Jason Wood (La Trobe, Liberal Party) Share this | Hansard source

I thank the member for Kingsford Smith for bringing this important motion on microcredit to the House’s attention and I also congratulate the member for Maribyrnong for looking at this as not only a moral issue but also a security issue. The member for Kingsford Smith has raised several issues relevant to the achievements of the Millennium Development Goals. Specifically, he seeks support for the following two propositions: that the Australian government support the goal of 175 million people receiving microcredit by 2015; and that the Australian government increase microcredit funding to 1.25 per cent of the Australian aid budget.

The MDGs are, of course, globally adopted targets for the reduction of extreme poverty. It is widely acknowledged that the continuing availability of microcredit to adequate levels underpins the achievement of these targets. The link between microcredit and MDG 1, which is eradicating hunger and poverty, is perhaps the strongest of all. A World Bank study has shown that microcredit has been responsible for 40 per cent of the entire reduction of moderate poverty in rural Bangladesh.

But what is microcredit? Microcredit is a program of low-interest loans and other financial services, such as savings and insurance, to impoverished people who are unable to borrow through ordinary channels. These loans are usually made to women to enable them to expand or establish small businesses, such as waste recycling and animal husbandry. Microcredit projects supported by the Australian government through AusAID have helped tens of thousands of poor households in Bangladesh, China, Indonesia, Papua New Guinea, the Philippines and Vietnam.

For example, the Capital Aid for the Employment of the Poor, or CEP, project was established in Vietnam in 2001. Average loans provided by CEP are just over $200. These are provided to poor households in urban and rural Ho Chi Minh City. Significantly, 80 per cent of its clients are women. One of the many success stories of this project is Ms Nguyen Thi Hoang. Hoang applied for a $170 loan to buy a sewing machine. At the time Hoang and her brothers were peeling cashews for 34c per kilo. Hoang now earns about $2.50 a day making clothes and has become the family’s breadwinner.

The year 2005 was the International Year of Microcredit. A national committee was established in Australia to increase awareness of microcredit and to lobby for an increase in funding. One of the three groups on that committee was RESULTS Australia, which operates out of Belgrave in my electorate. RESULTS Australia has been a strong advocate of microcredit for some time. Last month I met with Sue Packham and Emmanuelle Emile-Blake of RESULTS to discuss Australia’s progress towards the MDGs. They have met with me on a number of occasions, and I congratulate them on their hard work. Like the member for Kingsford Smith, RESULTS Australia has called for Australia to aim for microcredit to reach 175 million people by 2015 and for an increase in aid funding for microcredit to 1.25 per cent of total aid. This is a view I fully endorse, and I fully support the member for Kingsford Smith’s motion. Microcredit requires a tiny outlay and delivers enormous returns; 1.25 per cent still represents a very small proportion of Australia’s aid budget. If it takes 175 million people being reached by microcredit to achieve the MDGs then that must be the benchmark.

However, Australia’s contribution to date should not be overlooked. In 2006-07 Australia will provide just under $3 billion worth of official development assistance. The current ratio of Australia’s aid to gross national income, GNI, for 2006-07 is around 0.3 per cent, which is above the international donor average and is keeping us on track to achieve the MDGs by 2015. However, I share the view that Australia’s aid should reach the internationally agreed target of 0.7 per cent of GNI by 2015. Ordinary Australians in my electorate are doing an amazing amount of work to reach these targets. For example, the Friends of Ermera focuses its efforts on the Ermera district in East Timor, and Peter Cole is organising his second Operation Sports Airlift to help children in Fiji. (Time expired)

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