Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the opportunity to speak on the Asian Development Bank (Additional Subscription) Bill 2009. We live in a global economy, a global society and a global environment. The stark reality could not have been more evident than in the global financial crisis in which the collapse of the financial sector in the USA led to a domino-effect collapse of economies around the world, highlighting how closely the economies of the world are interwoven.

Likewise, in dealing with the threat of climate change there is universal acceptance that we are facing a global problem requiring a global solution. In fact every significant issue that arises on any matter in any part of the world inevitably has consequences for other parts of the world. That means governments, more than ever before, must have regard to the effects of their actions on overseas countries and, conversely, they must have regard to actions or events taking place in overseas countries. That is particularly more so with our nearer neighbours.

There is, of course, a secondary and equally important reason to be interested in and in touch with people of other countries and that is because, as a civilised society, we have an international obligation to assist or support people who are disadvantaged comparative to us. Our close neighbours, the people of the Asian region, are generally regarded as living in comparative disadvantage to us and for that reason I support this bill, which is fundamentally about Australia providing support to our less prosperous Asian neighbours.

The Asian Development Bank, which is headquartered in Manila, was established 43 years ago, in 1966. Its purpose was to provide assistance to the then predominantly rural economies of Asia. Of the bank’s 67 member countries, 48 are from the Asia-Pacific region. Over the years the focus of the bank has shifted to education, health, infrastructure, industry, regional cooperation and poverty.

I will focus my comments in support of how it relates to the global financial crisis and the global economic recession, the impacts of climate change on the Asian region and the level of poverty in the Asian region.

Australia, through the early, decisive and responsible action of the Rudd government, has been shielded from the full force of the worst global recession since the Great Depression. The Australian economy has fared much better than that of other advanced economies and has been the only advanced economy to not go into recession, to record economic growth over the last two consecutive quarters and to have the lowest debt and lowest deficit of all advanced economies. We have seen strong performances in the retail sector, in housing approvals, in the construction sector and in auto sales. We have seen business confidence rise and job advertisement numbers grow—trends which I believe are attributable to the government’s economic stimulus measures.

In the long term, however, the recovery and stability of the economies of our Asian neighbours will be of critical interest to Australia. Moreover, if those economies recover quickly and remain strong it will be good for Australia. Conversely, if they recover more slowly, there will be an impact on Australia. That is because Asia represents a major export market and trade partner for Australia. Six of Australia’s top trading partners—including our two largest trading partners, China and Japan—are from Asia. Importantly, around 70 per cent of Australia’s trade is with member countries of the Asia-Pacific Economic Cooperation forum, or APEC, which comprises those countries of Asia and those of North and South America.

The fact that nearly 70 per cent of Australia’s trade is with APEC countries highlights just how important the economic performance of the region around us is to our own prosperity. It is in Australia’s economic interest to ensure that the economies of our Asian neighbours remain strong. Right now, when access to finance is tight, support for the Asian Development Bank is most crucial.

I turn to the impact of global warming and climate change on the Asian region. On 19 August I attended a presentation by World Vision on the impact of climate change on developing countries. The presentation highlighted the effects of climate change on developing nations and that many developing countries are more prone to extreme weather events such as cyclones, storm surges, rising sea levels and droughts. It will be developing countries that are least able to respond to the impacts of climate change.

The consequences of climate change in the Asian region will directly impact on Australia. Many people within the Asian region live in the most vulnerable areas, such as low-lying land that can be prone to flooding or rising sea levels. In those countries, rising sea levels and floods are more likely to also destroy homes and infrastructure, which are not built to the same standards as those we apply here in Australia. Many of the poor also farm agricultural land that, even in years of stable climate and good rainfall, is marginal in its productive capacity. In many regions this land is becoming more prone to drought as a consequence of climate change.

