Canberra, 31 October 1953
Colombo Plan Expenditure
Budget allocation
In the 1953–54 Budget recently passed by Parliament an amount of £3 million was approved for all expenditure on the Colombo Plan.
To this can be added £326,000, which was the Colombo Plan balance in the International Development and Relief Trust Account at the beginning of this financial year.
Thus the total amount available for Colombo Plan activities during 1953–54 is £3,326,000.
Estimated expenditure 1953–54
A detailed statement of our estimated irrevocable expenditure for 1953–54 is attached, but in summary form the position is broadly as follows:—
-
(A) Economic Development Programme Pakistan 2,185,000 India 943,000 Ceylon 129,000 Indonesia 168,500 3,425,000 - (B) Technical Co-operation Scheme Equipment all countries| 118,500|
—|—|—
Training facilities all countries| 189,000|
Contribution to Bureau| |
Technical Co-operation,
administrative expenses and publicity| 7,500| 315,000
Total irrevocable expenditure| | 3,740,000
Concerning the estimates for expenditure on equipment, the figures include only items for which orders have already been placed. Excluding unforeseen manufacturing delays, there seems no possibility of expenditure falling below the above levels. The only way in which this could happen would be for us deliberately to delay manufacture or refrain from meeting our debts as they fall due.
The estimate for expenditure on training facilities and experts includes only continuing payments to trainees already in Australia, payments to Australian experts already in the field and the estimated cost of group training schemes to which we are already committed.
It is also important to note that the above estimates do not make any allowance for:—
(1) the award of any further scholarships or fellowships before June 30th, 1954.
(2) meeting requests for equipment which we could otherwise supply quickly. For instance, we have already received a formal request from Pakistan for 200 tractors, the approximate value of which is £375,000. Under normal circumstances these could be delivered 12–14 weeks after the order is placed.
(3) the supply of any equipment at all to Indo-China during the current financial year. In the absence of financial restrictions we could probably supply Indo-China with worthwhile quantities of agricultural and road-making equipment.
(4) The shipment of any equipment to Indonesia or Ceylon, except for a few tractors and trucks remaining from orders placed last year. In the case of both countries we have no real plans for future shipments of equipment, nor has it been possible to make financial allowance for this.
(5) In line with our policy to date no allowance has been made for any aid to Burma or the Philippines, except for continuing payments on a total of 8 scholarships.
In short, it therefore appears that considering our irrevocable commitments only, the shortfall in the budget provision for Colombo Plan expenditure is of the order of £414,000. The position is, however, more serious than this, for no allowance has been made for long-term forward planning.
Long-term programme
The total minimum amount which Cabinet has approved as the Australian contribution for the period ending 30th June, 1957 is £31.25 million. To the end of June 1953, our total expenditure was £6.6 million. Adding our approved Budget expenditure for the current year, total expenditure will be £9.6 million by 30th June, 1954. This will leave a balance of £21.65 million to be spent over the remaining three years of the Plan, that is at the rate of more than £7 million per year.
On present indications it seems highly improbable that Treasury would consider expenditure on such a scale. Indeed, a senior Treasury official has indicated that a figure of about £3 million can be taken as a rough estimate of what they are likely to agree to for Colombo Plan expenditure in future years.
Assuming we wish to honour our original undertaking to the Colombo Plan countries and spend the whole of our pledged contribution, it is essential we not only resist any cut in our programmes, but do all that is possible to ensure a regular and smooth flow of aid for the remaining period of the Plan. For effective programming there must be a freedom to enter into substantial forward commitments and a fairly even spread of expenditure over the whole period. At present, however, we are in no position to make effective long range plans or to give worthwhile forward commitments as there is no guarantee that our programmes will not be cut by Treasury. This is particularly serious when it involves requests to assist major long-term projects, as these are the ones which often merit the greatest consideration.
