and i believe that is what this coalition is all about. and on the subject of coalitions, let me be absolutely frank. as a member of the conservative negotiating team, we did consider whether we could try and bluff our way into bng a minority government. but it was david cameron's bold vision and nick clegg's foresight which saw before anyone else that that option would be the greatest compromise of all. a weak, unstable government, risking defeat nit after night in parliament. struggling to take the tough decisions that have been put off for too long. how much better to try to form a stable government with a majority of about 80, able to govern in the national interest? and at the heart of the agreement that we reached in that room in the cabinet office

is a firm commitment to tackle britain's debts and create the space for a private sector recovery. the very first item on the very first page of the agreement we signed says "deficit reduction and continuing to ensure economic recovery is the most urgent issue facing britain." of course, the question i get asked already already -- already all the time is where is the growth would come from course a mark of was asked this question in my very first press conferen as chancellor birds certainly we can no longer rely on an ever increasing public penditure or dead-fuelled consumption to drive growth. over the past decade, over half of all jobs created were associated in some way with public spending. over the past decade, business investment grew at about 1% each year, only a quarter of what it was in the 1990's.

of course we were not the only country affected by the financial crisis. but our consumers became the mo indebted, our banks beme the most leverage, and our government borrowed more of a portion of its economy than any other country of a similar size. so britain does need a whole new model of economic growth, where we save and invest for the future, where we seek to export instead of building our economy on debt, an economy where we sell our goods and services to cha and the rest of asia, instead of simply borrowing from them in order to make -- in order to buy the things that they make for us. but let's be clear -- when you ask the chancellor of the exchequer the question, where is the growth going to cooe from, there is not some sort of a lever in my office that i can pull to aumatically give you the answer. because the real answer is that the growth will come from you, the businesses of britain.

so this evening i want to explain brieflyow this government will make the case for enterprise and how we will help you to succeed. and i want to explain how we will do that while building a fairer society and an economy that works for everyone. i believe that enterprise needs three things above all. first, the sunlight of confidence and stability, instead of living in the shadow of debt and uncertainty. you need to know that the government is controlling spending, dealing with its debts, so that you are not hit by ever higher taxes and ever higher interest rates. second, the freedom to compete. you might have the best product in the world, but how can you win that order when the taxes you pay and the regulation you face price you out of the market? and third, the raw materials to succeed. ion't just mean the iron ore,

copper, an oil -- important as our heavy industry is. i mean the raw materials of new industries, like an educated workforce, a welfare sysem that rewards work, modern energy, digital and transport networks. tackling the deep underlying problems in our economy and our society that have been holding britain back for too long. let me take you through each in turn. first, controlling public spending and delivering economic stability. the situation we inherit is the worse any modern government has bequeathed to his successor. the british state is borrowing 1 pound for every four that it spends. sitting in my first ecofin council meeting is today -- yesterday, i was very conscious that i represented the country with the biggest budget deficit of any of the 27 sitting around

that table, including greece and ireland. that is a heavy responsibility, but it is a challenge that we are determined to meet. and having mentioned it and as helen mentioned it as well, let me tell you my approach to europe -- engage, understand, seek agreement, do not be afraid to disagree, and never forget that i am there to do what is right for our country. i hope people note that at my first ecofin, i arrived early, i stayed to the end of like some of my predecessors, and people noted that david cameron's first trip abroad is tomorrow to berlin. we will engage with europe but we should also pay heed to what is happening in the year rose on, not just because it is our largest trading partner, but because it is a vivid demonstration of the threat our public finances pose to the recovery. this is the reason that we must tackle our record deficit,

because otherwise there will be no recovery at all. it will be undermined by rising interest rates, falling confidence, and the fear of ever higher taxes. we simply have to do this. and let me be blunt -- do not rely on me to make this argument alone. we need to do it together so th we can take the whole country with us. we need to explain why what seems like the easier option in the short term will actually lead to rising unemployment and decline. the case for early and accelerated action is already supported by the conservative party, by the liberal democrats, by the governor of the bank of england, and by the analysis of the treasury. but i want the business community to join us in actively making that case -- not for my benefit,ut for the national interest you can explain how a higher budget deficit will mean higher interest rates and rising

business insolvencies. you can explain how out of control debt will mean ever higher taxes. let's make the argument together against all the vested interests that exist to defend every single line item of government spending. now we have already started to take action. let me tell you what we have done already in the space of just one week. we've launched a program to identify 6 billion pounds of end-year savings, while protecting the honorable on the quality of key front line services. we will do what you have all done over the last two years -- renegotiate contracts, cut out discretionary spending, control recruitment, reduce overhead. 6 billion pounds represents less than one in every hundred pounds that the government spends. show me the business that has not cut its costs by more than that in the last two years. in addition, we've started a review of all spending decisions

taken since the beginning of the year. it is increasingly clear that the last government embarked on a reckless and irresponsible spending spree in the run-up to the election. their attitude was summed up in that letter that the former labour chief secretary liam byrne left on the desk for his successor. dear secretary, i am afraid there is no money. let that letter stand as the handwritten testament to their period in office. i've already announced a complete change to the way budgets are made, by giving away the power to make forecasts to an independent office for responsibility. we're going to do something completely radical. we need to fix the budget to fit the figures, not fix the figures to fit the budget. and i have said ambitious timetable for an emergency budget on the 22nd of june, because we need to get on with it. their 6 billion pounds in cuts

