let’s start with a free market of ideas

OPINION - COMMENT

Australia's launching of a new development plan for the Pacific Islands went pretty much unnoticed across the region. Pacific 2020 raised roughly two dozen headlines on Google News, with just three of those coming from the Pacific. And yet the plan includes aid spending of some $766.6 million a year, more than half of it - $434.4 million outside of Papua New Guinea. You can read Foreign minister Alexander Downer's full speech below. Australia’s media quickly sliced and diced the 163 page report, offering breaking news headlines through to analysis.

Inside the islands themselves, Australian-owned Fiji Times offered a couple of stories, while the only other country with news media contributing to regional debate was Vanuatu, with a single story.

Everywhere else, silence. YAWNS

Possibly the report induced yawns in the region it is supposed to inspire. Or island media just cannot afford to spend time developing commentary, or their web presence, to a stage where editorials can be picked up internationally. That's probably because most of the journalists who were supposed to benefit from multi-million AusAID training programmes have simply gone - moved on to better paying jobs. And all the public broadcasters who are supposed to be informing citizens about events like Downer's new plan are too busy making users pay for advertising to help pay for staff. Gaps between Australian rhetoric and reality are no better illustrated than references by Downer to the new Pacific Enterprise Development Facility. A search on the web reveals a "coming soon" page that has not been updated since 2003, or at least that's what it says. PEDF is apparently a replacement for the South Pacific Project Facility. Just like the Pacific Media and Communications Facility replaced the Pacific Media Initiative or dozens of other upper case efforts.

WELCOME Island critics question the sincerity of Australian intentions, asking why these funds and facilities and projects seem to be dropped without explanation, acronyms scattered like confetti at a cheap wedding.

Where is the institutional memory? To be fair, however, Downer's earlier announcement that aid would be "untied" is a welcome step forward. In doing so, Australia has hopefully recognised the huge amount of cynicism their aid programmes generate in the islands, including among the media, when most of the cash goes straight back to Oz. Under the PMCF for example, a three year budget of $3 million saw 14 country researchers – the islanders who actually went out and got most of the information – paid a total of $35,000, or about $2,500 each, including this writer. No doubt, much more is being spent in the islands on training.

Deeply concerning is the fact that PMCF has attracted almost zero public comment from island media, even though there are plenty of behind the scenes comments, evidence of the impact aid has on freedoms of speech.

CONCERN Outside of aid and the media, Downer's continued tying of aid and assistance to free or open market liberalisation remains cause for long term concern. His comments about growth being held back by land tenure systems are cause for immediate alarm. Even with existing protections, there are plenty of examples of land rights being trampled upon and projects causing huge environmental damage. Nor is strong economic growth any guarantee of meaningful progress for the people it is supposed to benefit - Pacific Islanders. In the Cook Islands, strong tourism growth for the last two decades have not resulted in happy natives. Most Cook Islanders in fact live overseas. A recent climate change workshop saw leading public servants and heads of NGOs rank tourism as their very last concern when it comes to issues of global warming.

HAPPY? And land tenure is not the problem - tourism in the Cooks has flourished despite strong land protections. Seven times the resident population visits every year – an outstanding success at least in terms of volume. But would Australians be that happy if they had 140 million tourists visiting every year? Probably not. And nor are Cook Islanders. As well as the stress of coping with those kinds of numbers, Cook Islanders make very little from the industry. Rather than raise wages above $5 an hour, mostly foreign employers continue to charge high rates and hire hundreds of cheap workers from Fiji.

Even the arrival in the Cook Islands of the Survivor TV series, free-market television at its best, has been privately criticised for paying some of its workers $5.20 cents an hour - just 20 cents above minimum wage. Economically, exposure on Survivor should be good news, likely as it is to push tourism arrivals even higher than the current rate of 85,000 visitors a year.

CYCLONES

Environmentally, the show could prove a disaster. Cook Islanders already suffer widespread pollution problems from this free market approach to tourism partly because of political interference in environmental monitoring that has seen just three prosecutions in 15 years. Pollution got so bad that schools were closed over several weeks in late 2004. One boy with open sores died of blood poisoning after swimming in the lagoon. Ironically, global warming came to the rescue, and five near-misses from category-five cyclones cleaned out Rarotonga's lagoons and, so far, so good, pollution problems have not again got as bad as they were. It's only a matter of time. EVIDENCE

And yet Cook Islands tourism is counted in Pacific 2020 as one of the region’s “success stories” and as evidence that Pacific Islands can compete in global markets. In March, Standard and Poor’s improved its Cook Islands sovereign rating from BB- stable to positive.

