An address by James Marape, Prime Minister of Papua New Guinea
James Marape, Prime Minister of Papua New Guinea, spoke about strengthening Papua New Guinea's economy, climate change, and PNG’s place in the world.
After his remarks, the Prime Minister spoke in conversation with the Lowy Institute's Executive Director, Dr Michael Fullilove AM.
James Marape has served as Prime Minister of Papua New Guinea since May 2019 and as a Member of Parliament representing the electorate of Tari-Pori Open in Hela Province since 2007.
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Let me thank Dr Michael for the cordial and warm welcome and hospitality the Lowy Institute once again has conferred to me and my delegation. We are happy to once again find ourselves in the company of many of you who are profound and deep thinkers, and especially within the reach and precinct of this wonderful institution. Let me continue to thank Lowy for their contributions to public policy. You know how to spin the public conversations and public policies, not just in Australia, but also across the Torres Strait into PNG and the greater Pacific. I am happy to be once again back here joining you.
Michael, let me acknowledge the Indigenous and First Nations people on whose land we are here today; we pay our respects to the elders past, and present, as well as those emerging and those who will continue on after. I want to also pay my respect to greater Australian people. Thank you for your continued support to our country. Papua New Guinea — in case that younger generation Australians do not know — before 1975, we carried the same passport. Before 1975, we belonged to the same sovereignty. It was in 1975 that we decided to be two nations, brother and sister nations. It's only 48 years since then, going onto the 49th year next year. And so, it is important for us to maintain rapport, have exchanges, not just at the government-to-government level, but more importantly, at public service-to-public service level, our educational institutions, our business and private sector, and Australian business and private sector. But more importantly, our people-to-people.
And I am happy once again to represent my country, and the possibly 12 million plus people of Papua New Guinea, to once again present here in Lowy on the margins of the main streets this morning earlier, when I addressed the mining and resource sector conference that is still going on at the Sydney international convention centre.
Papua New Guinea is still emerging as I speak. The last time I was here on the 25th of July 2019, my conversation was that we are now writing a new book. We are closing the part of our nation's history, expressly, a history that is attached with complacency and corruption. And we're moving into a new phase in our nation's life. And so, in as far as the new book is concerned, I lived through the 45th anniversary of our country's independence that coincided with COVID-19. Coming out of COVID-19 (in the 46th anniversary) we lived through the 47th anniversary, and this year, we've celebrated our 48th anniversary as a sovereign nation.
Our nation has emerged through many challenges for us. Just to give you all some retrospective hindsight, in 1975, when we parted ways as a sovereign nation, when Australia granted us independence, our economy was sized under 5 billion kina. So that is your reference point for those of you who are in the know. We were a 5-billion-kina economy. And if you think that is a lot, you can extrapolate that against a nation that is 462,840 square kilometres of land. You have swamps, you have mountains, you have islands. At that time, have about 3.5 million people. As economists and social planners, you would know that an economy that is sized at 5 billion kina, with that mountain of obstacles, the big landmass, the big population — that was the starting point. And if you throw into the fray, the continuous changes of government we had from 1975 up to 2002, the economy at 5 billion kina in 1975 progressed to an economy of 17 billion kina in 2002. So, for 27 years, we only shifted the pendulum on economic growth by just about 12 billion kina. At the same time, the population was growing much faster.
And for those of you who are economists, I'm not an economist, but you know the basic formula of success in an economy. Population growth must be below economic growth. Economic growth must be north and population growth must be south, in as far as the formula is concerned.
Historically, our economic growth has been below 3% and our population growth has been above 3%. Simply put, that was unsustainable, exacerbated by continuous changes of government and the instability that exists or that permeated the entire structure of government from 1975 to 2002.
If you want me to run through how PNG went in the first 27 years, we had general elections in 1977 after Gough Whitlam was able to give us self-government, on December 1, 1973. In 1975, September 16, we became independent. In 1977 we held the first general elections, 1980 the first successful vote of no confidence, 1982 general elections, 1985 vote of no confidence and a successful change of government. In 1987 were general elections, 1988 a successful vote of no confidence, 1992 general elections, 1995 a successful vote of no confidence. In 1997 saw the Sandline crisis and an acting prime minister, 1997 general elections, and in 1999 a successful vote of no confidence when Mekere came in, and then 2002 a general election. Apart from that, the Bougainville crisis started when we were only 14 years as a nation in 1988, which ran for 10 years in that same timeline.
So, for the first 27 years of our life, we were busy playing politics. The shifting sand of our public service was non-responsive to an unstable government and the economic productivity was quite weak. Our reliance on one or two mineral sectors was closed when Panguna mine closed. Our non-focus in the diversification of our economy, especially drilling down on agriculture that used to be traditionally a strong PNG economic base in the 70s. That is the backdrop in which we have emerged.
