Gambling Away Aid in PNG


Australia has taken a more active interest in the Pacific Islands’ governance and security in recent years spending on ‘governance’ in Melanesia has tripled to an estimated $885 million in the past five years. But in Papua New Guinea, the dramatic injection of funds has not been matched by successful outcomes.

Australia’s recently failed $1 billion Enhanced Cooperation Program (ECP) with Papua New Guinea took almost a year of negotiations to set up. It took less than that for the program to completely collapse.

The ECP was supposed to be a five-year intensive program in an effort to tackle corruption within the PNG police force and improve PNG governance. It comprised 43 Australian officials working within the PNG Government, and 230 police working inline with the Royal Papua New Guinean Constabulary, which has around 3000 officers.

Hugh White, the director of the Australian Strategic Policy Institute (ASPI), wrote in the Sydney Morning Herald in 2003: ‘A team of 200 or more Australian officers injected into a force of 3000 PNG police is not simply an advisory mission. It is more like a takeover.’

From the beginning, some within the PNG Government were reluctant to accept Australian intervention.

The final impasse was over the issue of immunity given to the Australian Assisting Police (AAP). It was a clincher in an already faltering bilateral relationship. Immunity for so-called ‘designated persons’ meant that they could not be prosecuted under PNG laws. On 13 May this year, a five-judge bench of the PNG Supreme Court ruled that this was in violation of the country’s Constitution.

The outcome? The complete withdrawal of Australian police from inline positions.

The ECP saga began on 20 August 2003 when Alexander Downer suggested Australia step up its involvement in PNG. Interestingly, this proposition was made to the National Security Committee (a Cabinet sub-committee that meets to discuss issues of national security), not to the Australian Agency for International Development (AusAID).

From Islands Business

On 28 August 2003, a special team was dispatched by the NSC from Canberra to Port Moresby, with senior diplomat Bob Cotton at its helm. The letter that Cotton carried contained the beginnings of Australia’s negotiations for the ECP, and a message: if PNG didn’t improve its governance and take control of the corruption that has plagued the country’s institutions, Australia’s aid would be reassessed.

The visit drew fire from the PNG Prime Minister, Sir Michael Somare, who began a media campaign against the ‘neo-colonial’ attitudes of Australia. Somare went so far as to request a review of the $330 million of Australian aid that was already allocated in the Federal budget, and the preparation of an ‘exit strategy’ for Australian aid.

Australian aid makes up 20 per cent of the PNG Government’s budget. However, both Alexander Downer and his counterpart in PNG, Sir Rabbie Namaliu, admit that 80 per cent of this goes back into the Australian companies that are contracted to deliver the aid program by AusAID.

On 11 December 2003, ministers from both Governments met in the Adelaide foothills for the annual Australia-Papua New Guinea Ministerial Forum. It was here that the ECP plan was agreed to and the details fleshed out. The Joint Agreement on Enhanced Cooperation finally came into effect on 13 August 2004.

However, big money contracts were already being awarded by AusAID, even before the program was approved by the PNG Government. United Process Solutions (UPS), a company that primarily deals with property management, was given a six-month $343,000 contract for ‘provision of property-related services’ in relation to the ECP. The contract began on 8 December 2003 and was due to finish on 30 June 2004, the day that the finalised agreement was signed.

UPS were later awarded another contract of $900,000 to provide ‘security and accommodation related services for ECP’ beginning on 1 July 2004. A $6.7 million UPS contract beginning 26 August 2004 shortly after the ECP had come into effect was simply entitled ‘PNG Enhanced Cooperation Program.’

An additional $5.3 million contract for ‘logistic services relating to the Papua New Guinea Enhanced Cooperation Program’ was awarded to begin on 15 June 2005, one month after the ECP fell apart. DFAT says these contracts were to provide ‘support for logistics, accommodation and security for all ECP officials and their families in PNG.’

Other records show that the security company, AKE Asia Pacific Pty Ltd, received a contract for $522,711 for one security advisor for the ECP, over two years, beginning on 11 May 2005. This was two days before the PNG Supreme Court ruled the immunity given to the Australian Assisting Police to be unconstitutional. AKE Asia Pacific is well-known for employing ex-SAS soldiers to provide private security to contractors in places such as Iraq.

It is unclear exactly how much of the $1 billion earmarked under the ECP was actually spent. However, we know that $21 million was spent on the non-policing component over the 2003/04 and 2004/05 financial years. This included salaries, accommodation, logistics and technical assistance. This amount was expected to more than double in coming financial years. The Australian Federal Police, which was allocated $709 million out of the package, spent just over $58 million, according to AFP spokesperson Kai Ianssen.

The whole plan was risky. The PNG Attorney-General had advised the Australian High Commission of the Supreme Court challenge in August 2004. Despite this, the Australian Government forged ahead with their intervention in the affairs of a sovereign nation.

They took a $1 billion dollar gamble.

In normal circumstances, an agreement with a foreign country would see Federal Parliament’s Joint Standing Committee on Treaties (JSCOT) which comprises a mix of MPs and Senators from the Coalition, ALP and Democrats discussing the proposed legislation and submitting their recommendations to Parliament. In this case, however, Downer applied for a National Interest Exemption (NIE), normally only used in matters of emergency, to waive the usual 15-day tabling process.

Perhaps, had the Committee had a chance to discuss the proposed ECP, they would have advised the Australian Government to proceed with caution.

With the project (and the court case) already under way, the enabling legislation for the ECP was supposed to be discussed and passed in Australian Parliament in August 2004. But this was delayed until December 7, after the Federal election was called.

In other words, the ECP was in place in PNG for four months before ever being debated in Australian Parliament or coming before JSCOT. The Committee has since requested that they be briefed out of session on the details of any future agreements if the NIE is used.

After the breakdown of the ECP, Australian and PNG ministers agreed ‘in principle’ to revise the plan by limiting the police presence to advisory positions only. Negotiations began in August this year. However, agreement still hasn’t been reached on the new watered-down program which is expected to include about 40 officers stationed in six PNG provinces.

The estimated cost for the new operation is $40 million in its first year of operation a far cry from the original and ambitious $1 billion program.

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