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Tuesday, 14 September 1971
Page: 1277


Mr BARNES (Mcpherson) (Minister for External Territories) - I propose to deal with the area of my responsibility, which is Papua New Guinea. This year's Budget makes provision for Commonwealth aid of an economic nature to Papua New Guinea amounting to nearly $131m. This aid will enable the Government to meet Australia's obligations for the economic development of Papua New Guinea. It has become fashionable to emphasise political development as Australia's main task in Papua New Guinea. In many ways this is understandable. It is an area in which every one regards himself as an expert. But in the long term Australia will be judged by the way it has performed the more complex task of economic development.

When I became Minister eight years ago and paid my first visit to Papua New Guinea I concluded that we would have to do more towards economic development and do it quickly. An education system was well on the way. Many of the country's health problems were being met. A system of local government was drawing the people into active political participation. The course was already set which was to lead the House of Assembly to its present position as the authentic voice of the people. AH this was gratifying. But I took the view then, as I do today, that if selfgovernment and independence were to mean anything at all to the people of Papua New Guinea they must not be too dependent economically on Australia and other countries. The country had to build up its capacity to pay its own way. A World Bank mission reported in 1964. The Australian Government accepted the Mission's production programmes as a working basis for planning. It formulated plans to increase Papua New Guinea's productive capacity. These plans have since been incorporated in a development programme published in 1968 and revised this year.

As I told the people then 1 was guided by a sincere desire to do everything I could that would best further the progress and prosperity of the country. At that time agriculture was the chief activity. The economy was to a large extent dependent on the production of copra, rubber, coffee and cocoa. The timber industry was in the early stages of development. Manufacturing industries were of minor significance. Mining was declining. Commercial fishing was insignificant. Telecommunications were unsophisticated, if not primitive. The people relied heavily on costly air transport for freight. Revenue collected by the Administration was low - less than half the amount of the Commonwealth grant. Rightly. I think, we gave a new direction to Papua New Guinea's progress to nationhood. In the last 8 years economic progress there has been nothing less than remarkable. There have been substantial increases in primary production. The basic range of agricultural crops has been extended. Rural production has been diversified. A whole range of new industries has been introduced.

These new industries have included oil palm which is expected to generate exports valued at S7m a year by 1976-77; tea production which is expected to exceed $6m by 1974-75; cattle which has made substantial progress over the last 5 years. The national cattle herd increased by 15,000 head last year to 103,000 of which 14,000 are owned by indigenous farmers. These figures will be doubled in the next 4 to 5 years; rice which is making steady progress and will continue to develop under the stimulus of a seed improvement programme and improved storage and pest control measures. Papua and New Guinea's forestry and fishery resources have been researched and promising new large-scale industries are now in sight. Only last month an agreement was signed for the establish ment of a SI 2m forest products industry in Madang. Papua New Guinea waters have substantial resources of skipjack tuna. They hold out the promise of an integrated industry involving catcher boats, shore-based freezers and a cannery processing complex.

Manufacturing has been one of the fastest growing sectors of the economy. In the past 7 years manufacturing output has more than trebled. New industries now make glass bottles, fibreboard containers, cigarettes, fibreglass products and metal roofing. Mining is now becoming a prime source of export income and public revenue. Exports of copper concentrates from the huge Bougainville project will more than double Papua New Guinea's exports in 1973-74, the first full year of concentrate production. Total Administration revenue from the project is expected to amount to between $200m and $300m during the first 10 years of exports. At the same time Papua New Guinea's economic infrastructure is being strengthened and expanded. The provision of transport and communications services is costly and must therefore be carefully planned. The Administration has been assisted by international consultants under contract to the World Bank and the United Nations Development Programme and by loans from the Bank. As a result many major road projects have been undertaken or are under way. When the present stage of the telecommunications programme is completed in June next year, Papua New Guinea should have a system that will cater for all traffic offering at that time and be a sound foundation for future growth.

On top of this the Administration has established the necessary institutional framework for promoting economic development. There is a Development Bank, institutions for tertiary and technological training, and machinery for planning and co-ordinating the country's economic development programmes. Large scale foreign investment has been essential to the development of Papua New Guinea. The indigenous people simply have not had the savings to act on their own. Everywhere I have been in Papua New Guinea I have heard the same plea for economic development - for more roads, new businesses, new crops to make rising standards of living possible. Without overseas investment there would not have been any modern economy for the people of Papua New Guinea to participate in. This foreign investment has been subject to policy guidelines. It has also been associated with the increasing participation of Papuans and New Guineans in the economy at all levels. They have derived many advantages - through employment, the contribution of taxes to Administration revenue, training and the ownership of equity. The participation of Papuans and New Guineans in economic development has been a cardinal point in our policy.

The proportion of commercial, agricultural and pastoral production controlled by Papuans and New Guineans is increasing and is expected to reach 46 per cent by 1974-75. At present the Department of Business Development is giving regular assistance to 300 indigenous businesses. New fishing projects will provide an important new base for training Papuans and New Guineans and for servicing indigenous fishing activities. The Development Bank has an active policy of seeking indigenous borrowers. The number of Development Bank loans to indigenes increased from 422 in 1967-68 to almost 2,000 in 1970-71. The amount of indigenous loans increased from $678,000 in 1967-68 to $2.4m in 1970-71. A Bill before the House of Assembly will authorise local government councils to give preference to indigenous applicants for trade stores and similar licences to conduct small businesses. Legislation to restrict the entry of certain categories of non-indigenous workers is also before the House of Assembly. The Investment Corporation will acquire equity for the people of the country in selected major overseas business enterprises operating in Papua New Guinea. Business concerns themselves are responding to the Government's wish for greater indigenous participation in the economy. The record of Bougainville Copper is but one example. On behalf of the people of Papua New Guinea the Administration has acquired a 20 per cent equity interest in the Bougainville project. In addition, 14,000 shares in the company are held by landowners in the area. The recent share issue of Bougainville Mining Ltd of one million shares offered in Papua New Guinea was 300 per cent over-subscribed. More significantly, however, 75 per cent of these shares were allocated to indigenous people and organisations. In short, indigenous participation in economic as well as social and political aspects of the development of Papua New Guinea has increased significantly. Policies designed to further increase such participation will continue to be implemented.

Our record in Papua New Guinea has been a proud one. The Commonwealth contribution has been generous and well directed. Total economic aid over the 8 years to 1970-71 was $7 16m. The advice of recognised international experts has been sought at every stage. The result has been an increase in Papua New Guinea's financial self-reliance. Internal revenue in 1971-72 will provide about 36 per cent of total Administration expenditure in Papua New Guinea compared with about 25 per cent in 1963-64. From a country almost entirely dependent on a limited range of agricultural crops Papua New Guinea has been transformed into a country which in the period 1965-66 to 1969-70 had a rate of growth of 10 per cent per annum for the whole of the economy - an achievement equalled by very few other countries. Gross monetary sector product increased from $142m in 1963-64 to $450m in 1970-71.

I would be the last to deny that Papua New Guinea, like all developing countries, still faces many problems. But I have confidence in its capacity to overcome them. We can see beyond the problems of today to the broader prospects ahead. It is unfortunate that the enthusiasm and energy of the people are not being accurately depicted. Much of what we read about Papua New Guinea is clouded by pessimism. Such a view is not only harmful. It is incorrect. Papuans and New Guineas everywhere are participating in and, indeed, taking increasing responsibility for their own affairs. They are truly shaping their own destiny. The record of achievement in economic development shows how they are doing so. It is an achievement that should give every reason for confidence in the future.







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