Bob McMullan (Fraser, Australian Labor Party, Parliamentary Secretary for International Development Assistance) Share this | Hansard source

I welcome the opposition’s support for the Asian Development Bank (Additional Subscription) Bill 2009, and I of course rise to support it as well. I think we did allow the shadow minister a reasonably wide berth there. In the last minute or two he abused it, but for the rest of the time he was relevant enough. He would be shocked to know that I agreed with one or two things he said—but perhaps not the bits he would expect. I am pleased to have the opportunity to support this bill and to speak on it because it is an important matter. I expected the opposition to support it, because there is a long tradition of bipartisan support for these matters in the House—and it is appropriate that that tradition should be continued.

As the Treasurer has already said, Australia has much to gain by increasing its support for the Asian Development Bank. We should support it in the way that this bill outlines, because it is the right thing to do. It is what good international citizens do, particularly in a time of crisis. It is also profoundly in our national interest. It is in Australia’s national interest to live in a peaceful and prosperous region. One of the significant contributors to a peaceful and prosperous Asia-Pacific is the Asian Development Bank. Australia has been closely associated with it. Australia has been one of its biggest shareholders since its establishment—and continues, and should continue, to be so.

This bill will increase our capital contribution to the ADB to $228 million over 10 years. While this represents a small fraction of our overseas development assistance budget, it is a significant and important investment in Australia’s national interest and it is one which we have room to make because of the government’s commitment to increase the aid budget—and I will come back to that in a moment. This capital increase also demonstrates the Australian government’s willingness to be a global leader on issues related to development. It enables us to fulfil our commitment, made at the G20 summit in April this year, to a 200 per cent general increase for the bank. This demonstrates not only our commitment to the ADB but also our commitment to development assistance in general and development assistance in our region in particular.

We have the undoubted capacity to fund this measure because this government came to office with, and has reflected in its budgets, a commitment to increase the aid budget to 0.5 per cent of gross national income by 2015—and we are on track to do so. This generates additional resources for the fight against poverty in our region and in the wider world. It is an important part of the government’s strategy of international engagement, and it is the direction in which almost every modern economy is going. We came to office with a depressingly low ODA to gross national income percentage—0.3 per cent. We have now raised it back to a level which it has not been at for a long time, and we will get it, as the budget papers outline, on track towards 0.5 per cent by 2015.

In the face of the global recession, the work of the Asian Development Bank is of vital importance. The ADB’s own research estimates that, for every one per cent contraction in regional GDP, 21 million people will be forced back into poverty—21 million people. The global financial crisis makes the task of achieving the Millennium Development Goals significantly harder because, globally, the financial crisis which is affecting the living standards of people in developed countries is forcing people in developing countries back into poverty. That is not an advocacy to despair and say that the goals which the global community set for itself at the turn of the century to halve poverty by 2015 and the other millennium goals are too hard; it really encourages us to recommit and to work harder for the achievement of those goals. Even before the global recession, the Australian government recognised that the Asian Development Bank needed a capital increase. Australia had been a strong and early supporter of a capital increase of 100 per cent; however, in the face of the global recession, it became apparent that that was not sufficient and that a capital increase of 200 per cent was needed due to increased demand for loans by middle-income countries.

Let me explain how this capital increase is going to work. We are talking about big numbers here but the economics of it is actually quite straightforward. For the capital increase, Australia will contribute $228 million of paid-in capital over 10 years from 2010-11. This paid-in capital supports the Asian Development Bank’s lending to middle-income countries through its ordinary capital resources lending arm. This enhances the capital base, and the bank uses that capital base and its AAA rating to raise money at low rates on capital markets, which then enables it to on-lend, particularly through that account, to middle-income countries.

In our region and around the world—but in relation to the ADB in our region—there are very many starkly poor people in middle-income countries. Of course, we all see countries where poverty itself is the prevailing reality. But even in countries with the lowest of low incomes and in middle-income countries in Asia there are large numbers of extremely poor people, and assistance is needed to lift those people out of poverty. Much of the progress that we have made in reducing global poverty since 2000 has been in the middle-income countries—in China, in India and in Vietnam—where progress has been made substantially and effectively to lift many people out of poverty, but there are still many people left. There is a long way to go.

