There’s a price to pay for our indebtedness to PNG | The Australian

(Comment: see the section on the PNG universities. The Namaliu/Garnaut University reform proposals are official government policy, and stipulate a University Council of no more than 13 Members. The current UNITECH Council has 32 members according to the PNG University of Technology Act from 1986. AS)

Hon. Tony Abbott, MP, Prime Minister of Australia visiting PNG

Original: There’s a price to pay for our indebtedness to PNG | The Australian

WHEN Tony Abbott is in Papua New Guinea, we can expect a lot of talk in public about growing business relations between PNG and Australia, and to hear the old refrain of moving the relationship between the two countries from being focused on aid to being focused on trade and investment.


The sad reality, however, is that the bilateral relationship is now focused on asylum-seekers. The detention on Manus Island of those who arrive in Australia by boat is becoming increasingly controversial in both countries, and we have barely begun to grapple with the issue of where these individuals will be resettled if they are found to be refugees.

Abbott will be seeking assurances from Peter O’Neill that his government will stay the course on Manus. In return, O’Neill will be pushing to make it easier for Papua New Guineans to visit Australia, to involve PNG businesses more in the running of the Manus Island processing centre and to extract more aid funding for projects prioritised by his government.

Not only has the Manus agreement thrown all other issues to the side but it has taken away all Australian leverage in the relationship.

Our overriding objective with regard to PNG is now simply to have them on our side. It is impossible to run a $500 million aid program effectively in a country as difficult as PNG without leverage, and it is showing. Other key issues in which we have a stake have also been unceremoniously shunted aside.

Here are four issues that should be discussed by the two prime ministers but probably won’t be. They certainly won’t be mentioned in public. If they are raised at all in private, they will be passed over extremely lightly.

Sovereign Wealth Fund

The first is that PNG has effectively given up on its sovereign wealth fund. Millions of Australian dollars have been spent on advising the PNG government on setting up a SWF. It was once seen as so important that it was the subject of a separate agreement between the two countries.

A SWF was legislated back in 2012, but proper procedures were not followed so it is not binding. The entire point of the SWF was to receive and manage the proceeds from the massive liquefied natural gas project that will come on line this year.

But the PNG Prime Minister has just decided to commit those proceeds to the repayment of a loan he has decided to take out to get his government a stake in an oil company.

O’Neill’s Treasurer, Don Polye, refused to go along with this plan, saying that it would waste all the efforts made to establish the SWF. He was sacked last week as a result.

Misprocurement of Medical Supplies

The second issue that won’t get a hearing is the misprocurement of medical supplies. As part of our aid program, and to combat the longstanding problem of counterfeit drugs, PNG agreed it would select a company with international certification to supply its health clinics.

It didn’t, choosing instead a non-certified company that put in a much more expensive bid than the two certified companies that also competed.

In response to this blatantly compromised process, Australia withdrew its offer of financial support for drug distribution, leading O’Neill to make the outrageous claim that Australia was trying to protect its preferred supplier. But Australia wanted to keep the disagreement quiet, confirming its decision to pull funding only once the media found out.

PNG Universities

The third issue is the reform of PNG’s universities. They are in a desperate state and their reform was supposed to be a joint project following the Garnaut-Namaliu report that both governments commissioned back in 2007. There has been little follow through. 

Meanwhile, Lae University of Technology vice-chancellor Albert Schram remains exiled from PNG on trumped-up, and now discredited, charges. O’Neill could get him back in an instant but won’t. Instead, he is promoting a new university in his own constituency, the last thing the sector needs. Meanwhile, Australia’s offer of matched support for PNG’s universities goes begging.

Australia should insist that Schram be reinstated but won’t.

Country Largest Mine

The fourth and final issue is PNG’s expropriation of Ok Tedi, the country’s largest mine, and O’Neill’s continued efforts to get control of the $1.4 billion offshore trust fund of its previous owners, the Singapore-based Sustainable Development Program.

This isn’t an aid program issue but it is one in which we nevertheless have a stake. Ok Tedi was formerly owned by BHP Billion, which transferred its shares to SDP just more than a decade ago. Two Australians have been banned from entry to PNG for opposing this move: Ross Garnaut and Mark Davis. The war on SDP has and will continue to damage PNG’s reputation and development prospects.

These are, or should be, the big issues in the PNG-Australia relationship. They should be the focus of the O’Neill-Abbott talks. We should be putting pressure on the PNG government to follow through on agreements made with us, and we should complain when it adopts policies that undermine the development we are paying to promote.

Yet we won’t. That is one of the costs of the Manus Island agreement, a cost that will be borne by both countries, but in particular by the poor of PNG, a country where life expectancy is 20 years lower than in Australia.

(Stephen Howes is Director of the Development Policy Centre at the Australian National University.)