Chapter 15
Australia's assistance—strengthening governance
Effective administration
15.1
The committee has clearly identified a range of impediments that impinge
directly on the potential for economic growth in Pacific island countries. As
noted earlier, some of these are inherent structural problems that cannot be
changed—small size, land mass, limited range of natural resources, remoteness
and susceptibility to natural disasters. The circumstances that flow from
these, however, can be managed in a way that makes the economy more resilient.
The committee also found the governments of Pacific island countries have much
scope to generate greater productivity and enterprise by improving their own
performance in service delivery and economic management. In this chapter, the
committee identifies some of the major Australian initiatives that are designed
to assist Pacific island countries build capacity within their bureaucracy and
to improve the overall standard of governance.
15.2
The Australian Government has given a clear preference for assisting Pacific
island countries improve the performance of their public institutions. In his
2008 Budget Statement, the Minister for Foreign Affairs indicated that Australia
would continue to work at all levels of society in partner countries to
contribute to improvements in government capability, responsiveness and
accountability. He announced that spending on governance in 2008-09 would be
approximately 22 per cent of the development assistance program.[1]
The same proportion of Australia's ODA would be allocated to governance-related
areas in 2009-2010.[2]
Statistics provided by AusAID on the sector breakdown for ODA to PNG and the
Pacific indicated that a far higher proportion of funding is allocated to
governance in the region. In 2007–08, it accounted for 46 per cent of total ODA
for the region ($395,287,186 from a total $850,826,693). For 2008–09, it jumped
higher to 52.8 per cent ($524.8 million from a regional total of $992.8
million).[3]
15.3
AusAID explained that the reference to governance 'covers a broad suite
of activities, including the many programs around economic and public financial
management, law and justice and government'. In its 2009 Budget Statement, the
government indicated that it would give priority to improving financial
management and working with sub-national levels of government in partner
countries.[4]
It should be noted that the work of the AFP in Solomon Islands is included
under the term 'governance' and is considered in detail in Volume II.[5]
Public sector capacity
15.4
In the 2008 Budget Statement, the minister announced a new $107
million Pacific Public Sector Capacity initiative that would support public
sector training and workforce development and assist essential public sector
reform.[6]
Six million dollars was allocated for 2008–09. The minister explained that this
initiative would 'address a key impediment to poverty reduction, by helping to
improve service delivery and enable growth'.[7]
In partnership with the governments of Pacific island countries, the initiative
was designed to:
-
establish strong and enduring partnerships between Australia and
the region, particularly between governments and tertiary institutions in order
to strengthen the capacity of local and regional institutions to undertake
public sector workforce performance improvement;
-
address public workforce development needs across the region by
providing workforce development assistance to address priority organisational
and individual capacity needs, especially in leadership and core skills such as
administrative competencies, planning, budgeting and financial management; and
-
support the planning and implementation of public sector reforms crucial
to economic growth and delivery of basic services by identifying opportunities
to support locally-led reform efforts in areas such as public financial
management, human resource management and microeconomic reform.[8]
15.5
There are a number of specific government programs that together form a
multi-pronged approach to helping Pacific island countries address problems
with the performance of the public sector. For example, AusAID referred to the
four-year, $9 million Pacific Executive (PACE) program designed to enhance
the management and leadership capacity of senior public servants in the Pacific
as a way to improve administrative governance. (The 2008 PACE program comprised
40 mid-level and senior public servants from Fiji, Kiribati, Nauru, PNG, Samoa,
Solomon Islands, Tonga and Vanuatu.)[9]
The 2009–10 Budget announced that Australia would provide 20,000 training
opportunities over four years for Pacific public servants to improve core
writing, accounting and administrative skills.[10]
15.6
Developing capacity in managing the financial affairs of state is a key
area in which Australia is directing its governance aid. Through a number of
targeted technical assistance programs, the Australian Government is assisting Pacific
island countries build capacity in key institutions such as treasury and
finance departments and independent oversight bodies including the office of
ombudsman and auditors. The minister explained that this assistance could
include 'training, deployment of advisers, and links with agencies in Australia'.[11]
15.7
AusAID stated that Treasury is one of the government agencies engaged in
a range of capacity building programs intended to improve administration.
