Canberra, 28 February 1969

Confidential

Transition arrangements for Papua and New Guinea

[matter omitted]¹

In an interview in Port Moresby on 4th June, 1968, concerning the same issue, the Minister for External Territories (Mr C. E. Barnes) said that:

(1) it would be within the powers of the House of Assembly to pass a resolution seeking self-government;

(2) cognizance would be taken of any select committee resolution of the same character;

(3) Cabinet would have to be satisfied that a House or committee resolution reflected what the majority of the people wanted.

He commented that how Cabinet reached its judgement would be for itself to decide, but his personal view was that this would require a referendum. He also said that in his view independence was another twenty to thirty years away, but added that 'the important thing is not what I say: it is what the people of the Territory say.'

The underlying themes of the above statements appears to be that the pace of political evolution in Papua and New Guinea will be tied to the will of the mass and that self-determination will be dependent on the approval of the majority of the population, and not their acquiescence to the wishes of a political leadership. This is a view which accords with ideals of equalitarianism–which have been a feature of the Australian administration in the past–and had probably helped appease regional anxieties and jealousies within the Territory, and possibly encouraged outside investment. On the other hand it fails to anticipate the growth and potential power of a political leadership in the Territory and the general absence of plebiscites (including in Nauru) as part of the attainment of independence in recent times. It ignores international opinion about administering authorities having a duty to prepare and guide dependent people to accept responsibility for their own government. It disregards the view that it will be easier for Australia to retain real power if the semblance of power is given to the Territory willingly at an early stage. Nor does it recognise other interests an Australian Government might have in promoting or giving effect to an early act of self–determination, irrespective of what the majority of the indigenes may prefer, and the advisability of a policy of going 'too soon' rather than 'too late'–a view endorsed in 1960 by the then Prime Minister (Mr R.G. Menzies) who said that he had come to the conclusion that irrespective of other considerations, it would be better to terminate a colonial relationship 'too soon' rather than 'too late' in order to avoid the bitterness and recriminations that have characterised examples of the latter.

It is the purpose of this paper to suggest that it would now be in Australia's interest to accept and promote a flexible programme of political evolution aimed at self–determination; and to propose a number of transitional arrangements aimed at protecting Australian interests while giving effect to the programme.

International interest in Papua and New Guinea

Australia has been under mounting international pressure to set an early date or a timetable for the independence of Papua and New Guinea. In 1946 a number of United Nations members attempted to have target dates for independence written into each of the eleven trusteeship agreements then being negotiated. Although the administrating powers resisted this proposal at the time, pressure for target dates has continued within the United Nations arena ever since. Australia has persistently refused to accede to demands of this type and in the mid-1950's even found itself alone with Belgium in opposing intermediate target dates. This pressure has increased markedly over the past decade following the independence of a large number of former colonies, and if anything the emphasis has shifted from proposals for a timetable of progress towards self–determination to calls for speedy independence.

At the same time Australia has become more isolated from the world community, and a target of particular attention, in the decolonisation field. Although it is hoped that the greater understanding and appreciation of our position shown at the last session of the General Assembly will increase,² this should not be taken as a change in international endorsement of the ideal of decolonisation. Nor should the current concentration of decolonisation interest on outstanding African problems be seen as a permanent distraction from the Pacific arena. On the contrary, we should be wary of frustration in Africa, and political adventurism in any part of the world, leading to increased international attention on the decolonisation in the Pacific.

Even within the Pacific region we should not count on the British remaining as an administering power for very long after a settlement is made for Fiji (when the majority community wants independence); and on possible Afro-Asian embarrassment over West Irian giving us any immunity from special attention for more than one or two years after the 'act of free choice' is completed.³

Since 1960 nine trust territories (for whom the international community has an accepted special interest and responsibility) have been brought to independence, either on their own or through incorporation with a neighbouring independent territory. There are now only two left, New Guinea and the Pacific Islands (Micronesia). We should not expect international authorities to tolerate an extended continuation of either's dependent status for many years. An indigenous commission has already been set up in the Trust Territory of the Pacific Islands to draw up alternatives, and 1972 has been mentioned as a possible date for the Territory's act of self–determination. (The latter may possibly result in a choice by plebiscite for a 'commonwealth relationship' with the United States along Puerto Rico lines rather than separate independence, an outcome which could have implications for Papua and New Guinea.) Even with increased diplomatic efforts it is unlikely that we could continue the present relationship with New Guinea for many years more without risking an abrogation of our Trusteeship Agreement by the General Assembly, or risking demands that we accept a permanent United Nations supervisory or observatory team in the Territory.

In terms of world respect and influence, Australia gains little, if anything, from continuation of our colonial role, irrespective of the extent of our financial generosity and the considerations which make our administration wanted in Papua and New Guinea. A prolonged refusal to give effect to self-determination is even likely to weaken our standing in the eyes of our Western and Asian friends who now accept our bona fides towards the Territory.

Local interest in Self–Determination

Up to the present there have been no meaningful demands for independence from within Papua and New Guinea, although there has for some time been growing disagreement with facets of the Administration and growing antipathy towards Port Moresby in other parts of the Territory. There are nevertheless signs that political interest is moving in this direction. Recent proposals about the future of the New Guinea islands have included calls for secession and independence in the mid-1970's; the Pangu Pati has advanced proposals for a graduated progress through home-rule, self-government and eventually independence; and several M.H.A.s have recently publicly proposed target dates. None of these proposals appear to have been acclaimed widely throughout the Territory, but they do point to political spokesmen beginning to think and speak of independence. What is probably more important is that irrespective of popular beliefs about self-government and independence, a growing number of Members of the House of Assembly are becoming openly critical of Administration policies, and in some cases hostile towards Canberra controls on the operations of the Administration. They appear to be beginning to appreciate their political potential as M.P.s and are ceasing to be mute followers of a few expatriate members of the Assembly–a development which was evident in the debates of the House in the second half of 1968. It is also interesting that in a published study of the 1968 general elections Mr Wolfers4 noted that in the islands (amongst the longest contacted areas) a reputation for being 'difficult' or even 'anti-Administration' seemed almost a pre-requisite for electoral success; and that in the highlands (the most recently contacted) a reputation as a 'government man' was becoming a somewhat dubious attribute. It is also noteworthy that a growing number of young liberally educated indigenes are complaining of colonial injustices and racial discrimination in the Territory.

It is of course not possible to forecast at what speed demands for political change will develop and move over the next few years within the Territory. The electorate as a whole is basically conservative in its views on constitutional progress, and the more radical forces, such as the Pangu Pati, are not universally popular and have yet to prove their viability. The Territory is extraordinarily dependent on Australian finance and people. Even today the Territory Public Service has only some 540 Second Division officers (roughly equivalent to the Third Division of the Commonwealth Public Service) and less than 15,000 indigenes have completed some form of secondary education. In 1965 the secondary school enrolment in the Territory was only 7,525. These considerations should however not be seen as a serious impediment to the growth of political aspirations or a desire for a non-colonial status.

