Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

To the crowded galleries I say thank you for coming along to listen to this address on the Asian Development Bank (Additional Subscription) Bill 2009! The coalition supports this bill. The bill proposes to allow the government to increase the number of shares that Australia holds in the bank. The ADB is raising capital and has offered its members the opportunity to increase their shareholding. On 2 April 2009, the G20 leaders meeting agreed to a 200 per cent general capital increase for the bank as part of its US$850 billion commitment to support growth in developing countries. On 29 April 2009, the ADB Board of Governors resolved to raise capital by allowing its members to increase their shareholdings. The board’s aim is to triple the ADB’s capital, which they will achieve if all their members take up all the shares on offer. Members can buy additional shares in proportion to their current subscription. Australia currently owns 5.7 per cent of the total number of shares. As such, we are entitled to buy just over 409,000 additional shares: 16,379 paid-in shares and 393,101 callable shares. In layman’s terms, paid-in shares are normal shares—the stake in the bank. Callable shares service security for the ADB’s borrowing on world capital markets. The bank has never drawn on its callable capital and is not likely to do so.

In the 2009-10 budget the government announced it would purchase US$197.6 million, the equivalent of A$241 million, of additional shares in the bank over 10 years and draw on US$5.6 billion, the equivalent of A$6.8 billion, of callable shares. The additional shares are a capital measure in the 2009-10 budget and do not impact on the underlying cash or fiscal balance. The additional callable shares appeared in the statement of risk as a contingent liability.

This bill will continue Australia’s very important work with the ADB to develop our region. The ADB was established way back in 1966—well before the minister at the table, the Minister for Early Childhood Education, Childcare and Youth, was born and in the year after I was born. The ADB is a international development institution which works to foster economic growth and cooperation in the Asia-Pacific region. It works with its members to develop them on both an individual level and as a group of interconnected nations. Australia was one of the original 31 members of the bank along with the United States, Japan, New Zealand, China, Canada, Germany and the United Kingdom. There are now 67 members both inside and outside the region, including Brunei, the Cook Islands, Portugal and Luxembourg.

To digress for a moment, I recall attending an AGM of the Asian Development Bank in Manila in maybe 1999 or 2000, which was quite an experience. I learned a lot about the ADB and the good work it does in different parts of the region. It does work with individual countries, the private sector and non-government organisations and it uses its AAA credit rating to finance projects in agriculture, education, health, law, governance, transport and communications. The ADB funds training programs in public policy, water management, transborder animal disease control, customs and quarantine, and ADB consultants provide technical advice on important energy projects, road construction and attempts to deal with severe air pollution in different parts of Asia. ADB loans are also made available for infrastructure, while grants allow education and immunisation to take place.

I think the House will be interested to hear about some of the ADB’s projects. One example of its worthwhile projects is a public policy training program in Cambodia, Laos and Vietnam. These three Asian countries have moved from planned economies to market oriented economies in the past two decades. How ironic it is that this current government wants to take us back to a planned economy from a market oriented economy, whereas the ADB is actually funding the movement from planned economies to market oriented economies. However, that is one of the reasons why we are supporting this bill. The ADB supports the transition of those three key countries with US$17.8 million for training programs for senior civil service officials.

Another example is HIV prevention. As we know, the countries in South-East Asia are improving their transport infrastructure and, while this is good news for trade, it brings with it social and health issues such as the spread of HIV. The ADB has provided US$6 million to tackle this problem. Recently, I was in Africa and witnessed firsthand how severe the impact of HIV is in Tanzania, Uganda and Botswana—throughout the entire African region. One of the reasons that it is spreading so quickly throughout Africa, and why it has already spread so quickly, is improved transportation between countries. In Tanzania, I met a family whose members were all HIV infected. That was in Arusha, which is regarded as the middle point, the meeting point, of Africa. Tanzania, I think, has seven countries on its borders and it is a horrific problem.

