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A DIFFerence of opinion: cancellation of the Development Import Finance Facility.



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Contents

Introduction

Background

Changes in DIFF Rules

The DIFF Debate

Nature of DIFF Allocations

Effectiveness of DIFF

The Cancellation of DIFF

Conclusion

Endnotes

Appendix

Introduction

The Development Import Finance Facility (DIFF) has proved to be one of the

most controversial elements of the Australian aid program, attracting

strong criticism and equally strong support. It is a 'mixed credit' or

'associated financing' scheme which enables Australian companies to tender

competitive contracts for the supply of Australian goods and services for

projects in developing countries. The DIFF grant, usually equal to 35 per

cent of the value of a contract, is combined with export credit from the

Export Finance Insurance Commission (EFIC) of Austrade to provide a

concessional loan to recipient country.

The DIFF scheme was cancelled following the change of government in March.

Although no formal announcement appears to have been made, its cancellation

was foreshadowed in a pre-election media release by the then Shadow

Treasurer, Peter Costello.(1) Reaction from various groups with an interest

in the aid budget, including the Australian Council for Overseas Aid

(ACFOA),(2) has been largely negative. Given the concern that has been

generated by the discontinuation of DIFF, it is likely to remain an issue

for some time.

Background

It can be seen from table one that there has been a steady decline in

Australia's Official Development Assistance (ODA) over the last decade and

that it is currently below the United Nations target of 0.7 per cent of

Gross Domestic Product (GDP).

In 1995-96, Australia's aid expenditure is forecast to be $1563.2 million,

an increase of about $83 million over the 1994-95 outlay. In real terms

this represents a growth of 1.8 per cent or $28 million. However, due to

the growth of the Australian economy, the ratio of the volume of Official

Development Assistance to the Gross National Product (the ODA/GNP ratio)

will actually decline from 0.34 per cent in 1994-95 to 0.33 in 1995-96.

While Australia's GNP per capita in real terms has increased from $19 800

in 1983-84 to an expected $25 500 in 1995-96, aid expenditure over the same

period has declined from $99 to about $82 per capita.(3)

Table not available online

In 1988-89 there was a one-off forward of multilateral

development bank (MDB) payments. This had the effect of

increasing 1988-89 expenditure but decreasing 1989-90

expenditure.

Source: Australia's Overseas aid Program 1995-96, Budget Related

Paper No. 2.

The decline in the aid budget has also had an impact on its commercial

aspects. According to ACFOA:(4)

The Government defends the increasing commercial elements in the

program by pointing to the declining political commitment to aid

and arguing that a broader base of support needs to be developed

for the aid program.

Nonetheless, Australia's contribution at over $1.56 billion is by no means

among the lowest in the donors list. It ranks 9th in terms of ODA/GNP ratio

among the 21 countries that form the Development Assistance Committee (DAC)

of the Organisation for Economic Cooperation and Development (OECD). In

contrast, Japan, which has an aid budget of over $15 billion, ranks

16th.(5)

The Australian budget is split into country (bilateral) programs and global

programs which include funding for international organisations,

(multilateral aid), emergencies, aid to Non Government Organisations (NGOs)

and for commercial activity. In 1995-96, country programs accounted for

about 56 per cent of the total budget while 35 per cent was allocated to

global programs. Other development activities absorb about 3 per cent and

the Australian Centre for International Agricultural Research (ACIAR)

receives another 3 per cent.

In what could be described as a tacit spheres-of-influence arrangement

among Development Assistance Committee (DAC) donors, Australia has for long

had a regional focus on its aid program. This concentration makes for

greater cost-effectiveness and impact per aid dollar by reducing the

administrative overheads of a wider spread. As a relatively small donor,

Australia, for example, leaves Africa and Latin America largely to the big

donors with traditional interests in those areas.

In 1995-96, more than 77 per cent of the expenditure will be directed

towards Southeast Asia and the Pacific. While at first glance this figure

might look impressive, it is also deceptive. Of the total country program

budget of nearly $876 million, Papua New Guinea alone receives over $312

million, or over 35 per cent.