In entering into long-term forward commitments allowance must be made for some expenditure in the immediate future as it is generally necessary to make progress payments for equipment, even though its manufacture may not be completed for a year or two. The scale of these payments depends largely on the allocation which we make for various countries. These have not yet been determined for 1953–54, but working on previous figures and allowing for no increase these may be assumed to be in the vicinity of £6.5 million. The amount of such allocation spent in the year in which they are made depends largely, of course, on the nature of the equipment being supplied. For instance, in the case of most agricultural equipment for which the manufacturing period is short, a liberal allowance must be made, while in the case of, say, radio and broadcasting equipment the manufacturing period is much longer and therefore a smaller allowance can be made. On the whole it seems not unreasonable that at least 20% of these allocations should be available for actual expenditure in the year in which they are made.
In short, this means that something over £1 million of additional funds should be available over and above the amounts needed to meet our irrevocable commitments. In fact, we have already received advance information about requests which we can expect for £600,000 worth of equipment which India and Pakistan would like supplied this year.
Therefore, the total amount of money required additional to the present Budget provision seems to be at least £1,440,000.
Expenditure other than Colombo Plan
Apart from the £3 million allocated for the Colombo Plan, there is provision in the Budget for £1.25 million for other International Development and Relief. This covers:—
| U.N. Technical Assistance Programme | 175,000 |
|---|---|
| UNICEF | 100,000 |
| UNKRA | 900,000 |
| UNRWA | 50,000 |
| High Commission for Refugees | 25,500 |
| £1,250,500 |
A Cabinet submission is being placed before you for consideration on our 1954 pledge to the U.N.TA.P. The pledge recommended is $400,000 (£179,400), the same as last year. However, except for £28,000, this cannot be met from the current Budget appropriation as £147,000 has been used to pay the balance of our 1953 pledge. Unless a supplementary appropriation is made, it will not be possible to pay the bulk (£151,000) of our proposed 1954 pledge until late in 1954, with consequent serious effects on United Nations programming in Australia.
It should be noted that the £1.25 million for United Nations projects does not leave any room for manoeuvre. It is not possible to take more [than] £175,000 for U.N. Technical Assistance without depriving the other organisations of funds. For instance, the £10,000 for U.N.I.C.E.F. is an all time low allocation and certainly, cannot be cut any further; the £900,000 for U.N.K.R.A. means we will fall £300,000 short of our original pledge; while the amounts for U. N. R. W. A. and Refugees are simply token sums.
It may be desirable, therefore, to seek additional funds from Cabinet during 1953-54, not only for the Colombo Plan but also for the U.N. Technical Assistance Programme. A minimum of at least an additional £62,000 seems appropriate.
Conclusions
1. The present Budget allocation of £3 million for Colombo Plan activities is not sufficient to meet even our irrevocable commitments on equipment ordered or training programmes commenced.
2. Allowing for the absorption of credits in the International Development and Relief Trust Account, there is still a shortfall on committed expenditure of £440,000.
3. The effective development and continuity of future programmes requires additional funds of £1 million, if any orders involving immediate or near-immediate delivery are to be placed this year.
4. If it is intended to spend the whole of our original pledge of £31.25 million before the end of the Colombo Plan, it will be necessary to both plan and spend at the rate of £7 million per year for the next three years. Effective plans for an increasing rate of expenditure should be made now, but this cannot be done without a guarantee that funds will actually be available when needed.
5. Without a further allocation of £62,000 or more the U.N. Technical Assistance Programme in Australia is likely to be prejudiced.
Recommendations
It is recommended that:—
(1) You instruct officers of this Department to discuss the above matters with Treasury officials and to put firmly to them a case for:—
(a) increasing the current Budget allocations for Colombo Plan activities by £1.5 million and that of the U. N. Technical Assistance Programme by £62,000.
(b) being given a realistic allocation for the Colombo Plan in 1954–55. The amount for which we should aim is £7 million.
(2) If considered appropriate, you discuss the question with the Treasurer.
[NAA: A10299, C15]