Opinion & Commentary
An end to benign neglect
INCREASING aid to Papua New Guinea to more than $425 million for 2004-05 will enable more than 260 police and other law and order Australian mentors to be placed in PNG. This marks a new level of engagement with our nearest neighbour. Over five years aid at this level would total more than $2 billion.
The mentoring program recognises that PNG urgently needs our help. It is not only a generous response to PNG's problems, but also, in the light of past world-wide aid programs, an innovative and courageous one.
Although good weather and high export prices have helped the PNG economy to stabilise during the past year, GDP growth is still only running slightly above population growth. Standards of living for most people have barely increased since independence. Roads and public utilities have been deteriorating and health and education are in dire straits.
If health services do not improve, a horrendous HIV-AIDS epidemic threatens. In the age of globalisation, when human capital has become key to development, a generation of Papua New Guineans has been cheated of employment opportunities and another will be lost if healthcare does not improve and if schooling does not become universal and improve in quality.
Our aid can only be effective in a mutual obligation environment. PNG has to institute the reforms that will take it on a path to rapid growth and make our taxpayers' contribution to its economy and society work.
Establishing private property rights, removing regulatory barriers to small business, reforming industrial relations, reducing protection and overcoming the inadequacies of infrastructure are all urgent for job creation. Unfortunately, to date, reform has only been undertaken at the macroeconomic level and that to a very limited extent.
Civil strife and high levels of crime have forced Australian and New Zealand advisories to warn against travel in PNG. Corruption undercuts the economy. Changing its moral standards to establish law and order is not an option for PNG, but a necessity if it is to survive, let alone develop.
Further political reform, building on steps introduced by the Morauta government, is equally necessary. PNG's resource development strategy succeeded in fostering mineral and timber exports, but did not lead to economic growth. Indeed, mineral and timber rents (windfall revenues) - together with the rents from aid that has not been conditional on domestic support undermined economic growth.
ECONOMIC reforms that will create labour-intensive agricultural growth and urban jobs are urgently needed to absorb the underemployed and the raskols and ghost public servants who prey on people and the economy.
Australia has had to abandon its past policies of benign neglect towards PNG (and the Pacific more generally) for three reasons.
The first is compassion. It is unconscionable that our nearest neighbours should have medieval living standards with women dying in unattended childbirth and girls denied education.
PNG has excellent natural resources, its geography, like Switzerland's, could be a major tourist attraction, and it is well located in relation to booming Asian markets that are crying out for its palm oil and other products.
Growth rates of 7 per cent a year that would double national income every decade are well within PNG's reach.
Second, we must be concerned with our neighbourhood for our own security. Given its demography, PNG will have a population of 10 million within the foreseeable future. It is of considerable importance to Australia's security and wellbeing whether PNG is moving towards 21st century living standards with consequent cultural and economic exchanges, or whether it continues to be rent by civil strife and crime so that it can become a candidate for an Idi Amin dictatorship or Haiti gang violence and the export of HIV-AIDS, drugs and terrorists.
Third, Australia and New Zealand are the natural hegemonic powers in the Pacific until the rest of the countries catch up, when some, if not all, will wish to join the Australia New Zealand Closer Economic Relationship and take their share of regional responsibilities.
Australia is thus also taking up its international obligations in moving towards increased engagement with Papua New Guinea.
Professor Helen Hughes is a senior fellow at the Centre for Independent Studies in Sydney. 'Can Papua New Guinea Come Back From the Brink?' was released in 2004 by CIS at:
www.cis.org.au