The very form and shape of the legislature and government in Papua and New Guinea today, and the scope it gives to the free expression of political views, is likely to facilitate an accelerating growth in political competition. This in turn will most likely lead to a mushrooming of political platforms, making it difficult for Australia to withhold governmental responsibilities from local institutions and authorities. The lessons of other decolonisation situations point to a likelihood of demands for independence developing and gathering momentum suddenly and rather rapidly, with little regard for economic or administrative sense. (At the time Ghana became independent in 1958, officers of the Colonial Office said it would need another fifteen to twenty years to bring Nigeria to the same stage of political development. In 1956 a Trusteeship Council Visiting Mission reported that it would be another twenty years before Tanganyika would be ready for independence.) It would be foolish for Australia to pretend that the same could not happen in Papua and New Guinea. A small but growing group of ambitious, confident and potentially charismatic politicians–such as Somare, Oala Rarua, Olewale, Lus, Arek and Eri⁵–are beginning to make their presence felt and display skills in political arts; and the early 1970's will witness the first graduations from the University of Papua and New Guinea. The Australian record in Papua and New Guinea is not without incidents of racial discrimination, nor is the present administration free of methods and practices likely to give rise to popular demands for social reforms–and local control of the means of giving effect to social changes (i.e., the machinery of government). The obvious social differences between indigenes and expatriate underlines the constant threat of a volatile racial situation.

Australian interest in self-determination

A factor that is often overlooked in public statements about the future of Papua and New Guinea is the interest and attitudes of Australians in the issue. Last year the Minister for External Territories complained of some Australian newspapers trying to force the pace of political changes in the Territory, but rarely has the interest the Australian public or an Australian Government might have in forcing the pace been publicly recognised as an important consideration in this issue. Recent statements of government policy have emphasised that the rate of constitutional advance will be dependent on the wishes of the indigenous people; and Australian arguments in international councils have emphasised that changes will be tied to the wishes of the indigenous population. Yet to hold constitutional change to popular indigenous wishes, is to wait for widespread dissent and bitterness to become manifest in the indigenes' attitudes towards the Administration and Australia.

At present popular opinion in Australia would probably support retention of our administrative responsibility for Papua and New Guinea. There is, however, a large well-educated group within Australia who would favour an orderly but fairly early ending of Australia's colonial position; and it is highly unlikely that the Australian public would support retention of our administration in the face of opposition, however small, from a vocal and well publicised group of Territory politicians, without regard to the backing the politicians might have amongst the indigenous population at large. There was, for example, no public questioning in Australia of the decision to grant Nauru its independence when this was sought by the Head Chief.

Bearing in mind the close geographical relationship of Papua and New Guinea to its colonial power (an element which distinguishes it from most examples of European colonialism), the consequential desirability of bringing about self–government and independence to the Territory in a manner that will ensure intimate and friendly relations with Australia in the following years, and the general advisability of going 'too early' rather than 'too late', it is unlikely that any future Australian Government will want to resist unopposed demands by elected indigenous M.H.A.s for more political power to be transferred to Port Moresby. In addition the possible discomfort that could arise out of for ever subsidising a continually increasing budget, and supporting growing development demands, adds weight to the case for easing Canberra's acceptance of full responsibility for the good government and proper development of the Territory.

Problems for self-determination

In terms of domestic, bilateral and international political interests, it would seem to Australia's long term advantage to begin encouraging the movement towards self-government and independence for the Territory; just, for instance, as the New Zealand Prime Minister has tried to do in Niue by informing its legislature that his government was unwilling to perpetuate the existing colonial relationship; and as a British Minister recently tried to do in the Falkland Islands.

Unfortunately the internal situation of Papua and New Guinea does not easily lend itself to such a policy. The Territory takes in 700 different languages and a terrain that does not lend itself to easy communication of people or goods. There is no large tribal, language or religious grouping, and the common history of Australian administration is its principal unifying factor. Even people who have adopted the same Christian denomination belong to different mission groups. Regional differences are quite strong, and centrifugal forces appear to be gathering momentum rather than decreasing at present. It is to be hoped that they will abate soon, but the latest T.I.C. reports indicate increased support for Bougainville separation proposals; and the Melanesian Independence Front (which advocates secession by the New Guinea islands) has not yet withered as might have been expected if it were a transient organisation. In fact the dissension that could develop around secessionist movements, the antagonism between Papuans and New Guineans, distrust between highlands and coastal people, and regional jealousies and dissatisfaction, especially in comparatively less prosperous areas like the Sepik, Gulf and Chimbu districts, could easily outstrip the evolution of rational political forces. This could easily result in Australian authorities having to hold the Territory together in a mandatory way, and take police action against popular movements–all in the full glare of world-wide publicity and prejudice against colonial administrations.

Although there are relatively simple means of diverting attention from regional interests and inspiring national sentiment (such as creation of a common name, a new flag, a new currency, national sports teams), the most successful course would probably lie in giving attention to national political issues, and thereby compel the inhabitants to seek and adopt unified positions. On the other hand continuation of an expatriate administration for a long period could become a principal cause for further growth of dissident movements, and result eventually in the establishment of more than one client government within the present boundaries of Papua and New Guinea. This would, quite obviously, not be in Australia's political, financial or military interests, and it may become desirable to promote a faster growth of mature attitudes principally by placing greater administrative responsibilities in the hands of the more articulate and able indigenes in order to turn their attention away from regional issues and causes.

Similarly, difficulties with Indonesia along the West Irian border, or over West Irian/ T.P.N.G. relations, would find Australia caught in the sight of the world as a 'white colonialist', and subjected to severe restraints in the conduct of its own relations with Djakarta. On the other hand, Australian support for a self–governing or independent state would appear more acceptable, both internationally and domestically, and preserve a greater degree of flexibility for the conduct of relations abroad. The British for instance would have had far greater difficulty in resisting Sukarnoism in Malaysia and Singapore⁶ if the latter had still been British dependencies rather than sovereign independent states.

The processes of self-determination

This paper does not set out to examine the various alternatives open for self-determination in the Territory, as a 1963 paper entitled 'Process for Effecting Self-Determination in Papua and New Guinea' is attached.⁷ Broadly speaking Papua and New Guinea can terminate its colonial status (i.e., enact its right to self-determination) by becoming an independent state or becoming an associated state (i.e., self-governing with Australia responsible for external affairs and defence until the state unilaterally decides otherwise). In terms of legal requirements all that will be needed will be amendment of the Commonwealth's Papua and New Guinea Act and consequential changes made to a number of ordinances by the House of Assembly.

Ideally it would be preferable for the constitutional process to follow a graduated through home rule, self-government/associate status, independence. In some respects the existing pattern of select committees and general elections every four years appears to provide a logical graduation for new steps, but these may not coincide with political pressures, or other factors, promoting changes. It may also be considered ideal for the population to be given a choice of retention of an existing relationship, but such a choice has not been offered in most acts of self-determination in the past. In view of the basic conservatism and regional antipathies ofPapuans and New Guineans at large, it may prove difficult to obtain a plebiscite vote against maintenance of an existing relationship, if such a choice were offered. However an exercise of such an option would hardly receive United Nations approval, and would only prolong Australia's difficulties as a colonial power.

It will in fact probably be preferable to avoid offering a direct choice to the public at large, and from an international and trusteeship point of view it will probably be sufficient for the House of Assembly to vote in favour of independence. Should the House of Assembly opt to become self-governing in association with Australia, then it will probably be necessary for the House's decision to be confirmed by some form of electoral process (i.e., a plebiscite or general elections) before international approval is given.

In this regard the following considerations should also be noted:

(1) No trust territory has so far effected self-determination other than by becoming independent, either on its own or in parts, or through incorporation with an adjoining territory. In cases where a former trust territory became independent as a whole, no referendum or plebiscite was necessary. Referenda or plebiscites were, however, held where the territory was incorporated into an adjacent territory (e.g., British Togoland and the British Cameroons). The United Nations might look at precedent and insist on a referendum being held in the Trust Territory to determine whether it should be united with Papua, but as New Guinea has formed a union with Papua for over twenty years, and is the bigger half, this is unlikely to be raised unless strong objections are made to continuation of the union by New Guineans.