to be announced next budget -- next monday. that budget will set the fiscal path for the coming years, and the mandate for the public finances against which the independent office of budget responsibility will judge us and hold us to account. over the summer we will conduct a far-reaching spending review to allocate spending to the departments within the overall envelope set out in the buet. britain will then have what it has been lacking -- a comprehensive and credible plan to deal with our debts and live within our means. by turning the tide of debt threatening our economy, we will businesses up and down this country. creating the space for the independent bank of england to keep interest rates lower for longer while maintaining low and stable inflation, safeguarding britain's credit rating, boosting confidence, promoting stability, and attracting foreign investment into our country -- that is our first and

most urgent task. the second thing that enterprise needs to succeed is the ability to compete. and this presents us with a huge agenda. reducing the burden of inappropriate regulation and red tape, ensuring that businesses have a sufficient supply of affordable credit -- something that vince cable and myself will be making a priority. we will also be working together to reform our banking system, a subject or turn to in my mansion house speech nextmonth. but in particular, i believe that we have an opportunity to boost our economy and improve our society with radical tax reform. i believe that we can make our tax syst both more competitive and more fair. the tax system has become hugely complex over the last 13 years. since 1997, the tax legislation handbook has more than doubled in length. it is now over 11,000 pages long. and the spider web of tax rules is holding back people who want to set up a business.

and our corporate tax rates are increasingly uncompetitive. a world economic forum report ranks the uk 84 out of 133 countries in terms of the competitiveness of our tax system so we need wholesale reform. i particularly want to focus on corporate taxes. i want corporate tax reform to be a priority for this government, ani can confirm that the final coalition agreement that we will publish tomorrow will commit us to lower and simpler corporate tax rates. let me give you advance notice of what it will say. "we will reform the corporate tax system by simplifying beliefs and allowances, and tackling avoidance in order to reduce headline rates. our aim is to create the most competitive corporate tax regime in the g-20, while

protecting mafacturing industries." i want to set of five-year road map for big reform of corporation tax. well as lower rates and a simpler system, i want to reform the complex controlled foreign companies rules that have driven businesses overseas. i want multinationals coming to the uk, not leading. and i am none -- under no illusions. achieving all of this will be hard and it will not happen overnight. but let us work together for the long term, because ultimately l of britain's businesses will be winners if we succeed in this agenda. of course reforming corporation tax is not the only goal. i want britain to be the easiest place in the world to start a business. i want to do everythinwe can to support small companies. and i want to help new businesses by abolishing employers national insurance contributions on the first 10 jobs they create. but as well as making the tax system more competitive, we need to make it fairer.

when times are difficult, we want to give people more of a stake in this economy. i believe it is right that people on lownd middle incomes should be helped through the tax system. that is whthe budget i will be announcing has a substantial increase in the personal income tax allowance. our longer-term goal is to raise the allowance to 10,000 pounds, with real terms steps in that direction each year. this will ensure that millions of people pay less tax. it will send a message that if you put the effort and, you get a job and earn yourself an income, you will keep more of your money. i also believe that the same principle must apply to those who invest in new businesses and create jobs. so why we will increase the rates of capital gains tax for non-business assets, there will be generous relief -- and i mean generous -- for entrepreneurial investment in businesses, as has been made in the coalition agreement.

third and finally, this coalition government understands that enterprise needs ch more than just the freedom to compete. whenever radical program to tackle the underlying structural problems that have been holding britain back fofar too long. we want to be far more than just deficit cutters. we want to lay the foundations of a more prosperous and fairer economy that works for everyone. so we will launch of problem -- a program of radical education reform under michael gove. dad willits and vce cable will ensure our universities are among the best in the world for decades to come. iain duncan smith and david freud will reform our where for system so that we reward work and support those who need help. and others will insure that we attract the right mix of public

and private investment in britain's creaking energy, broadband and transport and to pressure -- infrastructure. next week in the queen's speech, you will see a truly ambitious agenda, the scale of which i do not believe the most people yet appreciate. and at its heart is the understanding tt it is not government ministers who create the jobs we need, you will create those jobs. let me finish that -- by saying that, despite the challenges we face, i am profoundly optimistic about our future. as country half -- as a country we have spectacular portunities ahead of us we of reasons to be cheerful. there is a prize out there for the taking. because every day around the world in places like china, india, brazil, indonesia and vietnam, people leave the grinding poverty that has trapped their families for centuries and they have them -- they have become connected to today's global economy.

