Port Moresby, 31 January 1968
Confidential
Now that I have completed my first year as Administrator I wish to make certain observations on the situation in the Territory and certain comments on the policies which the government is following there.
As a preface I state, as best I know it, the reasons for Australia’s continued presence in the Territory as administering authority and her continuing substantial expenditure there. To my mind there are two predominant reasons. The first is that we have freely accepted obligations to the U.N., involving economic and social, as well as political advancement, which are far from discharged. The second is sentiment, derived from wartime association and personal contacts, from interest in the work of missions and from a certain pride in doing a job which needs to be done. The first reason only influences us to retain a physical presence because of our interpretation of the Charter. So far as the majority of the U.N. is concerned, there is an overriding obligation to grant immediate independence. If we did so, no objection would be raised, though no doubt the U.N. would stop well short of assuming our financial commitment. But an early handing over of our administrative responsibility would probably lead to a chaotic situation. Furthermore, the job of establishing anything like a manageable (not even a viable) economy is clearly a long one. The two reasons here stated point clearly to our remaining so as long as we are wanted by the people of the Territory.
As I see it, Australia’s defence interests are not a primary reason for our continuing to administer the Territory. The Territory is not vital to them. The facilities we enjoy are useful and should be retained, but they are not of overriding importance. Our interests could be equally well served by the continuance, after our responsibility for administration is handed over, of close and friendly relations with the Territory’s government and people. They are not the sole basis of Australia’s commitment to defend the Territory as if it were part of Australia.1 I assume that that commitment also derives from our U.N. obligation.
It is, of course, very advantageous to the Territory. A future Territory government could not possibly keep up, from it own resources, a military force of the size it now has. If the commitment continues, it will no doubt powerfully influence the Territory leaders of the future to keep close ties with Australia, and to think carefully before moving from self-government to independence if an alternative such as ‘association’ with Australia remains open. Conversely, any disposition by Australia to modify its commitment in advance of self-determination would cause a loss of confidence in us by Territory leaders.
I do not give weight to other arguments for our continued presence. There is no economic advantage to be derived by the government sufficient to outweigh the heavy expenditure of manpower and monetary resources on our administration. Certainly the economic interests of some thousands of Australian individuals and a small number of companies are involved. But these only marginally affect the Australian economy. Nor is there any advantage to be gained from our continued presence so far as our relations with the international community are concerned. The balance lies heavily in the other direction. We get no thanks internationally except from our closest allies.
With this background I have given a good deal of thought to the kind of things the Administration should be doing. I summarise my conclusions as follows:—
(a) that economic development in the wide sense is the most important thing for the Territory and should continue to receive priority attention;
(b) that economic progress is bound to be slow and even partial viability many years off;
(c) that Australia’s financial and defence obligations are not affected by the rate of movement towards self-government, provided it is orderly and peaceable and compatible with close and friendly relations with Australia. We might be relieved of them in the event of a deterioration in relations and the violation of Australian interests;
(d) that a slow rate of political development is best suited to the Territory’s present capability;
(e) that, in the context of the government’s present policy that the decision on how fast to move forward should be left to the people through the House of Assembly, there is much that the Administration can do to expose the facts of the economic situation to Territory leaders, including the younger educated men and women;
(f) that correct economic policies need public support. A special effort is needed to make development a national task which captures the public imagination. More effective public relations, continuing consultation and increasing participation of Papuans – New Guineans in the economy are essential elements in such an effort;
(g) that the attitudes of individual Australians in the Territory are a powerful factor in the future attitude of Papuans and New Guineans. More needs to be done about this by the Administration;
(h) that for the purpose of economic development and as a bulwark against fragmentation in the future, the Territory needs a strong central government. This has administrative as well as constitutional implications.
The following paragraphs set out my views in more detail.
My experience in the past year has convinced me that it will be many years—a generation—before the country is able to stand on its own feet economically, let alone walk or run. Even on the basis of greater annual expenditure by Australia on the Territory, of modest international aid, and continuing foreign investment the long-term perspective does not point to any significant diminution of the Territory’s economic dependence. It does2 point to a much stronger economy in many respects with a growing capacity reaching a degree of viability. Thus, so long as the reasons for Australia’s commitment to aid the Territory continue to hold good, containment of Australian financial aid is not in sight, let alone reduction. The very long-term nature of the economic development obligation has not, so far as I am aware, previously been brought before Cabinet. I assume that you will wish in due course to bring this to Cabinet’s attention, and to do so in the context of the likely development of the political situation. I therefore comment briefly in what I see as the likely course of such development.
