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2010-2011-2012-2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
AFRICAN DEVELOPMENT BANK BILL 2013
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary .................................................................................................. 1
General outline and financial impact ....................................................... 3
Chapter 1 Enabling of payments to the African
Development Bank Group............................................. 5
Chapter 2 Statement of Compatibility with Human Rights .............. 9
Index ..................................................................................................... 11
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
the Group the African Development Bank Group, which
includes the African Development Bank and
African Development Fund
the Bank the African Development Bank
the Fund the African Development Fund
the Bank's Agreement the Agreement Establishing the African
Development Bank
the Fund's Agreement the Agreement Establishing the African
Development Fund
ICESCR International Covenant on Economic, Social
and Cultural Rights
1
General outline and financial impact
AFRICAN DEVELOPMENT BANK BILL 2013
This Bill enables Australia to become a member of the African
Development Bank Group (the Group) by authorising the Government to
make the payments required to subscribe to membership shares in the
African Development Bank (the Bank) and meet membership and ongoing
subscriptions to the African Development Fund (the Fund).
Date of effect: the day after this Bill receives Royal Assent.
Proposal announced: Australia's intention to pursue membership of the
Group was announced on 17 July 2012 in a joint press release by the
Deputy Prime Minister and Treasurer, and the Minister for Foreign
Affairs. The Government has also included relevant budget measures as
part of the 2012-13 and 2013-14 Budgets.
Financial impact: membership payments to the Group, at current forecast
exchange rates, will total around $249 million, payable from 2014-15 to
2016-17. Of this total, around $88 million will be for paid-up membership
shares to the Bank and around $161 million will be for the initial
membership subscription to the Fund. Further, there will be additional
regular payments to the Fund from 2014, the size of which will depend on
future negotiations between Australia, and the Fund and its donors. There
will also be a contingent liability of approximately $1.4 billion (at current
forecast exchange rates) in the event that the Bank would otherwise
default on its debts. At the time of writing, this risk was assessed as low.
Human rights implications: This Bill does not raise any human rights
issues. See Statement of Compatibility with Human Rights -- Chapter 2.
Compliance cost impact: Nil.
3
Chapter 1
Enabling of payments to the African
Development Bank Group
Outline
1.1 This Bill enables Australia to become a member of the African
Development Bank Group (the Group) by authorising the Government to
make the payments required to subscribe to membership shares in the
African Development Bank (the Bank) and meet membership and ongoing
subscriptions to the African Development Fund (the Fund).
Summary of new law
1.2 There are eight clauses in this law. Clause 1 specifies the Act's
short title. Clause 2 specifies when the Act commences. Clause 3 defines
key terms used in the remaining clauses. Clause 4 authorises the Minister
to purchase a fixed number of membership-related shares in the Bank, up
to a stated price per share. Clause 5 authorises the Minister to make
payments to the Fund. Clause 6 authorises the Minister to make payments
under clauses 4 and 5 in the form of securities. Clause 7 makes clear that
nothing in this Act can be interpreted as limiting any of the
Commonwealth's existing executive powers. Clause 8 enables the
Minister to make rules to give effect to this Act.
Context of amendments
1.3 The payments authorised by this Act are required under the
Agreement Establishing the African Development Bank (the Bank's
Agreement) and the Agreement Establishing the African Development
Fund (the Fund's Agreement), both of which Australia will have to
become a party to in order to become a Group member.
1.4 Once Australia becomes a party to these agreements, it will be a
member of these bodies and therefore a member of the Group -- there are
no further steps.
1.5 The Bank is a multilateral development bank whose aim is to
promote sustainable economic growth and reduce poverty in Africa. It is
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African Development Bank Bill 2013
comprised of 78 country shareholders (54 regional members and 24
non-regional members). The Bank makes loans to support development
activities in middle and lower income African member countries. The
Bank's resources are mainly made up of share subscriptions by member
countries, income generated by loan repayments and funds raised through
borrowings on international financial markets.
1.6 The Fund contributes to the promotion of economic and social
development in 40 of the least developed African member countries by
providing highly concessional loans and grants for projects and programs.
The Fund also provides technical assistance for studies and capacity
building activities. The Fund's resources are mainly made up of
subscriptions by non-African Bank members (usually on a three-year
basis) and contributions by the Bank.
1.7 Australia's intention to pursue membership of the Group was
announced on 17 July 2012 in a joint press release by the Deputy Prime
Minister and Treasurer, and the Minister for Foreign Affairs. The
Government has also included relevant budget measures as part of the
2012-13 and 2013-14 Budgets. Membership of the Group will allow
Australia to pursue its development and broader objectives in Africa.
1.8 Payment of the required membership subscriptions is a condition
of membership, so this legislation must be in place before Australia can
become a member of the Group.
1.9 Beyond passage of this legislation and payment of the
membership subscriptions to the Fund and the Bank, other steps that at the
time of writing will also need completion for Australia to become a
member are: issuing the Bank with a declaration of Australia's intention
to join; approval by all the Bank's members of Australian membership;
and signature and deposit of the signed Agreements with the
Secretary-General of the United Nations.
