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About the project

A focus on Pacific Islands has been a central component of the Lowy Institute’s work for more than a decade. We research contemporary challenges facing the Pacific islands region in areas including geostrategic competition, sustainable economic development, governance and leadership challenges, poverty alleviation, and Australia’s relationship with Pacific countries and organisations. We also hold major conferences, workshops, dialogues and exchanges. We have produced influential work on Australia’s Regional Assistance Mission to the Solomon Islands, the 2006 Fiji Coup, normalising Australia’s bilateral relationship with Fiji, Australia’s bilateral relationship with Papua New Guinea, the future development challenges of Papua New Guinea, the economic benefits of greater labour mobility between Australia and the South Pacific, security and resilience dynamics in the Pacific, and foreign aid flows in the Pacific.

The Institute manages four major projects focusing on the Pacific:

The Pacific Research Program (PRP) is a consortium partnership between the Lowy Institute and the Australian National University’s Department of Pacific Affairs and Development Policy Centre, with the support of the Department of Foreign Affairs and Trade. The PRP is designed to be a globally pre-eminent centre of excellence for research on the Pacific. More details are available here.

The Lowy Institute Pacific Aid Map is supported by the Department of Foreign Affairs and Trade and is designed to enhance aid effectiveness in the Pacific.

The Australia-PNG Network is a project supported by the Department of Foreign Affairs and Trade, designed to foster people-to-people links between Australia and Papua New Guinea. More details are available here.

The South Pacific Fragile States Project was a project supported by the Department of Defence to produce independent research and forward looking analysis on the key drivers of instability in the South Pacific and the associated security challenges for Australia and the wider region. More details are available here.

THE MAPPING FOREIGN ASSISTANCE IN THE PACIFIC PROJECT

The Lowy Institute Pacific Aid Map is an analytical tool designed to enhance aid effectiveness in the Pacific by improving coordination, alignment, and accountability of foreign aid through enhanced transparency of aid flows. The Pacific Aid Map has collected data on close to 13,000 projects in 14 countries supplied by 62 donors from 2011 onwards. All data has been made freely available on this interactive platform, allowing users to investigate and manipulate the information in a variety of ways. The Pacific Aid Map is supported by the Department of Foreign Affairs and Trade.

The Lowy Institute Pacific Aid map is available here.

Country profiles from Pacific Islands countries can be found here.

See the Chinese Aid in the Pacific map here.

 

 

Latest publications

Worry ahead of New Caledonia’s independence vote

Last month, a year before the deadline for the referendum on independence from France, French Prime Minister Édouard Philippe visited the semi-autonomous territory of New Caledonia.

Philippe is anxious about potential unrest. In October, a special delegation of New Caledonians expressed their concerns to the UN decolonisation committee in New York. According to them, the Noumea Accord (the territory's roadmap leading to the 2018 referendum) is not being applied correctly.

How this situation unfolds will be of significant interest to the region.

Memories of painful 'events'

New Calendonia has struggled with instability in the past, with the most notable example being the évènement, as the locals call it, in the 1980s. Despite decolonisation processes in territories around the globe, French governments succeeded in curtailing self-determination among the Kanak population for three decades until the territorial elections of 1984. That year, the influential indépendandtiste Jean-Marie Tjibaou proclaimed the creation of the sovereign state. The Kanak and Socialist National Liberation Front (FLNKS) rose up against  loyalists of the territory, leading to conflict along a distinct ethnic divide. In 1988 violence reached its peak with the deaths of 21 people in a hostage crisis in Ouéva.

This violence pushed both sides to open dialogue, which led to the signing of the Matignon-Oudinot Accords that same year. These agreements offered institutional and economic guarantees to the Kanaks and planned a ten-year development program that led to the negotiation and ratification of the Noumea Accords on 5 May 1998. The Noumea Accords, in turn, prepared for the progressive transfer of certain powers of self-determination to the locally elected government of New Caledonia. France kept the five sovereign powers (defence, foreign affairs, currency, justice, and public order) until 2018, and the organisation of a referendum for independence. The goal of this referendum (the first of a possible three from 2018 to 2022) is to vote on three topics: the transfer of all sovereign powers to New Caledonia, the admittance of 'full responsibility' international status, and incorporating nationality into citizenship.

Sources of instability

The potential for instability of a sovereign New Caledonia has three dimensions: social, political, and economic.

