****ADDRESS BY THE HON PETER O’NEILL CMG MP, PRIME MINISTER OF PAPUA NEW GUINEA, LEADERS EDGE LUNCHEON, HILTON HOTEL, BRISBANE, 31 OCTOBER 2013 **** I thank the Australian Institute of Company Directors for inviting me to address your Leaders Edge Luncheon – and I thank you, ladies and gentlemen, for attending. The strong response, and the very representative attendance from across the corporate sector, is something I gain a real assurance from. And that assurance is simple – interest in Papua New Guinea today is as high as it has ever been here in Brisbane, and, I believe right across Queensland and Australia. I have been asked to make some observations on Papua New Guinea in the Asian Century. I will happily do so, but the presence of such a representative and interested audience today surely tempts me to speak also about the Australia-Papua New Guinea, and the Queensland-Papua New Guinea relationship as well. I will give in to that temptation – and I hope you will forgive me for doing so! Can I begin with a brief overview of Papua New Guinea today? Our GDP this calendar year is likely to be around 5 per cent – a per cent below our initial projections, but strong by any comparison, regional or international. We are being impacted by international factors, notably weak commodity prices. The world price of our principal agricultural export crop, coffee, has dropped by around 30 per cent this year, and close to 50 per cent in the last twelve months. Other agricultural commodity prices have been lower or flat lining at best. The decline in the world gold price has impacted Papua New Guinea severely. Projects we were confident would enter the full construction phase this year or next year have been deferred. The construction phase of our first LNG project is ending. Production will begin next year. The ending of the construction phase in the coming months will have an impact on employment and local business activity. But the commencement of LNG exports will boost our GDP very significantly in 2015 – above 20 per cent. The decline in the value of the kina has presented challenges. The intervention of the Central Bank, supported by the commercial banks, has for now stopped the decline and the value has improved in recent weeks. This measure is strongly supported by my government. 2. We anticipated when we drafted the budget for 2013 that there would be a slowdown in activity brought about by the progressive ending of the construction phase of our first LNG project. The impact of that has been worsened by the real decline in mineral and agricultural commodity prices however. My government deliberately decided to bring forward infrastructure spending this year and in 2014 and 2015 to help maintain sound economic growth, and sustain private sector construction activity, undertaken by nationally owned and foreign owned contractors alike. The infrastructure we are spending on has been identified as the key to urban and rural economic growth, and enhanced competitiveness, something I will say more about soon. It includes roads, ports, airports and important social infrastructure such as hospitals. My government has also invested substantially in our greatest resource – our seven million men, women and children. We have now introduced free school education, free basic health services, and we have decentralised service delivery in these and other key areas to the levels of government closest to the people, such as district and local government. The purpose of this important change is to have serves delivered more efficiently, and to have decision making, and actual delivery and implementation undertaken at the local level. As we further decentralise government, the size of the national government in Port Moresby will be reduced significantly. We are also directly funding our churches to help deliver vital community services. In summary, ladies and gentlemen, while our GDP is going to be down this year, it is by any measure strong, and it will grow again in 2014, and reach an historic high in 2015. Our credit rating has remained unchanged – even though we have a deficit budget so we can fund economic growth generating infrastructure, and provide quality of life basic services. We have domestic challenges – some of them daunting. But I believe the right mix of spending, and more efficient actual service delivery, will stand us in good stead as we negotiate our way through these challenges. That brings me to the second subject I want to briefly canvas – before I make some comment on the main subject, Papua New Guinea in the Asian Century. I want to put forward a couple of ideas that might strengthen, and further broaden, the Papua New Guinea – Australia, and the Papua New Guinea – Queensland relationships. I am very pleased to be able to assure you, and assure you absolutely, that the relationship between my government, and the new Australian Government, is already on a sound footing – indeed about as sound a footing as it possibly could be after such a short time. 3. My first meeting with Prime Minister Abbott on the sidelines of the APEC Leaders Summit in Bali a couple of weeks ago was constructive and wide ranging. I have not the slightest doubt that our government-to-government relationship will grow, and diversify, for the mutual benefit of both our countries, and our peoples. My government is absolutely committed to lifting its share of the weight when it comes to addressing regional people trafficking and smuggling, and in playing a strong and co-operative role in border protection and fighting terrorism in all its forms. The basic agreement we reached with the former Government has been confirmed, and will be fully implemented and perhaps even broadened under your new Government. The Manus detention centre is being rapidly expanded. And if we need to expand it even further, or approve the construction of other centres if requested by the Australian Government, we will do so. But I do not want our relationship to be dominated by this issue, important though it is for both our countries – and our region. I want us to add new dimensions to the government level relationship, the business and investment relationship, the trade relationship, and the all important people-to-people links between us. I am going to make one or two suggestions which some may regard as being out of “left field”….but