Department of the Treasury
15.8
Treasury's work in the Pacific began in earnest in 2003. Treasury has established
a Pacific and Assistance Division with prime responsibility for helping foreign
economic ministries. It supports ministries in Nauru, Solomon Islands and PNG; assists some Treasury ministers in their work; and advises Australia's Treasurer on matters
related to the Pacific.[12]
The bulk of the division's work involves deploying staff to assist 'the
whole-of-government efforts in building functioning treasuries and finance
ministries' in these three countries'.[13]
The Division focuses on public financial management; is involved in
microeconomic reform; and advises on macroeconomic matters.[14]
15.9
Treasury has six staff in Port Moresby, six in Solomon Islands and two
in Nauru. Staff are at the senior level (Executive Level 2) and headed by an
advisor at the Senior Executive Service level. All are advisers with the
exception of one position in the Solomon Islands classified as 'in-line'.
Treasury noted that in Solomon Islands, there is a particularly complex
whole-of-government arrangement because they work with a range of agencies,
including the New Zealand Inland Revenue Department, Customs, and the
Australian Office of Financial Management. Australia's team leader in Solomon
Islands is an under secretary in the Ministry of Finance and Treasury.
15.10
In PNG, Australia has provided support for core governance programs 'designed
to strengthen some of the central platforms of state functioning'. These
programs have 'assisted with better budget processes, improved public financial
management and increased transparency of intergovernmental financial systems'.[15]
Through the Strongim Gavman Program, Australian officials work with local staff
in PNG departments of Finance and Treasury to improve accounting and auditing
practices, and macroeconomic development.[16]
Treasury has a twinning arrangement with PNG whereby PNG officers are located
in Australian offices for three months and Australian officers spend time in PNG helping them with special tasks when PNG requires the necessary expertise.[17]
15.11
As evidence of success, AusAID reported that the support given to PNG to
improve budget preparation and execution was 'reflected in higher scores
against these categories in an independent review of the country's public
expenditure and financial accountability systems'.[18]
The Australia Papua New Guinea Business Council strongly endorsed the Strongim
Gavman Program.[19]
15.12
ANZ was of the view, that although there had been improvements in
financial management, Australian Government assistance would 'be crucial in
helping PNG to build an effective, transparent bureaucracy and to assist it to
address institutional weaknesses...and other necessary reforms across
government'.[20]
Mr Graham, Esso, also saw a continuing role for Australia's assistance. He suggested
that the government could help PNG ensure that 'economic gains translate into
lasting economic and social benefits for all of the peoples of PNG'.[21]
With regard to the PNG LNG project, Esso believed that the Australian Government
has the opportunity to assist the PNG Government by providing 'early support
for the State's macro and micro-economic planning for the Project revenues'.[22]
15.13
With regard to Solomon Islands, AusAID reported that the development of
new payroll and financial management systems and the introduction of an
automated customs system showed the increased capacity of Solomon Islands Ministry
of Finance and Treasury staff and systems. It also noted that 'local staff are
now leading projects such as budget development and corporate planning'.[23]
15.14
Australia is also supporting efforts by Kiribati and Tuvalu to improve
public financial management. The 2009 Budget Statement indicated that Australia
provides annual contributions, linked to reforms, to the Tuvalu Trust Fund and
related budget mechanisms 'to support both recurrent government budgets and
Tuvalu's long-term financial viability'.[24]
One of the primary means by which Australia intends to help Tuvalu achieve
prudent management of its limited resources is through 'continued annual
contributions to the Tuvalu Trust Fund'.[25]
(The committee discussed Tuvalu's trust fund at paragraph 14.31.)
