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Tuesday, 10 April 1973
Page: 1280

Mr MORRISON (St George) (Minister for Science and Minister for External Territories) - It is rather a joy to be involved in a debate in which there is complete harmony on both sides. I think this is a result of the joint party approach in this

House to the developments in Papua New Guinea and also to such international institutions as the Asian Development Bank. This is the second loan negotiated by the Papua New Guinea Government. I stress, in response to a query by the honourable member for Kooyong (Mr Peacock), that it is on behalf of the Papua New Guinea Government that these loans are negotiated. Of course we had to provide guarantees, and the Australian Government has indicated that it will provide guarantees for all loans entered into on behalf of Papua New Guinea through to independence. The Asian Development Bank, as honourable members opposite have pointed out, is one of 4 international bodies of which Papua New Guinea has become a member. The other organisations are the Economic Commission for Asia and the Far East, the World Health Organisation and the South Pacific Conference.

Papua New Guinea became a member of the Asian Development Bank back in 1971. I think this is important because what the previous Administration did under the honourable member for Kooyong, who was a Minister, and what we are doing now is to provide an international identity for Papua New Guinea. This is not only in advance of independence; it is also in advance of selfgovernment. Each decision that we are now making in terms of self-government is being looked at from the point of view of the impact that it will have on Papua New Guinea in terms of independence. By the time we come to self-government, which the previous Government decided would be granted on 1st December 1973 and which we fully supported, and before Papua New Guinea gains independence it will in fact have an international identity. We regard this as a very important manifestation of our policy towards Papua New Guinea. In terms of Asian Development Bank loans, as honourable members opposite are very well aware, there are 2 types of loans. The first is the ordinary funds which are made available on normal commercial conditions and terms. The second, the one that we attach a great deal of importance to, is the special funds. The report of the Committee to which the honourable member for Wentworth (Mr Bury) referred paid special attention to the approach that Australia should take in international aid to the special fund provisions of the Asian Development Bank.

The legislation we are discussing tonight relates to a loan for the construction of a high way in Papua New Guinea. As all honourable members will understand, particularly those who have been to Papua New Guinea, it is highly important for the development of the country that access to the very remote areas in Papua New Guinea should be made easily available. The advantage that flows from Papua New Guinea being involved in loans from other organisations, particularly the multilateral organisations, is that it does supplement Australian aid. Nobody could say that Australia can provide the totality of the aid that Papua New Guinea will need in the future. We consider - I think I can speak here on behalf of the Opposition too -that Papua New Guinea and Australia have a special relationship. Certainly to my mind this calls for special conditions and a continuance of the special relationship. We would not want to stand in the way - moreover, we would not want to be seen to stand in the way - of Papua New Guinea receiving aid from other countries. We have, as the honourable member for Kooyong mentioned, indicated that Australian aid would be a continuing aid commitment. The Prime Minister (Mr Whitlam) during his recent visit to Papua New Guinea indicated that we will undertake a 3-year program starting in the budget period of 1974-75. We regard this as important because Papua New Guinea will need to have certain conditions that are known to it so that it can structure its own budgeting arrangements.

The honourable member for Kooyong mentioned the concept of project aid. I think it is important that the budgeting processes in Papua New Guinea be revised. It was not very long ago that the Permanent Head of the Department of Finance in Papua New Guinea - the Treasurer - indicated that the budgeting arrangements in Papua New Guinea were 50 years out of date. I am glad that he as the officer responsible there said that because it was a thought that struck me over the years in discussions we have had in this House on the Papua New Guinea budget. It is a very unsophisticated and simple budget, but it was tailored to the needs of a colony. As Papua New Guinea approaches self-government and independence it is very necessary that the structuring of the budget - the budgetary practices - in Papua New Guinea be changed. One of the areas of change which the Government has sought to encourage and to which we have had favourable response is the division in the budget roughly into two areas - recurrent expenditure and the development program.

I think this is important because if Papua New Guinea is to attract aid from other countries, it should have a development budget - in Papua New Guinea it is called, in general terms, an improvement budget - so that foreign countries can attach themselves to projects that are thrown up in the improvement program. This is certainly the form of approach that the Japanese Government has adopted in aid to the less developed countries and it is a form that many other countries will follow.

The Government will attach itself to this notion, but because Australia has had a very long association with Papua New Guinea it will not be in strict and inflexible terms. So these changes will take place. We will be looking towards an improvement or development budget and a change in the budgetary systems in Papua New Guinea, and we will be looking towards a definition in the Budget of projects that will open the way for assistance from the developing countries in aid to Papua New Guinea.

The particular project that is under discussion in the House at present is the upgrading, realignment and sealing of 75 miles of the Highlands Highway. As the previous speaker has pointed out, this is an area of very dense population and the access which this road will provide for the sending out of goods and products will be invaluable to the meal and subsistence farmers in that area. I should like to apologise to the honourable member for Balaclava (Mr Whittorn) who directed a question to someone else the other day. I was told, nine-tenths of the way through the question, that I was the Minister responsible for answering it. In essence the question was why the present Australian Government was forcing Papua New Guinea to borrow its loan funds from overseas and limiting Australia's contribution to a 'miserly' $10m. The point is that the Government is not forcing Papua New Guinea into world loan markets in preference to assistance from the Australian Government, but I think it is important for all honourable members to realise that there are advantages for Papua New Guinea in seeking loans from overseas to finance part of its expenditure. In the first instance these supplement Australian aid and Papua New Guinea revenue and increase the financial resources available to Papua New Guinea. The second point is that it is important for Papua New Guinea to establish itself on the world loan market. It is important that it establish itself at this time because Australia can still provide the guarantee. If we leave it much longer Papua New Guinea will have difficulties in entering the international loan market if it cannot provide the sort of guarantees that Australia can provide. I think Papua New Guinea will build up its credit worthiness as a borrower through this process.

I notice the honourable member for Balaclava has just entered the chamber. I apologise to him for the irrelevance, perhaps, of my answer to him, but I think it is very important that Papua New Guinea now entering into the international loan market and becoming an international identity is to be recognised in the international loan market. We regard this as one of the important objectives in bringing Papua New Guinea to independence smoothly. It has to establish a reputation in the international loan market and the only way it can do this is by borrowing on the international market.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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