20 June 2012


Your Excellencies, distinguished guests, friends of Australian National University

I thank the Development Policy Centre at ANU, in particular Professor Stephen Howes, for the opportunity to speak tonight on Australia, the Pacific, PNG and our aid program.


As this attendance here at the Crawford School tonight reflects, these are topics that resonate strongly within both academic and community circles.

Lost amongst all the talk of the Asia Century and what this changing strategic landscape will mean for Australia, is the focus on another part of our world that has had a significant bearing on our nation; the Pacific region.

We must never lose sight of the fact that while our interests as a nation are global, many of our priorities are local.

It is here, in our region, more than anywhere else, that Australia’s closest friends and partners look to us to take the lead.

It is here that Australia’s reputation as a valued global citizen can be made or lost.

Australia’s standing in the world is at its highest when our influence in our region is at its strongest.

Should we fail to show the leadership and vision that is expected of us in the Pacific, others stand ready to take our place.

Showing the leadership that is necessary demands an eye to the long-term strategic changes that are taking in place in the region.

Promoting Australia’s interests in the region means deploying all of the foreign policy tools at our disposal.

The tendency of some to point to Australia’s increased development assistance to the region, as evidence of the closeness of our relations or the effectiveness of our engagement, is no substitute for a coordinated and purposeful strategy.
Australia needs a focussed and effective, practical and principled overarching strategic framework designed to deepen our strategic, defence, trade, investment and diplomatic engagement throughout the region, and that will include coordination with our close partner New Zealand. 

Our ability to promote our values, to advance greater political and economic freedom to assist in poverty reduction and economic self reliance in our neighbouring developing countries, is essential to our security and prosperity. A good example and model is our regional coordination effort through RAMSI in the Solomon Islands.

Greater levels of aid do not necessarily correlate to better outcomes, nor does it inevitably lead to closer and more meaningful relationships.

While geography and limited development opportunities dictate that aid is a dominant feature in our ties with the region, we must not let it limit our thinking or replace proactive engagement.

The Coalition has been critical of the Government’s failure to give sufficient attention to the challenges facing our neighbours in the Pacific.

I agree with foreign policy analysts who believe that the Government has taken its eyes off the region and has failed to show the necessary leadership or long-term vision that is required of it.

Indeed, I have often been surprised, indeed even dismayed, by the decisions, action, inaction and lack of diplomacy of the current government in relation to the Pacific and PNG. Fiji is a case in point.

Australia needs to create a new narrative that encompasses a shared vision for the Pacific.

Australia’s appeal in the region must be more than just the strength of our economy – it must include the values and freedoms we cherish as a people.

It is our culture and ideas, in addition to other forms of our soft power, that creates the goodwill and support that is needed to cement Australia’s role in the region.

We must start by rethinking our approach to public diplomacy.

On my recent visit to Bougainville, we stopped off at a local guesthouse. An elderly man sat alone in a large room before a small television, watching a rerun of an American program on the Australia Network.

The rows of empty chairs around him did more to capture, in my mind, the problems facing the Australia Network, the flagship of Australia’s public diplomacy efforts in the region, than any number of evaluations carried out at home.

The Government’s tender process for the Australia Network required that it be expanded into the Middle East and North Africa. Well I say let’s do a better job in our region before taking it to the world.

Increased standing and influence in the Pacific, by attraction and persuasion must be the objectives our soft power diplomacy.

We can do better. Let me give two tiny but telling examples.

During my recent six-hour return drive on the unsealed road from Buka to Arawa in Bougainville, we crossed over a number of solid concrete bridges that had just been built by Japanese aid money – 14 in all. The creeks and rivers are prone to flooding causing communities to be isolated, disrupting business activity and the like.

These bridges have cut down travel times and helped local communities get their goods to market. On each one, there are coloured Japanese flags entwined with PNG flags – proudly displayed.

