AUSSIE ECONOMIST QUESTIONS BENEFIT OF PNG AID

admin's picture

By Brian Gomez

PORT MORESBY, Papua New Guinea (The National, Nov. 29) - An Australian economist has questioned whether Australia's enhanced cooperation package for Papua New Guinea "offers a sustainable solution" to the country's underlying problems.

Craig Sugden, director of Focus Economics in Brisbane, also questioned whether the ECP had satisfied normal cost-benefit considerations or, at least, a cost effectiveness test.

Sugden said the ECP represented a high-cost package with the placement of 300 Australian public servants and associated costs being equivalent to "providing a year's education to more than 700,000 Papua New Guinea children."

Writing in the Australian National University's Pacific Economic Bulletin, prior to the deployment of the initial batch of Australian police and public servants to PNG, Sugden also questioned who would benefit from the program and "whether it can do much to alleviate poverty."

He said most of the direct benefits of the ECP would be "captured by those already relatively well off" with good reasons to expect only weak flow-on effects to the majority of people who live in rural areas.

He said that although the program was publicly portrayed as an initiative of both governments, "it is best described as an initiative of the Australian government."

No conditions have been set for the provision of this aid, he said, and there was a clear indication that "Australia did not see itself ever being able to walk away from Papua New Guinea."

He said ECP was based on the premise that the critical tasks to be undertaken are currently beyond the capacity of Papua New Guineans, either within the public service or those that could be drawn from outside.

Sugden said ECP represented another attempt by donors "to address economic governance in Papua New Guinea" following three donor-sponsored structural adjustment programs over the past 15 years.

He said the World Bank had rated the 1990 program as "unsatisfactory" and the 1995 program as "marginally satisfactory."

Sugden said Australia has been providing aid to PNG's law and justice sector since 1984 with the sector accounting for one-third of Australian program aid by 1991 with support for the police force taking up two-thirds of this aid.

He said it was unclear if previous experiences made a clear case for the placement of up to 230 Australian police.

The less than satisfactory impact in the past, he said, would make it seem prudent that new initiatives were cautiously tried and their performance tested carefully.

Sugden also said full-time Australian public servants with potentially little developing country experience might have too little practical experience to carry out policy transfers.

Sugden said the annual cost of the ECP was equivalent to 20-25 percent of the PNG government's recurrent budget.

"The police component of the ECP alone (K420 million) is 30 percent more than is spent annually on the entire law and order sector," he said, adding that as a benchmark the contribution of the Australian police would need to exceed by 30 percent the contribution of 5,500 PNG police as well as the existing judiciary and corrective services.

He said funding of ECP is on a grant basis and there is no direct cost to PNG from the initiative.

The greatest risk, he said, would occur if the enhanced Australian aid program would indirectly support "laxness" in PNG's budget by deferring action on the wages bill of the public sector.

November 30, 2004

The National: www.thenational.com.pg/

 

Rate this article: 
No votes yet

Add new comment