Australia must focus on the people of PNG, not the government of PNG!

For the first time in a long time Papua New Guinea has been in the news in Australia, and especially in the finance pages and platforms.

While any coverage on PNG is to be welcomed, the news is a mixture of good and bad – in this contribution I want to focus on the "bad": in the hope it can be stopped!

The "good news" relates principally to the proposal for Telstra, financially backed by the Australian Government, to buy the largest telco in Papua New Guinea and the South Pacific – Digicel. The purchase is far from certain and the critics are really lining up..

I first suggested Australia needed to encourage the Australian telco sector to seriously look at Digicel, and do so with government support. While blocking China buy it was my initial reason for doing so I have come to the conclusion there is a far more potent reason for the proposal to be advanced positively, though of course consistent with shareholder concerns.

Digicel has 90 per cent mobile phone and related modern communications such as internet access in Papua New Guinea, and upwards of 60 per cent coverage in Vanuatu, Tonga, Nauru, and Solomon Islands. Coverage in Fiji is more diverse, but it remains a player.

If Telstra acquires Digicel, it should do so with a view to strengthening Australia's people-to-people and business-to-business links with PNG and the South Pacific. That would mean upgrading the ageing technology Digicel uses, offering competitive rates to domestic and business customers, and generally modernising mobile and other technology in a region where it is critical.

The second potential "good news" story relates to the proposal by the Australian giant, Santos, to merge with (or takeover) PNG's largest company, Oil Search. This proposal has a long way to go and other potential buyers such as Woodside and Exxon may seek to intervene.

But if a major Australian company acquired a controlling interest in Oil Search it would mark a welcome reversal of the recent retreat from PNG of major Australian entities such as the ANZ Bank and Westpac Bank. It is a proposal that is worth keeping an eye on in the coming weeks.

Bow to the bad news. This week, The Australian's Ben Packham has an interview with the Minister for the Pacific, Senator Zed Seselja, following his recent short visit to Papua New Guinea. The Minister clearly indicates that Australia is considering providing more "budget support" for Papua New Guinea – in other words more cash!

It has been my hope that this "cash payment" nonsense had ended. In the last two years Australia has given PNG over $450 million in budget support. It is supposedly a loan, but the first two loans have been rolled over, and are unlikely ever to be repaid.

I assume the cash handout is partly designed to win Australia "favour" over China within the PNG Government. If that is the case then it has been an utter failure!

If Australia were to give another $250 million this year it would equate to PNG Kina 650 million. The projected PNG fiscal deficit for calendar year is at least K7.5 billion, yes billion!

It is clear that another cash handout to PNG won't fix the fiscal deficit or really improve basic services. With national elections now less than a year away the temptation will be for the PNG Government to again disburse it via politicians and for national government recurrent costs.

And it won't stop China expanding its influence in our closest neighbour! During this year alone China has signed up the Papua New Guinea Government, and state owned corporations to "belt and road" and other infrastructure deals worth at least K6 billion! And it is all borrowed funds that PNG had to repay and linked exclusively to PRC contractors carrying out the work.

And if anyone doubts the growth of China's influence just read my recent article on the grovelling comments by the PNG Foreign Minister when in China as a state guest!

If Australia has a "spare $250 million" to "lend" Papua New Guinea it needs to do so in a way that directly benefits the people of our closest neighbour – not its government.

I have in recent contributions outlined a number of specific areas that Australian assistance can bypass politicians and the bureaucracy and truly enhance the living standards, and vital services, the good people of Papua New Guinea desperately need.

If we have $250 million spare – and it's probably money we will have to borrow as well – then here are just two projects that can be funded this year. One relates to Daru and the second vital hospital/health services.

Late last year I helped expose plans for China owned entities to build a massive port and "fisheries industry" at Daru, the PNG town nearest to Australia. While it does not seem to have progressed significantly, it remains on the agenda. If it proceeded, Australia would have another China controlled port within kilometres of Australia.

In response the Australian High Commissioner was forced to sign a MOU with the Governor of the Western Province, in which Daru is located. It can be accessed on the Australian High Commission website. I won't comment further on it because it is fundamentally meaningless.

What Australia should do is negotiate with the PNG and the Western Province governments to immediately fund, and oversee, the ungrading and building of vital community services on Daru.

The objective should be to give the long suffering people of Daru basic services such as reliable and clean water, sewerage, affordable electricity and a modern port suited to the needs of Daru's businesses, including fisheries. And also totally rebuild hospital and health care services for a community where typhoid, malaria, high infant mortality and now Covid-19 are critical challenges.

If this work was given to Australian contractors I am assured it could be done in a relatively short period, and at a cost of around $100 million, or PNG Kina 250 million.

The objective should be to give the people of Daru – upwards of 15,000 – the same level of basic services that are enjoyed by the people of Thursday Island and the Torres Strait, including the islands closest to Daru and Papua New Guinea.

This would deliver a body blow to any proposals China might have – proposals that would deliver no real improvement in basic services for the people of Daru.

But time is not on our side. China is skilled at influencing politicians, especially when elections are just around the corner. That is the position in PNG today – campaigning is already under way for elections in mid-2022.

It is surely a "no brainer" for Australia to immediately focus on the good people of Daru who have been crying out for vital not just quality of life services but life- saving services?

The second $100 million plus should be immediately and directly invested in the further upgrading of the Angau National Hospital in Lae. Australia has built three new wards, a deal negotiated by Peter O'Neill with Kevin Rudd when Australia wanted a safe site to house asylum seekers.

Australia should offer to effectively take control of Angau, not just for the benefit of the people of the city of Lae, but also for the many provinces that could benefit from, medicines and services emanating from and efficient and well run major hospital.

If Australia delivered, and delivered urgently, both these projects it would be money well spent. If on the other hand it persists with another cash handout it will be yet another significant foreign policy and regional policy in particular, failure.

In these challenging times, we simply cannot afford that the happen!!