(2) The absence of a high level of democratic processes has not hindered the acceptability of a choice for independence. In the case of Somaliland no one objected when the Italians told the Trusteeship Council that their objective was to develop a small elite to rule the country; and the presence of a disproportionate European and Asian membership in the legislature did not give rise to questions about its competence to decide on Tanganyika's independence. In effect, as long as the outcome is full independence there is unlikely to be any international questioning of the act of self-determination, but if it is anything less there may be an insistence on an international verification of public opinion.

(3) In 1960 the French were able, with the approval of the Trusteeship Council, to give independence to the Cameroons while maintaining an extensive administrative, financial, commercial and military presence. The extent is outlined in the attached Foreign Office Paper JK103117/3.⁸ Two years later however the United Nations insisted that the Trust Territory of Western Samoa become independent without entering into a prior treaty of friendship with New Zealand, the administering power. The General Assembly would probably have taken the same position towards Nauru had a treaty been agreed upon with Australia prior to independence. The Assembly might have difficulty in extending this requirement to a non-trust territory, but they would not ease it just because part of a territory was non-trust.

(4) Except for the Cook Islands, no act of self-determination short of independence has been approved by the United Nations since 1960. Several such territories (Alaska, Hawaii, Puerto Rico, Greenland, Surinam and the Netherlands Antilles) were incorporated or acquired a status short of independence prior to 1960 but none since. In fact the Puerto Rico 'commonwealth relationship' has since been under challenge in the Committee of Twenty–four, and the Committee and the General Assembly have refused to accept a termination of a colonial relationship in the Associated States of the Caribbean. It should however be noted hence that the latter acts of self-determination were made by the legislatures and not by referenda, there were no United Nations observers, and there were no migration rights given for entry to Britain. In the case of the Cook Islands, the state of association was probably approved only because

(a) the act of self determination included a choice of complete independence;

(b) it was witnessed by United Nations observers (about which British and United States authorities were unhappy);

(c) the Cook Islanders retained a right to break the association unilaterally;

(d) the islands were impoverished and the associate status included the right of free migration to New Zealand;

(e) the Assembly was then not well informed on the Pacific, and did not look on New Zealand as real colonial power.

On the basis of the above it would appear that if a choice of an associated status was to be offered at the time of Papua and New Guinea's act of self-determination, it would be desirable to invite United Nations observers to witness the procedures; the more so if it was intended that the choice should terminate the trusteeship agreement in respect ofNew Guinea whatever the outcome.

We should, however, not take it for granted that Papuan and New Guinean leaders will want an option of something short of independence at the time of self-determination, however sensible such a decision might appear to both us and them at this time. In January 1967 Cabinet decided that in the event of self-determination being accorded to Nauru there should be a reservation to Australia of the defence and external affairs power. As it turned out Nauru's leaders insisted on and obtained a legally unfettered independence, despite generally affectionate feelings for Australia.

Political considerations

More important than the legal or international requirements, it will, judging from other decolonisation processes, be highly desirable for the course towards independence to anticipate and be sensitive to political developments, rather than to proceed according to a pre-ordained plan based on economic and administrative logic and good sense. At the moment Australian policy and administration of the Territory can be commended on the grounds of economic and administrative sense, but neither appears to be always politically intelligent.

There is for instance no formal machinery involving the participation of governmental agencies outside than⁹ the Department of External Territories for the consideration of political issues concerning the Territory, although several authorities have an interest in and some experience of these problems. A proposal advanced in 1965 by External Affairs for a co-ordinating policy committee of several departments has not come to anything; and External Territories has, for example, not sought any more than informal consultation with External Affairs on the handling of secessionist proposals. All the best will in the world on the part of Canberra, and the most efficient administration and economic planning, will not ensure a smooth transition and harmonious future relations between Australia and Papua/New Guinea unless an effort is made to ensure that Australian policies and actions are politically intelligent.

On this account it might prove best to promote indigenous officials into positions they appear unlikely to be able to handle adequately, in order to produce a handful who will have at least some experience of higher office before suddenly assuming the responsibilities–especially financial responsibilities–currently exercised by senior expatriates. (This is a view which former British administrators have advanced as a first lesson of their experience.) It may at the same time be desirable to direct a lot more of the Administration's funds to housing programmes in Port Moresby and other urban areas, in anticipation of the urban indigenous population becoming the main centre of dissatisfaction in the transition and post-independence period unless they can see apparent scope for their own social improvement. It may be necessary to formulate schemes for the promotion of an elite drawn from all parts of the Territory, and recognise that the traditional character of the Territory's society does not lend itself to government based on egalitarian norms. It may be necessary to encourage, and even finance, political parties in the Territory to improve the prospects of future governments being cohesive and disciplined. It may be necessary rather arbitrarily to remove comparatively more efficient sections of the expatriate element in the Administration before independence, just because they are involved in politically delicate areas of government (e.g., immigration, broadcasting) or because indigenes are better able to replace them than in some of the less efficient but technical and less sensitive sections. It may be desirable to deliberately and arbitrarily create an indigenous capitalist community (which at present does not exist) amongst the more articulate and commanding indigenes, in order to avert social and political unrest that might easily later result in demands for expropriation of Australian investments. It may become desirable to restrict the level and form of Australian investment in the Territory with a view to avoiding economic and social disparities that could give rise to racial recriminations in the following years.

It is suggested that political questions of the character mentioned above should be the subject of continual review by high level authorities, preferably involving the participation of departments neither directly concerned with nor influenced by past policies, nor the operations of the Territory's administration, but who have an interest in shaping a basis for future friendly relations between a wealthy Australia and a poor Papua and New Guinea. Such departments would include External Affairs, Prime Minister's, Treasury and Defence.

At a different level policies in respect of transitional arrangements might be the subject of review by an all-party parliamentary committee.

Australian interests

In view of Australia's past and present deep involvement in Papua and New Guinea, and the latter's future regional and strategic importance to Australia, there are likely to be a number of interests which Australia will probably wish to protect both in the self-determination process and during the transitional period through to the end of the immediate post-independence phase. It should however be stressed that in view ofNew Guinea's 'international status' as a trust territory the United Nations is unlikely to agree to independence or an associate status coming about subject to conditions imposed by or entered into with Australia prior to the act of self-determination. In the event of a choice for associate status being condoned the United Nations is likely to insist on the new government having a unilateral right to opt out of all conditions and administrative contracts with Australia at the time of exercising its right to complete independence. It is therefore likely to' be necessary to accept that these interests will have to be pursued without binding legal protection until after independence. (This, in effect, amounts to an argument in favour of promoting self-determination while indigenous leaders are more easily susceptible to Australian persuasion.)

In a submission to Cabinet on 10th August, 1960, dealing with a proposed policy statement and pamphlet on 'The Political Future of Papua and New Guinea', the then Minister for Territories (Mr Hasluck) 'assumed that the Government does not wish to enter on any basic review of policy in respect of Papua and New Guinea but accepts such fundamental propositions as the following:

(a) The obligations which Australia incurred, first in Papua and then in the Mandated Territory of New Guinea, towards the country and its people should be honoured;

(b) The relationships in the future between Australia and a self-governing Papua and New Guinea should be such as to protect Australian interests, including trade, defence and the rights of our own citizens;

(c) Papua and New Guinea should never be occupied by peoples other than the indigenous people or fall under the domination of any foreign power'.

Taking the above view as a start, it is suggested that the interests Australia would most want to maintain and protect are:

(a) the maintenance of good faith and understanding between Canberra and Port Moresby;

(b) the maintenance of stable government and effective rule in Papua and New Guinea;

(c) the maintenance of mutually beneficial trading and commercial arrangements;

(d) the protection of Australian public and private investment, and other economic interests, in the Territory;

(e) the protection of our strategic military interests and lines of communication in the area;

(f) control over the entry of Papuans and New Guineans into Australia, and protection for Australian citizens (including missionaries) in the new state.