I believe they are, at the very least, worthy of consideration. We follow your “politics” closely, just as well follow your NRL, AFL, and especially at this time of the year – your horse racing! Melbourne Cup Day might as well be a public holiday in Port Moresby and our major centres! I have noted your new Federal Government, and the Campbell Newman Queensland Government, have a strong commitment to developing Northern Australia – including Northern Queensland. Northern Queensland is much closer to Papua New Guinea than it is to Brisbane, let alone Canberra! It takes just over an hour to travel by air between Cairns and Port Moresby – and if we introduce services between Townsville and Port Moresby it will still take less time than between Townsville and Brisbane! Clearly, the economic development of Northern Australia opens up unique opportunities to further strengthen our relationship at all levels – and for our mutual benefit. I would like to put on the table the establishment of a Northern Australia – Papua New Guinea Economic Zone. I am not sure we are ready for a wide ranging “free trade agreement” with Australia, but I believe the focus on developing Northern Australia does open the opportunity for the establishment of an economic zone focussed on bi-lateral trade, small business development co-operation, trade and vocational training, and importantly, joint venture business opportunities – from small to medium enterprises, to major resource and construction sector ventures. 4. The economic zone might also look at greater and mutually beneficial co-operation between indigenous communities on both sides of our common border. The successful development of small businesses, and tourism, in North Queensland indigenous communities, is something we could learn from. The establishment of a genuine economic zone should not been seen as a threat by either country. Indeed, it should be seen as adding a new and logical strand to our relationship. It could also involve greater co-operation in tourism, air and sea travel, and sport. Ladies and Gentlemen, the economic development of Northern Australia is going to require electricity, gas, and water. You hardly need me to tell you, or your government, that! Papua New Guinea can help, and help in a highly efficient, competitive and abundant way in all three areas. Let me briefly elaborate on each of them. First electricity…. the Purari hydro power project has been talked about for too long. I know that a consortium, led by Origin Energy, has done some work on it. My government has decided to progress this important project. We want it to happen – and we want North Queensland and Northern Australia to partner with us in its development. The Purari scheme – even at just stage one – can deliver 2,500 megawatts of affordable, reliable and almost zero carbon emission energy. If fully developed it could deliver three or four times that capacity. The great advantage about the Purari project is that the strong river flows are consistent – drought is not a factor. That means the project can deliver more than just cheap and clean power in abundance. It can deliver it in an environmentally friendly way. The Purari scheme can help not just meet our future electricity needs – it can help meet the needs the development of Northern Australia would require. Papua New Guinea also has proven gas reserves close to Northern Australia – both on our mainland and offshore. Their development is imminent. The capacity of these gas reserves, some of them stranded but substantial, to help meet your gas needs is clear. A number of Australian companies have gas assets in these areas. We want to encourage their development, and we will favourably consider supporting any proposals that involve the export of gas to Northern Australia. In the past, there have been proposals to transport water to Northern Australia. While that has been off the agenda for some time, who is to say the issue might not be re-visited in the future? But I believe the development of the Purari Scheme needs to be our most immediate focus. 5. We will be discussing the project with the new Australian Government – and I have already flagged it with the Queensland Government. We also need to engage your resource companies, the agricultural sector, and the Northern Territory Government, to progress what I believe is a very achievable project that will help with the development of Northern Australia. In summary, I hope we can strengthen our relationship with Northern Australia – and with North Queensland in particular. There is already extensive business, trade, tourism, and people to people engagement. I am sure we can add to that in a way that is substantial and mutually beneficial. It has taken ne a bit longer than I had intended to get there, but I want to conclude with some observations on the role of Papua New Guinea in the Asian Century. Just under a year ago, I had the privilege of delivering an address in Sydney hosted by the Lowy Institute on this theme. I canvassed a wide range of opportunities then – and I gather the address is available on the Lowy Institute website. So far it has stood the test of time! In addition, I have had the benefit of an excellent ANZ Insight Paper on the theme released by the CEO of the Bank, Mr Mike Smith, in Port Moresby two weeks ago. I recommend you look at this paper, and its comprehensive and far sighted recommendations. The ANZ Bank, along with Westpac Bank, has a substantial presence in Papua New Guinea. I have noted that both banks have confidence in our future – and remain fully committed to contributing to it. We welcome their presence, their contribution to our economy, and their confidence in our future. The Insight Paper expresses the view that if we maximise the opportunities the Asian Century offers, and maintain an overall sound investment and development environment, our annual resource sector export revenues can increase four to six times, yes four to six times, current levels, to between $23 billion and $36 billion by 2030! The report rightly points out that is going to require sustained investment by the private sector, a continued commitment to improving economic infrastructure, skilled workforce expansion, and greater national enterprise and individual entrepreneur involvement. I share the reports optimism – and I note that it recommends not just a focus on mineral, gas, and oil resource development, but on revitalising our agricultural sector, and expanding fisheries exports, to meet the food needs of the Asian Region. Our challenge is to “get the balance right” when it comes to focussing economic growth to meet the needs of the Asian Century. We must be visionary and far sighted in addressing this great challenge. 