Can Australia prevent Papua New Guinea becoming a failed state?

The question our readers, and others, most frequently ask me about our closest neighbour, Papua New Guinea is whether or not it is now classified as a "failed state"?

Its an issue needs to be addressed comprehensively by Papua New Guine and, the international donor and support agencies such as the World Bank, the IMF and the Asian Development Bank, but in this contribution I want to to offer some considered thoughts on how Australia can help PNG falling into a "failed state" position if it has not done so already.

My view is that Papua New Guinea is sliding close to being a "failed state" overall, but not quite there yet.

There are some key aspects of the PNG system of government that have definitely "failed", but there remains time for PNG to pull back from being a total "failed state" something that would have the most disastrous economic, and social, consequences.

The most obvious failure in PNG is sadly the total health system – hospitals, rural health centres, the management of diseases such as HIV, malaria, typhoid, even polio, and of course Covid-19. Only the most radical surgery can restore it – and sadly I detect no will within the PNG Government to do so.

This week, the alternate Prime Minister of PNG Peter O'Neill has offered the view that the country is already a failed state. With national elections just twelve months away he can hardly be blamed for doing so.

The great unknown when it comes to an assessment of whether PNG can avoid "Failed state" status in my view really depends on two factors. The first is just how much more critical the Covid-19 Pandemic will become. The second is whether or not one or more of the potential major resource projects now in "limbo" can move to the construction stage within the next twelve to eighteen months.

On both counts its simply impossible to be optimistic.

The Covid-19 pandemic is not being brought under control full stop. And the Australian Government needs a reality check – it is not being brought under control, our vaccine support for PNG, generous though it is, is only having a marginal impact on Covid-19 numbers.

In 16 months PNG has conducted around 85,000 tests – out of a population of close to NINE million. Over 10,000 of those tested have produced positive results. That is a high percentage and surely points to the number of actual cases being many times that.

Sadly, there is considerable resistance to testing and vaccinations in Papua New Guinea. Some of it is being driven by social media, and by reckless and irresponsible political leaders. Overcoming that is going to be a herculean challenge.

So the impact of Covid-19 on the economy, on hospitals and the health sector, and on the very survival of people is ramping up weekly. Vaccinating even half the population will, according to all my reliable PNG contacts, just not happen.

I heard of Sky News a day or so ago the host suggest that Australia should given PNG all the vaccinations we have in reserve – around three million. People need to get rule – and that includes media commentators and observers!

Australia initially gave PNG 8,000 doses of the vaccine. I am reliably informed that barely half have been given or distributed to the right areas.

The vaccine is going to continue to cause enormous problems for the good people of our closest neighbour – and be an ever present threat to the most northern parts of Australia in particular.

And tragically over crowded hospitals nd over worked doctors and nurses are going to mean that other serious illnesses are simply not going to be attended to. I hear that the already high infant mortality rate will worsen even more.

Given this reality, Australia simply needs to urgently review its whole aid program and overall policy approach to Papua New Guinea, as I have suggested on numerous occasions.

Firstly the existing $600 million a year "development assistance" budget must stop, and be totally restructured.

It is wasteful in the extreme to continue to fund dozens, if not hundreds, of development assistance projects while the pandemic continues to spread nationwide.

If Australia decides, as it might well do in the coming weeks, to half all flights to and from Papua New Guinea then development assistance programs managed by well paid private contractors will grind to a halt.

Australia cannot solve the totality of the problems facing the PNG health sector – hospitals, rural health centres, clinics and vaccine rollouts and more. But we can divert some of the aid budget to urgently re-building and upgrading major hospitals where the most serious Covid cases are taken.

And we can use some of the aid budget to boost the number of skilled medical teams Australia has already generously contributed.

But we cannot solve the problems in the failed health system alone. We need to line up with World Health Organisation in particular top do more.

And we can better fund and support worthy Australian groups, such as YWAM Medical Ships out of Townsville, to play a greater role in meeting basic rural health needs especially in the Western, Gulf, Central, NCD and Milne Bay Provinces that are closest to Australia.

The second contribution Australia can make towards helping Papua New Guinea prevent falling into "failed state" status is a politically delicate one – and one the Morrison Government sadly seems unwilling or unable to address.

I need to outline a piece of political history in outlining my suggestion.

Between 1988 and 1992 I had the privilege of serving in a senior advisory role to Prime Minister Rabbie Namaliu.

In 1989 a rebellion on the island of Bougainville saw the closure of the Bougainville Copper Mine – then the largest resource project, and contributor to the national budget.

