I am delighted to be visiting Papua New Guinea for the first time in my new role as Parliamentary Secretary for Pacific Island Affairs. I first visited PNG on a school trip in 1984 and then again in 1993 with my work at Slater and Gordon. From 2003-2007, I had much contact with the PNG Trade Congress, through my work at the ACTU. PNG featured in my first speech in the Australian Parliament, and I have been a member of the Australia PNG Parliamentary Friendship Group since my election in 2007. It has become a passion of mine to encourage across all Australia a much greater degree of engagement with PNG.
Our bilateral relationship with Papua New Guinea is deep, longstanding and enduring. From fighting on the Kokoda track in 1942, to Australia’s governance of PNG, our two nations have developed strong people-to-people links.
In 2008, former Prime Minister Kevin Rudd made Papua New Guinea his first overseas visit, where Sir Michael Somare and Mr Rudd signed the Port Moresby Declaration. This declaration set a positive tone for relations, with its emphasis on mutual responsibility and mutual commitments signalling Government relations have never been stronger.
Australia’s bilateral aid program in PNG is one of Australia’s largest and most complex at $A415m in 2010-11. Australia and Papua New Guinea enjoy a vigorous trade and investment relationship. Australia is PNG’s most important trading partner, and PNG is Australia’s 19th largest trading partner.
Crude and refined petroleum dominate Australian exports to PNG, but some 4,000 Australian companies export to PNG in a wide range of categories, including industrial and agribusiness products, food and beverages, and household goods. In 2009 Australia’s merchandise trade with Papua New Guinea totalled $A4.8billion and investment $A2.7billion, with prospects for major expansion of the trade and investment relationship.
Since 1975, I think all levels of Australian society – not just government, but the corporate and community sector as well – have not always maintained the human bonds that used to exist with PNG prior to independence. I am sure I am speaking to the converted when I say we need to raise the profile of Australia and PNG’s relationship both with the media and the Australian community.
Since 2007, the Australian government has been looking to re-establish and strengthen those bonds. The Gillard government will continue to approach its relationship with PNG in the same spirit of mutual respect and partnership, and having known Julia for over two decades I can assure you she is personally committed to the region.
I'd like to take this opportunity to pay tribute to the role of my predecessor, Duncan Kerr, in fostering bilateral relations during his term as Parliamentary Secretary for Pacific Island Affairs. If I can do half the job he did I will be very proud.
As PNG tackles its many challenges, it is very important that Australia is there as a strong partner, not just out of affection for a close neighbour, but also in our own national interest. Our main objective is to support PNG’s long-term, sustainable development. This needs to be taken forward in a way consistent with our mutual desire to reduce PNG’s aid dependence and to give expressions to the reality of our relationship being one of equals.
Both sides have recognised the potentially transformative effect of the PNG LNG project on the PNG economy and on the bilateral relationship. The 30-year, $US15 billion PNG LNG Project has the potential to deliver substantial and sustainable economic benefits to the people of PNG. PNG is already experiencing increased economic activity in anticipation of the project’s commencement. The project will generate significant employment and skills development opportunities for Papua New Guineans, and has the potential to provide substantial flow-on benefits for the region.
There has been much comment about Australia’s aid to PNG, and rightly so, considering PNG is Australia’s second largest aid recipient. Our aid relationship is complex, but there have been significant achievements. Australian support helped education completion rates increase from 41.5 per cent in 2006 to 56.9 per cent in 2009.
Australia supports PNG in its fight against HIV and AIDS on a number of fronts and in 2009 funded 60 per cent of the HIV response in PNG. Australian support helped to nearly triple the number of people receiving antiretroviral therapy, from 2,250 in 2007 to 6,342 people by the end of 2009.
In 2009, Australia supported the maintenance and rehabilitation of 2,034 kilometres of priority roads and highways, and Australian aid maintained the key section of the Highlands Highway from the industrial centre of Lae to Goroka in continuously good condition since 2008—a significant improvement on its previous condition.
