Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE díospóireacht -
Thursday, 4 Sep 2003

Vol. 1 No. 14

Overseas Development Aid: Presentation.

The next item on our agenda is a discussion with the Department of Finance, the Debt and Development Coalition and Dóchas on the role of the Department of Finance in providing funding for overseas development and its responsibility regarding Third World debt. This committee deals with the Government's contribution through the Department of Finance, while the issue of spending and the programmes and various activities in relation to the spending are a matter for the overseas aid section of the Department of Foreign Affairs and the Oireachtas Joint Committee on Foreign Affairs. Our role is to deal with the budget line - the amount of money being made available and Ireland's commitments in that regard vis-à-vis the World Bank and the IMF. The work of the individual programmes comes under the remit of the Department of Foreign Affairs. I do not wish to stray into that territory, which is properly the business of the foreign affairs committee. Our specific role is from the point of view of finance.

I welcome Mr. Robert Bradshaw, principal officer from the banking, finance and international division and Mr. Robert Carey, principal officer from the public expenditure division in the Department of Finance.

I remind visitors that while comments of members' are protected by parliamentary privilege, those of visitors are not so protected. Members' are also reminded of the long-standing parliamentary practice to the effect that members shall not comment on, criticise or make charges against persons outside the House, or an official by name or in such a way to make him or her identifiable.

Mr. Robert Bradshaw

My colleague, Mr. Robert Carey, from the public expenditure side of the Department of Finance, deals with the expenditure on overseas aid as one of his many functions, while I deal with our participation in international financial institutions such as the World Bank and the IMF as one of my many functions. That explains why both of us are here today. We are delighted to be present to explain more generally what the Department of Finance does in relation to this sector.

The Department's primary role in this area is to ensure the stability of the financial system of the world generally. While we concentrate more often on our national or EU financial system, the success of Ireland and the EU is of considerable benefit to other countries, including some of the poorest. Those countries in difficult situations can gain from our economic success, the success of the European Union, and also from international institutions.

We circulated a rather long paper to committee members which contains a section on our debt strategy paper which members may have seen before. It is not my intention to read that out. I will concentrate on some of the key points and I hope the members will follow with questions on any area they find of interest.

The Chairman made a moot point in his introduction. The Department of Foreign Affairs is the Department with primary responsibility for overseas development aid in Ireland. It operates through Development Co-operation Ireland, formerly known as Ireland Aid. The Department of Finance has direct responsibility for Ireland's membership of certain international financial institutions, particularly the World Bank group of institutions, the IMF and some others. Some of the costs in that regard are counted for overseas development aid purposes.

The amount of funding that is available for overseas development aid is a policy decision made in the context of the Estimates and budget cycle. This Department's role essentially relates to the monitoring of, and, as appropriate, the provision on behalf of the Minister of sanction or delegated sanction to the Department of Foreign Affairs for its voted expenditure. We do not directly provide services in overseas aid unlike some states where the finance ministry might have a more direct function.

Table 1 attached to our statement shows how Ireland's overseas development expenditure has increased in recent years from €157 million in 1997 to €456 million in 2003. We are now one of the more respectable performers in the overseas development aid stakes. Our contribution is 0.41% of GNP. The United States currently provides 0.12% of GNP in overseas development aid and a wealthy state such as Switzerland provides 0.32%, according to recent OECD figures. At the UN conference on financing for development in Monterey which I attended with others from the Department, both the EU and the US signalled their intention to increase overseas development aid.

I am sure members' are aware of the commitment reached by the EU in Barcelona in 2002 that it would increase overseas development aid towards the target of 0.7% of GNP. There is an active commitment to reach 0.39% which will be a significant burden on some of our colleagues in Europe that are far below that number at present. In some cases they have difficulties with their public expenditure programmes and taxation regimes but they are committed to doing it and were happy to do so in the run-up to Monterey. This matter will also be reviewed by agencies which will be looking hard at what the European Union has agreed to do. The Americans also offered to increase overseas aid.

The Bretton Woods institutions are so-called because they were founded at a conference in the Bretton Woods resort. The key one is the International Monetary Fund which came into existence in 1945. It is a co-operative intergovernmental monetary and financial institution concerned with the working and stability of the international financial system and with the problems of individual countries. The stability of the financial system is of general benefit and importance to everybody, both wealthy and poor countries alike. A key task for the IMF is surveillance of the financial system. This is an important role and it includes what we call an article IV process in which the IMF periodically looks at the performance of member states.

Recently, as members are probably aware, the performance of Ireland was assessed by the IMF in that regard. More particularly, the IMF is a source of assistance to member states that have difficulties. For example, as of 1 January 2003 the IMF had credits and loans outstanding to 89 of its 184 members. It is important to note that this phenomenon is quite widespread and amounts to in excess of $96 billion, which is quite a lot of money. Therefore, the IMF is necessarily involved in the operations in many of the world's poorest countries.

The Word Bank group of bodies is a multilateral development institution, the purpose of which is to assist the least developed countries. Formally, it is called the International Bank for Reconstruction and Development, but almost nobody knows that. It is usually referred to as the World Bank, but in fact its family of agencies - the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency, MIGA, and the International Centre for the Settlement of Investment Disputes - are referred to as the World Bank group and not all countries are members of all of them. Ireland is a member of all those agencies. Likewise, we provide a capital subscription to these agencies. We have, for example, a 0.39% quota share for the IMF. In other words, we do not own 99.61% of the capital of the IMF, which is provided by other states. The Minister for Finance is the governor for the bank and for the fund.

Given the volatility of the financial sector, the agencies rely very heavily on a resident board of executive directors in Washington. The executive directors are appointed by constituencies, which may be, in the case of the very biggest quota holders, individual countries such as the United States, or groups of countries. There are 24 executive directors and these are essentially the people who run both the bank and the fund on a day-to-day, week-to-week basis. They rarely make decisions on the basis of formal votes. They try to achieve a consensus and, like most committees, discussion and consensus are sometimes hard to achieve and sometimes issues will run for some time.

Ireland is in a constituency in both agencies with Canada, which is the dominant player in the constituency and which has almost 80% of the power, and a large group of Caribbean states. Therefore, it is an unusual constituency in that it has a G7 member, a European Union member and a number of states that have quite serious economic development problems of which we are aware. It is almost a microcosm of the institution itself. It has members from the western hemisphere, the European Union and the poorest states. We have excellent relations with our partners in the constituency and we try to reach, within the constituency operations, a consensus on our generalised approach. That is important. I should have mentioned in my introduction that my colleague, Mr. Carey, was, until relatively recently, a member of the World Bank staff in the Irish-Canadian-Carribean constituency. We do not nominate any executive directors. They are always Canadians. We hold some of the posts below them.

The International Development Association, IDA, is not the IDA with which everybody in the country is familiar. It is the concessional lending window of the World Bank. It lends to the poorest countries and on concessional terms. That is a short version of what the IDA does. It is periodically replenished by capital subscriptions, one of which is likely to come before the House for approval very shortly. We will be coming forward with a legislative procedure to underpin our commitment to what we call IDA 13. If the House agrees to it, this commitment will amount to €50 million.

We are also members of two other banks that have an international development function. These include the European Investment Bank, of which Deputies will be well aware. It operates not only within the European Union but also in other places and other continents. Also included is the European Bank for Reconstruction and Development, which was founded more recently in 1991 and which is specially tasked to assist the eastern European states and the former states of the Soviet Union.

