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SAM ABAL: Thank you Master of Ceremonies, thank you very much Minister Smith and Senator Sherry and the rest of the Australian delegation that are here with us today. And thank you also very much to my colleagues on the PNG side for their participation today at this bilateral meeting, together with all our officials on both sides.

I want to also express here, to pay our thanks to your former Prime Minister, Mr Kevin Rudd, firstly for setting forth the re-engagement of the Australia-PNG relationship on a much better footing. We and the Pacific were happy when that turned around — ready to engage and get our relationship up and going from a difficult period for the Pacific as well as for PNG, starting from the Bali talks. The engagement with the former Prime Minister opened that door and we are grateful for that.

Also for others who have helped our relationship go forth — Mr Bob McMullan, Mr Simon Crean and Duncan Kerr as well, who have helped us, with the colleagues on my side as well as your side to expand and deepen the understanding.

Yourself, Mr Smith, together with all those people, have been very good and I have been asked by my friends to thank you, my colleagues on my side to thank you, for furthering the relationship between PNG and Australia.

This last two and a half years has been very good in terms of expanding, deepening, and also making a closer working relationship at the government to government ministerial level as well as further down at the officials level. And so I want to thank you for that.

And also to congratulate your new Prime Minister, and the new government, and the new portfolio for yourself as well, and we look forward to continuing that pace, and I thank you for your warm words earlier yesterday to encourage us in that respect. That moment will not be lost by the department or the Prime Minister. Thank you very much for that.

The work that we have gone through today here, yesterday and today, for us were very important because on our side we have gone through with our full Cabinet some of the issues that come up in our bilateral meeting.

Although it was supposed to be a Ministerial Forum, understandably it had to be scaled down to bilateral ministerial level between myself and Minister Smith, and accompanied by colleagues from either side.

Cabinet on our side was very appraised of this situation and the (inaudible) mandates and I want to thank, on behalf of our side, all the cooperation and the understanding, the cooperation between your side, especially yourself, in achieving some of the work programs that were done.

The Cabinet did give us a mandate to carry through, and on my side I want to thank you, Minister, and your colleagues that we have achieved much of the work.

Especially in regard to the development cooperation — aid — relationship. Much publicity has been there regarding consultancy, technical assistance and issues of that nature, but also which brought the two Prime Ministers, the former Australian Prime Minister, and our Prime Minister to come together to agree for a new deal to be done in the Development Cooperation Treaty.

We have received that report and accepted the report, and as usual, proceeded to the officials to go through those important areas. On the PNG side we accept that report and we are happy that it brings to the forefront some of those concerns that we have had.

We want to have a better look at it, to understand it properly, and then hope that it will help us make the aid relationship better, and especially so, I agree with my colleague, as he has mentioned during our talks, that any good aid must always work itself to become not needed in the sense that, if it works well, it should capacitate the recipient country, and then for us to develop our own way.

And it is within this understanding and concept for which we, as a developing country, we have set forth our own vision 2050, the strategic plans and medium term strategies and plans, in order to try and achieve, in the long term, a self-sustaining economy.

And we see that it is important for us to do so with our own funds, as well as the benevolent funds coming from countries such as Australia. So we are locked-in ourselves with those plans, and as a nation trying to put its sectoral plans together, in order to achieve this in the coming years.

But thank you very much indeed for this very opportune meeting at a time when our Development Cooperation Treaty ends in 2010, and we are looking towards a new co-operation, in what should be big (inaudible).

It should not remain or be seen as a recipient-donor relationship. We want to expand from there, up towards a more economic relationship, that would hopefully become more as a trade partner business relationship between PNG and Australia and not only seen as an aid donor recipient, donor country basis. So that type of hope is building through our plans and programs now, and our long-term strategies are in place to be able to achieve a self sustaining economy for the long run.

So our meeting here underlines this, and we are happy that Australia is very receptive to this sort of plan, and our wish that we can go forth working together to achieve this.

I am happy to note the co-operation already related to the LNG and what is coming up ahead. Our ministers such as the Hon Arthur Somare and together with other colleagues have been involved in the lead up to these talks to put in the LNG-related issues together, and Australia has been good to accept to work with us on this.

Australia is a respected international community member country that is respected for the way it does its financial management and has got experience in sovereign wealth funds and we look forward to getting assistance from there and your help.

We see that as a growing way between PNG and Australia from an aid recipient-donor relationship to a trading partner. Somebody that for the long term that will align and emphasise and develop our two countries' relationship.

