Australia must ensure that Asian Development Bank is Accountable

From the streets of Seattle to the parklands of Washington, the siege of the world’s multilateral institutions recently shifted across the Pacific to picturesque Chiang Mai in northern Thailand, where thousands of people descended on the Annual General Meeting of the Asian Development Bank (ADB).

At the same time as Treasurer Costello announced an Australian contribution of $120 million to the Asian Development Bank in the Federal Budget, thousands of those whom the money is supposed to benefit marched upon the opening session of the ADB meeting. The images of angry protesters, barracades and baton wielding police were not dissimilar to those emanating from last years’ protests against the World Bank and World Trade Organisation in Washington and Seattle.

But there are two critical differences between last years’ US protests and last week’s in Thailand.

The first is that nobody could dismiss the Chiang Mai protestors as bleeding heart white middle class liberals with no experience of poverty. Front and centre in Chiang Mai were thousands of ordinary villagers dispossessed of their lands, livelihoods and rights by ADB funded projects including hydro-electric dams, industrial complexes and chemical intensive agriculture.

The second difference is that whilst Australia has little leverage over the WTO and World Bank, we play a pivotal role in the Asian Development Bank. Australia is the Bank’s fifth largest shareholder and has committed $1.35 billion of taxpayer’s funds to the Bank’s soft loan facility – the Asian Development Fund – through our aid budget over the years. Treasurer Peter Costello is a Governor of the Bank. Former Federal Court judge John Lockhart is one of the Bank’s Executive Directors, representing a constituency which holds just over 8% of voting power in the Bank.

The voices of dissent in Chiang Mai were many and varied. Teachers protested the impact of ADB-supported education sector privatisation on poor families. Environmentalists were protesting the impact of ADB- supported hydro-electric dams on river systems. Health professionals protested ADB support for the corporatisation of public health services, and workers’groups protested those ADB loans conditional upon the abolition of minimum wages.

Weaving its way through this myriad of grievances is a common thread – accountability. The lack of accountability of the Bank to both those impacted by its activities - and to the taxpayers in donor countries such as Australia whose funds bankroll the ADB.

Australia is a case in point. As a major donor to the ADB, the Australian government has no effective mechanism to monitor how Australian aid funds are utilised by the Bank, nor to assess the impact of these funds in fighting poverty.

More alarming from a public policy view however, is the fact that Australian taxpayer funds committed to the Bank may undermine Australia’s own bilateral aid program in the region. Community Aid Abroad’s experiences in Laos provide one example.

Working with Australian Government aid funds, we have successfully worked with local government and communities in the Vang Vieng District to manage their resources in a sustainable manner for more than a decade. Many villagers now however wonder what it was all for after the ADB funded the construction of a hydro electric scheme which drained their river of water and reduced fish stocks, posing serious food security and health risks for many.

The events of recent days in Chiang Mai will provide much to ponder for the many donor governments – including Australia – already expressing disquiet about the Bank prior to the protests. The next few months are a decision time for donor Governments considering the Banks’ request for up to $10 billion to fund its future work.

Amidst the chaos of protest in Chiang Mai, one thing is clear. With a chequered history of supporting projects which damage the environment and undermine the rights of poor men and women in communities, the Asian Development Bank must be brought to account for the impact of its projects on those living in poverty.

As a major donor to and shareholder of the Bank, the Australian Government has an obligation to ensure accountability of the Bank to both Australian taxpayers and to the communities impacted by its activities.