I must say I am digressing a bit, but the West has some responsibility in this. Some of the feedback I got was that, in an attempt to provide birth control measures in Africa, the West provided, for example, condoms that were out of date. That was as part of a so-called aid project. All that did was to completely undermine any confidence locals had in the quality of contraception. Obviously it made the spread of HIV worse by removing any confidence in the prophylactics that were offered. So the ADB’s work is very important in our region and if we can do some heavy lifting in our region then we will be doing good work.

As a third example, there was another health project to prevent and control avian influenza. We all remember the pandemics of the last few years, including of course bird flu. The ADB is providing US$25 million to fight the spread of the H5N1 virus among birds and to improve the region’s preparedness to tackle human influenza outbreaks. Obviously we have fears about the upcoming northern winter.

So there are a number of reasons why the coalition supports this bill. First of all, Australia plays an important role in providing both funding and expertise for the bank’s projects. The majority of the bank’s contracts are awarded through an international tender system which is open to companies and individuals from any member country. In 2008 Australia’s contracts for goods and services were worth $3½ million and contracts for consulting services were worth $32½ million. There are a number of Australian companies which have worked with the ADB in recent years, including HSBC Bank Australia, Flinders University, Sinclair Knight Merz and the Australian ITA Consortium. Australia has also recently co-financed projects in the areas of road assessment management in Cambodia, HIV-AIDS prevention in Papua New Guinea and hydro-electricity in Laos. As at 31 December 2008 there were 49 Australian professionals working at the ADB.

When the coalition was in government we made significant contributions to Australia’s place in the Asia-Pacific region. The most noteworthy economic contribution of the Howard government to our region was our action during the Asian financial crisis of 1997. We were one of the first countries to offer assistance to countries in distress in Asia, and Australia as a result became an important regional player. We provided $3 billion of currency swaps and loan facilities to South Korea, Thailand and Indonesia through the ADB. By doing so we were able to engage these countries in the economical reform that has helped them to develop.

The Howard government acknowledged that the Asia-Pacific region is integral to Australia’s future. We recognised that its development directly affected us as a nation in a number of ways, including, of course, in trade and security. The coalition government successfully managed regional partnerships during the very difficult move to independence by East Timor in 1999. We managed through that difficult period to maintain and in fact improve our relationship with Indonesia, our closest neighbour. We successfully maintained our relationship with China, a most important trading partner. I think that has been lost in a lot of the debate recently. Japan is unquestionably our most important trading partner, but that does not mean that we should in any way exclude the emergence of China or the emerging relationships with others in the region. We successfully identified one of those with the growing international trade associated with India, an emerging economy that is going to be a significant player in global commerce over the next 50 years and beyond.

Seven of Australia’s top 10 export markets are now in the Asia-Pacific region. They are, in order: Japan, China, the Republic of Korea, India, Singapore, Taiwan and Thailand. The export revenue for goods and services to these countries in 2007-08 was over $118 billion, from Australia’s total export revenue that year of $232 billion. This gives you an idea of the significance of the relationship between our economies. Added to that of course is the trade activity with our other regional neighbours, which widens the mutual benefit. In terms of security, development in the region will reduce Australia’s risk of being a target for terrorism, illegal drugs and people-smuggling. While these are, of course, criminal acts, they have a very strong link to poverty, weak border protection and corruption—three problems that have plagued the region.

If I can digress again for a moment, I would like to say that corruption remains the terminal cancer of democracy. Whether it be in other countries or even in our own, corruption is evil. It is a threat to every single person’s rights and freedom. I say that vigorously, coming from the state of New South Wales. I know this is not particularly related to the bill, but I am desperately concerned about the state of New South Wales. It is very hard for us to undertake international activity to fight corruption when there may be corruption in our own backyard. I think there is a long way to go in New South Wales in cleaning up the state—not that that is a surprise, I think, to anyone in this place.

