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Foreign Affairs, Defence and Trade References Committee
27/11/2015
Australia's bilateral aid program in Papua New Guinea

DAVID, Mr Benedict Anthony, Principal Health Sector Specialist, Health and Water Branch, Development Policy Division, Department of Foreign Affairs and Trade

KIMBERLEY, Mr Mat, Acting First Assistant Secretary, Pacific Division, Department of Foreign Affairs and Trade

[11:20]

CHAIR: Welcome. I remind witnesses that the Senate has resolved that an officer of a department of the Commonwealth or a state shall not be asked to give opinions on matters of policy and should be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. I particularly draw the attention of officers to the order of the Senate on 13 May 2009 specifying the process by which a claim of public interest immunity should be raised. Copies are available from the secretariat.

Before we start, could you just tell me what the Pacific Division encompasses exactly—which countries?

Mr Kimberley : It is all of the Pacific, starting from Papua New Guinea and moving east; we pick up Hawaii and South America—

CHAIR: So, we give aid to everyone—

Mr Kimberley : and the Solomon Islands, Fiji, Nauru, Palau, Tonga; I can give you the full list—but not East Timor. That is managed under our South-East Asia Division.

CHAIR: Would either of you like to make a brief opening statement before we go to questions?

Mr Kimberley : Firstly, thank you for inviting DFAT to give evidence to the hearing this morning. As you have heard from various submissions, Australia has made a significant investment in PNG since independence in 1975. We are neighbours and regional partners, with a shared history and a shared geography. A stable and prosperous PNG is clearly in our national interest. In its 40th year as an independent country, PNG continues to face a number of core development challenges, and despite over a decade of economic growth and a long history of aid, PNG continues to face a range of constraints for growth, including poor law and order, inadequate infrastructure, complex levels of governance, inequality between men and women, weak capacity, corruption, and poor health and education services. These challenges are compounded by PNG's extreme geographic and linguistic diversity, with rugged and remote landscapes and over 800 language groups. These factors have impeded PNG's ability to meet international development goals, and PNG will not meet any of the MDGs.

Australia is the largest aid donor, but in 2015 our aid flows will represent just eight per cent of PNG's total expenditure, and that will track towards five per cent by 2020. Building on the progress and the lessons learnt from our aid program to date, our relationship with PNG is evolving to reflect a more mature, focused and innovative engagement. In 2014 Australia and PNG agreed to reshape our aid program to better meet PNG's development needs, with shared priorities of both governments. The way our aid is designed and delivered also reflects the Australian government's increased focus on performance and mutual accountability. The value of our aid has been positioned to assist the PNG government to mobilise its own resources for development and serve as a catalyst for inclusive economic growth. We have reduced the number of sectors we work in.

We are continuing to invest in health, education, transport infrastructure, and law and justice. However, we recognise that it is a sovereign responsibility of PNG to deliver basic services for all its citizens. The aid program is less focused on direct service delivery and is encouraging new partnerships between the PNG government, churches, civil society and the private sector. I would like to use two key examples to highlight the complexity of our work in PNG and what we are doing about it: governance, and stunting. Good governance is fundamental to PNG's stability and growth. While we have over many years sought to help the PNG government improve the effectiveness of its state institutions, we know the effort needs to be strengthened further.

It is important to note that the reform of institutions and the focus of government work takes a very long time. According to the quality of governance measure it takes states with low capacity a very long time to evolve to the lowest OECD levels—on average, 100 years. The 40 years that PNG has had are simply not enough and we must be prepared to support them in the long term.

With this long-term approach in mind we are embarking on a new program of support for the PNG government through a new initiative: the Pacific Leadership and Governance Precinct. I have two documents here to table for you on this. This is the new Australia-PNG education and training initiative that is designed to strengthen management, leadership and core public service skills in PNG. A more efficient, ethical public service would help to increase business confidence and private sector growth for PNG.

The precinct includes the University of Papua New Guinea's School of Business and Public Policy and the PNG Institute of Public Administration. It is delivering a wide range of executive-level public sector ethic and leadership courses; certificates, diplomas and undergraduate programs in public administration management; in-service training; and applied research. PNG private sector representatives are also participating in many of the courses, and the precinct is supporting greater engagement between the public and the private sectors.

The precinct is establishing partnerships between Australian and PNG education institutions and training institutions. We are also bringing greater coherence to our governance efforts under a new governance facility which will come online in mid-2016. This represents a significant shift in the way we do work. We will be more agile, efficient and better able to adapt our approach to needs.

The governance facility is an innovative approach to consolidate the delivery of all of our governance programs. It will increase effectiveness and flexibility, simplify management, allow us to focus on the policy and strategic issues and will provide efficiencies and minimise overhead costs for the aid budget by consolidating under one single supplier. The PNG government is fully supportive of the design of the facility and is closely involved in the further development and finalisation of the selection of that private sector supplier.

About advisers: PNG Prime Minister O'Neill announced that all foreign advisers would leave PNG by 31 December 2015. This represents PNG's desire to exert further control over development outcomes and to make best use of the high-end technical interventions that advisers provide. We are working with the PNG government to progress this issue. We agree that it is important that PNG agencies have a greater role in managing advisory resources. We do, however, have concerns about the transition time frames that have been proposed. We have suggested to PNG that the transition period needs to be longer—something more like 1 July 2016.

We continue to discuss with PNG the concerns they have about our support and how we can achieve the most effective elements of our aid program. The key, though, is regularly reviewing what we do and to focus the partnership so that they use their systems and we deliver sustainability and ownership.

On the issue of stunting, which I know has been of interest to the committee, we provide a very different type of support in PNG. Stunting is one of the most persistent and significant challenges in development globally—there are 162 million children aged under five who are affected by stunting. Childhood stunting generally occurs before the age of two. It is an outcome of maternal undernutrition and inadequate feeding in infancy and early childhood. Stunting rates in PNG are unacceptably high. In 2010 it was estimated at approximately 48 per cent. It varies considerably throughout PNG—in the Highlands it is as much as 60 per cent and in the island regions it is lower, but it is still 38 per cent.

