Foreign Affairs, Defence and Trade Legislation Committee
Estimates hearing, 6 June 2013
Australian Agency for International Development
- Mr John Pacey, Chief Credit Officer, Export Finance and Insurance Corporation
- Mr Jan Parsons, Director, Environmental and Technical Review, Export Finance and Insurance Corporation
- Mr Sam Gerovich, First Assistant Secretary, Trade and Economic Policy Division
- Mr Peter Baxter, Director General, Australian Agency for International Development
- Mr James Batley, Deputy Director General,
- Mr Rob Tranter, First Assistant Director General, Pacific Division,
- Mr Roderick Brazier, First Assistant Director General, East Asia Division
- Mr Paul Wood, Chief Financial Officer
Senator RHIANNON: EFIC's environmental and social risk assessments for high-risk projects, as we have heard from you before, are not publicly released. Why was that decision made? Why are they not publicly released?
Mr Pacey: EFIC works in a commercial environment. We are provided with information from customers who are subject to commercial confidentiality. EFIC is required to provide confidentiality undertakings. That information is very important to our risk assessment and our ability to make decisions in terms of managing environmental and social risks. In terms of compliance with our policy and transparency, EFIC makes a commitment to have its compliance with our environmental and our policy and procedure audited every two years. That audit report is made publicly available on our website. The most recent audit was conducted from September to November last year. That audit confirmed that we do comply with our policy and procedure.
Senator RHIANNON: But without the actual mandatory public reporting on the environmental and social risk assessment for these high-risk projects on the projects themselves, how can the government assure the Australian public that the human rights and environmental standards in these countries impacted by EFIC supported projects are protected? We have heard from you a number of times about the commercial imperatives that you are dealing with. But you are part of the government that has these other responsibilities. Without the public disclosure, how can we be assured that the right thing is being done for the people? There is a development aspect to any project when it goes into a low-income country, which is what many of your projects are doing. So how, without public disclosure, can that be achieved?
Mr Pacey: EFIC makes a commitment to apply the OECD common approaches to the transactions we examine. We benchmark projects in those markets against the IFC performance standards, which are best practice international obligations in evaluating such projects for environmental and social risks. The transparency we provide, I think, is not—
Senator RHIANNON: Before you move on, I want to ask about the IFC performance standards. When the evidence was given at the inquiry we held recently, it actually came across, when I went back to look at it, that you use those standards as a guideline, not as something that has to be applied. I went through some of the material about this Mongolian mine that is quite controversial. A number of international environment and social justice groups have made an assessment that that project has broken with a number of the IFC performance standards. My question is about how you use the IFC performance standards. It appears that they are a guide, not something that has to be followed.
Mr Pacey: We make a commitment to adopt the OECD common approaches and to benchmark our transactions against the IFC performance standards. I can ask a colleague of mine who is an expert in this area to provide greater information, if you require it.
Mr Parsons: Would you mine just repeating the question?
Senator RHIANNON: It is precisely about the IFC performance standards. We were together last when you were giving evidence to the EFIC inquiry into the bill before the Senate. When I looked at the transcript, the way you described it, it came across that you use those performance standards as a guide, not as something that has to occur.
Mr Parsons: Well, no. They are the benchmark that we use to assess projects.
Senator RHIANNON: But let us explore the word 'benchmark'. That means it sometimes occurs. You have a lot of wriggle room, have you not?
Mr Parsons: No. There is no wriggle room. Our policy is that we will apply the IFC performance standards unless there is something equivalent to, or more stringent than, them. If a project does not meet the performance standards, we will decline that transaction. That is clearly stated in our policy.
Senator RHIANNON: I will give you one example from the Mongolian mine. I understand that, under performance standards 1 and 3, waste rock and tailings management plans are supposed to be publicly available, but there are not any. I have a whole lot of other items where performance standards 1, 5, 7 and 6 have not been met. That is why I came to the conclusion, after reading your evidence again and looking at some of this material about how that mine is proceeding, that these standards have not been met. It seems to emphasise that they are a guide, not mandatory.
Mr Parsons: No. That is actually not correct. The projects for the mine and social impact assessment address the management of the waste rock and the tailings storage facility. Some operational environmental and social management plans are currently still being worked on. At the time, the EIS was released back in August, there was an action plan released at the same time which identified that those operating environmental and social management plans were still being prepared and would be released at a later date. That is entirely consistent with the IFC performance standards.
Senator RHIANNON: What about performance standards 3, 4 and 6—that plans for a coal-fired power plant are not compliant with World Bank coal guidance, requiring an alternative analysis?
Mr Parsons: The project is currently sourcing its electrical power from power stations in China. The project's investment agreement has an agreement with the Mongolian government to source power from within Mongolia within four years of operations commencing. Operations, as defined in the investment agreement, have not commenced yet. The project and the Mongolian government are still determining where power will be sourced from. If power is to be sourced from an on site coal-fired power station, a supplementary ESIA will be prepared and publicly submitted. But there is no decision yet on where the power will be sourced.
Senator RHIANNON: So are you saying that because that decision has not been made, you are not actually bound by performance standards 3, 4 and 6 yet?
Mr Parsons: Well, they have not made a decision on the power station. The power may actually be sourced from a power station that is remote from the project, which may be a multiuser power station. Until that decision is made, there cannot be an assessment of the power station. But all performance standards relevant to the project were assessed and reviewed in the project's ESIA. I think the only one that was not relevant was performance standard 7, which deals with indigenous peoples.
Senator RHIANNON: That is one of the other ones that I had down. Performance standard 7 has not been followed as well. Could you just elaborate on where that one is up to, please? Thursday, 6 June 2013 Mr Parsons: Well, performance standard 7 applies to a project when the project is affecting indigenous peoples. The people within and surrounding the project site are not indigenous peoples as defined in the performance standards and are not identified as indigenous peoples by a whole series of experts on the topic.
Senator RHIANNON: But considering these are herders who have been there a long time, it has been widely recognised that disruption is going to occur. They are part of that community. Has it not become a convenient way to get past performance standard 7 by saying these are not indigenous people?
