Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Perhaps Senator Brown is aware of the history of this bank and why it took so long. The US government for a number of years lobbied very hard for a lot of people in the region, including us, not to sign onto this bank. Senator Brown is right when she says the UK was the first to break ranks and do so, and after that we saw a steady trickle of people signing on, including us.

I want to, firstly, raise the issue that infrastructure in this country is also very important. We believe that there is a significant pipeline of projects in Australia that should be financed, especially at a time of record low interest rates. One of the ex-leaders of the opposition, Professor Hewson, has been very outspoken, as has Saul Eslake, a fellow Tasmanian, on the one-off historic opportunity to finance infrastructure in Australia. I just want to get on the record that, when the consultation process around the national interest analysis was conducted on the Asian Infrastructure Investment Bank, you will see in attachment 1, the attachment on consultation:

Between 6 and 13 July 2015, Treasury sought views from state and territory governments on the AIIB Articles—

the AIIB being the Asian Infrastructure Investment Bank. It outlines in two pages that the various governments of New South Wales, Tasmania, Victoria and Western Australia welcomed potential investment from this bank in major infrastructure projects—for example, across New South Wales. So there was an expectation that perhaps this bank would be financing infrastructure projects in Australia, but if you read the report of the Joint Standing Committee on Treaties, which goes into a bit of detail on the national interest analysis, it says: 'Although no projects have been identified in Australia, the NIA advises that the bank is likely to focus its efforts in developing countries with significant infrastructure gaps. It is, therefore, unlikely that Australia will be a recipient of bank funding for a major infrastructure project.'

On its own, the fact that Australia needs infrastructure and this bank is unlikely to finance any in Australia is not a reason to knock it back, but I do make the point that there are a backlog of projects in this country. Saul Eslake said to a recent select committee inquiry, which I am part of, that the Australian government could spend up to $50 billion on infrastructure projects in this country under current arrangements without impacting its AAA credit rating. So let us be clear: there is no doubt that there is a need for infrastructure spending in our region and, on one level, we have a very strong feeling that Australia should be part of that, but we do need infrastructure spending in this country and it is something that the government said it would prioritise. In fact, I think our recently departed Prime Minister, Mr Abbott, said he would be an 'infrastructure Prime Minister'. As I have discovered through the select committee, that has been another broken promise. Whether because of fiscal constraints or other issues, it has not happened. So, while we are talking about infrastructure, let us not forget that Australia needs more infrastructure spending and it has a unique opportunity at this point in time.

Moving to the Asian Infrastructure Investment Bank itself, the concept is a good one—the idea of Australia playing a role and having a leadership role and influence over a large infrastructure investment bank in the region that has very significant Chinese buy-in is a good one. I note that one of my economic heroes, Professor Joseph Stiglitz, a Nobel Prize winner, has been very outspoken in supporting this bank and the concept of this bank in the region. He has been very critical of the US government for not supporting this bank, saying, 'You're stuck in the old ways through the World Bank. This is what the Asian region needs and the US should be playing a leadership role in this.' It is very useful to point out that Professor Stiglitz has been a supporter of this bank.

As was reflected in Labor's contribution, the Greens have some very specific concerns around what has not been addressed in the scanty information that we have seen to date. I might start by talking a little bit about environmental and social policy. I note that Senator Milne, prior to leaving the Senate, got it on record—and Adam Bandt, the Greens member for Melbourne, has expressed similar concerns—that we need to see what environmental and social policies the bank will pursue or, at least, what conditions or requirements are going to be put in place for an investment bank. We have seen investment in some socially and environmentally destructive infrastructure in the Asian region such as building dams in Sarawak displacing rural communities and ruining the environment. These are the kinds of things that we want to see avoided. So it makes sense to have some very clear-cut guidelines in place.

I have a number of questions for the government. I wish I had been able to get to the JSCOT meeting yesterday so I could have asked the Department of Defence, the Department of Foreign Affairs and Trade and others the questions directly—I was in here debating the amendments to a bill for small business. I will ask some questions during the committee stage. In particular, what is the government's intention in relation to the development of policies in regard to environmental and social impacts? Does the government intend to try to influence the development of the policy of the bank? Is it even clear if the government can influence that?