These are discussed in the following paragraphs.

Good political relations

In the course of time there will be inevitable fluctuations in the state of relations between Australia and Papua/New Guinea. It would seem advisable nevertheless to seek to put these relations on an amicable basis at the beginning in an attempt to avoid friction and bitterness at later times as far as possible. In this the geographical proximity of the two countries will mean that the retention of good will in the transition will be more than a matter of sentiment (as, for example, between Britain and India), protection of investments (as between Britain and Malaysia) or just honouring past associations (as between Britain and the Gambia). The pursuit of this objective would seem best served by according the Territory's new leaders a greater deal of respect and intelligence than they would probably otherwise merit, whether at the stage of self-government, association or independence.

For a start it would seem advisable to remove as much as practicable of the expatriate population identified with colonial practices and replace them with advisers and officials who will deal with the new leaders without reference to the colonial background. Apart from the question of introducing Australians with a different attitude it should also be an important part of the politics of the transition to allow indigenous ministers and officials who move into the administrative hierarchy to be aware of their real power and responsibilities, and to enjoy some of the perks of higher office such as homes in better suburbs. At the same time there will probably be advantages in appointing small advisory teams to almost every department of government to be maintained in Port Moresby, to assist them until such stage as they want to stand on their own. In post-independence Cameroons, for instance, there were French advisers, who did most of the real work, in every department except the foreign ministry.

One of the most important factors in maintaining close political relations between Canberra and Port Moresby in the transition period will however probably be the extent to which the former are seen as considerate and sensitive towards the latter. It will be very easy for Australian ministers and senior officials to tend to look on their Papua/New Guinea counterparts as uninformed, inarticulate and unintelligent; whereas the latter are likely to be sensitive to slights and consider a good deal of their relative disability due to a lack of experience and a denial of governmental facilities. In order avoid the bad effects of such a development it may be desirable to make special arrangements which recognise the need for Canberra to flatter Port Moresby to some extent, and to keep it well informed on the background and reasons for Australian attitudes on particular issues. Such arrangements should include the field of foreign relations but might also extend to other fields such as public finance, trade, law, social services, immigration and defence. At a more senior level it may be desirable to formalise high level ministerial consultations, both prior to and after independence, on a regular basis to encourage a feeling of trust and fellowship (and an affinity and alignment of interest and attitude).

Foreign relations

Prior to independence there could be a stage when foreign affairs and defence will be the sole governmental powers retained by Australia. After independence we would want to maintain easy access and a high level of influence (if not virtual control) in these fields. Prior to independence it will probably be necessary to establish a liaison office in Port Moresby to inform and advise the local chief minister and his officials of developments in the foreign affairs field, and to assist with preparations and training for the establishment of a local foreign and trade service after independence.

It should be recognised that one of the greatest difficulties for a new government in Papua/New Guinea will be how to cope with international factors in their every day operations. This will probably be most acute in the area of trade, commerce and financial matters and lead to the new state feeling, like other developing countries, that the rules of world trade and international finance are designed to leave the unprepared behind. Irrespective of the state of political sophistication in Papua and New Guinea, it is probably going to be many years before it has a sufficient body of both intelligent and experienced officials to deal successfully with the complexities in these fields, for it is an area where experience in decision-making alone will be quite inadequate against the acquired knowledge of other governments and international institutions. Indeed without Australian help Papua/New Guinea will probably fall rapidly backwards in terms of world trade and economic development, and be easy game for the more experienced and less scrupulous commercial operators of Manila, Djakarta, Singapore, Hong Kong, Tokyo, etc.

It would therefore seem desirable to offer or hold open the possibility of Australian governmental services in the international field being made available for Papua/New Guinea in both the pre and post independence period. In the likelihood of an act of self-determination being effected without conditions it should be possible to retain these factors on a de facto basis, but making it known that they will have to be incorporated into a treaty or contract of management, if, and after, the Territory opts for independence.

(This is referred to again below.)

National enterprises

For political and social reasons and contrary to economic arguments, it may become desirable for Australia to assist the growth of national sentiment in Papua/New Guinea through the establishment and promotion of enterprises such as a national shipping line, national radio and television network, a post office and possibly a national trading bank and a national trading company. At present air services in the Territory are completely expatriate owned (T.A.A.,¹⁰ Ansett, Papuan Airlines and a number of charter companies). Domestic sea and land cargo services are mostly expatriate owned and controlled. There is as yet no television in the Territory and radio is confined to a few A.B.C. stations and a small Administration network. Postal services are provided by branches of the Australian P.M.G's¹¹ Department. Apart from the new Development Bank, and a mooted new savings bank, all monetary facilities in the Territory are provided by branches of Australian banks. Nearly all inter–regional, all international trade, and most urban trading, is controlled by individual expatriates or Australian firms such as Carpenters and Burns Philp.

The degree of Australian involvement and control of economic activity of the Territory is quite marked, and possibly unparalleled by any other colonial situation–this has already been the subject of comment in the United Nations and will probably come under closer scrutiny and criticism in years to come. A defence that indigenes are not in a position to organise such activities or to provide significant capital for these enterprises is likely to give rise to rebuke for administrative shortcomings. (In fact, of the total indigenous population of 2,150,000 there are some 35,000 non-indigenes–only 234,000 are mainly in the money economy, 442,000 earn some cash, and 572,000 are subsistence workers). Quite apart from international considerations we should not expect Papua and New Guinea leaders to continue to accept such a position indefinitely (there have already been demands by M.H.A's for restrictions on expatriate trading rights), nor should we expect such a situation to provide a basis for harmonious and comfortable relations between Australia and Papua and New Guinea in the future. This is not a matter of expecting an outright rejection of Australian investment and interest in the Territory, but of making a sensible appraisal of the likely growth of indigenous aspirations and anticipating shifts in emotional attitudes towards outside domination and a low level of local participation in the management and control of domestic business enterprises.

Consideration might therefore need be given to the question and priority of formation of a T.P.N.G. airline (possibly with joint T.A.A., Ansett, Papuan Airlines and Administration ownership); a T.P.N.G. shipping service (with a similar consortium participation); a Territory radio/television service with a similar relationship with the House of Assembly as the A.B.C. has with the Australian Parliament, and creation of a commercial broadcasting network with restrictions on non-indigenous participation; re-formation of the present post office network into a local public organisation; creation of a public and a private Territory trading bank, (with Australian private banks providing a consortium backing for the latter) and establishment of a national public trading corporation. In all these local participation in management and ownership would be promoted and partially underwritten. In the early years all these concerns will have to be managed by Australians, but they will bear a local title, appeal to local pride, involve an increasing degree of local management and local political control. ln many ways these proposals will offend economic or administrative good sense, but they will go some way towards removing the dangers of fomenting discontent and animosity which could be bred by obvious and sharp economic and social disparities equated with race.

Aid

In 1965 a Committee of Heads of Departments which reviewed Australia's international aid programmes reported that 'as a general rule, priority should be given to meeting our responsibilities in Papua and New Guinea and to providing bilateral aid to those countries in South and South-East Asia which are of immediate strategic importance to us'. It went on to say that 'Australia is likely for the next few years to continue to have virtually the sole responsibility for the development of Papua and New Guinea which must have a very high priority amongst our External Aid expenditure'. In June 1965, Cabinet 'found these conclusions generally acceptable as a guide to future aid policy' but said the reference to Papua and New Guinea was 'not to be read as implying that the grant for Papua and New Guinea is merely another of the claims for external aid and something to be determined in the external aid context'.

