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Australian Pacific aid supports bankrupt regimes

By Helen Hughes - posted Wednesday, 15 December 2004

Income has scarcely grown faster than population in the Pacific for the 30th consecutive year despite $1.5 billion dollars of aid. The benefits have been absorbed by elites so that most villagers are no better off than they were at independence. Australian aid pays for 80 per cent of road maintenance in Papua New Guinea, but except for just completed road reconstructions, most roads are impassable. There has been little transport, power or communications development: And social services, including schooling, are on the level of disintegrating Sub-Saharan African states, and for women, with the Middle East. This is old news. But there is also some good news.

Some Pacific islanders are fed up with the excuses used to defend stagnation, corruption, crime and civil conflict. Nauru has voted out a government group that lost, wasted and stole nearly $2 billion. Newspaper articles and letters to the editor in the Papua New Guinea media are questioning the lack of growth. Even more significantly, they are beginning to question communal land ownership and exploring land registration and long-term lease possibilities. The Masalai-I-Tokaut (The Spirits Speak) website exposes exploitative timber companies. The Times of Tonga comments on that country’s rulers’ depredations from Auckland.

The Howard Government’s Regional Assistance Mission to the Solomon Islands was a first step toward a new Australian approach to aid in the Pacific. The police and legal mentoring program in Papua New Guinea was another. It was made clear to Vanuatu that responsibility to Australian taxpayers meant that there would be no aid without mutual obligation. But Australian aid policy still has a long way to go to cease supplying band-aids that keep counterproductive governments in power.


The principal excuses used for stagnation are distance, topography (too mountainous or too flat) and ethnic diversity. But the Pacific is near the world’s most rapidly growing Asian countries. The islands are beautiful and rich in agricultural land, minerals, timber and fish. Transport and communication costs have been falling. Countries that want high living standards have to accommodate ethnic diversity and most have done it through a common second language. In India, English not only binds the nation, it also facilitates a booming IT industry. Fijian Indians are following India, albeit on a miniscule scale.

Post-modernists have imposed an education philosophy that means that half of the Pacific children who are at school for a few years do not learn to read, write or do maths. With the exception of the Francophone countries and countries of emigration (where schooling is geared to finding jobs abroad), children are taught in a local tribal language and are not taught phonetics or rigorous maths. Children are being less well educated than in Missionary days. Whereas in Finland or Norway all children attend kindergarten to start to learn a second language, in the Pacific a whole generation has been lost, and another is being lost, to productive employment. Aid is playing a major role in underwriting this Pacific disaster.

If Pacific islands opted for policies that matched their endowments so that they would grow at 7 per cent and more, they could reach high living standards within a generation. They would be where Taiwan - catching up to industrial countries - is today. Pacific islanders are no less smart than the people of Botswana and Mauritius (similar to Papua New Guinea and Fiji) who are celebrating 30 years of sustained growth.

The economic reforms that are essential for growth are well known. Moving from communal land ownership to individual property rights, getting rid of barriers to business, eliminating protection, freeing up labour markets and downsizing and privatising the public sector are all needed if agricultural incomes and jobs are to be created and governments are to be able to enforce law and order and maintain infrastructure.

Government reforms are no less essential. The Pacific has 733 legislators, with the number of voters per parliamentarian ranging from 11 in Tokelau to 25,360 in Papua New Guinea, and 209 Cabinet members. Pacific islands belong to 40 international organisations. Pacific politicians and bureaucrats are so busy travelling to meetings and conferences that no one has time for pressing domestic problems. In addition the Pacific is so awash with international bureaucrats

The international financial organisations’ internal documents agree that they have nothing to show for their Pacific programs. Yet Australian aid has been used to service the Asian Development Bank’s non-performing loans to the Solomons. The Asian Development Bank’s and the World Bank’s Millennium Development Goals (adopted to ward off non government organisations’ criticisms) have no application to the Pacific. By focusing on distribution they undermine the productivity the Pacific desperately needs.


The United States’ Millennium Challenge Corporation, amazingly, selected, Vanuatu to be the first recipient in the Pacific of its aid for countries with a clearly defined path to development. But Vanuatu has the most counterproductive economic and social policies in the Pacific. Its government is laughing all the way to the bank.

Australia is on its own in the Pacific. It will be judged by how the Pacific performs. Australia cannot make policy choices for the Pacific islands. Colonialism is not an option. Australia can, however, support governments that choose growth and development.

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First published in The Sydney Morning Herald December 2, 2004. This article This is based on her report The Pacific is Viable! released December 2, 2004. It is available at

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About the Author

Professor Helen Hughes AO is a senior fellow of the Centre for Independent Studies.

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