Canberra, 4 November 1969
AP2l. Unclassified
Status of external aid and assistance to Papua and New Guinea
External Assistance to Papua/New Guinea continues to be provided in the main by the Commonwealth Government. Since 1966, the Territory has attracted an increasing flow of aid from UNDP, WHO, and most recently, loans from IBRD and IDA. Assistance provided from external sources other than Australian remains small, however, in comparison with the scale of the Australian contribution.
2. The following summary account of the present status of external aid and assistance may be of use to posts as background for discussions relating to the Territory.
Australian direct assistance
3. The Commonwealth Grant to the Administration is estimated at $96 millions for 1969/70 which represents an increase of 10.4% over the estimate for 1968/69. The latest Grant accounts for 55.9% of estimated net receipts in the 1969/70 Territory Budget (58.2% in 1968/69).
4. In addition, Commonwealth Departments are expected to spend a further $22.6 millions in the Territory in 1969/70.
Estimated Expenditure By Commonwealth Departments/Instrumentalities
For 1969/70
—
| | $millions
Defence Services| | 10.9
Civil Aviation| | 6.0
Interior (Meteorology)| | 0.5
National Development| | 1.0
P.M.G.’s (Sound Broadcasting)| | .1
Prime Minister’s (Audit Office)| | .1
Shipping| | .9
Treasury| | .1
External Territories| | .9
Works| | 1.3
ABC| | 0.9
CSIRO| | 0.2
| Total| 22.6
Of this total, Departmental expenditure which can be classified as expenditure of an economic development type under broadly the same definitions as those of D.A.C.1 is estimated at $12.3 millions. ($13.3 millions in 1968/69.) The difference between Departmental expenditure and its ‘economic development expenditure’ component is made up by deduction of the major proportion of defence expenditure and by off-setting corresponding revenue derived from the Territory by Departments.
5. After Commonwealth Departmental expenditure is included, Australia will provide an estimated 59.3% of total public expenditure in the Territory in 1969/70 (64.3% in 1968/69). This proportion is expected to fall as the Territory’s own revenues and loan receipts rise. Natural growth and the effects of the construction phase of the Bougainville copper project are expected to contribute an increase in revenue of approximately 11.8% in 1969/70.
6. In endorsing the objectives and targets of the economic Development programme for the five years 1968/69 to 1972/73, the Commonwealth Government recognised that the programme would require increased Commonwealth financial contributions. The Government has stated that it is prepared to provide increased contributions to assist in achieving the objectives of the programme on the understanding that the House of Assembly progressively increases the Territory’s self-reliance by raising the level of Territory revenue and loan receipts as much as practicable. The actual contribution in any one year will of course be subject to the Commonwealth’s own budgetary situation and to any special circumstances arising in the Territory that may reduce the need for the Commonwealth grant.
7. The Trusteeship Council in its 1969 Report which was completed before the announcement of the 1969/70 Grant, welcomed ‘the continued increases by the Administering Authority in its budgetary grant’, and said that the Council was ‘encouraged by the decreased percentage of the Australian grant in relation to the total territorial budget, which reflects the progress toward economic self-reliance’.
Australian Private Investment and other Assistance
8. Australian private investment in Papua/New Guinea is estimated to have been $19 millions in 1967/68 and accounted for 70% of the total outflow of Australian private investment. Australian Private investment in the Territory in 1967/68 increased by 72% over the figure for 1965/66.
9. At present, 80 volunteers are working in Papua/New Guinea under the Australian Volunteers Abroad scheme which supports a total of 135 volunteers. Volunteers are working in schools, hospitals, clinics, with local government councils, a co-operative society and other local organisations in the Territory. Direct Australian Government assistance finances approximately two-thirds of the total operating costs of the AVA scheme.
10. During 1968, 150 indigenous students and trainees studied in Australia under awards provided by the Australian Government.