Mr Parsons: No. Performance standard 7 deals with indigenous people and it recognises indigenous people as specific people who, for various reasons, may be specifically vulnerable to a project. The herders in the area are just normal members of Mongolian society. They do not identify themselves as separate to society. They do not have any features which distinguish them from the rest of Mongolian society, so they are not actually indigenous people. Therefore, that performance standard is not applicable to the project. The Asian Development Bank has done similar projects in the area and also come to the conclusion that the herders are not indigenous people under the normal recognised meaning of that term.
Senator RHIANNON: Apart from the Asian Development Bank, who else has determined they are not indigenous?
Mr Parsons: Well, there is an independent group whose name escapes me at the moment that deals with minority rights, or the rights of minority peoples. They too have not identified the Mongolian herders as indigenous peoples.
Senator RHIANNON: Could you find out the name of the group? I am interested in who has determined that they are not indigenous. Could you come back to us about that, please?
Mr Parsons: Sure, yes.
Senator RHIANNON: Take it on notice.
Mr Parsons: Yes.
Senator RHIANNON: Thank you. I want to move to the issue about EFIC and national interest decisions. At the moment, we have EFIC making these national interest decisions. Because of this issue of commercial-in-confidence and the way EFIC works, we are having decisions effectively made by individual government officials that are exercising enormous discretion about what constitutes a national interest benefit. The public and MPs—like the MPs here—are excluded from any of those deliberations. So how can we be confident that it is in the national interest when, in fact, it cannot be assessed in any open way?
Mr Pacey: I think DFAT would be best to answer that question because EFIC does not make decisions on the national interest account. We make a referral to government for their consideration.
Senator RHIANNON: Could DFAT answer that, please?
Ms Adams: I am sorry, Senator, but I will have to ask someone to come to the table and ask you to repeat that question.
Mr Gerovich: National interest decisions are taken by the cabinet.
Senator RHIANNON: So in terms of an EFIC project, they go to cabinet and the cabinet will then assess the national interest. Could you run us through briefly at what level that has to occur, please?
Mr Gerovich: My understanding is that the EFIC proposal goes to the cabinet through the minister for trade. Cabinet then considers whether it conforms to the national interest guidelines. If it does, it approves the project.
Senator RHIANNON: So, beyond cabinet, there is just no possibility for the public or MPs to interact with that process? So there is no other level? When something is determined on the basis of being of national interest, there is nobody else who can intersect with that process outside cabinet? There is no accountability? There is no oversight?
CHAIR: I think the officer has advised that it is a decision of the cabinet based on the advice that comes from the minister for trade.
Mr Gerovich: Yes, Senator. That is my understanding. Once the cabinet has taken the decision, it is a decision of the government to support a project proposed by EFIC on the national interest account.
Senator RHIANNON: Minister, could you come in on this? How is it justified that there is no parliamentary or public scrutiny of EFIC's national interest account decisions? There is an enormity here. We have this tension between the commercial interests of Australia and the often considerable damage to human rights and environmental protection in low income countries. The resources industry, as we know, has sometimes a damaging track record in these countries. We are talking about the national interest of Australia, but we are talking about what happens in low-income countries. How is that resolved? Why should there not be a public or parliamentary oversight?
Senator Bob Carr: Well, I return to position I have outlined in these debates with you before. The evidence is overwhelming that resource investment enables poor countries to achieve middle income status. Again, think about Myanmar, which we were talking about yesterday. If half the kids born end up being stunted because of inadequate nutrition and half of them do not finish primary school, there is a case for saying that a bit of responsible investment in the country, giving their mums and dads secure income and good jobs, is a big step forward for a country with only an agricultural base and, at that, an inadequate one. Second, I have not seen an indictment of a big Australian company for reckless or socially irresponsible behaviour in a developing country. If there is such evidence, I will alter my view and not hesitate to pick up the phone to a CEO of an Australian company and tell him or her that their outfit is behaving in a way that damages Australia's reputation and does more harm than good.
Senator RHIANNON: But can you give us an example of an extractive industry in a low income country that has brought benefits to that country and the bulk of the profits have not gone overseas? Can you give us an example where the extractive industry has worked for the local people?
Senator Bob Carr: They are two separate concepts. Whether it has done damage to local people and, second and separately, whether most of the profits go overseas.
Senator RHIANNON: I am happy for you to take it separately. Can you give me an example?
Senator Bob Carr: It would be harder to nominate an example where it has not provided a benefit.
Senator RHIANNON: Well, where there has been.
Senator Bob Carr: It is up to sovereign governments. Take the example of Mongolia, which we were canvassing yesterday and which our former ambassador to Mongolia, the non-resident ambassador based in Seoul, could elaborate on more effectively than me. A government like Mongolia confers the conditions attached to any development approval for a mine. Take the Rio mine as an example, which you referred to yesterday. It has imposed quite hearty and robust initiatives gaining an income flow to itself, which I can only assume will be—
Senator RHIANNON: Minister, I have five minutes left. Would like you to take on notice an example where the extractive industries have worked for low-income countries.
Senator Bob Carr: Well, take that example, because you raised it yesterday. I do not think you were present.
Senator RHIANNON: The Mongolian one is one. I would be interested to see if you would bring that back to us as an example—
Senator Bob Carr: But I did.
Senator RHIANNON: because of what happened with their mining tax. Their mining tax was overturned.
CHAIR: Senator Rhiannon.
Senator RHIANNON: I am going to lose time.
CHAIR: We have five minutes left in this whole of the department of trade, so please.
Senator Bob Carr: Chair, I did come back. Senator Rhiannon may not have been here. I did come back to the committee and list the benefits to the Mongolian community. There are benefits to the Mongolian community in terms of jobs, income to the government and training. I urge Senator Rhiannon to look at that supplementary answer I gave yesterday.
Senator RHIANNON: I will, but can you take it on notice, please?
Senator Bob Carr: But you are asking me to list the benefits of resource extractive industries.
Senator RHIANNON: Just some examples. Just examples.
Senator Bob Carr: Why do we not take that as a case study and you look at my answer? It was a long list of the benefits accruing to the people of Mongolia from that huge mine.