The farmers working this land are often subsistence farmers. The result of loss in production for a subsistence farm is that the family goes without food; there is no plan B income option when all your farm produce is needed to feed your own family. The World Health Organisation estimates that climate change since the 1970s, through drought, floods, tropical disease and a shortage of fresh water, could already be causing more than 150,000 deaths per year worldwide. Moreover, it is infants who are most vulnerable.

You often hear from the climate change sceptics opposite the argument that we should not act to reduce carbon emissions because of what they perceive to be the economic costs. I note from reports in today’s papers that coalition members opposite are still in complete disarray on the question of climate change. The science and economic modelling tell us, however, that the cost of inaction, certainly in Australia, is far greater than the cost of action. The cost will be even greater in developing countries, where many regions face a complete wipe-out of their agricultural production because of climate change. In July 2009 an Oxfam report warned:

By the year 2050, about 75 million people could be forced to leave their homes in the Asia-Pacific region due to climate change. Pacific island governments are already tackling climate change-related relocation and resettlement.

In recent times, Australia quite rightly has taken a leading role in addressing many of the significant issues in our region such as in East Timor, the response to the 2004 tsunami, the Cambodian peace process in the 1990s and financial assistance during the Asian financial crisis. I welcome the recent comments by the Prime Minister emphasising the importance of our defence forces partnering with Asian countries, including China, with the focus on responding to natural disasters such as floods, tsunamis and cyclones. It is often defence personnel who are the first people on the ground in response to a disaster. These responses will be so much more effective if the action of countries is coordinated.

I also note the comments today from the World Bank on the release of their 2010 World Development Report. The report notes that while advanced economies are responsible for two-thirds of carbon emissions, poor countries in Africa and South Asia will bear the brunt of the impact through drought, rising sea levels and extreme weather. The report goes on to say that the cost of climate change in the developing world will be up to US$470 billion, or A$547 billion, each year by 2030. Wealthy countries such as Australia should help pay to fix the climate change problems. The report states that a ‘climate smart’ world is feasible, but it will only happen if the countries of the world ‘act now, act together and act differently’. The report goes on to say that coping with climate change will require all the innovation and ingenuity that the human race is capable of. The report finds that it will require large shifts in lifestyle, an energy revolution and a transformation in the way forests and agricultural lands are managed. As an advanced economy, Australia is expected to show leadership in both reducing carbon emissions and responding to the threats of climate change by providing support to those vulnerable Asian countries now as they prepare for global warming impacts.

I have already said that within Asia we can see regions of extreme poverty. There are also regions in Asia where we have seen some of the most rapid economic growth and increase in living standards in our lifetimes. In 1960, South Korea had a smaller economy than Ghana. Today, South Korea is a prosperous and industrial First World economy and Australia’s sixth largest trading partner. Other success stories in Asia followed, through similar growth in places like Indonesia, Malaysia, Singapore and Thailand. However, the Asian financial crisis of 1997 showed how vulnerable these export focused East Asian economies can be to downturns in the global economy. The global economic crisis could drive millions of people from the Asian region back into poverty. We have seen many cases in China where migrant workers have come to the manufacturing hubs in East China only to lose their jobs as demand for Chinese exports from the West dropped and factories closed. These people moved from one side of the country to the other seeking a better life for themselves and their families and have lost their jobs through no fault of their own.

World Vision estimates that as a consequence of the global financial crisis an additional 26,000 children are dying each day. Before the global economic crisis began, we were already in the midst of a global food crisis, already threatening the livelihoods of billions of impoverished people in developing nations in Asia and around the world. In the past 50 years, no region has lifted more people out of poverty than Asia. But no region is more at risk than Asia because of the economic and environmental challenges the world currently faces.

