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Papua New Guinea country brief

General information

Papua New Guinea has a population of approximately 6.7 million. The Papua New Guinea mainland and its six hundred islands have a total area of 463,000 square kilometres. Most of the people are Melanesian, but some are Micronesian or Polynesian. Papua New Guinea has over 800 known languages. English, Tok Pisin (Pidgin), and Hiri Motu (the lingua franca of the Papuan region) are the official languages.

The spectrum of Papua New Guinea society now ranges from traditional village-based life, dependent on subsistence and small cash-crop agriculture, to modern urban life in the main cities of Port Moresby (capital), Lae, Madang, Wewak, Goroka, Mt Hagen, and Rabaul. Some 85 per cent of the population directly derive their livelihood from farming, and 15 per cent of the population live in urban areas. Population growth is estimated to be 2.8 per cent annually.

The Road to Independence

The Papua and New Guinea Act, passed in Australia in 1949, confirmed the administrative union of New Guinea and Papua under the title of 'The Territory of Papua and New Guinea' and placed it under the International Trusteeship System. The Act provided for a Legislative Council (established in 1951), a judicial organisation, a public service, and a system of local government. The first House of Assembly, which replaced the Legislative Council in 1963, opened on 8 June 1964. In 1972, the name of the territory was changed to Papua New Guinea and elections saw the formation of a ministry headed by Chief Minister Michael Somare, who pledged to lead the country to self-government and then to independence. Independence from Australia was proclaimed in 1975, and Somare became the first Prime Minister of Papua New Guinea.

Political overview

System of Government

Papua New Guinea is a constitutional monarchy. The Head of State is HM Queen Elizabeth II, represented in Papua New Guinea by a Governor-General, currently Sir Michael Ogio, GCMG, CBE. The Governor-General is elected directly by Members of the National Parliament and performs mainly ceremonial functions.

Government structure

Papua New Guinea has three levels of government - national, provincial and local. The National Parliament is a 111-member unicameral legislature elected for five-year terms by universal suffrage. The Prime Minister is appointed and dismissed by the Governor-General on the proposal of Parliament. The Cabinet – known as the National Executive Council or NEC – is appointed by the Governor-General on the recommendation of the Prime Minister.

The Supreme Court, National Court, and local and village courts form an independent justice system.

Political system

Members of the National Parliament are elected from 89 single-member electorates and 22 regional electorates. The regional electorates correspond to Papua New Guinea's 20 provinces, plus the Autonomous Region of Bougainville and the National Capital District. Members from regional electorates also serve as provincial Governors. Each province has its own provincial assembly and administration.

The main parties include the People's National Congress (PNC), the Triumph Heritage Empowerment (THE) Party, PNG Party, United Resources Party (URP), People's Progress Party (PPP), and the People's Party (PP).

Up to and including the June 2002 general election, members of parliament were elected on a first-past-the-post basis and, due to the large number of candidates, they frequently won with less than 15 per cent of the vote. After the 2002 election a system of limited preferential voting was introduced, under which voters are required to list a first, second, and third preference.

To date, no single party has won enough seats to form a government in its own right; all governments have been coalitions. Historically, there has been a high turn-over of parliamentarians at general elections. In 2002, for example, around 80 per cent of sitting members lost their seats. In the 2012 elections, the figure was almost 60 per cent, with 45 incumbents re-elected.

The Organic Law on Integrity of Political Parties and Candidates (OLIPPAC) or 'Integrity Law', was enacted by the Morauta Government in 2001, with the aim of strengthening political parties and the executive government in Papua New Guinea. The OLIPPAC included regulations on the formation, composition and funding of parties; limitations on how MPs could vote on a motion of no-confidence against the executive; changes to the rules on the formation of government, defections from political parties and offences for breaking the law; and restrictions on independent MPs. Sections of the OLIPPAC, including restrictions on politicians changing parties and limitations on no-confidence motions, were declared unconstitutional by Papua New Guinea's Supreme Court in July 2010.

Currently, Papua New Guinea governments are protected by the Constitution from no-confidence motions for the first 18 months of a five-year term. Once the 18-month moratorium expires, a successful no-confidence motion results in an alternative Prime Minister (nominated in the no-confidence motion) being able to form a new government without the need for a national election, unless the no-confidence motion occurs during the last twelve months of a five-year term in which case a national election must be held. With the exception of the 2002-07 and 2007-12 parliamentary terms, changes in government following motions of no-confidence have been a characteristic of Papua New Guinea politics since independence.

Economic overview

Papua New Guinea has a dual economy comprising a formal, corporate-based sector and a large informal sector where subsistence farming accounts for the bulk of economic activity. The formal sector provides a narrow employment base, consisting of workers engaged in mineral production, a relatively small manufacturing sector, public sector employees and service industries including finance, construction, transportation and utilities. The majority of the population is engaged in the informal sector. Migration to major city centres in the past decade has contributed to urban unemployment and social problems.

