Highlander with big shoes to fill

AN accountant who put on his first pair of shoes when he was 16 to visit his father's relatives in Melbourne has in six short weeks taken a firm grip on the steering wheel in Papua New Guinea.

But this country, Australia's closest neighbour, a tinny ride away, is notoriously resistant to direction. It is on the cusp of rapid, overdue modernisation, or sinking back to tribalised subsistence.

Especially today, Independence Day and a public holiday, the country's seven million people will be asking whether Peter O'Neill can succeed.

It is 36 years since prime minister Gough Whitlam and governor-general John Kerr, with Prince Charles representing Queen Elizabeth, who remains PNG's head of state, formally declared the country independent, inaugurating a brief, sunny period of optimism for PNG's future until corruption began to take its terrible toll.

The only Papua New Guinean most Australians can name is Michael Somare, who became prime minister at independence and has been at the forefront of public life there for an extraordinary 42 years.

But now Somare, "the chief", has lost his seat in parliament due to his absence during prolonged illness, and is most unlikely to return, although a court challenge that began yesterday on his behalf could still disrupt the new government's entrenchment.

Taking Somare's place is PNG's recently elected Prime Minister Peter O'Neill, who comes from the populous heartland, the Highlands.

O'Neill met Prime Minister Julia Gillard on the sidelines of the Pacific Islands Forum leaders' summit in Auckland last week, and gave an important speech to businesspeople in Brisbane on the way home.

In his first interview as Prime Minister he told The Australian that "our relationship with Australia right now is a very good one".

He revealed in Brisbane that he has already cautioned, "and will caution again, my ministers and state-owned corporations involved in the mining and hydrocarbon industry, to desist promptly from giving misleading signals to the foreign investment sector. My government is not about making life difficult for foreign investors."

On October 12 O'Neill will make his first formal visit to Canberra as Prime Minister.

Australian aid remains important, and is now being refocused on basic education and health needs, but has fallen as a share of the PNG budget to 11.7 per cent, as the country has enjoyed rapid economic growth over the past five years, reaching a projected 8 per cent this year.

But the topics O'Neill and Gillard will talk about in October now range further than aid, which is being rebadged as a "development partnership".

They are likely also to discuss PNG's plans for sovereign wealth funds to quarantine its windfall earnings from gas, health issues across the Torres Strait including a tuberculosis outbreak, the proposal to pipe hydro-electric power from PNG to Queensland and, of course, assessing asylum-seekers on Manus Island, which O'Neill backs. "Asylum-seekers are a regional issue," he says.

"We, too, have illegal immigrants entering our country, particularly from Asia."

The new leader brings to the position a fresh, different style from that of the veteran, 75-year-old founding father Somare, and from the extrovert "big man" leaders who have previously emerged from the Highlands.

O'Neill has already impressed by rapidly introducing bills to make education free up to grade 10 and to create a seat dedicated for women in each province, guaranteeing that the new parliament will have at least 22 women MPs where now it has just one, Queensland-born Carol Kidu.

"Women deserve to participate in the decision-making process and in the management of our country," he says.

His next urgent legislation is to create a new province for his home area, the Southern Highlands, where PNG's first liquefied natural gas project is being built by ExxonMobil for $16.5 billion, and which Southern Highlanders have threatened to destroy if they do not get their own provincial government in time for next year's national election.

He needs to move fast, since the election is due mid-year.

A 46-year-old former accountant and businessman, O'Neill is bright, courteous and thoughtful. His father Brian was an Australian "kiap", or patrol officer, who arrived in PNG in 1949 and stayed until he died in 1982.

His mother Awambo Yari was from Pangia in the Southern Highlands.

As the first outsider to be based in the Ialibu-Pangia district, O'Neill's father established basic government services in the area.

"So the older generation know him very well," O'Neill says.

Later in his career, his father worked as a magistrate, shifting to Mount Hagen, then Goroka, also in the Highlands.

O'Neill grew up in his mother's home village, until he joined his father in Goroka when he turned 15.

His father was born in the then working-class suburb of Williamstown, now a fashionable area with views across Port Phillip Bay to the Melbourne city skyline.

"I'm still in touch with relatives in Melbourne," says O'Neill, who has two sons of his own.

O'Neill attended high schools in Ialibu in the Southern Highlands and in Goroka, before studying at the University of PNG in Port Moresby.

"I didn't follow my father into the law, because I had grown up poor, and thought I'd have a better chance through accountancy," he says. "I was fairly reasonable with numbers."