Senator RHIANNON: I have never had a minister fail to take a question on notice, so it is disappointing, Minister. No, he has not given an example. Not one example.
Senator RHIANNON: I would like to move on to the Mining for Development Initiative. Could you confirm what the budget for the AMDI is, please? Is the four-year funding due to run out in 2014 or 2015?
Mr Baxter: The funding for the Mining for Development Initiative is $127 million. I think your response is correct; it runs out in 2014-15.
Senator RHIANNON: It runs out for that financial year.
Mr Baxter: That is right.
Senator RHIANNON: What are the plans beyond this date for AMDI?
Mr Baxter: As we are only in the second year of the initiative, we have not developed those plans yet. But undoubtedly we would do an assessment of the impact of the initiative and then make decisions after that based on the budget circumstances at the time.
Senator RHIANNON: Has AusAID conducted any evaluation of the achievements of AMDI relative to the MDGs?
Mr Baxter: Well, the whole emphasis of the Mining for Development Initiative is to assist countries to deal with development challenges by ensuring that the revenue they earn through their extractive industries is applied as effectively and equitably as possible to deal with a range of development challenges, including the MDGs, of course.
Senator RHIANNON: The question was about evaluation.
Mr Baxter: We can certainly point to a significant number of results in terms of the number of officials that have received training in different areas of the extractive industries under the initiative. One example is that we are currently training 1,000 mine inspectors from Indonesia. That is a really practical example of where the initiative will improve occupational health and safety standards. We have provided training to officials in areas of regulation relating to the environment and other areas. So there is a whole range of results that we have already achieved through the program.
Senator RHIANNON: Could you take on notice what you are doing in terms of how it sits with the MDGs, please?
Mr Baxter: Absolutely. The fundamental point is that people lift themselves out of poverty when they get a job. If mining sectors in developing countries are run properly, the prospects of people gaining employment and using governments using revenue to create jobs obviously is increased.
Senator RHIANNON: How much was spent on the mining for development conference in Sydney?
Mr Baxter: As the conference has only just been completed, we do not have all of that information. But I am happy to take it on notice.
Senator RHIANNON: I am sorry, Mr Baxter. I missed that; I was just speaking to the Chair out of necessity. Could you repeat that?
Mr Baxter: The total costs are still being finalised because the conference has only just recently been held. So we are waiting for some of the costs to come in. But I am happy to take that on notice.
Senator RHIANNON: Chair, do you want me to stop at this point?
CHAIR: Mr Baxter, we have just had a discussion here. There are extensive additional questions that people would like to pursue. But I think that in fairness to Hansard and Broadcasting, we do need to take a dinner break. So we will take a break now and resume at 7.30 pm. Minister, are you happy for that to occur?
Senator Bob Carr: Yes. You know my position. I am happy for it to continue.
CHAIR: Thank you very much. I apologise. It is just that people have had a big day and we need to take a bit of a break. Thank you very much. We will suspend until 7.30 pm.
Proceedings suspended from 18:34 to 19:30
CHAIR: Mr Baxter, I understand you have some answers to some questions in outcome 1.
Mr Baxter: Yes, I have some answers to some of the questions that Senator Kroger asked earlier about staffing issues. Senator, you asked for separations in 2010-11 and was it correct that 70 per cent of departing staff have been with AusAID for less than three years. In 2011, 27. 2 per cent of departing staff had been with AusAID for less than three years. You also asked was it correct that 66 per cent of AusAID staff have worked for AusAID for less than five years and 30 per cent of staff for less than one year. The figures are as of 31 March this year: 60.5 per cent of AusAID's total workforce had less than five years tenure in AusAID and 6.3 per cent had tenure less than one year. You asked what proportion of senior staff had five years or more experience in AusAID. As at 31 March, 56.3 per cent of senior executive staff had more than five years tenure.
You also asked for some details on the 15 reported allegations of bullying and harassment made by AusAID staff since 1 July in terms of the level of officers involved. Twelve involved allegations made against executive levels 1 and 2 or SES officers. I would note that they are all supervisory level positions. Eleven cases were resolved informally and four cases were or are being resolved formally.
Of the four formal cases, one case involves allegations of bullying and harassment against an EL2 officer. The investigation has recently been completed and AusAID is considering the independent report recommendation that found evidence of a breach of code of conduct. As the officer in question has left the agency, our options to pursue remedial action are limited. One case involves allegations of bullying and harassment against an SES officer. The investigation has recently been completed and AusAID has considered the independent report recommendation that there is no evidence of a breach of code of conduct and that the officer be counselled.
One case involves allegations of bullying and harassment against several SES and EL2 officers. Arrangements for an independent investigation have recently been made and will commence shortly following a formal grievance being lodged by the complainant on 26 April 2013. One case involves allegations of bullying and harassment against an EL2 officer by an overseas based staff member and an internal investigation is currently underway.
Senator RHIANNON: Continuing with the mining for development questions, were travel fees to the Mining for Development Conference for international civil society organisation delegates covered by AusAID?
Mr Gilling: Not all of the 600 attendants were covered, but some of them were. We had a small budget to accommodate support for people who might otherwise find it difficult to get to the conference, and some of the civil society representatives were indeed supported.
Senator RHIANNON: Could you take on notice how much was allocated and who was funded?
Mr Gilling: Yes, of course.
Senator RHIANNON: And what organisation they were from.
I understand that $2 million may have been allocated to Revenue Watch. Is that the case? What process did they go through to win this $2 million?
Mr Gilling: I do not believe their sum was actually $2 million. I think it was less than that. I would have to take on notice the process, but the Revenue Watch Institute is part of our approach to dealing with transparency and is really about how we engage with the community to ensure that they have the information to hold governments and companies to account. So that was the principle of the engagement. I would have to take the concrete steps taken on notice.
Mr Baxter: The quantum I can give you is $1.3 million.
Senator RHIANNON: Thank you. Has the $22 million that I understand has been earmarked for the CSOs been open for grants?
Mr Gilling: It is not open for grants, no. It is an earmarked indication, as you rightly say. The Prime Minister announced that intention. The Revenue Watch spending would have come out of that. I think we are still in the process of planning for how we might spend that, but it is certainly not a question of putting the intention out to the community to say, 'This is a grant, and please come one, come all.'
