The Intel

As we mark-up 50 years of independence, questions of PNG and Australia’s relationship will be asked almost as frequently as what the next half century means for PNG itself. In the coming months, we’ll hear proposals to strengthen the relationship: like improving migration pathways, calls to shift from aid to trade, and demands for more targeted investment of aid money toward priority development sectors.  

But before we jump the gun, it’s long overdue for the bilateral relationship to undergo some couple’s therapy. We all avoid tough conversations, we suspect they won’t paint the prettiest picture. I would also argue that PNG itself needs to take this same uncomfortable approach when preparing for the independence celebrations.  

The preceding half-century has culminated in a partnership best characterised as transactional, with a sprinkle of cynicism. Much like the tackles in Port Moresby’s local rugby league competitions – perhaps this partnership needs to be picked up and rattled.  

Both PNG and Australia can feel like completely different worlds, despite being “joined at the hip”, as Prime Minister Marape likes to emphasise. The partnership right now is defined at the elite political level and has struggled to break through to integration where it matters most – between its citizens.  

The focus in coming decades must be to build people-to-people links. For this reason, initiatives such as the PNG NRL deal – though I have been critical of it – play an important role. We need to build on this appetite for new ways of working together. Political cycles will inevitably produce much change in both countries, and Australia’s understanding of PNG rests on a narrow base of people. To make the relationship shock-resistant to future bilateral tremors, a new foundation must be cemented – one with people at the centre.  

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After a long hiatus, Australia recommenced providing direct budget support to PNG in 2019, via a A$418 million loan provided through Export Finance Australia. Australia has agreed to provide another loan worth A$570 million this year, taking total Australian lending to PNG to A$3.1 billion.

This recent A$570 million (K1.4 billion) loan with a 20-year repayment period provided at 4.2 percent interest, is considered cheap compared to domestic interest rates on PNG government securities. Australia’s relatively cheap loans coupled with PNG’s decreasing fiscal deficits as a share of GDP are encouraging. The series of Australian loans have likely been requested because PNG has struggled to raise finances domestically from its narrow institutional investor base, even when it raised interest rates on government securities rapidly in 2024.  

Yet it is important to note that Australia has continued to lend to PNG despite the International Monetary Fund (IMF) describing PNG as being at high risk of debt distress. One reason to be concerned with PNG taking on more debt from Australia is that costs have risen since 2019. The interest rate on this year’s loan is higher than the average interest rate on all of PNG’s foreign debt. This will add to PNG’s already large interest burden, comprising around 14.7% of PNG government non-grant revenue in 2024.  

Setting aside other sources of debt risk, for example the PNG economy’s vulnerability to commodity price fluctuations, the fungibility of Australia’s budget support is also concerning. Australia’s loans to PNG have freed up PNG government revenue to fund streams of unaccountable PNG government expenditure. These include MP ‘slush funds’ which have doubled since 2019, enabling PNG Prime Minister James Marape to strengthen his hold of office.  

Budget support has once again become a major part of the PNG-Australia partnership – but perhaps not all for the best.  

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I imagine an enhanced relationship, re-built through less aid, that promotes integration through permanent migration. This would be a PNG-Australia relationship that truly celebrates aid effectiveness where an individual, community and country no longer requires aid because they have achieved full agency.

This should be the shared vision and secured future for the two countries. Australia and PNG can do much better, and pursue a partnership that is much more transformative, than that reflected in NRL team deals.

An exclusive permanent residency visa from Australia to PNG citizens who opt to self-sponsor is a critical puzzle piece in that more optimistic shared future. It could be delivered through a random ballot format, similar to the Pacific Engagement Visa (PEV). We can call it the PNG Engagement Visa. It would be separate from the PEV and operate like New Zealand’s capped permanent residency visa that is exclusive to citizens from its own former colonial territory, Samoa.      

The time to go full throttle on this is now, as PNG prepares to celebrate its 50 years of independence as a sovereign state. After 50 years of aid as a former colonial administrator, this is a fitting point to re-define Australia’s relationship with PNG, by establishing that exclusive migration pathway.  

The PNG Engagement Visa would require less aid. More importantly, it would be the new building block upon which Australia can define a braver shared future with PNG.  

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