*Break in Audio* I think the benefits in reducing these costs, there are multiple benefits, but the first point to make is that when we actually have a look at the amount of money that migrants in countries like Australia are sending back to developing countries like Samoa or Tonga, we see that there is actually more money being remitted back than is actually provided by developing countries like Australia to those countries in foreign aid. So clearly, this is about assisting those countries that are the destination of those remittances to ensure that as much money as possible that is being remitted back home by migrants that have come to countries like Australia, as much of that money makes its way back to family and friends back home. That of course also ensures that the overall need to provide additional development assistance is not as great.
So it is designed to save Australian aid dollars?
No, no it’s not designed to save Australian aid dollars. It’s designed to ensure that as much money as possible that is being sent back actually makes it back home. You’ve got to put this in the context of what we see in the aid and development budget context that the amount of money being sent back to countries like Tonga and Samoa is between 20-30 per cent. In these countries, overseas development assistance is nowhere near that amount. So, this is actually a way that we can ensure that we are providing assistance. It’s not overseas development assistance but it is real and practical assistance that will ensure that countries in the Pacific and other Commonwealth countries that are developing countries around the world are able to obtain as much of the remittance dollars that are being sent back.
And how are some of these costs being absorbed?
Well the principle challenges that people find in remitting funds back to countries particularly in the Pacific, and I do have a particular interest in the Pacific having been the Commonwealth Government’s representative at the Pacific Islands Forum of Economic Ministers meeting for the past two years and clearly this has been a very big issue for our neighbours in the Pacific. One of the biggest challenges that people face are the transaction costs. What we have been doing particularly over the last 12 to 18 months is working very closely with a number of the banks in particular, but the institutions that are responsible for conveying those funds back home, particularly the two big banks that have a presence in the Pacific which are Westpac and ANZ. Working very closely with those institutions we’ve had Westpac dramatically cut the telegraphic transfer fee that applies. Just to give that some context, the telegraphic transfer fee is essentially a flat fee that applies to amounts of money that are remitted across borders. The difficulty in applying a fee of that sort is that the same fee applies to a very small amount of funds that might be remitted, compared to a very large amount of funds. What we do know is that the amounts that are normally remitted are frequent and regular payments, but they’re often not all that much in actual quantity. So what we were finding before cuts to the telegraphic transfer fee, that a large proportion of the sum of money that was being remitted back home was being sucked up and absorbed by this telegraphic transfer fee. That’s one initiative, but ANZ have gone down a different path. They have been supporting a stored value card, which allows a card to be used at both the country where the money is being remitted and the destination, to allow cheaper and more easy access to funds that are being remitted. But these initiatives, along with the ongoing efforts that we have been investing, particularly with New Zealand in the SendMoneyPacific website have ensured that there has been greater transparency around these costs. But as a result of that transparency and working with the relevant stakeholders, we have actually been able to bring down the actual costs to families that are sending money back home.
You announced today that it is a $2.5m Australian spend from the Australian Government, is that what all that money is going towards or are there other initiatives working as well?
Those funds in addition to those matters that I’ve discussed with you just now, those funds will be going to the World Bank to support various initiatives they already have in place, and we are working very closely with stakeholders like the World Bank. I know that these funds will help drive new, and we hope, innovative solutions to reducing the overall transaction costs of remitting funds back to developing Commonwealth nations. But of course, the Pacific is a genuine and real focus of our interest in these matters.