Analysis indicates that stunting is a result of the complex intersection between economic and behavioural issues. It is not just due to food availability and food security. Therefore, our work in PNG to support economic growth will not alone address stunting. In many low- and middle-income countries it has been demonstrated that economic growth contributes very little, actually, to the reduction of undernutrition. Targeted and coordinated policies and programs that deal with household poverty, agricultural productivity, health services, water and sanitation and education are all required to translate to success in this area.

We have agreed with the PNG government that we will work in health education, education and sanitation and hygiene. These programs are designed to increase household incomes, to increase access to health services and education levels, access to water and hygiene and to change behaviours. To complement these Australian aid also supports a number of programs that deal specifically with nutrition, with health services that provide support to women to breastfeed exclusively and that supply therapeutic foods and direct nutrition interventions, such as micronutrients. And we are developing a postgraduate diploma in nutrition for Papua and New Guinea health workers.

Nutrition has not been identified as a priority for the government of Papua New Guinea, but Australia's support has traditionally focused on strengthening systems able to provide core services. However, we have recently engaged in this area and are working with the World Health Organisation, UNICEF, NGOs and the PNG government to address it.

In conclusion, over the last 40 years the way we support PNG has changed considerably. We are constantly evaluating our support and adapting our assistance. In recent years we have gone from supporting a very wide range of very worthy projects in many different sectors to focusing on support where we feel we can make the most difference. This has meant making hard decisions about where we focus our aid and, in close collaboration with the PNG government, we have chosen to focus on health, education, transport infrastructure and law and justice. Support for governance and gender equality cut across all of our programs. We continue to reassess our programs in close consultation with PNG, a process that we will continue to refine as we move ahead.

CHAIR: Would you like to table that opening statement?

Mr Kimberley : I am very happy to.

CHAIR: You are a first assistant secretary?

Mr Kimberley : I am the acting first assistance secretary. My normal job is as assistant secretary looking after Papua New Guinea development and the Solomon Islands.

CHAIR: And Ewen McDonald?

Mr Kimberley : Ewen McDonald is a deputy secretary in the department of foreign affairs.

CHAIR: Is he in charge of aid?

Mr Kimberley : Yes. However—

CHAIR: I am just trying to get to the decision-making structure. Do you make decisions on Papua New Guinea or does he?

Mr Kimberley : My deputy secretary is Ric Wells, who has a geographic responsibility for the Pacific as well as a number of other geographic areas, and Ewen McDonald is a deputy secretary in the department who has carriage of a policy generally.

CHAIR: So $500-odd million—$5 billion over 10 years: who actually signs off on these projects? Is it you or McDonald or—

Mr Kimberley : It depends on the size and the scope of the project.

CHAIR: Can you just put that on the record?

Mr Kimberley : Yes. Within the department there is a delegations approvals list. We can provide that as to what levels have what capacity to—

CHAIR: I am not trying to pin the tail on the donkey; I just want to know who signs off on these projects, and then who can we ask about the key performance indicators of this expenditure as to whether or not they have been met? Is that you or is that McDonald or is that someone else?

Mr Kimberley : I am happy to talk about the performance of what we do in Papua New Guinea.

CHAIR: Which project have you signed off on and which key performance indicators have been measured, and what have been the outcomes?

Mr Kimberley : Perhaps I can go through the successes across projects in the sectors that I talked about, those five sectors that I listed, as a starting point and that can then lead into those conversations?

CHAIR: All of the evidence that we have had, basically, has been overwhelmingly pessimistic and/or negative. Senator Back will make his own assessment and his own contribution, but my assessment is that, for want of a better term, there is a lot of money going in here for not very good outcomes. I could put a basket case scenario to you, but I want to hear from you. You invest $100 million or $20 million and you have got key performance indicators. We need some evidence to say that we are having some measureable success.

Mr Kimberley : Is that at a program level?

CHAIR: Yes.

Mr Kimberley : We have overarching performance objectives that are set. We have recently published our new aid investment plan that was agreed with the government of PNG. That includes a range of mutual accountability and performance measures. We have also just recently published last year's performance report, which also goes into that in some detail. That is at a very high level, and then they all come down right through to individual project-based levels, which I think is what your question gets to the heart of.

CHAIR: I heard you say that we are 40 years into a 100-year achievement over governance.

Mr Kimberley : Yes.

CHAIR: Can you give me something a bit more positive than that? If governance is going to take us 100 years—I will not be around to see it—and we are 40 years down that track, what success have we had in governance?

Mr Kimberley : I think at one level the fact that we have a stable, effective democracy that still sits within PNG. They have a parliament that works and they have a separation of church, state and courts, which is effective. They have had and continue to have regular, well-run and successful elections. All of these point to successes over the course of that 40 years. I am not suggesting that it is perfect, and I do not disagree with many of the points that have been raised in the submissions, but I would also suggest that it continues to operate and work and it continues to roll through a process that we recognise as having strong democratic institutions.

CHAIR: Is there an amount of money that we have spent over the last few years that goes to that sector? How much would be?

Mr Kimberley : Within the law and justice sector in 2013-14 we invested just under $24 million. That delivers—

CHAIR: Is that towards courts and police?

Mr Kimberley : That covers a range of areas, but, yes, broadly.

CHAIR: We have heard evidence that mining companies pay for the fuel and for the wages of the police force so that they can deal with a recalcitrant workforce. Is that an example of how the law is working?

Mr Kimberley : The payment of—

CHAIR: Mining companies pay the wages and fuel for the police and get them to come on and do a bit of work for them.

Mr Kimberley : That would be a decision between those companies and the—

CHAIR: You are saying that we have been successful, but we are hearing competing evidence. We spent $24 million on law and justice—

Mr Kimberley : Are you asking what we got for that money?

CHAIR: Yes.