The Howard government recognised when the coalition was in office that it is in everyone’s interest to support development to combat structural challenges like corruption, terrorism and so on. The coalition still believe that—we believed it in government and we believe it today. That is why we are supporting this bill. I think it should be noted that today is in fact the first anniversary of the collapse of Lehman Brothers. I was fully expecting a debate in this place today initiated by the Treasurer in relation to that matter, but obviously the Treasurer has given up debating me these days. So I would just make this point, because this ADB bill, just to satisfy the government members at the table, is a direct result of the global financial crisis so I am in perfectly in order—

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

It’s close enough, Joe.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Yes, it is close enough. I would just say this: the coalition recognises that what has occurred in international markets over the last 18 months to two years has been very significant—significant for businesses around the world, significant for credit flows and significant for major developed economies.

But there is a debate, and there will be for many years, about why Australia came through the global financial crisis in significantly better shape than so many other countries. I want to lay down the five reasons why the coalition believe we came through. Even the RBA minutes today reveal that the RBA board is uncertain about any one particular factor but knows that an aggregate of factors actually had an impact. There are five key factors, from our perspective, that have helped to deliver Australia through the global financial crisis.

The first reason was that Australia went into the economic downturn in far better shape than almost any other developed country in the world. We did so because of strong economic management by the previous coalition government, whether the Labor Party in government today recognises it or not. They selectively cited President Obama’s speech today. When I read that speech I noted that President Obama said that he inherited a budget with a $1 trillion deficit. He walked into the White House and he had a budget with a $1 trillion dollar deficit. The current Australian government walked into office and not only had no government debt—none at all compared to the massive debt of Japan, Italy, France, the United States and a range of others—but what they inherited was $45 billion of cash in the bank. They also inherited an economy that was growing at over four per cent. They were so alarmed by the speed of the economy and by the impact on inflation that they declared war on inflation at the beginning of last year. They declared war on inflation and in doing so claimed that the Australian economy was growing too fast as the global credit crisis was spreading beyond the gates of Wall Street into the broader financial markets in early 2008. They had four per cent growth, $45 billion in the bank and four per cent unemployment—the lowest unemployment rate since the seventies, to the best of my memory. The government inherited that. That was the first reason we came through.

The second reason was that we had no obvious massive financial collapse. The most significant financial collapse was that of Babcock & Brown, which I think—and I will stand corrected—had a market cap at one stage of tens of billions of dollars but was not a collapse on the scale of Lehman Brothers. Australian financial institutions were not at the level of distress of AIG, Merrill Lynch, Fannie Mae, Freddie Mac, Wachovia or any of a number of financial institutions that even President Obama identified today. One of the reasons Australian financial institutions did not have those massive collapses was that we undertook in government the initiatives that President Obama identified in his speech today are essential for America to deliver in order to get reform: one single regulator of financial institutions for prudential supervision and one corporate regulator. In our case, it was the creation of APRA and ASIC, which were set up by the coalition government. We had the Financial Services Reform Act. Senator Conroy, who was the shadow financial services minister when I was the financial services minister introducing that bill, made my life merry hell in the Senate. But, in fact, we put in place the very best consumer protection legislation in the world through the FSR Act. I put that through this parliament. It was so good that other countries came to us to copy the legislation, because not only was it a piece of legislation that brought together a single conduct and disclosure regime for all financial products but it was also technology and distribution neutral in that, whether the sale of a financial product was done through an agent, over the phone, face to face or over the internet, the same conduct and disclosure regime existed. Not having the same regime was one of the reasons the subprime crisis got out of hand in the United States. So the second reason was that we had no financial crisis.

The third reason was that in Australia, on the one hand, we are very lucky that we have a large number of Australians who have variable home loan rates. As the RBA identified, changes to the cash rate by the Reserve Bank flow through dramatically quickly in Australia because of what they call the transmission rate. That transmission rate delivered a huge windfall to Australian households in the form of a 425 basis point cut in the cash rate by the Reserve Bank in a very short period of time. The Treasurer today, rather sloppily, did not know what that meant for households. But you do not want to hold the Treasurer to account on his figures or facts! But I do note that Australian households will feel a similar impact when interest rates rise. This is one of the things we need to bear in mind. The Reserve Bank moved quickly on that transmission impact, and the coalition is on record as saying the Reserve Bank got it desperately wrong at the beginning of last year increasing rates at a time when credit was becoming harder to access in the United States. We kept warning as the Reserve Bank was increasing rates, and we were criticised by the government. But we were right and history has proved us right. The Reserve Bank got it wrong at the beginning of last year, but they were being egged on by a government that had declared war on inflation. Having said that, I will give praise to the Reserve Bank for its actions at the end of last year, which delivered a significant and immediate benefit to Australian households. That was the third reason—interest rates.

