The peace negotiators deserve our admiration and congratulations for the progress they have achieved in just six rounds of talks. We regret that continued progress has been hampered by the LTTE's decision to suspend the negotiations and not to participate in this conference. We hope the LTTE will re-engage constructively to build on the vital contribution it has made to progress towards a peaceful political solution for Sri Lanka.

The ceasefire has clearly yielded many tangible benefits for Sri Lanka. We have been concerned, however, at recent violent incidents. It is of critical importance that all parties fully respect and reinforce the ceasefire and avoid violence.

Central to the proposed political settlement to the conflict is the agreement reached at Oslo to explore a federal solution within a united Sri Lanka. Australia recently provided expert advice on comparative federalism and constitution making through a visit to Colombo by an eminent Australian academic. We stand ready to provide additional assistance if requested.

The Sri Lankan Government has an ambitious program to address structural and macroeconomic reform, while pursuing a focused poverty reduction strategy. Conflict-related aid requirements in the North and East have been presented in the Needs Assessment prepared by multilateral agencies. Australia's aid program is addressing identified humanitarian needs in these conflict-affected communities, as well as broader development goals across the country. We will maintain our emphasis on assisting vulnerable groups, including women and children, in the key sectors of health, natural resource and waste management, relief and rehabilitation, education and capacity building.

The Australian Minister for Foreign Affairs, Mr Alexander Downer, recently announced additional funding of $A4.6 million for new rehabilitation and peace building activities in Sri Lanka over the next two years. Many of the activities have now commenced. They are being implemented under the Sri Lanka-Australia Community Rehabilitation Program, which aims to assist communities affected by the conflict. These activities focus on community rehabilitation, income generation, de-mining, health, rehabilitation of child soldiers and food aid. We have in place reliable mechanisms to ensure that our assistance reaches its intended target communities.

Since the beginning of the peace process, Australia has increased its annual aid to Sri Lanka by fifty per cent to help meet ongoing development needs and to maintain momentum towards peace. We will endeavour to continue this level of assistance in future years in line with progress in the peace process.

Australian Official Development Assistance to Sri Lanka next financial year (2003/04) is estimated at $A16.2 million. Of this, an estimated $A10.4 million will fund humanitarian and reconstruction activities across Sri Lanka. Other Australian development initiatives include a natural resource management project in the dry zone, costing $A9.9 million over six years. We have also boosted funding for a coastal environment management project in Hikkaduwa, to the south of Colombo. This is currently valued at $A3.4 million.

In conclusion, Australia continues to regard the peace process as the key factor affecting the future prospects of all Sri Lanka's communities. We urge both parties to work to ensure the process succeeds. We regard the observance of human rights and good governance as crucial to community support for peace. Australia looks forward to positive outcomes from this conference, and is pleased to confirm our increased commitment to support the peace process in Sri Lanka and related relief, rehabilitation and reconstruction efforts.