We support and have supported debt relief for poor countries, an issue of concern both to us and others in the Community. Attached to our paper is a very long debt strategy paper, which was jointly constructed by the Departments of Finance and Foreign Affairs about a year ago. I will not attempt to summarise it very much because it is quite long. The difficulty with debt cancellation is that if agencies cancel debt, they do not get back any income stream from that debt. There are agencies and institutions which would have a need for additional capital in that instance, whereas some countries would be willing to pay that additional capital in the event of debt cancellation. A large number of countries would not necessarily be so willing. Although Ireland does support debt cancellation, I stress that this is a minority position, even within the Union and especially among the international community.

I welcome the representatives of the Department of Finance. There are a number of issues I would like to explore. The Department of Finance, as Mr. Bradshaw has correctly stated, has the function of representing Ireland in both the IMF and the World Bank. I understand that the Department has argued over the past seven years that we should very much become part of initiatives such as HIPC, which is an initiative concerning highly indebted poor countries. When I was Minister of State with responsibility for debt co-operation, I very strongly resisted it, and a former Minister for Finance most correctly did so as well. I can find nothing in this presentation that indicates why I should change in any way my view on our contribution to HIPC. I know our aid donations have been increasing since 1992, at which time the programme had almost died. It has been reinstated and is now relatively substantial. I would like to know why Ireland should be a contributor to an initiative such as HIPC, which, even on the basis of the co-paper written in conjunction with the Department of Foreign Affairs and in light of the list of 25 countries, has hardly had any impact on the debt burdens of the most poor countries. Only four countries have reached anything like a stage of equanimity or sustainability and I find that there is a large washing of hands exercise in the presentation by the Department of Finance.

We are a member state of the European Union and have significant development aid experience. Since we are active members of both the IMF and the World Bank, I find it strange that we have to act as if we are members of the Carmelites and hardly speak out at all. One would think that we belonged to some monastic order that had taken a vow of silence in relation to the actions of the fund in particular. I have had long discussions with the bank and noted that it has, over the past four or five years, tried to reform some of its approaches to development issues, but the reality is that the IMF - I could list the countries involved throughout Africa - has overseen disastrous privatisation programmes and a cutting back in the essential areas of health, education and water. It has demanded slash and burn economic policies which have meant that the national budgets of countries such as Tanzania Rwanda and other countries in west Africa can barely sustain skeleton education or health services. That is the reality of the bank's policies. Many Irish NGOs, and Irish people generally, strongly support the notion of Ireland being proactive not only regarding development aid, but to the development of economic capacity and national budgetary capacity in developing countries.

There has been a lot of criticism, correctly in my view, of the kind of authoritarian dictatorship that Zimbabwe has descended into in the latter years of Robert Mugabe's rule. The IMF carries a large share of the responsibility. When Zimbabwe became independent it was encouraged to borrow extensively to fund education and health. Zimbabwe quickly developed one of the highest literacy levels in Africa. It all went pear shaped as the fund changed its policies.

How come the fund is almost completely silent about corruption? Much of the debt accumulated in the 25 listed countries lies in countries that are either at war or recovering from war. The fund has done almost nothing to change its economic policies. I understand when the delegation said that Irelands share of the fund is very small and, as an economic player, Ireland is relatively small. Nonetheless, we are a member of the EU and have, for various reasons, a strong tradition of interest in development assistance. Why is the Minister for Finance taking a Carthusian vow of silence on the issue of reforming the way the IMF operates its macro economic policies in some of the poorest countries on earth?

The delegation got its retaliation in first when it talked about the stability of the international financial system. Yet the stability of the international financial system would be far greater if developing countries got a fairer share and an opportunity to develop. When the Minister for Finance goes to Doha at the end of September I would like to see him, and the officials that represent Ireland on the fund and at the bank, meet with us to explain what steps they have taken to reform a disaster from the perspective of the developing countries. I do not want them to sign up and be yes men.

I lived in Tanzania from 1983 to 1986 and saw what the fund did when the men with the brief-cases arrived in Dar Es Salaam around 1985. Education went out the door, particularly for girls, as did health services. People could not buy insecticides to clear malaria carrying insects. I lived through two and a half years of the fund's tender care and attention to a country that never had a conflict, was democratic and did all the right things by international norms. Having borrowed, the country was then in the clutches of the fund and the IMF was at its throat. I am passionate about this issue because anyone that has seen what has happened in Africa over the past 20 years arising from the financial strictures of the fund will know that what was a poor continent has become poorer.

Why can Ireland not be proactive in changing these policies and becoming a persuader in reforming the IMF?

Mr. Bradshaw

That was an extraordinarily long question that raised many issues. There was one question at the end and I will answer it for the Deputy. It has been said that the only programme the fund ran that was popular with everybody was one that nobody knew about. Once it is labelled "IMF" it tends to bring out a considerable degree of criticism. One has to ask oneself would circumstances in Africa not be considerably worse if there were no IMF or World Bank. We cannot accept that we have not tried to change the policies of the bank for better both in relation to Africa and a commitment to education. Education was a theme that we mentioned in our speeches to the bank and the fund in recent years. We have also sought to improve the transparency of the operation of both the bank and the fund and modifying the operating procedures of them.

We do not accept that we have been silent. We do not accept that we have been a participant in a Carthusian, or Cartesian, silence. We strongly feel that we need to encourage the operation of measures in Africa such as NEPAD and HIPC. If we do not do that we believe the money will be spent elsewhere and Africa will not gain if there is nothing. The Deputy is quite correct in saying that the progress on HIPC has been disappointing. She is quite correct in saying that not many countries have achieved sustainability.

I did not notice any attribution of blame in the Deputys remarks for non-performance to the governments of those countries. It was almost as if the Deputy assumed that everything that happened in those countries was determined externally by the fund or the bank. The fund and the bank only partially fund any African state. Some African states have had no recent funding from the bank or the fund and are not in a particularly good state.

Deputy Burton sent me a letter on this topic yesterday that I circulated at the commencement of this session. Does the Deputy wish to comment on the letter?

The civil servants we have met today are presenting the position of the Department. I have to make a serious criticism of the policy of the Department and the Minister for Finance. I know Africa pretty well and have had connections with the continent for almost 30 years. I know countries that are not debtors of the fund. I am glad to hear an admission at last that HIPC has not worked out well. I held out against that for two years. There is nothing to show for that.

I gave the example of Zimbabwe. There is a dreadful dictatorship there and I hope it ends soon. The point I was making was that at the point of independence for Tanzania, and later Zimbabwe, those countries were encouraged to borrow for health and education programmes. In both cases the countries made significant strides. Tanzania was at one time encouraged to take on Idi Amin and bring an end to his reign of terror.

That is one side of the geo-politics of the fund. The other side is the men arriving with briefcases into places like Dar Es Salaam and telling the finance minister there that all domestic programmes had to be slashed and everything had to be privatised. It is a level of social engineering. We have regular elections in this country. No Minister for Finance or political party could take the kind of strictures that the fund offers as the medicine which must be swallowed to get the economic house in order.

To answer an earlier point, I do not think that the fund takes corruption or the failure to collect any domestic taxation in many developing countries as seriously as it ought. I would be happy to discuss that matter separately. I have been involved in efforts to try to ensure that there is a domestic tax base. In recent years the bank has made good efforts in this regard. However, the net effect is that Africa is becoming poorer and poorer. In my criticisms of the fund I am not saying that the fault lies entirely externally. However, in Uganda, one of the fund's showcase countries, the better economic performance was down to better coffee prices and the end of a violent armed conflict which cost more than two million lives over 20 years.

The Irish public, the NGOs and all the political parties would like to be constructive. What the fund is doing is not working for Africa and I hope that we start a dialogue here today, part of which will involve requesting a report from the civil servants who work with the fund, which will show how it is acting as a persuader for reform because reform is badly needed. We also need to hear from the Minister because he will make the presentation of our statement at Doha later this month.