No one was left in any doubt where this assistance had come from or who was to thank for the foresight in building what Bougainvillians saw as essential infrastructure.

Yes, AusAID does have a role in grading the dirt road between Buka and Arawa – but there was no visible evidence of the fact – and the locals I spoke to simply took it for granted that someone graded the road. Was it the PNG government?

I recently attended the 50th anniversary of Samoa’s independence.

The official day was marked by celebrations, including a parade in which school children, community groups, and public servants all participated with undisguised enthusiasm and pride.

Dozens of United States Peace Corps members dressed in red, white and blue danced through the parade in a spectacular display, there were US marines, a US navy band no less, all joined in the celebrations.

New Zealand was represented by their Governor-General and together with the United States, Japan, and China they were all strongly represented with large flags and banners on display.

Yet, despite being the single largest aid donor to Samoa, Australia’s participation was barely noticeable.

Promoting our reach and influence in the region also means looking at ways we can use Australia’s domestic market to support private-sector development in the Pacific over the long-term.

This includes strengthening Australia’s existing guest worker program to enable greater numbers of Pacific Islanders to undertake seasonal work in this country.

According to Institute for International Trade at the University of Adelaide, studies undertaken on remittances at the sending and receiving ends shows that it “can have a significant impact on poverty alleviation in the Pacific and therefore assist in the achievement of the MDGs”.

A review in 2010 of New Zealand’s Recognised Seasonal Employer program – which is recognised as world’s best practice, found that households that had a member participating in the scheme experienced increases in income and expenditure, a greater sense of subjective wellbeing and improved school attendance for their children.

The goodwill this program creates in the region should not be underestimated.

While there are significant obstacles to improving Australia’s current pilot program, the prospect of placing Pacific Island economies on a more stable and diverse footing should be seriously considered and the Coalition commits to examining the case for the expansion of this program.

This should be backed by the establishment of a Pacific-wide economic and trade agreement as a way to encourage sustainable economic growth and improve living standards.

Yes, I have been critical of the lack of leadership shown by the Australian Government in opening markets and further liberalising trade in the Pacific.

For example, no mention was made of the Pacific Agreement for Closer Economic Relations, also known as PACER Plus, in the Government’s trade policy statement of last year.

This caused considerable consternation in the region at the time, with the Solomon Islands trade envoy Robert Sisilo calling on our government to clarify what it meant by the omission.

I am determined that the Coalition inject the energy, focus and leadership that will be needed for this agreement to be finalised.

Within the Pacific, there is no more important relationship for Australia than with Papua New Guinea. And I acknowledge this evening the presence of the High Commissioner of Papua New Guinea Charles Lepani.

From the period leading up to PNG’s national independence and beyond, Australia and PNG have stood together as close friends and partners.

The close bonds that were forged during the early days of our relationship have carried our two countries forward, bridging any and all differences that may have arisen from time to time.

I am firmly committed to broadening, deepening and diversifying our links and to ensure that in government, our relationship with Papua New Guinea will be one of our country’s highest foreign policy priorities.

I have travelled throughout PNG in recent times, and on each visit I have meeting with government leaders, business representatives and members of the community to discuss our bilateral relationship and how it can be improved.

I have also visited the large oil and gas projects which have the potential to transform the economic landscape of the country, pushing PNG it into the heart of the global economy.

Energy exported from fields such as Hides will help drive the engines of Asia’s economic giants.

I have also spent time in the autonomous region of Bougainville.

With a referendum on its future political status to take place some time after 2015, it is important that Australia’s senior politicians and policy makers understand the many varied and complex issues that influence social, political and economic development in Bougainville.

As the referendum draws nearer, Bougainville will inevitably feature prominently in Australia’s foreign policy considerations.

We have a strong stake in maintaining peace and stability in the region and work should be underway now with all parties in Bourgainville and Papua New Guinea to address the causes that have the potential to undermine progress.

We welcome the PNG Government’s commitment to honour the peace agreement and promises of substantial financial support over a five year period to support development efforts.

