Comments

These aid management changes are perfectly sensible considered in isolation. There's no question that deregulation was needed. But, in their context, the changes carry some risks that will need to be watched. They coincide with the integration of AusAID into DFAT and the likely (still unquantified) loss of many experienced and skilled aid professionals. There must be some risk that the lifting of quality controls for all activities under $10 million, which is a fairly high threshold for grant-funded activities, will lead to two, linked outcomes. First, we could see increased program fragmentation as people face incentives to keep activities under the threshold. And second, we could see poor attention to activity quality on the part of people whose resource allocation decisions are influenced primarily by other factors. The changes will be a good thing if they result in greater attention to the quality of large or high-risk activities, but not such a good thing if they result in a proliferation of small, low-quality activities.

Stakeholders have acknowledged that a number of recent infrastructure projects have not delivered the outcomes required by Government, potentially as a result of lack of oversight by an IDA type organisation which suggests that current infrastructure projects should be overseen by an IDA type organisation in 2013 which suggests that the IDA needs to be established in early 2014. A number of strategic infrastructure projects have been identified for specific oversight by the IDA. Stakeholders have also acknowledged that funding of current strategic infrastructure projects comes from a number of sources including the Government of PNG including the Tax Credit Program, funds from Esso Highlands and Oil Search and a combination of Grants and Loans from a number of international development partners including Australia, Asian Development Bank, China, JICA and World Bank. Funding from the SWF will only be one source of funding of future strategic infrastructure projects, albeit an important source. Potential funding of strategic infrastructure projects from the SWF is scheduled to commence in 2015. To establish an IDA by early 2014 the following key actions need to be undertaken: - NEC to direct the formal drafting of a Bill for the IDA (Certificate of Necessity has been requested from the State Solicitor); - First Legislative Counsel, with advice and support to formally draft a Bill for the IDA and to issue a Certificate of Compliance; - Parliament to pass an IDA Act; and - Establish the IDA. As the establishment of the IDA approaches, the following steps are planned for early 2014: - Identification of the IDA Board (including Chair), design of initial Board briefings and training and planning for the initial Board Meeting; - Continuation of Stakeholder Meetings; - Development of an IDA Corporate Plan; and - Development of IDA operating procedures, specifically re. Planning, Procurement, Implementation and Governance Procedures. The design, establishment and operation of an effective and efficient Infrastructure Development Authority can have a very significant impact on the economic and social development of PNG. This is a ‘strategic’ PNG government initiative.

The PNG Department of Petroleum and Energy with the support and participation of key development partners recently hosted a workshop to consult on the National Electricity Roll-out Plan and its delivery. The PNG IDA Project Office under the Department of Works was represented. The IDA Project Office is specifically interested in the development of a ‘Power Sector Infrastructure Strategy’ as envisaged in the Draft IDA Bill (Part IV, Division 1 refers) and a ‘5 Year Power Infrastructure Plan’ (Part IV, Division 2 refers). The IDA Project Office notes that under the 2014 Budget, PNG Power Limited (PPL) has two ‘strategic’ infrastructure being the PNG Towns' Electricity Investment Project at K75.8 million and Upgrading the Power Distribution System of Ramu Grid at K28 million.

I agree 100%, I established a tuna processing industry on a small atoll in the Maldives that is owned and operated by the locals and sells their product to the top buyers in the EEC. I described how we did this in a book AKU History of Fishing in Hawaii and the Western Pacific available from Amazon. Our government MUST work with independent tuna industry personnel to plan, build, train and operate ALL aspects of a successful tuna industry or let the asians take all the tuna away from the islanders local tuna resources - the biggest and most important in the world...Peter Wilson

Another perspective on the same point. A donor responsible for the implementation of a project which is public sector based, for example, one involving policy or regulatory reform, will be dependent on having senior project staff who are familiar with the way the public sector works and the key people within it. Such people are not likely to be found in the private sector. While it is true that extracting competent civil servants from their role within the public sector diminishes the capability of that sector, the issue should be judged as one of net benefit, not just whether any costs are incurred. And it is reasonable to argue that, if those civil servants who are hired for project implementation work alongside expatriate staff with appropriate international experience, they will return to their public sector careers with enhanced skills and knowledge.