The fourth reason was trade. This government inherited favourable terms of trade and, as of today, they are more favourable than they were on the day the coalition government lost office. Even today, the terms of trade, as revealed in the national accounts, are more favourable to the government than they were on the day the Howard government lost office. I will give credit to the Hawke government, because we are prepared to give credit to the other side of politics when they do things right. When the Hawke government floated the Australian dollar back in 1983 it received bipartisan support at the time, but it was a hard decision. I have read a number of books about that and about how hard it was. But great credit to Bob Hawke, who, I might say, was a damn fine Australian Prime Minister—and he is a good bloke—because it was a hard decision but the right decision. And the benefit of that flowed through most obviously when the Australian dollar went from near parity with the US dollar to around 60c at exactly the right time for Australian exports, which helped to deliver some stability of income to Australian resource companies and exporters at a crucial time. Exports made a huge difference.

When you listen to Societe Generale, which, sadly, are no longer in Australia—they left Australia last year—and to their analysts in Hong Kong or elsewhere, or even read about them in the Economist magazine, they all refer to the fact that China’s massive stimulus package has helped Australia through this economic downturn. There is no doubt about that. But exports to China, particularly iron ore, have had a massive fiscal stimulus and, I might add, a monetary stimulus, in the sense of a massive easing of credit access. That has made the difference.

The fifth factor—one of five—was government spending. We are not going to pretend that government spending did not have any impact. That would be pathetic. When you have the government throwing $52 billion in stimulus packages into the economy but really adding another $54 billion in new spending announcements, taking it to well over $100 billion since the 2008 budget, of course it will have an impact. The question is: what have we got for it? That is what the coalition is asking. We believe the government has spent too much money. Moreover, not only has the government spent too much money, it is spending too much money into the future—in fact, into 2013. The government said in the budget papers that it had a debt repayment plan. The opposition criticised that plan as lacking credibility, because it was projecting that, after 2011, it would have six consecutive years of above-trend growth, followed by a number of years of trend growth. We said that it was too ambitious.

And today the Treasurer was seen running away from his own forecasts in the budget. I would think the Treasurer should know better than to stand up and shout abuse across the chamber when, in fact, we asked a simple question: whether he stands by his budget papers. It is a simple question. It is obviously quite a weak person who is not prepared to stand up and defend his own budget papers four months after they are delivered. And it is a weak person, in the form of the Treasurer, who is not prepared to be upfront, direct and honest with the Australian people in this chamber where, if he lies, he loses his job. The Treasurer feels it is okay for him to go outside and lie, but the reason why he does not answer any questions in here, like a weak Quasimodo avoiding any scrutiny, is that he does not know the answers. A simple question requires an appropriate, accurate and timely answer and that is all we ask for.

We need to know what the real impact is, because the lag impact of the government’s stimulus spending is the massive debt and the upward pressure it will put on interest rates. The Treasurer conceded today that cheap money will no longer be available. But I tell you what: it does not help if the government is borrowing almost $1 billion a week, in competition with the private sector. That does not help; it puts upward pressure on interest rates. We had the Minister for Finance and Deregulation, who prides himself on being a knowledgeable man, saying that the crowding out theory in relation to the public sector’s borrowings versus the private sector’s borrowing was complete rubbish. He said that earlier this year when I was in a debate with him. I could not believe my ears.