Senator RHIANNON: So that was the $22 million the Prime Minister announced when the initiative was first announced. Have any moneys been allocated apart from the $1.3 million?
Mr Gilling: It is one of these issues where it can be hard to draw a hard and fast line. Some of the work of the EITI and, indeed, some of the training activities are going to NGOs. I would have to take on notice the exact amount, but we have not issued any large grants beyond Revenue Watch.
Senator RHIANNON: Could you take on notice what allocations have come out of the $22 million, who they have gone to and what for.
Mr Gilling: Sure.
Senator RHIANNON: Thank you. Is there a strategy associated with community and social engagement under the AMDI?
Mr Gilling: In terms of the initiative?
Senator RHIANNON: Yes. $20 million is a lot of money. You have invited some of them to the conference. What is the strategy for engaging with this sector?
Mr Gilling: We are developing, particularly through consultation with our advisory group, which includes community representation on it, what the strategy should be in the long term. We have a process for developing a strategy for the entire initiative that will include an element on community investments. We are currently working with the advisory council on drafts of this document.
Senator RHIANNON: When do you expect that the drafts will be finalised? Will they be publicly available?
Mr Gilling: I would anticipate that that would not happen before the end of the year.
Senator RHIANNON: And will they be publicly available?
Mr Gilling: Certainly.
Senator RHIANNON: So by the end of the year on a website.
Mr Gilling: Yes.
Senator RHIANNON: Thank you.
On your website you have an infographic that has a bit of the pie chart of direct benefit to communities. I think it comes in at about $39 million. From the summary information it looks like this was just through the public sector linkages program and that there has not been much local CSO support for the existing projects working on mining related activities or in mine affected communities. I am trying to determine what that $39 million goes to when you say it is of direct benefit to communities.
Mr Gilling: I am afraid I do not have the break-down with me. I can take that on notice. As I said earlier, I think you need to be cognisant of the fact that it is hard to draw a line between a range of the activities we are doing. At the end of the day, what the initiative is aiming to do is strengthen the impact of mining investments that already exist for the poor of the countries we are working in. I think that, to some extent, we are talking about a much broader engagement with the poor than you are suggesting.
Senator RHIANNON: I was not actually suggesting anything. I was asking the question. To ask it in a different way: when somebody comes to your website, they see the pie chart and the significant piece of the pie with the statement 'direct benefit to communities'. What should they assume? What would be an accurate assumption for how that money is being spent?
Mr Gilling: I would have to take on notice the exact definition of that quantity.
Senator RHIANNON: If you need to take it on notice, has consideration been given that the website should have more information on it?
Mr Gilling: That is a fair point to raise. I will certainly verify it with the staff.
Senator RHIANNON: Thank you.
It appears when you look at this material that under the pillar of 'direct benefits'—
Mr Gilling: I beg your pardon?
Senator RHIANNON: Will I keep going, or do you want to deal with this?
Mr Gilling: I think there may be some additional information, but why don't you keep going.
Senator RHIANNON: It appears that under the pillar of 'direct benefits to communities' all the commitments are associated with research, with little direct benefit to communities coming through. That view that I formed in looking at your material has been partly compounded by you indicating that the CSOs cannot directly engage with this $22 million. Is that a fair assumption? Should this definition of 'benefits to communities' be placed under the 'regulation and governance' pillar? I am trying to work out how you are defining things and if you have them in the right place.
Mr Gilling: I understand the question, but I repeat that I do not have the information to hand to clarify that. But it is a useful question to raise, and I will certainly ensure that you have an answer for it.
Senator RHIANNON: Thank you. I would like to go to some questions about the use of the $375 million that has been redirected from within your aid budget. Was there a request for this money diversion at the request of or initiated by the immigration department, or was it by AusAID?
Mr Baxter: The minister answered a question on this earlier where he pointed out the decision on the reprioritisation of the official development assistant budget was made by the expenditure review committee.
Senator RHIANNON: So that is where the idea comes from? Is that what we take from that answer?
Mr Baxter: The expenditure review committee of cabinet makes decisions on the budget allocations and did so in this case.
Senator RHIANNON: Thank you. Do you know if DIAC is doing any other spending that they classify as ODA on Nauru and Manus?
Mr Baxter: I am not aware of any expenditure by DIAC on Nauru and Manus that is classified as ODA.
Senator RHIANNON: So you are not aware of it. Do you need to take it on notice to confirm it?
Mr Baxter: No, there is not any expenditure that would meet the ODA guidelines issued by the OECD. DIAC do receive funding for capacity building in developing countries, particularly relating to the relevant agencies that deal with immigration issues; but, for the details of that spending, you would need to refer to DIAC.
Senator RHIANNON: But not ODA eligible.
I saw the details you provided last year about what specifically the $370 million was spent on for 2012-13. Were there any changes to that information that was released?
Mr Baxter: I think you are referring to the reprioritisation of ODA funding prior to Christmas 2012.
Senator RHIANNON: Yes.
Mr Baxter: The OECD issues guidelines that the Department of Immigration and Citizenship have to adhere to when spending that funding. In the broad, it is related to the sustenance of people in Australia awaiting the determination of their refugee status and it only applies for the first 12 months—
Senator RHIANNON: I do understand that, Mr Baxter, and I appreciate you have explained that to us before. You gave detailed information about Indonesia reduced by $33.5 million, the Pacific, Cook Islands—so what I was after was: have there been any changes to that information you provided previously?
Mr Baxter: No.
Senator RHIANNON: With regard to the $370 million in 2013-14, have you provided a similar breakdown to what you provided for the previous financial year?
Mr Baxter: No, because the circumstances are different. As you would understand, the reprioritisation that happened before Christmas was halfway through a financial year after all of the funding for that financial year had already been allocated to particular programs and activities. In the budget process leading up to the release of the 2013-14 budget the $375 million was factored into the construction of that budget, so it comes from the growth in the aid budget rather than by having to change existing programs.