Countries in Southeast Asia and the South Pacific account for 29 per cent

and 13 per cent of the country program budget respectively. Some $38.5

million, or less than 5 per cent of the program development aid, is

destined for Africa although the continent remains a major recipient of

Australia's humanitarian assistance.

The contribution of NGOs was also recognised in this year's budget. Total

funding for NGOs is expected to be over $100 million compared to about

$97.6 million in 1994-95. The outlay for humanitarian assistance too has

been increased by $10.5 million to $84 million.

By contrast the expenditure of DIFF would have been reduced to $120 million

from $130 million in 1994-95.

The decision to introduce DIFF was taken in 1980, with the first project

being approved in 1982, as a response to the mixed credit programs of other

OECD donors. These programs had been initiated by many countries in the

late 1960s, and by 1982 they accounted for about 6 per cent of total OECD

bilateral Overseas Development Assistance. Initially, the Australian scheme

was directed at ASEAN countries and was to be used to support those

industries which were already internationally competitive. The main

objective was to match concessional financing being provided by other

countries and thus to help Australian firms compete for aid projects.

A secondary objective was to help develop new markets for Australian

exporters. While the original intention was not to subsidise manufacturers,

benefits to Australian industry being seen as ancillary to this objective,

there was a concern that Australia aid would be good for Australia too. For

example, where Australian goods and services could be used in Australian

aid projects, they should be used for this purpose as long as the result

was not to reduce their quality as good aid. Some questions about this

remaining the case, however, emerged with the changes in the administration

of DIFF which could be seen to have resulted in the commercial aspects

rivalling the development intent.

Table not available online

Changes in DIFF Rules

The first DIFF project was approved in 1982 and, during the same year, the

eligibility criteria was broadened from just the ASEAN region to all

countries receiving Australian aid. In 1983, the conditions attached to

DIFF grants were relaxed further. The requirement for applicants to

demonstrate aid-supported competition for specific projects was dropped;

all that was now required was sufficient evidence of foreign donor

competition in the country concerned. By 1987 it had been decided that the

DIFF/EFIC financing package could be tailored to suit the needs of the

recipients. Also, Burma, China, India, Indonesia, Malaysia, Pakistan,

Philippines, Sri Lanka and Thailand were declared by AIDAB to be 'spoiled

markets'. (The markets were considered to be 'spoiled' by the volume of

aid-supported financial packages available from other donors). This meant

that DIFF was available without the need of evidence of aid-supported

competition for capital goods. Such evidence was, however, required for

services and non-capital goods.

Another review in 1989 led to further changes with the aim of increasing

the effectiveness of the scheme. Feasibility studies had to be carried out,

which were then appraised by AusAID using the same criteria as that used

for bilateral grant aid projects. DIFF funding could be denied in cases

where assistance had been provided in the same sector and, in some cases,

the same region of a recipient country. Further, 90 per cent of each year's

funding would be used to support activities in Australia's region with a

maximum of 40 per cent of DIFF funds to be allocated to any one country.

In February 1992, a new set of international guidelines established by the

OECD, the 'Helsinki rules' came into effect. The aim of these guidelines

was to direct mixed credit financing away from commercially viable projects

toward projects and countries that had little chance of access to private

funds. The guidelines also have a provision that allows any OECD member to

call for consultations and 'challenge' another member to prove that their

project conforms to the revised rules. The effectiveness of these rules is

apparent by the fact that by June 1994, about 20 per cent of the total

notifications regarding mixed credit financing to the Development

Assistance Committee (DAC) of the OECD had resulted in consultations.

Under current Australian guidelines, to be eligible for DIFF funding, a

project must:(6)

* be accorded priority under the recipient government's development plan

* demonstrably contribute to the recipient government's economic and

social development objectives

* be consistent with Australia's development assistance objectives,

including environmental, social, cultural and gender specific

objectives

* be financially and economically viable

* goods and services being provided must be wholly or mainly of

Australian origin.

In addition, funding must be proven to be necessary and justifiable to

match officially aid-supported competition and for projects involving

mainly services.

On the other hand, DIFF grants are not available for projects where DIFF

has previously provided assistance in the same sector of a recipient

country. Grants are also not available for:

* defence equipment or defence related projects

* luxury goods

* consumer durables; and

* raw bulk commodities.

