Australian Aid to PNG - AusAID

7 FINDINGS AND RECOMMENDATIONSPapua New Guinea’s development record to date is generally regarded as poorbecause, by international standards and in comparison to similar countries, itslevel of development remains extremely low based on most key economic andsocial indicators. Nonetheless, improvements have been made in the standard ofliving. While there are some differences between data sources in the estimatedextent of the improvement, it appears reasonable to conclude that key socialindicators have improved substantially since independence.These improvements have been achieved despite some deep-rooted developmentconstraints, including consistently weak government capacity for servicedelivery, a deteriorating law and order situation over many years, an unstablepolitical environment, and a firmly clan-based civil society.Quantitative analysis of the sources of development is precluded by a shortageof reliable data. But because these development gains are to an extentdependent on the quality of public programs, it appears reasonable to attributeat least some of the improvements to effective public programs. In reaching thisconclusion, it is important to recognise that credit for the gains in developmentshould also be shared with the communities themselves, the NGO movementand, in particular, the churches.At an aggregate level, it is not really possible to separate out the effects ofGovernment and donor-funded programs. For much of the period there wasessentially no difference, with most donor funds provided by Australia asbudget support. However even under program support there are insufficientdata to distinguish the effect of government versus donor programs throughaggregate analysis. But by implication, it appears reasonable to conclude thataid has generated at least moderate development returns in improving theefficiency, effectiveness and impact of key public programs. It follows that itappears reasonable to conclude that aid has made a significant contribution toalleviating poverty. Education and health are important dimensions of thepoverty problem, so the improvements made over time to the standards ofeducation and health are likely to have eased poverty over time.In reviewing these conclusions, the implications of fungibility need to be keptin mind. A widely held concern is that by boosting the funding available to thebudget and relaxing the budget constraint, aid may have seen some low valueor inappropriate activities or practices emerge that otherwise could not havebeen afforded. So even though aid may be allocated to a specific, desirableexpenditure, the total impact also needs to consider the consequences of anyexpenditure that is in effect indirectly funded by aid.56 The Contribution of Australian Aid to Papua New Guinea’s Development 1975–2000