Aid Program Performance Report 2015-16

Aid Program Performance Report 2015-16

Papua New Guinea

September 2016

1.Key Messages

Australia’s program of development assistance in Papua New Guinea (PNG) demonstrated solid progress against economic growth objectives and mixed performance in human development and governance objectives in 2015-16. Most programs are working as intended, meeting seven out of 10 performance benchmarks.

Australia’s program is guided by a number of frameworks including the PNG Aid Investment Plan 2015-16 to 2017-18 (AIP), released on 30 September 2015. The AIP sets three strategic and interlinked objectives that are in line with PNG priorities and where Australia can add value: promoting effective governance; enabling economic growth; and enhancing human development. The AIP informed the development of the PNG-Australia Aid Partnership Arrangement 2016-2017 (Aid Partnership) which was signed by PNG and Australia on 3 March 2016.

The Aid Partnership and the Joint Understanding between Australia and Papua New Guinea on further bilateral cooperation on Health, Education and Law and Order (Joint Understanding) sets out the mutually agreed development priorities and commitments. The Aid Partnership affirms the priority sectors of health, education, law and justice, transport and governance. Improving the lives of women and girls is a cross-cutting objective. The Aid Partnership builds on PNG’s development cooperation frameworks including Vision 2050 and the Medium Term Development Plan 2 (2016-2017) and is consistent with PNG’s first Development Cooperation Policy (launched in April 2016) on the use of donor funds and government resources.

Some of the notable development outcomes of Australian assistance in 2015-16 include:

• 
  the launch of the Pacific Leadership and Governance Precinct (the Precinct) in support of PNG’s program of public service leadership renewal. The Precinct has delivered courses to more than 1,100 PNG students since February 2015
  
• 
  training 2,640 women and 4,051 men in public service core skills
  
• 
  supporting more than 1,100 Papua New Guineans to study in Australia and in PNG through Australia Awards, with a focus on developing skills and knowledge; building enduring people-to-people, country and professional links; and influencing positive change. For the past three years at least half of scholarships have been awarded to women
  
• 
  providing access to better standards of justice for more than one million PNG citizens by contributing to the training of more than 2,000 village court officials (12.5 per cent women), covering 42 per cent of Village Courts in 461 target locations
  
• 
  completing construction of 150 classrooms, 55 teachers' houses, and 57 ablution blocks in line with PNG Government specifications, benefiting more than 5,000 girls and boys
  
• 
  supporting more than 1,500 survivors of family and sexual violence to access services such as counselling; case management; and in some circumstances in the Highlands, repatriation and reintegration for those who experienced or were at risk of sorcery-related or extreme violence
  
• 
  an improved tuberculosis (TB) response in PNG, contributing to an increased TB detection rate in Western Province and an increase in the number of patients receiving and completing treatment. Better clinical management of drug-resistant TB cases at Daru General Hospital led to an increase of people staying on treatment from around 40 per cent in 2011 to more than 97 per cent by 2016.
  

While Australia remains PNG’s largest bilateral aid donor, the relative value of our aid investments has been declining – from about 40 per cent of PNG’s budget appropriations in 1975 to about eight per cent now. Australia’s development assistance is increasingly focussed on leveraging PNG’s own resources and those of the private sector to support growth and deliver services to Papua New Guineans.

2.Context

PNG has a special place in Australia’s foreign relations and the bilateral relationship is one of our most wide-ranging. Australia is PNG’s largest trading and investment partner ($6.4 billion in two-way trade and approximately $19 billion of Australian investment). A stable and prosperous PNG is in both countries’ interests.

PNG has experienced over a decade of comparatively robust economic growth, driven by high international prices for PNG’s exports and construction activity related to its liquefied natural gas project. But economic growth (Total Real Gross Domestic Product) fell from 11.8 per cent in 2015 to a projected 2.2 per cent in 2016¹ due to declining international commodity prices. The reduced revenue placed PNG’s fiscal position under pressure. Balance of payments difficulties look likely to continue for the immediate future and place pressure on the PNG budget. Cuts have already been made to core government services.