First, there is a social issue. At the time of the last census, New Caledonia had around 268,000 inhabitants. Kanaks made up 39%, while Europeans made up 27%. The others (populations feeling Caledonian and not affiliated with any other ethnic group proposed) represent 20% of the population, followed by smaller ethnic groupings. As a proportion of the population, the Kanaks represent the largest single ethnic group on the territory. However, when comparing the Kanaks' numbers against the total non-Kanaks, the native population is a minority. This dynamic can lead to tension.

Second, the political and legal situation of the territory is complex. The Noumea Accords generated a particular institutional landscape in New Caledonia. The French Constitution had to be modified to create the 'Transitional provisions relating to New Caledonia', resulting in the creation of a special and unique 'New Caledonian' citizenship.

This special status preserves voting rights in the referendum for long-term residents of New Caledonia. Only people with ten years' residency to 1998 and their descendants are able to participate in the referendum. This also creates a tension among the population living on the island, many of whom have arrived in the years since 1998 and expect to have a say on the territory's future sovereignty.

Finally, the fragile economy is an important source of instability in New Caledonia, a resource-rich territory with ample hydrocarbons, fish stocks and about a quarter of the world's nickel reserves. The nickel industry has always been important for the development of the territory's economy. Between 2004 and 2014, the metal's relatively high price accrued important economic benefits for New Caledonia; however, the past three years have seen prices collapse, and the industry has suffered as a consequence.

New Caledonia's economy is now in bad shape, making the territory's financial dependence on France more pronounced. The cost of public services in New Caledonia averages 350 billion CFP francs per year (AU$1.92 billion), half of which is paid for by the French central government. Various infrastructure projects have been financed by France and/or the EU to sustain New Caledonia's economy. Today, France's financial support makes up more than 15% of the territory's GDP. Without this support, it would be difficult for New Caledonia to finance its own public service and to sustain its economy. This, by itself, could contribute to anxiety on the island.

This instability is not only a worry for France, but also for the regional community.

For Australia and New Zealand, the French territory is of strategic importance. Over the past few years, China has been increasing its engagement with the region. As Australian former diplomat Denise Fisher wrote about New Caledonia, 'at a time when Chinese engagement … can potentially alter our seaways and immediate neighbourhood, a stable ally at the western end of the South Pacific is an asset'.

What can be done

It is in the region's best interest to keep New Caledonia stable. But what can be done?

On a societal level, both Kanaks and non-Kanaks need to find common ground moving forward. Although the yes or no nature of the referendum does not leave much space for consensus, both camps need to form a shared vision of how the territory can unify post-referendum.

On the political front, the French Prime Minister mentioned this month that 'everything possible will be done to identify everyone who is not yet registered on the electoral lists but who is qualified to be'. Having a clear electoral roll would simplify the election process.

On the economy, few solutions have been offered over the past few years. Philippe Gomès, leader of the pro-France group, suggests the creation of a 'fund for the future generations' that would be fed by revenues from the nickel industry. This would allow the country to create sufficient savings for the generations to come, and is a model used in other Pacific island countries, such as Tuvalu and Timor-Leste. But this would not help immediately, and would be challenging because the nickel industry is suffering currently. The economy also needs to diversify, with the government investing more in other economic activity, such as tourism, agriculture and fisheries. It could also look to explore opportunities in its immediate waters, rich in cobalt, phosphate and other hydrocarbons.

At the moment, the situation in New Caledonia should be watched closely by its neighbours. According to a recent poll, New Caledonians are likely to vote to remain a part of France. However, there is still one year to go before the referendum. No doubt Canberra, Paris and the region in general will be paying close attention.

The bad – and good – of China’s aid in the Pacific

The Pacific region is making headlines across Australia after Pacific and International Development Minister Concetta Fierravanti-Wells harshly criticised Chinese aid in the region. 'Useless' is how Fierravanti-Wells has described Chinese aid projects, leading countries to take on debt they can't afford. While her concerns are legitimate, her blunt delivery hasn't been constructive and has led to some considerable political and diplomatic fallout.

So what's the real story? Is Chinese aid in the Pacific useless?

The answer is not so simple. China's aid program is so opaque it is very difficult to understand exactly what it is doing. China does not conform to the sophisticated reporting and accountability mechanisms that traditional Western donors have developed over decades of aid delivery. According to some estimates, China announced more than US$350 billion in aid between 2000 and 2014 under a shroud of secrecy, leading to considerable anxiety about where, why and how Chinese aid is given.