Mr Kimberley : In the law and justice sector we helped finalise new infrastructure at the police centre in Lae, a new police station on Manus Island, 28 separate individual police projects supporting Bougainville, and securing the site and the design for the new magisterial services headquarters in Port Moresby. We trained 1,175 police, 19 per cent of whom were women; 2,906 other law and justice officials in various police management and training programs; and 560 new recruits, 83 of whom were female, graduated from the Bomana police training college—that increased from 299 the year before. We have supported 11,272 survivors of violence, through the 14 family and sexual violence units we have established across Papua New Guinea. The number of dispossessed and completed interim protection order applications increased to 849, up from 687. We also supported over 35,800 survivors of violence, mostly women, to receive support from those family and sexual violence units. We provided counselling and medical referrals and also prosecutorial support for the 11,000 survivors. We have also set up a partnership ExxonMobil. They co-fund with us a community safety adviser in Hela Province. Basically, they fund the salary and support costs of that individual, and they apply the program and the same approaches that we provide elsewhere. That is a good new way that we are working with ExxonMobil, one that we hope to expand further with other companies.

More broadly, from a policy perspective, through our Attorney-General and AUSTRAC departments we have supported the financial action taskforce regional review group. They have favourably assessed PNG's status against the financial action taskforce. Five new pieces of legislation have been completed on schedule and were passed in July this year, and significant whole-of-government reform is underway, through the support of the advisory assistance that we provide in the PNG Attorney-General's Department.

CHAIR: That is $24 million. What do we do in health and education?

Mr Kimberley : Health and education is a larger budget. This year we will invest $100 million there.

Senator BACK: In health?

Mr Kimberley : It is our largest sector.

Senator BACK: Could you break up health and education.

Mr Kimberley : Apologies—health and HIV. Education is a separate sector.

CHAIR: So it is $100 million in health and HIV.

Mr Kimberley : That focuses on tuberculosis, HIV, scholarships, hospitals and family planning. In terms of the successes and deliverables that have come under that, as I am sure you have heard there are problems with tuberculosis in the Western Province. I think you referred to YWAM before. They also work in that area with us. The issue of TB control is a priority for both governments.

CHAIR: On this assessment you are going to give us, we took evidence that a very modest investment in that—$2.5 million, I think—would provide for the production of the vaccine to get rid of the strain of TB that was going to be immune to any normal treatment. Can you address that in this sector?

Mr David : My role in the organisation is to look across our health portfolio and our strategy, multilateral and bilateral. We actually invest in product development, like vaccine development for TB and treatments, through a central budget, which is for product development partnerships. That includes—

CHAIR: Are you aware of the evidence that came to this committee that I am referring to?

Mr David : I am not, but I can certainly—

CHAIR: We will put it to you on notice then.

Mr Kimberley : I am aware that something was raised here but we have not been provided those details. Other than what was in the report that was submitted, that has never come, as far as I am aware, to the department.

Senator BACK: It would be worth examining the Hansard of it, because we discussed it in some detail.

Mr David : My point is that there is a set of central investments in new product development that we have issued through our health policy team, which is separate from our PNG program.

CHAIR: The submission to us was quite simple: for a fairly modest investment, you can make a substantial improvement. It appears that you are not aware of that. Maybe in broad terms you are aware of it but—

Mr David : We are investing in TB product development, including vaccines. There is a $30 million budget that goes into investments in the malaria and TB area.

CHAIR: We will put this evidence directly to you and seek a response.

Mr Kimberley : I will outline some of the successes in this area. We have seen dramatic improvements in diagnosis and treatment of both drug-sensitive and drug-resistant tuberculosis. However, the national TB program targets have not been fully met by the PNG government. We continue to advocate for the PNG government to also fully fund—it is a co-funding agreement that we have with them. We have $60 million invested in tuberculosis in Papua New Guinea over 2011 to 2017. The PNG government had committed at cabinet level to release $20 million to also support that. That funding remains unreleased. So part of the challenge we have in PNG is that without those funds it is not a fully implemented program.

CHAIR: How do you work with the federal system, the provincial system and the mining companies and NGOs providing services as well?

Mr Kimberley : We work at all three levels. At government-to-government level our counterpart is the National Department of Health. But then we have in Western Province strong links with and support going into the provincial administration and into the hospital. We fund directly a number of positions to ensure that they are fully staffed. Western Province is something of an exception. I said before that we seek to get PNG to deliver the services. Because of the geographic proximity of Western Province to North Queensland we take a slightly different approach there. Notwithstanding that we are still pushing PNG to take ownership and deliver its services for its population, which we do on our side of the border, we recognise that there is a unique link there and we need to pay careful attention to it.

CHAIR: Are you aware that we have taken evidence this morning that Australia has provided medicines which have been just sold on the black market? Do you want to—

Mr Kimberley : I heard that as I was watching this morning. Until 2013 we were supporting the procurement and distribution of drugs in Papua New Guinea. In late 2013 the government took a decision to no longer do that, because a procurement process was run that we felt was questionable. As a result, we advised the PNG government that we would no longer be supporting procurement and distribution. We felt that it was not appropriate that Australian taxpayers' money could be associated with that. I think there will always be cases raised of the type that you were told about. I can only counter that by saying that I went with the prime minister to the hospital in Wapenamanda—which is the city next to Wabag, which the previous witness raised—in Enga Province and it was fully staffed and had a full pharmacy, full of drugs, that was being used. We asked them very specifically, 'How are you going with distribution?', and they said that, while there are sometimes problems with delays in getting it, it was there. It was all there for everyone to see. There was no question—I am not for one second suggesting that there are not cases that are not like that. But I would counter it by saying that it is not—the word endemic is often used loosely, and I think we need to be cautious. There are still good people working very hard to deliver services in difficult circumstances. I can only offer that as a personal experience that I had some weeks ago.

Senator BACK: Is it too simplistic to say that when Australia was intimately involved in the distribution others saw it as a product that they could steal and convert into cash, and now that our involvement has been withdrawn and they have got to locally account for their own pharmaceuticals—

Mr Kimberley : No, I would argue that our withdrawal has unfortunately meant that it is easier for them to do that because the stringent procurement and distribution practices that we had through our suppliers—which were working with PNG government—are no longer in place.

Senator BACK: But you were telling us that there was a fully equipped pharmacy.

Mr Kimberley : Because they have good leadership and strong leadership and management.

Senator BACK: Yes, that is my question. Now that they have had to take responsibility themselves, there is a higher level of accountability. Is that the case or not?

Mr Kimberley : In this particular case that I saw, yes. I would suggest that there are as many good examples as bad examples. That is just the nature of a difficult environment.

