Australia needs to rethink Papua New Guinea aid. People need power and water, not governance workshops | Nick Coyle

As the Australian prime minister tours Papua New Guinea with the backdrop of growing Chinese influence in the region, it is the perfect time to evaluate and potentially reset our aid policies.

There have been no shortage of good intentions when it comes to aid for PNG, our closest neighbour, since its independence in 1975. However, for most, the country is poorer than it was when I was here as a child and the fact that only 13% of the population has access to regular power perfectly encapsulates this collective failure.

As someone who grew up in this country in the 1980s and 90s and returned in December last year after 14 years in China, the divergence of the development curve could scarcely be greater.

The reasons are many, from corruption to fanciful government schemes, and the solutions will take time. This much has to be acknowledged and a serious conversation is needed on what role Australia can and should play in PNG’s development.

The Department of Foreign Affairs and Trade (Dfat) has three main aid objectives for PNG: promoting effective governance, enabling economic growth, and enhancing human development.

I do not blame Dfat – there are dedicated, hardworking, highly capable people at every turn – but in my view the priorities are too broad.

We should not be spending 27% of the budget on “promoting effective governance”. By now, PNG politicians and departments are fully aware of what effective governance is and how to implement it. Whether they choose to or not is a different matter.

The priority should be infrastructure: power, transport, telecommunications and water. Everything else is just a Band-Aid.

A Dfat report gets it spot on by observing that economic development in PNG is still inhibited by “a lack of quality infrastructure, including in the transport, electricity, telecommunications and water sectors”. It should also have observed that you cannot enhance human development when 87% of the population does not have power and transport mainly consists of walking.

What is the point of education if there are no jobs? How do you improve health outcomes without power, water and transport? This does not mean we should remove current health initiatives, but we need to think more long term.

Ironically the Chinese development model is a pretty effective one.

I am not talking about China’s foreign aid – that is more complicated and political – but its domestic development model. As the country’s south and east rapidly grew and started leaving the central, west and north regions behind, the Chinese focused on building – yes, you guessed it – power, water and transport and telecommunications.

China understood very clearly that economic and social development is impossible without the building blocks to function and connect with the modern economy. Issues such as governance are problems to worry about in the future, when the region is more developed.

Australia also needs to urgently look at the quantum of spending in PNG. The headline figure of $600m a year sounds like a lot, but it isn’t. It is the equivalent of 0.77% of the cash deficit projected in the federal budget for 2022-23 – what macroeconomists might consider a rounding error. The six-month fuel excise cut last year cost the equivalent of a decade of the current aid flowing to PNG.

In real, inflation-adjusted terms, Australia gives half the amount of aid today than when PNG was granted independence. Once you adjust for population growth and inflation, this amounts to a scandalous 16% of 1975 levels per capita. That isn’t enough – not even close.

It would be a far better investment to increase aid levels by 500% or 600% for the next decade, working with Japan, the US and New Zealand to do the same, and build the necessary infrastructure, rather than dealing with what could be a failed state right on our doorstep.

Reforming governance will not come from study exchanges, seconded officials and endless workshops and reports, however comprehensive and well intentioned. It will come from leadership – Papua New Guinean leadership.

The leaders of tomorrow will develop when more Papua New Guineans can access economic opportunity through infrastructure and connect with the modern world. They will come from those who show the work ethic and innovation to build futures for themselves and their families. They will be the ones who will demand officials and the system be held to account.

Until then those potential leaders will be walking around in the dark.