This anxiety extends to the Pacific, where since 2006 China has rapidly expanded both its commercial ties and aid program. The Lowy Institute has invested considerable time to better understand China's engagement. Our map of Chinese aid in the Pacific shows projects committed from 2006 to the middle of 2016. By scouring budget documents from countries across the Pacific, Chinese government websites, secondary sources such as conventional and social media, and conducting numerous interviews, we have compiled the most comprehensive picture of China's involvement in the region. It is not perfect, but it identifies and quantifies Chinese aid better than any other source.

Our research shows Chinese aid in the Pacific has grown substantially, with China committing more than US$1.7 billion in aid to eight Pacific Island countries (including Timor-Leste). To put this into context, total traditional aid to these countries over the same period was over US$9 billion, with aid from Australia making up almost two-thirds this amount.

An important distinction must be drawn between Chinese projects and traditional ones. China typically engages in large infrastructure projects by providing low interest, or 'concessional', loans that eventually have to be repaid. There is often scant information beyond an announcement, with no detail on the terms of these loans or repayment schedule. Australia and other traditional donors typically provide one-way grants that do not need to be paid back and engage in more complex (albeit far from perfect) forms of assistance across multiple sectors, from humanitarian assistance to governance support.

To illustrate this point, while we have identified 216 Chinese aid projects in the Pacific from 2006, there have been more than 5000 projects carried out by traditional donors since only 2011. While Chinese numbers may appear large, it involves a concentration into select large projects. Because of this distinction, comparing Chinese aid to Australia's is like comparing apples and oranges. China has emerged as a significant donor, yet is it clearly still not the biggest player in the Pacific.

Understanding the quantum of Chinese aid is only the starting point. The greater challenge is understanding quality, the point that has landed Fierravanti-Wells in strife. Such judgments are not black and white, and ultimately projects have to be assessed on a case-by-case basis. The best research on this, looking at the experience of four countries in the region, has found that effectiveness of China's aid to be mixed; projects in Samoa have largely led to positive outcomes, while the experience in Tonga and Vanuatu has been less positive.

Importantly, the authors find that the quality of Chinese aid projects are 'dependent in large part on the actions of Pacific Island governments'. This shouldn't come as a surprise. China is not forcing aid on these countries; the Pacific governments have to tell China what they want and manage the projects to a standard that ensures China delivers. With these findings in mind, a criticism of Chinese aid is also an implicit criticism of the governments in the region that agreed to the projects in the first place.

The point Fierravanti-Wells makes about debt distress is a fair one. The International Monetary Fund has noted that Tonga, Samoa and Vanuatu all face considerable debt repayment pressures, and all have significant debt to China. Xi Jinping has even acknowledged the debt burden in the past, promising forgiveness that has yet to eventuate. There are also cautionary tales elsewhere in the world of China taking advantage of debt-distressed nations. Considering the portfolio of loans in Pacific countries (think government buildings and conference facilities, rather than critical infrastructure projects such as deep-sea ports or airports), this seems less of a problem, though certainly worth keeping a close eye on. But again, much of this responsibility must rest with Pacific governments. Australia can't criticise China without criticising decision-makers in the Pacific as well.

Given this messy context, the statements by Fierravanti-Wells, while not without basis, have not been constructive. Attacking the new kid on the block is the easy way out, and Australia is a far from perfect player in the region. The government should instead be working harder to encourage the role of Chinese aid in the Pacific, acknowledging it as an important complement to Australia's aid. China's continuing attention on the region should also be a catalyst for Australians to take a hard look at themselves and ask how they can do more in the immediate region and work with all actors towards a more prosperous Pacific.

Pacific island links: Chinese aid, the Panguna mine, Kato Ottio and more

By Euan Moyle, an intern with the Lowy Institute's Pacific Islands Program.

  • The Minister for International Development Concetta Fierravanti-Wells has accused China of providing unfair loans to Pacific nations and building 'white elephants' to grow influence in the region.
     
  • A volcano on Papua New Guniea's Kadovar Island has erupted after lying dormant for at least 300 years, forcing 700 people to evacuate and raising concerns of a possible tsunami if the eruption escalates. 
     
