Papua New Guinea Is in a Governance Crisis – and Australia Helped Put It There

Just before Pope Francis’ recent visit to Papua New Guinea, roadside stalls selling betel nut, a mild local intoxicant, were shut down. While this isn’t good for the many small stall holders who rely on this micro-scale business to get by, on the surface, it probably isn’t worth much news copy. But it stands for something far bigger: the desperate state of PNG and Australia’s role in its decline.

The Pope has gone, but the closure of betel nut stalls – and the sudden end to their owner’s subsistence income – to make the streets look nice for the visiting Pontiff, remains a reality. It is symbolic of the gaps that are growing in Papua New Guinea. An out-of-touch elite consisting of high-level politicians and moneymen is growing increasingly distant from a population suffering spiraling cost of living, crime rates among the highest in the world, and rampant corruption.

Recently, the PNG opposition laid out a long list of the funding shortfalls the Marape government is overseeing. It’s an unofficial report on the halfway stage of the current budget period.

According to these verifiable figures, actual government spending – the funds delivered to date – on medicines was 70 percent less than the budget projections for 2023. On the same calculations, the Public Prosecutor’s office has received 80 percent less than its allocated budget, education is down 77 percent, and health spending is down 73 percent.

The 2024 National Census, the first in 11 years, was supposed to conclude in July. Due to government mismanagement and downright incompetence, this has now been pushed out to 2025. While 150 million PNG kina (US$37.8 million) was put aside in the last budget for the Census process, only 24 million kina, or 16 percent of the total, has been delivered.

It might be argued that the PNG budget is under strain and cannot afford to meet its obligations. Indeed, it’s true that COVID-19 measures struck a mighty blow to the national economy and the country has struggled to recover.

Yet, Prime Minister James Marape found plenty of funds for his own prime minister’s office and for the National Executive Council. Together they actually received an increased allocation of 31.8 million kina over projected funds for this year. That’s more than double the allocated budget – and only halfway through the financial year.

Marape has stayed silent on the accusations, offering only meek explanations around “typing errors” and “glitches.”

Against these allegations of misallocated funds, it’s noteworthy that the Australian government has loaned AU$2.5 billion to the Papua New Guinea government, pouring it straight into the government’s bank account, to be spent wherever it wishes, over the past four financial years.

PNG’s total budget was 27.3 billion kina billion (AU$10.1 billion) in 2023.

Allocating Australian loans for “budget support” means that these funds have limited, if any, accountability or transparency. It’s often unknown just where these funds end up.

These loans are on top of the AU$2.4 billion provided by Canberra between 2022-23 and 2024-25 via Overseas Development Assistance spending and the added gift of a AU$600 million loan for a proposed PNG National Rugby League team.

Almost one-third of the current year’s grants from Australia – over AU$200 million – was for “Governance,” which basically means Australia is paying the PNG government to try and not graft away the money being given to them.

As Australians are suffering cost of living hikes, skyrocketing heating costs through winter, a housing affordability crisis, and other concerns, it's fair to ask whether such funds could be better spent at home. That’s especially relevant when it’s unclear where that money is actually going in PNG.

Papua New Guineans, on the other hand, are understandably confused about how Australia – the self-professed “family” of Papua New Guinea – could squander such large sums on wasted and often non-existent outcomes.

Canberra is not alone in this carnival of largesse. The International Monetary Fund recently approved a loan of 486 million kina, also for “budget support.”

It’s time to call out the use of public funds in PNG, which remains an environment of chronic overspending and opacity.

Throwing money at the PNG government of the day as a geopolitical exercise is not only skewing social and political life in Papua New Guinea, it is affecting Australia too. Those funds could almost certainly be better spent on Australian projects, or at least on sustainable, transparent and people-oriented outcomes in PNG.

Australia’s entire financial relationship with PNG deserves a serious review to ensure that Papua New Guineans and Australians are getting a better deal.