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PNG surprises Australia with request to change structure of aid

Bishop  Abel & DuttonABC | Edited extracts

AUSTRALIA’S increasingly tricky relationship with Papua New Guinea could be about to get more difficult.

The PNG government has asked Australia to directly fund its health and education spending after it suffered a severe economic downturn and was forced to make major budget cuts.

PNG used the 25th ministerial forum between the two countries to ask Australia to shift its $500 million of annual aid away from narrowly-focused programs into helping fund its health, education and infrastructure priorities.

Planning Minister Charles Abel said the shift was something that had been discussed for some time.

But the request came as a surprise to the Australian ministerial delegation.

“The PNG government has sent a signal at this meeting of our desire to move by 2020 into a budget support arrangement where the program is channelled more directly through the PNG budget process,” Abel said.

Australia is the dominant contributor of aid to PNG, providing 68% off its development assistance.

Abel said the money could be having a bigger impact.

“We would like to see a larger proportion of the budget actually going into hard, tangible, on-the-ground outcomes,” he said.

PNG’s major events minister Justin Tkatchenko said the request arose out of concerns about the effectiveness of Australia’s aid program and the amount of money that is spent on contractors and technical assistance.

The request also came after PNG has suffered a major drop in revenue that forced its government to slash spending, particularly to health services, but Mr Abel rejected suggestions it was linked to PNG’s cash shortage.

“It’s a policy-based directive that has come from a series of documents … it’s not a knee-jerk reaction,” he said.

Foreign Minister Julie Bishop said Australia did not know PNG would make the request.

“That’s apparently a matter that’s been discussed within the PNG government, it’s been raised with us today and we’ll consider it,” she said.

The change harks back to the way Australia used to deliver aid in PNG, by funding its budget directly.

But Australia stopped doing that in the early 1990s because of concerns about corruption and mismanagement.

Those concerns have not gone away.

Bishop said any change to the aid program would need to meet Australia’s accountability standards.

“And of course we must be answerable to the Australian taxpayer.”

The Government fears those taxpayers are becoming increasingly sceptical about the benefits of foreign aid.

The timing of the request, as PNG tries to weather a severe economic downturn, makes it even harder to sell.

Australia has given $5 billion in aid over the last decade, but has been changing its approach for the past few years.

The Australian government, which has consolidated delivery of its programs into a PNG Governance Facility, will be investing more in infrastructure and is seeking more partnerships with agencies like the World Bank and Asian Development Bank to deliver soft loans.

Such changes reflect a broader shift in aid spending, but also an attempt to make a bigger impact and force the PNG government to comply with the strict standards for governance and program delivery required by multilateral agencies.

But the non-government organisations working in the aid sector have criticised that approach, saying PNG is a clear example of a place where economic growth has not delivered much benefit for disadvantaged people.

It might not say so publicly, but the PNG government has also been recently displaying frustration with Australia in other ways.

There has been tension over the Manus Island detention centre, particularly over the need to close it to comply with a PNG Supreme Court ruling.

There has been no shortage of people noting the detrimental effect of the Manus Island deal on Australia’s ability to negotiate with PNG, but with the urgency increasing to close the centre by October, PNG could be looking to squeeze even more benefit out of its relationship with Australia at this time.

That has left Australia with a problem for both its aid program and its diplomatic relationship with the most populous and arguably most influential country in the western Pacific.


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Maureen Patia

PNG government seriously needs to get its priorities straight. We cannot keep depending on Australia to help us, fund this, fund that. What is the government doing with all the money that is coming out of LNG etc? This is absurd!

Lindsay F Bond

Go to Port Moresby Airport, see the Domestic Terminal baggage carousel, see the International Terminal escalator, and you guessed, those are not operational. That is just for introduction.

Go to Oro Province and see the Samboga River encroach under the Oro Bay 'highway'.

Go to …

Now seriously, there is wonderful advances and improvements and even worthy maintenance works, so be not dismayed.

Yet Planning Minister Charles Abel knows well that trading stores with goods for sale, cage those goods, out of necessity for survival of the enterprise.

The four bridges recently completed in Oro Province had funding caged for years until credible compliance would ensure delivery and eventual opening of real completed infrastructure.

Consider and contest and convince before consent. They who want gold need better sluice processes lessening monetary sleaze.

Barbara Short

I'm quite happy for my Australian taxes to go towards helping PNG solve its Health and Education problems. The Health problem is huge. People are dying everyday from curable illness. The future of PNG relies on its Education.

Here is a comment from a Health Worker in Maprik in the Sepik, one of my friends, made yesterday....

"We are now facing the problem of the decisions made by the top people and the government of that time and now we are using some of the sub standard drugs.

"For example the current Lignocaine vial for injection 💉 to stop pain before suturing a wound is not working, but we suture the patients with pain which is unethical and unprofessional.

"Still worse, all Health facilities in PNG are facing serious drug shortages than all the previous years before 2013.

"Currently all Health workers are referring their patients to pharmacies to buy their own drugs or for those who cannot afford to buy are asked to use herbal remedies to treat themselves.

"The people are being told to look after themselves as all Health facilities are facing the problem of drug shortage while the country is facing cash flow problem.

"Now it's clear any body can make their own conclusions as to how the decisions were made back then for reasons only known to them."

John K Kamasua

Unless we can be "Man Enough" to close the leads and holes open to corruption, no amount of donor money and aid will bring the majority of Papua New Guineans out of poverty.

We have a frightening culture of corruption, nepotism and evil that we are currently swimming in it.