Since that time assistance to Papua and New Guinea has continued to account for the major part of Australia's external aid funds, and has not been subject to the same competition for budget appropriations as other forms of international aid. It is presumed that future Australian governments will continue to give special consideration and a high rating to Papua and New Guinea because of past international and humanitarian connections and its bi-lateral and regional significance. The form this aid takes (whether under cover of a treaty or treaties, sets of understandings or management contracts) is discussed in the paragraphs immediately below.

At present Papua and New Guinea is heavily dependent on financial grants from the Commonwealth budget (approximately $112 million in 1968/69); and over 60% of the Administration's revenue comes from a direct budget grant from Canberra. There should be little doubt that a sudden removal, or a rapid reduction, of the budget grant would cause economic chaos; and that even a graduated reduction that exceeds the fall in total expenditure on Australian personnel is likely to place severe restraints on development expenditure, and create political and social unrest.

The British until recently appear to have left all their former colonies without providing budget grants over the transition phase or in the post-independence period; but in the last couple of years they have given small budget grants to Malawi and the Gambia. Nevertheless in 1965 they were spending over $20 million p.a. to subsidise the retention of over 10,000 British officers by over 40 former colonies (the equivalent of what a large part of future Australian grants will probably do). The French, on the other hand, have tended to work in a different way with their aid to former colonies. In 1962, soon after the independence of their vast African territories, French economic and financial support disbursements amounted to $(US)68 million p.a. Since then, however, the level of these grants has gradually diminished, and in 1967 came to $24 million, whereas total French official aid to the same states in the same years was $288 million and $270 million respectively, the balance being made up by an increase in technical co-operation from $132 million to $163 million.

Australia's regional and moral interest in aiding prosperity and political stability in Papua/New Guinea points to a likely requirement for us to continue to subsidise the local budget to a large extent. This was foreshadowed in Cabinet's comments in 1965 about assistance to Papua and New Guinea not being equated with other forms of external aid. It was also reflected in Cabinet's direction last October that Asian investment in the Territory was to be controlled so as not to give rise to undue economic influence in the hands of foreign investors, or to a level or type of immigration liable to generate undue problems for the future¹²–even at the cost of foregoing economic advantage. However, it is unlikely that a continuation of the present practice of providing the bulk of our assistance in budget grants will serve our best interests in the transition and post transition period; and the introduction of alternative types of aid and a flexibility between different types is likely to be more in keeping with Australia's basic objectives.

The principal dangers in continuing an annual grant to Port Moresby's budget lie in it tending to be taken more and more for granted and giving little scope for unobtrusively influencing its use. The Minister for External Territories (Mr C.E. Barnes) has referred to economic self-sufficiency as one of our objectives for the Territory, and it is unlikely that any Australian government would be willing to indefinitely commit itself to underwriting the Territory's public expenditure as Australia is doing at present. However the longer the grant is maintained in its present shape the more difficult it will be to reduce later even if the latter goes step in step with improvements in the local economy or returns from unexpected sources (such as oil or copper). It should, on the other hand, not be difficult to persuade Port Moresby governments of the virtues of a graduated timetable of reductions in the budget grant and its conversion to alternative forms of assistance (that will allow for a greater influence on its end use and on overall reduction in size).

The alternatives open to Australia include the following:–

(a) Subsidising the emoluments of expatriate officials whom the Papua/New Guinea government wishes to retain or employ along similar lines to the British Overseas Service Aid Scheme, i.e., topping up with allowances for children's education and home leave, and a recruitment inducement. The Administration at present employs over 3,600 expatriate permanent or contract officers, and 2,200 expatriate temporary officers. There are some 11,000 local officers in public service but only 540 of these are in executive and higher clerical positions. Although not all the expatriate employees are likely to be wanted or retained after self-determination, the initial level could be quite high. In highly technical and specialist fields of administration (including those not yet established in the Territory) sizeable numbers of Australians may be needed for several decades.

(b) Project development aid along the lines of our existing Colombo Plan economic development programme. Under these arrangements, instead of providing grants for Port Moresby to allocate to its general budgetary needs, Australia would undertake to assist or carry out particular projects from its own funds. This would retain a higher degree of control of funds and services in Canberra, enable Canberra to influence the choice of priorities, and to attract more prestige and identification for our contributions whereas the present grant, unlike 'Australian' aid projects in South-East Asia, is not commemorated. (Australia could find itself in an invidious position if after independence the Soviet Union or some other state attracts special praise by offering or undertaking a small aid project in the new state.)

(c) Technical assistance along the lines of our existing Colombo Plan technical cooperation programme. Under these arrangements, Australia would provide shorter term experts and advisers for special projects, as distinct from assistance envisaged under (a) above, scholarships and fellowships for Papuans and New Guineans to train in Australia, and items of specialist equipment. This aid would fit into the pattern of world wide programmes of a similar nature, and in political terms would gain more for Australia than a direct grant to the budget.

(d) Educational assistance is a field in which Australia will have a particular interest for humanitarian, economic, political and social reasons. Many of the expatriate teachers at present employed by the Administration may be retained under (a) above, but even in the longer term it is likely to prove desirable to supply higher level, tertiary and specialist teachers and educationists; and to finance the adoption of certain types of educational facilities. It may be desirable to define a special programme for education assistance in the transition period prior to education,¹³ and to offer a special programme to the independent state to be formalised on a treaty or contract basis. (It is worth noting that the French have made a feature of the supply of teachers in their aid programmes to former colonies–which have generally remained closer to their former metropolitan¹⁴ than ex-British colonies.)

(e) Special contractual or similar arrangements along the lines of (d) above may also become necessary in other fields such as medicine, civil aviation, meteorology, etc.

(f) If, as is likely, both the Australian and Papua/New Guinea governments wish, for political reasons, to see an initial reduction in the expatriate population in urban areas, much of the post self-determination assistance which Australia offers will probably have to be 'invisible'. This could involve the use of Australian services in such fields as trade promotion, commodity negotiation, consular activities, international banking, and engineering and technical services. Some of these will probably continue without interruption from the present time but it may become desirable to define, and if possible eventually formalise, these services. From the point of view of the welfare of Papua and New Guinea, facilities in the field of trade will initially probably be the most important but the range of services could extend to offering the best advice and accumulated knowledge of all governmental departments and agencies in Australia on a contractual or treaty basis.

Monetary integration

Papua/New Guinea is at present an integral part of the Australian monetary and fiscal area, an asset which gives it many advantages of opportunity for sound economic growth. In fact it is at an advantage over other parts of the area because of its lower rates of taxation and preferential controls on bank credit operations. It has no foreign reserves of its own, a very low national debt of only $25 million, and virtually no foreign debt. Former British colonies usually operated with a currency issued against sterling holdings, but they did not form part of the British monetary and fiscal area, and had their own reserves and debts. On independence, the alternatives open to the new state of Papua and New Guinea would be to establish its own monetary system on the basis of gold, foreign reserves and I.M.F.¹⁵ rights; to establish its own exchange system within the sterling area; or to remain a part of the Australian monetary area. A fourth alternative could possibly emerge if Australia decided to create a free exchange system for the small Pacific territories based at Sydney.

