Papua New Guinea Australia Business Forum
PNG taking up the challenge
16 May 2011
Speech by High Commissioner, Ian Kemish
I’d like to begin by extending apologies on behalf of the Parliamentary Secretary for Pacific Island Affairs, Richard Marles, who was unable to attend this forum because he was required to attend the Forum Trade Minister’s Meetings in Tonga. He will be discussing issues there of relevance to PNG and this audience, working to progress opportunities under PACER Plus and endorsing an MOU on a Regional Trade Mark Application System, to be based in PNG.
Richard has a real passion for Papua New Guinea – he has been here four times since his appointment, and on one recent visit travelled extensively to Bougainville and the southern Highlands. For the record, he hasn’t visited Manus Island yet.
We are speaking here on the theme “Papua New Guinea: Taking up the challenge”. If the Australian High Commissioner is going to speak before Papua New Guineans on such a theme, it’s important to establish credentials first. It’s also okay, occasionally, for me to speak about my own country.
I speak as the formal representative of a country which, like Papua New Guinea, has abundant and diverse natural resources. As in PNG, a series of major investments, including in the LNG sector, is set to significantly expand the resources sector.
Importantly, Australia’s economy is not only about resources. It is diverse. Mining, including petroleum, might represent more than 50 per cent of our exports, but in fact it represents only about 8 per cent of our Gross Domestic Product. Agriculture, associated so strongly with our economy, represents little more than half this. The services sector is by far Australia’s largest, representing much more than half of the economy.
I think that, when you look at the models available internationally, we are qualified to speak about economic management. The Australian economy grew for 17 consecutive years before the global financial crisis. Government policies, monetary policy and continued demand for commodities helped the Australian economy perform better than any other in the OECD in 2009, and by 3.3% in 2010. Unemployment remains at generational lows. An early return to budget surpluses is a serious prospect and intention, despite the additional blows dealt by our summer of natural disasters.
Speaking of which, we Australians can be proud of the way we banded together to respond to these disasters. Working together without question, staying focused on objectives, organisation, administrative efficiency and above all - delivery. These are things we know something about.
At this forum you will see signs of the Australian Government’s new global brand Australia Unlimited, which is being launched in PNG here. This brand emphasises that Australia is creative, confident, ambitious and globally engaged. I believe all those things to be true.
I don’t represent a perfect country. There’s no such thing. There are many Australians in the audience, and we are between us capable of having heated arguments about the downside of what is happening in Australia today. We probably will tonight. There are intense debates underway in Australia about pricing carbon, and about the management of our borders. Like many Papua New Guineans we would like to see improvements in health and education services. But I think we all know that the conversations in our two countries are about entirely different things.
So let’s talk about Papua New Guinea.
The key challenge, as we all know, is translating economic success into development outcomes. Over the past decade PNG has achieved considerable economic success. The macroeconomic fundamentals make this clear.
In 2001, the PNG economy was actually declining in size (and had done so by 2.5 per cent in the preceding year), inflation was around 10 per cent, while public debt was estimated at 71.3 per cent of GDP.
A decade later, the PNG economy is expected by the Bank of PNG to grow by 9.5 per cent in 2011, the fifth year in row that growth will have exceeded 5 per cent.
Inflation, while still a risk, has been broadly contained in the single digits. PNG Government debt has fallen below 30 per cent of GDP.
If the Bank’s forecast is achieved, PNG could be the 6th fastest growing economy in the world in 2011 (following Qatar, Ghana, Mongolia, Iraq, and China).
Government policies have played a part in this transformation, especially prudent fiscal management and some forward-looking micro-economic reforms – such as the introduction of competition into the mobile phone sector.
But as the Government made clear in its Vision 2050 plan, PNG has not delivered the development outcomes it aspires to.
PNG has given itself the challenge of rising from its 2010 ranking of 137 on the United Nation’s Human Development Index (itself an improvement on previous years) to a ranking of at least 50 by 2050.
It is good that the Government has acknowledged this so clearly. The people certainly know there are problems.
One of the great things about Papua New Guinea is the culture of speaking out. The population will not be hushed. People exercise their freedom of speech on a daily basis, in public presentations, on the airwaves and in the opinion and letter pages in the newspapers. So if you want to know the things that are wrong, just ask a Papua New Guinean.
They will tell you that corruption and waste in the public sector is a serious problem which will prevent this fantastic country from moving forward unless it is tackled in a serious way.