It’s a fair dinkum joke that free-market success causes the same environmental conditions that will literally swamp islands under rising sea levels – conditions Downer denies exist, even as a possibility. In fact, in his foreword to Pacific 2020, Downer calls for “sustained” rather than ‘sustainable’ economic growth. At the same time, global warming sceptics are melting away faster than the polar ice caps. By 2020, climate change sceptics will be in a very small group indeed, and rapid growth decisions taken today risk looking foolish, at best, in the very near future.

Where Downer is more realistic is in respect to reaction to the report.

“Few, if any, governments, organisations or individuals will agree on the full suite of policy options in this report. Most will find favour; some will be contentious. It is my hope that all will be debated and discussed in the spirit in which they are offered. While individual policies may – and should be – contested, what is clear from Pacific 2020 is that there is broad agreement on some of the vital ingredients of growth.”

GENEROUS

Let’s make no mistake – Australia’s assistance is generously given and greatly appreciated. Let’s also pause a moment to remember that before 2000, Australia committed to global targets of spending 0.7% of its Gross Domestic Product on international aid assistance and is still far from that goal.

But back to Downer on those vital ingredients.

“Good political governance, a dynamic private sector, regional cooperation through the Pacific Plan, integration into global markets and well-managed infrastructure all emerged from the Pacific 2020 process as essential for growth.”

Yes to all of the above – except maybe integration into global markets. Even without global warming, pushing small, vulnerable Pacific Islands into global markets risks doing more harm than good.

FOR WHO?

Economies may experience “rapid growth” – but for who? Unless negative factors experienced in the Cook Islands are taken into account, Pacific 2020 risks contributing to the bad governance Australia says it is seeking to avoid. What Australia needs to do more is look at assisting Pacific Islands develop sustainable industries built on intellectual property - culture and traditional medicines, for example. Global consumers are not swallowing pharmaceuticals without question like they used to, and demand for natural alternatives is growing. Australia needs to spend less time helping open up fragile islands for physical exploitation, often by the same commercial interests that write the cheques for Australia's political parties.

CHILLING Downer is right when he says the situation in the Pacific demands urgent responses. His report also notes an “antipathy towards open markets” in the Pacific by “some commentators.” It’s a welcome acknowledgement of public criticism even if the report fails to explain why antipathy is being expressed. Nor does the report state where in the Pacific those commentators are located.

Certainly not in the mainstream news media.

This weblog does not count, being an entirely voluntary effort which has attracted precisely US$27 in Google ads revenue since being set up in 2004 – welcome to the free market! What Australia needs to do first, starting with the news media, is give Pacific Islanders mainstream tools to inform themselves about plans like Pacific 2020 - so they can make informed decisions about their own futures, rather than be led by the nose from Canberra. Tools like proper public broadcasting systems – radio and television. Decent internet connections. And an aid programme that doesn't have a chilling effect on free speech but instead supports information systems that criticise as well as praise.

GLIMMER Instead of only funding bureaucrats to monitor good governance, Downer and his development officials might consider massively ramping up aid inputs for national media, as part of an information-driven response to regional challenges.

In their section on good governance, authors of Pacific 2020 write that “this analysis suggests one glimmer of hope – providing voters with more information so that they can judge whether national policies are working (for example, whether schools or roads are getting better).”

However the Downer report does not suggest how this “information” might actually be provided to voters. Use of the word media occurs just five times, compared with 58 uses of the phrase “economic growth” - a ratio that in turn suggests a whole lot of growth with not much participation. Self-interested commentary? Sure. For free markets to succeed they must first start with a free market of ideas.

Near total silence by island news media to Pacific 2020 suggests the region are not anywhere near ready to participate in either.

Pacific Islands: PINA and Pacific: SPEECH: Minister Downer Launches Pacific 2020 Report

Wednesday: May 10, 2006

Launch of Pacific 2020 Challenges and Opportunities for Growth

Speech by The Hon Alexander Downer MP Minister for Foreign Affairs at launch of Pacific 2020 Challenges and Opportunities for Growth in Sydney 10 May 2006.