they go to work for the low wages in factories. and i know the massive challenge that presents to our businesses here. and asia to america, from eastern europe to southern africa, nations of manufacturers are taking their first step in their journey to prosperity. nd as they become richer, they will become nations of consumers, just as we did after our industrial revolution. the middle classes or merging and in developing countries they are expected to treble by 2033 that as 1200 million people who will want to buy the things that we can sell to them. modern medicines and brande goods. aircraft engines, high-tech machinery, green vehicles, and renewable energy. computer software, television programs, oil and gas expertise. psions insurance advertising,

accountancy, and legal services. british goods and services, made in britain, exported around the world. the whole world must be our marketace. our whole future depends on it. so let us tell the world loud and clear that britain is once again open for business. thank you very much. and inside the house of lords. for one of britain's most celebrated occasions. live, tuesday morning, at 5:00 eastern on season and 2. >> coming up next, a senate

hearing on the may stock-market drop. after that, the shuttle and landis and the international space station crews. >> 99% of a text can be avoided by people doing simple things. -- of a tax can be provided by people -- of attacks can be avoided by people doing simple things. >> "the communicator's" on c- span 2. >> prime minister kevin rudd insert questions on climate change and the government's proposed budget, which included a 40% tax on mining projects. critics say it could hurt plans for expansion in the mining industry. the opposition leader challenged the prime minister, accusing him of playing politics before a

general election expected later this year. this is courtesy of apac, australian public affairs channel. the government has announced a new 40% tax on mining profits, which it says will help redistribute the wealth from the mining boom in australia, but the opposition is opposed. it said it could kill the golden goose that is building australia's economic strength.

mr. speaker, of a strike of's economic expansion, and australians can be proud -- of australia [pause] economic expansion, austrians can be proud, not just because together we avoided a position of strength by which we will ilan modern retirement assistance -- build on retirement assistance.

a position of strength from which we build the skills and capital we need for generations of prosperity. tonight we meet the highest standards. every dollar of new policy in the budget has been offset as we left the strict rules of are responsible fiscal strategy, a strategy that will see the budget return to surplus in three years' time, three years ahead of schedule and ahead of every major advance the economy, a strategy that will tie of things three years sooner, ahead of every major economy without affecting the economy beyond the levels we've inherited from our predecessors.

this builds a stronger, more secure future for australians. we will not easily forget this time last year, when we faced global economic conditions -- who grimaced global economic conditions since the great depression. last year company profits fell more sharply than in the 1990's recession. our state strategy was to support jobs and then lay down a framework. i am proud to announce this strategy is working. our economy has far outperformed in the developed

world. australia grew by 1.4%. without this we would have gone backwards by 0.7% that year. we expected our economy to contract by half a percent, but instead, it will grow by around 2%. last budget, the unemployment rate was rising and forecast to peak at 8.5%. instead, it peaked at 5.8% and is now on it's way down to four and three-quarters percent. last budget predicted a return to serve us. we now expect a surplus in three years ahead of schedule.

together, australians have defied global economic gravity, and not by accident, but by choice. together we have avoided the destruction of fuel and capital by keeping people in jobs and the economy ticking. fiscal stimulus, monetary policies, and are close ties with asia all serve to protect our country, but the events in greece remind us in the global economy to stubbornly endured. aftershocks from the crisis continued to reverberate around parts of the world. mr. speaker, the robustness of this budget forms a solid buffer against the problems of europe. our fiscal tradition remains strong, the strongest in the world regan we have more robust growth, and -- in the world. we have more robust growth.

our economy is expected to rebound with forecasts gdp growth of 3 and 1/4 percent in 2011 and 4% in 2011 through 2012. the unemployment is expected to fall further from 5.3% to 4.75% in 2012 appearance -- 2012. the australian economy is an important stage. business profits are recovering. the private sector is reemerging as a driver of growth, and we are taking steps to maximize our opportunities for the future. >> my question is for the prime minister, and i will refer to the repeated statements that

climate change is the greatest challenge of our time. order. >> the member from wakefield. the leader of the opposition has the floor. >> i refer the prime minister to his statement that climate change is the greatest moral challenge of our time. does he still believed that? further, does the prime minister still believe fed the preferred action would been an absolute failure of leadership.

>> order. order. >> the question has been -- the prime minister now has the floor. >> i welcome any question from the leader of the opposition on climate change, any question he may wish to ask on climate change, particularly given his recent discussion in sunday school with oliver children region with little children -- with little children. mr. speaker, no credible scientists in the world believe it was hotter in jesus, then it is 2000 years later, after 250 years of the industrial revolution.

things like factories and smokestacks -- that is what is making the world hotter. it is cold climate change with global warming. the statement remains unchanged. >> prime minister will resume his statements. but deputy prime minister. >> point of order. >> point of order, mr. speaker. on the question of relevance, in anyone's wildest dreams, that is not relevant. >> the member will resume. the prime minister is responding to the question. >> this new twist on the part

of opposition to substantiate policy positions on religious belief i find interesting, because there was a debate earlier on were he said in justifying his position that they would not support our position to bring down homelessness. >> order. the point of order will be on relevance. .

because of the prime minister and the mining tax, and in particular, and i quote, "the proposed tax has introduced great uncertainty about potential impacts on the economics. i ask, will the prime minister

