Australia attacked over Asian aid cancellation

Australia attacked over Asian aid cancellation

SYDNEY (AFP): Four Asian countries have made strong protests
to the Australian government over its cancellation of an aid
scheme tied to contracts they had negotiated with Australian
companies, a shadow minister said.

China, Indonesia, the Philippines and Vietnam were close to
signing contracts worth A$1 billion (US$800 million) sweetened
with the offer of soft loans under Canberra's Development Import
Finance Facility (DIFF) scheme.

But opposition foreign affairs spokesman Laurie Brereton said
the scheme had become a casualty of budget cuts by the new
government and the contracts had been lost -- with "enormously
adverse consequences for our relationship with Asia."

The DIFF scheme, which provided aid equivalent to about 35
percent of the value of a contract, had generated trade valued at
A$1.2 billion for A$126 million in expenditure in the 1995/96
financial year, Brereton said.

Figures released this month by Canberra's aid agency AusAid
showed 50 contracts involving 86 Australian companies in the
pipeline under the scheme this year were worth A$1.074 billion.

"This meant enormous job opportunities for Australians",
Brereton said in a television interview.

"Many of these projects are already in the pipeline so it's
not just a case of forgone opportunity for Australia. These are
projects in respect of which we have memorandums of understanding
with the governments of the host country."

In some cases, host governments had spent many millions of
dollars in preparation for these projects.

"This is the reason that Indonesia, China, Vietnam and the
Philippines have all called our ambassadors in and have protested
about the proposed abolition. It's not just a case of the nations
involved or a few industries.

"Every reputable business commentator, every business leader
in Australia has said that this is a very foolish proposition."

Officials in Canberra say the DIFF scheme was similar to
programs operated by most western industrialized countries and
all of Australia's major competitors in the Asia-Pacific region.

Brereton said the abolition of DIFF meant "that we are going
to be completely uncompetitive with the Netherlands, France, with
Italian companies who will be bidding for this work."

Australia's ruling conservative coalition had criticized the
then Labor government "for being too engaged with Asia and saying
they wanted to turn us back to our more traditional ties,"
Brereton said.

"But putting aside the rhetoric the reality is that some of
the measures now see coming through like the abolition of the
DIFF scheme will have enormously adverse consequences for our
relationship with Asia.

One casualty of the abolition of DIFF is the Melbourne-based
Transfield Defense Systems Pty. Ltd. which had tendered for a
A$60 million (US$48 million) contract to supply three search and
rescue ships to the Philippines.

The project had qualified for DIFF support worth more than
A$20 million and Transfield had high hopes of winning against at
least two other overseas bids.