There are broadly three possibilities. The first is that progress towards self-government and self-determination will take many years. Many factors point to this being a desirable course of events. There are very few Papuans and New Guineans in positions of responsibility in government, commerce and, in a meaningful sense, in primary, secondary or tertiary industry. With the present scale of educational effort, the output of qualified men and women in numbers that matter will not begin until the early 70’s. These people cannot without some further years of experience effectively take on responsible senior positions.
The second possibility is that the movement towards self-government will be much faster than, from a purely objective point of view, it should be. This would involve self-government in the short-term future. Self-government need not involve abuse of Australia and destruction of the economic interests of individual Australians. It could well be the result of peaceable progress. Thus we can contemplate a situation in which though self-government occurs earlier than it ought, it does not destroy close and friendly relations with Australia.
Both these possible courses of development pre-suppose that self-government is quite a distinct stage from independence. Self-government would be the completion, more or less quickly, of a process already started. It would in either case be followed, after an interval of time, by self-determination leading to independence or some form of association with Australia.
The third possible course is that of a fairly rapid move towards independence involving a deterioration in relations with Australia. The distinction between self-government, self-determination and independence would in such circumstances be obliterated.
The above-mentioned courses are not the only possibilities. There are many intervening shades. It is furthermore hard to forecast the course events will take, the more so before the 1968 elections. It is, however, worth canvassing the main factors which will be operating.
The first is public opinion in the Territory. Undoubtedly rural opinion (which is the majority opinion) is opposed to early self-government. This is not only because rural leaders realize that the Territory lacks trained and experienced men and women in every facet of political, economic and social affairs. Rural leaders are also under the impression that self-government will mean abandonment by Australia. They do not distinguish between self-government and independence. If they were convinced that self-government was a stage short of independence and that Australian aid would continue in the new situation, they would be less fearful, but still very cautious.
Another factor is whether the self-interest of the leaders, and of the potential leaders among the young educated Papuans and New Guineans, can be engaged in the long-haul approach to economic development. It is asking a good deal of them to expect their support of firm policies which offer few financial rewards (compared with these offered to no-better-qualified Australians) and in circumstances where an Australian minority lives better, does very well financially and tends to ignore Papua and New Guinea society. But this approach can be put in terms of self-interest. There are exciting prospects for the youth of the Territory. There are good opportunities to gain qualifications, and for those who gain them, interesting jobs are immediately available and responsible ones just around the comer. The imagination of youth could be fired, too, by the task of nation building.
A further factor is the role of the individual Australian in the attitude of Papuans and New Guineans. If Papuans and New Guineans are in their own self-interest to restrain their natural desire to run their own affairs, the Australian community here will need to respond more rapidly than it has to the changing social situation in the Territory. In the planting and business community this is a matter of self-interest and can be put to them as such. My brief experience tends to show that the small businessman or planter is mainly interested in making a quick profit and getting out with more than he came with regardless of the economic or social consequences of his presence in the Territory. On the other hand, the larger interests, whether family companies or large public companies, take a longer term view and are prepared to adjust (and insist on their staff doing so). From a social as well as an economic viewpoint they should be encouraged and the small men not. But we have to take the Australian community as it is and is likely to be in the short-term. Merely because of its size, wealth and standard of living it is likely to arouse feelings of envy and dissatisfaction which do not sit well with the gradual approach to political advancement here discussed.
A fourth factor is the opinion of persons outside the Territory. The United Nations gives voice to one sector of outside opinion. In the present climate of Territory opinion I do not rate highly the influence of the United Nations. Moreover, I see nothing to be afraid of in it. Indeed I see advantage in offering selected Papuans and New Guineans opportunity to see for themselves how the U.N. works and how many of its members manage their own affairs. This could put radical ideas into the heads of the young, but it is more likely to open their eyes. I see a more potent influence in the opinions of Australian individuals and learned societies, many of them reputable and acting from high motives in calling for the speedy handing over of authority. Such opinions are likely to win a response and to be the cause of agitation for quick political development.
The last factor is the nature of the human being himself. There are already ambitious men and men with grievances in public life in the Territory, Australians as well as Papuans and New Guineans. There are also Papuans and New Guineans who are genuinely convinced that political development should be speeded up. We must expect these people to seek power and office, and to be impatient of slow advance to self-government. The House of Assembly as now constituted is a useful forum for such men and one in which the government viewpoint cannot always be well and effectively put. It is a place where opposition to the Administration is itself a useful policy for individual members who want to make a name for themselves.