The government have an assumption that there is unlimited capital around the world that will invest in Australia. But they do not realise that we are but a small fraction of the world economy and so much of international investment is weighted on the size of an economy. Australia has always been a borrower from the rest of the world. Since Arthur Phillip set up camp, Australia has borrowed from the rest of the world. We have funded so much of our development with borrowed money from overseas. During the housing booms there were the Wizard home loans, the Oz loans. A lot of money from overseas funded that. If we are funding ourselves by borrowing from overseas for the private sector but also the 800-pound gorilla—the federal government—now enters into the market in a very aggressive way to spend money on things that are not going to lead to long-term productivity gains for Australia then all Australians will pay a heavy price.

That is why the opposition take a reasonable approach to the debate about spending and the global financial crisis. That is why we have identified five reasons why Australia came through it. All wisdom and knowledge does not reside on one side of the House. But, certainly, if one government, spending so much money, believes that it is beyond questioning and it is not even prepared to give reasonable answers then the Australian people can rightly say that they are being robbed of true democracy.

Bob McMullan (Fraser, Australian Labor Party, Parliamentary Secretary for International Development Assistance) Share this | Link to 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.

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

This week’s Micah Challenge’s fourth annual Voices for Justice event has been under way in Parliament House and it is therefore very timely to have the opportunity to speak on the Asian Development Bank (Additional Subscription) Bill 2009, which gives the Treasurer authority for Australia to subscribe to additional shares in the capital stock of the Asian Development Bank, and for related purposes, including authority to issue promissory notes to the bank. As the detail of this bill has been well canvassed by the previous two speakers, I do not intend to revisit that.

On this year’s brochure, the Micah Challenge poses the question: what if you could change the world? It explains that the Micah Challenge is a global movement of Christians which aims to deepen engagement with the poor and to integrate social justice as an essential part of faith. Those involved in the Micah Challenge have been engaged in urging governments to fulfil their commitments to the millennium goals to halve poverty by 2015. The millennium goals targeted eight basic needs. They include: eradicating extreme poverty and hunger, achieving universal primary education; promoting gender equality and empowering women; reducing child mortality; improving maternal health; combating HIV/AIDS, malaria and other diseases; ensuring environmental sustainability; and constructing a global partnership for development.

It is now late in 2009, which is the halfway mark and, since the world has made a commitment to the millennium goals, mortality rates for children under five have fallen, there has been progress in achieving the education goals, there has been progress on the goal to eradicate diseases such malaria, and according to the Asian Development Bank the absolute number of poor fell from 900 million in 1990 to about 600 million today. So there has been progress. But here we are, at the halfway mark of the timeframe to achieve the Millennium Development Goals, and we are still a long way from fully achieving those goals.

This is no time for complacency. According to the Asian Development Bank’s website, an estimated 1.7 billion people—more than half of developing Asia’s population—still live on less than $2 a day. The Asia and Pacific region is home to two-thirds of the world’s poor. Growth in the region has often been inequitable, threatening social harmony, and has put great pressure on the environment.

Over the years that I have been in this place, I have been privileged to travel to some of the developing countries in our region and have seen firsthand the work carried out through AusAID and non-government agencies as a result of Australia’s commitment to making poverty history.

The member for North Sydney spoke about some of the achievements of the Howard government, and I am pleased to say that there is a strong bipartisan approach to achieving the millennium goals. I think that everyone supports that objective. But during the time we were in government we were tested with the Asian financial crisis and also with the terrible tsunami which devastated many of our neighbouring countries in Asia. The government was very responsive and very generous with funding and assistance after both of those events which just added to the terrible poverty and suffering. So it should be that we offer that kind of aid to our near neighbours, because poverty is a terrible condition. It leaves men, women and children open to exploitation in the worst possible ways. It reduces lifespan as well as quality of life, and the abject suffering is heart-wrenching, to say the least.