-- >> i think the honorable member for his question, because it goes to the proposal to introduce a tax, and the reason the government -- provide tax cuts for businesses in australia, and three, the future infrastructure needs of australia. these are the three reasons why we are proposing this tax and are doing so consistent with the advice provided by the secretary of the treasury in his reviews. mr. speaker, can i say to the opposition as he goes through project by project that it will be useful for him to reflect on what others have said in a commentary in recent days about

this being run by those opposite. this is on the impact of those proposals. there is the comment by the former chief executive of the mining council of australia, who described the currency campaign as utterly baseless. also, there are those in the financial review. it follows logically, mr. speaker, that if you're going to impose a new tax, with the three priorities of nation building for the future, you are going to have opposition. mr. speaker, we have outlined our tax proposal and the process of the mining industry, which will go to implementation and transition, and we will continue it into the period ahead. >> my question is to the prime minister.

i refer the prime minister to the fact that there are the two biggest spending budgets in australian history which he presided over, including new spending since last year, and and i asked, why has the prime minister only become a conservative at election time? why would anyone believe that after three years of being addicted to this spending with an election looming the prime minister can now go cold turkey. >> the prime minister. >> firstly, mr. speaker, i think the leader of the opposition for his question. in this budget, 26.2% of gdp. in 2009, 2010. mr. speaker, that is less than the average.

>> order, order. >> i will draw the attention to this. there is the expansion a fiscal policy. the economy itself was expanding. they were fueling the fires. as a result, we had 10 in a row. they are acting countercyclical lead. when you have a global economic crisis of the type which has come in, what do you do, mr. speaker to support the economy, and that is what we have done. that is why, mr. speaker, in the course of the financial crisis, the australian economy has emerged with the fastest growth, the lowest debt, the lowest deficit, and they're the only economy of the major advance in the conor is not to go in recession, and the reason why, mr. speaker, is that this government stood up and injected a strategy. that is why, mr. speaker, if you

look around and ask this question, how did australia do it. they are proud of the fact that we negotiated this economy through the worst global economic recession since the great depression. this government is proud of the fact that we kept unemployment down. this government is proud of the fact that we defended tens of thousands of small businesses from going bust korea this government is proud of the fact that we have gone in the biggest school modernization program, and this is unique of the major advanced economies. we kept this economy out of recession. i challenge those to reflect on how they fueled the fires of inflation with one pro-cyclical, one proliferation may -- pro- inflationary budget after

another. >> my question is to the prime minister. i refer to his comments. he said, and i quote, we must broaden the economic base, as china could in upload. i studied it, lived there, and speak the language. i know china better than anyone here. its success can swing from one good or bad decision. >> order. the deputy of the opposition has the ford. >> prime minister, given the budget in a continuing strong demand for our resources -- and the continuing strong demand, what will be the impact of an

economic slowdown in china? >> the prime minister. >> thank you very much, mr. speaker. >> order. >> the debbi of the opposition returning to the subject of china, because the last time they were talking about china, there was a human rights record. it depends on which they we are talking about. mr. speaker, the deputy of the opposition -- of course, i spoke to them about the challenges. mr. speaker, the importance therefore of broadening the economic base of australia by making sure that the corporate tax rate was brought down across the country, a sensible course of action on the part of any

reforming government, which means that if you do have a rise in australian dollar, which is affecting things, also enhancing their competitors to bring down the company rage, and that is what we have done, mr. speaker. the second thing i would say to the deputy leader of the opposition is there is the government's assumption based on treasury advice about the future trajectory about commodity prices. mr. speaker, these ball at the conservative end of the spectrum. there are commentators out there and this morning have affirmed and affirmed again that this is in the ranger what most people analyze to be long-term demand for australian commodities. in fact,

i would draw her attention to the trade. for a medium term, a decline of 20%. a return to 2006, 2007 levels. in the provisional advice to the previous government, the only thing that has changed in this occasion is a does not go with what is being advanced with the chinese human rights. >> mr. speaker, my question is to the prime minister. there was a speech last year in

which he said failure to act immediately on climate change represented, and i quote, absolute political cowardice an absolute failure of leadership. >> order. >> given the prime minister has the prime -- climate change policy, is the f.a.o. leader and the political coward? >> the prime minister. >> mr. speaker, i welcome each and every question from the opposition on the issue of climate change, each and every question on the topic of climate change. the deputy of the opposition has just stood up and address the parliament and said this and said this on behalf of the opposition. climate change, that is his view.

>> prime minister, prime minister. >> when, in fact, you look at the history climate change, it was different in the time of jesus. on behalf of a party which is now dominated by climate change skeptics. this looks forward to fighting the next election on climate change, and the resentments of fortifying it on climate change is because those opposite reject it. ratifying kyoto. those on the opposite side refused to ratify kyoto.

those opposite failed to do so. they negotiated a scheme. >> the prime minister -- his seat. >> a member and others. just sit quietly. certainly, there are expectations that those on my left would like to see the proceedings. they are not assisting.