Immigration and Customs
15.15
The Department of Immigration and Citizenship and the Australian Customs
and Border Protection Service devote a significant proportion of their work in
the region to the revenue collection elements and to stopping ‘revenue
leakage’.[26]
Several of its capacity-building projects in Pacific countries focus
predominately on improving border management systems, identity management and
document and data analysis. Customs has four officers based permanently in PNG under the Strongim Gavman Program, one of whom is the Deputy Commissioner of PNG Customs.[27]
The department also has a twinning program, where officers from Australia are
placed in PNG to work alongside their local counterparts. Ms Wimmer, Australian
Customs Service, explained that they are involved in developing manuals and
standard operating procedures and assisting in analysis to identify where help
may be required in the future. People from PNG also work in Australian Customs
so that they can learn 'how a modern customs organisation does work'.[28]
Other agencies
15.16
There are a number of other Australian government departments and
agencies working in partnership with Pacific island countries to build capacity
so that they are better able to perform the functions of state. In its report
on Australia's involvement in peacekeeping, the committee cited the work of the
Australian Electoral Commission. The Australian Broadcasting Commission is
working with national public radio in the region to help strengthen public
broadcasting while the Australian Public Service Commission is supporting its
regional counterparts with human resource and workplace development. Other
agencies working in the region to improve the efficient operation of government
administrations through technical assistance have been mentioned previously,
for example, ACIAR and DAFF. The ADF, AFP and related agencies also assist
Pacific island countries to improve their capability to detect illegal
activities such as in the fishing or forestry areas. The 21-year-old Pacific
Patrol Boat Program, mentioned in chapter 6, has played a role assisting Pacific
island countries to police their exclusive economic zones.[29]
Key institutions—oversight and accountability
15.17
Achieving good governance is one of the four primary goals of the
Pacific Plan. It recognises that Pacific island countries need to improve the
performance of key institutions including Audit and Ombudsman Offices.[30]
The Pacific Plan Good Governance Work Program 2008–2010 stated clearly:
The challenge for countries in the region is to continue to
strengthen their performance in areas of accountability, government
effectiveness, regulatory quality and the control of corruption. Governance
indicators compiled by monitors of good governance, such as the World Bank,
suggest that political and financial accountability, including accountability
by public officials, requires greater attention among public institutions.[31]
15.18
The Australian Government recognises the important role that oversight
and integrity systems have in holding those in public office accountable for
the management of state resources and delivery of basic services.[32]
In this regard, it notes the importance of having 'checks and balances on the
way that the powers of the state are exercised'. In its view, 'transparency of
government decision-making is important in keeping the state responsive and
accountable to its citizens, as well as reducing the opportunities for corrupt
practices'.[33]
The Australian National Audit
Office
15.19
Government auditors have a key role in shining a light on the use of
government revenue and exposing poorly-managed public expenditure and corruption.[34]
Although the capacities of supreme audit institutions across the region differ,
all experience similar human resource capacity constraints. These include
'small numbers of trained and qualified personnel, the disproportionate effects
in small offices of staff turnover or absences, difficulties in attracting and
retaining staff...and the absence of structured career and professional
development paths'.[35]
These challenges intensify as financial reporting becomes increasingly complex
and the scope of audits extends to performance and environmental auditing.[36]
15.20
Australia supported the Pacific Association of Supreme Audit
Institutions to conduct a major review of auditing competencies and
capabilities of audit institutions in the Pacific.[37]
The Australian National Audit Office (ANAO) is a member of this association and
through its membership contributes to the association's objectives to
encourage, promote and advance cooperation among members in their public audit
functions.