My outlook on many things has dramatically changed since I came to this place and since I have had the opportunity to see firsthand some of the terrible conditions in which people live in our region. I suppose those changes were brought about after visiting children who were orphaned through HIV-AIDS in Africa—one of the continents on the Indian Ocean which is close to my home state of Western Australia. HIV-AIDS has produced 12 million orphan children. I have come face to face with victims of the child sex trade and have seen the devastating impact it has on young children, continuing through their adult years—if they manage to reach adult age. I have met children who go to school in two-hour shifts because there are neither teachers nor school buildings to allow students to have a full education. I have met children whose one meal a day was supplied through the World Food Program, funded by the Australian government. I have seen the squalid living conditions in the shantytowns of Africa and Asia, where human health was compromised because of a lack of sewerage, clean water and the sort of facilities that we take for granted. In the worst of these circumstances, health care is a hit-and-miss affair. In one instance, primary care was being delivered by student doctors who volunteered their weekends to deliver healthcare services. That was in one of the shantytowns that I visited.

On many occasions, I have marvelled at the quiet dignity of people living in such conditions and I have witnessed firsthand the triumph of the human spirit over adversity. The fact is, though, there can be no hope for peace or for the alleviation of poverty until we work together to eliminate the conditions that create poverty and ensure that all people have access to a decent standard of living. There are the obvious things that can be done, such as delivering food aid and establishing health programs to combat the spread of HIV-AIDS and other chronic diseases—and I might say that diabetes comes into that. I was pleased a couple of years ago when the UN made diabetes a priority, because it causes terrible devastation and just adds to the poverty. If you have one person who is suffering from the worst that that disease has to offer then another person has to stay home and care for them.

The Australian government has been engaged in facilitating better governance programs as well as delivering the aid programs. These programs are very important in those countries in our neighbourhood that have struggled to rebuild after devastating conflicts. This is fundamental to addressing poverty. The establishment of democratic forms of governance, including the independence of the judiciary and the rule of law, are basic building blocks that are pivotal to maximising the growth and development of a country and to achieving poverty reduction. Poor separation of powers and corruption robs a nation of its capacity to build and rebuild for the benefit of all, and abuse of power and corruption increase the risk of terrible things happening in those countries. We only have to look at countries like Darfur in our recent history to see the terrible problems that come through internal conflict and a lack of proper governance, separation of powers and application of the rule of law.

Also compromising the achievements of the millennium goals are the twin challenges of the recent global financial crisis and climate change. The global financial is the second such crisis we have seen, and this particular global financial crisis is perhaps going to have the biggest impact on developing countries. It hits them hard through reduced labour market opportunities and through government budget measures which, if the past is anything to go by, target social services, health and education for savings in difficult financial times. These cutbacks in essential services have always disproportionately impacted on women and children. The work of the Asian Development Bank, and Australia’s participation in particular, is critical, and it is pleasing that this bill has bipartisan support.

The Asian Development Bank was originally established in 1966 as an international development institution, and in 1999 the bank adopted poverty reduction as its overarching goal and announced its poverty reduction strategy. The strategy relies on three pillars. The first is pro-poor, sustainable economic growth, the second is inclusive social development and the third is good governance. These goals were reviewed in 2004 to take into account the Millennium Development Goals, and a broader, more comprehensive approach to poverty reduction was embraced. Partnerships and capacity building with an emphasis on managing for development results became key objectives.

Prior to the global financial collapse, many of the countries in our region were experiencing rapid growth, requiring the Asian Development Bank to rethink its strategic course, and this has resulted in a long-term strategy, called Strategy 2020, adopted in 2008, which will assist in delivering more innovative approaches to shaping the region’s future. It will always be necessary, though, to examine the operation of the Asian Development Bank, because events are moving very fast. It was pleasing to hear that the shadow Treasurer, the member for North Sydney, had attended one of the annual general meetings of the bank, because if we are to carry out our responsibilities here, we need to ensure that the commitment we have made to that bank is meaningful and that it is achieving what we all hope it will achieve.

There have been some criticisms of the operation of the bank. Oxfam expressed some concerns, saying in a general statement about development banks:

Operating at a global and international level, these banks have funded projects that have undermined people’s human rights and have had detrimental outcomes for poor and marginalised communities.