  • Still in PNG, Chief Justice Sir Salamo Injia was attacked and injured in Enga Province in what is believed to be violence related to sorcery.
     
  • Tongan King Tupou VI has officially reappointed 'Akilisi Pohiva as Prime Minister, after the King unexpectedly dissolved Parliament and called a snap election in late 2017, which Pohiva's Democratic Party went on to win.
     
  • Attempts by Bougainville Copper Limited to reopen the Panguna copper mine in Bougainville, the source of the decade-long conflict on the island in the 1990s, have been shelved indefinitely after a vote by landowners.
     
  • ABC's Pacific Beat reflected on some of the successes, comebacks and controversies that shaped the emerging music scene in the Pacific in 2017.
     
  • Stephen Howes and Sachini Muller look at the rapid growth of Australia's Seasonal Worker Program, which is attracting increased interest from Pacific Islanders.
     
  • PNG Kumuls rugby league player Kato Ottio collapsed and died at training in Port Moresby earlier this week at the age of 23, sending the rugby league community into mourning:


What next for Papua New Guinea?

It has been a tumultuous year for Australia's nearest neighbour.

The protracted and controversial elections in Papua New Guinea took up most of 2017, with Peter O'Neill winning a second term and cementing his position as the most formidable politician of his generation. The government announced an ambitious 100-day plan of reform to move the country in a more positive direction. The plan came to an end at the weekend, and while progress has been made, reform looks to have stalled. Last week's budget brought more bad news, showing the challenges of attempting a course correction given the government's stark fiscal position. With the cost of hosting the APEC leaders' summit next year only adding to tightening fiscal pressures, the scope for much-needed reform looks limited.

Compounding the pressure is the difficulty of making an objective assessment of where PNG stands and identifying the most pressing priorities. Quality data is scarce and incomplete, trends are difficult to establish and validate, and prognostications about PNG's future tend to be dogmatic and politicised. The Lowy Institute, through a new series of papers, aims to help fill in some of these gaps by assessing the contemporary state of PNG, and where it might go in the future. We have brought together experts from across their respected fields, drawing on the best available evidence, to assess the state of various parts of PNG.

The series begins with Bal Kama assessing local politics, a hard task in a year of such profound political upheaval. Kama argues that the country's recent political stability has come at the cost of weakening the legislative authority of the parliament. This has been exacerbated by the government's moves to control critical electoral funding through the District Service Improvement Program and Provincial Service Improvement Program, thereby controlling MPs' behaviour. While the legal system remains robust, cracks are appearing as it suffers under the strain of one of the most litigious societies in the world. Kama foresees growing political dysfunction, exacerbated by a marginalisation of the traditional bureaucracy. The results of the 2017 election illustrate an increasing risk of regional factionalisation among the political elite that could further complicate a messy process of decentralisation.

Paul Barker and I discuss the bumpy road of progress in PNG society. We show that on many indicators the country's rapid population growth is outpacing development progress, and service delivery is struggling to keep up. Growing urbanisation is increasing the burden on service providers. More than 40% of the population is under the age of 14 and soon to enter an already underemployed workforce. Women are severely marginalised. The small formal sector is growing, but employment needs are not being met by an underskilled domestic workforce. Without significant investment and smart policy implementation focused on developing the human capital of PNG, future generations will lack opportunity and be further marginalised. The country has some policies and legislation in place to turn things around, but resources and implementation have been lacking.

Sinclair Dinnen discusses internal security trends and prospects, outlining the prevalence of crime and interpersonal violence, corruption, illegal firearms, resource-poaching and transnational crime. While the drivers of these issues are complex and multidimensional, they are exacerbated by the neglect and politicisation of the PNG police force. Ineffective public policing and widespread insecurity provide the context for the rapid growth of the private security sector, which now outnumbers police three to one. The expansion of private security forces threatens to further undermine investment in public security, but may prompt the government to engage in security governance in a more holistic way.

A collection of experts, led by David Osborne, examine the current state of PNG's economy. Their paper provides an assessment of macroeconomic stability and of fiscal policy and debt. On the former, the authors chart the deterioration of PNG's monetary situation and argue for greater exchange rate flexibility to restore equilibrium and investor confidence. On fiscal policy and debt, the authors argue that revenue and expenditure volatility combined with revenue leakage has been a critical destabiliser for effective planning and expenditure. The chances of debt distress are currently low, but of growing concern.

