Peter Garrett (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Reconciliation and the Arts) Share this | Hansard source

I move:

That this House.

(1)

notes that:

(a)

microcredit is a particularly effective and sustainable means of eradicating poverty;

(b)

microcredit borrowers, particularly women, generate income that allows them to feed, clothe, educate and care for the health of their children;

(c)

to date 66.6 million people in the world have been reached with microcredit services;

(d)

Goal 1 of the Millennium Development Goals (MDG) seeks to eradicate poverty, while its 2015 target is to reduce by half the number of people living on less than $1 per day;

(e)

if the new Microcredit Summit goal of having 175 million of the world’s poorest families receiving microcredit were reached by 2015, then nearly half the MDG target would be met;

(f)

Australia spent $14.5 million on microcredit in the 2005-06 Aid Budget, which is 0.6% of the Aid Budget; and

(g)

the USA, which funded microcredit longer than most donor countries, has established an international benchmark for microcredit spending, being 1.25% of the aid budget;

(2)

urges the Australian Government to agree to support the new Microcredit Summit goal of having 175 million of the world’s poorest people receiving microcredit by 2015 as a means of achieving the MDG; and

(3)

urges the Australian Government to increase the proportion of money it allocates to microcredit to 1.25% of the aid budget.

This parliament, through the agenda set by the government, does not focus sufficient time or resources on the pressing issues of resolving and reducing global poverty, despite the fact that it remains one of the most important and critical issues of our time. And it is one of the glaring deficiencies of the government’s aid budget that the allocation for microcredit programs is so paltry. The government likes to emphasise the importance of trade reform in its aid budget, but its approach lacks balance. Despite recent increases in our aid budget, we still sit at the bottom of the league of equivalent countries in giving aid, and programs which can provide a direct means of enabling people to loosen the bindings of circumstance and conditions where poverty is the norm must be given priority. My colleague the shadow minister for overseas aid and Pacific island affairs will speak to these matters subsequently.

Microfinance, or microcredit as it is also known, is the provision of small loans and other financial services to the very poor. As the report by poverty advocacy group RESULTS, released in December last year, noted, microcredit is considered the best tool we have to reduce poverty amongst the very poor. Recent estimates suggest that up to 1.2 billion people worldwide, which equates to around 250 million families, live on less than $US1 a day and are subsequently considered ‘very poor’. Consequently this motion concerns the need for the government to expand its commitment to microcredit and so provide additional numbers of impoverished people in our region and beyond with the means of breaking out of the very difficult situation they face. Microcredit has, since the 1970s, grown as a proven and constructive way of getting people started along the road to economic sufficiency. By making small loans, usually without security, to people to enable them to start up small businesses, opportunities are created—often taken up by women, who are powerful actors and agents for development—a circuit breaker emerges and the cycle of poverty can be broken and people’s lives improved as a result.

Analysis by the World Bank has clearly shown that increased access to financial services does help to directly reduce poverty and explains why the provision of microcredit is considered such an important tool in the tool kit for action on poverty. This motion follows on from the highly successful United Nations International Year of Microcredit in 2005, which saw increased focus on this very practical way of addressing poverty in poor nations.

This motion reflects the desire in this parliament and of many in the broader Australian community for the Australian government to effectively address the Millennium Development Goals and to make poverty history. One key means of doing just that is to substantially increase the support that is given through the aid budget for microcredit. The Parliamentary Secretary for Foreign Affairs and Trade is on the record as saying that he is all for microcredit and that he is optimistic we are going to see more support going into this area. It is time these words were turned into action by the Howard government.

At this point in time microcredit takes up a tiny segment of the Australian aid budget, representing less than 1c of every aid dollar spent. We must do better. This motion calls on the government to expand the funding provision for microcredit from the current figure of 0.6 per cent of the aid budget to 1.25 per cent, an increase to around $25 million—not a large sum in comparison with the aid budget.

Consistent with the millennium development goals of halving the number of people living on less than $1 a day by 2015, such a commitment would see Australia meeting the target identified by the microcredit summit of extending microcredit to 175 million of the world’s poorest people. It is estimated that it would reach nearly half of this millennium development goal. The United States, as noted in this motion, has established a benchmark of 1.25 per cent for microcredit. There is no reason why Australia should not do the same.

This motion is about financial access for poor people. It is about providing people not with a handout but with a hand up. Access to microcredit enables self-sufficiency. It provides the means for people to produce income and to improve their health, their nutrition, their housing and their overall development. It works, as shown by the example of poverty reduction in Bangladesh, where microcredit programs have been well established for some time, and our aid program needs to respond now to this proven and practical means of addressing poverty. I commend the motion to the House. (Time expired)

See this speech in context