Real GDP was projected to grow at 7.5 per cent in 2012 - the 10th year of uninterrupted economic growth. Growth is supported by a recovery in mining output, and construction activity connected with the Papua New Guinea LNG project. Inflationary pressures continue, although monetary tightening in 2011 slowed inflation to an annualised rate of around 7 per cent at the end of the year, down from near 10 per cent in the second quarter of 2011. Risks to the economy include the possibility of 'resource curse' impacts from LNG and mineral sector growth, and the disruption to the economy should major resource projects not proceed as expected. Papua New Guinea government revenues remain vulnerable to volatility in global prices for gold, copper and oil.

The ExxonMobil-led Papua New Guinea LNG project represents an enormous growth opportunity for Papua New Guinea. The project is a vertically-integrated upstream natural and liquefied gas development with large facilities in the Southern Highlands and Port Moresby. Australian companies Oil Search and Santos have a substantial share in the project, with many Australian contractors providing technical support during the construction phase.

Australia and Papua New Guinea have a Joint Understanding on effective and transparent governance of the project's revenue, and the Australian Government has provided a loan of US$350 million to support Australian business equity in the project. Australia is supporting the development of a trained workforce by providing qualifications through the A$149.5 million Australia Pacific Technical College (595 students have already graduated). Australia is working closely with the Papua New Guinea Government to support the establishment of a sovereign wealth fund that will help to manage the LNG project's revenues for use by future generations.

Bilateral relations

Introduction

Geographic proximity and historical links have given Papua New Guinea a special place in Australia's foreign relations and the bilateral relationship is one of our most complex and wide-ranging. Government relations are underpinned by the Joint Declaration of Principles of 1987, revised in 1992. The current bilateral agenda includes close cooperation on economic, development, security, immigration and people to people issues.  Our leaders and ministers are in close and regular contact and there is a burgeoning trade and investment relationship.

The Australia-Papua New Guinea Ministerial Forum is the highest-level regular meeting between the two countries and shapes our bilateral agenda.  Papua New Guinea hosted the 21st Ministerial Forum on 6 December 2012 in Port Moresby.  The Hon Senator Bob Carr, Minister for Foreign Affairs, and the Hon Rimbink Pato, PNG Minister for Foreign Affairs and Immigration, co-chaired the Forum. Four Ministers and one Parliamentary Secretary from Australia, and 10 ministers and one Vice-Minister from Papua New Guinea participated in the Forum. Ministers also met briefly with business representatives and received a submission on issues of interest to the commercial sector.  

Key outcomes of the 2012 Forum are summarised in its Joint Statement and include ministerial endorsement of a final text of an Economic and Cooperation Treaty; a review of joint work on a PNG Sovereign Wealth Fund,  a review of police, defence and immigration cooperation and consideration of the bilateral development program. Ministers also endorsed current regional cooperation, including efforts to address irregular migration, and a range of initiatives to strengthen people-to-people links.

Australia has a strong interest in Papua New Guinea's sustainable development and stability.  Australia's bilateral aid program in Papua New Guinea is our second-largest, totalling $491 million in 2012-13. Following the outcomes of major reviews, the program has been repositioned to focus on delivering improved outcomes in fewer sectors. This is reflected in a bilateral Partnership for Development (2008), which is reviewed annually so that the aid program addresses key priorities agreed to by both governments. At the 2012 Australia-Papua New Guinea Forum, ministers reaffirmed the four agreed development priorities under the Partnership for Development – education; health and HIV/AIDS; transport infrastructure; and law and justice.  

Australia's work with Papua New Guinea is also supported by the Strongim Gavman Program, which places experienced Australian government officials in PNG agencies to help strengthen government and accountability.   Australian officials work closely with their counterparts in the areas of economic and public sector governance, border management, transport safety, and security and law and justice. Further information on Australia's Aid Program to Papua New Guinea is available on AusAID's website.

Australia and Papua New Guinea cooperate closely in regional and international bodies, including APEC and the Pacific Islands Forum, and on some international challenges, including climate change. Both, for example, are participating in negotiations in the Pacific for a regional trade agreement known as PACER Plus. Both also support a return to democracy in Fiji, as reflected in PIF leaders' statements. Australia and Papua New Guinea also work together to develop a regional solution to irregular migration.

Australia and Papua New Guinea have a close and longstanding defence relationship based on bilateral cooperation and a common interest in regional security and stability. The bilateral Defence Cooperation Program involves training and technical advice, a number of regular bilateral exercises, and the deployment of Australian Defence Force and civilian personnel in a variety of advisory and in-line roles in the Papua New Guinea Defence Force. Defence cooperation also extends beyond traditional military cooperation. The Australian Defence Force, for example, provided logistical and other support to assist Papua New Guinea deliver a free, fair and safe national election in 2012. Regionally, both Australia and Papua New Guinea participate in the Regional Assistance Mission to the Solomon Islands (RAMSI).  