CHAIR: But what did it look like before? Was it 80 per cent and now it is fifty-fifty?

Mr Kimberley : I do not know. I had not been there before. It was old and had not been refurbished for a long time—which was part of the reason we were there looking at it—but it was clean, well-run and fully staffed. I can only say that in that particular case—and it is one—it is an example of a community and a leadership that is leading the way. We can find partners like that to work with. I recognise that there are challenges in working through partner systems. I think you have had a number of points raised about the dangers of corruption, and I am happy to talk about how we manage that. We obviously have zero tolerance and a very dim view of misuse of Australian aid funding. But there are partners, and if we can find them and work we them, we can get success.

Senator BACK: Could you very briefly describe the management of that hospital you were just explaining to the Chair? Was that provincial management?

Mr Kimberley : A provincial hospital, yes.

Senator BACK: A provincial hospital. What was our involvement in it, if any?

Mr Kimberley : We do not have any partnership with it at the moment. The reason we were there, as well as this, was the foreign minister's visit—it is in PNG's foreign minister, Minister Pato's, electorate. You probably saw the media when the minister went to the highlands. It was one of many sites that we went to in the course of the day, but it was one that was being highlighted by both the governor and the minister to our minister and to our acting high commissioner, myself and the other people in the party as something they were interested in talking to us about—about what opportunities there are to invest in. What has come out is a program we have called the Incentive Fund. They are competitive grants, so there is an independent board of both Australian government and PNG representatives on that. Bids, both private and public, go into that to put forward worthy projects for consideration. That is one of many that is currently under consideration by the independent board. I do not know what the outcome of that will be. From a personal perspective, it looked like there is no reason it would not be competitive against the others, but you would have to have a look at where it stacked up with all of the other bids. That process will be completed by the end of the calendar year.

I might just go back to some of the other points in health about the $100 million. On HIV—which has obviously been a big focus of our support for the better part of almost 20 years in PNG—I would say that one of the successes has been in arresting what could have been a catastrophic medical emergency on our border. That has not eventuated, and that has been something I think is worth noting by both governments. Just last year we funded NGOs to test 78,737 people for HIV and supported just under 4,500 people to be on antiretroviral treatment. We funded scholarships for 297 midwives, 297 nurses and 350 community health workers. We also supported—and continue to support—the development of a master plan for the redevelopment of the Angau hospital in Lae, which was referred to earlier. I have been to the hospital and I can assure you that it is as bad as your previous witness outlined. It is desperately in need of redevelopment, which we have agreed to co-fund with PNG government fifty-fifty. The master plan has been concluded and we are now moving into the next phase, whereby tenders will be released to the market early in the new year. Australia's support in family planning has resulted in just under 12,500 women accessing outreach services provided by our partner NGO, Susu Mamas, and Marie Stopes International reached 14,666 clients with permanent and short-term family planning needs. That is just a brief overview.

CHAIR: Who signs off on that expenditure of $100 million on health?

Mr Kimberley : We have an overall program strategy that is developed each year. The individual components would be signed off principally by the minister-counsellor—the SES band 1 who sits in Port Moresby—who is in charge of these sectors. Depending on the size and scale they would, as necessary—

CHAIR: What I am trying to get at is—and it is a very simple view: if you give a private equity manager $100 million to deliver an outcome over five years, you know who you are dealing with. If he does not deliver it, you move him on and get someone else. In terms of $100 million of taxpayers money expended in health, who is signing off on those projects and who is measuring the success, or lack of, or redirection of that money?

Mr Kimberley : Our minister, council for development, high commissioner, and this position that I am acting in at the minute—

CHAIR: Ultimately, if in three years time this is a total failure, and there are more examples of Lae and the other example you gave, you would be moved along? Is that how it works, or would you just stay there for the next century and just keep spending $100 million?

Mr Kimberley : We would not be staying there for the next century and committing $100 million. We have closed down, shut down and changed a raft of underperforming programs over the last 2½ years while I have been in this job on this program. I cannot tell you off hand how many—

CHAIR: Have you moved any people along?

Mr Kimberley : Have we moved any people?

CHAIR: We might have moved the programs along and shut them down but have we actually said, 'That was a bad decision. We invested in the wrong area'?

Mr Kimberley : Yes. In terms of the implementation of underperforming partners, absolutely.

CHAIR: And what about in your department? Do you just get to preside over failure or do you get rewarded for success?

Mr Kimberley : The assessment of our performance is undertaken each year in line with the department's performance assessment framework in which I am responsible to my immediate supervisor and he or she to his or her supervisor. I think the department has a fairly robust performance framework.

CHAIR: What I am trying to say is that we have invested $5 billion and we have not met any of the goals. We cannot just keep doing the same thing. Ultimately, you have to look at the people who make the decisions about where the money goes. We can always blame the end recipients, but $5 billion for not meeting any of the—we have 48 per cent stunting on your figures here, with 60 per cent in the highlands and 38 per cent in the islands. We cannot keep throwing $5 billion down the drain. People want results.

Mr Kimberley : Five hundred million dollars is a very large amount of money to spend annually in one country. However, as I said, it is only eight per cent of the total expenditure. The challenge, I think, is for us to make better use of that money to leverage PNG resources to meet those goals that you have just highlighted. I do not disagree with what you have just said, which is in no small part why in 2013 we undertook our very comprehensive assessment of where we were spending money and how we were spending it. That is where we came up with the goals to redirect what we were doing in PNG. It was signed off by both governments. It included a commitment that, by 2017, 50 per cent of all of our expenditure will be on infrastructure and 30 per cent will be towards private sector-led growth. There is range of other targets. If you just bear with me, I will just get it—

CHAIR: No. I probably sort of ambushed you—

Mr Kimberley : No. It is in the report.

CHAIR: If you want to go on to education and how much that is.

Mr Kimberley : The expenditure last year in education will be just under $64 million. Primarily, that is invested in infrastructure and scholarships. The sort of outcomes that will be achieved will be the construction of 80 double classrooms, 40 teacher houses and 48 new ablution blocks for boys and girls. Obviously, regarding the key constraints to kids being able to get the school, all three of those things are really important. We know that particularly in rural communities in PNG, as not just in education but in other sectors, housing for teachers, doctors, nurses or police is key. Often, there is not adequate housing. So there is a big focus on those things to help encourage people—

CHAIR: We hear stories that teachers are walking for two days to go and get their pay cheque.

