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Australia and the Pacific Islands: strategies for development, speech

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by the

Minister for Foreign Affairs The Hon Alexander Downer MP

Australia and the Pacific Islands:

Strategies for Development


17 December 1998

(Check Against Delivery)


I am delighted to be here in Fiji again addressing such a distinguished gathering on key aspects of

Australia’s engagement with the Pacific island countries.

Today I will be announcing Australia’s new Pacific Islands Development Strategy, an initiative aimed

at better focusing our contribution to the important task of regional and national development.

But before I do, I would like to put the Development Strategy in its broader context, to talk a little

about the highlights and challenges faced by the region over the last year and the importance of this

region for Australia.

The Pacific Islands region is a unique part of Australia’s neighbourhood and we intend to give the

region the recognition it deserves. The need for this recognition was a key factor in my determination

to have the Minister for Foreign Affairs, rather than a junior Minister, represent Australia in the region

and I am pleased to say that I will be retaining that responsibility during the Government’s second term.

I have made it a personal priority to make at least an annual trip to the region in order to exchange

views with Pacific island leaders. On this trip I have been able to develop further Australia’s

understanding of the issues confronting the region through engagement with leaders in Solomon

Islands, Kiribati, Tuvalu and Fiji. This year I have also had the privilege of representing Prime

Minister Howard at the Forum Leaders’ Meeting in the Federated States of Micronesia.

The past year has presented the region with both new and old challenges. No part of the world has been

immune from the economic problems that are flowing from the downturn in East Asia. In the Pacific

islands region these difficulties have been compounded by a drought that has affected many nations and

is still having a dramatic impact here in Fiji. Developing the right responses to these problems gave a

special focus to the second Forum Economic Ministers Meeting held in Nadi in early July. A similar

commitment to developing long-term solutions is emerging in the way the region begun to address

critical fisheries management issues.


Economic and social problems will require sustained attention, but there has been progress made on a

number of fronts. In New Caledonia the Noumea Accords were endorsed overwhelmingly in a

referendum and with strong regional support, progress is being made to bring peace to Bougainville.

There are other examples, but the impression I have is that with leadership and vision the Pacific

islands region can meet the challenges of the next century.

Australian Interests and Australia’s Role

As was set out in last year’s first ever White Paper on Foreign and Trade Policy, Australia has abiding

strategic, political and economic interests in this region. These include the stability of countries in the

region; their understanding of and, where appropriate, support for Australia’s concerns and objectives;

the security of the region’s natural resources; and the expansion of opportunities for two-way trade and


These interests require more than just the maintenance of routine bilateral relationships. They require a

genuine engagement. We must be more than just neighbours, we must be good neighbours. That is

why we devote significant diplomatic resources to our relations with the Pacific island countries and to

the work of regional organisations, and why the Pacific occupies such an important place in the pattern

of our overseas development assistance. Australia ignores the Pacific at its peril.

Being a large and prosperous member of the neighbourhood inevitably creates expectations, both at

home and in the region, that we will play a leadership role. Our size is a fact of life: we don’t apologise

for it, nor will we shy away from putting our views on issues directly and forcefully when we have to.

Ultimately, however, we recognise that solutions to regional problems must be forged as cooperative

undertakings. They cannot be manufactured in Australia, or anywhere else, and imposed on the region

- unilateral initiatives are rarely effective. Australia needs the cooperation of the island nations of the

Pacific as much as they need ours - and we must work hard to obtain it. That is why my approach as

Minister has been to encourage Australia to appreciate differences, to listen to what our neighbours say,

accept constructive criticism and avoid facile assumptions.

Trade is of course an important part of our interests in the region. Pacific island countries have long

been an important market for Australian goods and services which are widely accepted and are seen as


having the right price, quality, high reliability and strong service backup. The Pacific market supports

numerous Australian small to medium enterprises, many based in regional Australia. These companies

are seen by Pacific importers as often more accessible and approachable than larger concerns, and many

have taken advantage of proximity of the Pacific market, which offers good opportunities for new

exporters. Australia has a major share of the import markets of most countries in the region, with

petroleum products, manufactured goods and foodstuffs being particularly important, as are services.

Needless to say Australia is also seen as a potentially lucrative market for goods and services from

Pacific island countries - as business people in Fiji have been particularly quick to recognise.

With the region’s prosperity in mind we have sought to play a positive role in the promotion of trade

and investment, supporting where we can regional efforts to liberalise trade, consistent with the

objectives we pursue through the WTO and APEC. Such liberalisation is an integral part of improved

economic management and associated structural reform. There are a number of longer-term issues

here which need to be addressed.

We have also worked bilaterally and multilaterally in support of efforts to improve economic

management, develop resources sustainably and address issues of good governance. It is a clear that

there is a broad consensus in the region on the need to meet the challenges which lie ahead. In

particular there is a willingness among regional nations to tackle globalisation and economic change in

an open and positive manner, and to integrate new ideas with old customs and values. I do not

underestimate the trauma this has caused. But, as I travel in the region I am told - and sense - a

determination to tackle the challenges that lie ahead - rather than retreat into despondency and the

erection of barriers against the outside world.