I will ask Mr. Bradshaw to respond without getting into specific policies in regard to individual countries since that is a matter more appropriate to the committee on foreign affairs.

Mr. Bradshaw

I am surprised the Deputy is unaware of our concerns in regard to some of these issues which we indicated in our annual reports. On a point of information, the annual meeting of the World Bank and the IMF is not in Doha but Dubai.

If we get into the issue of fund performance and activity, it must be recalled that the fund is a lender of last resort and only enters into member states as a provider of funds when that country has already failed in its economic performance. The World Bank is slightly different. It is because they cannot borrow from anyone else that they approach the IMF. Usually the problem comes first and the fund comes second. In coming to a member state, be it Ireland, the UK, Argentina or somewhere in Africa, the fund has to ask that state to deal with the traditional problems which finance ministries in every country in the world must deal with. I am glad the Deputy mentioned tax ratings because it is an important issue and one on which Africa has been quite defective and on which the World Bank has been doing some work. The Irish Government could help in that regard because of its expertise.

Finance ministries everywhere face the problem that states wish to spend more money than they have. The rationing system applies everywhere. If a country cannot sustain its loans and goes to the fund for assistance because it has a balance of payments or other crisis, one cannot reasonably assume that the fund will allow it to continue to operate the policies which created the problem in the first place. It must adjust its public expenditure profile. Whether the state does that in one way or another is debatable and there are a number of options. However, at the end of the day, if the country only has 80, it cannot pay 100. This is something the fund deals with on a daily basis.

No one is happy to see the fund arriving. The fund has an unusual problem in that in most countries it goes to the people, such as government ministers and central bank governors, who have perhaps caused the problem. They are the people who are still there when the IMF arrives and they do not wish to accept that the policies do not work or do not wish to change them. Therefore, the fund has a difficulty in that the other 183 member states of the fund, which put up the money to assist the member state which is in difficulty, do not have unlimited resources. The fund is not unlimited. It has resources which have been subscribed by the members. If they are all committed in country X or Y, there would be no money for country Z. Therefore, the fund necessarily requires harsh medicine and everyone in the community has accepted that.

I welcome this discussion and the presence of colleagues from the Department of Finance.

I greatly respect the sincerity, commitment and personal engagement of Deputy Burton in this area, both inside and outside of politics. However, I do not accept her criticism of the Minister or Department of Finance in regard to their engagement with the World Bank and the IMF. This is an interdepartmental issue in that it involves both the Department of Foreign Affairs and the Department of Finance. We have been fortunate in having some good Ministers in charge of development co-operation - Deputies Kitt, Burton and O'Donnell. The Minister for Finance has also become personally involved and engaged in the dimension which is being discussed today - debt relief and reduction.

I accept the point that one must have or encourage a viable system of economic governance. I accept Deputy Burton's point that in the 1980s, and earlier, the IMF acted as a crude bull-in-a-china-shop manner. However, my sense is that the situation has improved considerably since and perhaps Mr. Bradshaw might like to comment on the evolving ethos within the IMF in regard to these problems. We must remember that when we talk about education, health and privatisation, in many of the countries involved, by far the biggest item of public expenditure is inordinate military expenditure, which is partly related to the fact that often there are one party systems and this is part of internal as well as external security. If one is to cut public expenditure that seems to be one of the most obvious targets.

A valid point was made in the paper - not much dwelt on so far today - that if one indiscriminately writes off debt, there are many countries which need to be able to borrow and if one goes too far, it will make it difficult to borrow on acceptable terms. Therefore, there is a balance to be struck. It may well be, as Deputy Burton is arguing, that the international institutions and perhaps the Government have been cautious in this regard.

There have been increases in ODA since 1992, which I have always supported when it fell within my power to facilitate them. That has given us much more credibility than we had when we were near the bottom of the pile.

The following sentence in the opening page of the presentation raised my eyebrows a little, because it is only a partial statement of the position: "The amount of funding that is made available for ODA is a policy decision which is made in the context of the Estimates budget cycle." That is the perspective of the Department of Finance, but the amount of funding made available for ODA, in the last analysis, is a Government policy decision which is implemented in the Estimates. We should not forget that one of the elements of our campaign to win a seat on the UN Security Council was our commitment to contribute 0.7% of GNP to ODA. It is easier to make progress on this when growth is 1% or 2% than when it is running at 10% or 11%. On the other hand, in the former situation there are more pressures on public expenditure from other quarters. The Taoiseach confirmed within the past six months that the Government remained committed to achieving this aim by 2007. I hope we will stick to that commitment - it is a matter of international honour.

One can hear among the members of any party the pragmatic consideration that raising contributions to ODA is poor value for money compared with what can be done in this or that constituency. I disagree with this. As Ireland has become more prosperous there has developed a larger constituency of people who want to see it play a full part in overseas development, on a par with progressive countries such as those in Scandinavia and the Netherlands.

Hear, hear.

It is within our capacity to do this. We have already made the commitments: I argue that in the current Estimates campaign and those of the next two or three years we should take steps towards fulfilling them. As an immediate measure, we could aim to achieve next year the interim objective of 0.45% which was set some years ago.

We are a long way from the stated objective of contributing 0.7% of GNP towards overseas development assistance. While Senator Mansergh and the Chairman, among others, might say that the current economic situation is different from that faced by the last Dáil, I must say I had thought there was greater activity in this area during that time. That may have been due to the particular passion of the Minister of State with responsibility for that area at the time, Deputy O'Donnell.

I attended a mobilisation and signing of a commitment towards alleviating Third World debt in this city back in July. It may have been organised by the Debt and Development Coalition - I cannot remember - but it was supported by a broad range of NGOs and members of four political parties represented in the Dáil signed the pledge and the commitment. Deputy Gay Mitchell represented Fine Gael, Proinsias de Rossa MEP represented the Labour Party, Patricia McKenna MEP represented the Green Party and I represented Sinn Féin. Neither of the two Government parties were represented at this signing, which took place outside the Central Bank in Dame Street. This is indicative of a diminution in commitment - it is certain that this issue does not have the same priority at Cabinet level as it had in the previous five years.

I appreciate that the representatives from the Department of Finance will not be able to speak for the Minister, but there are undoubtedly strong voices throughout the country who would advise the Minister to reaffirm a couple of key points at the upcoming IMF-World Bank AGM in Dubai on 23 and 24 September. His commitment to the total cancellation of debt needs to be reaffirmed. The poorest countries should be considered for this as well as those that are stalked by HIV and AIDS - which has not yet been mentioned, although it is something of which we must be acutely aware.

The situation in Zambia was mentioned earlier. It is not that Zambia is spending too much on defence - Zambia spends more on debt repayment than it does on health, yet a fifth of its citizens are HIV-positive or suffering from AIDS. Life expectancy in Zambia has dropped from somewhere in the early fifties to 41 over a small number of years. This is a serious matter.

Unquestionably, our Minister for Finance has an opportunity of reaffirming Ireland's commitment in this area and its role as a leader in formulating world thinking in this area by making the case very strongly at Dubai for full cancellation of debt for the appropriate countries. The IMF and World Bank's stipulations which throw up obstacles to the whole process, such as those relating to the privatisation of utilities and some industries, are outrageous and unacceptable and reflect the thinking of some of those currently in Government here and elsewhere. They may be players in all of this but their agenda at home and, apparently, internationally is one of privatisation. I have no doubt about the importance and the fundamental role of the public sector in giving these countries, which are emerging from the tragedies of their current and historic experiences, a real opportunity of facing into a more welcoming future, in which individuals are given the chance to reach their full potential. As things stand at present, none of that will be achievable. Ireland is not playing the role it should be.