Mr Kimberley : Correct. Our money does not go through their systems to pay those bills. Our money can help build the facilities so that roof is not leaking, the walls are on, they have houses in which to live and have solar panels on the roof so that they can prepare the next day's study for the kids. That is what your taxpayer money is doing at the moment. Also, 55 per cent of scholarships to study were awarded to women last year. That is a higher proportion than in many—

Senator BACK: This is studying at teacher training college, is it?

Mr Kimberley : They are scholarships, generally, at our universities. They are the Australia Awards.

Senator BACK: In Papua New Guinea or in Australia?

Mr Kimberley : In Australia. We also do scholarships in PNG. A total of 584 scholarships have been offered in Papua New Guinea under the Australia Awards program.

Senator BACK: Over what period of time?

Mr Kimberley : This is for 2014-15, so last year.

Senator BACK: And what would the success rate, the pass rate, of the students be—100 per cent? Close to 100 per cent?

Mr Kimberley : It is not 100 per cent. I will have to take on notice the exact number, but it is equivalent to pass rates that we have for Australian students. We do longitudinal tracking in terms of where they then end up and—

Senator BACK: How long they remain in the profession?

Mr Kimberley : alumni networks, and work with that to then use that to leverage those relationships to influence decision making. We also fund domestic scholarships inside Papua New Guinea, which we do not do in many other countries at all. PNG is one of the few countries in which we do that. It is more a reflection of the size and scale that there has been this—our institutions are similar, so there are similar learning practices. I will have that number for you in one second. I can give you that figure: 584 scholarships to PNG, and 124 of those will study in Australia in 2016; seven tertiary students took up positions under the New Colombo Plan, and there will be a further 46 next year; and various new institutions are coming online.

CHAIR: So that is Australians going to study in New Guinea?

Mr Kimberley : Yes. PNG was one of the pilot countries that was undertaken when the New Colombo Plan was launched.

CHAIR: How many have we got going there?

Mr Kimberley : In 2015, Federation University Australia has 12 students, primarily in the field of study of education, and next year there will be 46. At Deakin, they will be looking at history—Kokoda and the campaign. The University of Wollongong are doing medical studies; they are doing clinical electives in medicine at Port Moresby General. James Cook is doing anthropology. They will be doing that with the University of Papua New Guinea. James Cook will also be doing health, which will be dental pharmacy and medical students undertaking clinical placements next year in Papua New Guinea.

Senator BACK: Very good.

CHAIR: I think we are up to $205 million, aren't we?

Senator BACK: Yes.

CHAIR: What do we spend the rest on?

Mr Kimberley : Transport is the other very large sector—that is $71 million there—and road infrastructure. We are into our second phase of support. This has been a long-running program. In 2014 we maintained and rehabilitated 2,125 kilometres of national priority roads. The key focus—

CHAIR: Were they bitumen roads?

Mr Kimberley : yes—has been to shift from doing the smaller roads and focus on those main economic corridors. So the Highlands Highway, which runs from Lae up to Mount Hagen—I have driven most of the way on this with Mr McDonald, whom you referred to earlier. There are a number of key parts to that. You go up through the mountains, and so as you can imagine it is a very important road. Something like 80 per cent of the internal trade goes up and down that highway, so a lot of our support is on that and the key feeder roads. One of the things we are working on is to make sure the local provincial governments—I think you heard before that the budgets are distributed at provincial and local levels—are working to make sure the feeder roads are supported, and we are encouraging them to do that, as well as, where appropriate, some of the mining companies. If a big mining company has a mine at the end of the road that links to that highway, there is no reason, from a public-private universal good perspective, Newcrest should not look at what they can do. We are happy to advocate on Newcrest's behalf to the local member to make sure their government is also investing, but there is a three-party agreement here and increasingly they are being looked at, which I think is worth noting.

The other areas we support, which are key—

CHAIR: Sorry; I presume this highway has got an assessment of economic indicators? Having that allows goods to get to market; people can transport to education and health. Infrastructure Australia would have a matrix, which would say it is 'X number of productivity', so for every dollar spent, it returns X number of dollars in productivity. Do you actually go to that level?

Mr Kimberley : We do quite sophisticated economic analysis in terms of what our—

CHAIR: It is probably common sense to do it.

Mr Kimberley : The answer is, yes, we do. I do not know that it is exactly the same as you have just described though.

Senator STERLE: Mr Kimberley, I know that nine years ago, when I was there, we were spending quite a bit of money on the Hagen to the Port road. Is that the Lae highway?

Mr Kimberley : Yes.

Senator STERLE: How much have we spent over all the years on that highway?

Mr Kimberley : The current program that I referring to is in its second phase. It started this year. I would have to take it on notice, but from memory we have invested approximately $250 million in that first phase and this next phase is about $400 million.

Senator STERLE: How long was that first phase?

Mr Kimberley : It was five years.

Senator STERLE: And we have just started the second phase now?

Mr Kimberley : Yes.

Senator STERLE: As I was saying, the officials told us nine years ago we were spending money on that. I just wonder how much we have spend on that road.

Mr Kimberley : I will take it on notice, Senator, and confirm how much money has been spent on the Highlands Highway in the last 10 years. I am happy to do that.

Senator STERLE: Go back to see how much we have spent on that highway altogether.

Mr Kimberley : Since independence?

Senator STERLE: Since we started giving them foreign aid and money was coming out in terms of transport. Do that one highway.

Mr Kimberley : I will take that on notice. I do not want to attest to the quality of the records since 1975, but I understand your question and we can certainly look into that. It is one of our biggest investments and it is important because of the nature of the economic corridor and partnership with the PNG government. The other part of that $71 million, though, which I think is not well understood generally—and partly it is because we have not been very good at explaining it—is that we support PNG's efforts in meeting international standards in accident investigation, aviation regulation, air traffic management, transport policy and maritime safety and security. Seventeen per cent of our overflights from Australia go across PNG, so it is in our interest as much as in theirs to make sure that that works well. It is actually one of the unsung successes. In fact, every year there is an annual meeting. They have just had it. The secretaries of our two transport portfolios, Mike Mrdak and Secretary Mumu in PNG, and all of the heads of their agencies, have an annual meeting where they compare policy program priorities. I did not attend this year but I attended last year and I can tell you that it is a very strong institutional and personal link that works well for us together.