In 2002, if you put that as a reference point at a 17-billion-kina economy, luckily with the backdrop of political stability, the Somare government had nine full years of being in office. And that stability gave a focal point in which government was out and engaged with investors. And at the onset of 2008 and ‘09 or 2007 and ‘08, or rather the global financial crisis, we were able to engage ExxonMobil in the PNG LNG project.
And that PNG LNG project, if you asked me what became the impetus for the next wave of economic growth, that was a stimulant, that was the impetus, that was the growth basis. From a 17-billion-kina economy in 2002, the Somare government brought growth.
By 2011, the Somare government exited with a 44-billion-kina economy, and I'm using average figures here. And by 2019, when I took office, it was a 79-billion-kina economy. But the worst news was population was still growing uncurtailed, unmanaged. Seventy to eighty per cent of the population was half-educated, unengaged, semi-skilled. And so that was the backdrop and the problems we were faced with in 2019 when we took office.
I just want to encourage everyone that, apart from all this sort of bad outlook, the greater structure was that society remained consistent. Our democracy remained vibrant. Our economy and the fundamentals had every indication of positivity. And so, we had to just tap into the positive characters of our country and our economy.
The number one good character we have is resilient people. Our people intrinsically are friendly, culturally they are hospitable, welcoming; they are Christians. And in the midst of our diversity, we find a common ground in things like rugby league and the good side of life. The good people, combined with the independent functionality of our judiciary, remain a big cornerstone of our economy.
Our judiciary remains very independent. Our politics is robustly democratic, governments can come and governments can go, but the main fixture of our democracy prevails and is maintained. Never, at one time has our country fallen to the rule of gun or rule of one big man. Even when those transitions were taking place, they were taking place within the state of democratic provisions of our country's constitution.
The big upside pluses of our national character remain fixed: preservation of our democracy, a vibrant free market economy, and a society that is deeply Christian and Melanesian, tolerant to the difference of opinion and worldviews. So we remain fixed.
When I arrived in 2019, I came here. If you have forgotten about everything else that I said then, I know, Lowy you have a good registry of all speeches spoken here. So, you can easily pick from your file. If you pick from your file, you would have heard what we wanted to do as a government, you can go through them and you have it on record. Just go through them and see whether we've ticked off ICAC, see whether we are striking a better deal from our projects that I've committed to negotiate. See whether we're having a foreign policy outlook that relates to all without compromising our core values and our core principles and our core relationships.
In my address here, at Lowy, on the 25th of July 2019, I just said exactly what we will step out to do. Today, as I speak, ICAC has been established. Remember, the first time ICAC was mooted in my country was in the mid-80s. Seven prime ministers before me never delivered ICAC. I almost lost government at the back of passing the ICAC bill in 2020. Right after passing ICAC, one-third of my cabinet and fellow politicians decide to move onto the other side. But by God's grace government was restored and we are still here.
Our government will deliver our commitment to ensure that 80% of the public services are in rural PNG and 20% are in the central government. It is a restructure that is going on. Our focus is to increase public service efficiency — it has been worked upon by a few key people appointed based on merit. Just to name one or two, for instance, a non-taxman, but a strong ethical lawyer was brought from outside and placed in our internal revenue. Today, four years on, he's collecting double the size of tax collection with no increase to tax, except we've reduced tax. For those who earn under K20,000, they don't pay tax any more in terms of personal income tax. With no additional increase on tax, we have increased collection to twice the size on what we were collecting before 2019.
So, we are committed to increasing efficiency. There’s a long way to go, but we've started the journey and some life-changing initiatives in our public service. And I sit here with my Chief Secretary; he is a testament to someone brought from outside to come into the public service also.
We also looked at ensuring that our budget is structured to carry the economy in tough times. We restructured the budget, although we had a strong deficit around the time we took over as the government.
Most of you know, in 2019, I inherited an economy that was in decline. And I speak as former Finance Minister. I knew exactly what the state of our economy in 2018 and 19 was - we were on record in 2018 with a 3% growth rate. We talk about the economy in 2019. We restructured but we sailed straight into COVID-19. That saw us increasing our deficit by 8 to 9% in 2020, so that we could keep our heads above water. Who else didn’t? Australia did. All economies did, all countries did. They restructured their budgets as a result of the COVID-19 shutdown. We did. But as soon as we hit the highest deficit in 2020, we were on a fiscal consolidation to come back to a balanced budget at the very earliest. We hope to hit a balanced budget by 2027. And my treasurer is quite aggressive. I am not aggressive, but we're inclined to move towards eliminating or bringing down our debt to a sustainable level by the time we hit the 2030s, and that's a work in progress for us.
