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Papua New Guinea and Australia: Ten years on: speech, Canberra



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No. Ml 5 2 Date 17 September 1985

EMBARGOED UNTIL 7:30 P.M. 17 SEPTEMBER 1985

PAPUA NEW GUINEA AND AUSTRALIA : TEN YEARS ON

Following is the text of the inaugural Sir Hubert Murray Lecture by the Minister for Foreign Affairs, Mr Bill Hayden, MP, to the Australian Institute of

International Affairs in Canberra on 17 September 1985.

As a person with an interest in our closest neighbour

bordering on fascination, I am especially pleased that I have been invited to give the inaugural Sir Hubert Murray lecture on the occasion of the 10th anniversary of Papua

New Guinea's independence. Let me (first) pay tribute to the organisers of this dinner and lecture: the PNG

High Commission (and especially Sir Alkan Tololo) and the Australian Institute of International Affairs. I am confident that this successful partnership will carry forward

its initiative for a lecture series which will be in effect an annual assessment — an annual examination — of a

relationship which has profound meaning for both our nations.

The personal interest in PNG which I mentioned just now coincides roughly with my public life. My own political development (if you like) had a significant PNG dimension. I had a fascination with the process of political development

in PNG which was parallelled by my frustration at the pace of that process. It has to be said that the pace of

political development in PNG was retarded by Australia for what I recognised were base motives. The orthodox view here in the 1960s seemed to be that time was limitless, that independence would take forever and that, accordingly, PNG should shelter under Australian colonial, control. A

less orthodox but immensely influential view during the latter part of the 1960s was that PNG's economic development should in no way be allowed to endanger Australia's economic interests. Empire and little minds do not go well together.

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It was an occasion of great historical moment for me that (with Kim Beazley senior) I was present in PNG in January 1970 when Gough Whitlam punched such a hole in this cynical policy that it never recovered. I attended the meeting

in Rabaul that had such impact on my own as well as PNG's political development. That meeting early in 1970

demonstrated to me an imperative point about the relationship between government and governed: powerlessness frustrates; absolute powerlessness frustrates absolutely; absolute frustration is a volatile fuel with which to run the engine

of government. We have seen this demonstrated in Britain recently. We were close to seeing it in in Rabaul 15 years ago. Instead, the transition to independence, once

quickened, was peaceful. It has not yet properly been appreciated, in my view, how much both Australia and PNG owe to Michael Somare, John Guise, Albert Maori Kiki, Julius Chan and others between 1970 and the election of 1972. They could have used the frustration epitomised by the

Mataungan Association to bolster their own share of the power that was inevitably coming. What we are celebrating is not just the 10th anniversary of independence. We are also celebrating the fact that leaders such as these were more statesmanlike in their concern for their nation than we in Australia perhaps deserved.

In this context, the choice of Sir Hubert Murray for the honour of the title of these lectures is interesting. His personal history is well known. He was the first Australian

to govern under Australian law in what is now PNG. His period as Administrator in Papua lasted more than 30 years: almost half his working life; almost half the period of

the Australian colonisation. He had his personal as well, as professional links with Canberra: his family owned the house which is now the home of the Governor-General in Yarralumla.

His record was both distinguished and honorable — one of the great administrators of the colonial era. He was a visionary in a way. Knowing how rich in resources the land was, he realised that it could be made more

self-supporting. As early as 1911, he was convinced that Papua would soon be able to dispense with the grant it was getting from Australia. His period1 of office was a

time of pacification rather than development. But he appreciated the need for development, not least because he understood the nature of the motives for expatriate

entrepreneurial activity. He was in some important senses the victim of his time: a very conservative time. Hardly anybody, in any colonial administration anywhere, imagined at the time that empire would end within decades. Even

as late as the 1960s, the notion of an end to empire was a kind of heresy in Australia. Hasluck talked about

self-government for PNG in 25 to 50 years. Barnes, his successor, imagined that it might come in 7 5 to 100 years. In many ways, Murray's administration was enlightened for its time. Land was not alienated, as it commonly was in

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the colonialist experience. Communication was maintained between people and the. Administration through imaginative use of village counsellors, assessors and traditional systems. All this is history. All elements of that history ended 10 years ago with independence.

Tonight I would like to ccntibute some reflections on these past 10 years and (more importantly) on where we are now and where we are heading. I say "we" because Australia and PNG are — for better or for worse — permanently thrown

together. The importance of the relationship between us will always be given the highest priority. Geography and history make it inevitable that our concerns must overlap and, in different ways, be shared. We should use this

anniversary of independence as a measure of the progress we have achieved together and the challenges that lie ahead.