Why we invest in this is that when you have a maritime or an aviation disaster the ability for our two governments at a personal and institutional level to pick up the phone and talk to each other is absolutely key. In many ways you probably cannot put a dollar figure on that. But that is one of the successes in the sectors that we work in—free sharing of information, data flying back and forth, which makes everyone's job easier. Most recently through that the International Civil Aviation Organisation gave PNG an effective implementation score of 50 per cent, which had improved from 49 per cent last year. It continues to improve, which gives assurance as business and tourism continues to grow between the two countries.

CHAIR: In the transport sector, how does that interact with the new port the Chinese have built? Does that road—

Mr Kimberley : In—

CHAIR: Where are the Chinese building?

Mr Kimberley : The Asian Development Bank provided the financing for the redevelopment of the Lae Port. I am not aware of what financing the Chinese might have provided for that port. It was principally ADB concessional loans, which have now been concluded. We have not directly contributed to that, but we work very closely with the Asian Development Bank and the other donors in PNG to make sure that our work is complementary and does not double up. They had a development partners forum yesterday, actually, where many of these things are discussed quite regularly.

CHAIR: We have gone through law and justice, health, education and transport.

Mr Kimberley : I can talk quickly on governance. I have raised the precinct already. Just to round that out, it has been up and running only for a year. Through the school of business 125 students, 44 of whom were female, participated in courses principally led by a visiting Australian National University lecturer. A twinning partnership between ANU and UPNG has been established under it. There are also partnerships with UQ, James Cook University and several other institutions. In fact, just this week a number of the principals for the two institutions are in WA, meeting with the Joondalup Learning Precinct as an example of how you get two slightly different organisations—an IPA is different to the university, and there have been some challenges in getting them to work together, so we have been showing them different ways that that can happen. We are also working with the Australia and New Zealand School of Government around leadership, business ethics and corruption. Also, ExxonMobil just recently partnered with us and the University of Queensland to deliver a course in the ethics around extractive industries, and we had the Exxon managing director come and present to a course that consisted of public officials, private sector reps and state-owned enterprise managers so they can all understand how to better and more ethically apply practices in the extractive sector.

We also have big support in this for civil society organisations, and we support more accountability: Transparency International, Media for Development and City Mission. We train 9,000 young people in the rights of leadership and good governance through an Open Parliament Project and the Mike Manning Youth Democracy Camp—they are just two examples.

In gender—just to round out your numbers, because I know you are keeping track, Senator—we had $10 million invested over five years in the UN Safer Cities Program for Port Moresby. That is to help produce markets so that women can trade without fear, and it is providing cash cropping opportunities, extension services, lighting, ablution blocks and those sorts of things that make it safer for people to trade through to the evening. We trained an additional 32 per cent above the figure for women trained last year.

We also do work in disability: $1.8 million in grants were provided to implement disability-inclusive infrastructure in a number of hospitals and schools, helping disabled people. We also distributed 8,000 assistive devices, mostly in rural areas, to people with disabilities. Also, in our scholarships program nine per cent of awardees are living with a disability. They are coming into Australia. I met a student who is visually impaired, and he will be coming to do a degree in agriculture, and as part of that his carer is coming with him. That is standard across all of our awards programs.

CHAIR: Senator Back has a few questions for you.

Senator BACK: Yes, I am sorry. Time is going to run out for me. You mentioned that, as we all know, the Papua New Guinea Prime Minister has informed advisers that they are to be out by the end of December; you have pleaded for that to be the end of June. Can you tell us, now or on notice, which agencies of the Australian government have advisers in Papua New Guinea and how many of each. I think from memory, with regard to police, we have been told it is 70. Are you able to tell us now?

Mr Kimberley : We have 33 Australian government officials deployed as advisers.

Senator BACK: Thirty-three in total?

Mr Kimberley : We have just over 100 contracted advisers working in various capacities, and there are 73 police.

Senator BACK: On top of the 33?

Mr Kimberley : Correct.

Senator BACK: And the 100?

Mr Kimberley : Yes.

Senator BACK: So there are roughly 200.

Mr Kimberley : Correct.

Senator BACK: What agencies would the contractors and the 33 officials be representing? Treasury? The tax office?

Mr Kimberley : I will take it on notice and give you a full list.

Senator BACK: Thank you.

Mr Kimberley : I will just talk generally about the 33 Commonwealth advisers. There are 11 from Attorney-General's, which is the largest group. There are six from the Department of Immigration and Border Protection, which includes Customs following the integration of those two organisations. There are four or five from Treasury, four from the Department of Finance, two from ANAO and two from ATO. Sorry, I am just thinking about who I have missed. There is one from the Ombudsman.

Senator BACK: And all of those people will be required to vacate?

Mr Kimberley : No. Advice we received just this week is that a number of those positions fall outside the administrative arrangements that have been issued by the Papua New Guinea government. What we are still working with them on is to determine exactly which positions do and do not fall in the categories which they have outlined. There is concern by some of the secretaries of the departments that are affected, who are speaking with the central Department of Personnel Management about how this will be implemented and what it means for them.

The other thing that is important to note is that it is not just about Australian funded advisers. It is all foreign advisers. The meeting I mentioned that happened yesterday was with the PNG government and all of the main donors—us, the US, the Japanese, the World Bank, the ADB, the Kiwis. This issue was discussed at length. The PNG government agreed that they still need to explain very clearly to everybody which positions they are looking at. Our foreign minister has written to her counterpart, Minister Pato, and Minister Puka Temu, the Minister for Public Service, outlining concerns.

It is not that we are concerned about what they are suggesting in terms of changing the in line. We have said all along that we do not disagree that there is a good opportunity and there may well be good benefits in making changes. What we are concerned about is the speed of the transition and unintended consequences. Aviation security is a classic one. It is in no-one's interest if all of a sudden we yank out our support on 31 December. That is recognised by the PNG government. They have absolutely said it. It is a conversation that will continue. We have our annual ministerial forum scheduled for early March and we have asked that the PNG government defer final decisions for ministers to make decisions at that point.