Senator RHIANNON: Thank you. With that $375 million being spent in Australia, is it direct government spending or is it going to NGOs or to private companies or is it going to the detention centres or to refugees in the community? I am trying to understand how it works, where the money goes.
Mr Baxter: It is being spent in Australia, but I do not have those details because it is the responsibility of the Department of Immigration and Citizenship.
Senator RHIANNON: Do you have a responsibility to ensure that how DIAC spend the money is in keeping with the OECD guidelines and, if you do have that responsibility, wouldn't you therefore gain the knowledge at some point?
Mr Baxter: As might colleague the chief financial officer pointed out earlier, DIAC and other agencies that spend official development assistance funding are required to report to us on a six-monthly basis against the OECD DAC directives, and they do so. The Chief Financial Officer, Mr Wood, might have some more details on that.
Mr Wood: I could provide you with a little bit more information; obviously the fine detail is held by the Department of Immigration and Citizenship. Based on some of the information that has been provided by DIAC, a lot of the payments are made to providers such as the Salvation Army and the Australian Red Cross, and Marist Youth Care was another example that I saw. So it is payments made by them to the service providers that provide some of this care. They have provided us just with some details in terms of what is given to them which just meet the criteria of being food, sustenance and shelter.
Senator RHIANNON: Part of my question was is some of the money going to NGOs, so I take it from that that some of it is. I understand Mr Baxter said we need to go to DIAC, but do you have any figures?
Mr Wood: I do not have any figures.
Senator RHIANNON: So how are you aware that it is going to NGOs? Did you see a report or were you at a meeting? How do we have that knowledge?
Mr Baxter: Some of that information is on the public record; it has been in the newspapers. DIAC have had to go through processes to award contracts and the like, so it is on the public record. We really are not in a position to provide a detailed breakdown of that expenditure or extensive information, not because we want to be unhelpful but because it is the responsibility of another department.
Senator RHIANNON: I appreciate that. We often have this at estimates, where we bounce back from one department to the other. I appreciate you have just said it is up to the department and they report every six months. When we were with the ADF or the AFP—I must admit I am not sure which it was; it has been a long couple of weeks—one of them, and it could have been the ADF because I know they ran into trouble about how they were defining their ODA eligible funding, said that they were regularly checking with you to get things closed off.
Mr Baxter: We do provide advice. That is certainly true. We are the organisation in the government that provides advice to other agencies, but it is along the lines of whether a particular activity is eligible to be counted as official development assistance funding or not. We can provide them information on that, but we do not make decisions for them. We just provide them advice on the guidelines and how those guidelines should be applied.
Senator KROGER: It might help Senator Rhiannon to reiterate that you have already been asked to table the six-monthly survey, which accounts for the ODA spend from DIAC and will provide much of the information that she is seeking. You have already offered to table that.
Mr Baxter: The responsibility that we have is to report to the OECD on the overall expenditure of the government against the official development assistance budget. As you know, the government has made commitments to spend a certain percentage of gross national income—in the case of this year, 0.35 per cent, as ODA. We track the aggregate expenditure taking account of all the appropriations of ODA to different areas of the government and then report that, but we do not do it in a way that polices, if you like, what other organisations do.
Senator RHIANNON: You said that you are there to give advice and that we have $375 million of ODA eligible money in Australia. Do you give any instructions or guidance to those who are responsible for implementing it or do you give that to DIAC to pass on in terms of how they are using that money? Do you get down to that level of instructions?
Mr Baxter: There is guidance that has been issued by the OECD, because a number of countries use part of their official development assistance budget to meet similar costs and all of those expenditures are based on the OECD DAC guidelines. We have sought advice from time to time from the OECD on behalf of other organisations as to what particular expenditure may or may not be eligible.
Senator RHIANNON: I will now move on to Bougainville. I understand that AusAID has granted more than $600,000 to Griffith University Professor O’Faircheallaigh and Australian National University scholar Anthony Regan to advise on illegal mining on Bougainville. Can you outline the purpose of the research and whether it for the Autonomous Bougainville Government?
Mr Baxter: I will ask Mr Tranter to answer that question.
Mr Tranter: The two academics that you refer to, Anthony Regan and Professor O’Faircheallaigh, are researchers who have a longstanding track record of work in Bougainville. They have been engaged through the Australian aid program to work with the Autonomous Bougainville Government as part of the process of building capacity within the public service in the province of Bougainville.
Tony Regan has been working closely with the autonomous government of Bougainville on preparations for the development of the constitution for Bougainville as well as contributing advice around the legislation to facilitate the transfer of regulations and public services from the national government.
Professor O’Faircheallaigh has also been working closely with the ABG around the consultations with the community about the future prospects for mining in Bougainville. The work that those two individuals are doing with Griffith University relates to a broader process of research, which, I understand, has been approved as part of an Australian development research grant. It is part of the portfolio of research which is commissioned by the agency.
The research is looking closely at the question of illegal mining in Bougainville. It is examining issues such as the social and environmental costs associated with illegal mining. We expect that that research will contribute to policy development by the Autonomous Bougainville Government around future considerations for mining policy in Bougainville, including issues of controlling illegal mining and establishing legal regimes to support the mining sector in the province.
Senator RHIANNON: When you award these grants, what steps do you take to ensure that those people who will be receiving the grants do not have any vested interests or links to organisations or companies that may have a financial interest in the country and how the research could possibly influence current decisions being made in that area? What steps do you take to ensure that research is objective and meets the fine aims that AusAID works under?
Mr Tranter: I will ask a colleague to speak about the specific processes associated with the Australian development research grants. Those grants are competitively sought across the university sector. The process of assessments takes into account the track record of researchers who are being proposed by the institutions which are making the case for funding under ADRA. As part of this process we satisfied ourselves of the credibility of the researchers that were put forward by Griffith University. They are two individuals who are very well-known to the aid program. They have a long-standing history of working in Bougainville and have the respect of the Bougainville government and the communities in Bougainville. We also satisfied ourselves around those issues of conflict of interest, and we have no concerns about the two researchers in question continuing to play a role under that Griffith University grant, nor do we have any concerns about them continuing to play a role in providing advice to the Bougainville government.