And, in a report released in 2008, Oxfam was critical of the operation of the Greater Mekong Subregion Program initiated by the Asian Development Bank. The report said, in part:

… there is significant evidence to indicate that for many who are the poorest in Mekong countries, life has actually become harder. In fact, one of the ADB’s own studies showed that in Laos, the level of poverty for these people had either stayed the same or become worse.

It went on to say:

While there is some debate about whether poverty is increasing or decreasing, there is no debate that rapid economic growth has led to greater inequality within all the Mekong countries. The gap between rich and poor has grown enormously. Perhaps most disturbingly, this gap has increasingly developed along ethnic lines—it is the region’s many ethnic minority groups who are being left behind at the bottom of the social ladder. This trend has serious implications for how society develops in Mekong countries.

The Asian Development Bank Institute did release a paper after that, entitled Transport infrastructure and trade facilitation in the Greater Mekong Subregion. I was pleased to see that they gave recognition to:

The gains from improvements in transport and trade facilitation—

being tempered by—

the potential negative impacts of improved transport networks in the region. These impacts include:

1. Increasing income disparities (international, regional, and ethnic)

2. A deterioration in regional economy in some areas and countries along the border

crossing routes

3. Spread of HIV and AIDS,15 avian flu, and other infectious diseases

4. Human and drug trafficking, a potential spread of terrorism

5. Deterioration of traffic safety.

I think the member for North Sydney mentioned some of these. So it is not all a rosy picture.

In 2007 there was a paper presented to the International Forum on inclusive growth and ‘poverty reduction in the New Asia and Pacific’ by Michael Walton of the Centre for Policy Research in New Delhi, India and the Kennedy School of Government in Harvard University. He highlighted some of the challenges the Asian Development Bank faces in the next decade or so. I do not have time to go into that presentation in any detail, but I would commend it to anyone who is interested in the operation of the Asian Development Bank. In part, he said that:

• In poorer countries, this will often involve continued support to central governments in the provision of infrastructure and social services.

• However, in emerging market countries, this will increasingly involve a mix of financial and knowledge-related services that tackle the more complex challenges of inclusion of lagging regions or groups in both social and economic development, developing comprehensive mechanisms for managing security, financial inclusion, and the management of environmental concerns.

Growth and development does not always equate to poverty reduction—and I think this is the message that Michael Walton was trying to drive home—unless attention is paid to inclusive growth. He cautioned that there are:

… a whole series of complex challenges around inclusion that are both of great intrinsic importance for the well-being of relatively deprived groups in the region, and need to be tackled to assure the sustainability of long-term growth.

These are the challenges that I believe the Asian Development Bank is aware of.

This is a bill worthy of support as Australia can play an important part in providing both funding and expertise to aid the work of the bank. I know that constituents sometimes ask questions about taxpayer money being allocated for such purposes, and when they are having difficulty accessing services in their own communities I suppose we can all have some sympathy for their expressions of disquiet over aid programs. However, that is why we in this place have an obligation to explain why Australia’s involvement in assisting developing nations in our region is important and why we need to ensure that our investment in aid funding is properly acquitted and achieves the objective of alleviating poverty.

As I outlined earlier, seeing firsthand the work of Australians abroad and meeting some of those who are the beneficiaries of that work, I have no doubt about the important role we can play in ensuring that a reasonable contribution is made to alleviating poverty in developing countries within our region. Apart from a desire to redress the awful human suffering in some of these nations, there are practical reasons for aid. Such reasons include arresting the spread of infection and disease, eradicating trafficking in people and illicit drugs, and promoting peaceful coexistence with our neighbours. A wealthy country like Australia should be able to do better than make the international aid target of 0.7 per cent of gross national income only aspirational. We should make it a reality.

In conclusion, I applaud the work of those involved in the Micah Challenge and the Voices for Justice campaign conducted in Parliament House yesterday and today. In particular, I pay tribute to the people from Pearce who made the long journey to Canberra to speak out about the need to step up our campaign to end poverty. Mr Martin Bent, Ms Jackie Knight and Ms Rosanne Logie travelled from Perth to meet with me and others.

Debate interrupted.