Changing the Aid Game in PNG
In what has been billed as a shock announcement carried by major news outlets across the Torres Strait, it’s been reported that PNG has formally asked Australia to consider and review how it distributes its annual $AU550 million aid package.
The request was put during the 25th PNG-Australia Ministerial Forum recently held in Madang with senior PNG ministers highlighting the government’s wish to see Australian aid managed directly through the PNG budget by 2020.
Citing internal policy documents including PNG’s Medium Term Development Plan, National Strategy for Responsible Sustainability Development Plan and the 2015 Development Cooperation Policy – which all signal changes in how the government wants to manage foreign development assistance – Minister for National Planning Charles Abel said:
“We want trade not aid. We just want them to come in and support the PNG Government system. They are channeling their aid, which is recognised in our budget, but it’s not really passing through our budget.
“We want you to continue the work, you helping us, but you have to make it more strategic and more visible and thicker, not thinly spread everywhere. All we are saying is we have established our government plans, we have our targets and we want you to come in and work through our plans.”
This message is not new.
It is one that has been consistently presented to previous PNG-Australia Ministerial Forums and PM Peter O’Neil himself highlighted the issue when he addressed the National Press Club in 2012 – that is, PNG wants the way Australian aid is disbursed to be “re-aligned” with government processes and priorities.
The main concern here lies with the creation of a “parallel system” outside the scope of national budgetary, administrative, management and – importantly – maintenance processes whereby duplication of programs targeting similar outcomes exist.
This wastage of resources is compounded when some foreign development programs are discontinued leaving a delivered outcome, whether asset or service, in administrative limbo. It does not help when provincial governments are tasked with ownership of these outcomes on existing stretched budgets.
It is not unrealistic for the government to seek to funnel development cooperation resources toward helping achieve PNG’s development goals as enshrined in the constitution and supported by government policies.
This makes sense, however, presenting such a request can only be taken seriously if adequate and transparent due diligence on the utilization and application of development cooperation resources by the PNG government can be guaranteed.
A level of respect and trust in the bilateral relationship is needed here – and whether it currently exists to the depth required for the request to be granted is questionable.
Ironically, the very substance of PNG’s request that Australia respect PNG’s sovereignty in trying to direct where development assistance should be invested – a premise alluded to time and time again in the 2015 Development Cooperation Policy – flies in the face of a sovereign state’s fundamental responsibility to ensure that its most basic needs are fully met out of its own pocket and not subsidized by the goodwill of others.
And herein lies the challenge for PNG – for no matter how this government frames it, the move to ask Australia to direct fund the national budget by 2020 will be perceived by many as a money grab by a floundering state.
Indeed, news headlines in Australia have already pointed the conversation toward this context; and it follows hot on the heels of other stories reporting PNG’s struggle to meet its financial obligations.
Despite this, with each consecutive budget, total foreign aid decreases as a percentage of PNG’s annual budget. In addition, the OECD Development Cooperative Directorate estimates that Australian development assistance to PNG has undergone a 29 percent real-decline since 2009.
But, as a component of total aid received by PNG, Australian development assistance makes up 68% of all donor contributions. It is because of its proportion that PNG is interested in setting a precedent of how it wants all aid to be “re-aligned”.
With the chances of the current government being re-elected for another five year term in 2017’s National Election remaining high, the push for Australia to fall into line with PNG’s request will not be sidelined – it will only gather momentum.
The Garamut 
Well, I think the biggest parallel system emerging in PNG is the kleptocracy where the pollies assume project management roles and spend vast public DSIP/PSIP funds on political priorities and cronies through their own management teams while the bureaucracy stands idly by lacking funds. Oz should ask for all PNG income (LNG etc) to be reflected in PNG budget and DSIP to be redirected into addressing the budgetary “national priorities” before even considering this.
Yes, I don’t think that system is “emerging” – it’s entrenched. But the request by PNG isn’t technically impossible to manage. There are systems and checks that can be introduced which would make oversight of expenditure transparent to Australia. The objection from PNG isn’t so much who has control over spending, but where Australian Aid is spent. I think the government would be more than happy to allow Australia full oversight of a direct fund model – as long as its being spent on “national priorities”.
Well then I guess I look around where I live and see schools, hospital, police station, court house and roads all directly funded by Australia over the last 10 years (and using local contractors). That seems in line with stated national priorities. It is difficult for me to see how putting that money in the general pot would improve things or allow the “Australian” money to have different oversight than the “PNG” funds (which don’t seem to have much existing oversight) – unless we have parallel systems (again) for tracking govt expenditure.
Purchase and distribution of medicines to health centres and aid posts would seem like a nice direct funding model to help the people of PNG in keeping with national priorities but look where that went a year or so ago.
Forgive my skepticism and quite happy to be wrong.
Totally agree that current donor support could be better thought out and directed. As you say there have been too many sponsored initiatives with initial support that have not followed through. Take elementary schooling for example. Not to mention the OBE fiasco.
“Trade not aid,” nice slogan, but I’m wondering what that really means? The Oz media are saying there’s a national emergency on its way due to low gas supply down there – is that a gas sales (trade) opportunity for PNG? Or are we suggesting Oz & PNG agricultura/tourism/fisheries companies work together to build markets, skills, capacity? Or does it mean building trade infrastructure – roads etc.
Anyway, thanks for the article – I hope it provokes more discussion.