Introduction

Distinguished co-chairmen Mr Sergio Vieira de Mello and Jemal-ud-din Kassum; representatives of the East Timor Transitional Administration, international agencies and the international donor community; ladies and gentlemen

On behalf of the Government of Australia I am delighted to welcome you to Canberra for this fourth Donors' Meeting on East Timor.

When donors and senior East Timorese representatives last met, last December in Brussels, planning for East Timor's transition to independence was still in its early stages. Today it is easier to discern the way forward, and to appreciate the challenges involved. We can now begin to look beyond East Timor's formal transition to independence, and to plan our cooperation in the task of nation building.

Australia's strong support

Australia is a committed friend and partner of East Timor. Through its development cooperation program Australia is working to help build East Timorese capacity to govern a peaceful, democratic and independent East Timor. Australia's commitment has also involved thousands of Australians living and working in East Timor - as members of the international peacekeeping force, and as volunteers and aid workers. And thousands more here in Australia have contributed their time and resources to support relief and reconstruction efforts. This commitment reflects the deep admiration felt by ordinary Australians for the sacrifices made by the East Timorese people over more than 25 years, in their quest for independence and identity.

These issues of independence and identity strike a special chord with Australians as we celebrate 100 years as a nation. During that time, the character of Australian democracy has been progressively refined. It has been forged through the constant competition of ideas, and the need to accommodate different points of view about government, the economy and Australian society. Now the people of East Timor must begin the process of defining their own democracy.

East Timor's new challenge

As East Timorese approach their second critical national poll in two years, the contrast with 1999 is remarkable. The autonomy ballot required all East Timorese to show genuine courage in the face of violence and intimidation, while communities today can register to vote without restriction, and political parties are freely able to campaign for election. I hope that the election process will remain peaceful and that - whatever the composition of the new constituent assembly - a spirit of tolerance will continue to apply in the discussions to frame a new constitution.

That constitution must protect the democratic rights of all East Timorese, not just those parties that succeed at the coming election. A strong and enduring constitution will be one that emerges from a well-informed debate and the widest possible consultation that allows all East Timorese to have their say.

The international community has much to be proud of in the way it has responded to the crisis in East Timor, particularly in the conduct of the 1999 ballot, the professionalism of the international peace-keeping force and the speed and generosity of the humanitarian relief effort. Cooperation programs that address East Timor's longer-term development priorities are being put in place. The elections in August and the arrangements for formal independence will also be important milestones.

Strengthening civil administration

But if the international community's work in East Timor is to be given the final stamp of approval, the job of establishing an effective and sustainable civil administration must also be seen through to its conclusion. An effective civil administration will not appear overnight, with formal independence. It will require hard work, skill, dedication and real partnership between East Timor and the international community over the period from now to the date of independence, and afterwards.

Bilateral and multilateral donors will need to make major contributions to building East Timor's civil administration. Australia has already set this as a key objective of its four-year, $150 million development cooperation program.

I know other donors are also taking up this task. But it will not be enough to rely solely on voluntary contributions from a relatively small group of concerned donors. While international staff numbers can and should be significantly reduced, there remain many essential functions for which more time is needed to build East Timorese skills.

The United Nations has an important role in this effort. The staffing and funding arrangements to apply to any post-independence mission to East Timor will need to be sufficiently flexible and innovative to ensure this essential capacity-building work is quickly and effectively completed.

In Australia's view, it is critical that the post-independence presence be a UN mission under a single Security Council mandate. It must cover both security and non-security elements, including the civil administration component, and be funded from UN assessed contributions to the maximum degree possible. The practical staffing arrangements for such capacity-building support under a post-independence mission must also put the East Timorese in the driver's seat, while ensuring that international staff have the right skills to do their work.

A solid financial future

Running parallel with this essential task to build East Timor's administrative skills will be other important work to ensure East Timor's financial future.

Representatives of the Australian Government, the United Nations Transitional Administration and the East Timorese people have been working since last year to reach an agreement on a new legal regime to replace the Timor Gap Treaty. It would not be appropriate for me to talk in detail about the negotiations, but good progress has been made in discussions in Dili last month and in Canberra over the last few days.

I hope it will be possible to endorse a framework agreement by early July that will provide the security investors need to proceed with planned investments. The framework will establish the basis for a new Timor Gap Treaty to be finalised by the time East Timor becomes independent. While the size of future revenue flows from the Timor Sea is by its nature speculative, from 2004 (when major Timor Sea projects are expected to come on line) East Timor is likely to receive a significant revenue stream.