Earlier this year, an independent review, commissioned by the PNG Government, produced a useful assessment of the economy of PNG. This assessment (known as the Goodman Report, after the leader of the review team) commences with an overview of PNG between 1975 and 1985. It describes

as "remarkable" the achievements of this period and details them. They are well worth repeating and emphasising:

- an uninterrupted period of democracy, through three changes of governments;

- institutions required to formulate

and implement economic policy have been established and have worked well;

- fiscal discipline has been maintained;

- the direction of the economy is now

firmly in national hands;

- a new currency has been successfully

introduced;

- the rate of inflation since 1975 has

been one of the lowest in the world;

and

- the benefits of development have . been spread widely across the economy.

The Goodman Report, it is true, also goes on to list some unresolved problems, and these too should be mentioned:

- real wages remain out of line with

productivity;

- there is a shortage of skilled and

trained people and financial resources needed for development;

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- constraints on land hamper development, particularly in urban areas;

- rural migration to towns is a burden

on social services;

- there are problems of law and order;

and

- there is a need for administrative

and financial reforms in the public sector.

Goodman, it will be noted, listed law and order as one

of PNG's particular problems. Another very detailed report, dealing specifically with this issue, was completed late last year by a group led by Mr William Clifford. The

recommendations of this second report contributed to the PNG Government's announcing a series of measures with the objective of containing the problem. The Clifford Report continues to provide an authoritative basis for firm action

to tackle what is accepted on all sides as a serious and embarrassing problem for the authorities.

It is a problem which has complex roots: in rapid and

unequal development, in urban migration and in unfulfilled expectations, especailly as they affect employment. But its origin is economic and it is in the economic areas that much of the damage is manifested at the national level, as well as the individual level. Lawlessness and disorder deter business, investment and the recruitment of skills

from overseas. They greatly impair efficiency at every level of economic activity. In this context, it is worth keeping in mind the findings of the Clifford Report that new approaches to the problem may be required. The

importance of informal and community institutions cannot be overlooked, for example. institutions ranging from the police to village courts need to be strengthened to enable them more effectively to complement each other's

role.

Problems of law and order need to be addressed on a number of levels if solutions are to be found. Clifford makes this clear. ,

I realise that aid from an external source such as Australia can play only a small part in this process. Nevertheless, there should be some ways in which Australia is able to help. At the request of the PNG Government, we have begun an investigation of the training and related needs of the Royal PNG Constabulary.

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One of the real and significant successes of which PNG can legitimately be proud is the achievement and continual nourishment of national unity. PNG, it must be emphasised, is a country of awesome geographic variety and unparallelled linguistic diversity. This fact was said at one time to be a reason — THE reason — why the country would never

be ready for nationhood. Threat of secession has been met by imaginative policies of decentralisation. Vigorous political life in the national parliament in Port Moresby has contributed to the maintenance of this national unity.

We should not be surprised that there should be particular problems in administering a nation with such vast

differences: of highlands, islands and coastal areas; of intense mining activity contrasted with areas not so attractive or conducive to commercial development; of education and opportunity. In a number of cases, the PNG Government has introduced correctives at the provincial

level where local administration has proved inadequate. It has imposed on itself at the national level one of the strictest leadership codes, one of the most stringent systems of protection for individual citizens and one of the most powerful offices of the ombudsman existing anywhere. The PNG Government is evidently fully aware of the importance of discipline in this area, both in terms of achieving national objectives and of the perceptions that the

international community might have.

The Goodman report focussed some salutary light on the economic dilemmas facing PNG. Analysis by foreign observers, however academic and disinterested, can be an uncomfortable experience. Australia has had its share over the years. But it does have the distinct advantage that it helps compose the mind wonderfully on the strengths and weaknesses in the economy and ways to remedy weaknesses. PNG faces problems with which we in Australia have grappled.

International commodity prices have a profound effect on PNG's general economic performance, for example. Imports of capital support real wages at levels which could not otherwise be afforded. As we in Australia have done, PNG

faces some hard political decisions in its dealing with these issues.

Common experience aside, Australia is important to PNG in several key economic areas. It has always been the

major source of official aid for PNG. It is also an

important trading partner with PNG, and source of PNG's foreign investment. Australia remains PNG's largest source of imports. (I should add that our share of PNG's import market has fallen from about 50 per cent in 1975 to 40

per cent, a largely natural development as PNG has developed its external connections.) The trade balance is still very much in Australia's favour, though we are still the third larget market, for PNG exports. PNG is a major

recipient of Australian direct overseas investment. Our investment in PNG in in 1983-84 totalled just under $500 million which is about 13 per cent of Australia's total overseas investment.

