Australian Aid to PNG - AusAID

Although there were many reasons for the joint desire to reduce budgetsupport, a key reason for the parallel increase in programmed assistance was toallow more effective targeting of Australian assistance to areas of priorityneed, in support of Papua New Guinea’s own development objectives. Annex Aseeks to capture some of the flavour of changing emphases in aid programpriorities in Papua New Guinea, summarising the main objectives andstrategies, as well as the catalysts for them.As the volume of available programmed assistance increased during the 1990s,the areas prioritised for Australian support were influenced by drastic changesthat occurred in Papua New Guinea’s own circumstances. The financial crisisand Rabaul volcano eruptions of 1994, the need to restore peace and providewelfare support on Bougainville, serious drought and frosts in 1997–98, andthe impacts of the Asian financial crisis of 1997, exacerbated the country’salready enormous development challenges through the 1990s. Prior to this,Papua New Guinea had managed its economy reasonably well sinceindependence and had achieved development progress. 10When programmed assistance was introduced in 1986, Papua New Guinea’spriority areas for Australian assistance sought to accelerate progress towardsself-reliance. Early assessments indicated that the shift from budget support toprogrammed assistance was generating significant benefits for both countries,improving both the effectiveness of Australian aid and its broader impact onhelping Papua New Guinea overcome key constraints to self-reliance – the lackof educated people and scarcity of capital. 11 However, as successivegovernments struggled to deal with growing economic and social problems inthe 1990s, it became clear that governance and institutional capacityconstraints posed the main challenges to achieving self-reliance. Futuredevelopment progress would depend on strong leadership, integrity andtransparency of decision-making, rigorous prioritisation of public investment,and a skilled, efficient and incorruptible public service. Priority in Australia’said efforts since about 1997 has been given to helping Papua New Guineaachieve economic stability and social cohesion.In 1995, both governments agreed that performance benchmarks would beintroduced to monitor reforms crucial to the success of jointly programmedaid. 12 A review of performance against these benchmarks at the September 199610 One Clear Objective: Poverty Reduction Through Sustainable Development, Report of the Committee of Reviewof Australia’s Overseas Aid Program, Commonwealth of Australia, April 1997.11 Joint Parliamentary Committee on Foreign Affairs, Defence and Trade Inquiry into Australia’s Relations withPapua New Guinea: Development Cooperation, Australian International Development Assistance BureauSubmission, August 1989.12 Benchmarks for 1996 were agreed for the health, education, infrastructure and forestry sectors.28 The Contribution of Australian Aid to Papua New Guinea’s Development 1975–2000