It’s good to be back in PNG.

This is my sixth visit here since becoming Parliamentary Secretary for Pacific Island Affairs.

As a neighbour and as a close friend, Papua New Guinea is one of Australia’s most important partners.

Not just geographically but on any level.

We are two countries inextricably linked.

And we have a shared future.

Our business and economic ties have been a major driver of the Australia-PNG relationship since independence.

You need only step onto a plane to PNG to be reminded of this, with most Australian passengers on flights to PNG coming from the business community.

Trade between our two countries was worth $7 billion last financial year and our investment relationship is growing strongly.

The Papua New Guinea of today is a very different place to what it was 36 years ago at independence.

It is the largest country of the Pacific Islands, not only geographically but in terms of population.

Its 6.5 million people account for 70 per cent of the entire population of the Pacific Islands.

It has recorded nine consecutive years of real economic growth.

This is a serious achievement given the global economic climate and it is something Papua New Guinea should be proud of.

Revised projections by the IMF show that PNG’s growth rates could reach low double digit figures in 2011, putting it up there with China and its stellar growth rate.

Strong macroeconomic management and high export commodity prices have helped boost business confidence.

The current climate has also helped foster investment and employment in the country.

Like Australia, much of PNG’s prosperity comes from its abundance of natural resources, including in minerals, oil, gas, timber, coffee and fish.

The Exxon-led LNG project stands as testament to the confidence the foreign investment community has in PNG.

But, again like Australia, the PNG economy is not a one-trick pony and there are other aspects to the economy that should also be mentioned.

The strong growth in telecommunications helped services expand by around 8.5 per cent in 2010.

Figures from the World Bank show that there were almost 2 million mobile phone subscriptions in PNG that same year.

Papua New Guinea is also reaping the rewards of good governance in banking and finance, with the IMF reporting that total financial sector assets have increased from 9.5 billion Kina, or AU$3 billion, in 2005 to 26 billion Kina, or AU$10 billion five years later.

For a vibrant business sector to be sustainable, the benefits of commercial activity need to be felt at all levels of society.

Because it’s business, not government, that drives genuine sustainable economic growth, and it’s business that generates genuine, sustainable wealth and prosperity.

Business is not merely about making money.

It is about improving the lives of ordinary Papua New Guineans by giving them access to employment and capital.

Business also builds links between countries – our governments and our peoples – and today’s function is proof of this.

Business and government often work together to achieve common goals – it is in business’s interest to operate in a sustainable economic and social environment.

We are seeing a generational change in PNG society - people who now expect that the economic benefits from major resource projects be translated into real development.

They quite rightly believe that services such as education, health, and infrastructure should be available to all.

Having a resource rich economy can be a blessing.

But without proper management it can be a curse.

Fast money from resource exploitation can feed corruption.

It can enrich the few and leave the majority out.

We can't deny that this is a challenge here in PNG.

It is certainly an issue the PNG Government has identified as a major problem.

Which is why I believe that economically and politically PNG is at a watershed moment in its history.

Economically, in terms of the LNG project and creation of a Sovereign Wealth Fund.

Politically, in terms of this year’s election.

PNG’s constitutional processes have come under unusual strain over the past few months.

Australia takes the position that the issues underlying this strain can only be resolved by the people of PNG themselves, speaking through an election.

Australia is therefore working to help the PNG Government improve its capacity to deliver elections in June and July.

I want to take this opportunity to register with you the importance Australia attaches to the elections being held on time.

I recognise that the credibility of PNG’s elections is a key concern for the PNG Government and Parliament.

But any delay needs to be thought through carefully.

Postponing the elections would raise serious concerns among the international community.

Political uncertainty could also breed uncertainty among the business community.

Good economic policies and strong, stable democratic governance are two fundamental pillars in PNG’s development.

A third fundamental pillar is business.

Business is an important stakeholder in PNG’s development.

ANZ and Westpac.

The Curtain Brothers of Townsville.

Newcrest Mining.

Wagner’s Global from Toowoomba.

Sun engineering from Brisbane.

These are just some of the Australian companies giving Papua New Guineans access to capital and employment – contributing to PNG’s overall development.

The Australian government is also working with the PNG government to help improve the lives of Papua New Guineans.

The four priorities for the Australia and PNG Partnership for Development are: health, education, transport infrastructure and law and justice.

Progress in these areas - which were identified as key priorities by the PNG Government - is designed to assist PNG in achieving sustainable development.

This can in turn only benefit businesses in PNG.

Take the Australian government’s commitment to helping improve PNG’s transport infrastructure.

Roads, bridges, airports, ports – these are all critical to businesses and to Papua New Guinea’s development.

They help people get to work, to school and to hospital and to get products to markets.

They are essential to delivering government services to those in remote areas.

And they make doing business in Papua New Guinea that much easier, from which everyone benefits.

Australia and Papua New Guinea are committed to ambitious, but achievable, targets under our Partnership for Development.