CHAIR: Are there any implications for governance and expenditure in our aid programs?

Mr Kimberley : Very little of our aid program goes directly through the PNG government—less than five per cent.

Senator BACK: I am interested in two things. What impact will this decision be likely to have on the effectiveness of our delivery? For example, you mentioned law and justice. There are 11 attorneys-general out of 33. The second thing is: to what extent, if at all, is it going to affect our capacity to be able to measure the effectiveness of our spend if these people, the 33 and/or some of those 100, are caused to leave?

Mr Kimberley : It will not affect the measurement of our effectiveness. We do that through systems and quality checks, often through independent verification against the original aid objectives of the programs. Certainly, having fewer people that are more intimately involved in what is going on will have an impact, but it will not stop us from measuring performance.

On the first point, the effectiveness of our investments, not having some key advisory support or having it withdrawn unilaterally would likely have an impact. One of the things that we have discussed with the government of PNG is that there is uncertainty about how long term you can leave advisers in PNG. Often people go with families and commit to three- or four-year contracts. We are now actively looking at deferring the deployment of any replacement advisers into the new year until this is resolved. We do not want to deploy someone and then have to pull them back, not least because it is expensive.

CHAIR: Particularly in terms of providing secure accommodation.

Mr Kimberley : There are housing and mobilisation costs. It is a prudent decision, and we have been very open and frank with our partners in the various departments and agencies in PNG. They understand that, absolutely. Prime Minister O'Neill himself has said, 'Don't worry. I am not going to kick people out and cancel their visas on 1 January.' He himself has said that.

CHAIR: You can take that to mean that he considered it and decided against it.

Mr Kimberley : I do not think so. I think it is well understood what is being asked on both sides. There is a very sensible conversation going on about the practicalities. It is a stretch target for both of us.

Senator BACK: You started to indicate that, by 2017, 50 per cent of our expenditure will be on infrastructure and 30 per cent directed at the private sector. I do not know that you got beyond that. We got onto other topics. I am anxious to know a little bit more about those changes.

Mr Kimberley : The changes that we were going to make? Just bear with me and I will just get the full list. Sorry, I cannot identify the actual, I can give you—

Senator BACK: The nature of my question, really—well, an extension of it—was what proportion of funding in general terms do you see as being directed by DFAT itself and what proportion do you see being allocated to the private sector, including NGOs? Do you see that proportion changing over time and, if so, why?

Mr Kimberley : At the moment we can give you a breakdown of the spend by implementing partner and by type, but we invest through private development companies. In the example of the transport sector that is delivered by the Snowy Mountains hydroelectrical company, which is an offshoot from when they built the Snowy Mountains scheme. They work internationally. They implement the transport sector program for us.

Senator BACK: Okay, that is useful information.

Mr Kimberley : That is about 80 per cent. Less than five per cent goes through PNG systems and then there are various breakdowns through academic institutions and various NGOs. I know the committee has heard from some partners about concerns around procurement and time frames and, indeed, prequalifications. The Department of Foreign Affairs and Trade—not just in PNG—has prequalified boards for all kinds of services. From memory there are 18 of them. Extensive work was undertaken to set those up under the former AusAID and they have continued under DFAT.

Senator BACK: I think one of the pleas was, if I remember correctly—and the secretary will correct me if I am not—that the concept for some of these programs was being allowed to have them developed out over three years, or longer than the one-year period—

Mr Kimberley : Yes.

Senator BACK: so that they are not spending most of their time applying for it and then being accountable for it. Obviously, you have to be accountable, but allow the length of the program. To work. As you said, to be 'prequalified'—

Mr Kimberley : Yes.

Senator BACK: if they are deemed to be competent, if audit processes show that they are honourable et cetera, then in a sense they get rewarded for a lesser level of annual audit.

Mr Kimberley : That is exactly what those panels are there for. We make use of them.

Senator BACK: Good, okay. You are giving us satisfaction that—

Mr Kimberley : I think that the issue, particularly for the NGOs, is that annual grants based programming is very difficult because, effectively, by the time they start the program they have to start bidding for the next one.

Senator BACK: That is right, exactly.

Mr Kimberley : We do not disagree. Increasingly we are looking at three- or even five-year sequencing. YWAM, who you mentioned before, were in that category up until this year. We now have a four-year grant process: they are getting a similar amount of money from DFAT, but they were getting it annually. Their complaints were valid. We have given them a surety on financing for four years. This is a change for them. Previously, they got annual grants and the process of assessing the performance was not really an opportunity for annual review. It was sort of ex-post, because the money was spent.

They are now into four-yearly, so now the obligation is on them and us to make sure that four years are working. We will, as is normal, have a midpoint review of how that is going and we will work with them to do it. That is well received, but that does pose an impost on many of the smaller organisations that we partner with and we have to be careful that it is not too onerous. But it still needs to be rigorous, because it is taxpayers' money.

Senator BACK: They are your strongest advocates, I can assure you of that, Mr Kimberley.

CHAIR: In the few minutes that we have left I want to summarise the position the committee finds itself in. We hear lots of competing evidence: most of it is overwhelmingly negative. If we look at the measurements, whether they are HIV, or TB-resistant strains or stunting in children, we hear all of those things being reiterated in a number of different submissions.

You are obviously good people doing good work and you come in and try to put it all back together, but the average taxpayer looking at the spend would, I think, be onside with me in being a little impatient with the results. The results are negative and declining despite all the best efforts. So you have a couple of minutes to try and plug us all back together and keep us on the path we are on. We have heard a lot of evidence, and I have also heard evidence on the Joint Standing Committee on Foreign Affairs, Defence and Trade foreign aid subcommittee. So I have been exposed to a whole lot of this stuff and I do not have any great optimism that we will see any improvement in the health indicators and those sorts of things. Can you put us back on the right path?

