Transcript
LUKE FLETCHER: In terms of what's happening with the current plans for a new infrastructure bank, so there's legislation before the Australian parliament now to create the mechanism for this new infrastructure programme. Which will be a mixture of half a billion dollars in grant money from the Australian aid programme with one and a half billion dollars of loans on the capital markets, which would be combined into a two billion dollar concessional finance facility. The mechanism to choose the projects would be DFAT, our Foreign Affairs Department, but the administering agency is EFIC which is Australia's export credit agency. So it would be a sort of a combined, the idea is to make it a sort of combined programme between DFAT and EFIC.
JENNY MEYER: So two billion dollars is a lot of money. Your report has called this idea misguided. What do you think is wrong with the notion, which I think is part of Australia's Pacific 'step up' and trying to balance out this Chinese influence?
LF: Well when you come to the Chinese influence, first of all we've looked at that in the report. And as far as we can tell China is acting pretty much like any other aid donor. It's giving aid to some infrastructure programmes in the Pacific but in many of the countries it is lending or granting money to more traditional aid areas such as agriculture, social programmes and so forth. In terms of the amount of the money, Australia is still well ahead of China at the moment in terms of its aid budget to the Pacific. So unless China does significantly step up its contributions, Australia is still well ahead. So there's a sort of, a bit of a panic about China which we don't think is warranted. We are concerned that a lot of the Chinese aid is being given in loans because the Pacific nations are already, most of them are already in danger of being in debt distress. But the solution to that is not for other donors like Australia to then do the same thing and change their programme from grants to loans. The solution is to continue with what we're doing rather than create this new mechanism.
JM: And I see that there are some concerns about transparency as well. That, you know, it might not be that easy to find out what's going on with the money and where it's actually going, what projects are being funded?
LF: So presumably what will happen is that we the public will get told about the projects. The problem with the transparency is, well there's two problems; one is in terms of what projects are being chosen and why? Are they being driven by Australia's commercial interests, rather than development needs in the Pacific? That decision is being made by DFAT. We have concerns about the sort of general principle behind the project. But then we have another set of concerns relating to the administering agency EFIC which our organisation is the main watchdog of. We've been following their impact on development in the region for many years. Unfortunately when it comes to EFIC, EFIC is exempt from our Freedom of Information laws. And it is really in terms of transparency, we believe, a black box. And we won't be able to get any information about their due diligence in terms of the projects that it is assessing. They never release that. They never tell us, they apparently do due diligence, but we the public never gets to see that. So yes, we have serious concerns about transparency.
JM: And it sounds like you're concerned that the whole notion of this infrastructure bank with the Pacific or for Pacific countries, is just repeating some of the past mistakes in terms of this top-down donor kind of way of operating, rather than actually consulting properly with what's needed from the Pacific countries themselves?
LF: Well that's absolutely right. So the only sort of arguements that we've seen that this is needed in a general sense are from projections done by the Asian Development Bank, the ADB. Which we've examined them and we think the methodology is extremely problematic to say the least. We would like to see more specific arguments and demonstrated need for particular infrastructure projects in particular countries. We're not questioning that the Pacific doesn't need infrastructure. What we would say is that if you're looking to address poverty in the region, there are a lot more effective ways of doing that. Infrastructure is premised on the idea of bringing economic growth. Which is an almost impossible calculation to get right, how to bring growth to small island states in the Pacific. It's not to say that there mightn't be some really useful infrastructure projects, especially those that are going to support local agriculture markets. And there are a lot of other very important development needs in the Pacific that don't have anything to do with infrastructure. So just sort of taking what may end up being 40 percent out of the Pacific aid programme and dumping it into infrastructure and giving it in loans, it's a very,very strange, from a development point of view, it's a very, very strange decision.
JM: So where is it at now? What's likely to happen?
LF: The legislation could be passed next week. But we very strongly hope that our senators will resist that urge. There has been no opportunity to properly debate this. The Senate enquiry into this legislation had no public hearings, there was a three week window to get in submissions, there's been no, really no public discussion. So really if this is going to happen, it should be a longer, more public, more open discussion. It should involve Pacific nations, the Pacific Forum Secretariat, civil society in the Pacific, civil society in Australia, and that just hasn't happened. So we need more time. And we need to delay this conversation until after the Australian elections.
JM: It does sound almost dodgy?
LF: Well I would say the premises of it are questionable.