UNITED NATIONS GENERAL ASSEMBLY 56th SESSION

Fifth Committee - Item 125: Scale of Assessments Report of the Committee on Contributions

Statement by H.E. Mr David Stuart, Ambassador and Deputy Permanent Representative of Australia on behalf of the delegations of New Zealand, Canada and Australia

16 October 2001

Mr Chairman I have the honour to speak on behalf of the delegations of New Zealand, Canada and Australia on Item 125, Scale of Assessments.

We wish to thank the Chairman of the Committee on Contributions, Mr Ugo Sessi, for introducing the Committee's Report (A/56/11 and Add. l). The Report contains a range of important proposals - both in relation to the procedures for the application of Article 19 and measures to encourage timely, full and unconditional payment of contributions - which require comment and guidance from the Fifth Committee.

Mr Chairman we appreciate that individual Member States will have concerns about how particular measures will affect them and these concerns need to be taken into account. However if we hold to the rule that no improvements can be made for the benefit of the Organization because of adverse effects on some Member States then it is unlikely that the Organization will ever change its practices for the better. An appropriate balance needs to be struck between what is good for the Organization and what is good for some Member States. Indeed there isone group of Member States whose interests are overlooked repeatedly. These are the Member States that pay their dues in full and on time - which include both developed and developing countries. These are the Member States that subsidize those Member States that pay late and those that accumulate arrears. Developing countries suffer just as much as developed countries when other member states - whatever their economic development - choose to pay late.

Mr Chairman we believe our consideration of the procedures for the application of Article 19 and measures to encourage timely payment would benefit if we considered their overall impact on the Organization as a whole. While individual measures may have a small financial impact, action by many Member States together can have a significant impact. It is correct to observe that if the relatively few Member States that would fall under Article 19 under the net-to-net approach pay the minimum amount necessary to recover their vote, the UN's cash balance increases by only $9 million. But if more members paid in full and on time, it would significantly improve the functioning and the flexibility of the Organization. The main purpose of the measure is not to minimally increase the UN's cash balance, but rather to encourage payment practices that bolster the UN's ability to function effectively.

Mr Chairman in Res. 55/5A the General Assembly took a decision to change the procedure for the application of Article 19 from the current gross-to-net approach to

the net-to-net approach. The merits of this decision are self-evident: the intention of the Charter was to compare two years of actual net assessments with actual net arrears. The change would bring an anomalous practice into line with the Charter's intention. We note that the Committee's report finds no technical reason to delay the change: it is essentially a political decision.

Under this decision, Member States that pay on time would no longer subsidize those who chose to accumulate arrears. In this context I would recall that the picture on who pays on time is complex and does not fall into simple north-south lines. Of the 141 Member States that had paid their regular budget dues by the end of 2000 well over half - 91 - were developing countries. I recall that this year Bangladesh led off the Honour Roll as the first Member State to pay its regular budget dues. There are other such examples. The change to the net-to-net approach would increase the

amount of money coming in to the Organization, particularly from those major contributors including developing country major contributors, whose practice it has been to accumulate arrears close to two years worth of assessments. Those Member States, which pay their bills on time, will not be affected. We believe that Member States, developed and developing, will make their best efforts to adjust and improve their payment patterns to reflect the new requirements.

The question we need to consider is when should this decision be implemented. In view of the fact that this decision was taken by the General Assembly in October 2000 we believe an implementation date of 1 January 2002 - which provides over twelve months notice - is sufficient time for Governments to adjust their payment practices and patterns.

Mr Chairman we believe this Committee should take a decision in favour of the biannual calculation of arrears. Again, this change is clearly in the best interests of the Organization. It would generate more and earlier payments to the Organization improving its cash position and its financial base. Its effect would be particularly marked on those major contributors that delay their payments to late in the year or deliberately accumulate arrears. Those Member States that pay their bills when they are due and who currently subsidize the late payers will not be affected.

Again, the Committee on Contributions has found that this change is essentially a political decision. There is a need to revise financial regulation 5.4, which can be readily achieved if the political will is there. We believe this Committee should do the right thing by the Organization and decide in favour of biannual calculation of arrears.

Mr Chairman the Committee on Contributions has sought the Fifth Committee's guidance on a range of measures to encourage timely, full and unconditional payment of assessments. We support the introduction of indexation of arrears although we recognize that charging interest is the less technically complicated measure. We read with interest the Report's discussion on multi-year payment plans, which would provide a commitment by states in arrears of their repayment to the Organization of their arrears. We would welcome a report from the Secretariat - which might then be considered by the Committee on Contributions - on how these plans might be negotiated, handled and approved. Finally, we believe that the S-curve incentive scheme, as used by other agencies in the UN system, and described on Annex II of the Addendum, while complicated, merits serious consideration.

Mr Chairman we look forward to detailed consideration of these matters in the informal consultations.