PNG graduated from ‘low income’ to ‘lower middle income’ status in 2008, but around 87 per cent of the population live in rural areas and remain dependent on agriculture for much of their livelihood². PNG has significant development challenges including poor health and education indicators, ageing infrastructure and capacity constraints in the public service, exacerbated by its vulnerability to natural disasters and a geographically-dispersed population. This makes delivery of government services difficult. The following indicators reflect the scale of PNG’s challenges.

• 
  The 2015 United Nations Human Development Report (HDI) ranks PNG 158 out of 188 countries in the Human Development Index (compared to 157 out of 187 in the 2014 report and 126 out of 174 countries in 1995). The HDI focuses on three dimensions of human development: to lead a long and healthy life; the ability to acquire knowledge; and the ability to achieve a decent standard of living.
  
• 
  Violence against women remains common and pervasive, with studies indicating two out of three women have experienced violence³. Médecins Sans Frontières (MSF) data released in March 2016 showed around 3000 survivors of violence sought care for the first time from MSF-run Family Support Centres in Port Moresby and in Tari, in the Highlands, in 2014 and 2015. Most had been injured by their partners, family or community members. Around 97 per cent were female. Children made up one in three of all family violence consultations in Port Moresby, and one in eight in Tari.
  
• 
  At least 460 mothers died during childbirth in 2015. Although PNG’s maternal mortality ratio has fallen by approximately 50 per cent since 1990 to an estimated 215 deaths per 100,000 live births in 2015, the ratio remains the highest in the Pacific⁴.
  
• 
  In Transparency International’s 2015 Corruption Perceptions Index, PNG ranked 139 out of 168 countries compared to 145 out of 174 in 2014. PNG’s ranking has remained static over a number of years (PNG was ranked 118 out of 133 when first listed in 2003).
  

PNG is among a group of developing countries that did not completely fulfil any of the Millennium Development Goals (MDGs). PNG made progress on a number of targets and gained experience from implementing the MDG program⁵. PNG localised and integrated a number of MDG indicators into its development frameworks, indicating a strong appreciation of the need to link targets to national goals and encourage ownership of challenges, and has stated its commitment to achieve the Sustainable Development Goals by 2030.

Australia’s estimated $549.7 million contribution to PNG’s development in 2015-16 (PGK1.3 billion⁶) is approximately 68 per cent of total Official Development Assistance (ODA) to PNG, a relatively high proportion for one donor by international standards. Other bilateral donors are New Zealand, Japan, the European Union and the United States of America. China is an emerging donor, partnering with Australia and PNG in a trilateral malaria project in the reporting period. Multilateral partners are critical to development in PNG, including the Asian Development Bank (PNG’s largest multilateral development partner with a US$1.1 billion active portfolio as at 31 December 2015⁷), the World Bank and the Global Fund to Fight AIDS, Tuberculosis and Malaria.

Outlook

Australia continues to respond to the new directions for development assistance, agreed with PNG in the 2014 aid assessment⁸, to align the program with shared political and economic objectives. These include the promotion of PNG’s economic development and security, which are key to both our nations’ interests. By 2017, we aim to allocate 50 per cent of the bilateral aid budget to infrastructure – in recognition that inadequate and poorly maintained infrastructure constrains economic growth – and 30 per cent to aid for trade and private sector activities. We will continue with key investments in PNG’s future leadership (such as the Precinct) across the political, bureaucratic, business and social sectors. In recognition that PNG needs significant financing to overcome its development challenges, we will seek to assist PNG to facilitate finance, develop its own capacity to deliver services, and prioritise and plan economic and social infrastructure. We will support and coordinate policy dialogue and investments – such as in agriculture – that promote inclusive and diversified economic growth and increased PNG trading capacity. We will pursue investments that are in PNG’s and Australia’s national security interests including through the law and justice sector, transport security and in response to health risks. Australia will scale up support for PNG’s delivery of its elections in mid-2017.