Will our two colleagues give us some indication of whether they have any insight into the Minster's intent for his address in Dubai? He will be representing not only the Government but also the people of this country, and he has a right to know what we expect of him.

Mr. Bradshaw

I welcome the general support for both the public service, as mentioned in Deputy Ó Caoláin's remarks, and the work of our colleagues in the Department of Foreign Affairs on overseas development aid, which I am sure will be encouraging for them.

What are the issues that Ireland has raised and will raise at international fora? In those fora, we try to raise the issues that we consider to be important. We have raised debt issues and the education issue - in particular, education for girls was very strongly featured in our remarks at the meeting last year. We have tried to draw from our experience in country and development issues. As many members will recall, relatively recently we were extremely poor ourselves. Some of what we have done has been useful in pulling ourselves up from where we were. We have tried to encourage people to go down the route of governance, or transparent procedures and of dealing with problems such as HIV and AIDS, which has been a strong theme by Ireland in many fora and groups - in particular, in raising the difficulties in Africa.

There is relatively little division of opinion as to what the issues are and how we should raise them. The problem is that if one is going to make a three-minute speech, as every Member of the Oireachtas well knows, one cannot mention everything. The question is, therefore, what does one emphasise. Does one say something new or something one has said before? Should one repeat just the one mantra "Drop the debt"ad nauseum, as some people may like, or does one go on to talk about other issues, such as HIV and AIDS, education for girls, governance or reform of the HIPIC? These are questions the Minister will have to deal with in the coming days. We have a very short period for speeches. There are 184 members and they all wish to say something. One cannot go on for an hour and a half, so Ministers generally try to keep their remarks brief, focused, pointed and relevant to the issues at the time. In that regard, our Minister’s speech will follow that and will also follow the issues which our constituency partners would wish to see raised and dealt with in the work of both the bank and the fund.

I did have a question in my contribution which was not actually answered. That was, do the witnesses consider that the IMF's ethos, modus operandi, and values have evolved somewhat from that described by Deputy Burton in the mid-1980s?

Mr. Bradshaw

The short answer to the Senator's question is "yes", I believe so. Perhaps Mr. Carey might like to say a few words about how the World Bank has been moving along that front and probably influencing the IMF in that regard.

May I ask a brief supplementary question? Mr. Bradshaw was talking about the need for transparency in developing countries, which I strongly support, but what about a bit of transparency concerning what Ireland does at the International Monetary Fund, and the two representatives at the World Bank? We do not get any reports back or details of the positions they adopt. We get very little detail about what they actually do there.

Mr. Bradshaw spoke earlier about harsh medicine being necessary. Does that mean that the Department is convinced that what has been done to Argentina is appropriate, or was the medicine too harsh or not harsh enough? With due respect, I think some of the answers are very blasé. I also do not understand why, unlike with many other countries, the Department of Foreign Affairs and people who have a lot of experience of the impact of what happens on the ground as a consequence of the bank's and the fund's policies, are not representing or co-representing Ireland at a number of the institutions. Would the speaker like to see, as happens with other countries, the Department of Foreign Affairs co-sharing the seats and participation in the activities of the bank and the fund? It might give more immediate experience of some of the issues in Africa and other areas.

Mr. Bradshaw

I am surprised the Deputy finds that we are not open and transparent. First, we do produce an annual report which sets out in considerable detail the activities that have taken place. Second, there are only two Irish positions, one in the World Bank and one in the IMF. There is a long-standing tradition that one is occupied by an official from the Central Bank, which has a relevant responsibility in the area, and the other is traditionally occupied by a staff member from the Department of Finance. It is not true that the Department of Foreign Affairs has no role in relation to this; we have a very close working relationship with our colleagues in Foreign Affairs and they attend the annual meetings of the World Bank. Indeed, they have been attending the spring meetings in more recent years as well. Therefore, it is not that the Department of Finance is carrying on a single-minded mission on its own initiative.

The Deputy asked me if I referred to harsh medicine. Yes, any medicine that is handed out tends to be harsh. It would be a problem for a state, when it is in financial difficulties, that the IMF has imposed conditions on it. Generally speaking, nobody likes those conditions. If, however, it is necessary to bring a country back into stability then all countries that have any sort of rational economic criteria will tend to support those conditions. I am not anxious to get into the issue of Argentina, for example. That situation was described to me recently by reference to a story that has been told about an alleged interview with a Hollywood actress. She was asked, now that she had four successful marriages behind her, what advice did she have to give to everybody else. In the context of measures to support Argentina, I think we are now in the fifth or sixth sorting out of the Argentinean problem. Quite obviously, all of those have been successful in the past.

We are not, by any means, unaware in the Department of Finance that to solve problems difficult decisions have to be taken. In this country we have had difficult decisions in the past and possibly will have difficult decisions in the future.

At this stage, I am going to conclude this portion of the meeting because we have to receive two further presentations. I thank Mr. Bradshaw and Mr. Carey for attending today's meeting and for their presentation and the informative information pack they provided. The item Mr. Bradshaw mentioned will spill over into the remaining part of our discussions this afternoon. One of the purposes of our meeting today is that through the committee and the agencies that appear before it, we will have an opportunity to pass these views on to the Minister so that they can be taken into account before he attends the annual general meeting of the World Bank. That is why we scheduled the meeting for early September and we hope the Minister will take note of what is being said here today.

We will suspend the meeting for a moment to allow the visitors to vacate their places. The Debt and Development Coalition representatives will be called now.

Sitting suspended at 3.58 p.m. and resumed at 3.59 p.m.

I would now like to introduce Ms Jean Sommers and Mr. David Joyce, chairperson of the Debt and Development Coalition who are very welcome. I must remind our visitors that comments of members of the committee are protected by parliamentary privilege but those of visitors are not so protected. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against people outside the House or refer to any official by name or in such a way as to make him or her identifiable.

I am getting tired of reading that sentence. I must find out if there is a mechanism whereby I can read it once at the beginning of a meeting and let that be it for the day.

Before Ms Sommers makes her presentation I would like her please to explain to the committee, and to people who might be interested in reading the transcript of today's proceedings, precisely what the Debt and Development Coalition Ireland is.

Mr. David Joyce

I thank the Chairman for the opportunity to address the committee today. The Debt and Development Coalition is a coalition of development NGOs, religious organisations, trade unions and other interested groups which for many years have campaigned for, and raised awareness on, Third World debt. I am the current chairperson of the coalition and Ms Sommers is its co-ordinator. We submitted two papers in advance of today's proceedings, one of which is on the role of the IMF in low income countries. I will speak to that topic. First, however, on the promotion of Ireland's debt policy I will hand over to Ms Sommers.

Ms Jean Sommers

I thank the committee for giving us this opportunity. The debt issue has already been discussed as part of the presentation by the Department of Finance. I will consider whether Ireland is doing as much as it should and could to promote the debt policy. I acknowledge that Ireland has taken a lead internationally in the debt policy adopted last July which proposed a 100% debt cancellation for low income countries. In particular it states strongly that the countries with high levels of HIV and AIDS should have their debts cancelled as soon as possible. In the Irish context we are not discussing whether debts should be cancelled in low income countries. This is official Government policy already. The question is where do we take it?

Many of the committee members will have been lobbied or have received representations over recent years on the debt issue. They may have heard promises of 100% debt cancellation, and $100 billion in debt cancellation which were made in 1999, on the eve of the new millennium. There has been some progress but this has been disappointing given the level of need. About one third of the $100 billion that was promised has been delivered resulting in an average 40% cut in debt servicing. That may sound like a great deal but it refers to very poor countries which were not necessarily servicing all their debt so the amount of money released is not as much as is needed. The good news is that the money that has been released is being used for social spending, which is progress.

