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Publications archive - International Activities and Commitments

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Key departmental publications, e.g. annual reports, budget papers and program guidelines are available in our online archive.

Much of the material listed on these archived web pages has been superseded, or served a particular purpose at a particular time. It may contain references to activities or policies that have no current application. Many archived documents may link to web pages that have moved or no longer exist, or may refer to other documents that are no longer available.

Australia's report to the UNCSD - 1994

Implementation of Agenda 21
Department of the Environment, Sport and Territories, 1994
ISBN 0 6422 0152 8

2.3 - Financial resources and mechanisms

Financial resources and mechanisms - Chapter 33 of Agenda 21

2.3.1 Progress achieved

2.3.2 Main activities

a. International Cooperation

b. National Measures

2.3.3 Experience gained

2.3.4 Problems and constraints

2.3.5 Capacity building

2.3.6 Financial resources

2.3.7 Expectations of international organisations

Introduction

The focus of Chapter 33 is the provision by developed countries of financial resources to developing countries and, as such, deals mainly with mechanisms for international cooperation. Given that Australia must also take appropriate measures to implement Agenda 21 domestically, the availability of funding for domestic purposes is also considered in this section of the report.

2.3.1 Progress achieved to date in the implementation of the objectives of Chapter 33 of Agenda 21

Since UNCED, Australia has put in place a process to apply the domestic aspects of Agenda 21 and has established procedures for the implementation of the UNCED conventions. Consistent with this, Australia is supportive of the international effort, including support for developing countries to prepare and implement their sustainable development strategies. AIDAB is updating its policy statement on ESD to further integrate ESD into all aspects of the Australian aid program.

All elements of Australia's development cooperation program are planned and implemented within a framework that integrates economic, ecological and social concerns within a long-term perspective. In the 1993-94 fiscal year, the Australian Government has allocated $A1.4 billion for the aid program which amounts to 0.35% of Australia's GNP. Bilateral aid comprises about 75% of the program and multilateral aid comprises the other 25%. The program focuses on promoting economic growth on the basis of equity, efficiency and long-term sustainability; on maintaining and enhancing ecological systems; and on improving quality of life through access to health services, education, human rights, and participation of all groups in the development process. Australia encourages the multilateral development banks and multilateral aid agencies to which it contributes to give priority to ESD including poverty reduction. Australia also gives priority to providing the enabling conditions for sustainable private sector development in developing countries to attract private flows and investment; and has been a strong supporter of trade liberalisation and a successful outcome to the Uruguay Round of the GATT.

2.3.2 The main activities that countries are undertaking or planning in order to achieve those objectives

a.International cooperation

In the 1993-94 fiscal year, Australia will provide over $A1.4 billion in official overseas development assistance (ODA) which represents an ODA/GNP ratio of 0.35 percent. This ratio has been relatively constant since the late 1980s. Australia is committed to the UN ODA target of 0.7 percent of GNP and has endeavoured to increase its ODA consistent with its own economic circumstances and capacity to assist.

Over the past two years, Australia has undertaken substantial measures to integrate and promote the principles of ESD throughout the development cooperation program. The original policy basis for this was set out in the 1991 interim policy statement on ESD in international development cooperation prepared by the aid agency, AIDAB. This drew on the World Commission on Environment and Development's report, Our Common Future. The 1991 interim policy statement is being updated at the time of writing this report and will take account of the subsequent development of Australia's national ESD policy and the outcomes of UNCED, principally Agenda 21. When finalised, this new policy statement will form the basis for Australia's development cooperation policy on ESD in the 1990s.

The environmental aspects of ESD are already addressed in the bilateral aid program on two levels:

A further key step was the introduction in 1991 of an annual environmental audit of the development cooperation program to monitor the environmental impacts of individual projects. This document is submitted to the Federal Parliament.

Funding for environment-related activities from the Australian development cooperation program is estimated at over $A100 million for 1993-94. Many other elements of the program have some environmental focus. Activities and programs that are specifically environmentally targeted include bilateral projects under the four year $A80 million Environment Assistance Program and funding to NGOs for environment activities under the NGO Environment Initiative ($A1.5 million a year). Examples of major projects include the $A7 million Sea Level Rise and Climate Monitoring Project in the Pacific; $A24 million to extend the capabilities of the Indonesian Environmental Impact Management Agency; and $A7 million for a watershed planning project in eastern Indonesia. Australia focuses considerable attention on providing environmental assistance to the South Pacific through the SPREP, to which Australia contributed $A1.8 million in 1992-93. It should also be noted that some 700 students sponsored under the development cooperation program are currently studying environment-related subjects in Australia. This is discussed in more detail in Section IV of this report under capacity building.

In addition to these explicitly environmental activities, there are many others which have significant environmental components. In 1992-93, around $A10 million from Australia's mixed credit scheme, the Development Import Finance Facility (DIFF), was expended on environmentally-related projects and the transfer of environmental technology, including a major water treatment facility in Jiangsu Province, China.

In 1992-93, Australia contributed $A261 million to international organisations including almost $A150 million to the MDBs and $A77 million to UN programs. Australia provides core support to the UNDP ($A17.2 million in 1992-93) and to UNEP ( $A1 million in 1992-93). Australia therefore has a keen interest in the objectives, effectiveness and efficiency of the multilateral organisations it supports. Australia also provided $A2.5 million in support of the Montreal Protocol in 1992-93. (For further details of Australia's expectations in this area see Section 2.3.7).

