Dr SOUTHCOTT (10:56 AM) —I am very pleased to be able to speak on this report Bougainville: the peace process and beyond . I think that the report stands alone as an excellent reference on Bougainville. I also pay tribute to committee secretary, Cliff Lawson, and the secretariat. The report not only drew extensively on submissions from DFAT, AusAID and the Department of Defence, but we also received a lot of information from Anthony Regan of the ANU. We also have drawn together a lot of information from Sean Dorney's book, from Mary-Louise O'Callaghan's book about the Sandline affair and from clippings and information obtained on our visit in March.

If you look at previous reports by this committee on Papua New Guinea and Bougainville, I think they have been very far-sighted. The 1991 report recommended replacing budget support with program and project aid. That recommendation was implemented and, in fact, next year Papua New Guinea will have their last dollop of budget support.

In 1994 they concluded there could be no military solution to the conflict on Bougainville and that armed secession was not an option. That recommendation in hindsight has been very prescient and had that recommendation been noted, then perhaps the Operation High Speed II, the Sandline affair and so on could have been avoided.

In terms of this report, broadly, the view of the committee is that, on the terms of reference that we were given, we would say we were able to give a tick to those activities. We were looking at the peace process, the activities of the Peace Monitoring Group and also the delivery of Australian overseas aid to Bougainville. In those three areas, I think we would agree that the Peace Monitoring Group brings great credit to Australia in the way they have carried out their activities. The peace process, while it does not move forward at a constant pace, we believe is moving forward. We did raise some of the issues that were raised with AusAID, but we were also able to see some very successful projects.

As the previous speaker noted, the infrastructure and economy of Bougainville have been destroyed. For example, in Arawa, which was a town really established by Bougainville Copper, there are whole suburbs where the houses no longer exist. You can see gates and stairs leading up to where a house was and the house has been completely obliterated. Everywhere we were we saw rusted buildings, we saw buildings that had been burnt, the roads were not complete and there is significant Australian assistance being delivered to Bougainville.

For example, $6.7 million is being spent on an 84-bed hospital at Buka—and we visited that hospital—while $9.7 million dollars is being spent on the rehabilitation and upgrading of Bishop Wade High School. When we visited the school 700 students turned out to see us. It was a very impressive visit. Another $8.5 million dollars is being spent on small-scale reconstruction, technical assistance and equipment, with $1.5 million on upgrade of the facilities at Radio Bougainville.

Very importantly, $2.3 million is going on support for activities linked to the peace process and another $3.3 million is for support for peace related transport. There is also $7.3 million for basic rehabilitation of the coastal trunk road and $5.5 million for construction of wharves at Kangu beach and Mamagota beach. We were not able to travel on much of the coastal trunk road as it had been destroyed.

The third point is that Bougainville has now been peaceful since mid-1997. There is widespread support for the peace process on the island. We did meet with most participants on the island and were also able to meet with members of the opposition and Sam Akoitai from the government. Unfortunately, we were not able to meet with then Prime Minister, Bill Skate. The estimated cost of the conflict is the deaths of hundreds of soldiers and 10,000 to 15,000 civilians.

The report also does document very clearly the history of the conflict and of Bougainville's and Papua New Guinea's colonial status. It is important to get an understanding of that. Bougainville was initially part of German New Guinea. In 1921, it was a C-class mandate administered by Australia. In 1945, it became a UN trusteeship. At the same time, neighbouring islands like the Solomon Islands were always British Commonwealth and so on. There have been secessionist sentiments raised in Bougainville from time to time. The Panguna mine, as previously mentioned, did provide 44 per cent of Papua New Guinea's exports and 17 per cent of government revenue. We found in our travels, and from speaking to people who are experts in this area, that there is no widespread support on the island for reopening the mine. That is something that may change as they gain more autonomy under the Papua New Guinea government's package.

When the conflict first broke out in November 1988, the grievances were complex. Initially, secession was not an issue. The committee report has charted fairly well how people's sentiments changed in terms of probably being in support of the BRA and then turning against the BRA. There was also a blockade from 1990 to 1994 which caused a lot of hardship to the island.

The Sandline affair is important in this whole thing in that it did provide a circuit-breaker in the thinking in Papua New Guinea. It did sour the relations between Australia and Papua New Guinea, but we made it very clear that we were not prepared to tolerate mercenaries in the South Pacific. It was really the Sandline affair that gave impetus to the talks at Burnham. Once the Sandline affair was over, and was unable to be carried out, there was no possibility of any military solution being carried out by the Papua New Guinea Defence Force. A sideline to this is that the MI24s, MI17s and rockets have been at Tindal since March 1997. That relates to what we were talking about previously.

