Former PNG PM wants Aust aid to focus capacity building

ABC Pacific Beat

Papua New Guinea's former Prime Minister, Sir Rabbie Namaliu, has called on the Australian government to put more aid money into training and education to help PNG cope with the enormous brain drain being created by PNG's resources boom.

In the PNG budget delivered last week, Treasury and Finance Minister, Peter O'Neill announced big increases in spending on education and health.

Sir Rabbie Namaliu says these were made possible by the increasing revenue going to the government from the resources boom, but he says that is not enough to deal with the scale of the problem.

The former Prime Minister, now chairman of Kina Asset Management, says money currently being paid to high-cost Australia aid advisors would be better spent on training Papua New Guineans.

In Port Moresby today, Papua New Guinea's parliamentarians are debating the budget as Sir Rabbie Namaliu explains.

Presenter: Pacific Economic and Business reporter, Jemima Garrett
Speaker: Former PNG Prime Minister, now chairman of Kina Asset Management, Sir Rabbie Namaliu

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NAMALIU: The budget has obviously grown quite significantly this year to 9.3 billion Kina from just over 8 billion Kina last year. There is obviously more revenue , as a result, available, not only for recurrent expenditure but more importantly for the development component of the budget and that has increased significantly to just over K4 billion which is quite a significant increase, which basically means there will be more money available to fund new programs, as well as existing ones. And the component funded by the PNG government has grown quite significantly to, I think, just over half of the development budget ..actually more than half, and the balance funded by donor funding. So that is a big plus and the projections are for windfall revenues and strong growth to continue not just next year but in future years.

GARRETT: How much of these new revenues that the PNG government will be spending are from the construction of the PNG LNG project?

NAMALIU: The LNG project will obviously contribute quite a bit to that but most of it will come from existing projects; from gold, from existing mines, from gold and copper mainly and a large part of it is to do with very high commodity prices that are obviously being experienced in Australia as well. So that is having a positive impact on our export earnings and as a result revenue from our exports that go to the government have increased well above projections for this year, which resulted in a supplementary budget for this year as well as for next year.

GARRETT: As well as the PNG LNG project there are other new LNG projects and new mining projects in the pipeline. Just what sort of impact do you see them having over the next few years?

NAMALIU: They will have enormous impact assuming all of them get off the ground. The Interoil LNG project, although slightly smaller than the ExxonMobil-led one, will be another significant LNG project, nevertheless, and that will also contribute substantially to the economy. There are mines that are in the process of being explored or likely to be developed over the next few years including Frieda River. That's a copper mine. And then Yanderra, which is Marengo Mining. That is copper-molybdenum. Hidden Valley has just gone into production. That is gold, mainly. And, of course, Ramu Nickel, which was supposed to go into production this year, is delayed obviously but once it gets into production, that is nickel and cobalt. So all of those will have a positive impact in terms of increased revenues, and though employment numbers won't be as big as in the non-mining sector areas, nonetheless, it will provide opportunities for employment and a whole range of infrastructure developments that otherwise would not have been made possible.

GARRETT: Just how well prepared is the PNG government to manage all this increase in revenue?

NAMALIU: I think, obviously the biggest problem and the Minister for Treasury, obviously himself, said this in so many words in his budget when he handed it down and that is that the biggest problem is to do with the capacity to deliver, you know to implement, in other words, the budget. And so we have a huge challenge ahead of us to build up our capacity and building capacity is not something that happens overnight. It will take time and take years to do because the mining and petroleum sectors, for instance, both need geologists, both need engineers, both need the whole range of technical personnel, which we have a scarcity of. We just haven't rained enough people to go into employment in that sector. And for the LNG project ExxonMobil are, in fact, building ..are about to complete a new technical college in Port Moresby, next to the existing one that was built by the Australian government. And part of it to be built up in the Southern Highlands but that is specifically for the LNG project. And for the others either they are recruiting for each other at the expense of others who have got people in existing positions or they are having to look elsewhere. And indeed for the LNG project, we won't be able to supply them with the numbers from within in the short term, because that will require about 6-7000 people, so most of these people are most likely to be recruited offshore.

GARRETT: These projects pay very good wages. To what extent are they sucking qualified people out of the Papua New Guinea public service and jobs like teaching, into the resources industry?

