Australia pledges $492 million to Asian Development Bank to further projects in Pacific

Australia pledges $492 million to Asian Development Bank to further projects in Pacific
  • PublishedMay 4, 2024

Australia will plough $492 million into the Asian Development Bank (ADB) but is continuing to heap pressure on the organisation to overhaul the way it funds major projects in the region.

Overnight the federal government committed the money to the Asian Development Fund at its 2025-28 pledging round, slightly higher than the $423 million the Australian government promised at the last replenishment in 2020.

The ADB is a major development player in the Pacific and Australia is the second highest contributor to the fund, after Japan.

But the Albanese government has been frustrated by the way the ADB and other development banks have operated in the Pacific and beyond, complaining they’ve funded too many low-quality and cut-price infrastructure projects.

The federal government has been particularly aggrieved by the way Chinese state-owned enterprises have won multiple major projects in the Pacific, saying the companies have deliberately put in low-ball bids that inevitably blow out down the track.

The government has also complained that broader development benefits for Pacific communities have been limited because Chinese companies typically use their own workers rather than hiring locals, and that contracts don’t typically take in maintenance costs after the build.

‘Poor quality outcomes for the Pacific’

The Minister for the Pacific and International Development Pat Conroy told the ABC the ADB played a “critical role” in the Pacific but there had been a “number of issues” with the way it had operated.

“They’ve been focused too much on awarding contracts to the cheapest bidder, and that’s led to, quite frankly, poor quality outcomes for the Pacific,” he said.

“It has been accompanied by not using local labour. So we have been lobbying very hard and will continue to lobby on this.”

Mr Conroy said the ADB had already agreed to Australia’s request to brand projects with the bank’s own logos rather than with the logos of the contractors who built them.

The government has been irritated by the way Chinese state-owned enterprises emblazon their branding on projects which they have built, but which were funded by the ADB or the World Bank.

“This confuses people — I’ve been in the Pacific many times and walked past projects which have been funded by Australian and Japanese taxpayers through the ADB, but looking at the project branding you’d think it was associated with another country,” Mr Conroy told the ABC.

“That’s not a reasonable position to be in. I’m glad the ADB has recognised that and changed its policy.”

The minister said the World Bank had also agreed to change procurement rules so that it looked at value for money over the life of the asset – rather than just the cheapest building bid — and that Australia would continue to use its sway as a major funder of the ADB for it do the same.

“They’ve heard our message. How they respond is something we’re working through with them,” he said.

“I think they recognise that partially, they’ve been trying to make funds go further by choosing the cheapest bidder, but that has resulted in not always good quality, and not using local workers.”

He said the government would also look to “top up” projects funded by development banks to ensure they were of a high standard and good quality, pointing to an ADB ports development in Tonga last year, saying Australia’s decision to provide an extra $20 million helped get a “good quality” New Zealand contractor in to complete the project.

The ABC has approached the ADB for comment, but it hasn’t yet responded.


Leave a Reply

Your email address will not be published. Required fields are marked *