Australia believes that in addition to the issue of levels of MDB assistance, improving the quality of World Bank (including IDA) operations is essential to ensure greater development impact and sustainability of Bank activities in developing countries. To this end, Australia has given its support to the proposed program of the 'Next-Steps' follow-up to the Wapenhans Report. Australia has also supported the Bank's efforts to incorporate ESD principles into the Bank's operations. As a practical measure, Australia has urged that National Environmental Action Plans be completed and incorporated into MDB country assistance strategies as a matter of priority. These national-level strategies seek to provide a framework for integrating cross-sectoral environmental concerns into the broader context of country economic and social development programs.

Australia has also been involved in the ADB's efforts to assume an appropriate role in the implementation of Agenda 21, the Framework Convention on Climate Change and the Convention on Biodiversity. Australia supports the ADB's increased emphasis on the environment as demonstrated by more rigorous environmental assessment procedures and through environmentally focused projects and programs, including capacity building and institution strengthening.

Australia has contributed $A30 million to the Pilot Phase of the Global Environment Facility (GEF). Guided by the principles established in the Participants Assembly Meeting of May 1992, Australia has been actively engaged in negotiations over the restructuring of the GEF envisaged in Chapter 33 and the Climate Change and Biodiversity Conventions.

Australia also supports the current replenishment process and has indicated its commitment to contributing to a replenishment of $US2 billion for GEF II. As is its policy with other multilateral environment funds, Australia supports a voluntary replenishment contribution based on the principle of fair burden share.

Australia participates in the development of debt rescheduling programs of the Paris Club for the poorest heavily indebted countries pursuing structural adjustment. Australia concluded a bilateral rescheduling agreement under the Trinidad terms with Nicaragua in 1993. To date, Nicaragua is the only poor and heavily indebted country to which Australia has a significant exposure, that has had debts rescheduled on post-1991 Paris Club terms.

b.National measures

As noted in Part I, a number of sectoral and intersectoral environment strategies have been developed that are broadly compatible with the range of objectives contained in Agenda 21. In general these strategies have been designed to put in place policy frameworks that make use of economic incentives to influence industry, business and the public into modifying their practices to be consistent with the strategy objectives.

In addition, the Federal Government has funded a wide range of major programs to address environmental issues. In December 1992, for example, the Australian Government announced a $A156 million package of environmental measures with emphasis on the protection of inland waterways, biodiversity-related matters, cleaner production techniques and related pollution issues. In addition State and Territory Governments also fund programs.

2.3.3 Experience gained, particularly experience from which others may benefit

Financing of the implementation of Agenda 21 in developing countries must come from a range of sources, including bilateral and multilateral aid flows, private investment and domestic resource mobilisation, and environmentally friendly international trade.

Aid transfers form only a relatively small part of the overall development equation and can never solve the problems of environmental degradation or poverty alone. To maximise the impact of development cooperation, emphasis must be placed on maximising effectiveness and efficiency. Multilateral development banks should be encouraged to continue their efforts to reduce poverty and promote sustainable development. With respect to the UN system, the need for improved inter-agency coordination and coherence is paramount.

Australia considers that private investment can be an important means of mobilising financial resources. Governments in both developed and developing countries have a key role to play in providing the enabling conditions for private sector development. Experience has shown that stable macroeconomic management, the adoption of market-oriented policies and strong institutions accompanied by high levels of investment in human resources through education and health care can generate significant economic growth and private investment. Such measures should be accompanied by the application and enforcement of appropriate environmental standards, the adoption of technologies that meet such standards, and information and education on the benefits of cleaner production techniques.

One example within Australia is that of the State of Victoria which operates a Local Conservation Strategies program through which over 50 local government bodies have already been financed to develop Local Agenda 21-type strategies.

2.3.4 Specific problems and constraints encountered by governments at all levels, including local authorities, in improving the availability of financial resources for the financing of Agenda 21

In relation to the financing of domestic Agenda 21 activities, the combination of significant budgetary constraints on all levels of government and the constitutional division of powers between the Federal and the State Governments has resulted in differences in assigning priorities to the implementation of Agenda 21-related actions. In some cases, these complexities constrain efforts to improve the availability of financial resources.

2.3.5 Assessments of developments in capacity building

Capacity building in the context of Australia's development cooperation program is dealt with in Section 2.4 of this report.

2.3.6 Assessments of the availability of domestic financial resources and of the needs and priorities for external assistance

It is anticipated no external resources provided on other than a commercial or quasi-commercial basis are available to Australia or will be sought for the implementation of Agenda 21.

2.3.7 Assessments of expectations from international organisations, financial institutions and funding mechanisms

Australia believes that the effective functioning of the multilateral organisations is vital to the achievement of ESD and poverty reduction. In addition to their roles as channels of development finance, these organisations are important sources of policy advice, technical services and development research. They are also focal points for aid coordination.

Australia believes that both the multilateral aid organisations and the multilateral development banks have key roles to play in financing the implementation of Agenda 21 - especially in the poorest countries. Australia has actively encouraged the MDBs of which Australia is a member, including the World Bank and the ADB, to increasingly concentrate on reducing poverty and promoting ESD. Australia attaches great importance to enhancing the role and functioning of the United Nations system in the field of environment and development and encourages the adoption of concrete programs for the implementation of Agenda 21 based on the comparative advantage of each organisation. For instance, Australia sees UNDP's responsibilities in the post-UNCED period as including capacity building for the implementation of Agenda 21; strengthening the national coordination of post-UNCED activities; and strengthening the role of women, youth and other groups in those activities. Australia considers the UNEP has been generally effective in fulfilling its mandate as the principal environment agency in the UN system. The Commission on Sustainable Development now has a vital role to play in overseeing interagency coordination of implementation of Agenda 21 post-UNCED.