On Monday I met with a delegation from Micah Challenge, who spoke to me about global poverty and the Millennium Development Goals. I understand that they spoke to a number of members of parliament about those same matters. Micah Challenge is a global movement of Christian aid and development agencies, churches and individuals who aim to deepen people’s engagement with the poor and to reduce poverty. The delegation highlighted to me, and to the others they spoke to, the compounding effects the global financial crisis and climate change would have on developing countries—and why in the face of these global issues it is even more critical for us to maintain our commitment to increasing aid assistance to developing countries. Micah Challenge would like to see Australia increase its international aid target to 0.7 per cent of gross national income, a figure the Prime Minister has previously stated that we should aspire to, and which I agree with.

The delegation from Micah Challenge included representatives from King’s Baptist Grammar School in the electorate of Makin, which I represent. Those representatives handed to me over 400 letters and cards written by schoolchildren from King’s Baptist Grammar School urging the government to increase our foreign aid to poor countries. I took the time to read most of those letters and cards and it was gratifying to see the young people, right through from the primary part of the school to the secondary school students, showing so much care and compassion for their counterparts in impoverished nations in other parts of the world, and their pleas for governments around the world that have the capacity to increase aid to be heard. It is encouraging because clearly these are young people who in future years will have responsibility themselves about world aid matters and government generally. But it is encouraging that the young people of today understand both their moral obligations to others around the world and also the threats being presented to particularly those Third World countries by climate change. I hope that, just as they are making representations and appealing to members of parliament like me, similarly children around the country are doing the same thing through their own members of parliament. My reading of today’s younger generation is that they very well understand the importance of developed countries assisting developing countries and they understand the significant threats being posed by climate change.

The children asked that I pass on their letters and cards to the Prime Minister. These cards and letters are in addition to the hundreds I had passed on to the Prime Minister from the same school earlier this year. In speaking about the children, I also commend the leadership at King’s Baptist Grammar School for encouraging children to think about people in poorer countries and to encourage greater support from the Australian government for those people.

The Asian Development Bank has the reduction of poverty as a core focus of its work. The measures in this bill will mean Australia plays its part in increasing the bank’s capacity to do its work. Importantly, the Asian Development Bank and other institutions have also placed combating climate change at the forefront of their work. This bill empowers the Asian Development Bank to take action in response to the key moral challenges of our age: climate change and ending poverty. The government’s commitment to this bill is one of many measures that it is implementing to support people in developing countries. I welcome the increased support the Australian government is providing under this bill and I commend it to the House.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

I take this opportunity to speak on the Asian Development Bank (Additional Subscription) Bill 2009. I do so because I have a great interest in these matters and the region. I will begin by talking about the Asian Development Bank itself. It was established in 1966 and comprises 67 member countries, 44 of which are developing nations in the region. With an aim of furthering economic development through the Asia-Pacific region and a vision of a poverty-free region, the bank provides loans and equity investment to the members that are developing nations.

I understand that in 2008 the Asian Development Bank lent US$10.5 billion. As part of the loan program the Asian Development Bank has also become involved in the policies and programs within the country involved. To put the bank’s activities in perspective, the major borrowers in the last year have been India, China, Pakistan, Indonesia, the Philippines and Vietnam. The sectors that received most assistance were transport and communications at 24 per cent and energy at 20 per cent. Australia of course has a large stake in the Asian Development Bank, being the fifth largest shareholder, and there are 49 Australians actually employed amongst the bank’s professional staff.

In April 2009, the board of the Asian Development Bank decided to increase the bank’s authorised capital stock by 7,092,622 shares, as well as increasing individual members’ subscriptions. If all members of the bank subscribe fully to these new levels, the capital of the bank will be tripled, whilst maintaining the share levels of each of those member nations. Consistent with Australia’s ongoing obligations to the Asian Development Bank, the government did announce in this year’s budget a contribution of US$197.6 million for capital to be paid into the bank and also accepted an uncalled capital subscription increase of US$5.6 billion. The funding commitment and the acceptance of an increased capital subscription will enable the Asian Development Bank to meet the region’s ongoing development needs.