Papua and New Guinea at present does not hold foreign reserves in its own name, and in view of the wide imbalance in its trading figures it would have great difficulty in establishing a stable monetary system able to attract external investment. Without complete Australian backing for its monetary arrangements, it would not be popular in the sterling area. It will, in any event, have difficulty in effectively staffing a central banking organisation with local officers for many years to come. There would appear therefore to be overwhelming advantages for the Territory (and general advantages for Australia in terms of promoting regional prosperity) for it to remain a member of the Australian monetary and fiscal area prior to, and for some years at least after, independence, despite restraints this will impose on its own monetary and fiscal programme. This will inevitably cause complications in respect of banking control and the sharing of loan authorisations as the new government gains confidence; and in the long run the local government will no doubt want to be master of its own operations (especially as some of its less sophisticated leaders may see their government's comparatively low national debt as a form of subsidy to Australia). Consideration might need to be given during the transition period to preparing the ground for a possible separate Papua/New Guinea monetary area, should Port Moresby wish to make a break; and at this stage action might be taken to check capital transactions, so that if an early break does occur the Reserve Bank and Treasury will be able to produce verifiable figures for reserves and debt commitments of the Territory.

Commercial integration

On all accounts the Territory is not well equipped with personnel to cope with the complications and complexities of either domestic or international trading arrangements. Most of its trade is controlled by Australians. Most of its exports and imports are with Australia; and most of its exports would not be competitive in international free markets. The difficulty of communication and lack of accumulated knowledge which indigenous officials are likely to suffer could prove a serious hindrance to development of their international trade for some years. Its dependence on the export of agricultural products in highly competitive markets is likely to prove a serious disability after independence unless it is able to depend on preferential access to Australian markets. It will therefore probably be necessary to provide guaranteed markets for the Territory's products, and to provide advisers and negotiating and marketing services until well after independence. Early consideration might therefore be given to ways of building in guarantees for the Territory to maintain its trading position after independence. This might involve establishing a 'special relationship' between the Territory and Australia that will weather constitutional changes in the former's status. It could involve creation of a South Pacific free trade area linking Australia and nearby island states. It might mean copying the relationship a number of African states have negotiated with the E.E.C. It might amount to repeating the twenty five years preferential trading arrangements entered into between the Philippines and the United States at the time of the former's independence.

Defence

At present the Pacific Islands Regiment and the T.P.N.G. Naval Division form part of their Australian counterparts. They come under the direction of the Australian Army Board and Naval Board respectively, and their costs are absorbed in the Australian Army and Navy budgets. There is no local air force. On the other hand the T.P.N.G. Police (some 3,000 strong) is a separate entity on its own under the overall direction of the Minister for External Territories and the Administrator.

From a political point of view the development of indigenous forces serves several purposes:

(1) They should help engender feelings of nationalism; and through their integration of recruits from all regions breed a nationalist outlook. (By contrast the police force has tended to recruit members for work in their own regions and has not overcome parochial attitudes).

(2) They should provide a 'first line' in the event of border problems, incursions or more serious difficulties with Indonesia.

(3) They should provide a 'first in' force for internal security operations, and thereby reduce the likelihood of 'white' Australian troops being used in this work.

(4) They could provide a 'long stop' for the maintenance of a constitutional and/or pro-Australian administration in an independent Papua and New Guinea.

Anything that helps reduce regional antipathies and discourages disunity will be to Australia's benefit. In the event of military operations against Indonesians, it will be politically desirable for local ground forces to be seen taking the brunt of any probes before Australian forces are deployed in defensive or retaliatory operations; and logistically it could be more efficient to use local land forces in operations within the Territory rather than bring in 'white' troops from Australia. The same general argument would apply to the character of forces used for internal security actions. It would be foolish to look on local armed forces as a permanent core of strong pro-Australian sympathies, but their officers are likely for some time to harbour pro-Australian views and admiration for Australian political and social standards, irrespective of whatever sentiments prevail in civilian circles.

For these reasons it is likely to be in Australia's interests for the strength of the local armed forces to be maintained or expanded, and for their discipline, equipment and training to be kept up to acceptable standards. On the other hand an independent and inexperienced government in Port Moresby faced with problems of balancing its budget could easily be tempted to reduce the size of its armed forces; and indigenous officers left to themselves for a while are likely to allow standards to slip quickly. It is therefore likely to be desirable to continue our present policy of meeting the cost of the indigenous military forces through our own armed service appropriations for as long as politically possible, and to propose a continuing scheme of direct assistance once the local government wants to extend its financial controls over all public expenditure in the Territory. (This would probably not occur prior to independence as during an associate status the military forces would remain under Australian control.) The latter scheme could consist of providing funds for the armed forces as a separate and direct grant, with provision for the secondment of Australian officers, the conduct of training and the supply of equipment. As an alternative, in the event of the local government wanting to assert effective budgetary control over the activities of its armed forces, the size of the major annual grant-in-aid could be made contingent on a specified part of it being allocated to the forces for agreed defence purposes and projects; and on the operation of a large military assistance mission with access to all, or most, parts of the local defence establishment.

A more complex situation could arise in the likely event of Australia wishing to maintain military facilities under its own control in the Territory. An obvious probability is the R.A.N. base at Lorengau, Manus Island; and the retention of air fields, army barracks and depots may be considered expedient at the time of self-determination. A number of former colonies, including trust territories, have retained deployments of the armed forces of their former administering powers well after independence. Very few of the African nations in fact came to independence without some military arrangements with its former administering power; and even today France has military units located in Senegal, Ivory Coast, Cameroon and Madagascar, as well as military training missions in many of its former colonies, including Cambodia. The British maintained senior officers in the armed forces of former Asian and African countries for several years after independence, and today retain sizeable forces in Malaysia and Singapore, and bases (which she does not propose to abandon) in Cyprus and Malta. Despite this background, today's rabid decolonisation forces in the United Nations are likely to be critical of any appearance of military commitments (especially in the trust territory) in the process of terminating our colonial relationship, the more so because of the recent Committee of Twenty-four's communist-inspired report on military activities in dependent territories.¹⁶ This may pose problems for Australia at the time of T.P.N.G's self-determination, and it may be necessary to allow the act to take place without any formal commitment or public understanding of future military arrangements. This possibility in itself provides an argument in favour of maintaining a heavy Australian subsidy to the forces through to the post self-determination stage in order to preserve a strong bargaining hand to obtain satisfactory base agreements later.

Cultural links

One of the features that is likely to distinguish the relationship between Australia and Papua/New Guinea from those between Australia and other nearby states to the north for several generations will be its cultural links with Australia. The potential strength of these links can be seen by the bonds which Britain and France have kept with most of their former colonies, and the general cultural modes and alignment of states according to the languages and social attitudes they have acquired from past colonial relationships. Papuans and New Guineans have acquired English with an Australian accent and Australian modes in sports, musical tastes, drinking habits and religions. In West Irian, by contrast, indigenous Papuans are being subjected to Malay language and to Javanese/ Muslim tastes and attitudes. At present the level of cultural development in the Territory is relatively low, and a greater impression on local feelings can be made by visitors like Slim Dusty than a string quartette. The level is likely to rise only slowly but a programme of cultural exchanges geared to popular developing tastes would help satisfy the people's desires for mental pleasure in a comfortable medium; and thereby reduce the risk of excessive exposure to foreign influences or feelings of abandonment.

This suggests formulation of a programme of cultural exchanges and a flow of films, articles and radio features to maintain an Australian presence and influence in the Territory. In view of the absence of strong local traditions the retention of an Australian cultural influence will engender a yearning for close ties with Australia, and reduce the possibility of a cultural abyss which could give rise to erratic actions. With the likelihood of worldwide satellite television in the next five to ten years it might prove worthwhile to contemplate a television station for the Territory in the near future despite economic arguments against this, in order to establish Australian pre-eminence in the programmes the indigenes receive. Apart from the general cultural benefits of television, it would provide a help to the smooth management of the process of self-determination.