It is essential that the Government in PNG, the new Government, to be formed after the pending election deliver on this promise.

The strong growth of PNG’s oil and gas sector has spread to other areas of the economy, such as construction and telecommunications.

Diversifying PNG’s economic base is essential if growth is to be sustained beyond the current commodity boom.

With overall growth predicted to reach 7.8 per cent in 2012, Papua New Guinea ranks amongst the standout economies in the Asia Pacific region.

According to Australian Treasury budget estimates in 2012, this places PNG’s rate of growth above India’s (6.25 per cent) and only marginally below that of China (8.25 per cent).

The dramatic rise in government revenues by over 58 per cent in just three years enabled the PNG government to deliver the country’s biggest ever budget last December.

The Coalition welcomes the Government’s efforts to establish the PNG Sovereign Wealth Fund as a way to manage fluctuations in revenue and support the country’s development needs and to curb inflation.

Left unchecked, inflation attacks the living standards making it difficult for people to climb out of the cycle of poverty and disadvantage that has trapped previous generations.

We also welcome the PNG Government’s commitment to fighting corruption, with funds provided in the budget to establish an Independent Commission against Corruption. Australia is well placed to offer assistance to the PNG Government if required.

Corruption not only undermines the foundations upon which our democracies depend, but saps a nation’s hope for a brighter future.

PNG’s 2012 Budget continued the Government’s investment in the crucial areas of education, health and infrastructure.

Strengthening Papua New Guinea’s education base – through greater recurrent and development spending – is needed if development indicators, particularly in rural areas, are to be improved.

Addressing capacity constraints within the economy, particularly the shortage of skilled workers, will be increasingly important if economic growth is to be sustained and inflation kept under control.

PNG is not the only country with a shortage of skilled workers and I believe there is much more that we can do with a body of skilled workers that can be in PNG for their resource projects and also utilised in Queensland, Western Australia and elsewhere in Australia under the enterprise migration scheme of the current government.

This is all essential if Papua New Guinea is to reach the goals set out in the Papua New Guinea Development Strategic Plan, 2010-2030.

The Coalition is committed to working with Papua New Guinea to move the relationship from aid donor-aid recipient to an economic partnership based on mutual benefits and mutual respect on the part of both countries.

The development of an Economic Cooperation Treaty to guide a new era in bilateral relations is positive step forward, however I believe that Australia should be aiming for a high-quality, comprehensive free trade agreement with PNG.

As the PNG Government increases its investment in key service delivery areas such as health and education, Australia should gradually shift its focus to helping PNG improve its overall business environment.

Australia can play a strong supportive role in strengthening the policy and regulatory frameworks that foster entrepreneurship and the development of a robust private sector.

The Howard Government recognised this crucial connection, establishing for example the Enterprise Challenge Fund that provided grants to small businesses that had viable commercial projects with demonstrable benefits to the community.

A mid-term review of this Fund in 2009 found that it has “attracted quality propositions, and has levered considerable co-investment commitments from private firms in support of a more pro-poor business focus.”

Improving access to financial services is essential if PNG’s economic base is to expand and the benefits of it strong economic growth are to be shared.

I am considering a range of policy initiatives that I want to discuss with the PNG Government including a business mentor program, which allows local entrepreneurs to learn from the experiences and expertise of Australian small businesses.

I am well aware of the concerns held by many in Papua New Guinea regarding Australia’s strict visa requirements.

Encouraging greater levels of trade and investment between our two countries, means making it easier for Australians and Papua New Guineans to travel and do business in each other’s country.

Should the Coalition form government after the next election, we will work closely with PNG Government to improve this situation.

Ladies and gentlemen, we need to give the region a reason to believe in Australia as their partner of choice.

This means demonstrating our genuine commitment by ensuring that the Australian people improve their knowledge and understanding of the region.

