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SPEARING NOTES FOR JOHN KERIN MINISTER FOR TRADE & OVERSEAS DEVELOP ME NT ACFOA DEBATE SYDNEY, 16 FEBRUARY 1993

(1) IDENTIFY THE KEY NEW DIRECTIONS IN YOUR PARTY POLICY ON AID AND IN PARTICULAR OUTLINE HOW AID POLICY AND PROGRAMS WILL TARGET POVERTY ERADICATION. (15 mins)

I would like to begin by saying I am not only glad to take part in this debate today, I am glad it is happening at all.

When I released CHANGING AID FOR A CHANGING WORLD last November I was trying to raise the quality and the profile of the aid debate because I believe that is the best way to generate genuine policy reform.

An event like this one is an excellent part of this process. Now, in an election campaign, it will attract even more attention. Overseas development assistance is an important part of our national relations with the rest of the world and of our

individual commitment to the welfare of our fellow human beings. It deserves more attention.

If we generate more heat due to the election, I hope we also generate more light. But let me begin with some basic facts that provide the context for this debate.

Australia's official aid budget for 1992-93 is $1.38b, a slight rise on the previous year and equal to 0.36% of GNP, almost exactly the OECD average.  It amounts to about 2% of the world's total expenditure on development assistance.

When you add private funds spent on overseas aid by our NGOs, Australia will contribute over $1.45b to aid this year.

The election context is crucial because the choice is so stark: under Labor, continuing funding growth to 0.4% of GNP by 1995, or over $1.7b by 1994/95. Under the conservatives, an immediate cut of $154m next financial year, followed by a further cut of $55m

in 1994/95, reducing aid funding to under $1.2b.

So, two years from now, the difference in annual official expenditure on aid will be over $500m.

As I said in CHANGING AID, the key issues that Australia's aid program must address in the 1990s are:

- economically and ecologically sustainable development

--  rapid population growth in most developing countries;

- the importance of institution building for sustainable growth;

- the social and economic consequences of the HIV/AIDS epidemic for developing countries;

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We are actively engaging in the revitilisation of the UN

development organisations and UN machinery for handling humanitarian crises. Senator Evans raised this in New York last year with UN leaders.  We also encourage the multilateral banks to continue to improve their performance.

We are continuing to lobby for a more efficient Commonwealth structure and for programs that utilise its development expertise.

The importance of ESD must be expressed at two levels: through environmental criteria being applied to all AIDAB activities, and through building a portfolio of projects which have specific environmental objectives. We also work with Australian companies to fully engage their expertise in this area.

A study to investigate the possible introduction of bilateral loans into the aid program is underway. This is in light of the dynamic economic growth by many countries in our region and the success other major donors have had in

integrating bilateral loans programs into their ODA and.

Studies such as this are an essential contribution to a more informed and open policy-making process.

Increased priority is being given to population-related activities and to utilising Australian expertise in the health sector.

A new Women in Development (WID) policy and plan of action is being implemented.

The new National Program of Action for Children, developed by partner developing countries, is to be incorporated in the preparation of country programs and policy dialogue.

New policy guidelines for programs in the HIV/AIDS area will foster partnership between government, the medical and scientific community and the non-government sector in meeting the challenge of AIDS.

Closer AIDAB/NGO relations are being encouraged through resource and personnel sharing and exchange, with special emphasis given to WID, human rights and HIV/AIDS.

An Advisory Council on Aid Policy has been established to provide a direct link between the Australian community, AIDAB and the Minister. We will meet twice yearly to discuss aid policy directions. The first meeting of the Council

takes place on Thursday.

This is an excellent aid policy and delivery service which is committed to consultation and change in order to raise that level of excellence.This is Labor's achievement.

In their bid to destroy it, the conservatives begin with a basic philosophic approach which negates much that aid stands for. They confirm this by proposing a massive cut in aid funding. After that, they offer only pages of contradictory rhetoric to paper over the mess, and tactical attacks on individual projects. They must be held to account and rejected.

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(2) COMMERCIAL INTERESTS VS POVERTY FOCUS

SHOULD THE AID PROGRAM BE USED TO FOSTER COMMERCIAL INTERESTS IN DEVELOPING COUNTRIES OR SHOULD THE AUSTRALIAN EXPORT PRESSURE BE RESISTED? ARE COMMERCIAL INTERESTS AND POVERTY FOCUS COMPATIBLE? PLEASE OUTLINE YOUR POLICY ON THIS ISSUE. (5 mins)

The development goals of the aid program are not compromised by any commercial or trade benefits that accrue to Australia. Our approach is to maximise the

benefits to developing countries and the returns to Australia. The achievement of one does not mean the neglect of the other.

The internationally agreed goal of development assistance is: 'to promote sustainable economic and social advancement of people in developing countries'

On this agreed basis, any claim that the commercial returns from the aid program somehow subvert our development goals is absurd.

