Comments

Ewen Tremendously important post and one dear to my heart having been an Ambassador since 2009. Real men don't ignore, condone, excuse or commit violence against women and real men can make a difference every day, not just today. We can stand up and speak out, as you have done. We can call out wrong behaviours. We can role model for our sons; future real men. I am proud to work at a company that takes this serious. At AECOM we not only recognise White Ribbon Day, we recognise the broader and enduring issue of violence against women and have ongoing awareness and support initiatives in place. While I am also proud to be an Ambassador, I will be happier when we have gone the way of the dinosaur and violence against women no longer exists.

Thanks Elizabeth that's a very useful suggestion, I will try and find the work. Terence

Thanks Garth, Good questions: information effects (mostly aid levels but we do want to do stuff on efficacy too) are something we are working on at present, using survey experiments. I will blog more about the results when the data are fully analysed. On where the data come from -- both sets from what were in effect omnibus surveys. I'd be curious to hear why you think this would make a difference, and whether it would be for better or for worse. Thanks again. Terence

Hi, It's true, the extent of people's knowledge about aid is important, and may well shape their opinions. Nevertheless, it's useful to learn about support based on what currently know. This being the case because, realistically, the typical Australian's knowledge about most of the details of aid is probably unlikely to change substantially. That said, for campaigners, it's certainly worth learning about knowledge-effects, and this is something we're currently working on. Thanks Terence

Thank you Terence. As well as looking at the odds of different groups opposing the cuts, have you noticed any differences in results based on how the questions are framed, whether they are part of an omnibus or aid specific survey or whether information about the impacts of aid is provided to respondents?

Hello Richard, Thanks very much for the detailed and well thought through response. I appreciate the reply. I will try to address your points, see what you think. You are right in saying that no matter what the exchange rate is there will be winners and losers. (However I do think you are underestimating the costs to exporters like coffee and oil palm, exchange rates definitely matter to them!). We know that if the exchange rate were 100 times lower, or 100 times larger there would be winners and losers. So then, if every exchange rate has winners and losers, what should the exchange rate be? How do we compare the benefits of any particular exchange rate for some, with the costs of that same exchange rate for others? The two alternatives are for the government to control the rate, or for the market to set the rate. There are benefits and costs to these kinds of regimes. Though over time, the evidence suggests that the best way to maximise the benefits, and minimise the costs is to use a market rate. In this case, the government set rules around the rate, but not long afterwards, commodity prices fell massively. While PNG’s competitors’ exchange rates fell (sometimes dramatically), the Kina did not. If you compared the kina market rate at 1 June 2014 to 1 June 2015, it had actually increased over the course of the year. This is not good for competitiveness. The recent Article IV put out by the IMF (page 15) shows that even if you don’t include the large appreciation of 17% in June 2014, the Kina has still depreciated slower than other regional currencies, this is despite the fact that PNG relies far more on commodities for foreign exchange. http://www.imf.org/external/pubs/ft/scr/2015/cr15318.pdf In this case, it is possible that the government had a good reason to introduce the trading rate bands. However, what is not clear, is that, when coming to the decision to introduce the bands, that the costs of overvaluation were as clear as whatever benefits to overvaluation there were. These costs were then exacerbated by the commodity price falls. Perhaps I am an optimist, but I do feel that most in the government want to do what is best for PNG and it’s people. This article (and the previous two) aims to provide evidence to suggest that, when you use tools to try and take in to account all the winners and the losers, we find that overall PNG would be better off with a faster reduction in the exchange rate, rather than a slower one. In a future article, I will be looking at whether the rate of depreciation has indeed actually sped up. This is not a doomsday scenario, but at the same time it is not a positive one either. Many are not affected in their day-to-day life by the exchange rate. Many are, both directly and indirectly. (Though those who are not affected would also not be affected by depreciation). Opponents of the government and others will gladly sensationalise articles such as this. People will always try to use research to achieve political ends. However, it would be inaccurate to say that the article is suggesting that the economy is at a stand still. Many of those using informal markets will be unaffected, however this does not invalidate the evidence that suggests that the economy is growing slower than if the rate of depreciation of the exchange rate was increased. This is something I thought through very much before writing. It is a fine line to balance trying to get people’s attention to risks associated with various policies, to providing a tone that can be misinterpreted (wilfully or not). Around the most recent MYEFO, the boss of ANZ put out a statement that deftly avoided talking about some of these issues, and instead focussed on the long-term future. Many thought that this meant he rejected the negative analysis, which was not true; the ANZ actually favours further depreciation. Most articles I have seen are positive on PNG’s long-term future and this is a sentiment I share. What I hope the article is suggest that the benefits of a market rate are greater for PNG than the benefits of an overvalued rate. And as such, if the government sped up the depreciation that this would be positive for the people of PNG. Ultimately, this is what I feel we are all working towards, the best future for PNG.