15.21
The ANAO also works closely with the PNG Auditor-General to help him
improve performance in core functions. A twinning program, funded by AusAID,
operates whereby PNG staff are deployed to ANAO offices and ANAO staff work in PNG. Currently, the ANAO has two senior officers working for the PNG Auditor-General under the Strongim Gavman Program. Generally, they spend two or more years in
PNG as advisers and provide both technical and strategic management advice and
support to the Auditor-General and his office.[38]
In partnership, the New South Wales Audit Office and ANAO are also hosting four
PNG officers 'who are participating in the respective offices' graduate
programs'. In addition, ANAO informed the committee that it had recently
initiated short-term twinning activities of PNG officers to Australia and ANAO
officers to PNG that relate to 'specific business projects or an identified
skill or knowledge gap'. This program is also funded by AusAID.[39]
15.22
ANAO's primary responsibility is to fulfil its core responsibilities in
Australia. Thus, its ability to contribute to activities and programs designed
to develop professional practices, to raise the standard of public auditing and
the capacities of auditors in the Pacific depends on the resources available
for such purposes. It informed the committee that there have been occasions
when ANAO has 'declined requests for assistance by our peers in the Pacific due
to our inability to devote sufficient resources'.[40]
Commonwealth Ombudsman
15.23
Ombudsmen also occupy an important position in the development of more
effective and accountable state institutions. They not only help to resolve
individual complaints, but have a central role in 'identifying systemic
weaknesses in policies and processes and recommending reforms to public
administration'. Their work often leads 'to significant security, welfare and
financial benefits for the communities in which they operate' and they can also
defuse tensions within a community 'before these escalate to violent conflict'.[41]
The Commonwealth Ombudsman recognised that ombudsmen in the Pacific region have
'an integral part to play in improving public administration in their countries'
which extend to:
...delivering better quality public services in growth-critical
areas such as health, education and the provision of public infrastructure, and
to overcoming some of the key hurdles to business investment and economic growth,
including political instability and internal conflict.[42]
15.24
In 2004, Transparency International found, however, that ombudsmen in
the Pacific islands 'were rarer than auditors and where these offices did
exist, they seemed relatively invisible and ineffective'.[43]
15.25
The Commonwealth Ombudsman is actively engaged in the region. In January
2006, an agreement for a 'Commonwealth Ombudsmen–PNG Ombudsman Commission
Twinning Program' was signed. Under this program, officers undertake work
placements of around three months in length and provide short-term expert
advice and workshops.[44]
The support given to PNG has assisted the Ombudsman Commission of Papua New
Guinea to improve its liaison with key law and justice sector agencies for the
more efficient resolution of complaints. The Commonwealth Ombudsman explained:
The placement to my office in 2006 of the (late) Senior
Investigator John Hevie, commenced a process which culminated in June 2007 in
the signing of a Memorandum of Understanding between the Papua New Guinea
Ombudsman Commission and the Royal Papua New Guinea Constabulary. The agreement
will help to improve the internal administration of complaints within the
Police Constabulary, as well as setting out protocols for more cooperative
relationships between the two agencies where independent complaint
investigation is required.[45]
15.26
The Ombudsman's office has also been involved in helping to forge a
similar agreement with the PNG Defence Force.
15.27
ANZ noted that PNG’s Office of the Ombudsman has 'been able to maintain
a degree of independence and has done a relatively good job as the public’s
watchdog on the conduct of political leaders'. It was of the view that the
Ombudsman's role in policing PNG’s Leadership code 'should be strengthened to
allow it to assume a more prominent role in driving transparency and
accountability across government'. ANZ suggested that continuing assistance by
the Australian Government 'to strengthen PNG’s law and order and accountability
institutions will be important in helping to break serious bureaucratic
bottlenecks and to tackling endemic corruption'.[46]
15.28
The work of the Commonwealth Ombudsman extends beyond PNG. He informed
the committee that his office is funded under the terms of a Pacific Governance
Support Program agreement (PGSP), signed in April 2006, to undertake placements
and network-building activities to the benefit of Pacific islands countries. He
explained:
Six Pacific Islands Countries with Ombudsmen (Samoa, Solomon
Islands, Tonga, Vanuatu, Papua New Guinea and the Cook islands) are currently
active in this network. Under the terms of a second PGSP agreement, the office
consulted widely in 2007/08 on ways to extend complaint handling services to
Small Island States without Ombudsmen.[47]
15.29
He indicated that based on this work, a new Pacific Ombudsman Alliance
was expected to be formed which should enhance 'the sustainability of these
arrangements by putting in place a formal Board structure to improve Pacific
leadership of Ombudsman support initiatives over a ten-year time frame'.[48]
The alliance was launched in November 2008 with the Commonwealth Ombudsman
elected chair.[49]
It is providing advice and support to Palau, Nauru and Niue as they consider
the establishment of an ombudsman's office.[50]
The Ombudsman concluded:
Pacific Ombudsmen have benefited from these programs both
through their impact on fostering systemic improvements in work practices, and
through the facilitation of greater contacts between them and their offices.[51]
15.30
He was of the view that their experiences 'have highlighted the
potential benefits of collaborating with other government agencies engaged in
the Pacific':
One special feature of our approach is the inclusion of other
Australian and New Zealand Ombudsman offices, widening the pool of expertise
available to Pacific Ombudsmen through staff exchanges and visits.
...
