Luke Hartsuyker (Cowper, National Party) Share this | Hansard source

I welcome the opportunity to address the House on the subject of microcredit, as I believe that this system of small loans, in one form or another, has great potential to alleviate poverty. Let me say at the outset that I concur with the good intentions of this motion from the member for Franklin. If microcredit is such a force for good then it would seem to follow automatically that the more money we devote to it, the better. Indeed, if one looks at the record of that pioneer of microcredit, the Grameen Bank, and its founder, Professor Muhammad Yunus, in Bangladesh, it would seem hard to argue the contrary. With more than seven million borrowers, more than 2,300 branches covering more than 91 per cent of Bangladeshi villages, and the recent award of a Nobel Prize, it would indeed seem to give force to the argument that more is better.

However, Professor Yunus himself cautions that microcredit has become a ‘buzzword’ and ‘has been imputed to mean everything to everybody’. Clarity on exactly what we mean by microcredit is essential, he says, to formulating the right polices and designing appropriate institutions and methodologies. In other words, one size does not fit all—what works in Bangladesh might not work in sub-Saharan Africa or in East Timor. The reason that Professor Yunus’s system of small, no-collateral loans worked in Bangladesh, apart from the fact that it was simple and brilliant, was that it was tailored to specific needs and the specific social structure. The principle that in order to get a loan the borrower had to join a group of borrowers worked in the context of Bangladeshi culture. Defaulting on a repayment impacted not only on a remote institution but on one’s peers in the village. Control and funds remained with the target clients—in this case, women. In a more male orientated society, this model may not work. Indeed, in any society, one can find institutions where control lies with those with high social standing but possibly without the skills or the good intentions to run an institution as intended. One has to consider the type of society one is dealing with. If we take the Grameen model as an ideal, with its underpinning of cooperative action and peer pressure, then should we try to impose that in countries or regions with small populations, sparsely populated regions or regions where travel between small centres of population is difficult?

Australia’s area of special interest is of course the Pacific region. Some form of microcredit may well bring benefits but, given the nature of the region, it is not likely to be in the form that works well in Bangladesh. Indeed, other forms of aid might be more effective. Also, it depends what you want to achieve with your aid money. If your aim is to alleviate personal poverty, and if you can find the right form of microcredit for the existing social set-up, then the initial Grameen model may well be appropriate. But look at its guiding principles. There are 16 decisions which borrowers are required to take. They relate, among other things, to maintaining houses, sending children to school, relinquishing dowries and keeping children and the local environment clean—all laudable aims, but they will not get hospitals built, nurses and doctors trained, roads constructed to get to the hospitals and so on.

Setting targets for a particular kind of aid, as the member for Franklin’s motion suggests, assumes that one can always find sufficient projects with the right recipients in the right conditions with the right social structures to make a success of that form of aid. With the best will, that might not be the case. It also restricts the flexibility of the aid budget overall.

I understand from the Minister for Foreign Affairs that neither Australia nor any other nation gave formal endorsement of the goal of the Global Microcredit Summit. That being the case, I believe that the government should continue to seek opportunities to finance appropriate microcredit projects as part of its aid program without being tied into the straitjacket that a particular target would represent. But, having said that, I must concur with the view that has been expressed by other speakers that the ability of microcredit to maximise individuals’ efforts and to empower them to succeed to lift themselves and their families out of poverty is a noble one—one that we should support. I welcome this motion being brought before the House.

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