The UN Human Development Report, launched in Dublin last July amid much publicity, echoes the Irish Government's position that if the millennium development goals of eliminating poverty by 2015 are to be met many of these countries need 100% debt cancellation. While it is true, as Mr. Bradshaw said, that Ireland's position is a minority one, Ireland is not without allies.

Part of the reason for the slow progress on debt are the onerous conditions attached to the grant of debt relief. If a country fails to meet all the conditions laid down by the IMF and the World Bank its debt relief is held up and part of it is not paid. One of the controversial conditions is privatisation of utilities which has held up debt cancellation in several countries. Nicaragua, Honduras and Zambia are still in the pipeline. In order to qualify for debt reduction countries have to have a poverty reduction strategy, similar to a national development plan, drawn up in consultation with their civil society groups. This has some parallels in our partnership agreement, although the process is different.

The agreement is that when countries develop that poverty reduction strategy the savings arising from the debt cancellation are spent through those strategies so it is impractical that while the country is developing its poverty strategy these external conditions are being attached to the strategy from outside. This happened in Zambia, which has a strong relationship with Ireland, and where debt relief was being held up because it did not meet the IMF demand to privatise the national commercial bank. One of the arguments against this is that in Zambia that is the only bank with branches throughout the country so it has a significant impact on credit availability and small producers in particular.

We welcomed the Irish Government's debt policy last year, and the efforts of the Minister of State at the Department of Foreign Affairs, Deputy Kitt, who has responsibility for overseas development, and the efforts of the Taoiseach in promoting that policy. We believe, however, that the Government has weakened its position by accepting the IMF and World Bank argument that they cannot afford to cancel the debt. They claim that they do not have enough resources to back up the cancellation. Can they afford not to cancel the debt in that both are officially committed to supporting countries to achieve the millennium development goals set by the United Nations millennium assembly? I do not want to go into detail about the resources of the IMF and the World Bank, which are complex and multi-layered but to date the IMF debt reduction has been funded through its own resources. It has substantial gold reserves and was able to revalue the gold and use the resources from that. It used the interest gained through this process andhas not actually reduced its reserves. Wesee no reason the IMF could not repeat this operation.

I remind the committee that the Oireachtas first passed a motion calling on the IMF to cancel its debt using gold sales in 1994. I have a copy of the original report if any member is interested in reading it. The Oireachtas has a historic position on this issue. The World Bank has reserves and its net income has increased over recent years. The Government has almost tied its hands in regard to promoting its policy by accepting that the IMF and World Bank cannot afford to pay the debt, rather than challenging them to look to their resources as they did in the 1990s. They argued that they could not afford to cancel any debt. I attended meetings with them throughout the 1990s to argue about this. When the public pressure grew they did look to the resources and both bodies found resources which they could use to cancel debt.

We are very concerned about transparency, which the committee has discussed already. There is much good will towards the Irish debt policy but people want to know what is happening. We recognise the problems that Ireland faces as a small voice in the IMF and World Bank and that can cause difficulties. Nevertheless, we want to know what is happening, and how Ireland is promoting the policy. These bodies discuss the debt issue several times during the year behind closed doors. We never hear on an ongoing basis what statements are made on debt at the IMF and the World Bank. These are often made on our behalf by the Canadians but if Mr. Carey is still here he could perhaps tell us how often Ireland gets to speak. These statements should be made public so that the considerable constituency of Irish people which is interested can follow the debate.

On the address by the Minister of Finance to the IMF and World Bank annual general meeting, which is due quite soon, we note Mr. Bradshaw's position that one cannot cover everything and if one has covered an issue before one has to consider whether to cover that issue again or take a different one. It is important that the Minister makes a commitment and a strong statement on the debt policy at this AGM because last year he did not mention the debt policy in his address, even though the policy had been adopted a short time before that, in July, and the meeting with the IMF and the World Bank took place in September. This was a major policy that Ireland took on and it was important that a strong statement was made to those bodies to show that this was the commitment across the political spectrum. When the Taoiseach was in Washington for the St. Patrick's Day events, he addressed the World Bank and committed Ireland to the debt policy.

The Dubai conference is the one time during the year that the Minister for Finance gets an opportunity to speak publicly and we will all be able to read his speech. It is important that it is clear that there is commitment across the political spectrum. It is important that the Departments of Foreign Affairs and Finance are both promoting the policy. We also want to urge those bodies to look to their resources and to recognise publicly that there is a need for debt cancellation.

We have not heard this statement from the IMF and the World Bank so far. The Minister for Finance should challenge this idea and call for the end of conditions that countries must fulfill in order to get debt cancellation. They are already committed to developing their own national programmes and spending the money through them. Those are the issues that we would like the committee to take up as a result of our presentation today.

Mr. Joyce

The second paper we submitted concerns the role of the IMF in low income countries. The committee was addressed in 1999 about this issue. Then there was a debate whether Ireland should contribute to ESAF - the Enhanced Structural Adjustment Facility. I recall the Minister for Finance was questioned by the chairperson of the committee. There was a decision taken after some changes in the IMF of the ESAF to the PRGF - Poverty Reduction and Growth Facility. Ireland would contribute and this would give us a much stronger position in terms of influencing the direction that the programme took.

Five years since then, we feel it is appropriate for the committee to review where things are at in the PRGF and what role has Ireland to play in terms of further influence of the programme. Some of the criticisms around the ESAF were about the negative social and economic impact of the programmes in developing countries. The changes that were promised by the IMF when introducing the PRGF were substantial. They included flexibility in macroeconomic targets, growth and inflation targets and fiscal and monetary policies. Poverty reduction was to become a central aim with the IMF programmes. This is part of the perceived improvement in the IFI's referred to by Senator Mansergh. There have been great improvements in the language used in these programmes. However, we question whether all of that is reflected in the practice since then. This is what our paper to the committee is focusing on.

There is very little evidence to suggest that real policy and flexibility in low income countries has resulted due to the change from ESAF to PRGF. On the positive side, there have been some increases in social spending referred to earlier by Ms Sommers. However, many donors are concerned that the IMF programmes are too restrictive and can also curtail investment for poverty reduction. Many countries have followed these programmes and have relatively stable macroeconomic situations. They run fiscal policies that are even tighter than what Ireland has to adhere to in the Maastricht guidelines.

The committee may remember that the Minister for Finance got into some difficulties with Ireland's adherence to the Maastricht guidelines. He was able to argue his position and retain his policy. The IMF, has a much more powerful voice in low income countries. The flexibility shown in the Maastricht example is not available to low income countries. The signalling role that agreements with the IMF hold in developing countries can be very important in terms of other resources such as overseas development aid and other loans. It can have a huge effect on their relief. There is the fond claim that privatisation is no longer forced on countries and a condition for loans. However, the evidence contradicts that claim.

If I might just draw on my experience in my day job as development officer in the ICTU and refer to the International Confederation of Free Trade Union statement on the upcoming annual meetings of the World Bank and the IMF. There are examples in the statement of article 4 consultations both in Cape Verde and Pakistan advising that privatisation targets remain for basic loan conditions. Drawing from another example in that paper, despite the World Bank and other organisations, research has shown that respect for core labour standards was good for development and poverty reduction.

The IMF advises on labour market flexibility in terms of the dangers of countries undermining their competitiveness by labour costs. This policy has the effect of pushing some workers below the poverty line, as defined by its sister organisation, the World Bank. For example, in a document on Sri Lanka, it was pointed out that wage costs of a textile worker there are 50 cent per hour. In Bangladesh and Vietnam they were 40 cent an hour which was a threat to Sri Lanka's competitiveness. To draw a parallel with recent events here, as Mr. Bradshaw pointed out, the IMF was here in its surveillance role. The IMF had comments to make about the benchmarking agreement. Of course, it does not have the power to stop the benchmarking agreement here. However, if that was in a low income country, the influence of the IMF would be much more powerful.

