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4-6 May, Cairns

Opening of the Australia Papua New Guinea Business Forum

Introduction

I'm delighted to be attending the 24th Australia Papua New Guinea Business Forum and Trade Expo especially given my long personal association with PNG.

Australia and PNG enjoy a vigorous trading relationship, which the Australia-Papua New Guinea Business Council (APNGBC) and the Business Council of Papua New Guinea (BCPNG) play a valuable role in facilitating.

Australia is by far PNG’s most important trading partner. Although two-way trade is dominated by petroleum, it is also highly diverse - some 3987 separate Australian companies exported to PNG in 2006-2007 (7th highest for Australia according to Austrade) with, I think, significant potential for many more to do business there as the PNG economy strengthens and diversifies over coming years.

It is appropriate that the theme for this year’s Business Forum is ‘Australia and Papua New Guinea: Business Partnership for Growth’. It fits in very well with the Government’s commitment to new policy approach in the Pacific based on respectful diplomacy, finding common agreement where possible and grounded in forging genuine partnerships between Australia and our neighbours.

This Australian government is very aware that no country can lift itself out of poverty without a strong private sector. We are committed to working closely with the PNG government and the business community to achieve this.

We see particular value in private-public partnerships for development. PNG already has a number of impressive examples of such partnerships, including those based at the major resource projects and the partnership on HIV/AIDS.

These are themes I will elaborate on today but let me start with the:

Port Moresby Declaration

Unlike the bilateral trade relationship, Australia’s political relationship with PNG has been difficult in recent years. Rejuvenating it is a high priority for the new Australian Government. Mr Rudd’s historic state visit to Port Moresby and Goroka in March was a milestone in setting a new direction. The new approach was crystallised in the Port Moresby Declaration, which Mr Rudd issued on 6 March. It is a 20-point plan that maps out Australia’s commitment to re-engagement with the Pacific.

Central to this new policy focus is the negotiation of Pacific Partnerships for Development, which will provide a new framework for Australia and Pacific Island countries to commit jointly to shared goals.

Under a Pacific Partnerships, our Government will forge bilateral contracts of shared responsibility and obligation between ourselves and Pacific Island countries, to achieve the Millennium Development Goals and provide better development outcomes for countries in the region.

These Partnerships will embrace:

Working closely with Hon Bob McMullan MP, Parliamentary Secretary for International Development on the Pacific Partnerships for Development.

We have selected Papua New Guinea and Samoa for the first Pacific Partnerships for Development, and negotiations with both countries are underway.

Ministerial Forum outcomes

I believe this new policy approach was crucial to the success of the 18th Australia PNG Ministerial Forum in Madang, which I attended on 23April. Six Australian Ministers and three Parliamentary Secretaries attended the Forum, the largest delegation Australia has ever sent to PNG. PNG Foreign Minister Abal led a PNG delegation of 17 Ministers.

I was also very pleased to have the opportunity of meeting representatives from the bilateral business councils at the Forum.

I would like to thank the councils for their active participation at the Forum and the detailed submission that was presented to Ministers.

I will be addressing a number of the issues raised in that submission today.

During the Forum, Australia and PNG signed agreements on preservation of the Kokoda Track, police cooperation, tourism cooperation and establishing an Australian Tsunami Warning System.

We also agreed at the Forum to rejuvenate and rename the Enhanced Cooperation Program - it is now the ‘Strongim Gavman Program’ - focused on strengthening and empowering government and we will continue to see senior Australian Government officials working to build capacity in key PNG Government agencies, many of particular concern to business.

One prominent example is in the area of visas and immigration. Australia is working closely with PNG to build up staff numbers and skills, with the aim of reducing processing times and other blockages. This will of course be vital for PNG and business in coming years as they recruit the staff needed for the big resource projects and other economic projects.

SGP officials will work closely with their PNG counterparts to strengthen financial management and budget controls, building on progress made in this important area.

At the Forum we also committed Australia and PNG to a stronger bilateral business relationship. We will be consulting closely with the PNG government about how to enhance dialogue on issues important to business, including through regular meetings between business representatives and senior PNG and Australian government officials. We would hope the first of these could be held early in the second half of the year.

But most importantly, Australia and PNG agreed at the Ministerial Forum to immediately start negotiations for a bilateral Partnership for Development in time for the Pacific Islands Forum Leaders’ Meeting in Niue in August 2008. Through a bilateral Partnership for Development, Australia will seek to strengthen and expand its current development assistance further, to make progress on key development challenges, and promote stability and prosperity in PNG. As we develop the Partnership, we will be keen to work with business people who share our interests in, and vision for, the advancement of PNG.

Challenges

PNG faces many challenges, as both the BCPNG and the APNGBC highlighted in their Joint Submission to the Ministerial Forum.