Immigration

One of the major obstacles to congenial relations between Canberra and Port Moresby in the future, and a problem that could easily mar relations in the transition and post-independence period is the question of immigration. Up to date Australians and most other European expatriates have had a virtually unrestricted ability to live in Papua and New Guinea. It has been Government policy to prohibit non-European expatriate settlement (apart from concessions to the Chinese community left over from German times) and its recent decision on removing discriminatory restrictions on Asian investment recognised a need to avoid unnecessary Asian migration into the Territory. Mr Hasluck in a submission mentioned earlier referred to an objective of preventing alien settlement. This is likely to continue to be the general policy of any indigenous government, but its views may not always coincide with Australian practice nor with what we would consider to be in their best interests. An indigenous government might, for instance, be attracted by the availability of low cost teachers from the Philippines or Ceylon; or might easily be induced by Japanese or Taiwanese investors to admit Asian labourers for foreign owned undertakings. It should be possible to retain a guiding hand at least on Port Moresby's immigration practice up to the time of independence, but it may be necessary to make special arrangements for the post-independence period. The provision of overseas consular and visa services for Papua/New Guinea in the immediate post-independence period should help for some time, but the shape and degree of co-operation will probably depend on the extent of consultation that is effected in the broader immigration field.

As mentioned above, Australians have had virtually no real restraints on their residing in Papua and New Guinea. Their protection and rights will however be a major problem for Australia in the post-independence period and will no doubt require the establishment of consular posts in major centres such as Lae, Madang, Goroka, Rabaul, and Kieta as well as Port Moresby. It may be necessary to provide a consular service within the Territory prior to independence should a separate Papua/New Guinea citizenship be created, and the local government begin to legislate against non-citizens or on issues such as land and labour in a way which affects the rights of the Australian business community. There will in any event be some sections and certain expatriate individuals whom indigenous governments will want to expel soon after independence, if not before. There will inevitably be difficulties over missionaries.

On the other hand more acute problems could arise over the rights of Papuans and New Guineans to enter Australia. At present there is a virtual ban on their entry for residence (except for a few categories like those married to Australians) and no Australian government is likely to agree to uncontrolled movement between the two states in the foreseeable future. Up to date there has been little interest amongst the indigenes about rights of migration to Australia, but there have recently been cases of educated indigenes questioning our policy and objecting to their need to obtain permits (or 'dog collars') to visit Australia. This disquiet will most probably grow amongst urban and educated indigenes (even if fomented by idealistic Australians), and could introduce moments of discomfort into official relations. Odd cases of the 'Sergeant Gamboa' type¹⁷ could prove particularly harmful to general relations.

Very few indigenes are in fact likely to want to come here to live, although pressure for both this, and rights of unrestricted temporary residence, will undoubtedly grow as more and more people move to urban areas and receive higher educations. They may object to our policy as racist and unfair and may propose reciprocal restrictions and expulsions of Australian settlers and businessmen. Consideration might therefore be given to establishing a form of special inter-governmental consultation on migration in order to maintain unobtrusive controls on immigration during and following the transition period. This could involve regular consultation with Papua and New Guinea ministers and officials to discuss conditions and implications of entry both ways in terms of economic and social factors. At these meetings agreement could be sought on categories of entrants for admission in each direction, and thereby, in return for allowing a small controlled intake of Papua and New Guinea migrants into Australia (which will probably be unavoidable), we will appear to be sharing responsibility for the¹⁸ control with the Port Moresby government. It is just possible that provisions for consultations as outlined above might overcome international objections to an act of self-determination in favour of an associated status without accompanying full rights of immigration (as are given to Puerto Rico and the Cook Islands).

West Irian and the British Solomons

The future of Papua and New Guinea is complicated by questions about future relations with West Irian and the British Solomon Islands. The division of the island of New Guinea into two parts, and the Melanesian people into three or four separate territories, will always be a potential source of political disquiet or grievances for a super nationalist movement. However, at the moment, a distinctive characteristic of the Melanesian community is its lack of traditional links, language or religion, or a hereditary or social hierarchy, the absence of communication between its various villages and tribes, and its lack of ethnic feeling or nationalist aspirations. The latter may emerge later but at the moment it does not pose any problems, except in the confined areas of Bougainville/northern British Solomons, and the Papua/Queensland border.

The likely course of development in West Irian was recently discussed in JIC (Australia) Paper (68) 46.¹⁹ From this it can be seen that while discontent is likely to linger on in West Irian, there is little prospect for the territory becoming other than a poor outer province of Indonesia. Conditions in West Irian may give rise to occasional expressions of concern, and cause excitement in Papua and New Guinea political circles at times; and economic and social disparities between the two halves of the island may lead to problems with refugees and difficulties along the border. There is, however, a lack of public interest about the western half in Papua and New Guinea at present; and unless there is a dramatic development of an indigenous nationalist movement in West Irian, the two parts of the island are likely to drift separately, generally disinterested in each other.

In the event of problems arising over refugees, border demarcation, diplomatic malpractices, or at worst, a revival of Sukarnoist policies, Australia will in all probability be called upon to assist. In such circumstances Australian Governments should anticipate the people of Papua and New Guinea expecting it to accept responsibility for the integrity and borders of the state it either is still protecting or which its predecessors helped create. Popular opinion within Australia will probably tend to much the same view.

On the other hand Australian governments will need to bear in mind international reactions to any action taken in this respect, and the effect such action could have on Canberra/Djakarta relations. Clearly our legal and moral commitments will bind Australia to protecting the integrity of the Territory both prior to and after its independence, but in any circumstances the international positions will be much stronger if Australia is seen to be backing clearly articulated local views rather than as protecting its own interests with little regard for local popular opinions.

Although West Irian on the surface appears the more likely source of trouble in the transition period, there could be more difficult problems with the British Solomons because of closer similarities of administrative background and introduced language and religions. The latter in fact gives rise to a larger problem which Australia will have to face in respect of the British Solomons, the New Hebrides and the Gilbert and Ellice Islands, when the British terminate their colonial interests in the Pacific. All three dependencies use Australian currency (in the New Hebrides, in conjunction with French currency) and are economically and commercially orientated to Australia. All are basically poor and impoverished, have no indigenous armed forces, are faced with difficult problems of communication, and suffer from a dearth of educated or ambitious indigenes. All three could become an embarrassment and potential danger to Australia if they are left impoverished and without outside material and financial assistance in the future. In the long run at least Australia is likely to be compelled to become the principal source of revenue for the territories (as in effect it already is in the case of the Gilbert and Ellice Islands through purchases of phosphate) as the British are not likely to provide more than a nominal and limited grant to each, and Britain, the United States and France are likely to look to us to assume principal responsibility for their welfare.

The B.S.I.P. on its own could be a potential source of embarrassment for Papua and New Guinea if left as an unendowed and unprotected neighbour, the more so if envious eyes in the southern Solomons look at the rewards flowing to Port Moresby from the copper mining on nearby Bougainville. British administrators in Honiara have in the past referred to the future of the Protectorate as an Australasian one, and have apparently encouraged Solomon Islanders to think along these lines. It is hard to see how any other outlook could prevail there, or in the other two territories.

From Australia's economic and defence point of view incorporation of the Solomon Islands into Papua and New Guinea would seem desirable. A proposal of this nature would probably have easily gained acceptance in both Papua and New Guinea, and the Solomon Islands, a few years ago, and it may be acceptable today but there is no certainty of it being approved in future years. Unforeseeable economic development may lead²⁰ the people of the Protectorate seeing better prospects for themselves on their own, or more likely, in a union of islands including Bougainville; and indigenous politicians in Port Moresby may in the future look on incorporation as implying a thinner spread of Australia's assistance to accommodate people with whom they have had no real contact, and for whom they bear no electoral responsibility. The position is already complicated by the growth of dissident sentiment in Bougainville in particular, and in the other islands of New Guinea in general. Recent intelligence reports indicate that some of the Solomon Island's politicians have been attracted to the idea of union with Bougainville, especially in view of the latter's copper potential; but that ideas of such a union have apparently lost ground amongst Bougainville Islanders to ideas of separate independence or a federal relationship with Port Moresby.

