Australia waiting in the wings of PNG’s political crisis

The political crisis in Papua New Guinea split open in mid-December as two men both claimed the right to be the Prime Minister. The current PM, Peter O’Neill, was ousted by a PNG Supreme Court ruling, which reinstated the PM ousted in August, Michael Somare.

Both men set about trying the build the state machine around “their government” with rival Governor-Generals and police chiefs. As this article was written it seemed most of the police were throwing their support behind O’Neill.

But the two men are both part of PNG’s ruling class and there is no indication of any real political differences between them, apart from their rival claims to control of PNG’s lucrative governemnt revenues.

The split has forced the rival camps to mobilise supporters outside their own narrow ruling class circles. Seven hundred people came out to support Peter O’Neill in Port Moresby. O’Neill has the support of 72 MPs in the 109 seat Parliament. But with many so parties and independents, majorities can be very fluid in PNG.

Waiting in the wings, should PNG’s split become a chasm, is the Australian government, which regards PNG as a “strategic asset”. The Australian Financial Review ran a headline proclaiming “Australia will step in if asked”, when no one in PNG had called for Australian intervention.

While Defence Minister Stephen Smith said PNG was a “friend” and “neighbour”, Australia’s role as neo-colonial master of PNG is obvious. The Australian Defence Force (ADF) already has, “a contingency plan to intervene should the situation spiral out of control”, according the Financial Review.

The Gillard government’s National Security Committee met within a day of the PNG crisis erupting and was “briefed”. A senior Defence source told the Financial Review, “The plan would only be activated if the situation grew a lot worse.” O’Neill is reported to be maintaining links with Australian high commission officers.

Rowan Callick, wrote in the Australian that, “PNG’s resource boom, which parallels Australia’s, has tremendously raised the stakes.”

Control of the government in PNG means controlling enormous wealth. A Canberra Times editorial called it, “The rewards that flow from incumbency.”

This is the root of the crisis. The private sector, both locally-owned and expatriate, remains very small. One example is that PNG’s largest newspaper, the PNG Post-Courier, is owned by Rupert Murdoch.

Legacy of Australian colonial rule
PNG’s model of growth, bequeathed to it during Australian rule, is based on mining and mineral exploration. Investments in the billions are at stake, like Exxon-Mobil’s $15.7 billion LNG project, due to start production in 2014. Mining provides 60 per cent of PNG’s earnings.

PNG’s industrial development was held back because of imperial plunder by Australia, through the conscious policy of successive Australian governments to restrict industrial development and allow development based almost only on mining projects.

This has meant successive PNG governments have been unable to create a stable economy capable of matching the demands of a growing urban population.

Mining employs just 1 per cent of the workforce, with most managers and supervisors being expatriate Australians. Almost all mine-related consumption is imported from Australia, including goods consumed by its personnel.

As one academic in the field wrote explained growth in the mining sector has failed to stimulate the economy more broadly, including the agricultural sector, and mining, “has essentially remained an ‘enclave’ with almost no fiscal link to the PNG economy in general.”

According to the census in 1990, only 12.5 per cent of the population was employed as wage-labourers in the formal sector. With youth unemployment currently at around 70 per cent according to the Australian High Commissioner, many people who migrated to the towns for work have turned to crime to survive.

In early November, there were riots in Lae, PNG’s second biggest city. Local youths blamed Highlander people who moved into Lae’s many squatter settlements for rising street crime. At least six people were killed and 20 injured in the riots.

Australian neglect of its colony
When Australia took over New Guinea from Germany in 1914, it restricted and prohibited the growing, processing and export of any crops which would compete with Australian exports such as sugar and bananas.

In the 1920s and 1930s, when economic development in PNG began to take off, Australia’s policy was to ensure that Australian business dominated the economy.

Ironically, Australians had discovered the copper on Bougainville as early as the 1930s! They didn’t mine it on a large scale until the late 1960s.

Australian control meant that the PNG economy never had the space to diversify. Its economy is based on mining, such as gold and copper, and agricultural products like coffee, tea and cocoa. All these commodities have highly volatile prices on the world market.

The stunting of PNG’s ability to diversify means today that gold mined in PNG goes to the Perth Mint for refining and PNG’s crude oil is refined in Brisbane. This underlines the fact that a manufacturing base has not developed and the jobs that go with it.

Rowan Callick, an Australia journalist who specialises on PNG, once wrote, “PNG, has since the
early days, lacked the capital to meet its development aspirations. The colonial power, Australia, had failed to bequeath it the infrastructure or skills it needed.”

In the context of the country’s wealth in mineral resources, the other issue is government corruption. The government’s corruption and priorities mean that revenue raising to fund social services stagnates. In the 1990s, Business Review Weekly quoted an example, that for want of $20,000, a tax audit of the forest industry would probably raise $3 million! But then would they really tax their business partners in the logging industry?

The government’s priorities meant that in the late 1990s, PNG spent $19 million on buying real estate in Cairns, rather than on social services in PNG. Indeed, PNG was then the fourth largest international investor in Queensland real estate, after Japan, the US and New Zealand!

This kind of waste leaves little to spend on social services. PNG Government spending on a range of services is woefully inadequate. Port Moresby and Lae are full of squatter camps with no running water, no electricity, no schools and no health care.

Just half of the country’s children go to school, and then only for an average of three years.

PNG spends 2.7 per cent of its GDP on health compared with sub-Saharan Africa’s 4.5 per cent and the world average of 8 per cent. The country has close to twice Australia’s rate of HIV.

Somare has been PM since 2002, in a period of growth based on mining and minerals, and is known as the “grand thief”.

Like all under-developed countries, PNG is a mixture of ‘combined and uneven’ development. That is a modern industry and working class is being created but in the context of an overwhelmingly agricultural and tribal society.

PNG’s working class has used the same methods as workers in Australia to improve their wages and conditions—strike action. Unions have been built in various cities and towns where there are concentrations of workers—on the waterfront, in transport, in the public service and amongst miners.

It is this class which can end PNG’s dependence on mining, corrupt politicians and Australia’s imperial meddling.

By Tom Orsag


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