Senator RHIANNON: You say that you took into account a track record and you satisfied yourselves. I took from that that you were aware of their association with the mining company Rio Tinto, which, as we are all aware, wants to reopen the mine there. Professor O’Faircheallaigh is currently a chief investigator, with his study partly bankrolled by Rio Tinto, and Mr Regan has published a book which is also partially funded by Rio Tinto. Is that what you meant when you said that you had satisfied yourselves with regard to the work that they would undertake?
Mr Tranter: We are satisfied that there are no relationships that these researchers have which would mean that their advice as part of that research grant, or indeed their advice to the Bougainville government, is anything but objective.
Senator RHIANNON: Even though Mr Regan publicly defended the company in 2003 against allegations of collusion during the Bougainville war? His taking of quite a partisan position there was very controversial. Did you feel that that showed a level of bias that should have been taken into consideration when you made this decision?
Mr Tranter: I think we are very confident of Tony Regan's objectivity as an adviser to the Bougainville government.
Senator RHIANNON: What do you base your confidence in him on when you consider that close relationship he has with Rio Tinto, particularly through a war that was so divisive for the community AusAID, hopefully, is assisting?
Mr Tranter: I am not aware of a close relationship between Mr Regan and Rio Tinto. I am aware of a long track record of work that he has done for the Australian aid program and also a long track record of work that he has undertaken on behalf of the government of Papua New Guinea and also on behalf of the provincial government in Bougainville, which has been of a very high standard.
Senator RHIANNON: You said that he has respect among communities. What were you referring to? The information I have received—this is really why I am taking it up—is that people from Bougainville are concerned about the allocation of so much money to two people who are closely identified with a company that has been very controversial in their country. When you made that statement, what were you basing it on?
Mr Tranter: Tony Regan has been endorsed as an adviser by the Bougainville provincial government. He provides direct advice to the Chief Administrator and the provincial administrator in Bougainville. He has their confidence and works directly with those leaders of the Bougainville community.
Senator RHIANNON: I have in my notes—if I wrote it down correctly—that you said 'respect of communities'. I know he works closely with the government, but why did you say that he has the respect of communities? The information I have received is the opposite.
Mr Batley: Are you able to be more specific about which communities you are referring to, Senator? We are not aware of this. There may well be individuals with specific agendas on Bougainville who may voice objections, but we are not aware of communities.
Senator RHIANNON: Equally, when you say that he has the respect of communities, I am not aware of who you are referring to in respect of these two academics. What are you basing that statement on?
Mr Baxter: Mr Tranter has explained why we have engaged those two academics to undertake the study. You may have a different view, and we understand and respect that, but we have already explained why we have used those academics and what their track record is in working with the government of Papua New Guinea, the autonomous government of Bougainville and with AusAID. It is on that basis that we engage them.
Senator RHIANNON: Are you saying that you can guarantee the impartiality of these advisers?
Mr Baxter: We are satisfied that the advice they are providing is objective.
Senator RHIANNON: Even though one of the primary beneficiaries of the Autonomous Bougainville Government deciding to resume mining operations will be Rio Tinto, a company that both these people are financially associated with?
Mr Baxter: I have no knowledge of Rio Tinto's position on the reopening of the Bougainville mine. You obviously have your own views on that, but all we can tell you is why we engaged the two academics and that we have confidence in the research that they are undertaking.
Senator RHIANNON: With regard to that research, I asked about illegal mining and I think Mr Tranter responded that that was part of their research. Could you elaborate on that, because I understand that is something that Rio Tinto has an interest in: cleaning up the illegal mining operations because it is seen as possibly detrimental to them opening up their operations again. Again, I am interested in exploring that possible link.
Mr Tranter: I cannot comment on Rio Tinto's view on illegal mining, but—
Senator RHIANNON: No, it is just about the illegal mining and the project itself.
Mr Tranter: It is an important development issue which the aid program is investing in. As I am sure you are aware, informal mining can create environmental and social difficulties, particularly because of the unplanned and informal nature of it. The research is to make a contribution to the evidence base, which can inform policy and will be directly relevant to the Autonomous Bougainville Government in their consideration of mining policy for the benefit of Bougainvillians.
Senator RHIANNON: Mr Baxter, can AusAID provide any estimate of the amount of money developing countries have recovered from taking action against tax evasion and tax avoidance activities as a result of assistance provided by AusAID?
Mr Baxter: I would have to take that on notice, but we are certainly aware that some of the work that we have already completed under our Mining for Development Initiative has resulted in governments being able to recover more tax revenue from mining companies in their countries. There is one African country that we have been working with under the Mining for Development program and that, as a result of improvements in the tax revenue collection of that country as a direct result of the training we have undertaken, has recovered the equivalent of half of its annual education budget. So it is a pretty good example of the direct benefits of helping countries have companies that are operating within their national boundaries pay the correct amount of tax.
I would also just make a general comment that this whole issue of tax avoidance, transfer pricing and ensuring that there is a lot more transparency around how taxation revenue is collected from natural resource extraction is becoming a bigger and bigger issue internationally. You are probably aware that we have our initiative. The Canadians have started a similar initiative. The government of the United Kingdom, in the G8 meeting which will be held shortly, is running a very big initiative around transparency and tax. So it is an issue. We can look and see if we can get you some other examples, but it is certainly a very relevant issue and we certainly think it is worth investing in helping countries ensure that they get paid their fair share of revenue from their own extractive industries.
Senator RHIANNON: Thank you, yes. Could you take that on notice. I noted that you made some interesting comments at the Mining for Development conference about that West African official. I am interested in what AusAID has budgeted to assist developing countries in cracking down on tax evasion and tax avoidance to help them generate their own sustainable revenue.
Mr Baxter: Those sorts of activities are actually part of quite a number of programs. In a country like Solomon Islands, we have worked very hard with their ministry of finance to improve the efficiency of tax collection, and we have seen quite significant increases in their revenue base as a result of it. We have done similar things with the government of Indonesia. We have had programs, working particularly through our own ministry of finance and Treasury, where officials are posted and are working inside the Indonesian Ministry of Finance to improve the collection of customs and border duties. We are also part of an international effort to help Afghanistan do likewise. So I can take it on notice and look at the range of countries.