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Aid, of course, remains a major element in the relationship between Australia and PNG. Since PNG won independence 10 years ago, Australia has provided more than $2,450 million in budget support aid alone. The Australian commitment

to assist the development of our closest neighbour is well documented. Ten years after independence, PNG receives one third of all our aid allocations. In 1985, Australian budget support is estimated to account for 32 per cent

of receipts by the PNG Government. The five-year agreement signed in Port Moresby by the Prime Ministers of Australia and PNG is the third such arrangement since PNG became independent. It is based on the findings of the Jackson Committee. It will be recalled that the Committee

recommended last year that Australia continue to provide budget support for PNG on a large scale. The agreement signed yesterday provided, therefore, for the transfer

of $1,400 million — more than one billion Kina — and that is before upward adjustments are made to compensate for inflation.

This commitment by Australia emphasises both the- continuity and the development in the relationship between our two countries. Continuity is important. The basic interests that link Australia and PNG are not subject to rapid change.

So it has been agreed between us that, for the next five years, budget support will remain the major form of aid.

It also having been agreed that the real level of aid will decline each year, the agreement signed yesterday provides the PNG Government with desired predictability concerning the level of funds that will be available. An important aspect of the agreement, of course, is that it'be consistent with the PNG objective of continuing to move towards greater

self-reliance. It has also been agreed that all activities conducted under the agreement be in accordance with the priorities of the PNG Government.

Another element of continuity in the aid relationship — closely related to the provision of direct budget support — is accountability for the use of Australian funds. Budget support funds are spent by the PNG Government through its

normal budgetary process. The Australian Government does not directly monitor the use of this money. Instead, it has available to it the various PNG Government reports on the level, efficiency and pattern of PNG Government

expenditures. It also consults closely with the PNG Government on development priorities and progress. In 1980, on the recommendation of the late Sir John Crawford, the two Governments instituted an annual development review process which provided the opportunity for what might be

called structured discussion of PNG's development. The agreement signed yesterday, in Port Moresby provides that this process should continue and that the review should

explicitly consider the contribution of Australian development co-operation to PNG's progress. These

arrangements should safeguard the interests of the Australian Parliament and people in the use of their funds. No

Government, after all, should ignore these fundamental and legitimate interests.

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In addition to the large budget support element in our aid to PNG, the new agreement provides for an expansion of the use of other forms of aid, such as projects and

technical assistance. This aid will be extended to PNG to assist specific development activities which are identified as a priority by the PNG Government. Under the new arrangements, a rapid expansion of this technical assistance and project aid' is. expected, rising to more than $30 million a year during the five-year lifetime of the agreement.

The way such aid is used creates a range of opportunity for co-operation between our two Governments. The areas on which the program will focus have not yet been decided. Some discussions have taken place, however, about aspects of agriculture, education, law and order, and health. The opportunity ailso extends a challenge. It will entail determined co-operative efforts by both Australia and PNG. Both Governments will contribute resources to the activities that will be undertaken. A major effort will be needed to ensure that the opportunities created by the availability of these funds are used t to the maximum. And it will take considerable administrative effort in Canberra and Port Moresby to back up the political will so that success can be achieved.

So, with the gradual decline in Australian aid, PNG will need to diversify its forms of aid. It is also important that it diversify its sources of aid. For a long time

the focus has been on Australia alone, and on budgetary support alone. Australia provides about 80 per cent of all aid received by PNG. The Joint Parliamentary Committee on Foreign Affairs and Defence saw this as important in

its report in May this year on the Jackson Committee

proposals. Indeed, it recommended a greater rate of decline in aid levels than Jackson had envisaged. In doing so, it referred explicitly to "the need to encourage PNG to seek additional sources of assistance". Greater utilisation by PNG of aid from other bilateral sources as well as

international agencies should also minimise the risk of the aid relationship between Australia and PNG being perceived in terms of neo-colonialism.

I shall deal for a moment with PNG's external relations because one of the effects of the relationship between us is that the evolution of the foreign policy of PNG has

significance for us in Australia. The basic tenets of this policy were laid down in the White Paper of November 1981. They are:

- consolidation and extension of existing relations;

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- independent and constructive neighbourly co-operation with governments of nearby nations; and

- diversification and development of relations with other countries with which PNG shares significant interests and with countries with substantial

capacity to affect PNG interests.

One of the most complex problems PNG faces in this area relates to its international land border. This is for the most part a line which, because it is straight, was considered simply enough in the days when it was drawn.

Like many borders drawn in colonialist days, however, it divides people of close affinity. Though there are

Melanesian people on both sides of the border, it is now also in effect the border between South East Asia and the Pacific. And another complication is that the border drawn so blithely runs through some of the highest mountains

and most inhospitable lowlands in either South East Asia or the Pacific. So, if management of this border is a

difficult challenge for both PNG aid Indonesia, nobody should be surprised. The two countries have drawn up a basic agreement on border arrangements. Officials meet regularly to oversee the agreement.