We have witnessed the usefulness of a genuinely regional
approach based on facilitating dialogue between public sector specialists in Pacific
Island countries.[52]
15.31
AusAID reported that improving regional networking, including that of
the Ombudsman, through the strengthening of partnerships between Australian
Government agencies and their counterparts was a major achievement.[53]
The Australian Prudential
Regulation Authority
15.32
The Australian Prudential Regulation Authority (APRA) is engaged in strengthening
institutional capacity among its Pacific regulatory counterparts through 'a
series of tailored, principally AusAID funded, technical assistance programs'. These
programs are intended to assist regulators in the region 'to improve the
standards of prudential supervision as part of broader whole-of-government
efforts to strengthen public sector governance in the Region'.[54]
15.33
APRA runs two main programs. Under the first, selected people from Pacific
island countries spend from four to 17 weeks in frontline units in APRA. During
this time, they learn about APRA's processes of prudential regulation with a
view to applying this knowledge to their work in their home country. According
to Mr Chris Gaskell, over the last four years, APRA has accommodated 24 interns
with most coming from the Bank of Papua New Guinea and others from Fiji,
Micronesia, Vanuatu, Cook Islands and Samoa. He explained that with the global
financial problems, APRA's core business has had to take priority and the
intern program has been suspended.[55]
15.34
Its companion program involves on-site supervision in various countries
in the region whereby an APRA expert provides training assistance. Mr Gaskell
explained that the programs are designed so that people do at least two or
three on-site sessions so they can build on their knowledge. Interns on their
return are also encouraged to attend these programs to consolidate their
experience and knowledge.
15.35
In the 2006–07 financial year, APRA conducted three training visits in PNG
which were attended by supervisors from Fiji, Samoa, Solomon Islands and
Vanuatu. During the past year, five training visits were made to Fiji and PNG.
The program extends across banking, savings and loans societies, superannuation
entities and general insurance companies. This project continued in the
2008-2009 financial year.[56]
15.36
Mr Gaskell informed the committee that APRA's program in the Pacific is
unique and its practical hands-on teaching, as opposed to classroom teaching,
is often not something that is commonly done by agencies that are helping to
train.[57]
He drew attention, however, to the limits of the amount of technical assistance
that Pacific island countries can absorb. He explained that a Pacific island
country authority that has a dozen staff in the prudential function can only
afford to have one or two away at any one time.[58]
APRA is also constrained in the assistance it can provide as indicated by the
suspension of the intern program because of current demands on APRA's core
business. Mr Gaskell noted that AusAID's budget for the two programs have
totalled about $300,000 a year, reaching a peak in spending at about $470,000
in 2007. The amount budgeted for 2008–09 was about $600,000 but, according to
Mr Gaskell, it would be rare for APRA to spend the entire amount because Pacific
island countries are unable to make use of the opportunities due to demands on
their own staffing requirements.[59]
Parliamentary oversight
15.37
In 2004, Transparency International stated that the oversight role in Pacific
island countries was often limited by the weakness of parliamentary accounts
committees, which failed to read, debate or act on their [auditor's] reports'.[60]
When asked about the effectiveness of parliamentary committees in their
oversight capacity, Mr Bruce Davis, AusAID, noted:
There are certainly some committees in some countries that
work well. There have been periods, for example, in the Solomon Islands in the more recent past, where they have actually had scrutiny of their
budget in a way that has never happened before courtesy of parliamentary
committees. However, I would certainly not claim that that is a comprehensive approach.[61]
15.38
He agreed with the proposition that there was no effective parliamentary
oversight of public spending in the region.[62]
15.39
A number of Australian bodies provide assistance to Pacific Island
countries to help them strengthen their parliamentary processes. The Australian
Branch of the Commonwealth Parliamentary Association (CPA) has set aside up to
$20,000 a year from its Education Trust Fund to provide training and assistance
for Pacific island countries. Funding will only be considered for equipment if
training assistance is also to be provided. The types of training and equipment
covered by this funding could include: secondments and visits of Australian
parliamentary officers, such as librarians, committee research and Hansard
officers to parliaments in the region.
