Last Thursday, ABC News reported that Papua New Guinea has asked for a re-direction of Australia’s foreign aid program towards direct contributions to PNG’s health and education budgets. PNG, a country already struggling with high population growth and public health challenges, such as a high rate of HIV infection, has recently suffered an economic and budgetary crisis due in part to lower commodity prices.
I expect Australian officials will be wary of the proposal from PNG, particularly given Australian officials would have little say in how the money would be spent. And rather than building up the nation’s capabilities, it would run the risk of turning PNG into a mendicant state forever. Arguably, a better way to assist PNG would be to further open up Australia’s labour market to workers from PNG, who would benefit their economy immensely through the flow back home of remittances.
Earlier this month, the Australian Foreign Minister Julie Bishop launched a report from the Menzies Research Centre, Oceans of Opportunity, which may well serve as a blueprint for how Australia and our Pacific neighbours, including PNG with its burgeoning population (see chart below), can mutually benefit from greater labour mobility. I particularly like the report’s recommendation (see p. 18) to establish two new visa streams: Pacific Connect (Skilled) for skilled migrants from the Pacific and Pacific Connect (Labour exchange) which:
“would allow employers, primarily in the tourism and hospitality sector to forge links with like businesses across the Pacific and establish an exchange of skilled and experienced workers.”
This would supplement the existing Seasonal Workers Programme which allows people from selected Pacific nations to work temporarily in the agricultural sector.
I hope the Australian Government seriously considers the recommendations of the Oceans of Opportunity report, given the mutual benefits to Australia, from a supply of additional workers that could work in sectors and regions with labour shortages, and to the Pacific nations themselves, through the remittance of much needed income.
Queensland Economy Watch 
Gene
Great post, and yes some of the ideas in Ocean of Opportunity make a lot of sense.
My observation is that there is also a fundamental flaw in the way much of the Australian aid in the Pacific is delivered because of current policy thinking and administratively-driven approaches.
The Commonwealth don’t actually deliver services in the Pacific, like they don’t directly deliver most government services in Australia. Rather they purchase services, where public servants are focused on acquitting expenditure, rather than delivering long term efficient outcomes and improvements. That might work in Australia where the capacity of the states and territories is pretty high. But it doesn’t work in the Pacific where capacities are low.
Invariably this results in the provision of capital equipment with little (probably no) thought about whether that capital equipment is an efficient way to address problems, or thought about the ongoing maintenance and renewal of that capital. Buying capital equipment is simple and fits easily within a low risk budgetary framework. But investing in capacity and genuine development is both difficult and uncertain.
I’ve done aid projects in five Pacific nations now, and the Pacific is littered with abandoned capital equipment ranging from aluminium can crushers in communities that don’t have 3-phase power to run them, through to desalination plants where rainwater tanks provide sufficient and reliable water.
While I don’t agree with PNG’s ambit claim, a more nuanced approach to aid that genuinely invests in development could be a better approach. That might include budgetary support via some form of specific purpose payments. It is a higher risk proposal from an administrative perspective, but it might actually make a more meaningful difference.
Many thanks Jim. Very astute observations.