Treasurer Joe Hockey says it is good for Australia to join the Asian Infrastructure Investment Bank. Source: AAP
AUSTRALIA will join the club of more than 30 countries negotiating the set-up of a $100 billion China-led development bank.
AFTER holding out for months, Prime Minister Tony Abbott announced on Sunday that Australia intends to sign up to the Asian Infrastructure Investment Bank.China is promoting the bank as a vehicle to help combat an estimated $8 trillion infrastructure gap in the region over the next decade, but the US has reservations about the venture.Signing on before Tuesday's deadline allows Australia to participate as a prospective founding member in negotiations to set up the bank.Mr Abbott says key matters to be resolved include its board of directors having authority over major investment decisions, and that no one country controls the bank.But he says good progress has been made on the bank's design, governance and transparency in the past few months.Treasurer Joe Hockey says infrastructure upgrades in Asia, funded by the bank's loans, would benefit Australian exporters and commodities in the medium to long term."We could massively increase our exports of iron ore to India if there were better port facilities," he told reporters in Tasmania.Australia wanted similar governance positions to other multi-lateral banks.Mr Hockey said the UK, Germany, Italy and France's interest had helped sway the decision.Those countries joined the queue to sign up after Beijing reportedly dropped its veto power over the bank."(It) has been encouraging for Australia to know that it truly is a global organisation," Mr Hockey said.Trade Minister Andrew Robb said it was imperative that Australia was at the table because improved infrastructure would help drive growth and demand in Asia Pacific countries.Federal Labor accused the government of dithering on the issue for too long."I think it's important to be confident about the institutional arrangements of the bank, but the best way to do that is through engagement with China," Labor's foreign affairs spokeswoman Tanya Plibersek told reporters in Sydney.Russia and the Netherlands also signed up to the bank this weekend.Australia will miss a meeting in Kazakhstan early this week because it has not yet signed a memorandum of understanding.There will be another two rounds of discussions on the bank's structure and governance before countries will formally sign on.There's speculation Australia might invest up to $3 billion in the venture.The Australia China Business Council said the bank was an excellent opportunity to help shape the region's future.ASIAN INFRASTRUCTURE INVESTMENT BANK EXPLAINED* Aims to provide billions in loans for Asian countries to build railways, ports, roads, telcos etc* Expected to have $50-$100 billion in capital. Most cash to come from China* Designed to address estimated $8 trillion infrastructure gap in the region over the next decade* Addresses concerns World Bank, Asian Development Bank, International Monetary Fund can't meet demand.* China: frustrated it's not getting much say in current institutions; keen to put to use excess foreign reserves* US: concerned the bank will increase China's economic influence in the region.(Source: Australian Institute of International Affairs)