15.40
In July 2008, the Australian Region Management Committee of the CPA
formally endorsed the following twinning arrangements between Australian states
and territories and Pacific island countries:
-
Australian Capital Territory with Kiribati
-
New South Wales with Bougainville and Solomon Islands
-
Northern Territory with Niue
-
Queensland with Papua New Guinea
-
South Australia with Tonga
-
Victoria with Fiji, Nauru and Tuvalu
-
Tasmania with Samoa
-
Western Australia with Cook Islands.
15.41
Since then, a number of parliaments have taken positive steps to develop
their relationship with their twinned island state. For example, the Speaker,
Deputy Speaker and Clerk of the ACT Legislative Assembly visited Kiribati in
July 2008 to explore opportunities for parliamentary development and assistance
between them. The ACT Legislative Assembly is sending two officers to
Kiribati—one to assist on IT matters and the other on parliamentary procedures.[63]
15.42
AusAID indicated that the vast majority of work concerned directly with
parliamentarians is through the Centre for Democratic Institutions (CDI) at the
Australian National University. It provides core funding to the Centre to assist
Pacific island states develop good governance and democratic institutions.
15.43
The centre works closely with the CPA and with other organisations such
as the UNDP. Its main activities focus on training new parliamentarians, for
example, through induction programs for those newly elected to parliament.
Professor Ben Reilly informed the committee that CDI is currently planning a
training course specifically for ministers in the Pacific. He noted that a
large part of their parliamentary training deals with clerks and other
officials, such as committee secretaries.[64]
Leadership programs
15.44
In chapter 11, the committee noted the Pacific Leadership Program,
through which AusAID works to improve leadership practices emerging at national,
local and regional levels.[65]
Policy coherence
15.45
The committee has documented the work of the many Australian agencies helping
Pacific island countries to promote good governance through improved financial
management and more transparent and accountable administrations. The activities
of agencies such as ANAO, Commonwealth Ombudsman, APRA, CDI and various
departments, including Treasury, Attorney-General's and Customs are making a
valuable contribution. But it remains unclear how well they complement and
support each other's work. For example, through its research and training
courses, CDI could be at the hub of the network of Australians engaged in helping
Pacific island countries improve the performance of their parliaments and
administrations. Yet, it appears to operate in isolation from the activities of
the ANAO, the Commonwealth Ombudsman, the Pacific Leadership Program and
Australian officers working with their counterparts in Pacific island
countries.
15.46
The OECD articulated the committee's concerns about the lack of
integration in this area of governance. It could see benefit in Australia
developing a policy framework on governance that would reflect Australia’s new
orientations and guide its aid program. In its view, this would facilitate
coherence in the approaches of the various Australian departments and agencies involved
in governance programs. It encouraged Australia:
...to develop a policy framework on governance synthesising its
different components and delivery modalities into a single policy. Such a
framework would guide the aid programme and ensure consistency across stakeholders.[66]
15.47
In 2007, Australia's Office of Development Effectiveness suggested that
all technical assistance 'would benefit from strategies to link activities that
may have impacts on governance'. It explained:
For this approach to work well, it should be integrated with
other activities in the aid program, including through sectoral programs and at
a subnational level.[67]
15.48
AusAID's November 2008 annual report on governance noted that overall
its performance in this area 'may be improved by clear strategic guidance that
ties the diverse but interconnected governance portfolio together and supports
governance work within other sectors'.[68]
Committee view
15.49
The committee commends the many Australian agencies engaged in helping Pacific
island countries improve their financial management and to develop a more
transparent and accountable public sector. It believes, however, that the work
of all those engaged in promoting good governance in the region would benefit
from having a framework that integrates their individual activities into a more
coherent, unified effort. It fully endorses the findings of the OECD peer
review and AusAID's own findings that Australia's governance program would
benefit from having a single strategic policy framework that would guide the
activities of its many separate components.
Recommendation 12
15.50
The committee recommends that the Australian Government direct AusAID to
formulate a strategic single policy framework to guide its governance program
in the Pacific region. The emphasis would be on integrating more effectively
the activities of the different departments and agencies engaged in promoting
good governance in the region.
15.51
In the following chapter, the committee continues to explore the role of
governments in the region as enablers of economic growth and development. It
looks at the extent to which the regulatory environment, corruption, law and
order and political stability influence business and investment decisions.
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