Australian neo-colonialism and corruption in PNG

The legacy of Australian colonial control has left PNG underdeveloped and prone to political corruption, writes James Supple.

PNG went to the brink of another political crisis in May as police opened fire on protesting students. There have been protests for months demanding Prime Minister Peter O’Neill resign and submit to questioning over corruption charges.

O’Neill became Prime Minister in 2011, promising to clean up corruption. He established Task Force Sweep as a national anti-corruption body. It successfully prosecuted three former and current MPs, four senior public servants and a number of businessmen over millions of dollars in corrupt payments.

But when the task force unearthed corruption allegations against O’Neill himself in 2014 and obtained an arrest warrant against the Prime Minister, he moved to disband it, cutting off its funding.

Turmoil and corruption in PNG politics is not new. But the source of these problems is underdevelopment and the neo-colonialism of the Australian government.

Australia ran PNG as a colony for decades until 1975. This began with control of the territory of Papua, on the south-east of New Guinea in 1906, with the German colony to its north added in 1914.

Australia’s main interest in PNG was strategic. It sought “to deny the use of the area to any other power”, as External Affairs Minister Paul Hasluck put it in 1961. The area was considered part of a “forward defence shield” for the Australian mainland. This obsession continues with the 2016 Defence White Paper declaring that, “Geographical proximity means the security, stability and cohesion of Papua New Guinea contributes to a secure, resilient Australia with secure northern approaches.”

Australia showed little concern for developing PNG’s economy, content to allow white settlers to establish plantations growing copra, cocoa and coffee. Local villagers were employed as indentured labour, described even by Lieutenant-Governor Murray as “really rather like slavery”. The locals would not work for the European settlers unless they were forced. A strike in 1929 by the entire workforce of 3000 in Rabaul was put down with arrests. Its leaders endured three years’ prison and regular beatings.

Any development was only to take place on terms benefiting Australia, seen in the prohibition of exporting crops that would compete with Australian companies, such as sugar and bananas.

It was decades before any attention was paid to building up basic services for the local population. Academic John Connell records that school education was not expanded until the 1960s, when the number of schools was increased from just two to 60. In 1968, just seven years before independence, the country had only four university graduates.

Even mining was hardly developed despite the discovery of gold in the 1930s. The country is rich in natural resources from gold, copper and nickel to oil and gas.

Even today much of the population remains in the informal sector, with 80 per cent continuing to rely on subsistence agriculture. About 40 per cent live in absolute poverty, around three million out of its population of 7.5 million.

Neo-colonialism and corruption

Despite formal independence, Australia has continued to dominate PNG and subordinate the needs of the impoverished population to the profits of Australian companies. Alongside this sits its needs for a political regime compliant with Australian strategic interests.

This has been achieved through using desperately needed aid money as a tool of control, maintaining a presence of Australians in influential positions throughout the PNG bureaucracy and the continued presence of military and police forces throughout the country. Australia also continues to dominate PNG economically, with Australian companies accounting for 58 per cent of Foreign Direct Investment, with almost three quarters of this is going into mineral and petroleum projects.

Since independence, exploitation of the country’s mineral and petroleum resources been promoted as the “solution” to PNG’s poverty by both Australian and PNG elites. The first big project was Rio Tinto’s Bougainville copper mine, which supplied 15-20 per cent of the government budget over its first 15 years. The commodities boom from the early 2000s brought unprecedented funds into the state coffers, with natural resource rents accounting for 36 per cent of GDP in 2011. But inequality increased markedly, making PNG the lowest ranking country on the UN Human Development Index outside sub-Saharan Africa.

Given the chronic poverty and lack of independent economic development, control of the state is one of the major sources of wealth in PNG. This breeds corruption and political instability. As a US embassy cable from 2008 released by WikiLeaks put it, mining revenue and aid money has been used, “more to enrich the political elite than to provide social services or infrastructure. There are no large-scale local businessmen, but numerous politicians are relatively well off”.

MPs are granted so-called “electorate development funds” which can be spent on any project in their electorate they wish. These have reached enormous sizes. In 2007 the then Prime Minister paid out $40 million to MPs for the funds, despite complaints from the Ombudsman Commission that the bulk of MPs had failed to account for the previous year’s spending.