NAMALIU :They are in fact doing that so you see more and more people are leaving existing positions for more lucrative opportunities with the LNG or the other projects, not just in PNG but elsewhere as well. We've been losing professionals overseas to Australia and the United States and elsewhere, especially in the petroleum and mining engineering and geology areas. And that will obviously continue but it will be made even more acute with these projects that are underway now in Papua New Guinea. So we have a huge catch-up task ahead of us to train more Papua New Guineans into these positions and, at the same time, fill in the gaps that are being left behind from non-traditional areas, like teaching for instance you mentioned. All the teachers who are leaving teaching to go into positions with the LNG or with the mining projects, something which would not have happened to any significant extent not too long ago but it is happening now.

GARRETT: Australia's Foreign Minister, Kevin Rudd, has announced a review of the effectiveness of Australian aid. How could Australian aid be used more effectively to see that Papua New Guineans see the benefits of the resources boom?

NAMALIU: well, capacity building is obviously one area and in that area I know AusAID has already got various programs in the area of training and education but I think that may need to be increased, especially into priority areas. An particularly, if we are not training enough from within, then more opportunities should be provided for those sorts of people to be trained in those key priority areas, in the technical and professional areas. Even if, especially with the significant increases in the health and education budgets - they will require trained skilled professional, technical people, that may not be all available from within. So, if the Australian government, through that program could provide additional opportunities for Papua New Guineans to be trained in those areas, otherwise we won't be in a position to implement programs that are being targeted in the field of education and health and those are just two because they received significant increases in the budget just handed down.

GARRETT: The Australian government has announced a cut-back in the number of high-paid Australian technical advisors. Are Australian consultancy companies that manage many of Australia's aid projects still getting too much of the aid pie in Papua New Guinea?

NAMALIU: That is obviously what is being said publicly and I think the Minister himself has said so and our own Minister has said the same thing so it's obvious that from both sides of the Torres Strait, I think there is a common view that, perhaps, that is the situation and it needs to be changed.

GARRETT: Would you like to see some of that money that is now going to consultants going to training Papua New Guineans to take part in the resources boom?

NAMALIU: Absolutely, if more of that money can be directed towards training and other opportunities in the education sector that would go a long way to making sure that we train more of our people to fill technical and professional people that are required and trades people as well. I think that is where the other gap is. There is a huge gap in tradesmen in technical areas and we require or we need more and more of those people. Our technical and vocational schools are not raining enough and if some of that money could be directed at area as well, as well as assisting the PNG government to provide greater resources to our universities and colleges that have got the primary responsibility of training these sorts of people.

GARRETT: The other issue for Australian aid in Papua New Guinea is its vulnerability to corruption. Just how vulnerable is Australian aid to corruption?

NAMALIU: Well I think because most of that money is basically controlled through the Australian government through AusAID I don't know that there is that much room for corruption at least in Australian, AusAID funded projects. But certainly as far as the Papua New Guinea component of the budget which is the main part of the budget is concerned, there continues to be strong evidence of that happening and that is a huge challenge that we have to continue to address. In fact, I think there is some disappointment that the efforts that are being made are not enough to try and curb it and we need to do a lot more at the national level, as well as at other levels of government, to make sure that we minimise the seepage of funds that are allocated for development as well as for services that the national, provincial and local level governments are responsible for.

GARRETT: what would you like to see come out of the aid review in terms of the effectiveness of Australian aid?

NAMALIU: Well, I think you know that it is important first, that the money is being well spent and that means not just in terms of its delivery efficiency but also in terms of its impacts on the livelihood of our people -that is actually making a difference. Ultimately, that is the bottom line. If it is not achieving that then, obviously it is not having much of a success rate. So its got to be measured against the level of delivery but its also got to be measured against the success rate in terms of how much it is achieving by actually making a difference to people's lives or standard of living.

GARRETT: The Papua New Guinea government has had difficulty getting services down to the people. To what extent would a bigger effort on anti-corruption help get those services out to the grassroots level?

NAMALIU: I think it could go a long way that a bigger effort is made in that direction especially when it gets down to the district level where large amounts of money or significant resources are being deployed to the district level in particular where the member of parliament is the head of the committee that determines where and how it should be spent, in terms of priorities. So that is a challenge that it has to better address in the years ahead and at the national level as well and, you know, I think we've had several enquires now into various areas where quite clearly, corruption has grown and grown significantly to the point where we are losing millions through stealing as well as through misappropriation. These are real problems and it is important when we have reports of enquires that are submitted that they be acted upon, b because that is the problem with these reports. We set up enquires, spend large amounts of money on them, reports are submitted but very little action is actually taken on the recommendations. That is one of the key things the national government must start doing, must implement and be seen to implement recommendations that have quite clearly been put together as a result of long painstaking enquires into areas where large amounts of money is being misappropriated, or being stolen or being diverted to things that they were not meant for.