>> of course. it is clear that people think that they can run the house. everybody on the chamber. that is not allowed under standing orders, and if people really want to try my patients today, they have picked the wrong day. the prime minister has the call. >> they have voted down the scheme.

now blaming the australian government. this is the ultimate irony. there was the passage of the carbon scheme. this country needs a carbon solution reduction scheme. they vote against it, and then they do so again, at copenhagen, mr. speaker. the rest of the world -- an agreement. that copenhagen would fail. mr. speaker, notwithstanding the opposition, the reduction of greenhouse gas emissions targets. further, mr. speaker, we intend to get on with the goal to take necessary action to reduce

greenhouse gas emissions, but there is one thing we cannot change, mr. speaker, and that is that this leader of the opposition stood up. >> the prime minister, i will say it again. people on my left asked for the withdrawal of comments that in a political debate i thought did not require the withdrawal, but if people think that language that would seem strange in the playground, a part of the debate, by way of introduction, i am sorry, they are wrong. given that there are senior members of the opposition, they might have a thought about their comments.

the prime minister. >> thank you very much, mr. speaker. this has confronted two realities. this is supporting the carbon pollution reduction scheme. the second thing which occurred was that the copenhagen conference, global action and climate change. this was not as substantial as the rest of the community had it would reintroduce legislation at the end of the current commitment period, but as it would do so on the basis of global climate change, it is clear. >> thank you, mr. speaker. my question is for the prime minister. does the prime minister agree of what was expressed yesterday.

. it is not all bad. >> the prime minister. >> i come from the great state of queensland, and we are strongly supportive of the mining industry. mr. speaker, he has rejected the comments. if he looked at the independent modeling provided by the treasury.

taxing profits, not volume. mr. speaker, can i say to the leader of the opposition, the fundamental challenge of economic reform for australia is boosting the competitiveness globally for the long term, making sure that we are boosting our businesses. the same for our small businesses. >> of the three budgets delivered by the rudd government, this is the least believable and the most damaging to the australian long-term future. it is a typical tax and spend labour budget that features all of the deficits that can be expected from laboutr and covered up by a great new tax on mining.

what they have delivered though if a $57 billion deficit this year, the biggest ever. borrowing at $700 million every week until then. brazenly, the government wants credit for a service that does not yet exist and is unlikely to ever achieve. it will happen in three years' time, that is based on increased taxes and on the growth that those taxes will almost certainly strangled. that surplus is roughly the amount for the tax program.

there is the computer in schools program. it is less than half the blowout. a reelected rudd government could avoid another surplus shattering disaster sometime in the next three years. the accumulated debt, but this government expects to do the same in less than half the time. it took a change of government last time, and once again, the best way would be to get rid of this government. now, everyone wants our country to succeed, and many still hope that the prime minister is up to

the job, but there is always this question. why should his latest promises turn out to be more credible than the ones he has already broken? and amidst all of the self congratulations about this budget, you almost expect the prime minister to declare that the deficit is the greatest moral challenge of our time. [laughter] in his 2007 budget replied, now the prime minister said we must remain committed to keeping taxes low, but he has just increased the cigarette tax and added a new mining tax to be 125 separate taxes that australia already has. he said that the labour government would withdraw an existing regulation for every new one. he has introduced 909,097 -- 9,

997 and has withdrawn just two. this deficit is for just one year. there is food prices, petrol, and child care. what housing affordability at record lows and a $4.5000 hit on families with a $300,000 mortgage, the prices keep going up. the prime minister said then that the economic impact would

be greater than taking early and responsible action. as recently as november, he said that to delay action would be an absolute political cowardice and an absolute failure of leadership. but now, he will not do anything korean -- do anything. >> the opposition leader with his critique of the federal budget and why he is not supporting this new 40% tax on mining profits. well, that is all from the australian parliament in may. i hope you can join us next time. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute]

>> up next, a house hearing on reconstruction efforts in afghanistan. following that, in space shuttle atlantis and the crews talk about the mission and the final flight. and then, a senate hearing on the may 6 stock-market drop. >> the u.s. senate returns tomorrow at 2:00 p.m. eastern. they will begin work on a 2010 spending bill, funding operations in iraq and afghanistan, providing $34 million to fund additional troops in afghanistan as well as $913 million to help haiti recover from january's earthquake. the chamber also takes up other motions. the votes are expected in the evening on monday.

and the house also returns tomorrow at 12:30 eastern four speeches. legislative work gets under way. on the agenda, a bill to reauthorize defense programs for 2011 and a measure to extend tax credits for businesses. see the house live on c-span. >> c-span. our public affairs content is available on television, radio, and online, and you can also connect with us on twitter and facebook. sign up for emails at c- span.org. >> and now, a house hearing on developments in afghanistan. major-general arnold fields. russ carnahan is chair.

this is about one hour 45 minutes. >> human-rights an oversight. we want to get started. we want to jump right into this hearing this morning, but before it started, i would like to recognize sooe distinguished visitors, a delegation from the standing committee on defence from pakistan. he is with us this morning. if you could please stand, and let's acknowledge our guests. welcome. [applause] they are in washington as the death of a democracy partnership. welcome.

