Australian Aid to PNG - AusAID

However, it seems reasonable to argue that the poor state of governance wouldhave seen at least some of the inappropriate practices take place even in theabsence of aid. A key factor in this regard is the ability for MPs to be electedon only a small share of the vote gain in their electorate. This has created abias towards expenditure that channels funding to selected groups rather thanthe electorate as-a-whole and provides opportunities for other means ofgathering support. It follows that it is unrealistic to have expected the samelevel of funding for high priority expenditures such as basic education andhealth care as was actually seen in the presence of aid. So while aid probablyhas indirectly funded some inappropriate activities, it appears reasonable toargue that aid also achieved a net increase in funding to important expenditure.Papua New Guinea’s main shortcoming has been in terms of growth. Overallthe growth that has been seen is mainly attributable to population growth and,on a per capita basis, there has been little or no growth. Aid may have played arole in preventing a worse outcome, but it cannot claim to have achievedgrowth. It appears that, despite improvements to human capital, the country’seconomic potential has been constrained by the poor policy and institutionalenvironment and public infrastructure.This rapid assessment has highlighted the importance of further research intoPapua New Guinea’s development record and the contribution of Australian aid.In particular:i. There is a need to clarify the accuracy and comparability of the mainindicators of development. This assessment has been based on the bestreadily available approximations of the indicators established under theMillenium Development Goals (MDGs). The World Development Indicators(WDI) is used as the primary data source in the analysis. For some indicators,data from the 1998 Human Development Report shows a less favourableoutcome. There would be considerable value in ensuring agreement betweenthe Government and the main donor agencies as to the data that will beused to measure performance against the MDGs. 29 It would also potentiallybe useful to investigate the basis of Papua New Guinea’s ranking as a lowmiddle-income country. This ranking in the face of social indicators of thelow-income countries is seen as evidence of poor performance, but theconclusion may be misleading, particularly recognising the highly dualisticnature of the economy in Papua New Guinea.ii. There is an opportunity to bridge the gap between the preliminary, positiveinterpretation offered by the aggregate data and the detailed sectoral datathrough a more detailed analysis of sectoral achievements. Thisexamination need not examine the full range of activities, but couldinstead focus on areas offering a rich source of information on lessons29 It is noted that such work may already be underway.The Contribution of Australian Aid to Papua New Guinea’s Development 1975–2000 57