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198 Note by Department of External Affairs

Canberra, 17 October 1951

Colombo Plan: Administrative Arrangements

The Australian contribution of �A31.25m. to the Colombo Plan economic development programme over the next six years presents a substantial administrative task of procurement. The first-year contribution of �8.75m. will be made available largely in the form of wheat and flour; but over and above wheat and flour supplies, commodities to the value of �5m. are to be supplied to India, �2m. to Pakistan and possibly �2.25m. to non-Commonwealth countries of South and South East Asia. In the second and subsequent years of the Programme, it is likely and desirable that supplies of wheat and flour should form a smaller proportion of the Australian contribution and that the emphasis will be more on other goods including non-consumer, developmental goods.

2. There is, in addition, an amount of �1.25m. worth of technical, scientific, educational and similar equipment to be provided by Australia under the Technical Co-operation Programme, which runs until 30th June, 1953. The difficulties already met in procuring equipment under this Programme illustrate the difficulties to be met in the larger field of economic development.

3. The Inter-Departmental Committee has come to the conclusion that an executive officer should be employed full time in organising and administering the supply side of the Australian contribution. He should be a senior officer with considerable experience and personal qualities of drive and initiative, with a good knowledge of Australian industry as well as of governmental procedures. He should be given an appropriate title. It is suggested that a suitable appointment would be a man drawn from the Trade Commissioner service.

4. The Committee has discussed whether the officer should be attached to Department of External Affairs, Department of Commerce and Agriculture, or Department of Supply, and believes that it would be best for him to be attached to the Department of External Affairs for the following reasons:

(a) The Minister for External Affairs is the Minister primarily responsible for the Colombo Plan.

(b) The Colombo Plan is closely bound up with foreign policy.

(c) External Affairs is the channel of communication with overseas political representatives and foreign governments.

It is also suggested that it might be best for him to be situated in Melbourne with an office close to the Department of Supply and to the Trade Promotion Branch of Department of Commerce and Agriculture.

5. The duties of this officer would be to examine enquiries from recipient countries and to ascertain what Australia can supply; to assist missions which might be sent to Australia by recipient countries; to arrange for procurement and to ensure that all necessary details are attended to up to the point where title to the goods passes to the recipient country.

6. The officer concerned would be responsible as above for the supply of equipment under the Technical Co-operation Programme as well as for supplies under the Economic Development Programme.

7. It is possible that the executive officer will need an assistant after the first exploratory stages, particularly when programmes of supply are being initiated on a substantial scale.
If so, a further recommendation will be made at an appropriate time. In the meantime, however, it is proposed that the provision of clerical and typing staff will be a matter for the Department of External Affairs. In the first instance, it is considered that one clerk and a stenographer will be necessary.

8. The Inter-Departmental Committee would remain responsible for examining the problems associated with the details of the Australian Government's contribution to the Colombo Plan and for advising the Minister for External Affairs on those matters. The executive officer would be a member of the Committee, carrying out his duties under its general supervision.

9. If this appointment is approved the procedures for procurement of supplies under the Economic Development Programme and of equipment under the Technical Co-operation Programme would be as follows:

(a) Preliminary negotiations

Procurement will usually begin with –

(i) An enquiry by a recipient country as to the availability of certain supplies, or

(ii) An offer by Australia indicating that certain supplies are available.
The executive officer would conduct the preliminary negotiations, sifting enquiries, examining projects and matching Australia's availabilities with country requirements.
The Inter-Departmental Committee would supervise generally these negotiations and would refer to the Minister for guidance where necessary.

(b) Firm authority to procure

At the conclusion of the preliminary negotiations the recipient country would provide the Department of External Affairs with a firm authority to procure supplies. This should be an official communication in writing, including all necessary specifications of the goods. (Action could be taken on cabled advice with the official letter following in confirmation).

(c) Procurement

On the basis of this authority the executive officer would arrange the procurement of the supplies in accordance with normal procedure for Government purchase. Placing of contracts would normally be done through the Department of Supply. The executive officer would be responsible for ensuring that arrangements were made for the acceptance, inspection, storage and equipment shipment of the goods and for forwarding invoices and shipping documents to the recipient country when ready. Title to the goods would normally pass the recipient country on arrival of the goods at the port of destination.

(d) Accounting

The existing accounting arrangements under the Economic Development Programme are as follows: Colombo Plan economic developments funds are paid into the International Development and Relief Trust Account. The Minister for External Affairs is responsible for expenditure from this account, and Treasury issues warrant authorities to External Affairs as necessary from time to time. The Department of Supply has been authorised by the Minister for External Affairs to operate on the account for procurements which they are requested to make. Actual expenditure from the Trust Account is advised to External Affairs by Department of Supply.

In the event of procurement being carried out through other Departments than the Department of Supply, it will be necessary for authority to operate on the account to be delegated to such other Departments. These Departments would similarly advise External Affairs of actual expenditures from the Trust Account.

At present the accounting arrangements for the Technical Co-operation Programme are not quite the same as for the Economic Development Programme, in that funds are not paid into the Trust Account, but instead the Department of External Affairs debits the appropriate vote when expenditure is made. It is suggested that it would be convenient for the accounting arrangements for Technical Co-operation to be brought into line with those for Economic Development.

(e) Administrative and other costs

Debits to the Trust Account will include, in addition to the cost of the goods, administrative costs, storage, insurance, freight and other expenses up to the point of transfer of title. The guiding rule is that the debits arising from the supply of the goods should total approximately the amount the recipient country would have to pay to procure the goods itself.

In the case of commodities like wheat and flour, the appropriate total sum should be readily ascertainable. For other commodities of a miscellaneous kind of flat rate could be applied to cover administrative and other costs (4 per cent was used for this purpose in the case of UNRRA). At an early date the executive officer should investigate and recommend a suitable rate under present day conditions.

(f) Returns

The executive officer should provide Departments concerned with periodical returns at appropriate intervals showing procurement progress.

10. The proposals as they are set out above are of course tentative in a number of respects and it is contemplated that they be reviewed from time to time as occasion requires.1

[NAA: A9879, 2202/El part 4]

1 A Director of Colombo Plan supplies was appointed in January 1952.

Last Updated: 10 January 2017
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