Craig Lawrence provides an overview of the state of infrastructure, focusing on telecommunications, transport, energy, and urban water. He argues that the physical stock of infrastructure assets in PNG is insufficient to deliver the economic and social services needed to drive faster economic growth and improve human development. Effective national infrastructure planning and funding and the role of the Independent Consumer and Competition Commission will be critical for infrastructure improvement in the years ahead.

Finally, Jenny Hayward-Jones discusses the changing nature of geopolitics in PNG. She argues that geopolitics in the Pacific are typically benign, but this is beginning to change with the emergence of China as a growing power in the region. Meanwhile, the government in Port Moresby is financially constrained and focused on domestic challenges, and its ability to manage a range of existing and foreign interests is very limited. The APEC leaders' summit in 2018 provides an opportunity to market PNG's economic potential, but could damage its international reputation if not managed effectively. Australia will assist with this, but will need to work harder to restore and maintain its legitimacy as PNG's closest partner.

I round out the series attempting to interpret what this all means for PNG's future, and what some future scenarios might look like. Accepting that this process is about as reliable as staring into a crystal ball, I outline three potential scenarios for the country: 'gradual improvement', 'muddling through', and 'accelerated decline'. Given current trends along with growing societal and economic pressures, the most likely scenario for PNG is a continued muddling through, or slow muddling down, in the immediate to medium term. Should demographic change and resource sector revenue volatility stabilise, together with a refocusing of investment on the development of domestic human capital, the long-term prospects for the country look more promising.

The Lowy Institute has a deep and long-standing commitment to our nearest neighbour, and we hope that this body of work will add to the discussion among PNG experts and policymakers, and contribute to the foundation of objective assessment from which progressive reforms can be drawn.

Pacific island links: PNG snapshots, the French PM in New Caledonia, Mini Games and more

By Euan Moyle, an intern with the Lowy Institute's Pacific Islands Program.

  • The Lowy Institute has released Papua New Guinea: Seven Snapshots of a Nation, which analyses PNG’s political, social, economic and security trends.
     
  • French Prime Minister Edouard Philippe has kicked off his four-day visit to New Caledonia with a visit to the grave of independence activist Jean-Marie Tjibaou and an address to the territory’s congress. The PM’s trip is part of the preparations for the 2018 independence referendum.
     
  • Meanwhile, Philippe Germain has been re-elected as New Caledonia’s President, after a three-month impasse between pro- and anti-independence politicians forced the territory to rely on a caretaker government.
     
  • After more than 30 years of local activism, Papua New Guinea has declared the Managalas Plateau a conservation area, making it the largest conservation area in the country.
     
  • The Pacific Mini Games has opened in Vanuatu, with 5000 people filling the Korman Stadium in Port Vila to watch the opening ceremony.
     
  • Kiribati is expected to suffer some of the worst consequences of climate change, with the UN estimating the nation could disappear in less than 50 years. DW looks at what the nation’s inhabitants are doing to prevent their nation from being lost to rising sea levels:

 

No course correction in PNG budget

It is no secret that the Papua New Guinea economy is facing some very tough times. The collapse of global commodity prices, a severe drought, an ongoing foreign exchange crisis, and questionable government spending have all contributed to a dramatic reversal of fortunes for a country that just four years ago had the fastest rate of growth in the Asia Pacific.

The 2018 budget was handed down on Tuesday and is the first in this government's second term. It offered a chance for a course correction to address some of the underlying drivers of the country's economic malaise. Unfortunately, and unsurprisingly, the government has not seized this opportunity. Still, there are aspects of the budget that deserve praise.

What to like

One bright spot of the controversial 2017 elections was the emergence of Charles Abel as both Treasurer and Deputy Prime Minister. Abel, through an ambitious 25-point '100-Day Plan', has injected a sense of urgency into the portfolio. In his budget speech, Minister Abel provided a point-by-point update on the progress of the Plan, which expires 2 December, and it appears considerable progress has been made. Minister Abel seems to have a genuine desire to shake up the status quo and we should hope that the pace and intensity of this reform agenda can continue.

Abel's budget speech was also upfront about the weak state of the economy after it 'endured a series of economic shocks'. Emphasising fiscal discipline, Abel acknowledged that the government was facing a revenue crisis. Indeed, government revenue now only represents 13% of Gross Domestic Product, well below the long-term average of 32%. Abel argues that 'need to identify why our GDP growth is not being matched with a corresponding growth in revenue'.