The Australian Government commends the many courageous steps that have already been taken by

regional Governments, often at some political cost. The efforts of Samoa, the Solomon Islands and

Vanuatu to refocus the business of government and to impose budgetary discipline, and here in Fiji,

where a new constitution which offers a vision of hope for all Fiji’s communities has been developed

and put in place, are notable examples. These steps are not small, they have not been easy, but they

represent concrete examples of governments’ willingness to get the foundations right.


Another outstanding example of the region working together to bring about a better future has been the

willingness of regional nations to make a real and positive contribution to resolution of the conflict on

Bougainville. The efforts of Fiji, New Zealand, Vanuatu and Australia in contributing to a neutral

monitoring group have been vital in providing the environment in which progress can be made. Of

course the peace process would not have gotten underway without strong support from the Solomon

Islands and, most importantly, a genuine commitment and vision from the Government of Papua New


These are the sorts of endeavours which make give me confidence that the region can tackle the big

issues which confront us all. It also leads me to believe that Australia is right to give the priority we do

to working cooperatively with the countries of the region and to support them in their efforts to meet

their development needs.

Pacific Islands Development Strategy

On that note I would like to turn to the Pacific Islands Development Strategy.

It goes without saying that aid is only one element of Australia’s relationships with the countries of the

Pacific region, and that it should therefore not be seen as defining what are broad relationships between

sovereign states. But neither should its importance be undervalued. Recent events in Asia have

dramatically illustrated how important well-targeted and well-timed aid can be in protecting economic

and social gains.

Like other facets of Australia’s broader relationships with the countries of our region, aid relationships

should from time to time be reviewed and given clear directions for the future. This is particularly so at

a time of regional and global economic turmoil, the effects of which are being felt by the Pacific island

countries no less than by Australia.

Australia has long accepted a special responsibility to help Pacific island countries overcome the

disadvantages they face. Australia provides about $130 million in aid to Pacific island countries,

excluding Papua New Guinea, each year in the form of goods and services sourced mostly from

Australia, New Zealand and Pacific island countries themselves. If our treaty based assistance to Papua


New Guinea is taken into account, Australia is by far the largest donor to the Pacific region. Even if

our assistance to Papua New Guinea is excluded, Australia still runs a close second to Japan. In fact

just three bilateral donor countries - Australia, Japan and New Zealand - provide around 80 per cent of

total donor assistance to Pacific island countries.

We may be one of the largest donors on the block, but in this as in other areas we do not seek in any

way to throw our weight around. Australia’s assistance is designed to be relevant to national and

regional priorities and Australia’s aid delivery mechanisms have established a reputation in the region

and with other donors for their flexibility and responsiveness in this regard. The Australian

Government recognises that most Pacific island countries are highly reliant on external support and that

uncertainty about aid levels can have a major impact on economic planning and management. For this

reason, we have been careful to cushion our aid to this region from the full impact of any year-to-year

fluctuations in Australia’s overall aid budget.

It is sometimes said that Pacific island countries receive too much aid for their own good, that the

combination of high aid levels and low growth rates presents a ‘paradox’—the overused 'Pacific

Paradox’. It is often claimed that donors are frustrated by the persistence of this paradox and are

reducing their aid as a consequence. And some even believe such reductions in aid would make little

practical difference because the great majority of Pacific islanders carry on a life of ‘subsistence


Let me say that in my view these three notions—the Pacific Paradox, waning donor commitment, and

subsistence affluence—are all fictional. When the special circumstances of small island developing

states are considered, neither their levels of aid nor their levels of growth should come as any great

surprise. Of course the quality of economic management will be a significant factor determining

growth outcomes, but good economic management alone cannot be expected to overcome the structural

barriers to economic development in the short- to medium-term.

This fact is recognised by the main donors to the region who, as the official statistics clearly show, are

not in fact reducing their commitment to its development. As for the notion of subsistence affluence, I

accept that graphic instances of poverty such as starvation are mercifully rare in the region. But poverty

has many forms and dimensions. For most Pacific island countries, poverty amounts to very limited


access to basic government services—such as clean water, primary health care and basic education—as

well as a high degree of vulnerability to external forces, whether climatic or economic. In this sense,

poverty is both very real and very widespread in the region.

I have every reason to believe Australia’s aid to Pacific island countries is already on the right track

being in keeping both with:

• the overarching poverty reduction objective of Australia’s aid program; and

• with the development objectives and priorities of Pacific island governments, as conveyed to us

through our discussions with leaders and ministers in many countries around the region and in

regional fora such as the Forum Economic Ministers Meeting and the South Pacific Forum.

