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Australian aid and its bilateral ties with PNG

By Brian Gomez - posted Wednesday, 8 September 2004

In a sense Australian aid to Papua New Guinea has gone full circle.  In the mid-1970s it was provided in the form of budgetary support with little Australian direction or control.
Now we have the Enhanced Cooperation Programme (ECP), which involves the direct placement of Australian police and public servants in important positions in this country.  Each of the officials coming here is clearly committed to doing the best he or she can in the tasks they have been given and most Papua New Guineans are optimistic they will have a positive impact. But The Bulletin's Bottom Line wants to focus on the issue raised last week about whether it was possible that Australia wanted PNG to remain in a weak and dependent state. The need for the ECP is in itself a sign that things have not gone all that well since independence was gained in 1975 after billions of dollars in Australian aid had been channelled to this country.
Another factor that most observers would accept is that, in real terms, the amount of aid flowing here from Australia has declined significantly in real terms, having been maintained at around A$300 million annually.

In retrospect one has to wonder why Australia had not done more over the years to help bolster the performance of the PNG economy and to help create jobs for its strongly growing workforce. In the 1970s and 1980s Australian aid in much of the rest of the Asia-Pacific was often focussed on helping various countries promote their economic development. For example, in the Philippines there were some notable integrated rural development projects that included the development of infrastructure to promote activities of smallholder farmers. Some of these projects did become controversial because of suspicion that their fundamental aims were strategic and political in nature rather than economic. Much of those issues have since faded away.

But in PNG the question still arises. Why was it that Australia, with its vast level of expertise in so many areas, had not tried to generate a more sustainable economic environment in PNG?


Take the case of agriculture. The hard currency policy of the early years had acted as a deterrent to expansion of the agricultural sector but this policy has persisted until 1994 even though 85 per cent of the population have remained as subsistence farmers. Over the years imports of rice have been growing rapidly and the public were constantly advised that rice was not suited to PNG conditions even though this appeared to be a nonsensical proposition. Rice is grown commercially in Australia, the US, Japan, China and in many other parts of Asia under a variety of conditions. In recent years pilot projects run with Asian assistance has shown that if this sector had been developed in earlier years PNG could at least be almost self sufficient in rice production. One pilot project in Lae has been able to have three crops in a year compared with only one or two crops elsewhere in the world and an upland farming exercise in the Highlands has proved to be two to three times more productive than in China. Nevertheless, the National Agriculture Research Institute recently told The National that even though local rice production has been growing by 20 per cent a year the country could attain 50 per cent self-sufficiency in 20 years time if this rate of growth was maintained.

Australian scientists have been able to adapt various tropical crops for commercial planting in Australia and could have played a tremendous role in boosting agricultural activities in PNG but appear never to have been given the opportunity to do so. Even if Australia was jealously guarding its agricultural sector - I doubt this would have been its aim in view of the great depth and diversity of Australian agriculture - these experts could have played a crucial role in boosting the productivity of our subsistence farmers.

They could also have introduced other crops that would have contributed to better nutrition levels and improved livelihoods, and possibly encouraged rural farmers to have greater participation in the cash economy. The failure to assist in these areas is also reflected in a lack of Australian investments in the farming sector with the biggest oil palm plantations, for example, having started as British-owned operations.

Australian expertise in mining is also second to none in so many areas but almost no government assistance has been provided to PNG though a strong and vibrant mining industry would have contributed greatly to a more stable and prosperous economy.

Australian bureaucrats held the notion that Australian mining companies and others could fend for themselves so they ignored their activities altogether. Instead they could have utilised pockets of strong economy activity provided by mines at Ok Tedi or Porgera to encourage other spin-off effects that would have contributed to more sustainable economic development. If they had been somewhat more involved, warning signals about the impending environmental disaster caused by the Ok Tedi mine may have been detected earlier and corrective action taken long before the damage became totally irreversible. Western Province, where Ok Tedi operates, is one of the more backward parts of the country.
Sensible use of Australian aid could have made a big difference in Kiunga and among other nearby riverine villages to the benefit of this province as well as the nation as a whole. Is it not ironical that a mining company has to carry out agricultural extension activities rather than focusing on what it knows best? But that is what is happening here in PNG.

When successive PNG governments looked around for advice on the kinds of policies it needed to encourage mineral exploration it had to turn to institutions such as the World Bank and the Asian Development Bank, neither of which have any expertise, to provide any meaningful input.
Despite being a continent of only 20 million people, Australia arguably has more mining expertise than could possibly be summoned from either of these august institutions. But the Australian Government stood by and provided no meaningful advice or assistance as exploration expenditure came close to vanishing.
The policy changes adopted by the Somare Government have more to do with plain common sense and the learning of lessons from the past. There has been no need for foreign input from Australia or anywhere else for this change to occur but if good advice had come to previous governments these changes could have happened many years ago.


Having made these comments I would suggest that PNG has to continue to learn to stand on its own and to face future challenges with home-grown solutions.

A reading of the recent Australian Senate report on Australian relations with PNG and the Pacific region is proof of this - Australian Governments of either shade probably like the idea of being "big brother" in the Pacific but appear incapable of reducing the level of dependency of so many island states, many of which are arguably not viable because of tiny populations and poor resources. Fortunately, despite the poor economic performances of PNG, especially since the 1990s, it is not among the countries in that category.

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Article edited by Ian Miller.
If you'd like to be a volunteer editor too, click here.

Previously published in the National on August 26, 2004.

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About the Author

Brian Gomez is based in Sydney and is Asia-Pacific editor for The National , a daily newspaper in Papua New Guinea. He also contributes a regular column to, a Perth-based website. Brian has worked as a journalist in Australia, Papua New Guinea, Singapore and Malaysia and has a special interest in development issues.

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