We knew we had to use our budget to ensure we have sufficient liquidity in the economy. The last four budgets we've delivered over 101-billion-kina in spending from the 2019 supplementary budget right until the 2023 supplementary budget. That is what we did. We are using a budget to ensure we try our very best to spread the love, as well as government can, to all sectors in all parts of our country.
Our flagship Connect PNG program tries to unravel our economic potentials in all parts of our country. When Australia granted us independence in 1975, there were only two or three highways. We are working to open up 462,840 square kilometres of land with key enabling infrastructure. Thankfully, the Australian government is still with us; they are supporting us with budget support, as well as soft concessional lending to key infrastructure — ports, and roads, to name two important ones.
I want to also indicate that we are working to reconstruct foreign relationships without compromising our own key values.
We relate to all at no compromise to our values and who can assist with individual pathways where our bilateral relationships are concerned.
And we also have other potentials that have not been harnessed before. For example, the green economic space.
Today when I addressed the mining and petroleum conference, I said everyone is welcome to operate in Papua New Guinea - we are still a green economy. And someone may ask, what do I mean by this? It's a simple reflection that our economy has, or our country rather, has great potential to be a carbon sink, more so than what we are achieving right now.
Someone asked me at a conference, and someone also asked me in Dubai at the margins of COP28: what is your commitment to the climate change? And I said Papua New Guinea is carbon negative, not carbon neutral. We are a carbon negative country. Our carbon sink has potential of 100 million metric tons. Current evidence from Papua New Guinea’s industry, Papua New Guinean people, is around 10 million metric tons. So, all who operate in the economy will have a green identity - green label - that they operate in a green country. And this is something that we're trying to promote in a big way.
Some of you would have seen my work with the French President Macron on the step up for our forestry conservation, forestry protection, forestation program, and sustainable use of our forest’s resources, so that we maintain our green label as a country going forward in a world that is conscious of the climate change effect, and the mitigations that are occurring in many places.
Those we have worked with can assess what we have been trying to do - just pick up a copy of my speech in 2019, and I want you all to give me an assessment, an honest assessment. I will not tell you to go through the whole list of everything we have done. But some of the major focus of what we want to do, we have started.
My conversation is on getting more from our natural resources. Someone thought I would be chasing away investors. But in the same four years, we attracted Newmont for instance - the biggest gold mining company in the world - which came into PNG. Australia's own Telstra, the number one company, came into PNG. We were able to successfully conclude the Santos takeover of Oil Search in PNG. We were able to allow for PNG government and Barrick, the second biggest gold company, to renegotiate better terms from a zero equity. Now the national government has 36% equity in the new Porgera, and our landowners have 15% equity in the new Porgera. And the new Porgera mine is 51% in favour of Papua New Guinean beneficiaries, 49% who are investors. They have read me clearly. I tell them you don't lose a return on investment. You invest on your side, you make a return on investment; we invest on our side, you go home winning, and we go home winning. Your rate of return on investment will be benchmarked against your investments in peer economies and your return-on-investment scales that you are used to in some of your global operations.
And so, the Porgera benchmark is something that is consistent with our "take back PNG" philosophy. Without harming investors, you win, we win. But we win on the upside, simply on the basis that safety and a better work environment is government's business. The better we earn, the more we plough back to law and order and enabling infrastructures, and so on.
We've come close to be on the path which I envisaged in May 30th 2019, when I made my first maiden statement. Not all is yet done as I speak. Some big weaknesses that continue to haunt us is the massiveness of our public service — sometimes it's ineffective and inefficient, the lawlessness that remains and permeates in our society, the political instability in all structures of our country, and continued exposure to imported inflation and global economy shocks that happened as a result of war elsewhere, increased oil prices elsewhere, and also our own sometimes feeble economic fundamentals we have in our country. Those weaknesses still remain.
But on the upside, Papua New Guinea remains closer to the market for all our produces. We are much, much closer than far off. Most of the nations that I have related to are big buyers of our produce. For instance, the People's Republic of China buys over 50% of our total produce. I gather that they buy 30% of Australia's total produce, so we are in good company in that space.
So, the market reach for Papua New Guinea remains very much closer to home than far away. Japan, the third biggest economy is within our reach, South Korea is within our reach, and Indonesia is within our reach. India has come on board lately. I'm working in the Indian space to ensure we have a readily available supplementary or complementary market for our produce, in case we have a problem elsewhere.
India has stepped up big as an alternate market for produce. And of course, we are encouraging the USA and Australia.
Bring your investments into Papua New Guinea, especially investments, as we focus on a downstream process, a diversified economy.
We're looking forward to a time in the next 10 years, that we make a transition from the export of raw produce to the export of finished products from our own resources, whether it's in gold, copper, minerals or in the renewable resources like agriculture produce, forestry produce and fishery produce. So those are the directions we are shifting, focusing very much on diversifying the economy, and moving as soon as possible to downstream processing. And our government has put programs in place, in making state equity funding available, state land accessibility available, as well as putting money for SME support that has been continuously run in our effort to diversify and strengthen the economy.