The effect of these factors can to an extent be influenced by the Administration. While I do not suggest that we base our economic policies on pleasing the people (that would be a ‘hand-out’ philosophy), we can retain a degree of flexibility. This would enable us to make certain modifications to accommodate political considerations. This does not involve a new policy. I would go a stage further than this and, for political reasons alone, suggest some slowing down in the present forced pace of economic development, with a consequent reduction in some of the social strains involved. But more important than changing our policies is their presentation. If the Administration can by public and private persuasion convince leaders and the younger and better educated people that our economic policies are the best and indeed the only ones which will bring viability and that the process is inevitably a long one, demanding their participation and support, then I would be hopeful that the economic factor will be one which slows the movement towards self-government.
Reviewing these factors, I incline to the view that, if we wish it, the pace of the arrangements towards self-government can be kept reasonably slow and orderly. This would not involve the government or the Administration in putting on the brakes in a formal sense. The decision on this would, in accordance with present policy, be one for the people themselves through the House of Assembly as the means of expressing majority opinion. The role of the Administration would be one of education, of exposing the facts which point to the need for steady movement and of avoiding measures which unnecessarily provide causes for the political agitator. Positive action would include better orientation and education of the Australian in the Territory, old inhabitant as much as the new, and through non-government organisations (such as Chambers of Commerce) as well as the Administration. It would also involve education of a specialised kind to make it possible for more Papuans and New Guineans to enter successfully into small or large business as entrepreneurs or shareholders. It involves education for productivity, a considerable task. All these things should occupy more attention from the Administration than they have in the past.
But by the words ‘reasonably slow’, I do not mean ‘delayed indefinitely’. Once the capacity for self-government exists, in terms of trained and experienced manpower, the argument for delay will lose its force. In the next ten years, or say within the life of the next two Houses of Assembly, this capacity will greatly increase, and any time after 1976, the situation could be much different to that now prevailing.
I mention this tentative time scale to make the point that at best the movement towards self-government is likely to be a good deal faster than movement towards economic viability.
Should the course of events follow, broadly, either of the two first-mentioned possibilities, I submit that the obligation of Australia to aid the political, economic and social advancement of the Territory and to defend it remains. The pace of progress towards self-government does not affect the nature of our obligation unless it is accompanied by a deterioration in relations between the two countries. It is only at the point of independence that the continued existence of our obligation should be called in question.
It follows that the question of continued Australian financial assistance to the Territory has to be considered as a long-term one not only because of the nature of the development task but also because of the nature of our obligation. The modalities could change from, for instance, the present annual subvention to the Territory’s budget to a system of annually negotiated grants for specific development purposes. I have no firm views yet on this. There are other possibilities, such as aid by way of low-interest loans as suggested by Walinsky.3 But I do not see that consideration of this important policy question need be tied too closely to the progress of the Territory towards self-government.
I hope the government will, without prejudice to its basic policy of leaving all options open, instruct the Administration to do what it can to bring about a course of events leading towards a gradual, orderly and peaceable progress towards self-government on the basis of continuing Australian financial and other assistance during and after the attainment of self-government.
I do not in this letter canvass the situation we would face if relations were to deteriorate and there were to be a precipitate rush towards independence. Naturally this course of events would cause the government to review its policies, including its aid policies. This completes my assessment of likely political developments as a background to consideration by Cabinet of aid policy.
One thing which clearly emerges from a study of economic development is the need for firm government at the centre. This is required in order to put the necessary economic policies into effect. It is also required for another reason, namely to forestall a tendency towards fragmentation. There is not yet a feeling of unity in the Territory sufficient to withstand the centrifugal influences which would immediately be at work if Australia should withdraw from the Territory in the next five years or so. The influences are already at work. They manifest themselves in tensions between Papuans and New Guineans (the feeling in this has surprised me); in occasional talk amongst influential Tolais of New Britain ‘going it alone’; in the strong (but not justified) feeling of Bougainville people that they are neglected and that they should keep for themselves the tremendous asset of their mineral resources. Factors such as these caused the Foreign Affairs Committee in 1966 to predict that the shape of an independent Papua and New Guinea would be different to that of the present two Territories.4 In my view the government should go to great lengths to prevent this happening. It is sufficient reason for us to resist proposals for regionalisation or for a federal system. Both would in any event be artificial. The natural unit of the language group is not coterminous with sensible economic or administrative regional groupings. There will be a certain amount of amalgamation of local government councils. This will be a good thing on a district basis, but I see no cause to encourage it on a regional basis.
If the argument for strong central government is accepted, there are other important consequences for the Administration in 1968. It will clearly colour our attitude towards future constitutional development. It requires some brake on the present enthusiasm for expanding (qualitatively and quantitatively) local government. It also requires, in my view, a strengthening of the line of communication from the Administrator to districts, sub-districts and the village. I have been unhappy at the present division of responsibility between the Department of District Administration and the Department of the Administrator in respect of what goes on in districts and at the village level. I believe that some amalgamation of these two departments is called for, with certain marginal responsibilities from these and other departments being brought together into a separate, service department. Such a rearrangement would strengthen the hand of the Administration and be a basis for firm central control as progress is made towards self-government. I shall discuss this as soon as possible with the Public Service Commissioner with a view to our making a joint submission to you.
