Sid Sidebottom (Braddon, Australian Labor Party) Share this | Hansard source

In seconding this motion by the honourable member for La Trobe, I would like to explain to the House why I believe microcredit is such an important tool in our aid program and why it is so important that the Australian parliament is represented at the forthcoming Asia-Pacific Regional Microcredit Summit in Bali. I am sure many members of the House will have some knowledge of microfinance programs and of their small low-income component, commonly referred to as microcredit. Members may also be aware that Australia supports various microfinance programs through its overseas aid budget in places like Papua New Guinea and Vanuatu.

Microcredit has proven itself to be one of the most effective tools available to break the cycle of absolute poverty that exists in so many countries of the world. Its value has been recognised by the numerous international financial institutions referred to by the honourable member, including the World Bank, which has introduced microcredit as part of its lending program. The effectiveness of microcredit and its contribution to mankind have been recognised through one of its earliest pioneers, Professor Muhammad Yunus of the Grameen Bank in Bangladesh, being awarded the 2006 Nobel Peace Prize.

Australia has partly funded a very successful microcredit project in Vanuatu. The project started in 1996 and goes by the acronym VANWADS. It serves over 3,000 women and is currently expanding its services to the outer islands of Vanuatu. It now earns enough income to cover its operational expenses and no longer needs to rely on donors to continue funding its services—and that, ultimately, is the very aim of the microcredit system. Its effectiveness, and the effectiveness of microcredit, is probably best illustrated by a group of five of its female borrowers. The women borrowed small amounts of money over a three-year period to start and develop various small enterprises, including a retail business, a sewing business, a kava store, a DVD rental business and a minibus. Their businesses allow them to now generate a sufficient income to meet their families’ basic needs. However, the women believe that the greatest impact of microcredit has been the opportunities it has helped create in their lives. Their confidence and belief in themselves grew beyond that which they thought possible. In the words of one of them: ‘Now I am strong. I am really, really confident.’

These examples of success which have been achieved through the microcredit programs are not isolated reports. Rather, they are the rule in well-run projects in many countries in Africa, Latin America, Asia and parts of Europe. Microcredit enables the cycle of poverty to be broken, because the family income increases to the point where the children are educated, fed more nutritious food and provided with basic health care, things we take for granted. It is more likely that the children in those families will go on to earn an income that will in turn enable them to better provide for their families and make a greater contribution to the social and economic welfare of their communities.

Microcredit has a strong connection with the United Nations Millennium Development Goals that were agreed to in September 2000 by all members of the United Nations, including Australia. There are eight development goals that respond to the world’s main development challenges through a set of targets for growth, poverty reduction and sustainable development. Microcredit is an important part of that great jigsaw puzzle.

The Treasurer’s recent budget indicated a considerable increase in support for the Millennium Development Goals, and I congratulate him for that. I think we should recognise that, as Parliamentary Secretary Bob McMullan pointed out on 23 May in his speech to the University of Adelaide, our budget of 2008-09 increases support to $3.7 billion, or 0.32 per cent of GNI. I know that is not enough, and he recognised it. In fact, our contribution—not just the contribution of this government, but our history of contribution—is quite disgraceful. Frankly, I think we all recognise that. We are a wealthy country and we can do a lot more. I think we would all acknowledge that still more needs to be done if the targets associated with the goals are to be genuinely met, and certainly the parliamentary secretary made that clear. It is especially relevant for Australia to focus on the Millennium Development Goals as they relate to the Asia-Pacific region in particular. This region contains about 64 per cent of the world’s population who live in absolute poverty on less than $1 a day.

The region has a large, unmet need for credit and other financial services as well as numerous organisations that have a strong track record in providing the poorest people with access to credit. One of those institutions is the Grameen Bank, which is one of the world’s leading microcredit providers. Whatever people may say about this system—and I have heard financiers and other banks talking about needing to broaden it and so forth—it is a significant contribution to the lives of individual people.

A concrete way that we can show the world and our Asia-Pacific neighbours in particular that the Australian parliament is serious about achieving the millennium goals is to promote a greater understanding of microcredit and its adoption in poor communities of the region, notwithstanding critiques of this particular system that exist. Whilst there is consensus on the importance of increasing the poor’s access to financial services, achieving this at scale and on a sustainable basis requires a broad focus on the financial sector, including but not limited to—and we understand this—support for microfinance.

The Australian government’s aid program has supported microfinance, including microcredit, and there are differentials in that, as one way of reducing poverty and promoting broad based economic growth. The Australian aid program—not just under us but under the former government—has committed an average of $10 million a year in direct support for microfinance initiatives over the last eight years. AusAID is currently exploring programming options to increase the number of poor people accessing financial services and to provide more choice in products and providers. No predetermined funding target has been committed to for such activities.

The Asia-Pacific microcredit summit in Bali on 29 July to 30 July this year offers a concrete means to help foster microfinance in the developing world. The microcredit summit goal is for 175 million of the world’s poorest to be receiving microcredit by 2015. If that goal were met then a large proportion of the Millennium Development Goals target to halve the number of people living on less than $1 a day would be achieved. But that is only half, which is extraordinary. When you listen to yourself talk about this you realise it is quite disgraceful.

We have an important opportunity before us right now to realise a major global achievement in relation to poverty eradication. Now is the time for us to push hard on those means that will enable us to achieve it, like microcredit. That is why I am very pleased to second the member for La Trobe’s motion. I thank him for it, and I also thank RESULTS Australia, particularly Ian Sansom, who resides in my electorate and happens to be president. They are very dedicated to this and they will not rest—and I thank them for it.

By sending the relevant government minister and his counterpart from the opposition to the microcredit summit in Bali, we indicate our strong and united support for the Millennium Development Goals—they are so crucial—and for the wider use of microcredit as a significant means of achieving the poverty eradication targets. I understand from the Parliamentary Secretary for International Development Assistance that the Australian government is likely to be represented at the conference, which is great; it is terrific. No doubt they are working on the other side to make sure the relevant person or persons go—and hopefully the member for La Trobe will be attending as well—and our government will give consideration to the appropriate level of representation closer to the summit. I truly do hope we have strong representation there. Be not confused about this: the Australian government is dedicated to improving the proportion of development aid from our national income—and so we should be. I thank the member for moving the motion.

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