on tuesday morning, we marked a solemn occasion, when a car bomb intercepted a u.s. convoy, and five u.s. soldiers died korea the total of americans dead in afghanistan passed 1000. thousands more wounded. we must redouble our efforts to effectively utilize our resources so that our brave american troops can also come home. from a one to may 3, i traveled to kabul, but it from a first to may 3, i traveled to new -- from may 1 to may 3, i traveled to kabul adn kan -- and kandahar

and another area. this reminds us of our urgency for success in afghanistan and pakistan. we must do everything at home and abroad to keep our citizens safe. with the special inspector general for iraq, there were a series of hard lessons conveyed to this committee. with repeated ships and poor management oversight, he went on and highlighted a lack of contract over a -- oversight. in one example, the largest ever

in the state department's history, was being managed by only three contract office representatives. he went on to describe an ad hoc situation. he emphasized a lack of institutional structure and he resources to effectively reform stabilization and reconstruction operations. operations. today i would ask major general arnold fields, special inspector general for afghanistan reconstruction simple question that has profound implications for protecting our citizens safeguarding our tax dollars. have we learned lessons. and if so as we say in missouri, show me last december president obama announced the 30,000 additional troops to be sent to afghanistan. to accompany the troop increase, the state department announced that it will immediately triple the number of civilian experts

and advisers. president obama's new funding request would bring u.s. support for the reconstruction and afghanistan to 71 billion. far surpassing what the u.s. provided to rebuild euro after world war ii and significantly more than was spent in iraq over the last eight years. we need to ensure that these civilian resources are being spent effectively and that waste, fraud and abuse are being rooted out. the government accountability office estimates that as of 2010, pproximately 107,000 contractors support u.s. and allied efforts in afghanistan. last month, general mcchrystal questioned our reliance on private contractors and said, quote, i actually think we would be better to reduce the number of contractors involved. i think it doesn't save money. we have created an ourselves a dependency on contractors that i think is greater than it ought

to be. we need to reduce our dependence on private contractors and ensure there is adequate oversight and contract management in place so that tax dollars are not wasted. in order to protect taxpayer resources, we must also strengthen efforts to combat corruption. a recent ulin survey estimates that afghans paid 2.5 billion in bribes to their government officials and membrs of the police force in 2009. in 2009 afghanistan was ranked 179th out of 180 nations on transparency international corruption perception index. a step down from 117 out of 159 in 2005. these are alarming numbers. the u.s. and other donors have pledged to increase the proportion of to filament aid delivered to the afghan government to 50% in the next two years. if we are going to work in

partnership with the afghan government, we must ensure that they are a reliable partner that will seriously address corruption issues. while we fight we stand corruption, we must also build afghanistan's capacity to provide for its own security and training and equipping the afghan national security forces. current requirements call for afghan national army to grow from 103,000 as of june of 09 to 171,000 by october of 2011. the afghan national police will be boosted from 94,000 to 134,000. we must ensure we are measuring not just a number of troops and police being trained, but the effectiveness in protecting afghan civilians. we must also develop afghans economy. according to the u.n., about 80% of afghanistan's population live in rural areas. we must do more to promote alternative development, build the african agricultural sector

and reduce the production of opium. the missouri national guard agricultural development team -- from eissenstat -- have been deployed to the nangarhar province and is doing well appearing with civilians background and training to teach them practices and techniques. as between the afghan national security forces to develop the afghan economy, we must also focus on women who make up 60% of the afghanistan population. under the taliban rule in afghanistan women ere subjected to inequalities and excluded from all forms of public life. last week i moderated a roundtable with female ministers from the afghan government to discuss how the u.s. -- hauer u.s. and afghanistan can work togethero in power women politically, economically and socially. i look forward to hearing the testimony today and all of these

critical periods for major general fields. we have the response of he to the men and women in uniform, to the taxpayers of this country and to make sure we have a strict accounting on how resources are bng spent. we cannot waste resources the troops need to keep themselves safe and get the job done. i want you now recognize our ranking member, representative robert -- rohrabacher for his opening statement. >> thank you, mr. chairman. yesterday i had the great honor to meet with our inspector general, major general fields. and i was deeply moved by his dedication and understanding the magnitude of the challenge that he faces which was just outlined very well. i do not see how we could expect any human being to meet this

challenge alone even as a great leader as a marine major general he has demonstrated his leadership. this has got to be aeam effort or we will fail. we have failed in the past. we have failed in the past, and i remember as a young person when i was 19-years-old, and again, i was not in the military but i thought of myself in vietnam and found myself confronting enormous corruption beyond my imagination as a 19-year-old, and the site of the board of the war end of this corruption was quite a lasting imprint on me, and i left that country thinking that all of those young men that i saw who

were wounded and were dyng that their lives may have been spent in vain but it was not because they were not fighing the battle but becse we were unableto control an out-of-control situation. i went home and i talked to my father about it. my father was a marine as general fields -- you were not quite as commanding officer, i think i was out by the timeyou got in. but i told him and that i thought the chaotic situation and the incredible corruption that i saw would prevent us from prevailing, and he had a very wise words for me. he said look, dana, what do you thnk it looked like when i flew the first d.c. three into the

pusan parameter in korea? and what do you think it was like in world war ii and korea? there is chaos in war. war comes with chaos, and those people, like the general howe, who is taking it upon themselves to try to bring some order to a situation in which people are losing their lives in great numbers bombs or going off and no one knows if they are going to live until e next day, and sometimes their morals are obliterated along with their bodies, it is an incredible job and it's one that we need to succeed in and american people will lose faith in rebuilding afghanistan if they believe that all of this money that we are committing or large chunks of it are being siphoned off just as