The concerns expressed by the IMF about insufficient social expenditure are usually mitigated by warnings against introducing social protection programmes that have budgetary implications also. There is also a debate outlined in the paper on Tanzania and the level of inflation required to both protect the poor and to promote investment and economic development.

Much of what we are talking about relates to the major omission of poverty and social impact assessments on IMF programmes. There seems to be an ideological assumption that the programmes pushed are the only way for a country to get out of poverty. For countries to have a loan from the IMF which can be important for balance of payments, etc., the actual repayment schedules mean that loans can have an impact on the debt sustainability of the country concerned. We would respectfully suggest that this committee make representations on some of the issues raised in our paper to the Minister for Finance, Deputy McCreevy, before he goes to Dubai. The committee might also invite him to report back on the positions taken by Ireland at the Dubai meeting, and the outcome.

I join in welcoming David Joyce and Jean Sommers to the meeting. Whatever uncertainty I had earlier about who had organised the event in July, once I saw Jean Sommers take her seat I realised I was right, that it was indeed the Debt and Development Coalition. I commend its members on their work.

Some of the points raised have already been made to colleagues from the Department of Finance. There is a further delegation to come before the committee today and, unfortunately, we are well behind time. I propose that, arising from the views of committee members expressed today, we make direct contact with the Minister for Finance, Deputy McCreevy, prior to the AGM in Dubai on 23 and 24 September. I know that the representatives from the Department of Finance will report back, but as a committee with specific responsibility for finance and the public service we should make our views known to the Minister. We should act on the important suggestion from the Debt and Development Coalition and invite the Minister to appear before the committee following the Dubai AGM. That is one of the most important decisions we can take today. The Coalition's recommendations make eminent sense. We should not leave everything in the hands of others, but should take ownership of our own decisions and ensure that the views of the committee are conveyed to the Minister. I formally propose that we should also incorporate in our correspondence the points I made earlier to the Department of Finance representatives in relation to what the Minister will focus on in the limited time available to him in Dubai.

The proposal is to contact the Minister for Finance and invite him before the committee on his return from the Dubai AGM. Are we going to suggest what issues he should focus on at the AGM?

Given that no mention of Third World debt was made in the past year by the Department of Finance, it is important that as elected representatives of the people we emphasise that we would like to see the Minister focus on it this year. Particular reference should be made to the areas we have mentioned, such as 100% debt cancellation for those Third World countries in greatest difficulty, including those suffering from significant HIV and AIDS problems.

The second issue relates to reform of the role of the IMF and the World Bank vis-à-vis what I have already described as obstacles and barriers to such progress - privatisation of utilities and so on. The Minister for Finance will be doing a great service to the people of this country, and to those who will ultimately benefit from his actions, if he takes up such a position on this occasion. This committee, as the substantive body within the Oireachtas, should be urging him to do so.

I welcome the representatives of the Debt and Development Coalition and their presentation. There is no great difficulty about transparency since there is only one secret in development aid, namely the trajectory by which we achieve the 0.7% target. On the positions that the Minister takes at World Bank or IMF conferences, for example, the mechanism of parliamentary questions can, if necessary, be used. If such questions are raised before the committee, they can naturally be discussed in more depth, and I have no difficulty with that suggestion.

We should not take quite such an ideological approach to privatisation. I am in favour of the public sector. While I have no particular feeling that everything ought to be privatised, neither should there be a position where nothing is privatised. If that were the case, the countries of central and Eastern Europe would be almost entirely State-run economies. One has to judge these issues on a case by case basis. If too much is assigned to the State sector, the elements that need not be there involve resources which could be used to fund health services and schools, for example.

We sometimes use the word privatisation mindlessly as if it had purely negative connotations. I would of course be equally opposed to people who talk of privatisation as if it had only positive connotations. We need to be a bit more nuanced in that regard: in practice, to take an "at home" example, ICTU is.

In the presentation there was a glancing reference to Sri Lanka, which I had the privilege to visit about a month after its peace process began in February 2002. I would like to use this opportunity to say what I have already said in the Seanad, namely, that not least because of Sri Lanka's peace process and its relatively manageable size as a country, I would like to see it become the subject of an ODA programme.

I know it is very late in the day. I welcome the representatives of the Debt and Development Coalition. Some years ago I hosted the first and very interesting meeting between officials of the Department of Finance and the Debt and Development Coalition representatives to discuss development policies and their impact. While there is a tremendous fund of goodwill from all the political parties, NGOs and people throughout the country, the difficulty lies in creating a holistic and rational approach. I have argued for increasing ODA, which is very important, but the impact of the IMF and the World Bank on very poor countries is enormous. We might return to this issue when we are discussing the work of this committee, but what I would like to see is the identification of some mechanism whereby we would, perhaps once or twice annually, get some opportunity, either by means of this full committee or a sub-committee, to go through, with the officials from the Department of Finance, the positions their appointees to the IMF or the World Bank are taking up on a regular basis. There are sufficient committee members interested in doing so, but, perhaps, not all have the time.

A couple of months ago, the Minister of State at the Department of Foreign Affairs, Deputy Kitt, wrote to all Dáil Deputies to ask if they could suggest how the ODA programme might be assisted. It is a very tricky area and I can understand that the officials may feel irritated when some of us sound a little righteous, but when one sees the levels of poverty that exist, it is difficult not to be angry. Nonetheless I recognise there is much goodwill in the Department of Finance on this issue. We should try to find a mechanism to progressively push the boat out to get the IMF to reform itself and change its attitude on development issues. The bank has done that to some extent during the past four or five years. It has become much more pro-education and pro-development than it was, say, ten years ago. At the end of the day, if the economies of continents such as Africa can grow and be successful the beneficial effect for America, western Europe and so on will be enormous. The same argument applies to Eastern Europe.

I wish to second the proposal by Deputy Ó Caoláin. I would like to see the Minister respond but we should give greater consideration to how we can interact regularly with the officials from the Department of Finance on the development issues on which they have an important voice. They are sitting at the table, at the bank and at the fund and can have an important input coming from the finance side. This would give some of the officials in the Department of Finance an opportunity to see how these tricky economic issues work in practice. Perhaps Senator Mansergh and I could put a proposal on how to do that.

To look at how this committee, perhaps, once or twice a year, could take up the issue and progress the dialogue between the Departments of Finance and Foreign Affairs and between the development NGOs and the Department of Finance.

At this stage there appears to be a consensus that we contact the Minister to convey the views arising from today's meeting and invite him back but we do not have agreement on the privatisation issue. In the submission before us there is reference to the debt reduction being delinked from various conditions. To an extent that is not to comment, one way or the other, on the privatisation issue. I will draft a letter and circulate it by means of fax to each of the parties present. If it is acceptable please call back——

Is the Chairman suggesting that a formulation of words is an alternative to a direct reference to privatisation?

I am suggesting we would not have a direct reference to privatisation because there are different views on that subject.

There is very broad agreement on the other issues.

There is no agreement on the privatisation issue. Sometimes privatisation can——

There are sensible reasons for arguing the position that I have already articulated. However, as we are not likely to get agreement, if that is the formula the Chairman is suggesting it will probably encompass us from my first hearing of it.

I am reading directly from the submission before us. I am quoting from the recommendations in the submission presented to us. I am taking their wording as opposed to Deputy Ó Caoláin's or Senator Mansergh's wording.

Will the Chairman circulate a copy of the text?