This includes a commitment to having 75 per cent of PNG’s 16 National Priority Roads in good condition by 2015:

Australia is maintaining over 500 kilometres of coastal trunk roads in Bougainville, which has cut travel times from 8-9 hours 10 years ago, to just 3 hours today.

Our investment has built up a local road contractor base.

It’s also helped develop a bustling passenger transport industry in Bougainville – a passenger transport industry that’s being fuelled by the boost to cocoa exports that better roads have also brought.

Another area where Australia is investing in sustainable development in PNG is in education.

We should not underestimate the power of education in the development of a country.

It’s been estimated that every year of schooling for a person is likely to translate into a 10 per cent rise in their potential income.

Education is also vital for other aspects beyond economic development.

For example, it’s estimated that infection rates for HIV AIDS drop by about 50 per cent among children who get a primary school education.

Australia’s assistance in providing school fee subsidies in Papua New Guinea has seen net enrolments rise from 64 per cent to just below 75 per cent in 12 months.

In 2010, we helped build more than 500 new classrooms and 430 other school buildings in PNG.

Last year, we distributed one and a half million primary and secondary school text books.

Australia is also committed to improving secondary and tertiary education in PNG, supporting, for example, the rehabilitation of infrastructure of selected high schools and universities.

Papua New Guinea’s current economic boom requires large numbers of skilled workers.

Skilled workers who must come from PNG.

PNG and Australia – both resource rich economies

The PNG LNG Project in the Highlands spells big opportunities for all Papua New Guineans.

Some estimates have in fact suggested that the project could boost PNG’s GDP by 15 to 20 per cent per annum.

At $15 billion, it’s the largest single investment in PNG’s history and it represents a once-in-a-generation opportunity to improve development outcomes for the people of PNG.

PNG has experienced resource-led booms in the past.

Yet on many development indicators it lags behind, with some of the worst health and education outcomes in our region.

PNG will unlikely meet many of its Millennium Development Goals.

40 per cent of its people live in poverty.

It has the highest HIV/AIDS rates in the region.

Only 60 per cent of adults can read.

And despite recent solid growth, PNG’s GDP per capita is under US$1,500 which is behind most of the region.

Clearly, PNG’s wealth in minerals has not translated so far into improving the lives of most Papua New Guineans.

But this time, we all hope, will be different.

Of course, like Australia, PNG has benefited from relatively high commodity prices.

But there has been plenty of hard work in managing the investment activity associated with this large resource project coming on stream.

Australia has supported PNG as it works through this difficult task.

Underpinning the Joint Understanding between Papua New Guinea and Australia on further cooperation on the PNG LNG Project is recognition that the project has the capacity to transform PNG’s economy.

As well as the Australia-Papua New Guinea relationship.

It provides the framework by which Australia is able to support decisions taken by the PNG government.

This support has already included, at PNG’s request, training and development and targeted technical assistance.

Drawing on our experience with our Future Fund, Australia is helping Papua New Guinea design and establish its first Sovereign Wealth Fund, which is a good way for PNG to ensure it preserves its mineral wealth in the future.

Officials from Papua New Guinea’s Sovereign Wealth Fund Secretariat will undertake placements in our Future Fund and relevant Government departments.

The first placements are scheduled to occur in the second half of 2012.

Australia has also helped Papua New Guinea develop the legislation required so that the Sovereign Wealth Fund can manage effectively the PNG Government’s future petroleum – that’s oil and gas revenues.

The legislation has just successfully completed its passage through Parliament.

The challenge now will be to implement the legislation.

The LNG project has shown the world that PNG is open for business.

And that it is able to attract and manage world-class projects.

Australia is committed to developing a further comprehensive package of assistance to support the effective management of PNG’s sovereign wealth funds.

This was one of the key outcomes of the Australia-PNG Ministerial Forum held in Canberra on 12 October.

The LNG project and its potential benefits are part of a larger story in the changing relationship between Australia and PNG.

This is reflected in the new Economic Cooperation Treaty currently being negotiated between our two countries.

A treaty of this kind will underscore the changing relationship between Australia and Papua New Guinea.

It will recognise that aid is only one part of our relationship, with other areas such as trade, investment and business becoming increasingly important.

And this is where all of you in this room have a role to play.

Conclusion

These are indeed exciting times for Papua New Guinea.

Whenever I speak with the business community about Papua New Guinea I am always struck by their optimism.

I'm also struck by the goodwill of Australian business people operating in PNG towards this country.

What I mean by this is a genuine interest in the long-term future of this country:

An interest in seeing a nation that is prosperous, stable and confident.

And a nation that is able to translate the revenue from natural resources into the development of PNG’s most precious asset – the people of this amazing country.

This overwhelming goodwill will ensure that Australian business work hand in hand with PNG business and PNG people for many decades to come.

Australian business people have a commitment to PNG’s future.

They also have a deep knowledge of, understanding of, and affinity for the people and culture of PNG.

Media enquiries

• Parliamentary Secretary's Office: (02) 6277 4330
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