Strengthening governance and accountability systems so that we are able to utilise first what are at our disposal should be the way forward.

Bernard Corden

People in glass houses......
Regulatory capture is also flourishing in Australia but more cleverly disguised.

William Dunlop

Strewth. Pigs might yet fly.

Barbara Short

Back to the future. Some of us have long memories.

Go back to 2013 when PNG Health decided to do the wrong thing and go against Australian advice. Why? Corruption was involved.

'PNG medicine funding withdrawn after concerns about contract process' (Liam Cochrane reported this story on Thursday, December 26, 2013 08:05:00)

"TONY EASTLEY: Australia has withdrawn funding for a $38 million medicine supply programme to Papua New Guinean health centres because of concerns about the way PNG awards contracts.

"Previously Australia's aid agency chose the supplier and distributor for the medicines, but this year that process was handled by PNG.

"In June the government there removed a crucial quality-control criteria and later awarded the lucrative contract to a local company that PNG doctors say supplies sub-quality drugs from China.

"Not only that, but the new contract is costing $9 million more than the old one. PNG Correspondent Liam Cochrane reports.

"LIAM COCHRANE: Three years ago, a corruption scandal within Papua New Guinea's health system left hospitals running out of drugs and prompted the PNG government to ask for Australia's help in stocking health centres.

"Since then the International Dispensary Association supplied medical kits to almost 3,000 health facilities across Papua New Guinea.

"Dr Glen Mola, treasurer of the Medical Society of PNG, says the IDA did a good job getting the medicine to remote health clinics.

"GLEN MOLA: The person who contracted to distribute the medicine didn't get paid unless they could take a digital photograph of the medicine arriving at the actual health facility at a time and a date that was verified by the health facility.

"LIAM COCHRANE: But the arrangement was always going to be temporary and this year the PNG government took responsibility for procuring the 2014 supply of medical kits.

"Australia agreed to keep funding the program, provided the tender process was transparent.

"But days after the closing date for tenders, an official at the Ministry of Health told bidders that an internationally recognised quality management accreditation known as ISO 9001 was no longer required.

"The company that won the tender, Borneo Pacific, does not have the ISO 9001 accreditation, but the company does have a history in PNG. Dr Glen Mola:

"GLEN MOLA: Borneo Pacific are a company that have been in Papua New Guinea for a couple of decades and they have a reputation. And many of us are very concerned because of past performance.

"LIAM COCHRANE: Borneo Pacific is a major supplier of drugs from the North China Pharmaceutical Group.

"A survey of antibiotics in PNG in 2011 found all four samples provided by North China Pharmaceutical Group were sub-standard, with one probably a fake drug.

"What's more, the Borneo Pacific bid was $AU9 million more than the firm which had successfully delivered the kits for the past two years.

"Australia's Department of Foreign Affairs and Trade released this statement about its funding of the medical kits:

"DFAT STATEMENT: This [funding] was conditional on the government of PNG purchasing the kits from a pharmaceuticals firm which met international drug quality standards, through a fair, transparent international tender process. Unfortunately, these conditions were not met and the Australian Government will not fund the distribution of the medical kits resulting from this tender process.

"LIAM COCHRANE: The ABC understands the PNG government has set aside money in next year's budget to pay Borneo Pacific for the medical kits and the drugs are expected to arrive in May and June.

"Dr Glen Mola from the Medical Society of PNG says the distribution of quality drugs in these medical kits is a matter of life and death.

"GLEN MOLA: if the health workers don't receive their medicine they need to treat the patients well then the patients die because it's not like in Australia, perhaps in other countries, where the patient can go just to a different facility or go to see a different doctor or something. When you're in a rural and remote area of Papua New Guinea, your health centre is the only health facility for your community - there's no alternative.

"LIAM COCHRANE: Australia's decision to walk away from the deal is another blow to the credibility of PNG's claims to be battling corruption and improving services.

"The ABC's efforts to contact the Papua New Guinean Health Minister were unsuccessful and there's been no response to a request for comment from the PNG prime minister's office."

Paul Oates

With all the best will and intentions, this proposal opens up a can of worms. The devil will be in the detail.

Australia must quickly get rid of the Manus lever and tread a very narrow tight rope between ensuring responsibility and accountability and yet acknowledging PNG sovereignty.

If this opportunity isn't successfully followed up it will leave a vacuum that will be instantly taken up by 'another foreign power' who will demonstrably not have anyone's interests at heart but their own.

United we stand. Divided we fall. (Aesop)

Des Martin

Perhaps the PNG government might try and recover funds from corrupt personalities' bank accounts or sale of property financed by corruption. This might even solve the national debt.

Daniel Doyle

An enduring memory of consultations with communities in almost one hundred villages in five provinces prior to the implementation of an AusAID-funded education project was the unanimity of their insistence that government should not be allowed to have anything to do with the money! The same was repeated in respect of an EU funded project in three districts. Heed the voice of the people, Australia, and any other 'aid' donor.

Barbara Short

Good comment by Robin Lillicrapp. Let Australian experts come in and straighten out the place... get rid of the rorts, sort out the Tenders Board giving jobs to wantoks. They need to be well trained on all the little tricks the clever bastards have been getting up to.

Set up the ICAC quickly, get Vergil Narokobi and Sam Koim and all the trusties etc to set up the rules and make sure people follow them. No more money to be stolen!

`Robin Lillicrapp

Well, it seems the door to fiscal prudence is being levered ajar by necessity.
That necessity is the opportunity for Australia to lay down some ground rules for aid -admin that allows for a systemic clean-up of PNG economics and allied corruption.

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