Without a capital increase the ADB would have had to limit its lending to middle-income countries to less than $4 billion from 2010 onwards. This capital increase will allow the ADB to provide additional funding of up to US$8 billion to crisis affected middle-income countries. The increase will also allow the ADB to provide additional money, on top of its normal lending facilities, for trade financing, loan guarantees and the provision of social safety nets and to governments under fiscal stress due to the global recession.

Recent data published by the ADB details the extent of the damage done by the global recession, particularly to the medium-sized export-oriented economies which have driven growth in the Asia-Pacific. This data also shows that construction and manufacturing industries in the Asia-Pacific have been hit by the global recession. These industries generally employ unskilled and semiskilled labour, and the slowing of these industries in the region has hurt the groups of workers that are the most vulnerable. In particular, evidence shows that women have been disproportionately affected by the global recession due to manufacturing industries in the Asia-Pacific responding to decreased demand. This is not some esoteric or remote piece of high finance; it affects real people facing real crises and the real risk of poverty.

This capital increase will allow the ADB to continue its crucial role in poverty reduction, by meeting the capital needs of the developing world. It will allow the ADB to finance more bank recapitalisations, more infrastructure, more social services, more trade and more debt rollover. It will support the growth of stable and effective governments across the region, which in turn will be able to provide more effective services to their citizens; because, for all the assistance that Australia, other bilateral donors and multilateral development banks like the ADB provide, ultimately success depends on the governments, the people, the NGOs, the companies and the other organisations in the developing countries. So strengthening their governments and their capacity to provide effective services is crucial.

The capital increase to the ADB will allow it to better support the growth of industries in our region, thereby generating additional trade and supporting jobs in the region and developing countries—and, ultimately, of course, generating export opportunities for Australia. That is why it is in our national interest. It is not the key reason that we do it; the key reason that we do it is that it is good international citizenship and sound international management. But it does, by enhancing the peace and prosperity of the region, serve our national interest.

This is a role played broadly by the development banks around the world, and Australia has developed and is developing more relationships with those development banks. We have, of course, been a long-term member of the Asian Development Bank. We have been a long-term member of the International Bank for Reconstruction and Development in the broader World Bank Group, and we have recently reaffirmed our membership of the European Bank for Reconstruction and Development. I was a strong supporter of our original membership of the European bank. In latter years of our opposition I came to the view that this bank—at least Australia’s participation in it—had outlived its usefulness. It appeared that eastern Europe was emerging from the crisis, from the collapse of the Soviet Union and the end of the Cold War, and that that special measure was, if still necessary, not an appropriate priority for Australia. But circumstances have changed, and I think the appropriate policy response has changed as a consequence. It is now clear that at least some of the countries of the former Soviet Union and some of the countries of eastern Europe are suffering severely as a result of the global recession.

The Prime Minister has spoken about the fact that these are some of the places the consequences are most severe. So the government has recommitted to membership of the European Bank for Reconstruction and Development. We were not, when we came to office, committed to doing that, but we have announced that we will, and in my view that is a correct decision. It would not have been my view a few years ago, in the middle of the boom, but at this time I think it is the appropriate decision, and I think it will be the appropriate decision for many years to come. Australia is not a member of the other two regional development banks—the African Development Bank or the Inter-American Development Bank—but we are in discussions with both about ways we can work together to fight poverty in Africa and in Latin America and the Caribbean. I expect that in the months ahead we will be in a position to announce initiatives that we are taking jointly with the African Development Bank and the Inter-American Development Bank.

So those multilateral development banks have a major role to play in leading the world out of this global recession, led by the World Bank but in our region very strongly and importantly supported by the Asian Development Bank. That is why this capital increase is so important. Its significance to Australia is shown in recent trade data which re-emphasised the importance of Asian trade to the Australian economy. Plainly, the more we assist our region now in recovering from the global recession, the greater the rewards for Australia. The capital increase is an investment in our region, and Australia as a nation will see real returns.

