Canberra, 19 September 1966
Confidential
Papua and New Guinea—political relations with House of Assembly
The purpose of this submission is to acquaint Cabinet of recent developments in political relations with the House of Assembly particularly with regard to the Territory budget and to seek Cabinet’s endorsement for a proposed attitude in these matters.
Select Committee on Constitutional Development
2. The second interim report of the Constitutional Select Committee1 appointed by the House of Assembly was adopted by the House at its September meeting. The Committee reported that it was desirable that the elected members should as far as practicable assume some control over locally raised revenue. The Committee would be studying how this control should be exercised—whether by way of a separate local budget or by way of a budget committee working in conjunction with the Administration. The Committee would be seeking the views of the Administration on this question.2 (A separate submission takes up the question of changes in the composition of the House of Assembly recommended by the Committee.)3
Consultation in the framing of the budget
3. An elected member moved the following amendment to the motion for a second reading of the Appropriation Bill—
‘Whilst not declining to give the Bill a second reading, the House is of opinion that no future Appropriation Bill should be introduced without adequate control by elected members as outlined in paragraphs 48 and 49 of the Second Interim Report from the Select Committee on Constitutional Development.’
This refers to the possibility of greater participation in local financial matters discussed in paragraph 2.
4. This motion was put without prior notice and without debate and was carried by a substantial majority. The adoption of this motion seems inconsistent with the endorsement by the House of Assembly of the Select Committee’s views on this matter (paragraph 2 above).
Reduction in budget item
5. In the committee stage of the Appropriation Bill an amendment was passed to reduce the item for recruitment expenses to the Territory Public Service from $250,000 to $200,000. This motion was carried by 28 votes to 26 with all 16 of the Australian elected members supporting the reduction. A majority of the native members supported the Government.4
Taxation Bill
6. A Bill to bring lower income groups (i.e. Papuans and New Guineans) within the scope of income tax was introduced in June. At its September meeting the Administration proposed some amendments to meet suggestions and criticisms that had been made by elected members. The Budget then allowed for a revenue of $150,000 from this source. The House deferred consideration of the Bill until November to enable elected members to consult their electors on the effect of the several amendments.
Mining royalty
7. In June the House accepted against some opposition the Government view that royalties from minerals should accrue entirely to Territory revenue and not to the owner of the land.5 Maintenance of this principle is especially important in relation to the prospective large-scale copper mining project at Bougainville. At the September sitting the Elected Member for Bougainville introduced a Bill for payment to land-owners of 5 per cent of the mining royalties. This Bill will presumably be debated in November.
The political issue
8. These developments indicate a growing desire on the part of the House of Assembly to assert itself. Other cases may be expected to arise as the political situation in the Territory moves forward (Cabinet considered some proposals relating to constitutional advancement in February 1966).6
9. The particular matters referred to above reflect the wish of the House to have a more positive share by way of new procedures or arrangements in the making of financial decisions including the framing of the budget and to assert with force their views regarding the size of the Public Service in the Territory and the need for more emphasis to be given to the recruitment and training of local officers.
10. It does not appear that the action taken at the September meeting in relation to the budget should be regarded as a serious challenge to the authority or policies of the Government by the House of Assembly. Nevertheless, if the House were to reject a Government proposal which was fundamental to existing policy or if it were itself to seek to force changes in basic present policies a serious constitutional position could arise. It is proposed below that the Ministers should define a Government attitude towards the House of Assembly which would serve as a framework of reference in the further handling of the particular matters mentioned above or other matters that may arise in the future.
RECOMMENDATION
11. I recommend that Cabinet endorse the following attitude:—
(1) The Australian Government is responsible for the Administration of the Territory and consequently it must remain finally responsible among other things for the constitutional arrangements and the decisions on the Public Service and the machinery of administration (it is accepted policy to accelerate ‘localization’ of the Public Service).
(2) The Australian Government is responsible for the way in which the Australian grant is spent and under existing constitutional arrangements it must be responsible for the strategy of the Territory Budget. The Government is ready to improve the arrangements by which the elected members can participate more effectively in the framing of the Budget.
(3) A substantial part of the present Australian aid to the Territory is directed to accelerated economic development. The Government is willing to help in this way if the help is wanted. The help can only be truly effective if based on the co-operation of the House of Assembly and the people of the Territory. If policies that are fundamental to accelerated development are rejected by the House of Assembly or by the people it would follow that the Government should re-examine the position including the level of Australian aid. The Territory’s need of Australia is greater than Australia’s need of the Territory.
[NAA: A5841, 453]
1 See Document 67.
2 Guise wrote to Cleland on 8 September requesting the Administration’s views on the desirability and practicability of a separate local budget, to which Cleland replied by letter of 14 October in the following terms: ‘This matter has now been discussed by the Central Policy and Planning Committee. The present budget integrates each item into a planned whole and the Committee sees exceptional difficulties in planning and administering a separate local budget … I suggest that your Committee might wish to discuss the implications of a local budget with the Economic Adviser (A.W. McCasker)’ (NAA: A452, 1966/2960).
3 Document 67.
4 The recruitment and retention of expatriate public servants was a continuing concern of the Government. Barnes, Warwick Smith and new Administrator David Hay discussed the problem in April 1967: ‘The Secretary said … It was not easy to see how to reduce the resignation rate although at the moment it might not be all that high. With a full employment situation in Australia it was to be expected that this factor alone would aggravate the position. The domestic problem in the Territory appears to concern job insecurity and the Administrator expressed the view that only the highly devoted type of officer would be prepared to stay indefinitely and train younger locals. He felt that the resignation rate would increase in future … The Secretary felt that the Commonwealth should not carry the whole responsibility. Members of the House should adopt the right attitude in this matter. They expect expatriate recruitment but by unfair criticism they disparage the public servant generally … The whole question was mainly a matter of morale. The people should be told that they are wanted and valuable. Good people get discouraged by the local attitude. The Administrator’s Council should also assume some responsibility in this matter. The need for public officers should be accepted and said publicly … The Minister agreed but did not think the attitude of members of the House could be changed’ (11 April 1967, NAA: A452, 1967/2526).
5 See editorial note ‘Changes to PNG mining legislation’.
6 Document 13.