blog / The ‘trickle down’ aid myth

Thu, 01 October, 2015

The ‘trickle down’ aid myth

The International State Crime Initiative (ISCI) has told Australia - in a report submitted to the Australian Senate inquiry into its PNG aid programme - that its approach to that aid programme has “enabled rather than remedied state fraud and market distortions in PNG”. In this post, we look at what ISCI says has gone wrong - and how employing Papua New Guineans, empowering PNG grassroots communities, and bolstering civil society can help.

Dr Kristian Lasslett says, that Australia’s approach to aid in PNG is founded upon the idea that making the country more business-friendly is the best way to foster development. The theory is that, by fostering economic growth and investment, a “trickle-down effect” that leads to enhanced human development outcomes occurs.

But Lasslett, of the International State Crime Initiative (ISCI), argues this belief in ‘trickle-down’ aid is flawed in the context of Papua New Guinea. As Radio NZ reported, Australia’s current approach to aid is “incompatible with the reality on the ground, where business has too much liberty.”

Lassett explained what he meant by ‘liberty’:

“When I say liberty, they have the liberty to set prices that are far in excess of the market value of the services and goods they provide; they have the liberty to misappropriate landowner assets, state assets with impunity; they have the liberty to develop completely superfluous projects that are often inflated in price and are not delivered at all or to inadequate quality; they have the liberty, as we've seen in the legal industry, to steal state funds en masse.”

In other words, both national and international business owners (including Australian companies) operate within a “wild west” in PNG, in which they are able to flout the law with impunity, thanks to systemic corruption in government departments and executive bodies. Lassett also pointed out that most of the aid money - funds that are supposed to be benefiting Papua New Guinea - is actually funnelled back into Australia and international businesses:

“What strikes you when you look at the Australian aid programme - where does most of the money go? It goes on Australian higher education institutions, it goes on Australian companies who are now the private service providers of aid, it goes on Australian advisors. Then of course most of the consultation is done with a lot of these international companies and international organisations.”

Dr Lasslett also contests the Australian Government’s claim that its strategy for delivering aid in PNG is based on "extensive consultation with a wide range of stakeholders from PNG and Australia including government, business, civil society and internatinal donors". He says input is heavily skewed in favour of companies and players in sectors such as mining, oil, gas and oil palm.

Lassett’s assessment is both damning and bleak, yet one that has been echoed by many long-time observers of the development industry in PNG. The obvious losers in this cycle of wasted aid and exploitation are Papua New Guineans. Lassett argues that Australia’s aid programme should therefore focus more on listening to and empowering PNG grassroots communities:

“there is a lot of knowledge [in PNG] about how to go about changing things for the better. People are deeply in tune with local development strategies that suit them - their culture, their custom, their ways of life and their ambitions as communities.”

In addition, he says, the Australian aid programme should provide more support to civil society projects and assist the development of a free and independent media in PNG. These are essential foundations for any successful democratic nation - one that all Pacific Islands should strive to build and preserve, and where Australia should, the ISCI argues, focus its strategic aid.

Page 11 of ISCI’s report, submitted to the Australian Senate inquiry, outlines this need to strengthen civil society:

“Civil society in Papua New Guinea remains small and vulnerable; many local NGOs are susceptible to co-optation owing to their size and resources. Yet a vibrant, critical, independent civil society, devoted to the values of human rights, good governance and people-centred development is integral to mobilising the public in ways that can enact substantive political and economic changes (Green and Ward 2012; Lasslett 2012b). Aid that can sustainably assist civil society organisations to grow and independently pursue objectives set at a local level – versus donor established metrics – can help build an independent civil society in Papua New Guinea that is resistant to intimidation and co-optation by forces looking to undermine good governance, human rights and accountability. [emphasis mine]”

A free, independent media must also be promoted:

“There is [...] a critical need in Papua New Guinea for alternative news sources, which can fearlessly investigate and report on corruption, resource theft, illegal land transactions, bribery, procurement fraud, and other illegal practices. By directing aid towards initiatives that promote arms-length investigative reporting, Australia could help support the transformation of the fourth estate in Papua New Guinea. [emphasis mine]”

Other areas identified by ISCI’s report as critically in need of support by Australia’s aid program (with suggestions for how they must be reformed) are:

- Building a muscular higher education system. "If strategically supported, ISCI says, "the higher education sector could be a major spoke in the sort of seismic changes Papua New Guinea needs to unblock the rich potential that exists in a highly committed, politically active citizenry." They emphasise, though, that this support must foster independent thought and research "closely attuned to local concerns and it must be meaningful accountable to affected communities."

- Popular engagement with anti-corruption reform. PNG’s anti-corruption institutions need active, public support or are vulnerable to political attack. ISCI says “only an active citizenry, organised through vibrant civil society groups can buffer anti-corruption agencies from political interference. This popular support requires patient, long term investment in civil society, a free, fearless media, independent research, and education.”

- Anti-Corporate crime legislation and institutional mechanisms (as voluntary codes of conduct are not enough). This is essential for trust to be restored in the private sector. Robust legislative and institutional mechanisms should be collaboratively developed with reformists within Papua New Guinea, to ensure that corporate crime is prosecuted.

- Listening to the rural grass-roots; aid delivery that listens to the people and allows for self determination. ISCI note: “This is not about being ‘politically correct’, it is about investing in those groups with the savvy to transform their communities in sustainable ways.” This is the only way Aid delivery can be congruent with the cultural, political and economic structures in existence.

- Invest in Papua New Guineans, and PNG-led development projects. An end to the fly-in, fly-out approach to aid and the “boomerang effect” of aid money essentially returning to Australia via foreign salaries, and expenses of advisers and consultants. ISCI note: “more aid needs to be invested in the countless unfunded, or underfunded organisations in Papua New Guinea who have a wealth of lived experience and expertise. Equally, where research excellence is needed, support must be given to Papua New Guinea universities to provide it, rather than their already better funded Australian counterparts.”

The evidence suggests that reform to Australia’s aid program in PNG - an ongoing project of noble intent - is essential to stop exploitation and wasted investment. ISCI advises that Australia needs to address “the existing climate of corruption, criminality and impunity that significantly undermines development and security”. And the main way Australia can do that is “to support civil society projects that empower and mobilise the people of Papua New Guinea, who remain the greatest hope and asset for change.”

You can read ISCI’s report HERE or HERE.

WORDS by Pauline Vetuna.

Image Credits:

Image 1 - 'Happy people in PNG' by eGuide Travel, C reative Commons.

Image 2 - 'Poster Money' by Michael Coghlan, Creative Commons.

Image 3 - AusAID Development specialist Colin Wiltshire handing over a 5 year plan towards better rural service delivery to the Hon Elon Mavare at a ceremony in Abaua, Central Province, PNG, 2009 by Francine Thompson/AusAID, Creative Commons.

Image 4 - Second year UPNG medical student, by Ness Kerton for AusAID, Creative Commons.

Image 5 - Vocational training at City Mission Farm, by Ness Kerton for AusAID, Creative Commons.

Image 6 - Gerehu Market Entrepreneur, by Ness Kerton for AusAID, Creative Commons.