Interestingly, the new guidelines did not reduce the popularity of the DIFF

scheme despite the fact that about 50 per cent of the proposed projects in

the energy sector and 60 per cent of telecommunication projects seeking

funding were found to be commercially viable, and therefore ineligible. In

1994-95, DIFF funds were oversubscribed by a factor of thirteen, with

projects worth over $1.7 billion seeking DIFF grants worth $123 million.

The 1995-96 figure was over $2 billion.

As a result of the changes, the main focus of DIFF funding over the past

few years has been on infrastructure projects such as education, water

supply and treatment, waste disposal, transport, and rural

telecommunications and power. In the 1994-95 budget the Government

introduced a new Green DIFF initiative to 'provide expanded opportunities

for Australian business to supply developmentally important goods and

services with an environmental focus to developing countries'. The

objective of the Green DIFF is to transfer 'environmentally friendly

technology and the provision of vital environmental infrastructure...'(7)

This initiative could perhaps be viewed as a response to an earlier

recommendation by the ACFOA, a critic of the DIFF program, to phase out the

DIFF component of aid and establish a Green Technology Transfer Fund

(GTTF).(8)

It can be argued that the early years of the DIFF program were thus not

just an exercise in helping Australian industry find new export markets;

DIFF funds were used to develop the export capability of a select few

Australian manufacturers. For example, of a total of some $118.5 million in

DIFF grants provided between 1982-83 and 1988-89, almost all were for

projects in Indonesia and China. During this period, one company alone,

Transfield Construction, was provided with DIFF funds amounting to $64.6

million for the Steel Bridges Projects No I and II in Indonesia.(9)

Transfield is also a company that did extremely well out of the scheme in

its early years between 1984 and 1993 receiving $153.4 million in DIFF

funds, or nearly 30 per cent of all DIFF expenditure during this period

(see Appendix). By 1991-92 as well, DIFF expenditure in Indonesia exceeded

project aid expenditure and in 1992-93 it was about $50 million. Over the

period 1982-83 to 1992-93, about 46 per cent of total DIFF expenditure was

in Indonesia.(10)

These apparent distortions or imbalances contributed to the questioning of

DIFF as 'good aid'. While that questioning often neglected to take account

of both the enormous developmental needs of Indonesia and China and their

significance to Australia in the region, AusAID's own review has questioned

the viability and developmental relevance of the early programs (especially

in Indonesia): 'concerns were expressed both about the lack of scrutiny

applied to DIFF proposals and the developmental effectiveness of some of

the activities supported.'(11)

These criticisms were more valid for the first few years after its

inception when projects in sectors such as manufacturing and mining

absorbed a considerable amount of DIFF outlay. Also, as AusAID has argued

in its Review,(12) it was not until 1992 that the effect of the changes

made in 1989 became obvious. The reason for the delay was a substantial

backlog of projects which had been approved under the old guidelines, an

indication of the popularity of the scheme among Australian businesses

during a period when oversight was lax and there was little competition for

available funds.

As DIFF has developed, however, with a tightening of the rules and greater

scrutiny, the original objectives are more likely to be met.

The DIFF Debate

Throughout its life, the DIFF program has come under sustained criticism,

especially from the NGOs. The linkages between aid and Australian business

were seen as simply a subsidy for Australian business It was argued that

mixed credit schemes distort development cooperation. Debate has also

continued over whether DIFF is developmental or commercial by nature.

Critics have argued interalia:(13)

* DIFF diverts scarce aid resources to better off countries which have

access to commercial funding. This is done at the expense of projects

which would directly assist the poor and disadvantaged.

* It is a trade promotion subsidy for Australian industry; that if this

is the aim then the funds would be better used in other, more

cost-effective trade and industry promotion programs.