Thank you for this commentary Wesley. Mostly, I agree with your assertions but make some disagreement with the particular Quarantine case that you bring to light and would like to join you in highlighting that capacity needs to be built on the developing country side to address some of these issues. Firstly, as a plant pathologist with a particular interest in plant biosecurity I believe it is important to realise that not all injunctions brought against an Import Risk Analysis are solely to protect an industry without any scientific basis, which I hope is not implied here. I'm not saying that it doesn't happen, but I think a soil-grown crop which could easily be transferred from market to garden is not the best example to use. Soil-borne pathogens are particularly difficult to control and manage for. I note that Tess mentions above that New Zealand allows in many more imports, but they also lack the environmental and cropping diversity that we have here in Australia. In some cases I believe that any potential contaminants would be restricted in spreading in a country such as New Zealand just through hostile climatic conditions. As I don't know the full details of the case I feel uncomfortable commenting too much further - suffice to say that I would like to see a little more agricultural technical expertise taken into account when making broad-sweeping policy recommendations of this sort. Ginger may also not be a good example when you are also (and I fervently agree with you here) recommending that smallholders focus on differentiated products that command premium prices (as also recommended in the reference of Ron Duncan). Difficulties with slow IRAs could be addressed in part through a committed long-term capacity building effort in areas of plant pathology, entomology and agronomy which would allow for countries such as Fiji to have the intellectual and technical capacity to address the speed of such applications on their own side, while having the added bonus of helping to reduce pre- and post-harvest losses to pests and disease before they leave the farm gate and hopefully improving farmer incomes. "Low technology" skills in these areas are still sorely lacking in developed countries and sustained commitments from funding agencies (be they sovereign nations or NGOs) could begin to address these issues. Similar commitments to succession planning and adequate and appropriate staffing of Australian agencies may also go a long way to dealing with the backlog of IRAs that need addressing.

Dear Jesse I appreciate your sympathy to the Pacific Islanders. But your reply to me illustrates the failure to understand the injustice against current Pacific Islanders. You say that "This history of exploitation forms part of the reason that so many social protections have been put in place for the SWP." I doubt the validity of this statement of yours. Currently Australia (and NZ and Canada) take as many skilled and professional human resources that the Pacific Islands throw at them- but not the hundreds of thousands of unskilled persons who really need the jobs. The SWP is a "drop in the ocean", tokenism by Australia at the moment (however valuable to the persons and their communities). You say: "Anecdotal evidence suggests that even with these protections in place, there have still been instances of Australian employers taking advantage of Pacific seasonal workers". Of course there will be exploitation of workers, just as there is exploitation of Australian workers here and there. Respect the Pacific Islanders enough to let them decide on the benefits and the risks of coming to work in Australia. Just as millions of Europeans have decided over the decades on whether to settle in Australia as part of Australia's subsidized immigration schemes, even though for many it often resulted initially in quite miserable lives for themselves, but great standards of living that were enjoyed later by their children and grand-children. The real problem for Australia is the inability of decision-makers to get out of their "White Australia fortress mentality" in the Pacific Ocean, surrounded by brown people. That mentality is being made more more and more painful for Australia with China's enormous inroads into the Pacific Island economies and politics, including that of Australia. It won't be too long before China and India also ask Australia to say "sorry" for the injustice against all the Chinese and Indians who were also ejected in 1905 (in addition to kanaks) as part of Australia's federalism plan to create a White Australia. Perhaps then Australia might say "sorry" to the Pacific Islands whose young people were enslaved a hundred years ago, and in addition to just "reflecting" on that sorry enforcement of a labor market of sorts, right the historical wrongs by letting unemployed Pacific Islanders work freely in Australia (often at jobs that Australian citizens are reluctant to take on). This is a "win-win" situation that Australia has sadly not taken advantage of, and in the process lost a great opportunity to really bind the Pacific Islands to themselves in ways that no external Super Power would have been able to unbind. Some of my thoughts here (and other failures of Australian policy towards the Pacific) were elaborated in this article "PICTA, PACER and EPAs: weaknesses in Pacific island countries' trade policies". Pacific Economic Bulletin - Volume 19, Number 3, 2004. Your original article also gave the impression that the slow progress on the token 100 Working Holiday Visas for PNG might have been on the PNG side, when clearly the article also made clear that it was Australian "paper work" that had held up the program even though the initiative had begun in 2011. Lovely euphemism, "paper work". That said and done, Australia is moving in the right direction, even if it is at the endangered tortoise speed, and for whatever reasons.

