Australia’s New Asylum Seeker ‘Solution’: What’s In It For PNG?

Andrew Wilkins frequently travels to Papua New Guinea for business, and produces an annual business and investment guide to the country. We asked for his insight into why PNG – a developing country – might have signed up to Kevin Rudd’s controversial outsourcing of asylum seeker processing, detention and resettlement.

Wilkins says that for PNG PM Peter O'Neill, the agreement may be a rare chance to achieve the significant realignment of Australia’s aid spending that PNG governments have been long seeking.

Last week’s surprise joint announcement from Kevin Rudd and Papua New Guinea’s Prime Minister Peter O’Neill about asylum seekers has drawn an unprecedented level of attention onto Australia’s nearest neighbour.

Generally, Australians are quite ignorant of the country that acquired its independence from us in 1975 (an event touched on in Drusilla Modjeska’s recent novel, The Mountain).

'Those who do know PNG are often older Australians, who still see it through the filter of colonialism.'

If you had to form on an opinion based on PNG’s coverage by the media, you might easily judge it as backward, cruel, violent and corrupt.

Those who do know PNG are often older Australians, who still see it through the filter of colonialism. I have often met Australians from the pre-1975 era who describe PNG back then as an orderly colonial outpost and express sincere regret at what they see as the endless decline of the country since independence, in spite of a mountain of Australian development aid.

While no doubt there are elements of truth in both views, the reality is altogether more complex – and worth examining, if we’re to figure out what’s behind that extraordinary Rudd–O’Neill announcement.

'For the past ten years, while most Australians have been resolutely looking elsewhere, our nearest neighbour has transformed itself into one of the world's fastest-growing economies.'

'For the past ten years, while most Australians have been resolutely looking elsewhere, our nearest neighbour has transformed itself into one of the world's fastest-growing economies.'

For the past ten years, while most Australians have been resolutely looking elsewhere, our nearest neighbour has transformed itself into one of the world’s fastest-growing economies. While this has been driven in no small portion by the same mining and petroleum sector responsible for Australia’s economic boom over the same period (PNG is ‘blessed’ with significant reserves of copper, gold, silver, nickel, oil and gas), the spin-offs into other parts of the economy have been significant. On top of traditional exports such as cocoa and coffee, PNG is becoming a major regional processing centre for tuna (the Pacific’s main catch), and a notable exporter of sustainably-produced palm oil. It has also built up a sizeable manufacturing and services sector.

When I first travelled to PNG in 2005, I made the naïve mistake of asking someone what PNG’s unemployment rate was. They politely pointed out that PNG’s employment rate was just over 10%, with the remaining population existing outside the formal economy. Over the past decade, however, the number of jobs in PNG’s formal sector has doubled, according to Bank of PNG figures. While this growth is from a small base, it has seen the emergence of a genuine middle class in PNG, which is paying taxes, buying cars and houses, and driving the growth of a flourishing retail sector. Five years ago, you couldn’t browse through a bookshop full of new releases, go a multiplex cinema, or sit in a café drinking a cappuccino while flicking through a locally published fashion magazine. Today, you can.

The big driver in all of this has been the US$19 billion ExxonMobil-led PNG LNG project, the largest resources project in the country’s history. It’s a game changer for PNG, offering hitherto unimaginable long-term revenues to the country and giving the government confidence to take significant steps to fixing many endemic problems: poor education and health systems, unreliable electricity and water supplies, congested ports and impassable roads, all of which stymy development.

PNG's Manus Island. 'In return for support on asylum seekers, O’Neill ... has been able to achieve significant realignment of Australia’s aid spending.'

PNG's Manus Island. 'In return for support on asylum seekers, O’Neill ... has been able to achieve significant realignment of Australia’s aid spending.'

After years of relying heavily on overseas aid, the largest portion of which has come from Australia, it may be within PNG’s means to fix many of its own problems in the future.

So, there is a new spirit of self-reliance and self-confidence in PNG. (This is detectable too in the increased role it is taking in regional affairs, especially as regards Fiji.)

In one corner: the PNG government (in the midst of a once-in-a lifetime opportunity to lift its country out of extreme poverty, with the PNG LNG project) is keen to recalibrate its relationship with its traditional aid donor and largest trading partner, Australia.

In the other: an Australian government that wants to shut down a debate on asylum seekers just weeks or months out from a general election.

'Clearly, both O’Neill and Rudd saw an opportunity.'

Clearly, both O’Neill and Rudd saw an opportunity. And hence Rudd made his at-the-time questionable 21-hour trip to PNG.

In return for support on asylum seekers, O’Neill (a canny and pragmatic politician with a strong business background) has been able to achieve significant realignment of Australia’s aid spending – something sought unsuccessfully by previous PNG governments. It’s not quite the blank cheque Tony Abbott suggests it is, but it will mean Australian aid is guided more by stated PNG government priorities rather than by what Australia thinks its neighbour needs.

Judging from the comments O’Neill made at his joint press conference with Rudd, there seems to be little expectation that many refugees will actually be settled in PNG.

‘We hope that the boats will stop and there will be nobody coming to Manus and that is the objective of these arrangements,’ he told journalists.

If this is the case, O’Neill will have skillfully negotiated PNG into a new relationship with its neighbor, without major negative impact to his own country.

'What the thousands of desperate refugees get out of the deal is less self-evident at this stage.'

As a bonus, the inhabitants of Manus Island, a remote province far to the north of PNG’s mainland, will get jobs, new roads and schools, and a chance to sell goods and services to a new local refugee processing industry. O’Neill’s country will get much-needed assistance with the law and order issues that are hindering its economic development, and more besides.

And Rudd may get re-elected.

What the thousands of desperate refugees get out of the deal is less self-evident at this stage.

Portrait of Andrew Wilkins

Since 2005, Andrew Wilkins has been a frequent traveler to Papua New Guinea. He publishes an annual business and investment guide to the country, and the online business news service, businessadvantagepng.com. He also owns the independent book publishing house, Wilkins Farago.