* DIFF distorts the domestic economy and has an adverse impact on

exporters by creating a dependency effect

In defence of the DIFF program, it is maintained that:

* The restrictions introduced under the Helsinki rules have effectively

directed mixed credits towards projects and countries which have

little or no access to market financing. Since these restrictions do

not apply to countries recognised as 'least developed' by the UN,

mixed credits are now more freely available to such recipients than to

relatively more developed ones. In the Australian context, the two

largest recipients of DIFF grants, Indonesia and China, are also, with

the exception of PNG, the two largest recipients of bilateral aid.

Also, sustainable development, the primary objective of Australia's

aid, requires a long-term perspective rather than an attempt to meet

the immediate needs of the poor. Hence, investments in areas such as

water supply, sanitation and communication facilities can play a

significant role in addressing the causes of poverty.

* If DIFF were a trade subsidy, then other elements of the aid program

could also be classified as such. Food aid would have to be considered

to be a very inefficient subsidy as it is provided on a 100 per cent

grant basis, compared to the 35 per cent AusAID contributes to DIFF

project costs. The latter not only provides a mechanism for stretching

the aid dollar but also encourages the involvement of the private

sector in the Australian aid program.

* With a DIFF expenditure of about $120 million or about 0.03 per cent

of GNP, any distortion effects are likely to be rather small and,

compared to exports, not measurable. A similar rationale applies to

the dependency argument. DIFF is too small to have any significant

effect on the industry sector.

Nature of DIFF Allocations

As funding for the DIFF scheme has grown rapidly over the past decade, it

has developed into a well focused program. From $12.5 million in 1984-85,

outlays on DIFF have grown to $130 million in 1994-95, about 8 per cent of

the aid budget. As figure one shows, over this period, Indonesia and China

have been the main recipients of DIFF grants, accounting for 46 per cent

and 30 per cent of the expenditure respectively. The 9 per cent of total

DIFF disbursements of $61.5 million to India are for the only DIFF related

project in the country, the Piparwar Coal Mining project. These three

countries thus account for 85 per cent of the total DIFF funding.

However, from the scheme's inception until June 1994, 90 projects with a

total value of $643 million were undertaken in 15 countries. Another $123

million was committed on 13 projects during 1994-95.(14)

Figures not available online

Effectiveness of DIFF

A report on a review of the DIFF program carried out by AusAID, (A Review

of the Effectiveness of the Development Import Finance Facility, January

1996) concluded that:

47 of the 51 projects surveyed had been effective in delivering

the specific development benefits which had been intended.

Overall, two-thirds of the project were rated as having delivered

75 per cent or more of their intended development benefits.(15)

The report also concluded that substantial benefits had been generated for

Australia. Involving $285 million of AusAID funds, the 51 projects

initiated between 1988 and 1993, generated $709 million expenditure on

goods and services in Australia. Follow-on business directly related to

these DIFF projects already realised by companies was estimated at $263

million and it was anticipated that another $397 million worth of follow-on

business was likely to be achieved. Thus, excluding the follow-on business,

it has been estimated that $1 of DIFF expenditure generated about $3.50 of

business for Australia. Table three illustrates the direct commercial

benefits from DIFF by country and region.

Table not available online

The highest rate of commercial returns from DIFF projects by table four

includes the communication, manufacturing and agriculture sectors. However,

it must be pointed out that several of the agricultural projects were in

fact processing activities which could be classified as manufacturing.

Table not available online

Other benefits identified in the review include:

* companies achieving economies of scale with repeat orders making them

more competitive on a commercial basis for further work of a similar

type. This is especially true in the field of high technology.

* companies gained practical experience in working overseas and

establishing contacts. For example, Transfield Construction changed

from a company with less than 5 per cent of its total income derived

from international activities in the mid-1980s to one where about 26

per cent of its income is now derived from its overseas operations. It

won $4 million worth of bridge work in Laos without aid support. In

China, Thailand and Taiwan it had, by the mid 1990s, won $100 million

worth of business 'not involving Australian aid, but which was

partially linked to the original AIDAB (as AusAID then was) support in

Indonesia'.(16) Amongst the participating companies there also

developed a greater awareness about overseas market opportunities, as

is shown in table five.