All the major political leaders are corrupt.

Current Prime Minister Peter O’Neill took power in 2011 by ousting the sitting Prime Minister Michael Somare, while he was overseas receiving medical treatment. Somare, the first leader of PNG after independence and Prime Minister three times, was questioned by anti-corruption officers about how he obtained two properties in Cairns at a cost of over $1 million.

Peter O’Neill’s takeover was ruled unconstitutional by the PNG Supreme Court. But he managed to secure the support of parliament and the police force to keep the job.

Now he is accused of helping lawyer Paul Paraka steal $31 million of government money by signing an authorisation to take the funds. Despite this, O’Neill claims 90 out of the 110 members of parliament now support his government.

His success has been based on the proceeds of the mining boom. Between 2008 and 2015 government spending doubled. As part of this O’Neill has increased the control of local MPs over government funds, putting them in charge of multi-million dollar “district support improvement funds”, essentially MP slush funds. One MP, Vice Minister for Provincial and Local Level Government Affairs Joe Sungi admitted recently that, “because DSIP is there that’s why we will be in the government and support the O’Neill-Dion Government… so long as you have the money, you will master the numbers”.

It is not just distribution of state revenues that fuel corruption, but also the greed of major corporations operating in a largely unregulated environment. In 2015, Thulsi Narayanasamy, a director of Australian NGO Aid Watch said, “a recent Commission of Inquiry into Special Agricultural and Business Leases, or SABLs… found a number of Australian companies had engaged in fraudulent leases. One of these companies benefitted from the largest lease in PNG history and that is a Queensland-based company. Australia has done nothing to bring these companies to account”.

O’Neill has postured against Australian interests in PNG, expelling 15 Australians working in senior roles in the PNG public service at the start of 2016. He has also courted aid money and loans from the Chinese government. Chinese aid to PNG was second to Australia between 2006 and 2013, according to the Lowy Institute, although its total over this period was still only what Australia spends in any one year.

Both the US and China are now “engaged more extensively with Papua New Guinea in the diplomatic, aid and economic realms”, according to academic Joanne Wallis. “Other external powers, such as Japan, Malaysia, Korea, Indonesia, Iran, Cuba, Russia and the United Arab Emirates are also becoming involved in PNG and the South Pacific as aid donors and diplomatic partners”, she adds.

But despite this, Australia maintains its dominant position, providing more aid in the last year than the Chinese government has over the past decade. On top of the more than US$460 million annual aid payment, in the 2015 financial year, the Australian government also provided $556.7 million to support the Manus Island detention facility, turning a blind eye to how it is spent and allowing O’Neill to shore up his position.


Anger at the deep corruption in PNG’s political system has boiled over this year, with student protests culminating in an indefinite boycott of classes starting in April.

The demand that O’Neill step down has won mass support, with boycotts closing down major campuses such as UPNG in Port Moresby, the Technical College in Lae and a number of high schools. The police shooting of student demonstrators on 8 June injured scores, some critically. Severe police repression of the movement has continued in the wake of the shootings, with many student leaders currently underground. Two students have been murdered in Lae, a result of bitter feuds that have followed the repression. UPNG has now cancelled the academic year.

The protests have come in the context of deep social unrest in PNG, as the commodity boom has come to an end and the government launches a wave of savage austerity to reign in its declining budget, including cuts of between 30-40 per cent to healthcare and education. Recently there have been delays in paying public servants’ and teachers’ wages.

The PNG National Doctors Association and Nurses Association have joined student calls for O’Neill to step down, as well as protesting against cuts to wages and positions. Similar calls have also come from the Aviation Sectors Union and the Maritime and Transport Workers Union.

The crisis in PNG is set to deepen in the coming months, with more budget pain expected and O’Neill increasingly willing to use force to crush protests. Building solidarity with the trade union and student movements in PNG can play an important role in strengthening their fight against the corrupt O’Neill government. It can also help loosen the chokehold Australian state and corporate interests have on PNG.


Solidarity meetings

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