It is my great pleasure to be in Sydney tonight to launch the report, Pacific 2020: Challenges and Opportunities for Growth, and to formally open the Pacific 2020 conference.

This report is about a critically important issue in a region that is critically important to Australia: economic growth in the Pacific and East Timor.

The report has some very simple but important messages about the challenges and opportunities for the Pacific region towards the year 2020.

It tells us that without growth, the future of the Pacific region is bleak.

There has not been much growth in the Pacific for some time.

The report tells the simple but disturbing truth that per capita income in some Pacific Island Countries is no higher today than it was twenty years ago.

Some countries have done a little better, but overall the region is being left behind.

The report talks about 'doomsday' and 'muddling on' scenarios. This is not alarmist.

Countries that are doing somewhat better than others are largely doing so because of aid and remittances.

And no country has become wealthy that way.

Whenever I visit the Pacific, and that was as recently as last month I am struck by the vast potential of the region's natural and human resources.

So even when I read reports that talk about the sluggish economies of the Pacific I am still optimistic because I firmly believe that it doesn't have to be this way.

Good governance and good political leadership, effective investment, clear property rights, trade and access to markets and a lot of persistence can make a very big difference to the fortunes of any country.

These factors underpin economic growth and that is what is needed if the region is going to deal with the other challenges it faces: serious health problems, environmental challenges and the very fundamental problem of unemployment.

Not enough jobs is leading to poverty, unhappiness and it results in crime, violence and instability.

In the Pacific, this could create a lost generation of young people unable to contribute to the economic and social well-being of their nations.

Young Pacific Islanders have talent, enthusiasm and energy.

They need and want jobs to achieve their goals and dreams, to make good lives for the families they will have one day.

And jobs will only come from growth.

The Pacific does not have to be a crisis-prone region, left behind, compared with the rest of the world.

Yes, the Pacific islands face problems of isolation and vulnerability.

But, as this report shows, they also have enormous opportunities.

There are sectors that have shown real success.

And there are some countries which have done much better than others or sectors succeeding in a highly competitive international economic environment.

And there are other small countries in other parts of the world which show that just being a small island state does not mean that you have to be poor.

Consider Mauritius which has almost tripled its Gross Domestic Product in the last twenty years.

So we need to ask ourselves: How do you get growth? How do we realize the Pacific Leaders' vision of the Pacific as ' a region of economic prosperity'?

This is the core focus of Pacific 2020 with its examination of growth opportunities and challenges.

Nine growth topics were studied. Wide-ranging consultations were held with scores of Island leaders and experts.

From this work, four common themes emerged: governance, infrastructure, integration and implementation.

Governance has to be improved and government institutions must be strengthened if growth is to accelerate.

Political commitment is essential to meeting the challenges facing the Pacific today.

Instability, a breakdown in law and order and corruption are stymieing growth. Property rights are unclear. Legal systems are outmoded and regulation requirements are overwhelming.

On the World Bank Group's composite 'ease of doing business' indicator the Pacific Island Countries range from 36 th to 142 nd out of 155 countries. The average ranking for countries in the OECD is 22.

Recent events in Solomon Islands only serve to underline the importance of governance reform.

The country faces immense challenges.

We need to have realistic expectations about how much can be achieved and how fast, in Solomon Islands and elsewhere in the Pacific.

In Solomon Islands, the over four per cent real GDP annual growth achieved since 2003 would need to continue to 2025 for GDP per capita to reach the same level as in 1980 .

The region is crying out for better and more reliable infrastructure.

Remote locations more than any others need to be connected by telecommunications, roads, air and sea transport.

The report describes what happened when a provincial government in one of the Pacific 2020 countries upgraded and sealed 10 kilometres of road in a rural area. The whole community was transformed. People tended to their gardens and were busy growing and harvesting to take produce to the market. Public buses came into the community to pick up and drop off passengers. Tax collections almost doubled. Local business flourished, and everyone benefited.

Unfortunately, the story has a sorry ending. The government did not maintain the road. It eventually became unusable again. Pretty soon things returned to how they were before.