Table not available online

* a number of companies said that during the time the Australian economy

was in recession (which included the period covered by the survey),

they might not have remained viable. Some stated that they would have

gone out of business. Westinghouse Brake and Signal, for example,

reported that had it not been for the DIFF financed Rail Signalling

project in Thailand in 1989, it would have been forced to

substantially reduce its numbers.(17)

* while it was difficult for the AusAID review team to arrive at an

accurate assessment of the impact of DIFF-supported activities on

employment, a conservative estimate of the employment generated by

DIFF financed contracts and direct follow-on business, was of the

order of 1500 staff years for the prime contractors only. This figure

does not take into account employment generated through

sub-contractors or for any multiplier effect. To cite Transfield's

experience again, as a result of the Steel Bridges Project, it

invested $15 million in its Seven Hills fabrication facility, which

would otherwise have closed down, and created an extra 350 to 450

jobs. BHP which supplied the steel for the project, was estimated to

have created about 500 extra jobs.(18)

According to AusAID, 'It is fair, therefore, to conclude that DIFF helped

in a modest way to ameliorate the adverse employment effects of the

recession.'(19)

Nonetheless, it is important to note that the review was based on an

analysis of the DIFF scheme as it was (1988-89 to 1992-93), rather than it

is today. In other words, the review covered projects approved before the

revised Helsinki guidelines of the OECD took effect. Some of the projects

would not be approved under current guidelines. This is especially true of

the mining and manufacturing sectors. Public sector infrastructure projects

in the water supply, sanitation and transport sectors, energy and

telecommunication projects in remote areas would still be eligible.

When the cancellation of the DIFF scheme was announced, according to media

estimates, there were about 52 projects with a combined value of around

$1.2 billion in the pipeline. Australian companies are reported to have

spent about $70 million on their development. They range from large firms

like Transfield aiming for a $60 million contract to provide search and

rescue vessels to the Philippines(20) to various high-tech small businesses

aiming to enter the Asian market.

Internationally, it was expected that the revised Helsinki guidelines might

lead to a reduction in mixed credit financing. This appears not to have

been the case. Notifications of Helsinki type mixed credits rose from about

$5.92 billion in 1993 to $7.14 billion in 1994. $4.2 billion of projects

were notified in the first half of 1995.

The Cancellation of DIFF

Pending a review, the DIFF scheme was cancelled in April 1996. The

scrapping of the scheme has also been the subject of criticism from various

quarters, including some of the recipient countries

The former head of the Department of Foreign Affairs and Trade, Richard

Woolcott, urged the Government to reverse its election commitment to

abolish the DIFF because it contradicted the Government's larger commitment

of making closer ties to the region a foreign policy priority. In a

confidential letter to Andrew Thomson, the Parliamentary Secretary to the

Foreign Minister, leaked to the Australian, he said:(21)

As things stand, Mr Howard's and Mr Downer's rhetoric about

closer engagement with Asia has been eroded by this action and

our credibility and reputation for reliability in the region will

suffer, especially in the Philippines, following understandings

reached during President Ramos's visit last August...

...I am sorry to have to write in these terms, especially as I

have done my best to assist the new Government establish its

credentials in Malaysia and in Indonesia and in a series of

meetings with other ASEAN ambassadors in Canberra, but I believe

this decision really will damage Australia's wider national

interests in Asia.

Interestingly, given its earlier position, ACFOA issued a statement saying

that the decision would 'send all the wrong signals to Asian neighbours

and, in the end, act against Australia's national interest'.(22)

One of the largest recipient of DIFF-supported projects, China, also

expressed concern about the decision to abolish the scheme. Some 19

projects worth about $140 million are said to be involved. The Chinese

Ambassador to Australia, Hua Junduo said in a statement:(23)

Should those projects be scrapped off, it would not only cause

financial losses on the Chinese side, but also do no good to the

Australian side in terms of its credibility and business

interests in China...

...We hope that the Australian Government will follow

internationally accepted practices and continue to support the

projects in the pipeline and implement these projects on time.

The Philippines Ambassador to Australia, Delia Domingo-Albert, was also

critical of the decision to abolish DIFF. Appearing in the Nine Network's

Nightline program, she said:(24)

It is a business transaction where there is a lot of competition,

so if you are not in the market, then someone else will come in.