Despite these shifts the fact remains that ethnically the people of Buka and Bougainville are closely related to the peoples of the northern British Solomons, and there are apparently close family links between people of southern Bougainville and of the adjacent Shortland Islands (which lie just south of the arbitrary line drawn to demarcate the British and German territories as part of a deal over Tonga). It may be desirable to seek a permanent adjustment of the border to unify the Shortland Islands with Bougainville at an early date; but any action in this direction will give rise to the problem of the entire Solomon Islands Protectorate. It would be unwise for Australia to condone or acquiesce to secessionist or even federal demands within Papua and New Guinea as this would make it more difficult to promote national unity; it would mean substantial increases in the financial needs which Australia will have to subsidise; it would inevitably give rise to further separatist movements based on whim or selfishness rather than reason; and in the case of Bougainville it could mean the loss of the benefits of the copper mining in the Territory as a whole. One of the worst legacies the Australian Administration could leave behind for a new indigenous government would be a lingering secessionist movement, and from a defence point of view the fewer governments we have as near neighbours the better. The discontent on Bougainville should not be irreversible and could probably be appeased through better local administration and a more beneficial allocation of royalties and other benefits to the island and its people–preferably now rather than after the returns begin to accrue.

Nevertheless this assumption may not prove to be the case, and in any event consideration might be given to whether or not the interests of future Australian and Papua and New Guinea governments might not be best served by an early incorporation of the British Solomons into the existing territory. Such a move would almost certainly weaken the case for secession in the New Guinea islands, especially Bougainville, and offer a solution for the problem of the future welfare of the Protectorate. As mentioned earlier, the trend is probably against such a proposal being acceptable in Port Moresby political circles in the future, but the degree of malleability of the present membership of the House of Assembly is probably sufficient for a proposal to this effect to be endorsed–provided it is first approved by the people or legislature in Honiara. Although an enlargement of the present union would attract attention to the territories in the United Nations, there should not be insurmountable difficulty in gaining approval for incorporation, provided of course that both legislatures have given clear support for the proposal and no dissident group makes a public outcry against it. There is nothing in our Trusteeship Agreement²¹ which would legally prevent a union provided responsibility for administration of the Solomons was first handed to Australia. (Article 5 of the Agreement says Australia shall be at liberty to bring New Guinea into a customs, fiscal or administrative union or federation with other dependent territories under its control ... )²² In any event the above factors point to a need to consider establishing a diplomatic office in Honiara to ascertain local thinking on future political courses and to influence local officials and politicians to helpful attitudes about future regional relations.

The preceding reference to the Papua/Queensland border raises the question of whether early moves should not be commenced to transfer Boigu and Saibai Islands and their Papuan inhabitants to the Territory of Papua and New Guinea. Both lie just off the Papua mainland and their retention as part of the Torres Strait area of Queensland seems to serve no Australian interest.²³

Departmental arrangements

There have in recent times been several public suggestions (including within the T.P.N.G. House of Assembly) that departmental responsibility in Canberra for Papua and New Guinea should be vested in the Minister and Department of External Affairs rather than the Minister and Department of External Territories. Within the Territory these have often been associated with criticism of the degree of control exercised over the Administration by the Department of External Territories from Canberra.

At present there is probably not a strong case for External Affairs to take over the duties of External Territories, but there is a need for closer consultation and co-ordination of policy between the two departments; and for External Affairs and other interested departments to participate in deliberations about what is politically intelligent for the Territory. External Affairs, with an eye to the future and to overseas representations, already has a need for more intelligence about political developments and personalities in the Territory. At present our principal source is the Territory Intelligence Committee constituted under the JIC structure, and not the Department of External Territories. The latter exists essentially and primarily to conduct departmental responsibility in Canberra for Papua and New Guinea (it is also responsible for three small island territories and phosphate matters), and has not been concerned with any breadth in international questions, or for that matter with other decolonisation issues. It is organised to keep a close watch on the use of Australian funds in the Territory, and to carry out many administrative functions that should, in the next few years, be progressively assumed by Port Moresby–if for no other reason than to meet rising aspirations and avoid a growth of political frustration amongst indigenous leaders. If and when the form of Australia's aid to Papua and New Guinea changes from a straight out budget grant and direct expenditure by Australian departments to project aid, technical assistance, tied grants, special services, etc., there will be a case for drawing on External Affairs experience in the management of such aid. Once questions of citizenship and consular facilities become important, External Affairs experience will again have to be drawn upon. When the Territory becomes self–governing (or a state in association) a principal function of government reserved for Australia will be the External Affairs functions. Questions concerning West Irian and the British Solomons will be primarily the concern for²⁴ External Affairs.

As mentioned earlier it will probably be desirable in a few years' time for External Affairs to have a liaison office in Port Moresby to keep the local authorities well briefed on international matters of interest to them. Consideration might however be given to locating an External Affairs office in Port Moresby in the near future irrespective of the timing of the next and future constitutional changes, in order to commence the process of liaison with indigenous politicians and officials, and to provide a source of information and intelligence unaffected by operational administrative matters.

Consideration might also again be given to the early establishment of machinery for closer consultation and co-ordination on policy matters between External Affairs and External Territories (possibly along the lines proposed in 1965); and to anticipating External Affairs absorbing External Territories (except possibly for the island territories which might pass to Interior) at the time when self-government or associated status comes into existence.

[NAA: Al838, 936/1/10 part I]

1 Matter omitted includes excerpts of Lord Casey's speech of June 1968 at the opening of the second House of Assembly (see footnote 1, Document 200 and editorial note 'Territories: changes to the department and portfolio').

2 See Document 252.

3 Presumably a reference to possible discomfiture over Indonesia's manipulation of the terms of the 1962 New York Agreement (see paragraph 8, Document 12).

4 E.P. Wolfers, Fellow, Institute of Current World Affairs, New York.

5 Vincent Eri, a student at UPNG.

6 An allusion to Indonesia's quest under former President Achmed Sukamo to 'crush' the federation of Malaysia. See footnote 2, Document 12.

7 Not printed.

8 Not printed.

9 This word seems to be superfluous.

10 Trans Australia Airlines.

11 Postmaster–General's.

12 See Document 232.

13 This word should probably read 'independence'.

14 The word 'power' or similar appears to be missing here.

15 International Monetary Fund.

16 For background, see footnote 2, Document 161.

17 A naturalised US citizen of Filipino origin, Lorenzo Gamboa was in 1948 refused a visa to join his Australian wife and children in Melbourne (memorandum, Australian Mission, Tokyo, to DEA, 25 October 1948, and memorandum, Department of Immigration to DEA, 15 December 1948, NAA: A 1838, 1453/334). Following interest in the case from the commander of Allied forces in Japan, General Douglas Macarthur, and excitement in the international press (memorandum, Shaw (then Head of Mission, Tokyo) to DEA, 14 April 1969, ibid.), Robert Menzies' government announced in February 1950 that Gamboa would be eligible to apply for pennanent residence in Australia (cablegram 36, DEA to Australian consul general, Manila, 17 February 1950, ibid.)

18 This word appears to be superfluous.

19 Not printed.

20 The word 'to' appears to be missing here.

21 See introduction and Document 38.

22 Ellipsis in the original.

23 See Document 217.

24 Presumably, this should read 'of'.