We recognize there is scope to improve the effectiveness in delivering development outcomes and providing better value for money. At Alotau in July 2010 Australian and PNG Ministers welcomed the independent review of the Australia-Papua New Guinea Development Cooperation Treaty, commissioned by Sir Michael Somare and Mr Rudd in 2009. Ministers agreed to address jointly the Review’s recommendations. Officials are drafting a joint response to that Review right now. And that will include both completing joint reviews of technical advisory positions in Australia’s aid program and also options for an umbrella economic cooperation agreement encompassing development assistance, trade and economic cooperation.
We've noted the important opportunity presented by the PNG LNG Project and the Review of the Development Cooperation Treaty to redefine the basis of PNG and Australia’s bilateral relationship. A new cooperation framework will require hard decisions and discipline on both sides to ensure resources target the highest priority areas for Papua New Guinea’s economic and social development. But a project of this scale brings important challenges, and getting them right will be crucial for this country. Revenues need to be managed prudently to ensure resources are there for the long term benefit of PNG.
The Australian Government is providing extensive support to ensure the LNG project goes ahead to the lasting benefit of the PNG people. In December 2009 the Australian Government offered a loan of up to $US500 million to support Australian participation in the development of the PNG LNG project. This decision demonstrates our confidence in the project and the importance we place on private sector growth to PNG’s development.
Australian exporters have already been identified as preferred tenderers and suppliers for contracts worth more than $US1.2 billion for the construction stage of the project, with significant further opportunities available.
In 2009 our two governments signed a Joint Understanding on further cooperation between Australia and PNG in support of the PNG LNG project, reflecting our shared appreciation of the potential for the project to transform the PNG economy and the bilateral relationship.
Through the Joint Understanding, Australia is working closely with PNG to help give effect to PNG government decisions on the project, including on the establishment of sovereign wealth funds to manage project revenue effectively and transparently for the long term, and to assist PNG develop capacity in other LNG project-related areas including border security, skills training and licensing and regulation.
It’s become clear to me in the brief time I've been here that Port Moresby is experiencing something of an economic boom. Papua New Guinea is experiencing robust economic growth, despite the global downturn, and official forecasts are for very strong growth of 7.5 per cent in 2010. Demand for minerals and energy commodities continue to provide a solid foundation for PNG’s exploration and development projects. Overall the mineral-sector activity in PNG has proven very resilient. The resources sector accounted in 2009 for more than 20 per cent of the PNG economy and 78 per cent of PNG’s exports. Resource-specific taxes, royalties, and dividends accounted for around a quarter of PNG Government revenue, with the sector also responsible for a significant share of company and income taxes.
PNG’s enormous resource potential should enable it to deliver benefits to the whole country. In addition to the LNG Project, you'd all be aware of the Ramu nickel-cobalt laterite project and the Wabo Hydro Project, just to name a couple. Australian companies are well positioned to benefit from Papua New Guinea’s economic growth. The potential exists for two-way trade to increase significantly, particularly if estimates are realised of a 15 to 20 per cent annual increase in GDP as a result of the PNG LNG Project.
I welcome PNG’s support for the PACER Plus negotiations. We know that trade provides access to a wider range of goods and services, technologies and knowledge. It creates entrepreneurial activity and jobs, and provides opportunities for skills transfer and knowledge development. It also attracts private capital and increases foreign exchange earnings. We believe that the more the Pacific nations are integrated with the wider global community, and the freer the flow of goods, services and investments within the Pacific, the better the prospect of genuine, stable and long-term economic growth there will be for Pacific communities.
We recognise the importance of maintaining the engagement of key participants in the Australia-PNG Business Dialogue, with its potential to play an important role in connecting the public and private sectors, and in promoting conditions that encourage and support investment in PNG. It is important that regular engagement take place between the business councils and the Australian and PNG Governments, and we are committed to working in partnership with the Councils in support of our mutual interests.
We see PNG as an emerging power in the Pacific and we welcome this. There are challenges but they can be met. We clearly want to help this happen, as a close committed friend. As businesses working in both countries, you are in a pivotal position in our two countries' shared destiny, and much rests on your shoulders. I want to assure you that our mantra, as I'm sure is yours as well, is what’s good for PNG is good for Australia.
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