I suggest we draft the letter and get it out to representatives of Fine Gael, Deputy Ó Caoláin and the Independent Group and they can communicate back or suggest a variation. I was suggesting we would wait to finalise our report at the next meeting but as that is the Thursday before I expect the Minister will be travelling it is too late. He needs to get that——

Tomorrow, if possible.

——within the next couple of days.

I support Deputy Ó Caoláin on that issue. It is because Ireland is a small country we feel we cannot contribute when we go to these international forums. When the Minister goes to these forums he should speak as if he is from a large country and not from a small country such as Ireland. Due to what is happening in Iraq and the poverty that has been created there the whole world is disrupted. I suggest we encourage the Government to try to get as much aid as possible for the developing countries. It is the right thing to do. At every public forum where the Minister speaks he should address that issue and say we fully support him.

Mr. Joyce

On Senator Mansergh's remarks on an ideological approach to privatisation - that is not what we state in our paper. What we state is that developing countries require and deserve the policy flexibility that is available in other parts of the world on privatisation. A poverty reduction strategy process may decide that privatising a certain utility is a useful——

I was responding to the use of the word. I am not an apostle of privatisation. It was just that I felt it was being referred to in an entirely one-sided fashion.

Mr. Joyce

Very well.

I thank Ms Sommers and Mr. Joyce for attending today's meeting and for their presentation and I apologise for the late start.

Sitting suspended at 4.36 p.m. and resumed at 4.37 p.m.

We shall move on to the final presentation which is from Dóchas. I welcome Mr. Hans Zomer, director of Dóchas; Ms Caoimhe de Barra, policy officer of Trócaire; Mr. Oisín Coghlan, policy officer of Christian Aid and Mr. Colin Roche, advocacy officer, Dóchas.

I remind visitors that comments of members are protected by parliamentary privilege but those of visitors are not so protected. Members are advised not to comment on, criticise or make charges against a person outside the House, or an official, either by name or in such a way as to make him or her identifiable. I invite Mr. Zomer to make his presentation.

Mr. Hans Zomer

We thank the joint committee for giving us this opportunity to discuss the important issue of the Irish Government's contribution to overseas aid. We will try to keep our presentation short. We are here to make only two points, that is, we welcome the significant progress that has been made in increasing the budget for ODA during recent years. We encourage the joint committee to keep up the pressure and to live up to the commitment we have made. That means we are calling for 0.48% of GNP for ODA next year. It is important that the Government sets out how it intends to achieve the target of 0.7% by 2007. My colleague, Caoimhe de Barra, from Trócaire, will brief the joint committee on the global context of the aid discussions and Oisín Coghlan, from Christian Aid, will go into further details of our submission.

Ms Caoimhe de Barra

As members will be aware, the problem of poverty is enormous. More than one billion people in the world today live on less than $1 a day. Members will also be aware of the millennium development goals and the challenge that lies behind them. In short, the millennium development goals are to halve absolute poverty by the year 2015. In order to achieve this, overseas development assistance must be almost doubled from its current €56 billion per annum to more than €100 billion per annum. This would require the OECD donors to increase their level of assistance from the current 0.23% to 0.5%, which nonetheless falls short of the 0.7% target.

An increase in aid levels would merely mean, in some cases, redoubling the efforts to regain the losses experienced during the 1990s when sub-Saharan Africa in particular suffered from losses of aid. Aid was reduced by 38% to the continent of sub-Saharan Africa. What we are seeing in development currently is a dramatic change. Over recent years, some concepts have become axiomatic. One of them is that aid should be untied. Aid should be harmonised to reduce the costs to recipients of making reports on receiving donor missions. Aid should also have a strong poverty focus and should focus primarily on the least developed countries. The other side of that is that recipient countries must commit to good governance, respect for human rights and respect for economic management. These concepts form the core of the millennium development goals and the context within which we are asking the Government to commit to a growth path and to make that public this year.

Ireland's aid programme has been highly praised by the OECD and the peer review group within that organisation. Compared to our OECD fellow members, Ireland performs very well on many counts, including tide aid. We have 0% tied aid compared to an average of 18% across the OECD. We do not demand that countries buy our goods and services before we deliver aid to them. Also, the bulk of our aid goes to least developed countries, and that compares to an OECD average of only 22%. Ireland is a very strong ambassador, notwithstanding its small size, for high quality and effective overseas development assistance. My colleague, Oisín Coghlan, will outline in detail what we would like the Government to do this year and over the coming years to reach the target of 0.7% by 2007.

I wish to thank the committee for this opportunity. To give a little background, the 0.7% target was set by the United Nations in the early 1970s as the appropriate level aid should reach to allow development occur across the world and to eradicate poverty. Most countries have fallen short of that target although five countries, as members of the OECD, have now met the target, mainly Denmark and the other Scandinavian countries.

Senator Mansergh alluded to the fact that our spending on overseas aid is not simply a matter for the spending estimates and the budgetary cycle but is in fact a Government decision. We welcome the fact that in 2000, the last Government took an historic decision to set a timeframe for meeting that 0.7% target, which is 2007. The Taoiseach announced that commitment at the millennium summit, which set the millennium goals, in New York in 2000. That announcement reflected the will of Irish society and indeed of all political parties. Deputy Burton already alluded to the fact that aid began to rise 11 years ago, in 1992. Indeed, all parties in the House have either taken a position in support of reaching the 0.7% target or have been part of a Government which has been part of that growth since then. As my colleague, Ms De Barra, said, we have made significant progress over those years and since this Government took the decision in 2000 we have increased our aid from approximately €254 million to €450 million this year.

Progress has been made but our main point today is that in order to meet the 0.7% target by 2007, we have to intensify our efforts because only four years remain. This year in particular the credibility of our commitment is at stake, given that there are only four years remaining. We have, in a sense, already reaped the political dividend from making that commitment. We have used it to get on to the United Nations Security Council and organisations like the United Nations Development Programme have honoured us by having the launch of its human development report here in Ireland.

My colleague, Colin Roche, commented the other day that one of the few ways someone in west Africa or South America would have heard about Ireland is through our overseas development programme. That programme has always scored highly when reviewed by our colleagues in the OECD. We face a choice now of either reinforcing that by continuing in a staged way towards the target of 0.7%, and being able to build on it going into the European Presidency, and to exercise that position of global leadership by pressing our European colleagues to meet their commitments under the UN Monterey conference on financing for development last year in Mexico. Alternatively, we can embarrass ourselves by failing to live up to the commitments we made. That leaves us with a challenge, which is doable, of needing to increase aid between now and 2007.

That brings us to our second point. There should be incremental phased growth, not a pause now followed by a huge amount of aid in the final years before 2007. We say that for two reasons. First, if we are trying to run a development programme either from Ireland or at the recipient end with our partner countries in sub-Saharan Africa, predictability and certainty are two important factors in properly managing that programme. Second, in terms of the capacity of Development Co-operation Ireland to implement that programme in a meaningful way that ensures its most positive impact, knowing what the growth path will be is essential to managing that programme well because it will grow.

In our submission we have examined what that will mean for spending in practical terms and we have used a model developed by Development Co-operation Ireland in its submission to the most recent review by the OECD members who examined Ireland's aid programme. In fact, the mathematics are not that difficult. We are at 0.41% now and we have to get to 0.7% in four years' time. The simplest way to do that is to raise it to 0.48% next year, 0.55% in 2005, 0.62% in 2006 and to get from 0.62% to 0.7% in 2007. That means significant increases each year in terms of monetary allocations. Obviously, they depend somewhat on our growth rates and, as Senator Mansergh said earlier, it might be easier if we are not growing as fast and if the goal posts are not moving as fast as they were during the boom of recent years.