Nevertheless it is important that Australia take stock from time to time. Adjustments in our priorities

and methods will inevitably be needed if Australia’s aid is to keep pace with emerging challenges and

evolving regional priorities, particularly in a period of global economic uncertainty. It is also important

that the objectives guiding Australia’s aid, and specific strategies for advancing those objectives, be

explicitly codified. This makes it plainer what we intend to do and it makes us more accountable for

achieving outcomes. In a context of increasing transparency and accountability in the operations of

governments across the region, we could hardly do otherwise.

Let me now set out some of the future directions for Australia’s aid relationship with Pacific island

countries contained in Australia’s new Pacific Islands Development Strategy, which covers the three

years 1999 to 2001. This is the first in a series of new country and regional strategies that I asked

AusAID to develop in response to a recommendation of the 1997 independent review of Australia’s aid

program. The fact that it is the first to be launched is, I think, a fitting reflection of the importance

Australia attaches to its relationships with the Pacific island countries. I believe the new directions I

am outlining today will add further substance and clarity to those relationships in the years ahead.

In the long-term, the objective of Australia’s strategy is to achieve the maximum possible degree of

self-reliance for Pacific island countries. Given the enormous diversity within this group, self-reliance

will take different forms in different countries. In the larger and more resource-rich nations, it will

ultimately mean a cessation of, or “graduation” from, most forms of ongoing aid. For the less


economically viable atoll states, self-reliance will probably never mean independence from aid.

Nevertheless, these smaller nations could benefit from being given greater flexibility in the use of their

aid resources.

For the medium term, Australia’s aid will aim to contribute in a material way to the achievement of five

principal outcomes for pacific island countries:

• First, better governance — through widespread adoption of the policy and legislative frameworks

required for an efficient, accountable and service-oriented public sector;

• Second, stronger growth — through sustainable resource use, infrastructure development and

effective promotion and regulation of trade, investment and private sector activity;

• Third, greater national capacity — through improvements in professional, technical and

administrative skill levels in both the public and private sectors;

• Fourth, better service delivery — through improvements in the quality and reach of basic

government services in the areas of primary health care and basic education, particularly outside the

main population centres; and

• Fifth, environmental integrity — through national and regional measures to mitigate the impact of

economic activity and population growth on land and marine environments.

The World Bank’s recent study Assessing Aid provides convincing evidence of a strong positive

correlation between good governance and aid effectiveness across all sectors of assistance. Australia’s

growing portfolio of assistance in the area of good governance, combined with a strong resolve on the

part of Pacific island governments to implement commitments, is the best form of insurance for

Australia’s considerable investment in health and education programs across the region. There is not

only a balance, but also a high degree of synergy, between aid in support of good governance and aid in

support of other, more traditional social and economic objectives.


Australia will be putting in place a range of specific measures in pursuit of the five broad objectives I

have just outlined. These fall into three broad groups.

Measures in the first group aim to ensure coherence and coordination between the many strands of

Australia’s bilateral aid efforts, and between our efforts and those of other donors.

Measures in the second group aim to improve Australia’s capacity to identify and mobilise the very best

Australian, New Zealand and regional public sector expertise for technical assistance assignments in

key government agencies and institutions of public accountability in the region. A related aim is to

increase our capacity to establish lasting personal and institutional linkages between Australia and

Pacific island countries, not just through the traditional medium of scholarships but also through

volunteer programs, technical assistance programs and support for institutional exchanges.

Measures in the third group aim to increase the effectiveness of regional approaches to aid delivery.

Australia will be seeking to encourage both productive competition and closer working relationships

between the Pacific regional organisations. At the same time, we will be taking steps to ensure that our

own regional programs become more strategic and more firmly grounded in regional institutions.

I do not suggest that anything I have said today represents a major shift in Australia's aid priorities or

strategies. Our new strategy does not seek to reconstruct the foundations of Australia’s aid to the

region, but simply to sharpen its effectiveness, and to make its guiding priorities consistent and


United by Common Values

My experience on this visit and on others before it give me great confidence in the willingness of our

Pacific neighbours to engage with us on a range of issues, even if sometimes we disagree on them. I

very much appreciate and value the closeness and openness of our dealings, which I believe, has meant

that Australia is involved positively in the affairs of the Pacific island countries to a greater extent than

it is anywhere else in the world.


This closeness is, I believe, underpinned by a consensus across the region on basic values. This is a

consensus which can too easily be undervalued or taken for granted. Shared sources of religious belief

and ethics within our diverse societies are very significant. Just as importantly, traditions of

consultation and consensus stemming directly from the cultures of the region have provided the

inspiration for the high levels of cooperation which countries of widely differing characteristics and

endowments have been able to attain.

I have no doubt that this closeness will remain a feature of our relations into the future. As a key

element in those relations, Australia’s Pacific Islands Development Strategy will, I am confident,

ensure Australia remains a responsive, reliable and flexible development partner for all Pacific island

countries as we jointly face the challenges of the new millennium.