Now why do I speak on the economy? I do not want forever to be a borrower. I do not want forever to be a recipient of aid and grants.
Papua New Guinea has emerged as a shared leader in the Pacific. We want to share responsibility with Australia to assist in keeping our Pacific safe and keeping our brothers and sisters in the greater Pacific also well assisted.
We had in the latest Pacific Games our own contribution with Australia. We assisted Solomon Islands in the last PIF. We were able to retire some commitments of past governments, we gave some little money to Cook Islands, to Tonga for the disaster, and to also one or two other nations. That is our shared responsibility to Australia to ensure Pacific remains free, Pacific remains a fair place and we keep our pristine and lifestyle for not just ourselves, but more importantly, our children to come after.
And so, I want to say to each and every one of you here at Lowy, thank you for giving us an opportunity. You have to look into our statistics. In the first 44 years, the seven predecessors before me worked to grow our economy from, at the macro economy level, from a 5-billion-kina economy to a 79-billion-kina economy. It's not James Marape speaking but the World Bank, IMF. Everyone sees that by this time next year there will be a 120-billion-kina economy. And that's a 50% double down in just four years, five years.
That's at the macro scale. In the next 10 years, I'll be lining up six projects - they are all almost in a mature stage. Porgera is restarting. We've retired all statutory obligations. Porgera is restarting, and Barrick as our operator will be announcing the time in which it will be restarting this afternoon, if not tomorrow. We will soon have a Wafi Golpu project. We have delivered what is called a mine development contract and SML back-to-back for Porgera. I have here with me the Vice Minister, the Honorable Jimmy Maladina, who assists me in the state negotiations. We are MDC and SML away from Wafi Golpu project, which is a $5-$6 billion investment project. We've already sequenced Papua LNG FID (final investment decision) with P’nyang LNG FID back-to-back. There'll be about 5,6,7 years of construction, with both Papua and P’nyang. ExxonMobil tells me there's a bigger gas find they're drilling- the deepest drill in what is called the Eastern Papuan fault belt.
If you know the map of Papua New Guinea, if you know Kerema town, a little bit north, north-west of Kerema town, they'll be putting five kilometers of well into what is called Toro or the sand basins below. I'm not a geologist but they say something that goes like that. To establish whether it's a 13 TCF, or a 13 to 15 TCF, or a one TCF of gas, the assessment reveals some find in that space.
If that is established, we will be sequencing oil and gas for the next 10 to 15 years in terms of construction. PNG will be a gas producing nation for the next 40 years to 50 years. And we are bringing our oil and gold and copper projects into the picture. We have about five or six exciting projects never before seen in our country's history. You have simultaneous projects running ten years in a row. The next 10 years will be projects after projects after projects that would see me hit a 200-billion-kina economy by 2029. And our country should be on its way to be a growth economy in the 2030s. I look forward to your continuous assessment in how we are doing business up there.
I'm not here to buy your support. I value constructive criticisms, especially when criticisms come with alternates to point us down the right road. No one is all knowing, and any help from any Australian institutions is welcomed, especially from Lowy with a ton of credibility behind you, and your heap of experience. Everything we say and do in your fair assessment. If you feel something else needs to be done, we look forward to considering a recommendation from yourself.
But I just want to conclude, in tough times, we have steadied the ship, we have structured our public service too. We have put up corruption-fighting institutions, and the assistance the Australian government is giving us lately is to come into the space of making sure we have more judges, are training more police, and infusing police especially into mid-management level with the independence to ensure we prosecute cases that are outstanding for some time. This is all work in progress to improve the law-and-order space.
I see work in the law-and-order space from an economic spectrum, for there is no point increasing the size of the economy if the economy is ransacked by lawlessness, including white collar crimes. And so we work in that space to protect the gains from the economy, and Australia is partnering with us lately now in a big way, in the law-and-order space and in internal security, while working with USA in external security. These are two differences. Internal security, we're working with Australia. External security, we're working with the USA.
And Australians here, taxpayers, don't feel that your taxpaying money is wasted.
You have over 5000 Australian companies who do business in Papua New Guinea. But more than this, you know, you might have canoes coming down seeking refuge in Australia if PNG is a failed state.
And so we're working to ensure PNG is not a failed state.
We are a proud nation.
We are a resilient people; we have our own ups and downs.
But please journey with me. I may not be prime minister ten years from today. But the path we've have laid is a path to economic independence, economic self-reliance, and a prosperous nation. And at the end of the road, we stand to assist Australia to carry the load in our part of the world as we live together to face an Asian Century that faces us.
Thank you very much, God bless.