High level visits

There have been regular ministerial and parliamentary visits between Australia and Papua New Guinea since its independence in 1975.  Recent high level Australian visits to Papua New Guinea have included:

Recent high level Papua New Guinean visits to Australia have included:

Community links

Reflecting the close historical association between Australia and Papua New Guinea, there are over 10,000 Australians in Papua New Guinea at any time, and approximately the same number of PNG nationals in Australia. As at 31 December 2012, there were 814 PNG student visa holders in Australia, 160 of whom were studying on Australian-funded Development Scholarships.

Both Governments have agreed to support efforts to promote a better understanding of each other's contemporary societies - building on the historical political, economic and cultural links that continue in our two communities.

The Papua New Guinea Independence Day Oration provides a public platform for a prominent Papua New Guinean to speak at Parliament House on key issues in Papua New Guinea. Previous speakers have included former Prime Minister Rabbie Namaliu in 2011 and former parliamentarian and women's' leader Dame Carol Kidu in 2012.

A new annual Australia-PNG Emerging Leaders Dialogue, announced at the 2012 Australia-Papua New Guinea Ministerial Forum and to commence in 2013, will bring together 10 young leaders from each country across a range of sectors to exchange views on the bilateral relationship and contemporary challenges.

Australia and Papua New Guinea have also agreed to a Work and Holiday Maker Program. Once administrative arrangements are implemented in Papua New Guinea, this program is expected to allow up to 100 young people from each country to visit and work.

Australia and Papua New Guinea's shared experience in World War II is reflected in continuing interest among Australians to visit and walk the Kokoda Track. The Kokoda Initiative is a partnership between Papua and New Guinea and Australia on the Owen Stanley Ranges, Brown River Catchment and Kokoda Track Region. Activities under the agreement bring together a range of organisations to work towards the sustainable development of these regions and protection of their special natural, cultural and historic value. The Initiative is implemented locally and reviewed annually by Australian and PNG ministers.

Australians and Papua New Guineans share a love for sport. Because of the positive impact sport can have on development outcomes, Australia is supporting the growth of Rugby League in Papua New Guinea with a $4 million Rugby League program that will be rolled out in 2013 under the Pacific Sports Partnership, administered by AusAID and the Australian Sports Commission. The Australia-PNG AFL Taskforce is also working to develop Australian Football in PNG.

Bilateral economic and trade relationship

Bilateral Trade

Two-way merchandise trade between Australia and Papua New Guinea was worth A$6 billion and total trade worth A$7.2 billion in 2010-11, having grown from $5.9 billion in 2009-10.

Major Australian exports to Papua New Guinea are crude petroleum, civil engineering equipment and parts, and specialised machinery and parts.

Major imports to Australia from Papua New Guinea are gold, crude petroleum, and silver and platinum.

Bilateral Investment

Australian investment in Papua New Guinea is worth over A$16 billion. The resource sector has traditionally been a focus of this investment, particularly gold mining and oil and gas. Key Australian companies in the mining and petroleum sector include Santos, Oil Search Ltd and Highlands Pacific Ltd. Opportunities continue to exist for Australian companies to supply Papua New Guinea's resource sector, particularly the Papua New Guinea LNG Project, which will continue to look for competitive services, prompt delivery and good after-sales service. Other key investors in Papua New Guinea include Australia-based companies Coca Cola Amatil, Campbell's Australia Pty Ltd and Nestlé Australia.

Key Bilateral Agreements

At the 21st Ministerial Forum in Port Moresby, Australia and Papua New Guinea agreed on text for an Economic Cooperation Treaty (ECT). The ECT covers trade, economic cooperation, and development assistance and provides a framework for growing economic ties between Australia and PNG. Subject to parliamentary processes in both countries being concluded, the ECT is expected to come into force in 2013.

Other agreements include: the Papua New Guinea-Australia Trade and Commercial Relations Agreement (PATCRA II); the Agreement for the Promotion and Protection of Investment (APPI); the Double Taxation Agreement; and the Torres Strait Treaty.

Business Dialogue

The Governments of Australia and Papua New Guinea welcome dialogue with the business community. The annual Australia-Papua New Guinea Ministerial Forum usually includes interaction with business representatives and the 2011 Australia-Papua New Guinea Ministerial Forum established a Bilateral Business and Officials Working Group, which brings together senior officials from both governments and senior representatives from the business sector to discuss issues raised by the business community. The business representation at these meetings has included, but is not restricted to, the Papua New Guinea Business Council and the Australia-Papua New Guinea Business Council.

The major annual bilateral business conference, the Australia Papua New Guinea Business Forum, also brings together political and business leaders from Australia and Papua New Guinea to discuss business and economic opportunities and issues.

Market access

The Australian Trade Commission (Austrade) is the Commonwealth Government's agency which assists Australian companies to build and implement their export strategies. Austrade offers practical advice, market intelligence and ongoing support (including financial) to Australian companies looking to grow their business in Papua New Guinea.

Updated February 2013