we lost faith inthe war in vietnam and eventually lost that war we could lose this conflict as well. but we note our enemy was and is not necessarily religious fanaticism, what of the corruption of the human soul. and this is a great challenge, a great challenge in this context i am very honored that we have a man of integrity trying to tackle this. general, you can do it on your own. we are here to learn fr you today about some of the success and also perhaps some of the things we must overcome in order to succeed. i appeciate your leadership, mr. chairman. you take this very seriously i can tell when you're opening statements. let's get on with the hearing and see if we can come t some conclusions that will do some

good. >> thank you. now we would like to turn to today's witness, major general arnold fields. he is the special inspector general for afghanistan reconstruction, a position he has held since july of 2008 where he is responsible for assuring effective oversight appropriate for the reconstruction of afghanistan. previously general fields served as deputydirector of the center for strategic studies at the department of defense and chief of staff of the iraqi reconstruction management office in the u.s. embassy in baghdad where he assisted in coordinating over $18 billion of u.s. appropriated funds for the iraqi reconstruction. major general fields retired from the u.s. marine corps in january of 2004 after 34 years of active military service. his decorations include the distinguished service medal and

defense superior service medal. general fields will master of arts degree in management from pepperdine university. he's also a graduate of the army war college, the marine corps command kawlija and marine corps amphibious warfare school. again, welcome. we are honored to have you here and very much appreciate your many years of service. >> thank you, mr. sherman. ranking member rohrabacher, and members of the committee thank you for inviting me to discuss the oversight mission and the issues we have identified that must be addressed to improve the implementation of what is placed to become the largest overseas reconstruction effort in american history.

in february this year, the preside submitted a budget request that if approved will add about 20 billion to the 51 billion congress has appropriated for the reconstruction of afghanistan since 2002. it was stood up to bring focus oversight to this money, and we are doing so by providing a broad branches oversight to the reconstruction activities that e funded through and implemented by multiple agencies. over the last 12 months, sigar has produced 23 reports. we have seven reports currently in the final stages, and another ten audits that are under way. our work has identified several issues that hamper the reconstruction effort in

afghanistan. let me talk about a few of them. reviews of infrastructure contracts have found serious construction problems due in part to a lack of quality control. the agencies continue to suffer from a shortage of qualified contractors and officials and u.s. agencies lack a full picture. let me say that again. the agency's lack a full picture of reconstruction projects in afghanistan. i am particularly concerned about three issues that our auditorsave identified over the last year. one, inadequate planning, inadequate sustainability, and inadequate accountability. a coup of six evils. sigar audits found documents in the energy and securities

sectors. we issued to all the reports of u.s. funded construction contracts to build afghanistan national army garrisons. the united states has invested more thn $25 billion, nearly half of all free construction dollars appropriated to train and equip the afghanistan security forces. u.s. military officials were unable to provide us with an updated master plan for the facilities to house and train the forces representing the afghanistan's security sector. and a bit about metrics. as part of the planning process, implementing agencies must establish reliable metrics to measure progress. sigar has been conducting an audit of the capability milestones or cms rating system. the primary metric used to

monitor development progress of afghanistan security forces and units. the ability to accurately measure the abilities of the afghan army and police is absolutely critical to the u.s. strategy in afghanistan. our audit, which is yet to be released, but when it will have been released will describe witnesses that have affected the reliability of the ratings system and certainly we will make recommendations. this audit has had an impact already given the of brief but we have already provided to general mcchrystal as well as certain members of congress. it has caused the defense department to acknowledge limitations of the ratings system. the international security systems force or isaf joint command is replacing the ratings system with a new unit, the new

unit level assessment system. one of the most serious development challenges anywhere is creating substantial programs. our audits in the energy and securities sectors have found the afghanistan government does not have the financial resours to operate and maintain new infrastructure. therefore the united states has funded operations and made contracts for the next several years. while this solves the short term problem, it does not address the long-term issue of sustainability. under the new strategy, the international community and partnership with the afghan government is committed to increasing both the afghan national army and the afghan national police forces. an important question will be how the forces can be sustained over time. the united states and

international communities are planning to provide more demint funding through afghanistan institutions. sigar certainly supports giving afghans a greater say in how money is spent. but we also believe that it is vital afghans be held accountable for u.s. funds channeled through the african institutions. there for sigar has begun assessing number one, with the united states and other donors are doing to build the capacity of afghastan institutions to detour corruption and a strengthened through a flaw, and extent to which areas national and local institutions have systems in place to exert ternal control and demonstrate accountability fer boehner fondest. this work is having an impact for example the international community and the afghan government have taken steps to implement many of sigar's, our organization's recommendations

to strengthen the principal afghanistaagency responsible for combating corruption. sigar is reviewing the souder support the u.s. government is providing for afghan civil servants. we've also begun an assessment of the afghanistan national solidarity program which has received more than $900 million in donor assistance to fund small infrastructure programs. sigar's legislation gives a special responsibility to provide independent and the object of assessments of every aspect of econstruction efforts to congress and to the secretary of state and defense. schlossman the sigar began a review of the implementation of the interagency civilian surge. this audit seeks to identify the number and types of personnel provided to implement the civilian surge. it will also evaluate the extent to which civilians in the field are being effectively utilized