We already know some of the answers as to why revenue has collapsed: declining capacity of revenue collection agencies, accelerated asset depreciation of new major resource projects, revenue streams being channelled off-books through state-owned enterprises and tax and compliance avoidance. All have contributed. Above all of these issues is the reality that PNG's non-resource economy is now in the throes of a recession, a point not picked up by the Treasurer.

Yet acknowledging the severity of the revenue problem is certainly a prerequisite to solving it, and Abel does put forward some reform proposals that are steps in the right direction.

What not to like

Unfortunately, the language of the budget speech does not stack up with the numbers. Both revenue and expenditure are estimated to be two billion Kina, or roughly 17% and 15% respectively, above numbers found in the 2017 supplementary budget. This hardly seems credible.

With so many expenditure commitments considered key deliverables for this government (the decentralisation agenda, including fully funding the controversial constituent funds used to buy political stability; APEC 2018; free education, and so on), the Treasury is caught in a straightjacket of spending.  

In an effort to make the deficit spending look somewhat achievable, the budget announced a number of one-off revenue collection efforts. These include yet another attempt at a sovereign bond, further squeezing of state owned enterprises, and budget support from the World Bank and Asian Development Bank.

If you have been watching the PNG budget over the last few years this is a very familiar story. We have seen similar promises in multiple previous budgets. Unfortunately, the government has consistently failed to deliver on these revenue generating efforts. This results in the need for a supplementary budget with much lower revenue projections and a deficit that the government simply cannot finance. In response, expenditure is slashed in a way that ultimately protects the government's priority areas of expenditure at the cost of recurrent expenditure in education and health.

While there is a new Treasurer in the chair, the administration and the government is ultimately the same. Their failure to deliver on one-off revenue injections in the past is a body blow to the credibility of the budget. I hope that I am wrong, but I worry that this time next year, just as the dust is settling on a successful APEC leaders' summit, we are going to see history repeat itself.   

The fall and fall of Australia’s aid program

Diminished and marginalised sums up the way Australia's development assistance program is treated in the Foreign Policy White Paper.

The program represents by far the biggest proportion of Department of Foreign Affairs and Trade's budget (DFAT's total budget in 2017/2018 is $5.8 billion, of which official development assistance is $3.6 billion) and its work should be recognised for the key role it plays in Australia's relations across Southeast Asia and the Pacific region. But reference to development assistance in the White Paper is largely limited to one-liners buried within the paper's thematic chapters. 'Global Cooperation', the chapter where the program might have been given its due place in the sun, presents a simplistic narrative that blurs a wide a range of issues, including domestic challenges such as the protection of the Great Barrier Reef.

Why is this so? It is revealing to see how far Australia's aid program has fallen in the hierarchy of Australian foreign policy relevance since the Howard government released the first and so far only white paper on Australia's development assistance program in 2006: Australian Aid: Promoting Growth and Stability.

Much has happened to Australia's aid program since that white paper was produced. It suffered from the unsettling administrative upheaval that came with unfulfilled promises of massive budget expansion under the Rudd government; it lost its own administrative base with the demise of AusAID under the Abbott government; it lost a critical mass of internal skills and knowledge with the absorption of the program into the DFAT; and it has had its budget massively eroded.

But most importantly, it has lost the intellectual clarity of its contribution to Australia's broader foreign policy and national interests. The transparency of its activities and achievements is now buried under broad statements of intent and a portfolio budget document that requires a solid understanding of accountancy to interpret.

The 2017 White Paper indicates a determination from the government to keep the aid program in the shadows and a reluctance to make clear the role and value of Australia's aid program, not only as an important element of the broader foreign policy agenda but as a prominent aspect of how Australia approaches its responsibilities as a developed nation. When the document does finally allot some space to the aid program in Chapter Six, it does not provide any analytical basis or framework for a program that has a budget of just under $4 billion of taxpayer money.

Yet the prevailing need for Australia's aid program to support the national interest and address our region's challenges has remained constant since 2006. An appallingly broad and arguably incorrect statement in the paper attributes the reduction in global poverty to globalisation. Having delivered that assertion as fact, there is no substantial discussion about what is happening to poverty, despite the reduction of poverty still being a core goal of the government's development assistance policy.