O'Neill joined international firm Coopers & Lybrand from university, then formed his own small partnership with a New Zealand accountant in Port Moresby, before returning to Goroka where he established a trading business, which he sold in 1988 to move back to the capital.

He was then asked to help rescue failing state corporations, including the PNG Banking Corp, of which he became executive chairman.

The bank was privatised under Mekere Morauta's prime ministership in 2002 and is now the highly successful Bank of South Pacific, with interests across the islands region.

In 2002, a report on the National Provident Fund's financing of an apparently over-priced office tower in Port Moresby, in which O'Neill played a role, recommended his referral to the public prosecutor, but no action was taken. This has been his only public brush with misbehaviour, one that has effectively been left behind.

In the same year he stood for parliament for his home area, Ialibu-Pangia.

"I went into politics out of a sense of frustration at the way decisions were being made, and a sense of obligation to my father's efforts to bring some level of government services to my area," he says.

"Growing up in the village environment, I knew very well the limitations of opportunities and services that my people suffered - and are still suffering.

"There was no power, no running water, no road."

Boarding during the week, every weekend he walked home the 28km from his high school in Ialibu, taking back his food for the following week.

Now the road has been upgraded. But there is still no power or running water in the village, named Paiyomari.

Besides English and Pidgin, O'Neill speaks three Southern Highlands languages (PNG has more than 850 indigenous languages).

After being elected in 2002, he was swiftly given the labour and industrial relations portfolio by then prime minister Somare, an later the public service ministry.

"It was quite challenging at first," he says, "coming from a different, business background, adapting to how a government operates."

O'Neill is the leader of the People's National Congress Party, which in 2004 quit the coalition government over Somare's doubling to 12 months the grace period before an election, within which a no-confidence motion cannot be moved.

"We felt that governments need a level of accountability, and that such a change would be undemocratic, leaving the government unchallengeable for too long."

O'Neill then became opposition leader until the following five-yearly election, in 2007.

"I enjoyed that position," he says, "because it gave me an opportunity to set up my own policy alternatives, and build up my political skills, in debating and making sure the government was held accountable."

After the election, he returned to Somare's government, which was made up of 14 parties, and to his former portfolio of public service before being given, as a reflection of his growing authority, the powerful role of Treasurer.

When Somare fell ill and flew to Singapore for surgery, he appointed Sam Abal as acting prime minister, and Abal demoted O'Neill to the works portfolio.

But O'Neill had felt, since his time as opposition leader, that he had the capacity to become prime minister, and sensed this was his hour.

Within the labyrinthine world of PNG politics, O'Neill has made his mark and attracted others not only through his decent bearing and intelligence, but also through his sense of timing and his consistent luck, luck that had him rising to the peak of his political influence just as Somare's physical powers were waning.

When Abal began reshuffling the cabinet in Somare's absence, O'Neill was convinced PNG should instead seek "a mandated leader to take the country into elections in 2012". And that would be him. "I began speaking with the opposition parties about forming a credible government, a government of unity in a way, in preparation for the election."

It came down to two names, he says: Don Polye, the former foreign minister (also a Highlander) and his.

In a secret ballot in the caucus room in parliament, O'Neill came out on top. He has since given Polye the substantial consolation prize of Treasury, further reinforcing his position by appointing a cabinet of 33, with 11 vice-ministers. This gives him a comfortable 80 per cent of the votes he needs to pass legislation.

O'Neill has already differentiated his administrative style from Somare's by keeping his office door constantly open to ministers: "Michael Somare is an iconic figure in our country, well respected and fatherly to many of us. I wished things could have been done differently (with the succession).

"But for more than eight months, decisions were being made which were not mandated, the government was serving the interests of a minority.

"And Papua New Guineans were entitled to know how their leader was doing."

Somare, who returned to Singapore yesterday for further medical treatment, now "needs to retire with dignity and respect" O'Neill says. "We all know how we have squandered our opportunities in the past.

"Some of us are determined not to make the same mistakes again.

"And aware that we are in government for less than 12 months (before elections), we are focusing on a very few areas, education being our number one priority.

"We are now spending 20 per cent of our budget on education, likely to increase to 25 per cent by 2012. We are also revamping the health system, including by centralising drugs purchase and supply, which has been bound up with corruption in the past, and by rehabilitation of the six major referral hospitals."

- ROWAN CALLICK - THE AUSTRALIAN