I have spoken often of my enthusiasm for a new Colombo Plan style student exchange program that captures the spirit and idealism of the Menzies era.

Through its Colombo Plan, the Menzies Government reached out to our region, drawing in the best and the brightest to universities in Australia. In doing so, we built a legacy of enduring friendships and understanding between peoples and countries in our region. Numerous political leaders and policy makers in our region are Colombo Plan alumni.

However, I believe it should now be a two-way student exchange so that more young Australians are given the opportunity to live and study in our region, immerse themselves in the culture, language and society in which they live and study. Such a program should be extended to include teachers and academics.

If we assist Australian researchers to undertake secondments at universities, say the University of Papua New Guinea for example, we are supporting the exchange of ideas, research and expertise upon which economic and social development depends.

It will also contribute to efforts within the Pacific, within PNG, to strengthen the quality of its educational institutions.

Another initiative worthy of consideration which I have raised in my discussions with PNG is increasing the level of two-way twinning opportunities for officials in Australia, public servants in Australia, and those in Papua New Guinea. Ideally, this should occur at a local, state and federal level.

Increased opportunities for twinning would improve the transfer of knowledge and skills that are needed in areas such as basic service delivery, research and policy formation and public service management.

It is not enough for us to send a Treasury official on a two week secondment to PNG and assume that their work is done. We need to bring, for example, PNG Treasury officials to work in our Treasury for a period of time and have our people in their Treasury for a period of time.

Another area of soft power diplomacy that we should harness is in the field of sport.

During my visits to Papua New Guinea, I have witnessed firsthand the benefits sport offers to strengthen ties between our two countries at a grassroots level.

We mustn’t underestimate this. If you have ever been there during a state of origin game being played in Australia you will understand precisely the passion that they hold for Australian sport.

I have also held discussions with the North Queensland Cowboys in Townsville to discuss the potential for a greater level of cooperation and competition in this area – a PNG team in the Queensland Cup for instance.

I have even raised the Holy Grail for PNG – a national team in our NRL – with the former CEO David Gallop and with the PNG NRL bid team – yes one exists, a PNG NRL bid team. But we should not underestimate the bridges that would be built through sporting links with our close neighbour.

Sport, like education, offers us the opportunity to rebuild and cement the close community links that existed between our nations and that characterised the people to people links of previous generations.

When I visit PNG I am often confronted by someone who played school boy rugby in Australia. The memories are strong; it evokes such positive feelings about Australia. The goodwill is enormous.

A significant part of our foreign policy approach in the Pacific is seen through the prism of foreign aid.

The objective of our aid program is “to assist developing countries to reduce poverty and achieve sustainable development, in line with Australia’s national interest”. There must be a sustained focus on transforming aid recipient nations into sustainable economies.

AusAid’s long term aim should be, ultimately, to put itself out of a job by ensuring we can assist in transitioning countries off aid dependency to self sufficiency.

Australia’s aid program has received considerable public attention over the course of the past 18 months, caused initially by the Independent Review of Aid Effectiveness and more recently as a result of the Gillard Government’s decision to break its promise to increase the aid budget to the equivalent of 0.5 per cent of gross national income (GNI) by 2015.

In the lead up to the last election, I called for an independent inquiry into the aid program to investigate the concerns, including those of the Australian National Audit Office, about AusAID’s capacity to deliver the aid budget efficiently and effectively.

In fact it was the Coalition election promise to hold an inquiry and I was pleased that, after the election, former Foreign Minister Kevin Rudd responded and established the review.

My concerns and those of the Australian National Audit Office proved justified, for the Review found, amongst many things, that although the aid program was “improvable but good”, it lacked a clear and comprehensive overall strategy, it was scattered and fragmented.

It lacked a whole of government approach, there were increasing risks of fraud, it needed greater transparency, there was no single easily comprehensible scorecard on the program’s effectiveness, there was no effective communications strategy, it was under administrative stress, and on top of that, the Review warned that the upward trajectory of the aid budget was steep and challenging.

