UNITED NATIONS
Conference on Financing for Development
Resumed Third Preparatory Committee Meeting
Statement by Ms Jacqui DeLacy
Counsellor (Development) for the Australian Delegation
15 October 2001
Introduction
The UN Financing for Development conference provides a welcome opportunity for the international community to affirm the critical importance it attaches to poverty reduction, and increase understanding and commitment by developing and developed countries alike to the roles each must play in addressing the causes of poverty and underdevelopment. Developing countries own policies and institutions play the central role in their development. The efforts of the international community in areas such as trade liberalisation, effective aid assistance, and facilitating capital inflows can only supplement national policies. This reality is fundamental to building the necessary consensus for action. It is also necessary that the actions we set ourselves for going forward be realistic, achievable and based as far as possible on the effective use of existing mechanisms.
We therefore share the disappointment expressed by others that the draft outcomes document before us today exhibits neither this balanced recognition of the respective roles that need to be played by developing and developed countries nor a practical awareness of what is achievable. In choosing too broad a canvas, and failing to focus on the central theme of financing for development, it has compiled a list of wide ranging initiatives which, in our view, are inappropriate, impractical and ineffective. In attempting to place responsibility for the majority of the initiatives on the donor community, it provides scant attention to the critical importance of national policies and the responsibility placed on national authorities. We don’t regard it as a constructive basis for further negotiations.
There are a number of areas where, with greater acknowledgment of the mutual responsibilities of all countries, and an appreciation of the strengths and comparative advantages of our existing multilateral institutions, consensus might be achievable on a list of actions both realistic and beneficial to addressing poverty. The document would also have been strengthened by providing focussed and practical recommendations addressing the specific circumstances facing Small Island Developing States. It is not sufficient to simply group SIDS, together with economies in transition, low income countries and landlocked developing countries. Each of these groups face very different development challenges.
The paper is a lost opportunity that may well prove pivotal in the fight against poverty. While it is clear that poverty remains a fundamental problem of huge dimensions, there have been recent indicators of some progress. We should examine the broad range of policy frameworks – domestic and international – to determine what aspects are working well and where we could commit to doing better. In short, this conference has the potential to deliver on some very real possibilities for action and successful outcomes, but they remain untapped by this draft outcomes document.
Our remaining comments outline the areas of the draft where we have significant concerns. In providing our comments, I would like to note that as an election has been called in Australia for 10 November 2001, we are unable to commit to any major new policies or initiatives until after the election.
Mobilising Domestic and International Financial Resources for Development
We readily acknowledge the fundamental importance that both mobilising domestic resources and accessing international private capital flows can play in promoting development. However, the draft should give greater recognition to the critical importance of sound national domestic policies in creating an environment that not only enables domestic resource mobilisation but which is attractive to international capital flows. In particular, we place considerable weight on sound macroeconomic policies. But, the importance of good governance and rule of law cannot be overstated. A well functioning private sector and sound regulatory frameworks help ensure scarce resources are invested efficiently and generate sustainable growth and employment, while also helping deliver macro stability.
With respect to the proposals regarding strengthening international cooperation in the promotion of foreign direct investment, we note that given the demands already before it, the UN should take care not to duplicate efforts already being undertaken by others such as the World Bank.
Trade
We welcome the document’s recognition of the benefits of trade liberalisation, the need for an open, rules based trading system and for further multilateral trade negotiations. There is no clearer example of benefits to developing countries than those that would be delivered by ambitious and strong outcomes on agriculture. We will work towards ensuring that a new trade round meets the needs of developed and developing countries alike.
We consider the document could have given greater recognition to the importance and benefits of developing countries in addressing many of their own protection problems.
International financial cooperation for development
We readily acknowledge that Official Development Assistance (ODA) plays an important catalytic role in assisting national governments to meet their development goals. For many developing countries and small island states, ODA is indispensable in building capacity and strengthening governance.
Australia has indicated its support for the 0.7% of GNP ODA target as an indicative one and endeavours to maintain aid at the highest level consistent with the needs of partner countries and our own economic circumstances. Calls for doubling – or even tripling – of ODA are unrealistic and at best should be viewed as aspirational .
Debt Financing
Australia is a strong supporter of the current multilateral debt relief mechanisms that are designed to provide a comprehensive and coordinated international response to the issue of unsustainable debt. However, we have always emphasised that debt relief alone is not sufficient to provide permanent solutions to poverty alleviation. Sound national macro-economic and structural policies are necessary to achieve the economic growth that is necessary to ensure debt sustainability.
While progress has been made with the HIPC initiative to date, we need to continue to work towards its full and effective implementation, and evaluating the framework for the delivery of that debt relief. Such deliberations are best pursued through the World Bank and IMF’s established processes.
Systemic Issues/Global Governance
Australia supports closer collaboration of the IFIs with each other, the UN and other international bodies, as appropriate and consistent with their existing mandates.
We are concerned, however, with a number of proposals that would represent a substantial shift in the existing governance arrangements of these institutions and substantially increase the role of the UN in areas where other international organisations are already active and enjoy comparative advantages.
To the extent that there are concerns with the governance arrangements within or between existing international financial institutions, these are best addressed by the institutions themselves rather than creating new arrangements that add to administrative complexity. Decisions going to the governance of the international financial institutions should be based on an assessment of the comparative advantages and likely effectiveness of the existing institutions. Proposals to create new bodies, such as an international tax organisation or a global economic forum are very unlikely to reach consensus as they would not help solve development challenges. They would simply create a new layer of bureaucracy and yet another fora in which current debates would continue – spreading limited government resources even more thinly.
Conclusion
I think we can all agree there is much to be done before March 2002. Unfortunately, the document before us is not helpful to that process. We believe further efforts are needed to develop an outcomes document that can provide a basis for building the consensus required for both a successful conference and a clear and constructive, balanced and practical agenda to promote development in those countries seeking permanent exits from poverty.