They will tell you that many other organisations – the private sector, donors, volunteers – are standing in the place where Government should be, delivering basic services like health and education.
There are some terrific leaders in this country – and we are in the presence of some of them – who are working to address these challenges. It is with them that we want to work as we try to make a difference with our development assistance.
Australia’s Aid Program
I hope it’s clear to everyone that Australia stands with PNG as it takes up its challenges, including through our development assistance program.
As announced in the Australian Budget last week, Australia’s aid program to PNG is expanding – to an estimated A$482.8 million (approximately PNGK1.2 billion) in 2011-2012, an increase of A$26 million (almost PNGK70 million).
In close collaboration with our PNG partners the aid program is being targeting more effectively towards addressing PNG’s needs – in particular we are strengthening the focus on education, health care, law and justice, and infrastructure and transport.
We are also targeting specific areas identified by PNG as requiring attention as it deals with a rapidly expanding economy based on a booming resources sector - such as Sovereign Wealth Fund design, and training and skills development.
I hope some of you saw an article we ran in the PNG media last week on what the aid program is achieving in terms of bricks and mortar. I decided to run that article because for many, the best way of explaining the impact of the program is in terms of infrastructure. There’s a great deal being done, and if you don’t think that’s the case then I’d suggest to you that you’ve been asleep for the last year or so.
I hope it is no longer in any doubt, at least to those who have heard me speak before, that the program is now refocused, and is achieving concrete results, easily measurable in:
- hundreds of education facilities built,
- hundreds of thousands of text books delivered across the country
- the construction of health facilities, including currently at Alotau and Vanimo General Hospitals, and upgrades to some of the remotest health centres and aid posts here in Madang
- hundreds of kilometres of roads sealed, resealed, gravelled or maintained.
The auditorium in which we stand and sit today was built with the assistance of the Incentive Fund, as was the Divine Word University’s (DWU) library. Australia assistance towards these state of the art facilities amounted to over PNGK12 million. The Incentive Fund is currently funding construction of additional student accommodation at DWU, and well as new buildings at the adjacent PNG Maritime School.
My colleague, AusAID Minister Counsellor Stephanie Copus-Campbell will discuss further the contributions being made by Australia’s aid program later today.
Australia – PNG Commercial and People to People links
Our links are not just about the aid program. Nor are they only about the formal relationship between governments. You are testimony to that.
Business and informal links between Australia and PNG will remain immeasurably important as PNG works to meet the challenges ahead.
People to people links, in business, academia, and church and social groups, allow sharing of skills, experiences, and goods and services. This enables businesses, service providers and governments to find more creative solutions to problems they encounter.
This forum has over the past 27 years provided a valuable role in building and sustaining such linkages.
Commercial connections between PNG and Australia remain important and prominent for both our countries.
Trade and investment, and cooperation on contemporary issues such as sovereign wealth funds, are increasingly features of the modern relationship. The relationship is changing because PNG is changing. No country apart from PNG itself is more delighted than Australia about this change.
The investment figures help tell the story.
On one hand, Australian investment in PNG (as of 2009) was A$4.4 billion (over PNGK11 billion).
But PNG investment in Australia is also considerable – at over A$1.5 billion in 2009 (almost PNGK4 billion).
We know that Australian investment in PNG has expanded considerably since then, with major investments by Newcrest at Lihir and Hidden Valley, and with Australian participation in the PNG LNG Project (to name a few).
Australia remains PNG’s primary destination for exports, and its major source for imports, with the value of two-way-trade in excess of A$5 billion (or PNGK13 billion) a year. As you all know, this trade is diverse, profitable, and growing.
Business opportunities in PNG are only set to expand further, and Australian businesses are well placed to take advantage of these opportunities.
The range of business services on display at this years’ Austrade/IPA Trade Expo speaks volumes on the diversity of opportunities available by trading with Australia.
So yes, we are mindful of the opportunities for Australia in our association with Papua New Guinea. Of course we are. As Australia’s High Commissioner I am above all else here to pursue and protect Australia’s interests.
Australian interests lie, however, in a stable, prosperous, confident and highly developed Papua New Guinea.
And in any case to assume that it is all about self-interest would be to misunderstand Australians as a people, and to misunderstand how deep the bonds really run. We are friends, and we actually want to support PNG as it works to embrace the challenges and opportunities that lie before it.