Senator RHIANNON: Can you take it on notice, and the projects and the budget.
Mr Baxter: It is one of the most effective forms of assistance that we can provide, because relatively small investments can get some big returns if you are catching tax evaders and tax avoiders.
Senator RHIANNON: Yes, it is a very good story. Has AusAID earmarked any funding for the OECD initiative Tax Inspectors Without Borders?
Mr Baxter: I do not think so, but I will take that on notice.
Senator RHIANNON: Could you tell us if you have any feedback about the program—your judgement on the program.
Mr Baxter: Yes, I am aware of the program, certainly.
Senator RHIANNON: Thank you.
Senator RHIANNON: I would like to move on to Burma but still stay on some of the mining issues. What is the focus of the Mining for Development Initiative in Burma and how much money is allocated to this program?
Mr Baxter: As you are probably aware, we had a very significant delegation from the government of Myanmar attend the Mining for Development conferences. The government sees Australia as a country that can provide assistance as they particularly open up to more foreign investment, but I will ask Mr Brazier to answer that question.
Mr Brazier: Australia is providing assistance for the development of a sustainable and equitable mining sector in Myanmar to ensure its effective management and that it improves the lives of Myanmar's people, many of whom are very poor. As Mr Baxter mentioned, we recently hosted a study tour to Australia by a delegation of government ministers, senior officials and civil society representatives from Myanmar to share Australia's mining experience. We are helping the government of Myanmar to join the Extractive Industries Transparency Initiative. Australia and the UK will cofund the Revenue Watch Institute to support local civil society in Myanmar to pursue improvement of extractives governance and engagement in the EITI process.
Senator RHIANNON: Who requested that Australia focus on this area of development in Burma? Was it an AusAID initiative put up to the Myanmar government, or did some grouping or the government request it of us?
Mr Brazier: It would have been the government of Myanmar that requested this assistance.
Senator RHIANNON: So it was the government?
Mr Brazier: Yes.
Mr Baxter: Specifically, the President of Myanmar, when he visited Australia in March, in his discussions with government made this request.
Senator RHIANNON: Can you provide details on what consultation and engagement AusAID has had with local communities who will be directly affected by Burma's extractive sector?
Mr Brazier: We will conduct those consultations. I will have to take on notice the full details of that. This is a part of our program that we are developing at the moment so, beyond study tours looking at what sort of training we can provide for officials from the government, we have not actually done much yet. As you know, we are on a pretty strong growth path with our program. It is scheduled, I think, to get up to about $80 million in the next financial year and, as we grow our program in Myanmar, the government of Myanmar has asked us that assistance with their mining sector and their natural resource sector be part of that.
Senator RHIANNON: If you could take it on notice that would be useful. Could you also indicate whether you will be engaging with local communities prior to the projects being initiated or once the projects have been initiated? On another issue, earlier this year Burma and Australia signed a memorandum of understanding regarding the aid program. Where is this up to and what benefits do you judge have come from the MOU or any problems arising?
Mr Baxter: This was something that occurred when I was in Myanmar in late January. You may recall that we have opened an office jointly with DFID, the UK aid agency, in Naypyidaw. It was really to put our development relationship with Myanmar on a normal footing so that we could work on a government-to-government basis. Up until that time, all of our assistance had been provided through multilateral organisations or NGOs, but with the reforms that have been made in Myanmar and are underway the government has made a decision to allow AusAID to develop a direct relationship with the government. We are very pleased about that. We now have a program which focuses on education, health, rural livelihoods and governance, including a scholarship program. We are now providing scholarships for people from the government for the first time. Of course, we continue to have an ongoing humanitarian program dealing with, in particular, some of the issues relating to ethnic conflict.
Senator RHIANNON: I was interested that you mentioned health and education, because you would obviously be aware that in the March budget that the Burmese government brought down those two sectors came in at a very low level. I think education was about 4.4 per cent, it has gone down since 2012, and health is below four per cent. What outreach is Australia doing to see Burma's spending priorities shift to health and education?
Mr Baxter: You are right in the general point that Myanmar has had some of the lowest spending as a percentage of GDP in both of those sectors. It has increased, but clearly there is a long way to go. One of the very difficult challenges that is faced by the government is the capacity of the public sector to actually develop and implement programs in those areas, and it is an area where Australia and other donors are seeking to help.
Earlier this year the government in Myanmar held the first Myanmar development forum and engaged extensively with the international community on issues relating to domestic expenditure in these areas. There is no doubt that that process of dialogue and engagement is going to help ensure that the government does actually commit more funding in those very critical areas, because, as you know, we face the prospect of the current generation of children in that country being the first to be less well educated than their parents.
Senator RHIANNON: That is extraordinary. Mr Baxter, still staying in Burma I would like to ask about the work that has been done with the Rohingya community, particularly in the context that it is the rainy season and many have inadequate housing. What is being done to assist to house these people?
Mr Brazier: The humanitarian situation in Rakhine state remains very difficult. That is why Australia has in the current financial year provided more than $5.79 million for humanitarian purposes in Rakhine state which makes us the third largest bilateral donor. Australia's assistance is helping to provide to more than 100,000 displaced people through the World Food Program.
Senator RHIANNON: When you say displaced people, are they Rohingyas? If they are, how do know if they are getting the aid?
Mr Brazier: They are principally Rohingyas although, if you mean Muslims in Rakhine state, there are some displaced Buddhists in that state as well, but they are principally Muslims. We are confident that that assistance is reaching those communities because we have made visits to those camps. Our ambassador and AusAID staff visited as recently as early April to look at conditions and to ensure that our aid is being delivered. We have confidence in partners such as the World Food Program, UNICEF, Save the Children, UNHCR and Care as well.
Senator RHIANNON: I would like to move on to Sri Lanka. In December last year the foreign minister committed $45 million to build or rebuild poor and rural communities in Sri Lanka. Are any of the construction works from this money occurring in northern areas such as Jaffna said to be compulsorily acquired by the Rajapaksa regime?