Once the government’s economic policies for the Territory have been reviewed, I see it as essential that the Administration do its utmost to mobilize public and private support for them. The road ahead is a long and hard one requiring, as I have said, firmness at the centre. But this is not a thesis which will capture the imagination of the leaders and of the younger men who, from an administrative viewpoint, are going to have an essential part to play. Two things, in my opinion, have to be done. The first is to avoid a position in which it can be said that our policies have been imposed on the Territory. There must be genuine consultation (by which I mean consultation which entertains the possibility that the government’s views will be modified to accommodate the views of the Territory). This consultation needs to be continuous and to take place with businessmen and the younger educated men and women, with local government councils and the ‘big men’ in the rural areas, as well as with the new Administrator’s Executive Council as soon as it is formed.
The second requirement is effective public presentation of what the Administration is doing. Attention has been paid to this in 1967. More attention is needed, including the use of professionally trained persons. I hope in this connection, that public statements by the government, including those which you authorize me to make in the Territory can be drafted so as to fire the imagination and, in a practical way, to create the incentive for people in the Territory to look upon its development as a task essential to the building of a nation.
I have not, in this letter, attempted an exhaustive commentary or set of recommendations.
I have been deliberately selective. Two things remain to be said.
The first is that good relations between the Administration and the Department of Territories have been an important objective. A certain amount of tension between the outpost and the headquarters is bound to exist, and there are some in the Territory’s public life who make a point of exaggerating it. But in my experience so far, there has been no problem that could not be amicably discussed with the Secretary and his officers, and when, as has not often been the case, views have not been reconciled, I am satisfied that the Administration’s case has been fairly put to you when you have made your decision. I have also found valuable the present practice of joint Administration–Department study of major issues. There is no need for me to add that I personally have been treated by the Secretary and his officers with the utmost courtesy and understanding.
The second thing is that, in my opinion, as the capacity of the Administration to handle responsibilities is demonstrated, there should be a gradually increasing degree of delegation within agreed policy to the Administration. I have already made certain proposals to this end5 and propose to follow them up in 1968.
I have written this letter at a time when the political and security situation in the Territory has been quiet, the elections are starting in an atmosphere of calm and there is a moderate confidence about the economic future. All reports reaching me confirm this general conclusion.
In conclusion, I would like to thank you personally for your understanding response to the problems of the Administration and for your courtesy towards myself which has made it a pleasure to work under your direction.6
[NAA: A452, 1966/4576]
1 See paragraph four, Document 12.
2 The word ‘not’ should perhaps have been inserted here.
3 American consultant economist L.J. Walinsky had been commissioned by the Government to ‘advise on [a] The most effective approach for completing a comprehensive long term economic development programme [b] The administrative machinery and procedures required for implementing the planned programmes effectively, for reviewing them periodically and for adapting annual budgets so that they will to the fullest extent reflect plan priorities and contribute towards the achievement of plan targets [c] Any comments on the content of the proposed economic development programme’. On Australia’s grant aid to PNG, Walinsky argued that there were three reasons why this should be ‘modified before very long. The first of these is that Commonwealth aid will be extended in an increasing degree for capital development projects of a self-liquidating nature which can appropriately service the loans which may be extended to them. Second, while I am not aware of any disinclination on the part of the Commonwealth Government or of Australian taxpayers to provide, solely on a grant basis, the increasing amounts of external aid required for the economic development of the Territory, it seems to me only natural that in due course such a disinclination might develop. Thus, the total of grants plus loan assistance in future might well exceed in substantial degree the amount the Commonwealth Government and the people might be willing to extend on a grant basis only. Third, and more important, is the objective of fostering a sense of financial responsibility within the Territory, as responsibility for self-government is broadened … It has been, I think, a general experience in other developing countries that grant aid is not used as carefully, responsibly and effectively as is aid which must be repaid … Such loans, if extended, could of course be on terms as liberal as circumstances required’ (report by Walinsky, 3 July 1967, NAA: A452, 1967/7044).
4 Presumably a reference to the 1966 report on PNG by a sub-committee of the Joint Committee on Foreign Affairs which, in fact, discussed the prospect of independence on the basis of the assumption that ‘an independent nation would not necessarily embrace only the present Territories’ (undated, NAA: A1838, 5611611 0). See also footnote 3, Document 78.
5 See Document 144.
6 Barnes informed Hay verbally that he was in full agreement with the policy matters raised in the letter (see Document 259).