Pacific Partnership for Development

from Island Business

Help-out, not hand-out!

Dr Satish Chand
Kevin Rudd, the new Australian Prime Minister, made an official tour of Papua New Guinea and Solomon Islands mid-last month. If the reception he received in the Highlands of Papua New Guinea and its capital Port Moresby is any indication, than this was more than a welcome visit.

Just over 100 days in office, PM Rudd has signalled that the close neighbours and developments therein will get their fair share of attention.

The PM and Bob McMullan, his parliamentary secretary for development assistance, had announced in the lead-up to the Australian elections of their intentions to use the Millennium Development Goals (MDGs) to build consensus on future international cooperation.

For readers not familiar with the MDGs, suffice to note here that these were initiated at the UN Millennium Summit of September 2000 where an agreement was reached amongst the leaders attending on progress with respect to eight specific goals.

These include: eradicating extreme hunger; achieving universal primary education; improving gender equality; reducing child mortality; improving maternal health; combating HIV/AIDS and malaria; ensuring environmental sustainability; and, developing a global partnership for achieving the above-listed.

These goals have specific targets; the first MDG, for example, stipulates that the proportion of people living on less than one US dollar per day (at 1990 prices) is to be halved from 1990 to 2015.

Rudd, through a declaration made in Port Moresby on the March 6, 2008, committed his government to the 8th MDG; that of a ‘Pacific Partnership for Development’. No sooner had he been back in Canberra, Dr Puka Temu, the deputy Prime Minister of Papua New Guinea, was speaking in the Australian Parliament endorsing the proposal.

All healthy signals for deepened development cooperation between the close neighbors for sure.

Getting endorsement on the ‘Port Moresby Declaration’ was little sweat; achieving results may be a different matter altogether, however. While some Pacific nations are well on the way to achieving their MDG-targets, the region as a whole will struggle to meet the 2015 deadline. This is simply because the more populous of Pacific nations, Melanesia in particular, has been lagging on several of the MDGs. The spread of HIV/AIDS in PNG, for example, is far from being contained when Target number 7 for the 6th MDG stipulates that its spread will he halted by 2015.

Fiji, one of the more developed of Pacific nations, is witnessing a resurgence in poverty-the proportion of the population living in poverty climbed from 25 percent in 1991 to 34 percent by 2002. Halving the 1991 figure by 2015 will require some concerted effort on the part of the Fijian authorities and donors.

More and better aid to the rescue

Australia, under the proposed ‘Partnerships for Development’, will “provide increased development assistance over time in a spirit of mutual responsibility embracing commitments by the Pacific islands nations to improve governance, to increase investment in economic infrastructure, and to achieve better outcomes in health and education”. Furthermore, targetted support to local employment-creation initiatives, including those via investments into improving economic infrastructure, has been promised. Support has also been promised to achieving universal primary education (MDG 2) and improving health outcomes (MDGs 4, 5, & 6).

Progress on the outcomes foreshadowed in the MDGs will require more funding as much as better use of the expended dollar. Some new ideas on how this may be done are long overdue. Why not pay, from a joint (partnered) fund, on progress made with respect to specific outcomes? As an example, I have proposed a Progress Education Fund (PEF). The PEF would pay $50 for each additional child that completes primary school and another $50 for each additional child that passes the nationally set external examination. ‘Additional’ is defined as the number in excess of the average for the previous five years. Participation could be totally voluntary with the proviso that payments for progress on specific outcomes would be made public—this to facilitate competition between suppliers and to create the demand for improved governance.

Improving growth as the plank to make progress on the MDGs

Progress on the MDGs requires resources. Aid, and the promised Australian support in particular, can fill this void but this on its own would not be enough. The biggest inroads into poverty reduction globally, those achieved by China and India in the recent past, have been made on the backs of sustained and rapid economic growth in per capita income—not aid!

While good donor support, and the willingness of Australia to come to the party, is helpful, genuine and sustained progress on the MDGs can only be rested on sustained growth of the economy.
Health and education services can be ‘provided’ by donors, but for how long? Why would people invest in education if doing so was of no value to them?

A preferred route to achieving better education and health outcomes would be via conditions that induced people to increase demand for these services. There could be no better incentives than improved employment prospects to induce parents to invest in the education of their children.

Similarly, sustained progress on health and gender outcomes can be better girded on greater income-earning opportunities for women. Some new thinking on this front is also warranted.

Yet, the record on economic growth has been less than enviable. Could the Pacific be at the cusp of change with respect to the above? Dr Temu, in the context of PNG, believes so.

Another Australian government report, the Pacific Economic Survey 2008, just released by the Australian Agency for International Development (AusAID), claims that the regional economy is set to expand by 4.5 percent in 2008. While such optimism is welcome, the growth record will differ considerably across the individual economies—PNG, for example—is foreshadowed to power along on the back of its resource boom. But many others may not be so lucky. Making matters worse is the rapidly cooling global economy. The political turmoils in Timor Leste and Fiji could compound the economic problems further.

The survey does suggest areas for attention at the regional level. It argues for deeper ‘connectivity’ within the Pacific region as a whole. Mobile (and modern) telecommunications and transportation technologies provide the means for the above. The islands nations of the Pacific have been hampered by isolation from major markets—a handicap being ameliorated by the advent of modern technology making telecommunications, shipping, and aviation services cheaper by the day.

Pacific governments, however, have been slow to embrace these developments—held back, in many instances, by public sector monopolies loath to face competition.

Uptake of mobile phones, as pointed out in the survey, skyrocketed after prices fell in the face of competition in Samoa and Tonga. The one clear lesson from this experience is that the sooner we remove the shackles from competition in these sectors (and the economy more generally), the better for regional integration, consumer welfare and growth of these economies.