Business chiefs back $930m investment in Asian bank

Business has backed Australia’s decision to become a founding member of the Asian Infrastructure Investment Bank with a $930m investment.

Question Time

Business has backed Australia’s decision to become a founding member of the Asian Infrastructure Investment Bank with a $930 million investment making it the sixth-largest shareholder.

Joe Hockey will travel to Beijing next week to sign up to the $100 billion AIIB, which has been extensively pushed by China and originally divided cabinet.

The Treasurer said concerns over the governance of the bank had been addressed after extensive negotiations with the Chinese.

But Mr Hockey said Australia was still not big enough to command a board seat in its own right.

“We are in discussions with New Zealand, Singapore and a number of other countries about setting up a pool of shareholders that ensures that we have a very regular seat at the table,’’ he said.

The Business Council of Australia, the Australian Industry Group and the Australia Chamber of Commerce and Industry all backed the decision to sign up to the AIIB.

“As a founding member, Australia can play a key role in setting the direction of this body and the decisions it will make to finance projects that address Asia’s infrastructure gaps,’’ BCA chief executive Jennifer Westacott said.

“Australian companies will benefit from opportunities to participate in developing and building new AIIB-financed infrastructure, as well as having access to improved­ infrastructure which facil­itates trade in the region.

AiGroup chief executive Innes Willox said the AIIB’s objective of financing infrastructure development in the Asia-Pacific would foster greater trade and economic development in the region of ­Australia’s closest and most ­important economic partners.

“Given our national ambitions to be more thoroughly engaged in the Asian region, it makes clear sense for Australia to become a founding member of the AIIB and to work to ensure its success,” Mr Willox said.

ACCI chief executive Kate Carnell said the AIIB would boost economic development. “Australia benefits when countries in our region have better infrastructure, including ports, airports, road, rail and power supplies, because it helps to facilitate trade. The World Trade Organisation’s trade facili­tation agreement adds to the ­importance of infrastructure that makes easier the movement of goods across borders,” she said.

Mr Hockey said the original concerns in cabinet had been around governance arrangements and whether the AIIB would be a truly international bank.

The government was now ­satisfied with the governance ­arrangements and it passed cabinet unanimously, he said.

“The governance of the AIIB will be based on best practice, ­ensuring that all members will be direct­ly involved in the direction and decision-making of the bank in an open and transparent manner,’’ the Treasurer said.

Australia had consulted the US and Japan over the decision to join the AIIB. Mr Hockey said the US “understood where we were coming from. It is a significant opportunity for Australia’’.