Decisions on the use of future oil and gas revenues from the Timor Sea will have a major bearing on East Timor's long-term prosperity. There are examples of countries that have used revenue streams from natural resources very successfully to invest in human capital and sustainable infrastructure. Unfortunately, there are also examples of countries that have made very poor use of such revenue streams, often involving high levels of expenditure on recurrent costs with little attention to long-term fiscal sustainability.

With limited domestic sources of revenue apart from oil and gas, and with a high demand for services from its growing population, the first government of an independent East Timor will face many difficult policy decisions in establishing a sustainable level of public expenditure. The international community stands ready to assist East Timor as it addresses these difficult policy choices, and works to spell out its long-term vision of economic and social development.

Building international partnerships

The international community, too, must address some difficult policy issues. The relief and reconstruction effort in East Timor has been characterised by effective coordination and pooling of individual donor resources through mechanisms such as joint planning missions and the use of international trust funds. These innovative partnership approaches have worked to East Timor's advantage, simplifying planning and administration and ensuring that scarce resources are devoted to the highest priority needs. The challenge for the international community is to achieve equally effective coordination of support for East Timor after independence.

A partnership approach will be essential if the international community is to continue to respond effectively to East Timor's needs. Building effective national institutions of government and administration is a large and complex task, and will require a disciplined and well-coordinated response from international donors.

In the same way, the international community will need to work together to ensure East Timor can continue to balance its budget over the next several years, until it is able to rely on its own sources of revenue. Provided East Timor manages its budgets responsibly and develops sound plans to use future resource rents to tackle poverty, it deserves our continued support.

Development founded on peace and justice

This meeting is appropriately focussed on the transition to independence, but the fate of thousands of refugees who remain in west Timor is inextricably bound up in East Timor's future. Australia remains deeply concerned about the situation of the refugees in the camps. Indonesia is taking steps to help resolve this issue, including a registration exercise and the preparation of a Global Plan that allows for the voluntary return of refugees to East Timor, or their permanent settlement in Indonesia. United Nations agencies are pursuing a settlement of the refugee issue, and I am also heartened by the steps taken by East Timorese leaders to promote dialogue and reconciliation.

But this issue must be resolved more quickly. The longer the process drags on, the more difficult and intractable it will become, and the greater its potential to disturb the development of constructive relations between East Timor and Indonesia. This would be in neither country's interests. Every possible effort must be made, therefore, to enable those refugees who wish to return to do so, without further delay. Indonesia must take further concrete steps to provide effective security in west Timor, disarm and disband the militia, bring to justice the perpetrators of crimes, ensure that the conditions exist for the return of UN and other international humanitarian agencies, and ensure that refugees are able to make free decisions about their future.

East Timor's future security and well-being is very much dependent on the quality of its international partnerships post-independence. Our region has a strong interest in a stable and secure East Timor that has constructive relations with all of its neighbours, especially Indonesia. We are heartened by the constructive approach adopted by leaders from both sides and look forward to continued cooperation as East Timor approaches independence.

Australia is closely monitoring the steps being taken to bring those responsible for human rights abuses in East Timor to justice. We urge Indonesia to work effectively with UNTAET under the terms of the April 2000 Memorandum of Understanding on legal, judicial and human rights cooperation. We also urge Indonesia to establish the ad hoc human rights court on East Timor as soon as possible and to include in its jurisdiction all crimes committed both before and after the August 1999 ballot.

Conclusion

This meeting of East Timor's friends and development partners occurs at a critical time. Immediate humanitarian needs have been satisfied and work is well advanced on the most important reconstruction tasks. But in other areas - debating and agreeing national development policies, establishing legal and administrative frameworks and the institutions of government, and developing individual skills - the task of nation-building is only just beginning.

On behalf of the Australian Government, then, may I welcome all participants to this meeting. I am sure that it will provide a valuable opportunity for us to discuss and agree on practical measures to support East Timor as it moves towards nationhood, and beyond.

The East Timorese people have endured great hardship to claim their national identity and their democratic rights. In this struggle, they have won the respect and admiration of the international community. Theirs is a very strong base on which to build a new, independent nation. The simple and noble objectives that all East Timorese have for their country - that it should be free, democratic and prosperous - deserve success, just as they deserve the active support of us all.