to achieve strategic goals. now a bit about sigar. we are steadily building our staff and are prepared to provide the expanded oversight necessary to detect and detour waste, fraud and abuse of the increasing u.s. funding for this reconstruction effort. we currently have 79 employees and plan to reach the goal of 132 during the fiscal year 2011. we are in negotiations with the u.s. embassy to increase the number of investigators present at the embassy. currently we have0 full-time and for a year. investators and auditors with a small support staff located at the embassy in kabul, afghanistan. the united states, together with the international community, is committed to a strategy that

will put afghans in control of their future. the president is asking for nearly 40% increase in u.s. funding. however, the success of the strtegy depends not only on how the u.s. implements its reconstruction program, it also depends on the actions of the afghan government. afghanistan must do its part to make sure that is a human and financial resources provided for its reconstruction are not wasted. thank you, mr. chairman. ..

i guess, can you assess the time before the special ie got up and running in terms of evaluating the time period mack and then of course we want to talk about from that time for it but can you assess that time before the inector general's office got up and running? >> thank you mr. chairman. first, i will say that it was a mistake, that we took too long to stand up this office of special inspector general. i applaud, however, my

counterpart under the current leadership of mr. stuart bowen, who largely almost from the start was developed to provide the same oversight over iraq, providing for afghanistan. so it took us almost eight years into this very expensive and very serious and pivotal operation in afghanistan to bring about the organization that i am currently privileged to represent. so, we are going back, however, commensurate with the following legislation and we are looking at what it in fact in retrospect take place between 2002 and actually the point at which we stood our office a virgo in so doing we are conducting forensic investigations to determine who may have wasted, for audit or

abused the american taxpayer dollar during this period, during which this office was not stood up. meanwhile, the offices of the inspector general of the department of defense, the department of state and usaid were in fact expected to provide the oversight and the absence of such an organization as the special inspector general for afghanistan. >> thank you, and i guess to drill down more specifically, have you evaluated that time period mac, looking back in terms of the amount of money that was wasted i guss his number one and number 2, if if you could address some of the criminal prosecutions for fraud that were mentioned in your report?

>> thank you mr. chairman. we are, by way of the forensic effort, going back in determining the extent to which funds were wasted during the period in advance of this office having good stood up. we don't have figures are at this time to provide to the subcommittee, but we will determine that over time. initial indications are though that we have wasted money. i am not prepared today to put figure on it, in the millions or billions, but i would hazard sir that it is in the millions and perhaps even in the billions that we have wasted and fo fraud at the american taxpayer ouof money during the period period between 2002 and 2008. >> in the process, to come to a more precise number on that, tell me what that process is an

how we can get some better numbers? >> yes sir. we are as i mentioned conducting before and six but this essentially means we are boring down into various documents and procedures and spending that place over about an eight year period. we will review the contractural arrangements, folks involved in that spending for that period of time and as a result of that, we hope that we will be able to determine if there was in fact waste, fraud and abuse. >> excuse me for interrupting and real quickly because my time is about to expire. if you could briefly mention some of the criminal prosecutions and some of the monies that have been recovered. >> yes, sir. this far, we have been a part of the criminal joined community

responsible for finding criminal activity and as a part of that mechanism, which is ongoing and up which we are members, we have at least sent to folks to jail or been a part of the process that has resulted into afghanistan americans having been sent to jail. as a part of that, we have identified about $2 million associated with their activity. >> i'm going to have to cut you off there. sorry but my time is up and i'm going to yield five minutes to mr. rohrabacher. >> thank you. >> well, as i mentioned in my opening statement, you face quite a challenge and your testimony today has only underscored that point. in looking back, it is a little

brthtaking to understand that, when we rushed into iraq, how unprepared we were to handle the specific things that needed to be done in order for us to succeed, and here we are still in iraq, and then to understand it as it appears now, from what you are saying and from what we have heard, and what our got told us that the time, was that going into iraq took our focus away from afghanistan, and so for all of those hearings we have not been doing the job we needed to do there either. so, one area of, where we were not able to competently do what was necessary to be done actually the magnitude of that challenge drew away from what we could do in afghanistan.

let me note that in the 1990s, i was somewhat of a lone voice here talking about afghanistan. as you know, i spent time in afghanistan with the mujahedin when they were fighting the ssians and also that ispent considerable time and effort during the reagan white house years when i worked in reagan's white house to make sure that we were supporting pople who were fighting the soviet empire as the a strategy to eliminate that with the afghans more than anyone se, they gave us a victory in the cold war and a victory in the cold war simply meant that soviet communism disappeared from the planet, and i realized, because i had spent time inafghanistan, how much we owe to the afghan people.

they bore the brunt of that effort. and yet we abandoned them after after the soviet union dissolved. we abandoned them and did not help them rebuild their country, as we should have and they ended up with these radical or says that play, and then with 9/11 and i might add during that time in the 19 '90s i was here cling for usto make sure that we did right at them and that it would hurt us if we did not. and here it did, but here again what happened? after 9/11 with 211 million soldiers on the ground and several, perhaps 20, 30,000 members of the northern alliance, and at one point, when