Going back to the national interest analysis, at page 29 and 39 it says that 'the NIA advises that Australia is negotiating to lead a constituency of regional members which would, as a group, be able to secure a seat on the board of directors. If successful, this position should allow Australia to enforce decisions made by the bank.' I would have thought that, before we signed up to this, we would have had a guarantee that we would be able to influence decisions of the bank and that we had secured a seat on the board. If you go to page 4 of the national interest statement, it makes this look a little more certain than the analysis that was given to us by JSCOT. Nevertheless, there is uncertainty there. Australia, as yet, has not secured a seat on the board. I would have thought that that would be a pre-requisite for us before putting billions of dollars of Australian taxpayers' money into an infrastructure bank in the region.

I also note that the UN sustainable development goals are due to be agreed to at a meeting in New York on 22 September 2015. Does the government intend to apply the principles of the UN sustainable development goals in influencing the policies of the bank? That is a perfectly reasonable question to ask given all the work group that has gone into developing those sustainable goals. That is also very unclear.

In terms of the clause allowing any of the members of the bank or any of the shareholders to withdraw by giving six months notice, has the government established any triggers for potential withdrawal from the bank? In other words, will there be mandatory triggers that would lead to withdrawal of our support for the bank such as the breach of environmental or social conditions? And would the government withdraw from the bank if it was found to have breached one of its own policy objectives? It is hard to answer that because we do not have those policy objectives yet. This is the problem: the concept sounds great but there is no detail on the ground. This is something the Greens believe it is very important for us to get more information on.

In relation to the immunity clauses set out for the infrastructure bank, what oversight will employees of the bank be subject to? What mechanisms are available to prosecute employees of the bank for any potential misconduct? Do the immunity provisions in relation to the conduct of employees relate to bribery? What standards will be upheld at the bank? Once again, there are some precedents that we could use from the World Bank and other organisations but it is not spelled out clearly.

You need only look online at the corruption index for countries in our region to know that there is significant corruption in terms of business dealings in these areas. If we are looking at financing private projects, particularly if there is co-financing of public private projects in this area, then corruption is going to be an issue on the table. Unfortunately, that is the lie of the land. So these things should be spelled out in a lot more detail.

I think it is unusual that the enabling legislation for Australia participating in and providing promissory notes for this infrastructure bank actually lays out that 'each country has to guarantee immunity with respect to acts performed by them in their official capacity, except where the bank waives the immunity, and shall enjoy the inviolability of all their official papers, documents and records'. This has been noted by the Scrutiny of Bills Committee report. The committee, therefore, remains concerned about the proposed approach and the limited information readily available as to the detail of the intended immunities and privileges. That is another significant area of uncertainty when we are being asked to support enabling legislation that puts billions of dollars of Australian taxpayers' money into an Asian infrastructure bank without us having even seen how the employees of this bank are going to be scrutinised, audited and, potentially, prosecuted for any breach of law. In fact, what is law when it comes to a bank that is operating across various jurisdictions? These are more questions that need to be addressed.

And what about the strategy of the bank? There is no doubt that there must be a huge pipeline of potential infrastructure projects in Asia. Are we talking about brownfields projects or are we talking about greenfields projects, which, by their nature, are of much higher risk? That is also unclear. Is there an expected or benchmarked rate of return on investment that the bank is seeking? How do we actually define and measure the social return on projects in the region in terms of what they bring to local communities? What projects will be selected on the basis of their benefits to the communities they are in or the basis of return to investors? Have any particular projects been identified? Is there even a pipeline for projects? I would be very interested to see the kinds of projects that this bank would be investing in—primarily because I am interested in getting more investment financing in Australia for infrastructure because we do have a backlog of projects here and I would like to see what is on offer in these regions. Of course, that ties in very closely with potential conditions around social and environmental factors.

And then there is governance. Who is in the constituency of countries which, according to the national interest analysis, Australia is expected to lead? As the fifth largest investor, shouldn't we assure ourselves a place on the board before signing?

