The Guardian 25 May, 2005

Budget 2005-06:
Boomerangs & "law ’n’ order"

Bob Briton

Slight increases in the 2005 Australian aid budget have scarcely been noticed and have not been warmly welcomed by aid workers in the field. Australia now commits just 0.28 per cent of its Gross National Income (GNI) to aid; up slightly from its previous 0.25 percent. This is way below the average donor nation contribution of 0.42 per cent and way below the 0.7 per cent of GNI target that Australia committed to with the signing of the Millennium Development Goals.

However, the biggest failure of this year’s aid budget (along with many of its recent predecessors) is that its emphasis is on top down "law and order" programs that dovetail with the Howard government’s strategic outlook. As aid lobby group AID/WATCH noted: "Poverty alleviation failed to get a mention in Minister Downer’s 2005 aid budget." It noted that 17 per cent of the entire Australian aid program now goes to projects like the Enhanced Cooperation Program (ECP) in Papua New Guinea.

The five-year $1 billion program in PNG stalled last week when the country’s Supreme Court ruled that the immunity from prosecution under PNG law granted to members of the Australian Federal Police (AFP) was unconstitutional. While Howard and Downer have pledged to find ways around PNG law, the 149 AFP officers previously stationed in Port Moresby have come home. The background to these events speaks volumes about the type of "aid" that the Australian government has increasingly favoured in recent times.

Tensions about the role of Australian government personnel have been building and would have been a political factor in the decision of the PNG Supreme Court. Local media like the Port Moresby National have reported that more than 40 per cent of ECP funds are dedicated to AFP salaries and accommodation. It was also noted that the major real estate agents getting fat off this situation are owned by Australian interests and while PNG contractors might get some benefit from the operational and logistics spending, Australia appears to have little interest in boosting PNG’s own law enforcement capacity.

The Royal PNG Constabulary is set to get only around $56 million in direct assistance from Australia over the next five years. Other reports have it that PNG police regularly seek donations from locally-based Chinese businesses to buy petrol to carry out their duties.

The assistance to local authorities must be contrasted to the $339 million previously allocated for a similar period for AFP salaries and accommodation and $394 million for logistics and operational costs. Claims that the Enhanced Cooperation Program is a "nation-building" exercise in the former Australian colony look ridiculous in light of these figures.

Aside from the amount of "aid" money the federal government has allocated for its own law and order agencies, AID/WATCH has also criticised the high proportion of "tied" aid that locks taxpayers into supporting favoured Australian businesses.

Over 40 per cent of Australian aid is officially tied and institutions such as the World Bank have estimated that it is 20-25 per cent more expensive to deliver than untied aid. A small number of Australian companies consistently get the lion’s share of aid dollars. Financial year 2003/04 was typical. In PNG, the top six contractors — ACIL Aust. Pty Ltd, IDP Education Australia Ltd, SAGRIC International, AusAID PNG Roads, GRM International and IDSS — get 16.2 per cent of AusAID contracts in PNG but cost 65.42 per cent of the total $771.87 million value of contracts. Overall, the situation is similar. The top 10 companies (many of them prominent in the PNG list) get 13.68 per cent of AusAID contracts which are worth 51 per cent of the value of contracts.

The workings of this self-interested "boomerang aid" are now well understood in our region. PNG has received over $15 billion of Australian aid since it achieved independence in 1975. However, as AID/WATCH points out, "… this money appears to have had little significant positive impact for most people who live there. Human Development Indicators (HDI) in PNG have improved only minimally in the last 30 years."

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