From our side we are happy that this has happened, and we would like to come up, possibly later, to look at an economic co-operation agreement which will house many of our relationship matters that are going on in different sectors, such as trade as well as LNG Joint Understanding, and all that kind of things, so we are happy with what has transpired today.

Thank you very much for your understanding, for the meetings that we have concluded, and for the joint communiqué in place. Thank you.

STEPHEN SMITH: Sam, thank you very much for that. Firstly can I thank you and your Ministerial colleagues for the productive nature of our conversations, for the warmth of your hospitality, and for the friendliness of your welcome. And could you also again relay to the Governor our thanks for his hosting our dinner last night.

This is my second visit to Papua New Guinea as Foreign Minister, and my first as Trade Minister. This meeting follows on from our successful Ministerial Forums in Madang, in Brisbane, and also our successful meeting last week on the LNG Project in Melbourne.

I think in the meeting we've had today and yesterday, there is a joint and shared appreciation that not only do we have a long-standing friendship which is deep in history, and meeting in Milne Bay itself reflects that.

Not only do we continue with that longstanding shared friendship and history, but we both see that the relationship now is potentially at a turning point.

And in part, if not a substantial part, that is caused by the very great potential which the PNG LNG Project brings to PNG's economic and social development, and why we are very happy to give as much technical and other assistance and advice as we can, to help see you bring that project to a successful conclusion.

So in that context, but also in the context of a review of our Development Cooperation Treaty, which our two Prime Ministers, then Prime Minister Rudd and Prime Minister Somare, initiated a couple of years ago, we have also, I think, come to agree that there are substantial improvements that we can make to the developmental assistance program.

We have tried in the past to do too much, we've spread the butter too thin, and we should focus on a small number of areas where we think we can make a real impact.

We have also agreed, and I think this is very important and does signal the turning point, that instead of having a Development Cooperation Treaty, we should place our relationship and our development assistance program under an economic cooperation treaty, an economic development cooperation treaty, dealing with trade, investment, economic development and development assistance matters.

As we've both said in the course of the last two days, the best development assistance program is a development assistance program which, in the end, comes to an end because capacity has been built for the individual nation state to deal with these matters itself.

When you look at those matters, plus the very important other matters that we have discussed and signed - can I say I am very pleased that we have just signed a second agreement on the management of the Kokoda Track.

This is a very important agreement, nothing more than the Kokoda underlines the history and the strength of the relationship. The Kokoda is an icon in the eyes of Australia, and so we are very pleased that Benny Allen and Peter Garrett, the two Environment Ministers, have done such good work to bring this to a conclusion, and this agreement will now last us until 2015. So that is a very good agreement we have signed.

The exchange of letters that we have had on enabling both government officials and health professionals to more easily cross the Torres Strait border to assist in medical and health matters is also a very significant, on the ground, practical initiative which all goes well for continuing to jointly address the health and quarantine issues which we know occur in our border on the Torres Strait, which is a complex and complicated one.

We are also very pleased that you have signed up for the Pacific Seasonal Worker Pacific Scheme allowing Papua New Guinea on an individual case-by-case basis to make applications to enter into that program.

We have as well dealt with a range of other matters which were reflected by an extensive communiqué, so extensive that you and I have been caused to signed it to give it official effect.

I have also been pleased to announce, in the course of our meeting, that as a second phase to Australia's support for the PNG churches, and the work that the PNG churches do in local communities for poor and disadvantaged people, particularly in remote areas, in the vital areas of health and education. We are pleased to announce a $50 million contribution to the work of the churches in PNG in those vital areas for the most disadvantaged people in those key areas of health and education. (Applause)

Can I end where you started. When the Australian Government came to office, there had been considerable strains in the relationship previously between Australia and Papua New Guinea. It was of great credit to both Papua New Guinea and Australia and also of great credit to former Prime Minister Rudd that, very quickly, we restored the relationship to its traditional basis. One of warmth and friendship and one of working together in co-operation and in partnership.

I said in my opening remarks, Prime Minister Gillard has asked me to relay, which I do again, her best wishes to you, her gratitude in receiving a very early message of congratulations from Prime Minister Somare, and her ongoing commitment and the ongoing Australian commitment to continue to do the things that we have reinforced and underlined over the past couple of days.

So Sam, to you and your colleagues, can I thank you and your officials very much for the good and productive work. There is always more work to be done. We have set our officials some important work to do on a pretty tight timetable, particularly as it relates to the LNG Project. But we do very much see this as being a very important meeting where jointly we recognise that this may well be a significant turning point in the relationship and a very significant turning point for Papua New Guinea's economic and social development. Thank you.

