If Australia’s aid program had been better administered and less affected by political influence, PNG would now be reaping the benefits
TUMBY BAY - A cardinal mistake Australia made, and continues to make, in relation to Papua New Guinea is its extremely generous and sustained provision of about half a billion dollars a year in aid money.
Australia’s promise of ongoing funding aid to PNG was originally used as an inducement to accelerate its progress to independence.
The idea was that the aid would be steadily reduced over time as the new nation grew and found its own economic feet.
That decline actually happened but only at an annual rate of around 3% until the Manus agreement to house asylum seekers came into force.
Then it rebounded to an even higher transfer, touching on a billion dollars – half of which was spent cooping up asylum seekers on Manus.
Before the Manus agreement, PNG received about 10% of Australia’s total development aid spending, but this became 15% and has stayed there since.
Australia has always protected the aid it gives to PNG. In 2020-21 this came to over $600 million (K1.5 billion).
Several credible studies have been published outlining the negative impacts of development aid.
One of these impacts is the damage that aid can do to political institutions by impairing democracy.
Government revenues and development aid funds share a common characteristic in that they can be appropriated by corrupt politicians. And, in doing so, need to subvert good financial management, manipulate the legal system and suppress political opposition.
In this sense, rather than a godsend, aid becomes a curse. It is highly likely that this has happened in a systematic way in Papua New Guinea, even though hard data is difficult to find.
Oil and gas producing nations seldom receive aid. The rent from oil and gas in countries like Kuwait and Saudi Arabia represent something like half of their GDP. In PNG the figure is less than 15%. That appears to be a huge anomaly.
In Uganda, a survey of primary schools investigated how much of the aid given for education actually reached the schools. The horrifying finding was that only 13% of the funds got to the schools.
Again in PNG, we have no data but, looking at the quality of education, it is not difficult to suppose that much of the aid meant to improve schooling fails to reach its intended destination.
The same assumption can be made for aid provided to the health sector.
What this all points to is that if Australia had been more judicious about its aid to PNG right from the beginning many of PNG's basic problems may not now exist.
If Australia’s aid program had been better administered and less attached to political influence, perhaps PNG would now be reaping the benefits.
What has happened is somewhat analogous to the way a spoilt child has difficulty coping with the realities of life when it leaves the parental nest.
In 2019 Papua New Guinea received $930 million (K2.4 billion) in development aid, about two-thirds of it from Australia.
Perhaps PNG’s leaders have been spoilt by this largesse, are too reliant on it and too attached to the personal benefits it brings.
And, as usual in such circumstances, it is the people who suffer.