Australian businesses best placed to help Papua New Guinea

Blog Australian Businesses Best Placed To Help Papua New Guinea01

Canberra’s pivot back to the ­Pacific, highlighted during last weekend’s APEC summit in Port Moresby, is overdue.

But the gap between rhetoric and capacity to deliver is immense.

What can be done to prevent the ambitious announcement of powering up Papua New Guinea — where only 15 per cent of its inhabitants have access to mains electricity — ending in a perfect storm of pink batts-style problems?

The simple answer is to engage business.

While Australia’s politicians and most of the rest of the establishment have long shrugged off PNG — by far Australia’s closest neighbour — and the Pacific as ­irrelevant, a core of Australian businesses has remained engaged.

The experience, networks and ideas of these businesses can provide the crucial missing link between Canberran rhetoric and fruition.

Some of Australia’s biggest companies — such as ANZ, with a network of a dozen countries and territories — retain a substantial presence in the region, though others have steadily sold down their interests as the islands have tended to fail to reach their economic targets.

However, a large group of middle-sized companies, and some of Australia’s larger law firms, accountants and advisories, are running important and profitable operations in the Pacific.

There also remain many Australians operating their own companies in PNG and other regional countries, including substantially and importantly in the construction industry.

Many of them are members of the Australia-Pacific Islands, Australia-PNG and Australia-Fiji Business Councils, which are based in Brisbane, Australia’s hub for island contacts, and which hold meetings, conduct research and communicate with decision-makers in Australia and the Pacific.

Somewhat surprisingly, little contact has been initiated by Canberra with the councils as the pivot to the Pacific has been developed and announced. These ambitious proposals should go to tender, but it’s going to be important to enlist those Australians who understand the islands region in helping guide the whole process.

This is where Australia does have an advantage over other potential partners including China — we do have more feet on the ground, and a longer history of connections, through the churches, sports organisations, education, and migration and guest worker programs, as well as through business.

Australian businesspeople operating in island countries have been expressing concern about losing tenders to Chinese companies with much less experience and which sometimes use far fewer local inputs — of either labour or materials. An injection of funding from Australia and elsewhere could provide the impetus for a handy correction, evening up the playing field.

Jon Fraenkel, professor of comparative politics at New Zealand’s Victoria University, tells The Australian: “If the objective is truly to compete with what ‘China’ is — or rather with what Chinese firms are actually doing — one has to wonder whether Australian firms will ever be able to engage in analogous state-led ways to, say, the China First Railway Company, or China’s bauxite firms or road-building operations. I doubt it. We’re unlikely to see subsidised Burns Philp steamers controlling the modern-day equivalent of the copra trade, or Australian traders setting up shop selling off cheap goods.”

But development areas that require engagement with island communities should be among those in which Australian firms can lead the way.

The huge gas production industry in PNG, for instance, which requires large-scale, patient negotiations with landowners, has been driven by Australians — with ASX-listed Oil Search an exemplar in social engagement and playing a prominent role.

The most eye-catching of the proposals is Canberra’s dusting down of the three-year-old report by Port Jackson Partners for ANZ on PNG electrification, which suggested exactly the same goal, of providing power for 70 per cent of the country by 2030.

No power, so no fridges, no village mechanics, inadequate light for children’s studies, limited access to information, scant adding of value to agriculture or fisheries, and few chances to build incomes beyond subsistence. Those with ambitions — mostly the young — throng towns or cities where they have little or no sense of ownership or belonging, but where, literally, the bright lights prove a lure.

Grant Mitchell, prime author of that report, proposed that transmission stay in government hands as a natural monopoly but that generation and retail be separated off, possibly through privatisation. The report said the grid might already have reached its greatest economic limit, and that gas — now produced in abundance in PNG — offered a superior alternative to large hydro plants.

It said that most of the rural catch-up would be best achieved by off-grid solutions, including a range of new technologies with reducing cost and increasing storage options. A great precedent is the rush of mobile telecoms into PNG — almost entirely a private sector effort.

To enlist maximum Australian involvement in such ambitious projects, Canberra can most usefully play a role through providing a flow of information about private sector opportunities in the Pacific, and should consider focusing its ­financial commitment on providing a form of guarantee, perhaps through EFIC.

Helping channel private sector efforts into government-backed development priorities is an area that has encountered problems in the past, because of a dislocation with traditional aid concepts, while China’s own programs are being attacked for creating unbearable debt burdens.

But this shouldn’t prevent an adapted version coming under consideration, since the strings ­attached to traditional aid — and the constant shifting of social ­priorities to suit the donor’s own predilections — also appear unbearable for many.

Labor’s foreign spokeswoman, Penny Wong, has also suggested an infrastructure fund for the ­Pacific, giving hope that an enduring bipartisan program might be workable.

The three key business councils active in the region have already been discussing with Pacific Islands Forum head Meg Taylor proposals for innovative financing, including from the growing domestic funds and from Australia.

It would be helpful if structured ways could be developed so our firms could work with Chinese businesses and institutions, too — it’s already happening through a joint aid project with New Zealand in the Cook Islands, and with Brisbane-based Highlands Pacific joint-venturing with Chinese miners in PNG.

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