Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

I present the report of the Foreign Affairs, Defence and Trade References Committee, Economic challenges facing Papua New Guinea and the islands of the south-west Pacific, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

John Hogg (President) Share this | Link to this | Hansard source

Do you wish to speak to the report?

Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

Mr President, the situation is that the report has been divided into two. The first part of the report is being presented this morning and the second part of the report will be presented on 24 December. I seek leave to move a motion in relation to the report.

Leave granted.

I move:

That the Senate take note of the report.

In its report on the island states of the south-west Pacific, the committee identified a range of impediments to economic growth in Pacific Island countries. Some of these are inherent structural problems that are beyond the control of these countries—small populations and land mass, a limited range of natural resources, remoteness and susceptibility to natural disasters being among them. These physical and geographical limitations often produce conditions that inhibit the ability of Pacific Island countries to develop their economies. These include little scope to achieve economies of scale, difficulties developing the human capacity necessary to support and sustain a growing economy, a narrow economic base, reliance on a small range of export products and the need to import key strategic products such as energy.

Despite these limitations, the committee found that many Pacific Island countries have the potential to lift economic performance and raise the living standards of their people. Yet a range of factors, largely human, prevent Pacific Island countries from unlocking this potential. Agricultural productivity, which, according to AusAID, has stagnated in the Pacific for the last 45 years, indicates the lack of progress being made by the islands. One of the main obstacles to increased economic development is inadequate investment and planning in key economic infrastructure—things like roads, bridges, ports, the supply of energy, potable water, telecommunications, storage facilities, and aviation and shipping facilities.

The committee heard from Qantas in relation to this matter, particularly in relation to aviation activity around the region. Qantas described a situation where the majority of runways have poor markings and are often unfenced, navigation aids are intermittent, aircraft handling equipment is limited and terminal facilities do not meet current safety and security requirements. Shipping facilities in the region are inefficient, expensive and slow.

The lack of human capacity is another major impediment to economic development. Although unemployment, particularly among young males, is a major problem in the region, there is a chronic skills shortage across all sectors of the economies in the region. This absence was especially noticeable in relation to sustainable development; in land, resource, business and financial management; in marketing and trade negotiations; and in building and construction. The reasons for these shortages are largely to be found in an education system that in many parts of the islands, particularly Papua New Guinea, the Solomons, Vanuatu and Nauru is failing children and not providing the vital building blocks for economic and human development—for example, the committee heard that only 53 per cent of children in Papua New Guinea are enrolled in school, and of the children who start school only 45 per cent are expected to complete primary school. In cases where Pacific Islanders attain qualifications, there is the problem of brain drain or the flight of intellectual capital from the region.

The committee also found that economic activity is stifled and people are deterred from investing in many Pacific island countries because they are difficult places to do business. There were numerous examples of this: under-resourced and poorly equipped bureaucracies are unable to deliver essential services; regulatory environments frustrate rather than encourage enterprise; land ownership and limited access to finance and financial services inhibit economic growth; and political instability, law and order concerns and corruption dampen enterprise and discourage investors.

Let me turn to the matter of Australia’s aid to the region. Australia is the main source of aid to the Pacific. Through its extensive aid program, work is being done in agriculture, fisheries, forestry, mining, managing natural disasters, climate change, economic infrastructure, education, health, financial management, governance, law and order, land tenure and financial services. Across these many sectors, Australian funding is being used for research and development, for building and improving infrastructure, and for providing advice, training, education and technical assistance.

The committee recognised the fine work that Australia is doing through its aid programs to help Pacific island countries develop their economies and improve living standards for their people, but it also identified areas where Australia could increase the effectiveness of its assistance. It acknowledged that setting priorities from among the numerous competing needs is a significant and challenging task for the Australian government. Indeed, the OECD peer review of Australia’s development assistance praised AusAID as:

... a highly dynamic organisation working in an increasing number of sectors and trying to be responsive to the needs of partner governments.

But it also noted:

The downside of this positive attitude may be an attempt to do too much, leading to a loss of focus and/or dissipation of energy, thereby ultimately weakening impact.

Thus, one of the major challenges for the Australian government is to set a policy framework that provides a clear focus, one that enables it to target its aid to areas that are likely to provide the best means for Pacific island countries to achieve positive, long-term economic and human development.

In this context, the committee expressed a number of concerns about aid delivery to the Pacific that have direct relevance to Australia’s official development assistance program. The committee was of the view that Australia could do more to, among other things: ensure that aid reaches its intended beneficiaries or those most in need; respond to the urgent call from Pacific island countries to help them meet the challenges of climate change; find more effective ways to ease the burden on Pacific island countries of monitoring and policing activities in their exclusive economic zones and representing their interests in regional and international organisations; ensure that benefits deriving from Australia’s assistance do not fade as projects come to an end and funds and technical assistance are withdrawn; better align Australia’s assistance with the priorities of recipient countries and of other donor countries; make better use of the private sector to help alleviate poverty in the region and boost economic activity; strengthen Australia’s whole-of-government effort by having a more coherent plan and implementation strategy; incorporate the work of states, territories, local governments and NGOs in Australia’s assistance to the region; help improve the quality of statistics available on key economic and human development indicators; and foster a culture of continuous improvement in the delivery of its aid program by making the monitoring and evaluation of projects far more rigorous.

The committee made a number of recommendations addressing these areas. Some called on the government to give greater attention to the specific areas of climate change, tourism and the non-formal education sector; others required specific action in relation to these matters. The overarching recommendations, however, were concerned with improving the overall effectiveness of Australian aid.

To conclude my remarks, on behalf of the committee I thank the staff for the excellent support they gave us in the course of preparing the report and during the lengthy time it took to undertake our inquiries, and as usual I acknowledge the highly professional nature of that support. In contrast, I also note the lack of support and cooperation that the committee received from the Department of Foreign Affairs and Trade. On numerous occasions the committee asked for its support to visit the region and to consult with various individuals who had knowledge and special information that might have been useful to us. Notwithstanding the efforts of the committee to press these inquiries on numerous occasions, we regrettably did not even receive the courtesy of a response. That was an immense frustration to the committee’s activities and in fact I think is a reflection of an appalling state of management of the department’s affairs and an appalling state of cooperation between the committee and the executive. I seek leave to continue my remarks later.

Leave granted; debate adjourned.