Mr David : I might respond from a health perspective. I think the issues around pushing effectiveness of the aid programming are really important and a lot of the points are very valid. We might take a step back and look at the context in which we are working and what we are trying to achieve by way of results—for example, maternal mortality reduction for the whole country and child mortality reduction for the whole country. That is something that we cannot do unilaterally; we have to work in partnership with the country and, particularly, the government as the steward of that health investment. To give you a sense of the challenge, though—and I am sure you have heard these sorts of figures before—PNG spends less than $100 per person for health, of which our spend per year is about $10 of that total. That is compared to, say, $5,000 to $6,000 in Australia. The issue is: how do we get the very scarce resources that exist in PNG and influence those to take these key interventions like childhood vaccination or BCG vaccination for TB to every child under five for every generation of children coming through? The point is that we have very limited resources in a very poor governance environment and we have to think about the balance of how to invest to fill gaps; but also, ultimately, to get those big shifts in mortality reductions, we have very little choice but to work with government to try to influence how they allocate their resources. I would say that the things we have achieved, certainly in health, have been significant, and we certainly have offset bad things happening and things getting worse. That is one of the key points.

For a lot of commentators, it is about understanding the context in which we are working and that very scarce resource environment, where it sounds like a lot of taxpayers' money, and it is, but, relative to the problem, it is relatively small—$10 of the $100 for health, when, really, that country should be spending $3,000 per person per year for health. I hope that gives a sense of some of the issues.

CHAIR: But, as I said to Secretary Varghese, you have had, since 1994, I think, a continuous compounding economic growth of over 4½ per cent, so the economy has been growing at a quite stupendous rate in a lot of cases, but there has been no inclusive growth. The sharing of that economic growth has been non-existent outside of, say, oil and gas in Port Moresby.

Mr David : I would agree with you, and the issue going forward is: how do we more effectively influence domestic budget allocation and then implement that? There are a number of constraints, but you are absolutely right. And we know that it is going down now, so the resources available for basic health and education are going right down. So it is really very important now that we think about not just what we do through NGO delivered projects but how we influence, through that diplomacy, the allocation of those domestic budgets.

CHAIR: Mr Kimberley, I know you said that Timor-Leste is not in your purview, but do you agree with the evidence given earlier that it is perhaps a bit better on governance than New Guinea?

Mr Kimberley : I cannot really comment. I have not had anything to do with Timor-Leste for about 15 years, so I am not really in a position to make a comparator. I think that, for any developing country in our region or elsewhere, these are often very challenging environments. Leadership is key and having partners whom we work with is key. We have some very good partners in Papua New Guinea at a national, provincial and local level. The difficulty is often maintaining the support. The challenges are big, as Mr David has just said, and maintaining our support in the long term and being able to work with them to use their resources is absolutely key.

On education, as you have heard, we would absolutely support continued investment in the children of today so that they are the leadership of tomorrow. That is very clear and that is why we continue to do that. Supporting systems of health to leverage their resources and to deliver services for their people so that they have healthy kids that then can grow into smart and healthy adults is important. But these are generational changes. I am not sweeping under the carpet the last 40 years of support and indeed before that, pre-independence. But I do think, as I said, that we often hold some of our developing partners to a higher standard than indeed our own history would show and that it takes a long time for institutions to become as robust and as strong as the ones that we benefit from here today. The benefit in PNG, and indeed much of the Pacific, is that our systems are based on the same basic structures in the Westminster system, which makes it easier, in many ways, for us to work, but also we would not fall in the trap of saying that they are exactly the same. PNG's systems are different to ours, and we need to work within their systems and their context to help enable successes.

CHAIR: I know we keep coming back to the spend of eight per cent of their budget—it is relatively small in numerical terms—and the 7½ million people. Does anybody measure the cost of the corruption and what percentage of their budget that is? Is corruption costing that nation 10 per cent of their available spend? Does anybody do that?

Mr Kimberley : There are a number of independent assessments that put figures. I am not able to comment on the veracity of those. The analysis that we have certainly undertaken is more about where they are allocating money and then tracking, as we do in Australia, your budget and your actual outcome at the end of the year, in terms of mapping and understanding—'So you said you were going to spend X on health and then you actually spent Y'—and then looking at what were the factors that stopped the spend. Corruption is an issue. However, sometimes it is just basic inefficient systems that do not get money from A to B to buy the goods that then get it to C. Value chains are key. The work that Customs is doing, for instance, in part is to work out how they can fix those blockages so that goods can get through the ports faster. By doing that, you are going to increase productivity or increase growth. There are low-cost interventions that we can undertake that can help unblock those things.

I am not for one second suggesting that corruption is not a problem—it is. That is why we have very strong controls around where we spend our money. What happens to PNG's money is, in many ways, a matter for them. Where there are accusations or claims that funds are flowing into Australia, those are referred to the appropriate authorities all the time and we have zero tolerance for this. We have very strong, robust systems, both with our law enforcement agencies and with our banks. So I think that the issues are treated very, very seriously whenever they are raised, but supporting their systems to be more efficient through our interventions is a way that we can support them to spend their money more effectively and put in place those controls that then stop the leakage that you have heard about on a number of occasions as well.

Senator STERLE: Mr Kimberley, I know you cannot comment on the veracity of the information that is floating around about the costs of corruption, but it was said to us 10 years ago at the high commission of PNG, that PNG did rate among the top three most corrupt countries in the world. Do you have a ranking now?

Mr Kimberley : I do.

Senator STERLE: I misled the Senate. It was 10 years ago, not nine years ago. Sorry. I had better correct the record.

Mr Kimberley : I will get you that. I just cannot put my finger on it right this second.

Senator STERLE: Yes, sure. No worries. It would just be interesting to see. I know populations hide all sorts of stuff.

Mr Kimberley : It is no longer in the top three.

Senator STERLE: Good.

Mr Kimberley : It has reduced, but it is still high. I will just take that on notice and I will give you the latest Transparency International assessment that was used.

Senator STERLE: That would be good. Thank you, Chair.

CHAIR: I would like to close this public hearing and on behalf of the committee thank you for your submission and your evidence here today. Thanks to Hansard for their good work through the day. If you have taken questions on notice, we are suggesting that 11 December 2015 would be the appropriate date to respond to that. Thanks very much for your evidence. We will now adjourn.

Committee adjourned at 12 : 30