The effect of the mine closure was catastrophic. Around 25 per cent of the nation's GDP was taken away overnight, government revenue fell by around 30 per cent, and the national government was forced to commit enormous police and defence force resources to Bougainville.

The loss of life by rebels, soldiers, and police, in combat, and the wider loss in the community through the abandonment of health and other services, was catastrophic.

But the immediate challenge for the Namaliu Government was to address the decline in economic activity, export income, and national revenue.

I would argue that the economic and fiscal conditions in Papua New Guinea today are even worse than they were in 1989. So some lessons from the effective response then ought to be picked up by the PNG Government, and by the Australian Government, today!

The then Prime Minister immediately engaged with the World Bank on a support package that included cuts to government spending, restructuring AND a government-led campaign to secure immediate and substantial investment of the resource sector, given that the Ok Tedi Mine was the only major resource project in operation.

Prime Minister Namaliu personally drove this challenging endeavour, and I would argue did so with great success.

By the end of his term in 1992 work was well advanced or actually in production, at the Kutubu Oil project, Progera Mine, and the Misima Mine. Planning for the Lihir Mine was commenced.

Not only did the outcome assist the economy it sent a positive signal to investors that despite Bougainville Papua New Guinea was a secure and profitable destination for major investment.

The position today when it comes to investor confidence could hardly be worse, and that is a factor Australia simply cannot ignore as it reviews its relationship with its closest neighbour.

I am fully mindful of course that great care has to be exercised when it comes to major policy decisions by the Papua New Guinea Government and how Australia can carefully and respectfully influence them.

But we cannot be expected to bail out the PNG budget with cash loans, low interest and probably never to be repaid, as well as a generous development assistance program and picking up the tab for at least a million vaccines without offering responsible views on how PNG can avoid falling into a "failed state" position.

As the Namaliu Government proved way back in 1989-1992 the best way to save an economy from total collapse – and that is facing PNG – is to attract major investment if the resource sector. And it need not just be mining, oil and gas. It can also be agriculture and fisheries in particular.

The state of the major resource sector min PNG today simply has to be of profound alarm!

The Porgera Mine remains closed. Even if landowners can be persuaded to co-operate the mine is not going to be re-opened before mid-2022. The cost of restoring it will run into hundreds of millions meaning that the mine will not contribute to national revenue, and landowner royalties, for years.

The long promised Papua Gas Project has been announced – but major construction is probably a year or mire away. The Wafi Mine in the Morobe Province remains in limbo, and economy-revenue driven activity is probably three to five years away.

And the promised and government trumpeted Pasca Gas Project suffered a serious if not fatal setback last week when Twinza the project proponent effectively delayed any work on the project for another year at least.

This sad position comes at a time when world LNG prices and exports are under serious threat through over production and reduced demand.

What the Australian Government has to do is to firmly encourage the PNG Government to seriously address the lack of confidence, and absence of investment, in the resource sector.

We should be offering technical support to bring negotiations forward so the serious investment PNG needs can be secured.

The "take back PNG" theme of the Marape Government must be acknowledged – but so must the real world!

Investment has dried up Covid-19 is draining the skilled workforce and the government simply cannot continue borrowing between K6 billion and K8 billion a year just to fund the recurrent budget!

This won't be an easy conversation for the Australian Government, but if we are genuine about helping our closest neighbour it simply cannot be ignored.

The third area is which Australia can offer urgent assistance is in regard to revitalising agriculture and building an independent fisheries sector – a sector increasingly dominated by China.

Papua New Guinea desperately needs a major boost to non-mining export income as well as the tax revenue and export income the resource sector can provide if real growth occurs.

The most obvious propriety areas are agriculture and fisheries. Australia can offer practical assistance in both. There are still Australians around who worked in the PNG agriculture sector prior to and just after Independence who would willingly contribute.

Australian agriculture, and fisheries, today are real success stories.

We can offer to share that with Papua New Guinea where the rural majority still depend on agriculture and fisheries for food, and cash income.

And if we can help agriculture and fisheries grow it directly benefits the majority of the good people of our closest neighbour and friend.

The game of "pretend" which seems to be being played out in Canberra simply must end.

We must face up to reality. Respond responsibly and positively to the enormous challenges overwhelming Papua New Guinea.

The proposals I have outlined may not be conclusive. But is a start and surely worth consideration without delay.

We cannot afford to have a totally "failed state" on our northern doorstep – making it susceptible to even greater influence and control from the Peoples Republic of China than it already is!