JOURNALIST: So where exactly do we go to on aid now? Following this review, the current agreement ends in 2010. What's happening on the aid front exactly?

STEPHEN SMITH: We've formally received the Review of the Development Cooperation Treaty. We've referred that to officials and we've asked officials to report back to us, in a preliminary way by the end of July and in a conclusive way by the end of August, to enable us to make decisions to set the scene for new arrangements effective from the 1 January next year.

We hope, its ambitious, but we hope, it will be in the context of a new economic cooperation or economic development treaty. There are some things we agree on already: that we've been trying to do too much over too many areas and that we need to narrow and reduce the focus to get maximum impact from what we do.

And whilst we've made no final decisions, there is a view that certainly continuing what we're doing in the education area is very important and continuing what we're doing in the health areas is very important.

But we've charged our officials with that task and we'll get a preliminary report in a couple of weeks and a final report by the end of August to enable enough time to implement new arrangements for 1 January.

JOURNALIST: What does that actually mean? You said, to focus on areas that need (inaudible) exactly, give us an example of what exactly?

STEPHEN SMITH: If you read the Treaty Review, you'll see it says a number of things. It says as a general proposition that we've been trying to render assistance in too many areas and as a consequence the successful outputs or the productive outputs have been reduced.

We think, as a general proposition, we need to narrow the focus, to reduce ourselves to a smaller number of areas, and importantly, from Papua New Guinea's point of view, to also make sure that those areas are aligned with the priorities that Papaua New Guinea as a Government itself sets.

And ongoing work in education, both at the basic education level — primary education is important. We've also got a separate review on university arrangements so we want to consider that in the same context.

And we have a very important health program, particularly, and including in the HIV/AIDS area.

So there are a couple of obvious areas where instinctively we think work needs to continue. What other areas there may be or what other areas fall off will be the subject of further consideration.

JOURNALIST: So are these highly-paid consultants wages going to be going down?

STEPHEN SMITH: Well that's another separate area. I announced in our Budget in May that we were going to be doing a review of technical advisers to ensure that we were getting value for money.

The facts are that over the most recent period, the number of technical advisers or the amount of money spend on technical advisers has been reducing as a proportion of the PNG development assistance budget.

We are also in agreement that we need to ensure there is value for money in that area, that we do get productive outputs, and I think instinctively, it will be the case that there will be a lesser amount of money spent in the technical advisers area.

But we have got a separate process on that. We don't need to receive a preliminary report on that because we initiated in our budget in May a review that we are expecting to get from officials on the same timetable — end of August — the result of that joint review on the ongoing use of technical advisers.

The other issue which we are also looking at, under the Strongim Gavman Program, is the possibility of having more Australian advisers sitting online in actual departments. Because we have got plenty of examples of where that process has been successful, including in the Kokoda Track Authority.

But we want to consider the Strongim Gavman Program and consideration of the advisers in a sensible and comprehensive way so we'll get the report on the technical advisers back from our officials jointly by the end of August.

JOURNALIST: It is also a lot easier to criticise Australian advisers than to say, your partners, who are often in the past have been criticised under the Howard Government.

STEPHEN SMITH: In this area, in development assistance, it is very easy to criticise people for not getting 100% success in difficult circumstances. That's the reality. And when you are dealing with often remote or difficult physical terrain before you start, whether it's in Papua New Guinea, whether it's in other parts of the Asia-Pacific, whether it's in Africa or the Caribbean, it is always very easy to criticise when you don't get 100 pre cent output in the development assistance program.

But what you do have to do, what both the development assistance partners have an obligation to do, is to make sure, as best we can, that we can get value for effort, value for money and value for output. And that's what, in the case of Australia and Papua New Guinea, what we're doing in terms of the technical advisers.

SAM ABAL: And we are agreed on all those issues that Stephen has mentioned. As a developing country, we realise that assistance that comes into the country is also complementary to what we have, to our own national fund as well.

Of course we need to streamline everything but, as I mentioned, there is a 2050 Vision. The country is starting to plan and organise itself, and putting itself through plans that will oversee it for the medium-term and the long-term.

And so, what we have now, is a Development Cooperation Treaty which comes to an end, so we have to come up with a new set of arrangements. It is timely that the Review comes into place. But every other funds within PNG or outside the government — the donors that come in, the assistance — we have to pool them to compliment our 2050 strategy, including the plans and strategies that we have.

That is important for us so that we have a whole-of-government approach to try and implement set policies.

