Mr Hockey the accolade and the acclaim, because it was him that saw the importance of us joining the Asian Infrastructure Investment Bank.

Senator Cameron will be delighted to learn that on 29 June this year, Mr Hockey, the excellent Treasurer of Australia, gave effect to the government's commitment to join the Asian Infrastructure Investment Bank by being the first person in the world—I am going to repeat that in case Senator Cameron needs to write it down—the first person in the world to sign the bank's articles of agreement in the Great Hall of the People in Beijing. His signature was followed by representatives of 49 other countries. What a great legacy for that great man. Mr Hockey said:

The decision to join the bank was made following extensive consultations with key partners inside the Asian region and outside the Asian region. This included participating on negotiations on the bank's design with 56 other prospective founding member countries.

It is important to understand that we are the fifth-largest regional shareholder in the bank. In that sense Australia, through the excellence of Mr Hockey, will be able to influence the bank's decisions and strategic direction.

The question was asked in earlier contributions today—I am not sure if it was you, Mr Acting Deputy President Whish-Wilson, or Senator Lambie—about what governance processes were in place. I believe, since you are nodding, Mr Acting Deputy President, that it may have been you. So I have availed myself of this opportunity to inform the Senate of this.

In March of this year the government made clear that the key issues to be resolved before Australia could commit to join the AIIB were that the bank's board of directors would have control over key investment decisions and that no country—and I hope Senator Lambie's staff are listening because she made the observation that China in some way would have some massive influence—will dominate the bank or the decisions of the directors. So, in announcing our decision to sign the articles of agreement in June, again that excellent Treasurer, Mr Hockey, noted that all these criteria have been met and that the governance will be based on best practice, ensuring that all members will be directly involved in the direction and decision making of the bank in an open and transparent matter. I hope that is further discussed when we come to look at some of the amendments.

Mr Acting Deputy President, why do we need to be involved? I cannot go further than the comments of industry leaders. Peter Collins, the chair of Industry Super Australia, made the observation:

This move will be a huge fillip for Australian expertise in funds management, engineering, construction, architecture and legal services which could be widely applied to projects financed by the AIIB.

He also made the observation that not only will they 'provide new opportunities to deploy capital but also export the funds know-how in connecting funds services and savings to bankable projects'. There you have Australian super. I am sure Senator Sinodinos will correct me if I am wrong, but if already have the second-largest or third-largest pool of superannuation investment in the world, and we are rushing to become the second-largest, if not the largest. To have an acknowledgment and an endorsement from the chair of Industry Super Australia has to be seen as a very valuable point. I hope it is a point that is not lost on members of this chamber when they finally come to consider this.

The Business Council of Australia, Chief Executive Officer, Jennifer Westacott, welcomed the government's decision to join the bank as a founding member. She made the point that Australia can play a key role in setting the direction of the body, and decisions it will make to finance projections that address Australia's infrastructure gaps. She obviously realises that Australian companies will benefit from the opportunities to participate in developing and building new bank financed infrastructure, as well as having access to improved infrastructure which facilitates trade. As we all know, we are a massive exporter. Our own state exports 95 per cent of the grain it produces. We cannot consume it. We have the land mass of continental America excluding Alaska, and we have the population of Greater New York. I just do not know where those who stand up in this place and talk about Australia not needing to be actively engaged in the world of export get off. I just do not know who they think is going to consume the produce that has made this country great, and will go on making it even greater.

Putting to one side for a moment commodities, which of course will be 99.9 per cent free trade once the China-Australia Free Trade Agreement is in place, the big point that has attracted China to Australia with this FTA is our services sector. Ten years ago, when the negotiations started under the Howard government for the China free trade agreement, the emphasis was on commodities. The Chinese now see themselves going past America as the leading economy in the world but they know they are deficient in a range of areas—in the services sector particularly, and they recognise Australia as a country that may be able to provide those services. How wonderful it will be for us in our employment, in our university sectors, to be able to produce graduates and continue to work in services sectors such as corporate governance, prudential regulation, banking and finance, insurances and extending beyond that. Minister Robb is another excellent trade minister—probably the best in our history; nobody else has produced three free trade agreements within two years—and as he says—

Senator Cameron: A dud.

Senator BACK: A dud? I would say, judging from Senator Cameron's appraisals of people, reference to Minister Robb being a dud would be the highest praise that could be accorded.

Senator Cameron: Mr Acting Deputy President, I rise on a point of order. I did not call Minister Robb a dud—I said the agreement was a dud. But I can add the minister to it if you like.

The ACTING DEPUTY PRESIDENT: Senator Cameron, that is not a point of order.

Senator BACK: Senator Cameron has allowed me time to take a small libation, for which I thank him.

Senator Bilyk: A what?

Senator BACK: A drink. Minister Robb was telling us—this will be very interesting to people from Tasmania, too, because there are some very good private health providers in Tasmania—that, for the first time, under this free trade agreement, and of course Senator Sinodinos is well aware of this, an Australian-based company could purchase land, build an aged care facility, staff it, manage it and repatriate the funds back to Australia. The same thing could be repeated in the hospitality industry or, for example, in the higher education sector. So there are opportunities in the services sector of the free trade agreement. You might ask where this is relevant to the Asian Infrastructure Investment Bank, and it is relevant because it is building up that level of confidence and that level of interoperability between our Asian neighbours and ourselves, which indeed goes towards complementing this whole activity.

We do know that some in America were concerned about the decision that Australia was making to participate in and become a founding member of the Asian Infrastructure Investment Bank. That is all well and good, but again the question was asked by you, Acting Deputy President Whish-Wilson, when you made your contribution: will this provide the opportunity for Australian investment in infrastructure in Asia. An example is the Thai-Lao Friendship Bridge that was completed in 1994—I believe Mr Keating may have been the Prime Minister at the time—a structure funded by Australia and built by that wonderful Western Australian company John Holland Construction. The impact that that bridge has had socially, culturally, economically and commercially on the border between Laos and Thailand has been phenomenal. It reminds me to make the observation that, because of the intertwining of aid and trade at that time, Thailand was a recipient country—it was receiving aid. But because of the focus of that aid partially at least on the trade space, we now see Thailand no longer as an aid dependent country but as a contributor. That surely must be the goal we move towards. How will this be partially funded? Through the Asian Infrastructure Investment Bank.

Often there is criticism in this place about the efforts of Foreign Minister Bishop, arguably the best foreign minister this country has ever had, certainly for the last decade or so. Minister Bishop's focus in the aid space is twofold.

Senator Cameron interjecting

Senator BACK: I am sure Senator Cameron will want to take notes so he will not make a fool of himself in the future. The first aim is to allocate 20 per cent of the aid budget specifically into the aid for trade sector, emphasising the opportunity for people in developing countries not just to be given aid, not just to be given the fish, but to be taught how to fish. As has happened with Thailand, they can be moved out of that dependence on aid. The second has been the initiative of Minister Bishop, led by Bloomberg, the recently retired mayor of New York, to put together a group who can look at the effectiveness and efficiency of aid expenditure around the world, using Australia as a pilot and hopefully extending that to get much better value for aid recipients.

I am delighted and proud to support this bill and to urge my colleagues in the Senate to give it their full support for the 40- to 50- to 100-year future of our relationship with Asia.