There is little reference to the fact that despite Asia's success in reducing poverty (largely through China's own social and economic reforms), extreme poverty is still a grim reality for almost half of the region's population. And while the paper celebrates the rise of Asia's middle classes, it is silent about the rise of inequality and the changing boundaries of poverty, with more than 70% of the world's poor now living in middle-income countries. The size and purchasing power of Asia's middle class has grown in the past two decades, but their share of overall income has fallen as that of the richest quintile has increased. The paper is also silent on the development dilemma that the drivers of inequality are the same forces supporting stronger economies: technological progress, globalisation and market-oriented reform.

Even in the chapter dedicated to working with the developing Pacific countries, the role of aid and Australia's very significant development program is treated more as a leitmotif than as a major component of the relationships. Perhaps one should take this as a positive recognition of the need for Australia to look beyond the aid program as the defining element of its relationships with these countries.

But the White Paper's overall treatment of aid and development suggests that even in this region where Australia remains the leading donor, the prevailing preference is to diminish and stifle Australia's international development story. Why is this so?

Pacific island links: COP23, PNG corruption, Tonga’s election and more

By Euan Moyle, an intern with the Lowy Institute's Pacific Islands Program.

  • The crisis on Manus Island continues almost a month after the refugee processing centre officially closed. This powerful photo essay from the New York Times illuminates the situation for Manusians and asylum seekers in the centre.
     
  • Meanwhile, the new operator of Australia's detention centre on Nauru has been revealed. Canstruct will be paid $385 million over the next year to provide services to the more than 1,000 asylum seekers remaining on the island.
     
  • Labor Shadow Defence Minister Richard Marles addressed the Lowy Insitute earlier this week on Australia's lacking approach to the Pacific, arguing that Australia currently has a 'holding pattern policy' when it comes to the region.
     
  • Eric Kwa from the PNG Constitutional and Law Reform Commission addressed ANU's Development Policy Centre in Canberra on the importance of anti-corruption laws in PNG and the soon-to-be-established Independent Commission Against Corruption.
     
  • The Democratic Party of Tongan Prime Minister 'Akilisi Pohiva, whose government was dismissed by the Tongan King in August, has been returned in a snap election, winning 14 of 26 electoral seats. ABC's Pacific Beat spoke to Commonwealth Observer Group chair Margaret Wilson on the organisation of the election.
     
  • The COP23 UN Climate Change Conference hosted by Fiji concluded in Bonn last week, with Fijian schoolboy Timoci Naulusala addressing world leaders on how climate change is affecting his community:
     

New Solomon Islands PM will need all the support he can muster

Prime Minister Rick Houenipwela was sworn in last week in Solomon Islands.

Hou (the surname by which he is more readily known) replaces Manasseh Sogavare, who was removed in a motion of no confidence on 6 November reportedly for failing to implement policies and for a lack of consultation with fellow members of parliament. Changes of leadership through motions of no confidence are frequent in Solomon Islands, with few leaders governing for a full term.

Hou is an exceptionally qualified member of parliament and his election to the top job has been well-received by the public. As Governor of the Central Bank during the country's ethnic troubles, he was one of the very few public servants to stand up publicly for good governance, resist overwhelming pressure from both militants and members of parliament and reject extortion attempts. He was a shining light in very dark times.

Hou worked for the World Bank in Washington for two years after leaving the Central Bank, before winning his seat of Small Malaita in the 2010 elections. He was Minister of Public Service and then Minister of Finance and Treasury between 2011 and 2014.

As Hou takes charge, Solomon Islands faces major economic challenges. The most recent IMF Article IV Mission reported that the 'deficit widened to 3.3% of GDP in 2016 when lower revenues and grants were not matched by expenditure restraint'. The cash balance had eroded 'from 3.6 months of recurrent spending at end-2015 to just 0.8 months projected for 2017.' Government payments have been delayed due to these fiscal strains, with vital rural health services adversely affected. The IMF warned the weakening fiscal position has increased the economy's vulnerability to shocks and advised that 'fiscal adjustment will be needed in 2018 - including revenue raising measures, expenditure control and a plan to eliminate arrears'. The IMF also urged the government to speed up financial sector reform and align spending in the 2018 budget more closely with the National Development Strategy.

In his first speech to the nation, Hou acknowledged the short time he has to achieve his goals before the next election is due by the end of 2018. He said his first priority was to stabilise the country's 'ailing fiscal situation, address the cash flow situation and ensure fiscal discipline', promising to formulate an affordable and credible 2018 budget.