I am pleased to advise the House that the Australian government has very recently, in the last few days, signed a 15-year agency level partnership framework for development with the Asian Development Bank. We have had a memorandum of understanding with them since 1990; this agreement replaces that MOU. The framework’s main objective is to work together in the Asia-Pacific, emphasising a strong ADB presence in the Pacific and donor coordination via the 2009 Cairns compact. I would just like to thank the Asian Development Bank. I know that at the Pacific Island Forum in Cairns there were some difficult issues for the bank related to the implementation of the Cairns compact and donor coordination in the Pacific. We had some very hard discussions with the bank. I understand their concerns, and we greatly appreciated the statement of support for the Cairns compact made by Vice-President Larry Greenwood of the Asian Development Bank. We welcome that support and we look forward to working with the ADB in the implementation of the compact.

The framework is also designed to promote greater aid effectiveness, particularly through harmonisation and coordination between the ADB and Australia. We are, for example, working together through the so-called PRIF, the Pacific Region Infrastructure Facility, of which the members are Australia, New Zealand, the ADB and the World Bank. We hope to see other major donors in the region join soon in a manner that will enable more efficient and effective implementation of infrastructure decisions in the region. We work together under this framework to build awareness of the outcomes of the partnership by promoting greater visibility of Australia’s multilateral aid activities and improving the quality of the engagement between Australia and the ADB.

The framework builds on a strong foundation of cooperation between the ADB and Australia in a number of areas of international development assistance. We are for example in close discussion with them about major Mekong transport infrastructure initiatives. We are discussing with the ADB and the government of Vietnam some possible initiatives which I think, if it all comes to fruition, will be very important.

As the shadow minister referred to previously, we have an active engagement with the Asian Development Bank in the area of HIV/AIDS prevention and control in Cambodia, Laos and Vietnam, and in Papua New Guinea. Australia has provided $3.5 million towards a project to contain the spread of HIV in Papua New Guinea in conjunction with the ADB, New Zealand and, of course, the government of Papua New Guinea. It was a project which sought to stabilise the prevalence of HIV/AIDS in PNG by 2020 through education and improving health infrastructure and services. Specifically, the Australian contribution has contracted a not-for-profit company to market and distribute condoms on a country-wide basis.

So, around the region we are working very closely with the Asian Development Bank and we welcome their increased engagement in the Pacific. We work particularly with them in the major countries in Asia and we expect—as a consequence of this capital increase—that we will be able to work with them even more. At a time of global financial crisis our capacity to work with this bank is very important. It is important in the context of broader development assistance strategy focused on the achievement of the Millennium Development Goals.

This bill is part of that process of Australia committing resources to assist the global fight against poverty. In 2000 Australia joined other countries in committing to the Millennium Development Goals. These goals aim to halve extreme poverty by 2015. They are a bold statement of what we want to achieve in the first quarter of the 21st century and this government has lifted the profile of those MDGs within our aid budget and we intend to continue to do so. They are a practical and measurable scoresheet against which we can track our successes and our shortcomings.

It would be foolish to underestimate the task we face, because 900 million people around the world will go to sleep hungry tonight. Twenty-five thousand children will die today from preventable disease. Tomorrow, 1.4 billion people will be forced to survive on less than $US25 for the day—more than two-thirds of them women and children. There is a very big task, but sometimes I think we place too much emphasis on the task and not enough on the progress. We have made substantial progress.

In the last 25 years we have seen 500 million fewer people living in poverty despite rapid growth in the global population. Real incomes in the developing world have more than doubled. Child mortality has halved and life expectancy has increased by more than five years. In the last decade, deaths from measles in Africa have fallen by 90 per cent. Overall, girls now have the same participation rate in primary and secondary schooling as boys. The number of children in developing countries out of school has dropped by 28 million.

The global recession has hampered our progress towards the MDGs but we should not let it weaken our commitment to them. It is imperative that we continue to focus both on the challenge and the progress. A key part of our mobilising of resources to meet the challenge of achieving Millennium Development Goals is the G20 decision to support increased resources for the multilateral development banks. It is in that context that I am delighted to have the opportunity to commend this bill to the House.

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