Dissenting Report—Coalition Senators and Members
Coalition members understand and appreciate the need for an
enhanced international response to the issue of food insecurity in developing
Australia is well positioned to offer support to countries
suffering from systemic food security issues. Australia’s technical expertise in
areas such as tropical agriculture, dry land farming and establishing the
regulatory frameworks that sustain agricultural development is widely regarded.
Despite the worthy objectives of IFAD, concerns remain
regarding its organisational capacities.
In announcing the decision to withdraw from the Fund in
2004, the Australian Government cited the following factors:
- the Fund’s limited
relevance to the Australian aid program’s priority countries in South-East Asia
and the Pacific;
- lack of comparative
advantage and focus—other organisations are more strongly involved in rural
development in our region; and
- shortcomings in
management and failure to respond to concerns that the Australian Government
raised with IFAD senior management.
The decision to withdraw from IFAD was supported by Mr
Charles Tapp, the then Deputy Director-General of AusAID, in evidence presented
to the Joint Standing Committee on Treaties.
According to the Committee’s report, ‘AusAID has had
concerns regarding IFAD’s performance in relation to the Australian aid program
and its priorities for a “substantial period of time”.’
The recent Review of Australia’s Engagement with IFAD
(April 2011) backed this assessment, stating that ‘In 2004, these were
clearly valid and important enough reasons for Australia to take the
significant (and protracted) step of withdrawing from a UN organisation.’
While Coalition members note the reforms that have been
undertaken since Australia’s withdrawal in 2004, it is clear from evidence
presented to the Committee that more work is needed if the concerns of the
Howard Government are to be fully addressed.
At a public hearing into the Bill on 25 October 2012, AusAID
officials were unable to assure members of the Committee that IFAD had
addressed all of these issues.
Mr Ruddock: Do you believe all of those concerns have
now been addressed?
Ms Bryant: I believe that the concerns have been well
documented and that we are satisfied that our concerns have been heard by IFAD
and substantially acted upon. As per our previous comments, they are not all
the way there yet but they are making progress against a number of our concerns
to the point where we are satisfied that they are on the right path.
Mr Ruddock: But you cannot quantify that.
Ms Bryant: No. I am not sure how you would like me to
quantify it. In terms of a list and a tick box, no, I cannot do that.
A Desktop Analysis of the International Fund for
Agricultural Development (March 2011) identified ongoing challenges for the
organisation in the areas of human resources and financial management.
The Analysis found that ‘IFAD is benchmarked worse than
peers for some aspects of financial management and administration.’
It referred to the Multilateral Development Banks’ Common
Performance Assessment System (COMPAS) 2008 Report, which found that ‘IFAD had
the lowest disbursement ratio and one of the less satisfactory variances
between planned and actual project duration.’
In the United Kingdom’s 2011 Multilateral Aid Review,
IFAD’s organisational strengths were only rated satisfactory, with mention made
of its high administration costs and the need to improve project efficiency.
Since Australia’s withdrawal from IFAD, the number of
allegations of fraud and corruption received by IFAD’s Office of Audit and
Oversight (AUO) has increased from five in 2004 to 41 in 2011.
According to IFAD’s 2011 Annual Report on Investigation
and Anticorruption Activities, 25 allegations were made against external
parties, 13 related to IFAD staff members, and three involved both staff
members and external parties.
The staff misconduct cases involved harassment, breach of
confidentiality, recruitment irregularities, and conflicts of interest, while
the external cases involved collusion in procurement activities and other fraud
on the part of companies and project staff.
The ability of IFAD to investigate these allegations was not
assisted by a reduction in staff numbers in the AUO and Investigation Section.
While a number of contributing factors maybe behind this
increase, the broad negative trend since 2004 is concerning.
When asked about corruption within the Fund, AusAID
officials stated that they were not aware of any allegations.
Mr Ruddock: Have there been any allegations of
corruption within the fund?
Mr Wojciechowski: Not that we are aware of. We
understand that there are reporting mechanisms for corruption, but we are not
aware of any making it to the executive council discussions. I think the report
that we have commissioned, the 2011 report, looked at that issue and also did
not identify any allegations of corruption. I am using the word ‘allegations’
here; there were certainly no cases.
This is disputed by IFAD’s 2011 Annual Report on
Investigation and Anticorruption Activities, which stated that reduced
staffing led ‘to a very high investigation caseload of 59 active cases in 2011
(compared to 49 active cases in 2010 and 33 active cases in 2009).’
The lack of awareness, on the part of AusAID, of the
allegations of fraud and corruption related to the Fund is likewise troubling.
The United Kingdom’s 2011 Multilateral Aid Review
concluded that the likelihood of positive change within IFAD was uncertain.
According to the assessment, ’IFAD has a relatively new top
management team and although commitment is clear, it is too early to judge
At a public hearing into the Bill on 25 October 2012, AusAID
was unable to satisfactorily explain why Australia should rejoin IFAD at the
present time, rather than waiting until the impact of the recent reforms are
Mr Ruddock: Yes, but the results of the changes [are]
described as uncertain. We are dealing with it eight years after we left the
organisation. It is still uncertain, and we are saying, ‘we should give them
the benefit of the doubt and rejoin now.’
The Government has also failed to adequately explain the
reasoning behind its decision to contribute $126.4 million over four years to
support Australia’s re-engagement with the Fund.
According to the 2012-13 Budget papers, this includes a $120
million payment to IFAD in 2013-14, as ‘the total replenishment commitment is
expected to be made in that year’.
This is far more than was committed by larger economies in
Mr Wojciechowski: In 2011 replenishment—and this is in
US dollars—Canada pledged $76.8 million, New Zealand opted not to pledge,
the United Kingdom pledged $82.9 million and Germany pledged $70 [million].
Mr Ruddock: So the United States must be the big one,
Mr Wojciechowski: The United States contribution was
The Government must explain why, based on these figures, it
will contribute more than the United States, United Kingdom, Canada and
Germany. This is particularly important given Australia’s long-held concerns
about the Fund.
It must demonstrate that the Government’s significant
financial commitment is based on a careful analysis of Australia’s national
interest, and not motivated by its need to reach its spending targets for
overseas development assistance.
The International Fund for Agricultural Development Bill
2012 was referred to the Joint Standing Committee on Foreign Affairs, Defence
and Trade for inquiry on 13 September 2012 by the House of Representatives
Specifically, the Committee was asked to ‘Determine whether
the International Fund for Agricultural Development (IFAD) has fully addressed
the concerns that were raised by the former Howard Government, and which prompted
Australia to withdraw from the organisation in 2004.’
While reform of the organisation has been undertaken since
Australia’s withdrawal, it is apparent from evidence presented to the Committee
that the concerns of the former Howard Government have not been fully
Given the substantial amount of money that the Australian
Government has committed to rejoining the Fund, the Australian public must have
full confidence that their money will be spent efficiently and effectively.
The Coalition recommends that the Bill be delayed until the
concerns of the Howard Government are fully addressed and the impact of the
reform program commenced by the organisation’s new management is known and properly
|Mrs Joanna Gash MP
|Senator the Hon. David Johnston
the Hon. Ian Macdonald
|Senator Stephen Parry
|Hon. Julie Bishop MP
Dennis Jensen MP
|Mrs Sophie Mirabella MP
Ken O’Dowd MP
|Mr Stuart Robert MP
Philip Ruddock MP
|Hon. Bruce Scott MP
Dr Sharman Stone MP
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