SPEECH
In the lead up to the 2007 federal election Australia had experienced more than 15 years of economic growth. As a result there appeared to be a preparedness in the community to do more with our prosperity. Australians are a generous people; in fact we are the second highest private donors to aid NGOs in the world. But our government then was not as generous.
The Australian Labor Party's advocacy of a commitment to increase overseas aid was comparatively easy. We committed to increasing spending on international development assistance to 0.5% of Gross National Income (GNI) by 2015. As well we committed to engaging more with the United Nations (UN) and focusing on poverty reduction and the Millennium Development Goals (MDGs). For the first time ever international development assistance became an election issue.
Some people wanted us to go further and adopt a target of 0.7% but my judgement was that 0.5% was as much as we could handle while guaranteeing efficiency and effectiveness.
In addition, we went to the election with commitments in four main areas:
- Climate change;
- Water and sanitation;
- A Debt to health swap – an innovative financing mechanism; and
- Disabilities.
Once elected, our first budget put three of our four initiatives in place. The Debt to Health initiative should be put in place in this coming budget in May.
There have been three major changes facing developing countries which have influenced our thinking since the 2007 election.
The first is Climate Change. Climate change has had a great effect on developing countries in particular because they are often dependent on agriculture. We have long known this was coming. However, we didn't see the next two coming.
The second event was the global food crisis. In 2008 the price of rice and maize increased by over 50%, putting another 100 million people in poverty.
The long-term upward trend in food prices has had a significant effect on the poor in developing countries. Urban dwellers in particular but even farmers are affected as they need to buy some produce. The overall effect of the global food crisis has been to dramatically increase global poverty.
But as always, the crisis has created opportunities for some. Agriculture in Africa has the potential to take advantage of higher prices.
The third event, and this we could not have foreseen, was the Global Financial Crisis.
The World Bank estimates that between 200-400 thousand more children will die each year if the Global Financial Crisis continues; that is, 200-400 thousand more than those who are already dying each year.
We need to focus on this.
No Australian would stand by and watch a baby die; how can we stand by and allow conditions to persist which will mean thousands will die? To respond effectively we need to mobilise health resources in developing countries as well as increasing our support.
But: our response is made more difficult because of the challenges that we now face at home with unemployment and other social challenges.
As a government, our primary responsibility is to our citizens. Increasing aid will be challenging in these circumstances but we need to remind ourselves that not is it the right thing to do, it is in our national interest.
The Minister for Foreign Affairs and, more importantly, the Prime Minister, have also reaffirmed the Australian Government's commitment to the target of 0.5% of GNI by 2015.
However even with this recommitment we will not be putting as much money into aid as we had expected. Our GNI is not increasing as much as forecast, and probably even falling, therefore our dollar commitment will not grow as fast as we first thought it would. We will maintain our 0.5 commitment, but we need to look at generating new and additional resources.
To do this we need to look at new areas of financing.
The Prime Minister has given particular priority to MDGs 4 and 5 which address child and maternal health.
Our Prime Minister has signed on to the International Health Partnership (IHP), a global plan in developed countries to help health services in developing countries. This plan commits the world's leaders, donors, agencies and countries receiving aid to working together in a more effective way to meet the health MDGs. The partnership provides strong support for national health plans rather than taking a more fragmented approach to specific activities.
In New York in September last year at the UN Summit on the MDGs our Prime Minister joined the Network of Global Leaders for the Health MDGs and announced a plan for $250 million for women's and children's health in the Asia Pacific region.
Prime Minister Rudd has committed Australia to membership of the High Level Task Force for Innovative International Financing for Health Systems. The Minister for Foreign Affairs is our representative. I have had the privilege of attending all the meetings of this Task Force so far. It is jointly chaired by the UK's Prime Minister Gordon Brown and Robert Zoellick, President of the World Bank.
To understand why our Prime Minister has prioritized, this issue of child and maternal health, let me give some background.
Infant mortality is very high in Afghanistan: it is 156 per 1000 births.
It's lower but still high in Papua New Guinea, Cambodia, Burma and East Timor – between 55 and 65 per thousand.
This is compared with Australia and New Zealand, Malaysia and Singapore where fewer than nine infants per 1000 die.
The World Health Organisation (WHO) believes that more than 80% of maternal deaths could be prevented or avoided through affordable means even in resource-poor countries.
The training and availability of birth attendants is a key factor. In Laos, Cambodia, PNG, East Timor and Indonesia only one third to half of all births are attended by skilled birth attendants. Compare this with Australia, where virtually 100% of all births are attended by skilled health practitioners.
Almost two-thirds of the 8 million infant deaths that occur each year are because of poor maternal health and hygiene and deficiencies in health services. The vast majority of stillbirths and deaths of newborns and infants are preventable.
We have to look at ways of financing MDGs 4 and 5 and bridging the identified funding gap.
If all developed countries committed to giving 0.7% of GNI by 2015 and kept this promise, the current funding profile still would not meet the target needed for reaching MDGs 4 and 5. We would raise an additional $42 billion but expert analysis by a working group which has reported to the Task Force suggests we need as much as $49 billion. We would still need to raise at least an extra $7 billion, perhaps more.
Many people in developed countries underestimate the extent to which health in developing countries is funded by private interests. Low income countries currently spend only $24 per capita on health compared with $4000 in Australia. Of the $24, only $6 comes from international sources and $11 from out of pocket payments by patients.
The High Level Task Force established two working groups one of which assessed the funding gap as outlined previously. The other looked at new funding options. They started with 100 ideas – not all of which Australia would support – and then reduced the list to a few priority options.
For example, one initiative concerns new taxes. An airline tax in France helps support health in developing countries while a proposed small tax on international transactions would do the same.
It should be noted that Australia doesn't support the first tax and I really do not think the second will ever happen as it would require too much international coordination.
In fact, I don't find any of the new tax options attractive.
However, there are other interesting options, some of which have potential in Australia.
The International Financing Facility for Immunisation (IFFIm) uses the front loading principle of borrow now, spend early and pay back over a long time. Early expenditure on immunisation generates subsequent enhanced productive capacity to countries in this area and Australia is open to discussing this option. Australia has given money to the IFFIm and may give more.
A second mechanism that Australia is interested in joining under our new government is the Advance Market Commitment (AMC). Private drug companies cannot get a sufficient return on the drugs they develop if the market is mainly people in poor countries who cannot afford to pay commercial prices. If they cannot sell at a decent price they cannot get their money back. The AMC works by giving drug companies a guarantee in advance that if they develop such a drug it will be bought at a reasonable price by aid donors.
AMCs could also be used to develop other initiatives such as solar energy systems which could be used for example in African villages. They might not be commercial as people would not be able to afford large prices to buy them, but this is a way to mobilise private resources to get the research and development stage completed.
As well as looking at innovative ways of raising money, we also need to look at more effective ways of spending money. One priority must be the training of the health work force. At present the lack of a trained work force means that there are difficulties in delivering health programs, even when funds are available.
However my main message tonight concerns our humanitarian response to the poorest. This challenge remains and has become starker as a result of the Global Financial Crisis. More and more people are drifting into poverty. The Global Financial Crisis will affect some people in the developing world a lot and affect all people somewhat. It still remains important to our national interest to support them. It means Australia's future will be better if we live in a region which is prosperous and stable.
In the next few years it will be harder to argue the case for increasing Australia's international assistance as the Global Financial Crisis will make people insecure. I hope you have listened, and that if you agree with these arguments you will become advocates for the cause.