6. And the National Government must do some of the initial “heavy lifting” to create the right environment for our resource industries, and our businesses, to explore, and deliver on what the massive growth of the region to our north and west has to offer. That is why my government has decided to bring forward investment in economic infrastructure – with a multi-billion kina package being implemented from this year onwards. This spending is not just about maintaining economic activity and employment is a transitional phase brought about by the ending of the initial LNG construction phase, and a delay in construction in sections of mining, notably gold mining. It is also about positioning our economy to meet the opportunities ahead – in the fastest growing region in the world with which we have a wide ranging and beneficial engagement already. Improving infrastructure is only one part of that positioning. We must also become more competitive - something I addressed in some detail in my Lowy Address. That is probably going to be the most daunting challenge of all. Now that we are about to become a significant LNG exporter in particular we simply must be more competitive, and more efficient, than we have been. Some of our export activity has been largely protected from the full effect of a more competitive environment because of concessions we have been granted as a developing country. That is going to reduce progressively – and when it comes to the highly competitive LNG sector, we simply have to stand on our own feet. There are some who are alarmed by the more competitive environment we have to operate in. I am not among them – I regard this is a challenge, yes, but also a great opportunity. An opportunity to lift our productivity, end our complacent attitude in so many areas, and develop infrastructure that will serve us well for generations, not just years, to come. We also need to focus on the opportunities the Asian Century offers with regard to tourism. The growing middle class in countries such as China, and our neighbour Indonesia, offers tourism opportunities we have not even thought of. But again, we will have to be competitive, we will have to improve service in the hospitality sector, and we will certainly have to make our cities and towns, and tourist areas, safer. Another challenge, yes, but an opportunity we cannot pass up. In a substantial way, we are already contributing to the growth of the Asian region – through mineral and agricultural exports. 7. When we start exporting LNG in a year’s time we will be making an even greater contribution – as the majority of our initial gas exports are destined for Asian customers. But I fully accept we cannot be resting on our laurels. We need innovative and far sighted policies that centre around efficiency, reliable delivery – and on producing more of what the Asian region needs. That may require a substantial change – especially in agriculture and food production. My final point on this subject is a simple one. I don’t see our focus on meeting the food, energy, and other needs of the Asian region as diminishing the business and investment relationship we have with Australia. Indeed, the contrary should be the case. We need assistance in becoming more efficient, in lifting production, and in frankly being much more competitive than we have been. I want our existing Australian investors and businesses, and potential investors and businesses, to work with us to maximise these opportunities – and to form partnerships with our businesses, our industries and our entrepreneurs to do so. I know Australia – at all levels – is looking at how you can maximise the opportunities the Asian Century offers. We may be competing to benefit from the region’s growth – but we can also work together to do so! There is one significant advantage we have when it comes to the challenges of the Asian Century. Our relations with the nations of the Asian region have never been in better shape! At the recent APEC Leaders Summit in Bali Papua New Guinea was chosen to host the Leaders Summit in 2018. This is not just an historic opportunity for Papua New Guinea – it is a reflection of our growing maturity as a nation and our increasing regional standing and the leadership we are providing for the South Pacific in particular. We are well placed – but we are not going to get a free ride! In conclusion I just want to very briefly mention one issue I know concerns business and investors – current and potential. Corruption is not just a challenge for Papua New Guinea! I note it is very currently a challenge for one of your major construction industry leaders – and for some former politicians in New South Wales. I have come to the conclusion that the best way to reduce corruption, and reduce it significantly, is to greater enhance the prospect of detection, prosecution, and punishment. To that end, I will be introducing comprehensive legislation to deal with the corruption cancer in our country when our National Parliament meets the week after next. We will establish an independent, well-resourced anti-corruption authority. It will be based on successful state authorities in Australia and elsewhere. It will build on the work of Task Force Sweep – which I established – and which is already making arrests and launching prosecutions for corruption and fraud. The package of measure will also include our first ever whistle blower protection laws. We will reduce corruption by apprehending offenders – and prosecuting them through the courts. That will also serve as an effective deterrent – something we simply don’t have today. Distinguished guests and friends of Papua New Guinea, thank you for your patience as I have sought to address a range of issues I hope you are interested in. It is always a pleasure to meet with the business community here, and elsewhere in Australia. Thank you.
Posted on: Thu, 31 Oct 2013 07:54:10 +0000
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