Maintaining a road is not a very exciting task for a Government. There are no grand openings with plaques and cutting of ribbons.

There mightn't be any big media story, but people do not necessarily want new roads. They want the roads they have to be maintained.

When services such as road maintenance are delivered, people see governments at work, and they do recognise it and that is not only good of itself, but it goes to a broader issue - it helps people recognise the legitimacy and importance of democratically elected governments.

Infrastructure, ultimately, comes back to governance and good public sector management.

The Australian Government's 2006-07 budget announced last night includes a number of new aid development initiatives.

One is an Infrastructure for Growth Initiative to help address some of the infrastructure needs of the region.

Integration is the third theme of this report.

Regional cooperation and integration into global markets are not options but necessities for Pacific Island Countries.

The importance of regional cooperation to economic growth further underlies Australia's support for the Pacific Plan, with its emphasis on sharing governance resources and creating deeper and stronger links between Pacific Island Countries.

Governance, infrastructure, integration . These are all important.

But the single clearest message from Pacific 2020 is that poor implementation is the most serious constraint in the Pacific to rapid growth.

The problems are known, even the solutions are often known, but they remain on paper. They are not implemented.

Implementation will improve if reform plans are prioritised and realistic, if they are monitored, and if they are based on consultation and backed by political ownership.

Ultimately implementation comes down to ownership, to the choices made, and the leadership shown by people like you, the leaders of the Pacific.

This is not to say the task of implementation is an easy one.

But with your continued leadership, and your perseverance will come success.

The 2020 process has been inclusive.

We welcome the collaboration we have enjoyed with agencies such as the Pacific Islands Forum Secretariat and the Secretariat of the Pacific Community as well as the many individuals who have contributed to the report.

Australia believes in the Pacific vision and has made very significant commitments of resources to the Pacific and East Timor over many years.

Now we stand ready as a partner to help countries make the choices and decisions that will deliver sustained growth and poverty reduction.

As you know I have just released a White Paper on the doubling of the Australian Aid Program by 2010.

This recommits Australia to supporting growth in the Pacific and to deepening partnerships with countries in the region.

The Pacific 2020 report directly addresses many of the issues raised in White Paper and is a practical manifestation of the White Paper commitments.

It underscores that we need to do more to support growth and private-sector development in the region.

It is therefore with great pleasure that I announce tonight Australia's support for up to $22.5 million over six years for two programs aimed specifically at encouraging private sector development in the Pacific and East Timor.

The first is with the World Bank Group's International Finance Corporation.

An increased Australian financial commitment of $12.5 million will enable the corporation's Pacific Enterprise Development Facility to expand its operations and open offices in East Timor and Papua New Guinea.

The facility will work to improve the business environment for small and medium sized enterprises in the Pacific through targeted programs of technical assistance.

This covers access to finance, tourism, the business enabling environment and rural export development.

We look forward to cooperating with the International Finance Corporation on this initiative over the coming years.

And I am also pleased to announce Australia will contribute up to $10 million over five years to the Asian Development Bank's proposal for a Private Sector Development Initiative in the Pacific and East Timor.

This initiative will promote enterprise, investment and growth by addressing the impediments to private sector development.

Australia and the Asian Development Bank enjoy a strong and cooperative relationship as important partners in the Pacific region, and we look forward to enhancing this relationship in the area of private sector development.

It is very important to ensure that there is appropriate donor coordination and engagement with Pacific Island countries on these new initiatives.

I have asked AusAID to work with other development partners to ensure that assistance to the Pacific region on Private Sector Development is coherent, coordinated and demand driven.

Pacific 2020 is an important report, and a valuable resource.

It is short, it is readable, it addresses the Pacific's most compelling challenge, that of growth.

It breaks new ground by dealing openly with underlying, complex problems such as political governance and land tenure arrangements which to date have hindered growth in the region.

There is a lot we can all agree on in this report.

But not everyone will agree with everything in the report. Hopefully that will open up a useful discussion on growth, and the factors that underpin successful growth.

The situation in the Pacific demands an urgent response from us all.

My hope is that Pacific 2020 will stimulate not only debate but also ideas and action in the region to take forward the vision of the Pacific Plan. I hope your discussions over the next two days will take us further down that path.

Thank you.