Coming back to what I said earlier, why is it that we are planning to ratify the articles of the bank and provide financing as the fifth biggest shareholder when, as yet, we have not actually locked in a position on the board? I like the idea of us being able to influence infrastructure spending in the region in areas like renewable energy. I think there is enormous opportunity for Australian know-how and innovation in technology development, as there is in agricultural technology, to be employed across the region. It would be beneficial to Australia businesses. Of course, it would be beneficial to the environment, which is critically important. It is something that we can actually say we have some expertise on. If we have a leadership role and the ability to influence these kinds of things, that would be a positive for Australia. But it is not locked in. There is no certainty around that.

My last set of questions relate to aid. What impact will Australia's participation in the bank have on Australia's aid budget and activities? How close are aid activities going to be to the commercial activities of an infrastructure bank? I do not know the answer to the question of whether we even provide aid for infrastructure projects. It comes back to the earlier question: are we dealing with greenfields projects or brownfields projects? Are we dealing with assets that have already been set up and somehow been securitised or monetised and the bank is providing the financing for maintenance? What are we talking about here? I would like to see a lot more information around that.

How will Australia's participation in the bank align with our aid objectives? This government has been brutal in the last two years with the aid budget. Aid has been an ATM—an automatic teller machine—for other things in this country. I would hate to see this capitalisation from the Australian taxpayer of an Asia infrastructure bank being used as a smokescreen for reducing our aid budget further or not taking our aid responsibilities further. I am worried about this because it is something the government has introduced. It has looked at aid for private businesses—aid for business swaps. The remaining deputy leader of this country, Ms Bishop, has raised this issue in foreign affairs—that is, swapping aid for private business. Of course, that has a whole range of potential ethical and moral considerations to be taken into account as well. I am not sure if these commercial activities will displace current aid. That is something the Greens would like to know a lot more about.

Here is a scenario: we have an option to withdraw from this bank, giving six months notice. There may be some financial implications to that, but every investor in this bank has an option to withdraw. Under what conditions would Australia potentially withdraw? Should we set an automatic set of triggers for withdrawal if those conditions are reached? This seems like a reasonable approach to risk management to me. Those conditions may relate to governance—the loss of influence on the board. Those conditions may relate to something entirely different, like corruption or illegality in relation to those immunity provisions that we talked about earlier. They may relate to a breach of a very clear set of environmental or social guidelines on ethical investing. I think ethical investing is being taken seriously around the world now. Even a lot of private funds invest along ethical guidelines. Should we consider building in, through legislation, a mandatory code for potential triggers to withdraw from the bank? If we sign up to this, if we give everyone the benefit of the doubt and give the concept the benefit of the doubt in our region without the information that we need to make a good decision, shouldn't we at least put a fail-safe device in place whereby, if it does not meet our environmental, social and ethical standards and other overlays, Australia will withdraw from this project? There may be a range of other things we could include in that, but that is something the Greens would like to consider in the committee of the whole.

To wrap up, the strategy is a good one. There is a whole broader geopolitical overlay to this bank that raises the idea that the yuan, the Chinese currency, could end up becoming a replacement for the US currency as an international reserve currency. This is certainly going to see increased Chinese hegemony across the region. While we are involved in that, it is not necessarily a bad thing. It could actually be a good thing. We have seen the US oppose countries signing with this bank for its own political reasons. We have seen some very good, well-respected Nobel laureates come out and say, 'Actually, this is the kind of thing the US government should be promoting.' The US should be behind these projects because they will have the ability to raise living standards and increase environmental advocacy—a whole range of positive things—across the Asian region. There is a huge amount of infrastructure there that could be financed.

While that concept is good and the Greens support it, I would like to say that without the necessary information that we need, including information addressing the direct concerns raised by the Scrutiny of Bills Committee, we are taking this as a matter of blind faith—an article of faith. The Greens would like the Senate to consider what amendments we may be able to make to at least put triggers in place for withdrawal should conditions not be met. I think that is the only way we can actually back-test this without having that information up-front to provide some protections in line with our ethical and environmental considerations, and other factors. So, yes, I am looking forward to getting more information, as is Labor, very shortly.

I move the second reading amendment standing in my name:

At the end of the motion add, "but the Senate:

(1) urges the Government to use its diplomatic influence to secure standards for labour rights, environmental preservation and the protection of local communities that face displacement from large projects; and

(2) calls on the Government to withdraw if policies addressing environmental and social impacts required by Article 13 of the 'Asian Infrastructure Investment Bank Articles of Agreements' are breached."