Wadan, Thank you for your comments. I would certainly agree that the tragic exploitation of Pacific Islanders in building the north Queensland sugar industry should be reflected on. I haven't had a chance to see 'Sugar Slaves' yet, but have been meaning to. This history of exploitation forms part of the reason that so many social protections have been put in place for the SWP. Anecdotal evdience suggests that even with these protections in place, there have still been instances of Australian employers taking advantage of Pacific seasonal workers. On your second point, expanding the Working Holiday Maker (WHM) Visa to PICs is certainly something we've been pushing for. Allowing Pacific Islanders access to this visa category would enable them to compete on an equal footing with European and Asian backpackers in the horticultural labour market. Horticultural employers have overwhelmingly endorsed Pacific seasonal workers for their dependability, enthusiasm while working and productivity levels. Not as much can be said for backpackers or Australian workers. On your final point, I believe there was some reluctance on Australia's part to enter into a binding agreement on labour mobility because they'd said it would need to be WTO compatible. In theory, this would have left Australia open to that agreement being challenged by other states for similar access. To what degree this was used a means of avoiding entering into said agreement is open to debate.

Hi Lawrence, Really interesting post, thanks. It's such a complicated issue. In Indonesia, I talked to many people who saw eating at Western fast food chains as a kind of aspirational goal and marker of having 'made it' as middle-class. The 'cool' factor is reiterated by the powerful marketing prowess of these companies. There's also the issue of the cost and accessibility of healthy food -- packet noodles are one of the cheapest things around, laden with who knows what really. Even traditional drinks in Java are just packed with sugar. The domestically-manufactured junk food market is huge, so it isn't just those brands from the West causing problems. And street food (even vegetables) is just soaked in cheap palm oil. There's also so much misinformation in the community--I read a news story in a local paper where a mother listed chocolate milk as a health food and in another story about the price of subsidised cooking oil, someone lamented that they couldn't put enough oil in their fried noodles for them to be 'healthy'. And as someone who is overweight myself, the amount of times someone in the street grabbed my arm fat and said "sehat sekali!" (very healthy) in the years I was in Indonesia, particularly when in villages etc, was too many to count! (Funnily enough I never really felt it was a compliment...). Cities like Jakarta are completely hostile to anyone who might want to walk or cycle (except on car-free day), and malls are prioritised over public open space. When you think about the reforms needed in Indonesia to address this issue, it's even more staggering when you think about the steps still needed on other significant public health issues, like smoking. This ties into so many other development challenges, like addressing inequality (particularly the rural-urban divide), sustainable urbanisation, adequate public infrastructure and planning, regulation, education, health service provision, and more...