There will be a feeling in the region that Australia is not

serious in promoting its capabilities in terms of its products in

the market. Other countries support their companies in making an

inroad into markets, and the DIFF scheme is definitely a way to

help Australian companies into the market.

On 26 June, the Minister for Foreign Affairs, Alexander Downer informed

Parliament that he had received written or oral representations at the

ministerial level from Indonesia, China and the Philippines regarding the

cancellation of DIFF.(25)

The Queensland Minister for Economic Development and Trade, Don Slack and

the Victorian Premier, Jeff Kennett had also written to the Government

about the adverse effects of this decision.(26)

Nonetheless the decision to abolish DIFF continues to be defended as one of

those regrettable decisions required to bring the budget into surplus. The

Minister for Foreign Affairs, Alexander Downer, replying to a question in

Parliament on 17 June 1996 said:(27)

The fact is that if we did not abolish this program we would

otherwise have to reduce spending on humanitarian programs within

the aid budget...we were not prepared to do that. If we had to

make a reduction in the aid budget, we were prepared to do that

in the area of business subsidies.

A day later, on 18 June 1996, the Parliamentary Secretary to the Minister

for Foreign Affairs, Andrew Thomson indicated that the cancellation of DIFF

may not be permanent. Speaking during a debate on DIFF he said:(28)

....if there is room and if budgetary circumstances

permit....down the track, in the financial year after next, we

may be able to reintroduce a form of mixed credit scheme and

resume some of the projects that were in the pipeline. If it was

the case that after the election we had been left with a budget

that was in a reasonable shape, I have no doubt that there would

be no abolition of a scheme like DIFF.

Conclusion

The Development Import Finance Facility (DIFF), a mixed credit funding

scheme, has had its share of controversy. Supporters maintain that it

provides them with a level playing field in the growing markets of Asia

where other countries have traditionally provided such funding to their

exporters. Critics maintain that the scheme distorts aid priorities and is

a trade promotion subsidy for Australian industry.

From its inception in the early 1980s to its demise in 1996, DIFF has been

the subject of many reviews, revisions and changes in guidelines. The 1990s

saw the program deliver what it was designed to do - development projects

in recipient countries while helping Australian industry develop an export

outlook.

It should perhaps be noted that aid, by definition as an operation in

underdeveloped, overseas environments, is difficult. If it were not, it can

be argued that the private sector rather than the government, would do it.

Reviews of forms of aid have been an ongoing part of the international aid

debate since aid became a significant aspect of international relations

with the de-colonisation process that followed World War II and this will

quite probably continue to be the case. DIFF has been no exception. But, as

only 8 per cent of the total aid budget as at 1994-95, and moreover that

part of the budget particularly encouraging the involvement of the private

sector, it is paradoxical that it has been unilaterally rejected by a

Coalition Government which has stated its intention to involve the private

sector in its aid program.

While the DIFF scheme in its present incarnation appears to be dead, there

may be a distinct possibility that the program could be revived. Sections

of the Australian business community and other organisations involved in

the aid program have strongly defended the scheme. Currently, a review of

the aid program is being conducted by Paul Simons, former Executive

Chairman of Woolworths. The report is due by the beginning of 1997. It is

possible that the findings of this review might lead to the reincarnation

of a mixed credit scheme in 1997-98.

Endnotes

1. Meeting Our Commitments, Media Release, 15 February 1996.

2. Financial Review, 12 May 1996.

3. Australia's Overseas Aid Program 1995-96. Budget Related Paper No, 2,

p. 15.

4. Actionaid, The Reality of Aid 94, London, May 1994, p. 37.

5. OECD, Development Assistance Committee Report 1995, Paris, 1996, p.

92.

6. AIDAB, Development Import Finance Facility: Explanatory Brochure,

Canberra, 1994.

7. Australian Development Cooperation Program 1994-95, Budget Related

Paper No. 2, p. 48.

8. Australian Council for Overseas Aid, Aid For Change, May 1992, p.

91-92.

9. AusAID, Commercial Benefits from Development Cooperation with

Indonesia, Canberra, 1995, p. 136-137.

10. ibid. p 27.

11. ibid. p. 31.