Australian development assistance to Papua New Guinea is our largest aid program. Two-thirds of all overseas development assistance to Papua New Guinea comes from Australia. We will also be spending greater than $100 million on aid to Bougainville in the five years up to 2002-03. This is done in consultation with the Papua New Guinea government and recognises Australia's support for PNG sovereignty in relation to Bougainville.

The Papua New Guinea economy is commodity based and is subject to external shocks. In recent times they have been subject to the downturn in the East Asian economic crisis, a very severe drought, failed negotiations with the IMF and the World Bank, a decline in the forestry industry, the tidal wave at Wewak in July 1998 and also an obligation to pay $38 million in compensation to Sandline.

I have great faith in the new Prime Minister, a former Central Bank Governor, Sir Mekere Morauta, who has confirmed that economic reform and restoration of investor confidence as well as Bougainville will be priorities for his government. As previous stated, we did meet with the Minister of State, Sam Akoitai, who is also a Bougainville MP. The Minister for Foreign Affairs has acknowledged in the committee report that these two individuals were quite flexible in relation to Bougainville and did help to advance the peace process. Under the new government, Sir Michael Somare is the Minister for Bougainville Affairs. Recently this month he announced that autonomy will be given to Bougainville as long as they can come up with something by 25 December.

The submission from DFAT, which I agree with, said that most Bougainvilleans were comfortable with remaining part of Papua New Guinea but that they also wanted a greater say in their own affairs than they have so far had. We did have submissions to the contrary, but I think this submission carries more weight.

There were a number of parts to the Lincoln Agreement—disarming, phased withdrawal of the Papua New Guinea Defence Force, establishing civil police and law, and also a discussion of Bougainville's ultimate political status. There have been delays in the Lincoln timetable, but we did feel that the peace process was moving forward. During our visit in March we met with the opposition in Port Moresby and also with the Leitana Council of Elders, who were echoing similar concerns to the opposition's: everyone supported a peaceful solution, but they were critical of the process and felt that elections proposed at that time were unconstitutional.

Since more recent meetings and the Makatana and Oketaina Understanding in April 1999, the then opposition has been less critical and the process has been moving forward. As I said, on 8 October this year—that is, this month—Papua New Guinea offered autonomy to Bougainville, and they now have a 25 December deadline for the new constitution. I think that is something that will be acceptable to most participants.

Another issue touched on by the committee was the disposal of weapons. Some progress has been made there towards an agreement for organising disposal. Perhaps that could also be linked with the phased withdrawal of the Papua New Guinea Defence Force—another part of the Lincoln Agreement. We also talked about basic communications, and one of the recommendations related to the provision of satellite phones to participants in the peace process so that dialogue between them could be speeded up.

Australia has made an outstanding contribution to the peace process—facilitating the process, providing the bulk of the Peace Monitoring Group and also assisting with aid. It was encouraging to see peaceful elections in May this year for the Bougainville People's Congress. While we were on our trip we saw the Peace Monitoring Group in action. I think this was a New Zealand adaptation, but they had a little hut there which was neutral ground and various participants would come together to talk in the hut. While we were there we saw that preparations for the elections were well under way. We think the peace process continues to move forward.

As previously stated, as well as Australian personnel, the Peace Monitoring Group includes personnel from Fiji, New Zealand and Vanuatu. Their key role is monitoring compliance with the cease-fire and also promoting the peace process. Earlier this year there were 300 members—245 from Australia, 29 from New Zealand, 12 from Fiji and 15 from Vanuatu. The important points are that the Peace Monitoring Group be neutral and be perceived as being neutral. Australia did have some baggage in Bougainville, related to Bougainville's colonial status, Bougainville Copper, and the defence arrangements between Australia and Papua New Guinea which saw Iroquois helicopters used in Bougainville. I think that has been overcome.

People do understand that the Peace Monitoring Group is not a permanent presence. At Wakunai, when the Peace Monitoring Group explained that they would be leaving, people said, `We're going to go back into the bush when you leave.' But the members of the group are emphasising that it is not a permanent presence, and I think that they are widely welcomed. We were told that, initially, when they arrived with the helicopters, people would actually run away, but that now, when the orange helicopters arrive, people come out and wave. It is something that you see right across the island. It is important that this is a multinational force and that it is also unarmed. They play an important role in building confidence and trust.

We also saw the ADF health element at Loloho in the old tailings shed of Bougainville Copper. That is a very impressive facility and they have made a number of adaptations—for example, a humidicrib made out of just a bit of wire and Gladwrap and costing about $15,000 less than the commercially available alternative. I also believe that the Peace Monitoring Group should limit its role to supporting the peace process. It should not be proactive. Its exit should be event driven with, possibly, a phased reduction and an eventual withdrawal.