I would, however, like to make mention of how the Asian Development Bank operates, because I have read that the bank involves itself in the policies and spending programs of countries that it lends to. In particular I note that the Socialist Republic of Vietnam is in receipt of loans from the bank. There is little doubt that the people of Vietnam need to benefit from the work of the bank; however, what is not clear is what sort of governance and political freedom obligations are imposed on recipients of loans and technical assistance. Apart from the issues of moral standards of good governance as well as the freedoms of speech, religion and democracy, providing money to inefficient regimes serves only to prop up that inefficiency. This is not the way to produce ongoing economic capacity. Democracy and a free market economy is the destination, and the bank should help the people of Vietnam get there by imposing obligations on the Socialist Republic of Vietnam.

In researching this contribution, I looked at a potential recipient of assistance from the Asian Development Bank, Myanmar, or Burma as we often refer to it. As all members of this parliament would be aware, democracy does not exist in that country, and the people of Burma, the Karen minority particularly, do not thrive under the regime. The bank notes about Burma:

High prices for natural gas exports continued to support modest rates of growth in FY2007. Inflation remained at around 30%, largely the result of money creation to finance fiscal deficits.

That demonstrates the level of effectiveness of the regime in Burma. We should remember that this is the regime that built a new capital and began moving its institutions of government to that capital based on the advice of soothsayers and superstition. Although the bank has not provided direct assistance to Burma in over 20 years, the bank could play a part in advancing democracy in that country. Burma represents an opportunity for the bank to create change for the better and meet the vision of the bank attacking poverty in Asia.

I have spoken about the opportunities for the Asian Development Bank to progress opportunities for people in Vietnam and in Burma. I acknowledge that the bank recently held a joint meeting with the Organisation for Economic Cooperation and Development in Manila. The Asian Development Bank and the OECD’s joint Anti-Corruption Initiative for Asia and the Pacific brings together government representatives and anticorruption officials from 28 countries and jurisdictions in the Asia-Pacific region. I commend the Asian Development Bank for their work, because it has been estimated that bribery payments around the world amount to in excess of $1 trillion each year, and that money could be far better spent on reducing poverty.

With this bill being about the Asian Development Bank, it is appropriate that in the last few days we have seen representatives of Micah Challenge Voices for Justice here at the parliament. A number of speakers have spoken on that, and I would like to join them. Both the Asian Development Bank and Micah Challenge are about fighting poverty. I was visited by Voices for Justice representatives Jackie Knight, Rosanne Logie, Martin Bent and Maryanne Hastings. Whilst in my office, they handed me letters from constituents of mine regarding the Millennium Development Goals. I would like to take this opportunity to acknowledge the effort of Lisa Lee, Grant, Lucinda and Chelsea Cullen, Ashlyn Burton, Kylie Christie, Tamra and Jamie Richards, Dominique Telfer and Andre Golik in writing those letters. I thank them for their passion in this area and for their commitment to this cause. I seek leave to table those letters.

Leave granted.

I will conclude my contribution by saying that the Asian Development Bank has an important role to play in the development of sustainable capacity in the Asia-Pacific region. I feel that it also has the opportunity to encourage democracy, freedoms and the sorts of economies that will benefit the people of the region. I encourage it to do so. Australia has a part to play in the bank, and I am in support of our involvement with the Asian Development Bank.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Asian Development Bank (Additional Subscription) Bill 2009. This bill fulfils our commitment made in the 2 April 2009 communique from G20 London summit, in the ‘Strengthening our global financial institutions’ passage:

• we support a substantial increase in lending of at least $100 billion by the Multilateral Development Banks (MDBs), including to low income countries, and ensure that all MDBs have the appropriate capital.

This bill is about ensuring flexibility and ensuring effective assistance as a good neighbour in our region.