There has been a tendency by some of the foreign aid stakeholder community to focus more on the size of the budget as a percentage of GNI – the dollars – rather than how and where it is spent – a focus on the inputs rather than the outcomes of the aid program.

The aid budget has increased substantially over recent years, commencing with the Howard Government’s commitment in 2000, along with other nations, to commit to the Millennium Development Goals with the aim of halving the number of people living in extreme poverty by 2015.

A dramatic increase in the budget followed and in 2005, Prime Minister Howard publicly committed Australia to doubling the aid budget over a five-year period. It was in that year that the Howard Government announced the single largest aid contribution ever made by Australia, in response to the devastation caused in our region by the 2004 Boxing Day Tsunami.

Under the former government, Australia’s aid program experienced the largest annual increase in percentage terms in the past 20 years, growing by almost 17 per cent in 2005-06.

AusAID’s Portfolio Budget Statement confirms the Howard Government oversaw two of the four largest annual increases in percentage terms, in the aid budget, since 1971-72.

We are committed to a strong and effective aid budget.

With still another Labor Budget scheduled to take place in May next year, before the next election the Coalition cannot now responsibly commit to a target date. To do so would be reckless.

We commit to the target of 0.5 per cent of GNI but we cannot now commit to the target date.

We will review the nation’s finances after the Labor’s budget and commit to what we can as a nation realistically afford and what we can deliver. I do point to our record in terms of our commitment to do that.

There must be an increased focus on accountability, transparency and a reassessment of priorities within the aid program.

The establishment of an Independent Evaluation Committee to oversee the work of the Office of Development Effectiveness is a positive step towards ensuring that Australian tax dollars are well spent.

The Howard Government established the Office of Development Effectiveness in 2006 to monitor and improve aid effectiveness across all aid delivery agencies.

According to the then Foreign Minister Alexander Downer, part of its role was to “publish an annual review of development effectiveness as part of the annual budget process as well as spot check existing performance management systems as a means of strengthening overall accountability and aid effectiveness”.

Despite being designed as an annual review, only three reports have been produced – in its first year in 2007, one in 2008 with the last in 2009.

If the Australian public is to support further increases in the aid budget, they must assured that their money will deliver the intended outcomes.

This means acknowledging failures as well as celebrating successes.  It means, as the Independent Review of Aid Effectiveness stated, adopting a ‘warts and all’ approach to transparency.

Improving the quality of independent project completion reports is an essential component of this.

As the Review found, AusAid’s current independent evaluation policy was not being adequately implemented:

  • Of 547 projects that should have had a completion or progress report in 2006-2010, only 170 were recorded as being done;
  • Of the 170, only 118 could be found
  • 26% of the completion and progress reports were assessed as too low quality to publish;
  • Only 20 were published on the AusAid website.

This is not acceptable.

The Coalition believes that a focus on greater accountability through performance indicators, greater transparency and greater integrity must be a priority.

We will ensure that performance benchmarks are developed and implemented, as clearly recommended by the Independent Review of Aid Effectiveness.

The Review states there must be consequences for a failure to meet these benchmarks and recommends the withholding of funding increases until the benchmarks are met.

The greatest danger to Australia’s development assistance is that it loses the support of the Australian public and/or the people of recipient nations.

If the program is subject to ongoing allegations of waste, mismanagement or the misallocation of priorities this would greatly undermine public support.

That is why the Coalition remains committed to more scrutiny of the multi-billion aid program and to higher standards of effectiveness and to performance benchmarks.

There are great benefits to Australia and the people of our region for ours to be a dynamic, economic, social and cultural hub.

We can achieve all of that through the forging of true economic partnerships with our great friends of the Pacific and great friends of Papua New Guinea and beyond through a sound policy framework underpinned by our values and interests, with a reinvigorated effort in our economic and soft power diplomacy.

That is my aim.