Australia will definitely be asked to play a leading role in the economic and fiscal rescue package that Papua New Guinea desperately needs.
The amount needed to prevent PNG from becoming a failed state is very lucrative.
The original program which was discussed with the International Monetary Fund, and other countries and institutions, is believed to be around US $ 1.7 billion. The latest estimate around US $ 2.2 billion.
This package is still called the ‘Coronavirus Rescue Package’, which can create the wrong impression. Economic and social restrictions imposed in an effort to curb the spread of the virus in PNG have hit a country dire economic and fiscal circumstances.
PNG needs serious help – especially support and fiscal reform – long before the virus attacks. If the package is seen only as a response to a virus, structural reforms that are urgently needed will be ignored.
Australia has an opportunity here to help address PNG’s long-term economic problems.
PNG government debt, including debt held by state-owned companies, is more than A $ 13 billion. It is the highest ever, and is at the edge of the debt security figure that currently exists.
So any package decided by the IMF, the World Bank and donor countries such as Australia will have a serious impact on the country’s total debt, and the ability of the PNG government to pay it.
Australia’s contribution must keep this reality in mind.
Our current development assistance for PNG is around A $ 600 million. To that end, we need to add a loan of A $ 400 million which we developed at the end of last year to support the budget for 2020. It must be extended and payments deferred.
In general, our development assistance program in PNG is good. It’s not perfect, but it has improved in the last few years. For example, the unreasonable policy not to fund a direct program run by PNG churches has ended. The reality is that churches in many communities in PNG are not only the best providers of rural health services, school education and vocational training, they are only service provider.
Australia has always been careful about how it manages its relationship with PNG as a former colonial power and closest neighbor. But it’s 44 years since PNG became independent, and its people – and people will hope that their national leaders – will not object to aid packages designed to provide for the people and the economy.
Australia needs to strengthen its approach to corruption, and especially the misuse of public money, which is still not adequately addressed by the government of Prime Minister James Marape, despite encouraging guarantees. No matter how strong the international package is, it will not be fully achieved if the national and provincial governments do not deal with corruption, fraud, and massive abuse.
Question to UBS loan disaster must continue, and, however uncomfortable for Australian companies and executives, allegations that bribes are paid to ministers and officials in the mining sector and the refugee detention sector must be pursued and not ignored as happened today.
The PNG parliamentary public account committee does an excellent job of exposing the rampant corruption and fraud in the health sector and hospitals that deny drugs and medicines that save people’s lives. Australia can offer to provide qualified auditors and other officials from its own parliamentary committee system to help its resource-poor PNG partners prepare final charges and reports.
Australia must also urge that action be taken to overcome the evidence that the committee has received the supply and distribution of vital medicines. This work was formerly managed by Australia through AusAID. Surely, we can demand to be restored?
The PNG Parliament finally passed the legislation needed to form an independent commission against corruption, so that Australia could offer to put it to good use.
We must also see increased funding for vital services provided by the church in PNG, an area where China cannot compete.
There are many more things where Australia can reasonably ask for action to be taken as a condition for expensive and broad economic and fiscal aid packages.
The large national bureaucracy and the PNG province must be reduced substantially. That would be painful for politicians who face national elections in just two years. Transition programs for civil servants will be very important. Australia has the experience and capacity to work with the private sector, such as small businesses, agriculture, fisheries and areas that can be transferred by public servants.
These are difficult times for Australia, so any assistance for PNG, even with a loan, must be carefully balanced.
Whatever we contribute needs to help bring about change.
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