This is all very well in terms of analyzing the figures, but what do people think they are supporting? 'Aid' is taken as a given, but very often when people are asked to define overseas aid they come up with a diversity of responses. It is often equated with charity hand-outs. The information from the survey is not much help unless you also know what people understand by 'aid'.

Hey Rohan, Great research on a critical issue for the PNG economy. It's very interesting to see what's happening in PNG from an international perspective and to have a more comprehensive understanding of what the literature says about the impact of exchange rate manipulation in developing countries. Another factor that must be weighing against any further devaluation is the elephant in the room of interest repayments to government debt held in foreign currency, notably USD. With on-budget interest repayments, which don't include the controversial [http://www.smh.com.au/business/energy/ubs-papua-new-guinea-deal-respected-figures-question-pm-peter-oneills-role-20151012-gk78zo.html] UBS loan, already swallowing up 10% of the 2016 budget any further depreciation would likely push that number up even further. Who knows what would happen to off-budget debt but there's clearly a lot of political interest aligned with keeping it propped up. It will be interesting to see how the Government addresses questions on the exchange rate from potential investors when going after their proposed Sovereign Bond. Cheers, Jonthan

Great analysis Terence. Thank you for undertaking this deeper analysis and explanation. This data helps those of us who try to engage in deeper conversations using deeper information within our networks, colleagues and families. Look forward to seeing more short articles using data and analysis of our current economic state and options and what that means for assertions about why we need to cut aid when it is such a tiny portion of our expenditure as a nation. Makes one wonder what would happen if we used a well informed study approach similar to that done by EPAC on attitudes to tax in the early 90s. You may be familiar with the study - I think Glen Withers led that work.

An interesting article Grant. Taking a broader view though, it's a shame that corruption has ended up subsumed into a mishmash of topics under SDG-16. Both the World Bank as well as the UN have for a number of years now, has rated corruption as the single greatest obstacle to reducing world poverty. According to the World Economic Forum and the World Bank recent data suggests that corruption now costs around 5% of global GDP – or US$2.3 Trillion per annum – and increases the costs of doing business by up to 10% (globally)! Now the third largest industry globally, it's also on the rise. For those of us who have worked at the coal face, this comes as no surprise, as the direct daily impact (and damage) that corruption has on all sectors of society - in particular the poorest of the poor - can be seen everyday. Unfortunately, corruption and the SDG's is yet another case of a lost opportunity, as rather then reducing corruption to the flow of illicit funds (which in itself shifts the focus to transnational financial flows), corruption should have been an SDG in its own rights. By doing this, it would have enabled the selection of a multiple set of indicators / quasi-indicators and measurements that in turn, would have enabled a more contextualised and nuanced approach to the problem. My fear at the moment, is that in its current form the SDGs - when it comes to corruption - will end up a failure, as not only with the topic not get the political focus so desperately needed, but will end up buried behind a host of competing topics.

Thank you for raising an issue of great concern, not only among Pacific Island employees in Aust and NZ but also students who also have the added responsibility of supporting families back home with their limited scholarship allowances.

There are other financial inequalities that conspire against a level playing field for Pacific Islanders. The Internet always promised to reduce the "tyranny of distance", providing the remote scattered island communities with new opportunities arising from globalisation. However in Solomon Islands where I live, and probably other regional countries, would be online businesses, eco-tourism operators and artisanal traders still lack access to online payment systems that support local bank accounts. Telegraphic transfers are not suitable as a general payment system for many reasons, they are expensive and thus prohibit small transactions, and customers expect one-click purchasing. The only real contender owing to it's ubiquity is Paypal. However, it does not support local bank accounts here. This means that Solomon Islanders cannot offer it to their customers as payment system. As far as I know there are no other online payment systems that are as accessible as Paypal that would be available to local people here. For those expatriates and elites who have access to offshore accounts this is no problem. But why is this service - a normal aspect of commercial life in most of the world - not available here? Some time ago I asked Paypal online help about this and received the rather generic reply: “I understand that you want to know why adding a Solomon Islands commercial bank account can’t be added to a Solomon Islander PayPal account. Due to the challenges and complexities associated with the worldwide financial network, we cannot offer the option to add a Solomon Islands commercial bank account to a Solomon Islander PayPal account. We also cannot offer a firm date or timetable for expansion of specific services.” One possibility is that commercial banks here are resisting the introduction of such services. It is certainly true that banking services here are generally second rate compared to what the same banks offer in Australia and New Zealand. If we want true financial inclusion it has to be on equal terms with dominant economic powers. Over several years I have brought this question up in online forums such as the Pacific Chapter of the Internet Society, and with contacts in our Central Bank for instance, but there is no change in the situation.