Mr Dawson: The announcement that Senator Bob Carr made related to the Australian Community Rehabilitation program. That is a program which has a range of activities associated with it which is implemented through a range of partners including UN organisations and non-government organisations. A lot of the work is around working with small businesses and disadvantaged groups to create opportunities for economic activity and for livelihood support, so there is a lot of work around value chain creation for small businesses, supporting communities to advocate for equitable distribution of resources from government and social cohesion programs et cetera.
For example, some of the things being done under that program relate to small-scale microfinance training work to establish potential export industries around papaya harvesting for rural women. Two hundred women are being employed in a factory processing crab meat for export.
Senator RHIANNON: The question was specifically about areas where there had been compulsory acquisition. Is any of that money going to construction of works in those areas?
Mr Dawson: I was just coming to that, Senator. The program has some local infrastructure work but it is very small scale and there has been certainly no compulsory acquisition of land underneath that program.
Senator RHIANNON: Is any of the money intended to be spent in traditional Tamil areas or Sinhalese areas only?
Mr Dawson: The program relates to poor areas. The majority of the project is located in conflict affected communities in the north and eastern provinces and in the multi-ethnic central province. So, by the nature of the geographic location, many of the communities will be Tamil majority communities.
Senator RHIANNON: Was this money provided to the Sri Lankan government to build the houses, run the campaigns, or is AusAID actively involved in the construction and the spending of money?
Mr Dawson: As I explained, the funding is not going to the Sri Lankan government; the funding is going through a number of international organisations and non-government organisations—for example, the United Nations Development Program, Oxfam, World Vision, the Asia Foundation.
Senator RHIANNON: Thank you. Moving on to the REDD Kalimantan forest partnership, the Indonesia-Australia Forest Carbon Partnership runs until the end of June this year, I understand. Does the government intend to extend the period of the project and, if so, for what period of time?
Mr Brazier: You referred to the Kalimantan Forests and Climate Partnership, which is a subcomponent of the Indonesia-Australia Forest Carbon Partnership. The IAFCP, the overarching project, is coming to an end, as planned, on 30 June this year. Some elements of the program may be extended, we think, to maximise their impact. Those elements—
Senator RHIANNON: When will the decision on that be made?
Mr Brazier: The decision on that has been made, between the Australian government and the Indonesian government.
Senator RHIANNON: What is the decision?
Mr Brazier: The decision is to continue some community development activities and the Indonesian national carbon accounting scheme. Senator RHIANNON: Has any money being allocated to the Kalimantan Forests and Climate Partnership in the 2013-14 budget and, if so, could you identify the budget line for me? I could not find it.
Mr Brazier: We have set aside $8 million in 2013-14 for those two elements that I mentioned. I will have to take on notice which line item it is.
Senator RHIANNON: Thank you. Has permission for an extension of the project been sought and/or granted from the Kapuas district government and/or the central Kalimantan provincial government and/or the Indonesian federal government?
Mr Brazier: Certainly in the case of the Indonesian national government; I will have to take on notice the provincial and district governments that you referred to.
Senator RHIANNON: Have other potential funding partners been approached regarding financing of an extension of this project and, if so, who are they?
Mr Brazier: I do not believe so.
Senator RHIANNON: Do you need to take that on notice? Is it the case or do you need to check?
Mr Brazier: No, I do not need to check that.
Senator RHIANNON: Upon completion of the project, is any evaluation of the project planned and will this be externally conducted to ensure independence or neutrality of that study?
Mr Brazier: There would certainly be an evaluation of the project upon completion. All such evaluations are set up in ways that ensure impartiality.
Senator RHIANNON: To describe how you ensure that impartiality, who the researchers are that will be involved and what method is for assessing the social and ecological outcomes and impacts, could you describe who is involved, the time, the methodology?
Mr Brazier: I can refer you to the progress report that was conducted on this project earlier, and perhaps a description of the people who were involved in it can give you a sense of the calibre that we would likely involve in the end-of-project evaluation.
The team leader for the end-of-project report was Mr David Barber, an expert in program monitoring and evaluation who has a Master of Science degree from the London School of Economics and who also studied at the Harvard Institute for International Development. He has had roles including as governance adviser and counsellor with the Australian Embassy in Bangkok. The national forest carbon specialist, Dr Agus Sari, an Indonesian national, is a CEO of sustainable conservation and has a PhD from the University of California, where he was a Fulbright scholar. Previously he was Executive Director of Pelangi, an Indonesian environmental think tank. Forest carbon specialist, Mr John Hudson, has deep expertise in international development, focusing on forests, national reserves, resource management, rural livelihoods and the environment. They are not the people we propose to put on this evaluation. That is the calibre of the person we would be proposing.
Senator RHIANNON: Regarding some specifics about the project, I understand that the KFCP originally aimed to protect about 70,000 hectares of peat forest and then there was to be a reflooding of about 200,000 hectares of the dried peat lands and lots of trees to be planted. However, from reports, I understand that much less than these goals was achieved. What are your latest estimates of what was achieved in tree planting, the canal blocking and other conservation activities? To what degree were the goals achieved or not achieved?
Mr Brazier: The Kalimantan Forests and Climate Partnership was a pilot program aimed at testing some very innovative approaches to climate change mitigation and adaptation. It was announced in the middle of 2007. Since the announcement, and subsequent announcements of the expansion of the program, the international environment in agreements among countries has changed somewhat and the circumstances in Indonesia have changed somewhat. It is true that on some measures this program did not meet the ambitious goals that were set, but we are pleased that some of the following results have been achieved. These results include 2.6 million seedlings raised for planting in the KFCP area—that 70,000 hectares that you mentioned; additional income sources for 1,800 households provided through payments for the raising and planting of those seedlings; livelihood support for local communities, by helping farmers improve forestry and farming methods; establishment in the KFCP area of one of the largest and most rigorous tropical-monitoring systems in the world, which is the critical part of estimating the greenhouse gas emissions from peat; and, finally, the establishment of a forest management unit in the KFCP area. We would be happy to provide on notice further information about the results against the targets.
Senator RHIANNON: Yes, please take that on notice.
CHAIR: Senator Rhiannon, do you have other questions to put on notice?
Senator RHIANNON: Yes, I do.