PRIME MINISTER
FOR MEDIA 24 MAY 1989
Today, the Hon. Rabbie Namaliu, Prime Minister of Papua New
Guinea and I signed a Treaty on Development Cooperation
between our two countries. This Treaty sets out the
arrangements relating to future development cooperation
between Australia end Papua New Guinea. The Treaty has
been framed in the context of the Joint Declaration of
Principles which our two countries signed in December 1987,
and which we agreed should guide the development of
relations between us. Under the terms of the Treaty,
Australia will provide Papua New Guinea with assistance
totalling $ 1.5 billion over the next five years.
In reaching agreement on our future aid program, Prime
Minister Namaliu and I have agreed that as revenue from
Papua New Guinea's mineral resource developments begins to
increase in the mid-1990s it will be possible, and indeed
desirable, for Australia eventually to phase out direct
budget support. This is expected to occur by the year
2005, and sooner if this can be achieved. Concomitantly,
our annual project aid grants will increase modestly in
accordance with Papua New Guinea's capacity to absorb such
aid.
While the total financial outlays will remain for some time
the biggest single item in Australia's Aid Program ( 29 per
cent in 1988/ 89), the amounts on which Prime Minister
Namaliu and I have reached agreement represent a decline of
16 per cent in real terms in the total level of aid to PNG
over the next five years. For this period, budget support
is expected to fall from 15 to 10 per cent of PNG'e total
budget revenues, compared to 27 per cent in the early
19809. The new aid levels should also be viewed in the context of
Australia's favourable trade balance with PNG. In 1988,
Australian exports to PNG, our closest neighbour, amounted
to $ 776 million, compared with PNG exports to Australia of
$ 100 million. In addition PNG, where over 15,000
Australians live, ranks as a major destination for
Australian investment overseas. The new Treaty opens the
way for the introduction of more commelcially-related
assistance from which the two countries would derive mutual
benefit. rI0A7&" k
* AC;, W
I l ANNUAL AID DISBURSEMENTS TO PAPUA NEW GUINEA
FINANRCIAL YEARS 1989-90 TO 1993-94
Financial Budget Project Total
Year Support Aid
Sm $ m Sm
1989-90 275 20 295
1990-91 275 25 300
1991-92 275 30 305
1992-93 275 30 305
1993-94 260 35 295
1500
( 036(