Australia is committed to helping PNG through our aid program, valued at $355.9 million this year. During his visit to PNG Mr Rudd announced an increase of $25 million for the 2008-09 financial year.

Our development assistance program recognises the challenges PNG faces in building and maintaining infrastructure. We will be looking at ways we can further expand our commitment in this area including as part of the Pacific Partnerships for Development.

We recognise that law and order, including the operation of an effective criminal justice system, is essential for investment and business. The Law and Justice Sector Program is one of our biggest programs in PNG. I am sure that the business community will be delighted to hear that at the Ministerial Forum we announced agreement with PNG for the placement of 11 Australian Federal Police advisers with the Royal Papua New Guinea Constabulary, the first such re-engagement since the ‘Wenge decision’ led to the withdrawal of Australian in-line police in 2005.

Unless interventions to address the spread of HIV/AIDS in PNG are scaled up, the workforce will have declined by 12.5% by 2025, and GDP will be 1.3% less than predicted. From 2007, we will provide $178 million over five years through a broad program of support for PNG’s response to HIV and AIDS. This includes $100 million through PNG-Australia HIV/AIDS Program (Sanap Wantaim), which commenced in 2007, and funding through health sector, law and justice, civil society and private sector organisations. This funding focuses primarily on preventing the spread of HIV and also on improving treatment, care and support for those infected and affected by HIV and AIDS.

Australia is very pleased to be a partner with the Business Coalition against HIV/AIDS, particularly in relation to developing a business case for HIV and AIDS prevention and working to develop an appropriate HIV and AIDS workplace policy with a focus on eliminating workplace discrimination and ensuring private sector employees have access to HIV/AIDS treatment and support.

We welcome the excellent contribution that the Australia-PNG business councils have made in this area.

Education and the development of a skilled workforce is vital to PNG’s economic and development prospects, as well as to businesses operating in PNG. In the context of the Partnership for Development, we have the opportunity to expand our support for basic education in PNG, consistent with the Millennium Development Goal of universal basic education. We are also willing to discuss how we might work with PNG to strengthen higher education.

Aside from development assistance, the future of PNG – as with any country – will ultimately depend on getting economic policy fundamentals right. Ministers had a very good discussion on this at the Ministerial Forum:

PNG’s present economic position provides an ideal environment in which to undertake microeconomic reform.

PNG’s strengths

While considering these challenges, it's important not to lose sight of the fact that PNG also has a number of important and impressive strengths. For instance, PNG’s abundant natural resources present it with the opportunity to enter a new economic phase in its development. We will be watching with interest the progress towards developing PNG’s extensive gas reserves and want to assist the PNG Government’s build capacity to capture the benefits of its major resource projects for its long-term development.

At the same time, there is enourmous potential to expand agriculture and improve agricultural productivity and better link agricultural producers to markets. This is important considering the long-term upward trends in food prices internationally.

PNG’s other great asset is its people. The Government is strongly committed to ongoing communication with the region on its deep interest in labour mobility. However, this is not an easy issue, and we are taking time to consider and consult on all aspects of it.

We are studying this complex issue carefully. Australia is very keen to learn from the New Zealand experience and we look forward to having a Pacific-wide discussion on the issue at the next Pacific Islands Forum Meeting in Niue.

PACER Plus

One of the most important things any country can do to improve its business environment and the overall living standard of its people is free up the flow of goods and services through trade. Negotiations on a Pacific free trade agreement – ‘known as PACER Plus’ – are expected to start soon.

More open trade will be good for all Pacific economies. We know that this is of keen interest to the business councils. We need to be clear-eyed about the problems likely to be encountered and acknowledge that PACER Plus arrangements will take time to develop and must take account of the needs of all stakeholders, particularly smaller countries.

Australia can offer the benefit of its own experience in this regard. In opening up our own economy under the Hawke and Keating Governments, long-term benefits have been self-evident but we must remain sensitive to the real issues that our neighbours will face in grappling with this important economic reform, and do what we can to assist them through it.

By working closely and in partnership with our Pacific neighbours on these issues, we can play our part so the region and its people achieve their economic and social goals and aspirations.

Conclusion

Our Government has a new approach to PNG and the rest of the region. We aspire to assist the region deliver on its enormous potential not least because we recognise that Australia is part of it

We are all in this together.

Our approach is based on mutual respect and seeking common agreement, and grounded in forging new partnerships with our near neighbours.

Australia shares its history and its future with the PNG and the broader region. To this end, PNG’s challenges are our challenges, and we have a stake in helping PNG meet its responsibilities and achieve its aspirations.

The bilateral business community has a key role to play in this, and we are committed to working with you.

Media inquiries: Mr Kerr's office - 02 6277 4991

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