There are three pillars of the Australian Labor Party’s foreign policy. The first is our engagement in the Asia-Pacific area and being a regional power in that area, with our commitment to peace, order and good governance and our commitment to aid, which is so ably given through AusAID in places like Indonesia and the South Pacific. Second is our involvement in the United Nations, in multilateral assistance to so many countries through the WHO, UNESCO, UNICEF and other organisations and in our participation as a medium-sized power on issues of law and order, justice, the relief of poverty and assistance for those suffering from ill health. The third pillar of our foreign policy is our alliance with the United States. The United States is simply the superpower of the 21st century, as it was of the 20th century, when it emerged from the world wars as our great and powerful friend.

This bill involves cooperation with other great and powerful friends as well as the United States of America. The advanced economies have a real responsibility to assist those less fortunate in our region. If you travel through South-East Asia or the South Pacific, you will see at times great evidence of middle-class prosperity and development. Political leaders in rural areas in South-East Asia speak with a great deal of pride and honour about the work they are doing in terms of development. But far too often when you travel along freeways and highways in South-East Asia you will see evidence of terrible poverty—grinding, awful, degrading poverty—and children being, sadly, at home in the company of their families at times when they should be in educational institutions.

Australia has played a significant role in South-East Asia not only tackling the challenges of people smuggling, law enforcement and turning boats back but also assisting in places like Indonesia, such as in rural Kalimantan where we are assisting in the peatlands, tackling the challenges of climate change, trying to assist in the saving of orangutans and also building schools in places where there are no schools. We are involved in assistance in Asia through the Asian Development Bank and this bill is extremely important if we say we are going to be a good neighbour.

The Asian Development Bank has been around since the mid-sixties and its first focus was, quite typically, on the Third World regions of Asia. The focus on agriculture changed through rural development and technical assistance into an emphasis on education, health and infrastructure. Later the focus was on regional cooperation, the relief of poverty and ensuring not just development but sustainable development and better health care for so many of its members. It has 67 members, 47 from the Asia Pacific area, and we should be proud that Australia was a founding member of the Asian Development Bank.

The Treasurer himself is governor for Australia and the member for Fraser, the Parliamentary Secretary for International Development Assistance, is the alternative governor. As I say, we have been an important player in the Asian Development Bank and, like any business or any bank, it reviews its capital needs from time to time and this is done on a five-yearly basis. What we are doing here is fulfilling our commitment and ensuring that we support the Asian Development Bank to improve its capital and its capacity to provide assistance, because we know that if we want to have a stable region and if we want to have sustainable growth in the Asian region we need to ensure that countries and companies, individuals and families are given as much help as possible at this time of global recession and global crisis in the financial markets.

Australia may be an island in terms of geography but we are not an island in terms of our finance or our economy, so we are an important player not only in the G20 but also in the Asia-Pacific region. If you travel through South-East Asia or the Pacific you will see Australians everywhere—on business, on cultural exchanges, playing sport, tourists and backpackers. Australians are integral to the future of Asia. We now play soccer in Asia, and I am proud to say that we are the best team in Asia notwithstanding the most recent defeat by South Korea in a friendly.

Asia is important and we need to show leadership. Parliamentary approval by virtue of this bill for Australia to take up its allocated subscription to a fifth general capital increase at a cost of about US$197.6 million over 10 years is important. Under the general capital increase we are entitled to subscribe to an additional 409,480 shares. Only four per cent of these shares are required to be paid in. What we are doing is supporting our neighbours and our region. We are demonstrating our commitment to our fellow G20 countries and we are showing that we are good neighbours, not just a regional power. There has been some concern in our white paper on defence, but our cultural exchange, sporting contacts, economic development and export and import with our Asian neighbours will demonstrate that we want to be part of the future of the fastest-growing continent in the world.

It is important that we are good regional neighbours. We have been providing assistance for a long time. The previous government, to its credit, did this in the Asian financial crisis back in about 1997. We are doing this now. The previous government, to its credit, assisted in the tsunami in Indonesia. That was a bipartisan approach and this assistance to our Asian neighbours is also bipartisan, and it is important that we use our resources, energy, time and commitment to ensuring that the Asian Development Bank achieves what it hopes to in providing regional support.