We are happy with the (inaudible) timely thing that the Review has come into place, and also the push for an economic cooperation and development cooperation agreement.

And that will put in place the sectors and issues that we want to develop and the internal funds that we apply to those sectoral priorities — the development assistance is there to assist us.

I agree with the Review that the butter is spreading thin. You get a lot of criticism for that.

It is how you put the measuring stick yourself. If you say one to ten, then of course they will measure you out of ten. If you say there are two or three things you want to do, then you get a better percentage of achievement.

So focussing on sectors and looking at landmark projects and following some of the programs that our sectors want to do — that way we hope that when the review is completed we can come up with a program that we can measure ourselves against.

Also, within our own area, we need to reorganise and focus properly, and that is helped by our 2050 Vision as well as the planning processes we are doing.

So we welcome the approach now, that the cooperation agreement, as one comes to an end and the new one is coming up. And then the LNG is coming up and that pushes on our systems and our processes as well.

There are new developments — new possible LNGs and other developments, also pushes at our develop capacity to be able to handle with all those, so we are looking to Australia to assist us in those areas as well.

I think the opportunity is now for the officials, when they come through in July and through to August, it will help us re-assess and then try to focus on certain key areas where we regard technical assistance needs to be applied.

Some things we can do, we will do ourselves. Areas where we need technical assistance we can look into those, but it is not the number of consultants definitely, it must be the quality of the result of what is done that we must look at, rather than everybody saying there are too many consultants.

But, right now, even in the need of the LNG-related assistance in macroeconomic policy planning management there, we might have a couple of people there but the cost might be high.

You cannot just look at the number of consultants, that is a quick thing to say there, but they have to be applied and focussed into certain areas where the Papua New Guinea system requires. This we will make known to you and we cooperate in this manner to achieve what we want. It is not like just opening up everything. But there are serious systems where we would like in-line positions where they can assist us there.

Criticism has been because of the large funds or percentages used in the consulting area, but if we can focus and get landmark things that are going then I am sure even Australian taxpayers would like to see something that is a landmark in PNG, and we want to see that too.

It really helps with our relationship that people know that we are not only using our own funds properly, but also other people's funds properly. So we are looking to increasing our ability to plan and apply our resources openly and properly.

JOURNALIST: Has the issue of your approach to asylum seekers been raised, and can we ask what, Minister Abal, your comments are?

STEPHEN SMITH: I'm happy to go first. I took the opportunity while I was here today of giving Sam a brief on what the Prime Minister had announced at her speech at the Lowy Institute. I gave him an outline of that, indicating that, as we are doing with all of our friends and partners in the region, our officials will conduct formal briefings over the next days and weeks.

So I took the opportunity of giving Sam an update on the proposal which the Prime Minister launched during the week, underlining the importance of the United Nations High Commissioner for Refugees' involvement and approval, underlining the regional nature of it, underlining the need for resettlement countries in the region to also be involved because there are obviously settlement and resettlement issues. So it was a good opportunity to brief Sam on the proposal.

JOURNALIST: Was there any talk of establishing one of them here, re-opening Manus?

STEPHEN SMITH: No I just gave Sam a brief on the proposal. As the Prime Minister herself has said from the first moment, this is the start of the conversation, it is not and can't be a unilateral or bilateral conversation. It has to be a genuinely regional conversation, either under the auspices of the Bali Process or generally throughout the region. So I gave Sam a briefing along those lines.

SAM ABAL: I was advised by Stephen on this, that the Australian Government has come out with regarding the asylum seekers. At the moment, the only brief I have is the one from Stephen Smith, but I think, for us, we have the place up in Manus at a time that the policy was to close it off and that is where we are as far as policy and that is concerned. For the moment we have not considered anything. Sometimes I face resistance from within. It is the first brief I have gotten from Stephen and I cannot say much more than that until I am given any other mandate.

JOURNALIST: But it is fair to say that it potentially could be revisited?

STEPHEN SMITH: That would be entirely a matter for PNG to indicate to the region that it had a particular idea or role to play. Sam has made it clear that he is not proposing to do that at this stage, PNG may not do that at all.

But certainly I have not sought from Sam any indication about any particular location. I have made the point that the Prime Minister has spoken to President Ramos Horta from East Timor. She has also spoken to Prime Minister Key from New Zealand because of New Zealand's importance as a resettlement country and also spoken to United Nations High Commissioner for Refugees Guterres.

As I say, this is something for the region and not for unilateral or bilateral decisions.

[ENDS]

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