Detailed explanation of new law
1.10 The Minister may: make an arrangement for Australia to become
a Bank member, involving subscribing to, and paying for, 5,912 paid-up
shares and 92,616 callable shares of the authorised capital stock of the
Bank, at a price not more than 10,000 special drawing rights per share;
and pay for these shares from the Consolidated Revenue Fund. The Act
thus establishes legislative authority to spend that money on membership
of the Bank for the purchase of 98,528 shares. Payment for the callable
shares would only occur if the Bank could not otherwise meet its financial
obligations and so explicitly requested payment for some or all of these
6
Chapter 1: Enabling of payments to the African Development Bank Group
shares from all Bank members. The word `arrangement', in this context, is
intended to cover both unilateral action by the Minister as well as the
making of an agreement (whether the action or agreement is binding in
law or not). [Part 2 -- African Development Bank, Clause 4]
1.11 The Minister may subscribe to, and pay for, only the specified
number of shares. If, in the future, Australia wanted to subscribe to more
shares, then the Act would be amended to authorise this. [Part 2 -- African
Development Bank, Clause 4]
1.12 The Minister may make an arrangement for Australia to become
a member of the Fund, including by making an initial subscription to the
Fund and making payments in connection with this and any subsequent
subscription to the Fund. Payments for subscriptions to the Fund will
come from money appropriated under other legislation, such as an annual
appropriation. The intended meaning of the word `arrangement' is the
same as for clause 4. [Part 3 -- African Development Fund, Clause 5]
1.13 The Minister may issue securities for making payments to the
Bank and the Fund, given that the Bank Agreement and the Fund
Agreement allow this. [Part 4 -- Issue of securities, Clause 6]
1.14 This Act does not, by implication, limit the Commonwealth's
existing executive power. [Part 5 -- Miscellaneous, Clause 7]
1.15 The Minister may make rules prescribing matters required or
permitted by this Act to be prescribed, or necessary or convenient to be
prescribed for carrying out or giving effect to this Act. It is not envisaged
that any such rules will be required to give effect to the Act. At the time of
writing, however, it was Office of Parliamentary Counsel policy to ensure
that all new legislation contains a clause to cover the scenario where the
Government wants to make rules to further define certain parts of a new
Act, including any amendments subsequently made to the Act. [Part 5 --
Miscellaneous, Clause 8]
7
Chapter 2
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
African Development Bank Bill 2013
2.1 This Bill is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
2.2 This Bill enables Australia to become a member of the African
Development Bank Group (the Group) by authorising the Government to
make the payments required to subscribe to membership shares in the
African Development Bank (the Bank) and meet membership and ongoing
subscriptions to the African Development Fund (the Fund).
2.3 These payments are required under the Agreement Establishing
the African Development Bank (the Bank's Agreement) and the
Agreement Establishing the African Development Fund (the Fund's
Agreement), both of which Australia will have to become a party to in
order to become a Group member.
2.4 Once Australia becomes a party to these agreements, it is a
member of these bodies and therefore a member of the Group -- there are
no further steps.
2.5 Australia's intention to pursue membership of the Group was
announced on 17 July 2012 in a joint press release by the Deputy Prime
Minister and Treasurer, and the Minister for Foreign Affairs. The
Government has also included relevant budget measures as part of the
2012-13 and 2013-14 Budgets. Membership of the Group will allow
Australia to pursue its development and broader objectives in Africa.
9
African Development Bank Bill 2013
2.6 Payment of the required membership subscriptions is a condition
of membership, so this legislation must be in place before Australia can
become a member of the Group.
2.7 Beyond passage of this legislation and payment of the
membership subscriptions to the Fund and the Bank, other steps that at the
time of writing will also need completion for Australia to become a
member are: issuing the Bank with a declaration of Australia's intention
to join; approval by all the Bank's members of Australian membership;
and signature and deposit of the signed Agreements with the
Secretary-General of the United Nations.
Human rights implications
2.8 This Bill does not raise any human rights issue. This Bill does
not engage any of the rights or freedoms in the seven core international
human rights treaties as they apply to Australia.
2.9 Membership of the Bank and the Fund, however, is consistent
with Article 2(1) of the International Covenant on Economic, Social and
Cultural Rights (ICESCR). This Article requires that United Nations
Member States take steps, including through international assistance and
co-operation, to assist in the progressive realisation of the economic,
social and cultural rights recognised by ICESCR.
Conclusion
2.10 This Bill is compatible with human rights as it does not raise any
human rights issues.
Deputy Prime Minister and Treasurer, the Hon Wayne Swan
10
Index
Bill: Enabling of payments to the African Development Bank
Group
Bill reference Paragraph number
Part 2, clause 4 1.10, 1.11
Part 3, clause 5 1.12
Part 4, clause 6 1.13
Part 5, clause 7 1.14
Part 5, clause 8 1.15
11