The member for Pearce and a number of other speakers have talked about the Millennium Development Goals and the Micah Challenge. I commend the Bible Society for the Poverty and Justice Bible which was given to the Prime Minister and the Leader of the Opposition recently. Many of us received a copy as well. As a person who is not a particularly good Christian but aspires to be a good Christian from time to time, I must say it was such a challenge to read passages of the Bible and discover so much of that great book from the Judeo-Christian tradition which talks about the relief of the poor. I commend the government for its aspirations with respect to achieving the Millennium Development Goals, but I along with many others think we can do better, and it is good to see this bipartisan approach. One of the issues that really concerns me is the desire to reduce child mortality by two-thirds and maternal mortality by three-quarters and reverse the spread of age, malaria and other major diseases by 2015.

In concluding, I want to read a letter from a constituent of mine who lives in the Lockyer Valley, in a rural area at a place called Mulgowie. Her name is Narelle Poole. I thought it was appropriate to read her letter because the message she wanted to give to me as her federal member is a message which is germane to this bill and to all of us. Her letter is to the Prime Minister and is dated 23 August 2009. She writes:

I am writing as an advocate for the poor—those who mostly are unable to speak for themselves.

I believe there is a real opportunity to stop poverty. Thank you for your commitment to the Millenium Development Goals and to increase Australia’s overseas aid to 0.5% of our national income by 2015.

However, I believe we need to aim for the original target of 0.7% of national income, and ask you to make this a firm commitment for the next election.

I also ask that you encourage other leaders of nations to make firm commitments to meet the aid target.

I pray for wisdom and courage as you lead Australia, and thank you for saying ‘sorry’ to our indigenous Australians.

If we can make it an election commitment from both sides of politics at the next election that we raise overseas aid to 0.7 per cent, if that is our desire and our commitment, then our journey will be a lot better. We will be better as a country, and our neighbours will also receive the benefit of our generosity and of our affection and our love.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

in reply—I want to thank all of the members who have participated in this debate on the Asian Development Bank (Additional Subscription) Bill 2009, and in particular the previous speaker, the member for Blair, for a very important contribution. The purpose of this bill is to obtain parliamentary approval to enable Australia to subscribe to its additional capital share at the Asian Development Bank. In so doing, it will ensure that Australia is able to continue to deliver on its commitments to the G20 leaders summit in London in April. The G20 has played a landmark role in responding to this global recession. It is important at this time that members of the G20 continue to work together to support recovery in the global economy. Indeed, that was reaffirmed at the finance ministers meeting only the weekend before last in London. It was 10 days ago that G20 finance ministers met and reiterated all of our commitments to deliver on the commitments that were given in April in London at the leaders meeting.

This is important, because every G20 finance minister knows just how fragile the global recovery remains and how important it is that we continue to support the global economy. Of course, the G20 finance ministers did note that the multilateral development banks were on track to deliver US$100 billion in additional lending, and this is very important to support the global economy. This additional lending is playing a critical role in supporting recovery in developing economies and, therefore, the global economy. Through its part, the ADB is helping to secure recovery and ensure sustained growth and stability in the Asia-Pacific region. Of course, this will be of great benefit to Australian exporters and Australian jobs for many years to come.

The April leaders summit also agreed to ensure that the ADB has appropriate capital to increase its support for recovery in the region through a 200 per cent general capital increase. Australia’s capital contribution would be at a cost of around US$197.6 million, paid over 10 years. This subscription appeared as a capital measure in the 2009-10 budget and does not impact on the budget bottom line. Australia’s contribution represents a small part of Australia’s aid program over this period but a very important one. Supporting this bill will enable Australia to demonstrate its leadership globally and support recovery from the global recession in our region. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.