UNITED NATIONS GENERAL ASSEMBLY 54th SESSION

Fifth Committee - First Session

Item 125: Scale of Assessments

Statement by Mr Henry Fox, First Secretary on Behalf of the delegations of CANZ Group of Countries

19 October 1999

Madam Chairman

I have the honour to speak on behalf of the delegations of Canada, New Zealand and my own delegation, Australia.

We wish to thank the Chairman of the Committee on Contributions, Mr David Etuket, for introducing the Committee's Report of its 59th Session.

Madam Chairman the task before the Fifth Committee is to agree on instructions for the Committee on Contributions on the elements of a new scale of assessments which would provide the basis for calculating Member States assessments for the period 2001 to 2003. The view of our delegations on the scale are well known. We wish to comment briefly on those elements which we regard as particularly important in the development of the new scale.

It is a longstanding view of our three delegations that there is a need to make the methodology of the scale more stable, simpler and more transparent. We welcome the efforts of the Committee in this regard. However we believe this objective is some way off from being realised.

Our delegations have long maintained that any scale of assessments should be based on the principle of capacity to pay. Our delegations believe that the methodology of the scale does not produce an accurate reflection of the capacity to pay. Technical adjustments to the machine scale should produce end-results which are consistent with current global economic realities. While some improvements were made to the current scale, it is our view that the scale still does not reflect fully developments in the world economy over the last decade and a half, and certain elements require further modification.

The current rates of contribution do not reflect the fact that over the last decade and a half some parts of the world have experienced high and sustained rates of economic growth while others have struggled with declines or painful transitions. This is the result of elements of the methodology which contribute to a greater or lesser degree to obscure those economic developments which we regard as central to the principle of capacity to pay. Our delegations will continue to seek the elimination of these distorting elements from the scale methodology.

We note differences of view in the Committee on Contributions as to the merits of reducing the base period to a three-year period or retaining it at six years. We believe that the scale of assessments should reflect current rather than past economic reality and therefore a shorter base period is more appropriate. In our view this would assist those Member States whose economies are facing difficulties. At the same time we note arguments in the Report in favour of the view that longer base periods provide greater stability over time.

On conversion rates, we are of the firm view that the Committee on Contributions should strictly limit the use of price-adjusted rates of exchange to the most serious cases and that where Member States have fixed their exchange rates to the US dollar, those fixed rates should be used.

Regarding debt burden adjustment, we support the Committee on Contributions' view that, should the adjustment be retained, it should be based on actual principal repayments - that is the debt flow approach - rather than on an estimate of the repayment of total debt stocks, the so-called debt stock approach.

As the element which is often the largest source of redistributed points, the low per capita income allowance deserves close attention in any review of the scale methodology. We do not dispute that countries with per capita incomes lower than the world average should continue to receive relief. In our view it is a question of the extent of that relief and the distribution of the ensuing burden, which needs to be reviewed.

We support the view that the calculation of the low per capita income adjustment should involve the reduction of total assessable income by the amount of the adjustment, rather than its reallocation to other Member States. This would bring the method into line with the other adjustments in the scale methodology, namely the debt-burden adjustment, the ceilings and the floor. It would also share the cost of the adjustment among all Member States except those limited by the ceilings.

We do not support the introduction of delays in assigning points to Member States moving above the threshold. This would be unfair to those countries which had experienced the discontinuity in the past without such relief.

We support a reduction in the level of the gradient from the current level of 80 percent. We also support further examination by the Committee of the proposal to address the situation of those countries for which the current low per capita income formula reduces their rate of assessment by more than fifty percent of their share of GNP. As noted in the Report, technically a better first approximation to the capacity to pay of these Member States would be an assessment rate of zero.

The principle of capacity to pay is also skewed by the ceiling or maximum rate. The views of our delegations on the current ceiling are very well-known. In our view it confers a benefit on the largest and wealthiest contributor, the burden of which is borne by others. This seems especially inequitable when many states currently pay a floor rate in excess of their capacity to pay. Any further reduction in the ceiling would seriously obscure the relationship between the amount to be paid and actual capacity to pay, objectively assessed, to the point where the continuing relevance of the principle of capacity to pay would have to be questioned. While we have no in-principle objection to a review of the ceiling - or indeed of the peacekeeping scale - we believe arguments about movements in the ceiling should be made on their merits, without linkage to other issues, and with due regard for possible effects on other Member States including other large contributors. We do not believe over-reliance on any one contributor is healthy. At the same time we do not support unilateral determination of individual assessments.

Of particular importance to us is the idea of annual recalculation. Under this process the methodology would remain unchanged for the three year scale period, as required by Rule 160 of the Rules of Procedure of the General Assembly but the data would be updated each year. The Asian economic crisis is a graphic illustration of how this procedure would ensure that contemporary realities are reflected in the scale of assessments and thus be of great assistance to such countries as they work to rejuvenate their economies. Annual recalculation is the one tangible way in which the scale of assessments can reflect large currency fluctuations or sudden and calamitous events.

Madam Chairman, one issue in the Report which has become a particular focus of the Fifth Committee's work are the procedures for considering requests for exemptions from the

provisions of Article 19. At issue is the effectiveness and viability of Article 19 of the Charter of the United Nations. Our delegations have been amongst those who have urged the General Assembly to adopt a range of measures to act as incentives for prompt payment of assessed contributions and disincentives and penalties for those who fail to honour their legal obligations including ineligibility for election to various boides in the General Assembly. Agreement has not been reached on such measures and the only encouragement for prompt payment therefore remains Article 19 of the Charter.

The test to grant a waiver from the provisions of Article 19 was intended to be a hard one. If Article 19 is to have the effect of encouraging Member States to meet their financial obligations it needs to be applied particularly during the Regular Session between September and December each year during the period of maximum General Assembly activity. In dealing with the procedural aspects of requests for waivers the Fifth Committee has taken a piecemeal approach in recent times including granting waivers without seeking advice from the expert body specifically created by the General Assembly for this purpose. Our delegations regret this and believe the Committee needs to reflect on the appropriate course of action for dealing with these applications including the timing of its meetings in New York to best provide advice to the General Assembly. We must avoid taking decisions which undermine the strength of Article 19.

We note the suggestion made by the Chairman of the Committee on Contributions in introducing the Report that the Fifth Committee may wish to specify a timeframe for submission of requests for exemption from Article 19. In our view this proposal has merit and should be considered by the Committee during the current session.

In recent years the Committee on Contributions has sought to ensure consistency in its recommendations by analysing fully economic data and by relying on sound precedent. In our view the Fifth Committee should refrain from taking decisions which set back these efforts to ensure that all cases receive fair, consistent and technically-based treatment.

The Committee on Contributions should continue its consideration of technical measures intended to improve the financial situation of the United Nations. A key issue is the timing of the calculation of Article 19 and we welcome the discussion of this issue in the Committee's Report. Our delegations are firmly of the view that the thirty day deadline should be consistently applied for the purposes of Article 19.

We recall that General Assembly Resolution 14A (1) of February 1946 which set out the Terms of Reference for the Committee on Contributions gives it the mandate to report to the General Assembly on the action to be taken if members fall into default with their contributions. We welcome the Committee's discussion of a range of measures to encourage payment of assessed contributions and look forward to further exchanges of views with Member States on the merits of these measures.

Madam Chairman, our delegations look forward to working constructively in this Committee to reach an agreement on a new scale of assessments for 2001 to 2003. We remain committed to a new scale, adopted by consensus, which reasserts the primacy of the principle of capacity to pay.