The best thing that could happen now would be for the committee to recommend to the Minister for Finance that there should not be a pause in our growth towards 2007 and that a growth path should be followed next year and over the following years. It might be worth noting also that at the end of October in the United Nations in New York there will be a high level follow-up to the Monterey conference last year which we understand the Minister of State at the Department of Foreign Affairs, Deputy Kitt, will attend but he will be accompanied by officials from the Departments of Finance and Foreign Affairs. We welcome such good co-operation. Given that the Taoiseach made his historic commitment in New York three years ago, that might well be an appropriate opportunity for the incremental growth path to be set out between now and 2007.

Our two recommendations, therefore, are that there should not be a pause and that an incremental plan should be set out as to how we will get to the 0.7% target by 2007. There is much more detail in the paper and if members have questions, we will be happy to address them.

I thank the Dóchas representatives for their presentation, although it is unfortunate that it has come at the end of the day. I compliment them on the paper which covers much of the basis.

I am concerned about one area, which goes back to our discussion earlier with the Department of Finance. The Irish programme has been increasing its contributions to various UN organisations. I was party to that when I was Minister with responsibility for development co-operation because I believed we should seek membership of the boards of the different organisations ranging from UNICEF to UNDP in order to have an impact on the governance of those organisations.

As the amount of our aid continues to grow, instead of merely putting a cheque in the post to various UN organisations, I share very much what Senator Mansergh said that it is important that we increase the number of countries to which we allocate priority and direct development assistance. It is appropriate that one or two of those ought to be in Asia. If we simply write cheques to international organisations we lose sight of the governance of how that money is spent. In my experience the quality of UN organisations varies enormously from one country to another and is often dependent on the quality of the director and team in a country. As the level of our aid continues to grow - hopefully the Government will keep to its commitments in this area and I am confident that it will do so - it is important in regard to those organisations to which we contribute, whether it is the IMF or the World Bank, but particularly the UN developmental organisations, that we press for an agenda of continuing reform in the UN organisations. The quality of those organisations varies dramatically and their operations can cost a great deal of money and not be entirely effective. With that caveat I support the presentation Dóchas has made and when communicating with the Minister, I appeal to the committee to urge him to keep to the schedule, but I am confident the Government will do that.

Time constraints allow me to only briefly comment on this matter. I welcome the Dóchas presentation and commend its members on their work. If there was any slippage in the commitment made, it would not only result in a loss of face on our part or a loss of an estimated €1 million by 2007 - which represents a significant commitment by this small economy although in the overall scale it is still a small amount - but real damage would be caused if an economy such as ours which has given a commitment and taken up a strong international position did not fulfil its commitment, as it would be an excuse for others not to do so and there would be further slippage. That would have a domino effect and others would say that Ireland did not fulfil its commitment and therefore we are not expected to do so. We need to consider this from the perspective of the bigger picture and not only from a domestic point of view.

With respect of our Senatorial colleagues and the Chairman, sometimes we fail to reflect adequately on matters. It is the role, function and responsibility of Opposition Deputies to continue to press Government and to nettle it, if necessary, to ensure it adopts an incremental approach to this matter over the remainder of its term of office. It is important that we meet the commitment given and that has much greater consequences than merely the situation at home. Hopefully Ireland will affirm itself as a world leader, set an example and ensure that at last there is real and substantive address of the great need that exists for which we are collectively responsible.

I point out to Deputy Ó Caoláin that it is the equal responsibility of Government backbenchers to make sure that a Government fulfils its policy commitments and, in this instance, none of us is in disagreement with the commitment.

We are all of the one view.

Exactly. At the same time one should reflect on the realpolitik to keep our feet on the ground. An incremental approach is better - there is no doubt about that. Sometimes there is a capacity to do more in one year than in another. If one considers the period of the previous Government, its spending in this area was very uneven and there was a mini crisis, in which I was involved, around the year 2000 about the trajectory of reaching the interim target of0.45%. When that crisis was passed and resolved there was a considerable leap. Its spending in this area went up to about 0.4% or 0.41%. Meeting this target is important for our self respect. Let us be honest about this, if we do not fulfil this target, we will be in the same boat as many other countries which not only have not fulfilled their targets but are rowing in a backward direction. If we do not meet the target, we might lose some respect among some countries of the world, but unfortunately among our OECD peers that would just be par for the course. Meeting this target is more important for our self-respect rather than for gaining respect among other OECD countries. There is some respect for what we have achieved. It is within our capacity to meet this target. We have to overcome the scepticism, resistance and the beliefs that there are more urgent and pressing priorities put forward on the floor of both Houses. Consistent with dealing with those problems we can and should do this, we have promised to do it and we should resolve that we will carry out our promise.

I agree with Deputy Burton in that quantity is an important headline but quality and what we do with it are very important. So far we have done this very well. The support of some countries in Europe for ODA programmes has been undermined by major scandals of one kind or another involving recipient countries. We must be careful, particularly when we are rapidly expanding the programme to avoid serious errors and money getting into the wrong hands which would then allow critics to rubbish the whole programme. Fortunately, our ODA programme is in high standing here and that is the way we want to keep it.

I entirely support the broad thrust of what the representatives said. I may be a little sceptical from a realpolitik point of view that it will all be done in equal instalments, but I hope we will reach the target whether it is by equal or unequal instalments. I accept the point that it is better to expand gradually and organically rather than putting in a large instalment when it is suddenly realised there is only another 12 months remaining to meet the target, which can be difficult to digest.

Has Mr. Zomer a final comment?

Mr. Zomer

I thank the committee for its contribution which has been helpful. I would like to take up two of the points mentioned. The point about Ireland's engagement in the UN organisations is an important one and is related to Senator Mansergh's point about the quality of the aid programme. My thesis is that the quantity and quality debate are not separate from each other. The growth we have had in recent years has had clear consequences for the quality of the programme. I am thinking in particular of the Ireland Aid review that took place in 2001. One of the recommendations of that review, which is now the guideline for current policies of Development Co-operation Ireland, is for us to be much more strategic about which UN organisations Ireland engages with and to ensure that we are on the board of these organisations. There are similar issues which we discussed earlier on the IMF and the World Bank. I would like to see some greater feedback on what positions we are taking in these multilateral organisations. However, Ireland is playing a much more proactive role in them.

On Senator Mansergh's point about the quality of aid, that is important. The current Minister is interested in maintaining the quality of the programme. The extra resources the programme has had in recent years have led to a number of quality improvements. Dóchas is the umbrella organisation of development NGOs and it is important the way the Department is now interacting with NGOs. There are more strategic and long-term oriented mechanisms in place. I am thinking of the multi-annual funding programmes and the HIV-AIDS funding programmes over three to four years which will allow for a more strategic approach and more emphasis on monitoring, evaluation and measuring the impact of the aid programmes of the NGOs.

There are other improvements in the aid programme which do not directly impact on NGOs, but are important for the aid programme. I am thinking of the creation of the advisory board to Ireland Aid, which is a reinforcement of the programme's research and evaluation capacities. I am thinking of the development forum, which is a strategic think-tank and brings together private sector, trade unions, development NGOs and the Department to look at the strategic issues facing the development debate. I am also thinking of the strengthened capacity in terms of human resources of the Department. One of the complaints of NGOs for many years was that the staff in the Department were not dedicated specialists to development. However, we have achieved that with the growth in the programme. There are now dedicated specialists in DCI which means there is continuity in terms of the personalities involved. There is a greater concentration of expertise and experience. With greater quantity comes greater quality.

I thank Mr. Zomer, Ms De Barra and Mr. Coghlan for attending today's meeting, for their presentation and for their concise answers to the queries raised.

The joint committee adjourned at 5.05 p.m. until 11 a.m. on Thursday, 18 September 2003.
Barr
Roinn