12. A Review of the Effectiveness of the Development Import Finance

Facility, loc cit. p. 16.

13. See for example Actionaid, The Reality of Aid 94, London, May 1994, p.

25, 37. 'Corporate Hijacking of Australian aid' AidWatch No. 6, June

1995, p. 8-9, Australian Council for Overseas Aid, Aid For Change, May

1992, p. 90-91.

14. Minister for Development Cooperation, Media Release, 21 July 1995.

15. A Review of the Effectiveness of the Development Import Finance

Facility, op cit., p.7.

16. Commercial Benefits from Development Cooperation with Indonesia,

op.cit., p.137.

17. Vivienne Filling, 'The Role of DIFF in Industry Strategies' in AIDAB,

Development with a DIFFerence, 1993, p.102.

18. AIDAB, Focus, June 1992, p.26.

19. A Review of the Effectiveness of the Development Import Finance

Facility, op cit.,p. 37

20. Financial Review, 15 May 1996.

21. 14 June 1996.

22. News Fax 16 May 1996.

23. Financial Review, 17 May 1996.

24. ibid.

25. Current House Hansard, 26 June 1996, p. 2777.

26. Financial Review, 17 May 1996, also 6 June 1996.

27. Current House Hansard, 17 June 1996, p.1956.

28. Current House Hansard, 18 June 1996, p.2076.

Appendix

Top 10 Development Import Finance Facility Contractors 1984-85 To 1994-95

----------------------------------------------------------------------------

Company and Project DIFF Grant ($m)

----------------------------------------------------------------------------

Transfield Construction Pty Ltd

Steel Bridges Project I (Indonesia) 21.7

Steel Bridges Project II 42.9

Steel Bridges Project III 67.6

Steel Bridges Project IV 10.1

Sarawak Transmission Grid (Malaysia) 11.1

Total 153.4

Westinghouse Brake and Signal Co

Cirebon-Kroya-Jogjakarta Rail Signal Project (Indonesia) 40.4

Tasikmalaya-Kroya Rail Signal Project (Indonesia) 24.5

Rail Signalling Equipment (Thailand) 18.4

Total 83.3

White Industries Ltd

Piparwar Coal Mining Project (India) 61.5

Total 61.5

GEC Alsthom Australia Ltd

Jakarta Electricity Substations (Indonesia) 24.3

Bekasi-Bandung Railway Signal Project (Indonesia) 27.5

Penang Port Commission Project (Malaysia) 9.3

Total 61.1

Olex Ltd

Xian-Chendu-Zengshou Telecommunications Project (China) 10.6

Lanxin Rail Communications Project (China) 7.3

Lanzhow-Urumqi Telecommunications Project (China) 25

Outer Islands Telecom Project (Cook Islands) 0.1

Total 43

Energy Equipment PtyLtd/CMPS & F

Henan Coal Gasification Project (China) 29.9

Luoyang Mining Machinery Plant (China) 2.6

Total 32.5

John Holland Construction Pty Ltd

Main Line South Railway Upgrade Project (Philippines) 18.1

Aircraft Hangar Complex (Bangladesh) 11.5

Total 29.6

Alcatel Australia

Gansu, Ningxia, Tibet Rural Telecommunications Project ( 21.2

Qinghai Telecommunications Project (China) 5.1

Digital Telephone Exchanges (PNG) 1.4

Total 27.7

ABB/EPT Pty Ltd

Jakarta Powerline Upgrade (Indonesia) 20.1

Total 20.1

Kirby Engineering Pty Ltd

Refrigerator Compressor Plant (China) 16.4

Vehicle Body Plastic Tooling (China) 3

Total 17.6

----------------------------------------------------------------------------

Note: While facts on the recipients of DIFF grants are available in AusAID

publications, the dispersed nature of the information meant that this table

had to be compiled from various sources.

Sources: AusAID, Commercial Benefits from Development Cooperation with Indonesia,

Canberra, 1995.

AusAID, Business Participation in AusAID's Aid Programs 1994-95,

August 1995.

AIDAB, Business Participation in AIDAB's Aid Programs 1993-94,

September 1994.