Early in 1984, incidents on the Indonesian side of the border led to more than 10,000 Irianese crossing into northern and central western areas of PNG. The motivation for this movement is not clear. Dissatisfaction with their

lot in Irian Jaya (whether justified or not) and fear of the OPM have certainly been factors. A number of border crossers have chosen to return to Irian Jaya but most remain in PNG. They impose considerable economic burdens on PNG. Their presence is also a. potential cause of destabilisation

in the relationship between PNG and Indonesia. After a difficult start, those living in camps in PNG are now well fed and cared for, largely because of the work of UNHCR (to which Australia has been pleased to make an important

contribution) . This fact had led to a great irony: many of the border crossers now enjoy a standard of living greater than that of the PNG villagers around them and higher than

that they had back home" . This and other complexities in the issue will provide a challenge to policy makers in PNG for some time yet to come. I note that Prime Minister

Somare has mentioned that the Irianese camp dwellers could be settled in PNG.

I should say that, on defence matters, there has been close co-operation since before independence. The Joint Statement in 1977 by the Prime Ministers of PNG and Australia provides

the basis for co-operation and consultation. on matters concerning common security. We maintain a Defence

Co-operation Program with PNG, for which we allocated about $20 million in this year's Budget. The PNG component is

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far and away the largest in our overall Defence Co-operation Program assistance policy. in PNG's case, it involves our providing specialist manpower assistance to the PNG Defence Force, training of personnel, supply of equipment and co-operative projects. Combined exercises are held

regularly in both countries.

Successive Governments in PNG have recognised that Australia ranks as a country with which relations have developed far beyond the formal level, for all manner of reasons.

There has also developed a readiness among people in both countries to characterise the relationship as "special". Now I have to say that ' the present Australian Government is a trifle uncomfortable with this word, which has overtones

of patronage. The relationship is certainly unique; but it is between two equal and sovereign nations. Neither of us wants to be diminished in any way by being too

dependent. Neither wishes to be taken for granted. It is worth stressing here that the relationship enjoys strong bipartisan support and is widely supported by the Australian community. But we must face the reality that this is a time of dynamic international change. Change — even in a relationship so solidly based as ours is — provides

continuous challenge to the attitudes and the motives which go to make up external policy. And change can derive from many sources not conducive to control or influence by us: international economic developments, for example; the .quick growth of a sense, of community in our immediate

environment; even political evolution in our own domestic situations. PNG has taken up an active role within the region. It has developed new contacts internationally.

Moved by its own interests as it sees them, it has adopted positions on some issues different from ours. We have increasingly seen, in short, the emergence of national

policies by PNG. We Australians regard this development as healthy and natural and inevitable. It is an example of what is meant by the kind of change which the relationship has undergone or will undergo. We have had no difficulty

in adapting to the fact that we have an individual and confident and lively northern neighbour which is — in the full sense — independent. This is the essence of what

we are celebrating at the moment.

But I think we need to reflect on the fact that our contacts have dwindled or lessened in some ways. Our practice of close consultations has become somewhat intermittent. There have been occasions on which the concerns of one partner have gone unrecognised by the other. Happily, the answer

to this is (in a sense) simple. There is nothing easier to arrange than talking — unless it be listening. All

that is needed is to arrange the form by which consistent contact can be encouraged.

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I discussed this with John Giheno (my PNG counterpart) when we met for the aid talks in Port Moresby in July. The

joint statement which we issued at the time reflected our interest. We mentioned in it the need for renewed work to build up contacts between us. We agreed that the outcome of our talks was reaffirmation of the deep commitment by both countries to a strong and enduring friendship. We agreed also that this friendship must be founded, not just

in our close historical links but also in steady, consistent, determined efforts by both countries to maintain the relationship at a time and in a region of change. We

decided, therefore, that there should be a deliberate effort over the long-term to make a substantial increase in the present frequency of visits and contacts by Ministers and officials; a sustained effort to raise the level of

knowledge and understanding of each other's country. There is not (in my view) a more beneficial legacy to hand on

to those who will come after us, transcending the value of all the physical, economic and social links which I have described this evening.

I have tried in this inaugural Sir Hubert Murray Lecture to explain the way Australia and PNG have grown up together since independence 10 years ago. It is fitting in a way that the venue in Port Moresby for most of the anniversary

celebrations is the Sir Hubert Murray Stadium. The man himself would have been honoured — and certainly amazed — had he known what was coming to PNG and in what form

and in what time-frame. His history suggests that — better than most administrators in his era — he understood the significance of H.G. Wells' aphorism that history is a race between education and catastrophe. But he could not possibly have imagined how quickly and how well this

particular race was going to be run.