The IDA and Support for the 2015 Planning and Budget Process The IDA Project Office is participating in planning for the 2015 with the Transport Sector under the leadership of the Department of Transport (DoT). Initial advice has been well received by the Sector. Initial advice has focused on strengthening the planning for and justification of projects through the adoption of a Business Case developed by DoT. An institutions planning and budget process will be strengthened by the development of key sectoral and institution infrastructure strategies and plans, similar to the National Transport Strategy (NTS) and Medium Term Transport Plan (MTTP). The IDA Project Office notes that whilst the Transport Sector is well served by such key documents that inform and align the government’s stated priorities, other sectors appear to lack such documents. At present, the Government does not have an independent ‘technical’ authority to provide guidance on its infrastructure needs and priorities and to assess individual infrastructure project proposals. The proposed IDA may be able to provide such support and reinforce the infrastructure focus of those bodies involved in planning and budget decisions. The IDA Project Office notes that there is some concern with the number of projects received by the Government and the quality of assessment in formulating submissions (2014 Budget Volume 1, p73 refers). As a way to improve this process, it is further noted that the Department of National Planning and Monitoring (DNPM) proposes to introduce a two stage project approval process: (i) The first stage will involve ‘Initial Concept Approval’ where the first year is to ascertain a strategic business case for the project proposal. This will include initial justifications, indicative costing and may request the funding required to develop a detailed business case; and (ii) The second stage will involve ‘Final Government Approval’ where a detailed business case including full justification, specifications costs based on tender quality prices is assessed by Minister’s and considered in the budget process for final government approval. Dow, including its IDA Project Office seeks to be involved in discussions regarding the implementation of this important proposal. The IDA Project office also notes that approved infrastructure projects are to be undertaken in consultation with DoW (2014 Budget Volume 1, p75 refers) and that agencies may only seek private sector implementation or supervision involvement where DoW agrees it has capacity constraints and is unable to assist. DoW, including its IDA Project Office seeks to be involved in discussions regarding the implementation of this important proposal. The current Budget definition of ‘infrastructure’ appears to be narrow and does not adequately reflect either the quantum or value of all ‘infrastructure’ projects funded in the 2014 Budget. It noted that the value of the Capital Expenditure Component of the National Budget is K 7.471 billion. Perhaps the IDA definition of infrastructure is more appropriate. The Government’s procurement process needs to be revised and strengthened as very significant delays have been and are being experienced by DoW and other institutions which is delaying timely implementation of its infrastructure projects. Such delays are not acceptable. It is noted that the Central Supply and Tender Board (CSTB) is required to provide a set of clear guidelines for Departments and agencies seeking approval for centrally coordinated tender processes and appropriate formal undertakings to specify the maximum length of time it will need for its deliberations at each stage of the tender process (2014 Budget Volume 1, p77 refers). DoW, including its IDA Project Office seeks to be involved in any workshop regarding the development of such guidelines. The current review of the Government of PNG public procurement system, to which DoW has contributed, may provide for some longer-term reform and strengthening of this process. DoW, including its IDA Project Office seeks to be involved in this important review.

While I agree in principle that small remote economies suffer diseconomies that hinder trade, I'd also note that Winters (including in collaboration with Martin) excludes Australia and New Zealand regularly from his data as we are outliers - in other words, small remote economies that shouldn't be able to trade effectively, but do. When all things are held equal, remoteness is going to stop trade every time. But all things are not held equal and good policy, people and resources in a small remote economy can overcome distance - as Australia proves. Not much comfort to Kiribati, perhaps, but there is one entrepreneur there trading successfully in luxury yachts, so we shouldn't write industry off anywhere - just recognise it's a hard(er) slog.

This debate and what Minister Julie Bishop wants to do, needs to go beyond the cosmetics. First, there needs to be an acknowledgement of the horrendous exploitation of Ni Vanuatu, Solomon Islands and other Melanesian people ("kanaks") who were enslaved to clear the bush for the Queensland plantations a hundred years ago, and then, those who survived, were ignominiously expelled on racist grounds out of Australia (there is a great ABC documentary on this, airing in Fiji, over and over). It is their descendants who are now fighting for a "seasonal worker scheme" back to Australia. The Seasonal Worker Scheme, while to be welcomed, has to be on a large enough scale to make the inevitable horrendous costs of administration (more jobs for the boys) worth while. As for the 100 places for "holiday workers" supposedly being made available to PNG citizens, that is a bit laughable, compared to the 600,000 or so back-packers from Europe, who are hardly the poverty stricken people from the Pacific that need such work. Out of sight in this debate is the elephant in the room that hardly anyone talks about- the total failure over the last ten years, of Australia and NZ to push the Pacer Plus negotiations, under which many of these issues could have been consistently and sustainably integrated in a binding trade agreement, not subject to occasional lobby pressures from unions at election times, or ministerial whims. Of course, a lot of hot air (and work for many) continue to be generated about the "Pacific Plan" (read the recent Review Report).