11. A further significant volume of aid to the Territory is channelled through religious organisations. In 1967/68, a total of $5,724,000 in gifts and subscriptions from abroad was received by religious missions which $1,756,000 was provided from Australia. Missions also received assistance from the Territory Administration ($3,905,000) and from other local sources ($1,078,000). The total funds available to missions in 1967/68 amounted to $12,763,000.
Aid from UNDP and the Specialised Agencies
Undp
12. Two major UNDP Special Fund projects are at present in operation involving:—
(a) assistance in the establishment of a secondary school teachers’ college at Goroka (UNDP contribution—$ US1,196,000), and
(b) a transport survey by consultants to IBRD, (UNDP contribution $US489,000).
Special fund requests are under consideration by UNDP for a vocational and industrial training project (provisional UNDP contribution-$US917,000) and for assistance in the establishment of a co-operative college at Laloki, (provisional UNDP contribution $US210,000). Papua/New Guinea has also been allotted a UNDP Technical Assistance Target of $US210,000. Four TA projects are in operation (UNDP contribution $US312,000) and two projects are in operation (UNDP contribution $US153,000). A further three projects have been approved but are not yet in operation and requests for two projects are under consideration by UNDP.
Unicef
13. A project is underway to further develop primary science education for which UNESCO2 is acting as executing Agency. The UNICEF contribution is estimated to be $US275,000.
Who
14. WHO has provided fellowships for overseas training and study by Territory health personnel and visiting consultants and advisors in various aspects of health. Requests for assistance involving estimated WHO expenditure of $US60,000 (1969) and $US90,000 (1970) have been approved.
15. Further requests for 1971 involving estimated WHO expenditure of $US150,000 are under consideration by WHO. Other WHO assistance which is not reflected in the budget figures is provided in the form of visits by consultants and advisers attached to the WHO Regional Office in Manila and participation by the Territory in regional projects.
Ibrd/Ida assistance
16. Since the first IBRD loan of $US7 million to the Territory in June, 1968, for a telecommunications project, the World Bank group has had a number of other projects under consideration for finance. Earlier this year an agreement was signed between IDA and the Territory Administration for a credit of $US1.5 million to assist in financing a small-holder palm oil project on New Britain. Bank appraisal missions recently visited the Territory in connection with the Upper Ramu hydro-electric scheme and further agricultural projects and assistance from the World Bank group is in prospect in both instances.
17. An IBRD economic mission visited Papua/New Guinea earlier this year to gather information on the Territory’s current economic position and prospects.3 Similar missions visited Papua/New Guinea in 1963 and 1967.
18. The suitability of certain road projects for IBRD/IDA financing will be investigated by a further Bank mission which is tentatively scheduled to visit the Territory in November.
[NAA: A1838, 936/20 part 6]
1 Direct Assistance Committee, Organisation for Economic Co-operation and Development. Australia was a member of DAC.
2 United Nations Educational, Scientific and Cultural Organization.
3 For a detailed explanation of the mission’s terms of reference, see letter, R.J. Goodman (Director, East Asia and Pacific Department, IBRD) to Randall, 22 January 1969, NAA: A1838, 936/2811/5). Inter alia, the mission’s report noted that while important economic development had occurred since the visit of the 1967 mission (see Document 99 and editorial note ‘The World Bank mission report, 1967’), PNG was ‘so undeveloped and confronted with various formidable problems it cannot be expected that these advances will bring any easy and quick solutions toward self-sustained growth. The Territory is still heavily dependent on external, mainly Australian, capital and know-how and Australian Government assistance, and this is likely to continue for a long time to come … The Territory still includes a large non-monetized sector whose share in the economy is declining but from which a large majority of the indigenes still derive nearly all their necessities of life … The [economic development] program … covers only the monetized sector, for which a fairly high growth rate is planned. This will, of course, bring more indigenes into the market economy and raise their income, but no detailed assessment of such impact has been made’ (IBRD report, ‘Current economic position and prospects of the Territory of Papua and New Guinea’, vol. 1, 21 July 1969, NAA: AA1979/97, box 10).