Any judgement of our aid program's effectiveness must be made against development criteria alone. Commercial gains are a secondary and largely irrelevant issue.

We all know the paucity of 'trickle down' theory. Even Senator Hill may acknowledge this for the purpose of this debate, despite the fact that his party's

philosophy and domestic economic proposals reflect this theory in its driest and most outdated form.

We also know, however, that economic growth reduces poverty. Whether aid supplies basic food or shelter, an electric power transmission line, a village well, or a course in sustainable forest management, it still reduces poverty.  We can argue about matters of degree,

of immediacy, of personal preference - but ultimately all our aid activities fulfill this goal.

And the aid program - across its full range - is very much about the supply of goods and services. The Government wants these goods and services to be supplied by Australian individuals and companies. And we want those same Australians to secure follow-on business and

expand their market within the countries concerned. We make no apology for this.

I know a lot of the concern in this area centres on the Development Import Finance Facility, DIFF.

This year, $120m will be spent on DIFF, a little over 8% of our total aid budget.

Because DIFF is a combination of grant funds and concessional loans, it typically supports projects with a total value of over 3 times the actual expenditure.

DIFF is classified by the DAC as Development Assistance. So two key questions must be asked -

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(3)

AFRICA

AFRICA IS IN CRISIS. POVERTY IS INCREASING AT AN ALARMING RATE DEMANDING EMERGENCY RESPONSES IN A NUMBER OF COUNTRIES. AUSTRALIA WILL CONTINUE TO PROVIDE E(ERGENCY AND FOOD AID BUT WILL THE NEXT GOVERNMENT MAINTAIN A COMMITMENT TO DEVELOPMENT ASSISTANCE? WHAT PRIORITY WILL YOUR PARTY

GIVE TO ASSISTING DEVELOPMENT IN AFRICA? WHAT MEANS WILL YOU USE TO DELIVER SUCH ASSISTANCE? (5 rains)

I receive two extremes of that it is a basket case, stop wasting our time and that it deserves the vast because of the degrees of

suffering being endured i:

view about. Africa. One is a lost cause, and we should money there.  The second is majority of our aid effort poverty, hardship and human i Africa.

I reject the first on simple humanitarian principles. I deal with the second by pointing to the overwhelming presence of much larger aid donors in Africa and the fact that, according to figures from the UN's

International Fund for Agricultural Development, rural poor in Asia outnumber those in Africa by around four-to-one (2019m to 443m).

So our aid to Africa must be sensibly targetted and its place in the balance of our total program is about right.

The current level of funding to Africa, including emergency and refugee assistance, is close to 10 percent of the aid program, which is the level advocated by ACFOA.

Future activities in Africa will move away from traditional country program lines to concentrate on specific sectors where Australia can provide expertise. Areas of sectoral focus will include agriculture, health, HIV/AIDS and human resource development.

The program will have a clear poverty focus and look at strategies for sustainable development. There will be an expanded role for NGOs in the fields of both agriculture and health assistance at the community level. Assistance through NGOs will expand and become a major delivery mechanism for Australian aid to Africa.

A new $1 million HIV/AIDS initiative in Africa has been launched to strengthen the capacities of indigenous organisations working in the field of AIDS care and prevention.

Finally, the program must be responsive to the needs of South Africa as it moves towards a democratic, post-apartheid constitution, and will support democratic reforms in other African countries.

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This comes to a head in Fightback which proposes to cut

AIDAB's admin funding by $14m, more than one-third. But his 'Blueprint' has several claims that the aid program is suffering through lack of resources!

Where will the cuts be made? Which overseas offices will be closed? Which overseas AIDAB officers will be recalled? Which regional AIDAB offices will be closed?

2. Will the rumours and fears be proved right?

will AIDAB be subsumed into DFAT as part of a cost-cutting exercise?

is this an option he is considering?

if so, how would AIDAB's work be protected from being overcome by the larger departmental agenda, or by Austrade or business interests?

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This brings it back to the key issue: funding.

Under Labor's commitment to fund ODA to the level of 0.4% of GNP by 1995, current estimates mean aid funding by the last year of the next Parliament (1994/95) will be $1.738b .

By the first year of the next Parliament, 1995/96, it will rise to around $1.867b.

Under Fightback's plan to cut ODA by $209m over two years, by 1994/95 aid expenditure would be reduced to $1.175b

This is a shortfall of 563m compared to Labor.

This is a cut of 33% compared to Labor .

Senator Hill cannot explain how he can propose such a savage cut in ODA and still claim in Fightback:

'The Coalition will maintain a substantial and worthwhile aid program.....In many ways, the quality of the program will be improved.'

Under Labor, as I have explained, Australia has an excellent and comprehensive aid policy and delivery service.We are committed to consultation, change and increasing levels of funding to raise that level of excellence.

Under the conservatives this would be squandered and it would be up to the next Labor Government to rescue and rebuild.

The choice is clear. The choice is yours.