Refreshingly, Hou said the government would concentrate on achievable infrastructure programs that benefited rural areas. Hou promised to reopen health clinics that had been forced to close under the Sogavare government and committed to delivering the controversial anti-corruption bill that Sogavare was unable to get through the parliament. Hou's tough stance on corruption resonates with a public tired of politicians more concerned with their own fortunes than the nation's.

Crucially for Australian interests, he reconfirmed new arrangements negotiated with Australia to construct the undersea cable to deliver badly needed high-speed internet. Prime Minister Sogavare had previously negotiated with Chinese company Huawei to construct the cable, but this deal was terminated after the Australian government stepped in over security concerns.

As Central Bank Governor and as Minister of Finance and Treasury, Hou had a positive relationship with the Australian government. Given Solomon Islands' dependence on Australia for aid, security and now telecommunications, this relationship is vital. In his speech, Hou promised to re-engage and 'take extra efforts' to work closely with Solomon Islands' development partners.

In a 2016 paper written for the ANU, Hou makes a strong argument that the constituency is the key vehicle for service delivery and development in Solomon Islands. He argues that constituency development funding (currently expensive, lacking in transparency and vulnerable to corruption) should be subject to stronger 'accountability rules and regulations'. If he is able to improve the accountability and transparency of constituency development funding (likely against the wishes of a majority of MPs), that alone would be a significant achievement. It would endear Hou even further to development partners.

He is also one of the few leaders in Solomon Islands in the last 20 years not associated with questionable acts during the troubles, with corruption (though he was charged with official misconduct for misuse of constituency funds in 2015), with opposition to RAMSI, or antagonism towards Australia. His appointment of Sogavare as Deputy Prime Minister and Minister of Finance and Treasury also promises an element of continuity and stability. Hou's Prime Ministership is an attractive proposition to Solomon Islanders who desire good governance and to international partners such as Australia, New Zealand and the international financial institutions. Expectations will be high.

If Hou's government is able to even partially deliver on his agenda over the next 12 months and resist the inevitable pressures associated with being Prime Minister, he stands a good chance of forming government again after the 2018 elections. Retaining the top job following elections is even rarer than serving a full term in Solomon Islands.

But for Hou's many admirers inside and outside Solomon Islands, it is worth remembering the obvious. As PM, Hou can set the agenda and make some big decisions but he can't personally implement every single policy and commitment. He will still be dependent on his cabinet ministers, who may not wholeheartedly share his reformist instincts, and he will have limited financial resources at his disposal. He will need all the support he can muster.

Pacific island links: A new PM for Solomon Islands, PNG’s cable, COP23 and more

By Euan Moyle, an intern with the Lowy Institute's Pacific Islands Program.

  • The situation in the Manus Island detention centre remains tense, with approximately 400 refugees refusing to leave. New Zealand’s Prime Minister Jacinda Ardern has pledged AU$2.7 million for essential services to refugees on Manus and Nauru, and has also pressed Malcolm Turnbull to reconsider an offer to take 150 of the remaining refugees.
     
  • Solomon Islands parliament has elected a new Prime Minister, with the ruling Democratic Coalition for Change’s Rick Hou to replace the ousted Manasseh Sogavare.
     
  • On the sidelines of COP23, Pope Francis met with Pacific Islands Forum leaders at the Vatican and spoke out on the risks of rising sea levels in the Pacific.
     
  • Malcolm Turnbull and PNG Prime Minister Peter O’Neill have announced that Australia will build an undersea telecommunications cable between the two countries. A deal between Chinese telecommunications company Huawei and the government of Solomon Islands to build a similar cable that would connect to Australia’s communications network had previously raised security concerns in Australia.
     
  • Tonga’s snap election, called after King Tupou IV dismissed the government of ‘Akilisi Pohiva in August, is being held tomorrow. There is a strong possibility that no female candidates will win seats and ABC’s Pacific Beat spoke with ‘Akosita Havili Lavulavu, the only woman in Tonga’s parliament, about the obstacles for aspiring female politicians in Tonga.
     
  • The University of PNG’s School of Business and Public Policy and the ANU’s Development Policy Centre are calling for academic papers for the 2018 PNG Update, to be held in Port Moresby in June 2018.

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