THE Pacific has received more than US$50 billion – K140 billion – in aid since 1970.
Australia has by far been the largest donor and most of its aid has flowed to Papua New Guinea. Despite this massive inflow, there is no evidence on the ground to show for the funds.
This is because the aid monies have been spent on projects and programmes, more on consumption rather than on investment.
None of the aid money has been used to grow the economy and, thereby, increase employment. Similarly super profits from mineral and hydrocarbon extraction have been wasted on the recurrent budget and very little has been used to fund the development budget.
The Government realised much too late that there was much wastage and tried to channel more funds into the development budget but by then, tens of billions of kina had been sunk in wastage.
Prof Helen Hughes of the Centre for Development Studies wrote that together, aid and minerals have made development difficult everywhere.
She said: “Understanding that aid can have negative effects is essential to assisting the Pacific to growth and development.
“Re-colonisation in any form is not a solution. Pacific problems can only be tackled in the Pacific. The first step toward reversing stagnation and falling incomes is the recognition that excess of population over income growth means serious trouble.
“No amount of muddling will fix this fundamental disequilibrium. Pacific societies have to adopt policies that establish secure, free economic environments that deal with economic rents and make growth possible.
“The Australian stance most likely to be effective would be to suspend all aid and thus to provide the catalyst for change. Withdrawing US aid turned Taiwan and South Korea into economic ‘tigers’, but it would be a harsh step for the Pacific.”
The professor advocates a “softer” alternative, to insist on the principle of mutual obligation in Australian aid to the Pacific. PNG and other Pacific states have always regarded aid as part of their Government revenues. They spend it as they please, almost all of it on consumption.
Roads, bridges, electricity, telecommunications, schools and health centres have had to suffer as the inevitable result of such policies.
Recognising this, Australia and other bilateral and multi-lateral donors have also been changing their approach by insisting that aid be tied to programmes rather than as direct budget support. More changes have happened in the countryside in terms of schools, health centres and other public infrastructure as a result.
It would pay for PNG to also get maximum value out of not just aid money but super profits as well. As it awaits the fruits of the LNG project to start flowing in, it must change its approach so that more and more funds are invested in development projects rather than on recurrent expenditure.
The political gimmick to place so much money – nearly K1.3 billion – in the hands of politicians through the district services improvement programme funds and through various sectoral trusts such as for education, health and agriculture is a complete waste of money and should be discontinued immediately.
As it stands, there is not a single report from any politician before Parliament accounting for the use of this huge amount of money. Much of this money is distributed through the tiny Office of Rural Development which is attached to the Planning, Monitoring and Implementation Department. The office has nil capacity to actually do physical checks on MPs’ projects in every electorate.
While it does make sense to channel more funds to the rural areas, these are public funds which need to be accounted for.
Project submissions are rarely submitted and when they do come, they are merely letters containing guesstimates. There are no professionally drafted submissions.
Although guidelines exist for the use of the funds, they are hardly followed, making this fund the most abused and mismanaged.
It would pay to do a major investigation into the use of the DSIP, the RESI funds and the NADP funds, among others. The results might be sobering.
Funds from the boom of the last seven years have already been exhausted and now we are dashing about money willy-nilly to get major projects like the LNG project up. It will not do. More revenue is not an excuse to spend without wise and responsible planning.