Alex Hawke (Mitchell, Liberal Party) Share this | Hansard source

I want to firstly congratulate the member for La Trobe and indeed all members who are supporting this fine motion. Since the United Nations 2005 International Year of Microcredit, the microfinance program has become one of the most significant global economic programs in alleviating poverty. The public awareness that was created from this international year was followed by Bangladesh economist Muhammad Yunus and his Grameen Bank winning the Nobel Prize for pioneering the use of microcredit. As many members have now noted, Muhammad Yunus will be one of the experts who attends the summit in July.

Although the Rudd government recently increased the Australian aid budget to $3.7 billion, if we are serious about eradicating poverty globally we need to invest more time and greater resources in promoting economic programs such as microfinance. The causes of poverty in our world today are vast and well known. They include corruption, trade barriers, poorly developed legal systems and property rights, appalling infrastructure, coupled with malnutrition, disease, lack of sanitation and drinking water, and illiteracy. Many of these problems are not addressed by traditional programs to alleviate poverty. Indeed, if you want to achieve an end, you must consider the means. If you want to achieve a goal, you have to know how you are going to get there. Microfinance answers some of those significant questions about how we are going to alleviate poverty. It is particularly the most disadvantaged people in non-industrial economies who benefit the most from microfinance programs.

International Finance Corporation figures for 2007 report that women represent 47 per cent of borrowers, which is extraordinary in the context of the countries that we are considering. These programs represent the long-term good, enhancing the traditional models of charity. They do not create welfare dependency. They give pride of ownership in an enterprise and skills to serve in future successes and future failures. One of the important aspects of microfinance is that it is cost-effective, it is self-regulating and indeed it builds a sense of community. Experience has shown that there is pressure from friends and neighbours to pay back the loans so that other people themselves can then obtain those microfinance loans. Experience tells us that it is one of the most effective measures available to us today.

This measure is also very important to our region. As noted previously by some members, we live in a region where there is enormous poverty. Indonesia has 20 million people living below the poverty line—one person for every Australian citizen. Case studies on microfinance in Indonesia showed that borrowers increased their incomes by 12.9 per cent, whilst a control group showed growth of only three per cent. These programs work, again, addressing the important question: how do you achieve the ends that you are seeking? With respect to Indonesian microfinance loans to people on the island of Lombok, for instance, it was reported that clients increased their incomes by 122 per cent, and nine out of 10 recipients moved out of poverty. That is absolutely amazing empirical data on the success of these programs.

An eight-year study in Bangladesh showed that, amongst the poorest in the country, only four per cent were able to rise out of poverty without any assistance. Figures obtained from the Grameen Bank show that microfinance borrowers were escaping poverty at a rate of 48 per cent.

On 29 June 2007, the International Finance Corporation invested $3 million in microfinance programs for Papua New Guinea, piloting what will be important microfinance initiatives in that country. This is a regional leadership question and Australia needs to be at the front. There is no doubt that further study and consultation needs to take place in order to ensure a reliable distribution system is developed and that systems are put in place to ensure that products created by the microfinance program actually reach the market. This is one reason why it is so important that we do participate in Bali in July and that we give serious consideration to our delegation representation.

Microfinance also provides a big opportunity to improve our Indigenous communities. Our governments must consider that one of the major problems facing Aboriginal communities participating in the economy is access to capital. Any program that can be shown to demonstrate an improved access to capital and which can alleviate poverty must be considered in improving the lot of Indigenous Australians.

As the government of the leading economic nation of the South Pacific, the Australian government does need to take the initiative in this area, and attendance at the Asia-Pacific Region Microcredit Summit in Bali will be a significant step in this process. The conference will be attended by many of the leaders, some spoken of here and many not mentioned. But, if we are seeking a goal—and we are all seeking the same goal—to alleviate poverty and pull people out of poverty, we have to consider the means and how best we can achieve that. Microfinance has been demonstrated to be one of the most effective economic programs in the world today and there is every reason why we should be participating in the summit in July.

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