Canberra, II June 1969

Confidential

Arek Motion on Constitutional Development

The Secretary's personal telex 5681 of 5th June to the Administrator¹ indicated the position that the Minister wishes Official Members to take when this motion comes on for debate.

2. 1t also indicated that a working paper prepared in the Department would be forwarded. If a Select Committee is established it is proposed that this working paper, together with any other suggestions put forward by the Administration, would be discussed between departmental and Administration officials with a view to seeking a Government direction on the attitude Official Members on the Select Committee should take.

[matter omitted]

Attachment

WORKING PAPER FOR OFFICIAL MEMBERS

Introduction

This Working Paper has been prepared for discussion if a Select Committee on Constitutional Development is set up. A Government direction will then be sought on the attitude Official Members on the Committee should adopt.

Australian policy is directed towards helping the Territory to become self-governing as soon as possible and to ensure that when this aim is reached the Territory will, to the greatest extent feasible, be able to stand on its own feet economically.

The Government said in the Governor-General's speech when the House of Assembly was being inaugurated in 1964–'Political autonomy is not compatible with extreme economic dependence'.

The Minister, in his Summer School speech in 1968 said ' ... We are seeking the social, economic and political advancement of the people of Papua and New Guinea to the stage at which they are ready to choose their own form of government'.²

'The Government has made it clear that it is not its policy that self-government must wait on complete economic self-sufficiency. Papua and New Guinea will clearly need continued outside aid for as long ahead as can be foreseen',

'without substantial economic self-reliance, self-government or independence would be a mockery'.

'Responsibility in government really comes from having to decide the right balance between meeting demands for services and imposing taxes to pay for them . . . It is vitally important that this element of responsibility should be built into the developing political structure of Papua and New Guinea'.–(No section of the population should be discriminated against in taxation.)

'In the light of the present stage of development of the Territory and its lack of capacity in terms of economic strength and of qualified people of its own I myself see little need for or advantage to be gained in forcing the pace of constitutional change. But ... what I think is ... subordinate to what the majority of the people think'.

The Minister reverted to the same theme in his Madang Speech in June 1968–

'I have in the past been asked to indicate how much aid Australia will give Papua and New Guinea after self-government. I do not think that it would be a practical approach to try to say how much might be given in years to come. Australia will continue to give financial help towards the development of this country. It will continue to help in trading arrangements and in providing specialised skills. The Australian grant provides many of the roads, wharves, public utilities and pays for much of the administration and essential services such as health and education.

'But the Australian grant will not always be the major factor on which the development of the Territory will depend.

'What the people of this country do for themselves, and the extent to which the country can attract private investment from outside will be key elements.

'The Government's policy in the Territory is to establish a climate of opportunity for overseas investment.

'In the same way if the people want overseas people to stay and work in this country, they have to show a willingness to work in partnership.'

It will be more than a decade before contributions to Territory revenue by the Bougainville copper project will make any significant impact. Moreover, responsible government is not a matter of a group of Territory politicians gaining complete control of all the funds which they would expect to continue to receive from the Australian taxpayer (amounting at present to about two out of every three dollars of public expenditure).

If the Select Committee on consideration wishes to discuss the prospect of self-government or a timetable for self-determination, we expect the Government would say that this ought to be discussed with Ministers in Canberra. Discussions would no doubt include criteria for self-government, means of ascertaining the opinion of the bulk of the people of the Territory, procedures, and the form of financial and other aid that a self-governing Territory could expect to receive from Australia. This procedure would apply whether the Committee had it in mind to propose self-government by a given year or whether it sought to propose a fixed timetable unrelated to actual progress in the economic and social fields.

Criteria for constitutional re-arrangements short of self-government

When the 1965 Select Committee on Constitutional Development was set up, Cabinet determined certain requirements with which any proposals for interim changes in executive government (short of self-government) should not conflict if they were to be supported officially. These requirements were to serve as guides within which policy could be determined. They remain valid–

(i) though the Commonwealth would progressively devolve (the devolution referred to here is devolution to elected members or political office holders) its authority, in practice it would short of self-government retain final responsibility in the sense that it remains accountable for the administration of the Territory; and the Minister would retain the right to direct policy or to question any action;

(ii) this devolution would not apply in relation to certain 'reserved' subjects–internal security, external affairs, defence, constitutional advance, law and information;

(iii) the need for a reasonable pace of constitutional development has to be balanced with the difficulty of maintaining standards of administration; progress needs to be evolutionary and educational but cannot await the availability of persons with full capacity to operate at normal standards of developed countries;

(iv) the extreme economic dependence of the Territory and the fact that a substantial part of the Budget is met by Australia must be recognised; in these circumstances the Commonwealth must determine the strategy of the Budget;

(v) the Commonwealth Government's control over the conditions of service of the Australian members of the Territory public service must be preserved; and

(vi) the final constitutional pattern for a self-governing territory should not be unduly determined by the interim arrangements.

It should be made clear publicly that the Ministerial Member system does not extend to 'special subjects' and the departments concerned with them. (But this need not apply to Assistant Ministerial Members.)

Possible changes in the Legislature

One shortcoming of the existing House is its ability to take legislation through all stages in one meeting or indeed one sitting day. It is unlikely that the proposed '21 day rule'³ for legislation will be sufficient to slow down the passage of bills, although it will give members a clearer understanding of legislative proposals.

Some notes on bi-cameral possibilities for the Territory were forwarded to the Administration in February 1969.⁴ In the covering memorandum it was suggested that Official Members could canvass the question of a Second Chamber if a proposal is made for a further constitutional committee.

In the debate on the motion, if it appears likely that the Select Committee will be established, the Second Chamber should be mentioned so as to ensure that it will be included in the ambit of matters which could be given consideration by the Select Committee.

A Second Chamber would not only provide the necessary brake to the passage of bills but could, if based upon regions, positively assist in national unity by watching the interests of the more remote areas.

In the previous House, ten members were elected from 'reserved' electorates. For the present regional seats, anyone with substantially the equivalent of the N.S.W. School Certificate may stand; nevertheless eleven regional members are expatriates. The idea of 'reserved' electorates in the 1964 House was that leadership from Australian members would help the House. There now seems to be a need to guard against a position in which excessive expatriate membership inhibits the proper development of the House.

The regional electorates could be replaced by a House of Review containing representatives elected on a regional basis–possibly indirectly though local government councils. The Local Government Association's twelve members might be the nucleus of a Second Chamber possibly augmented by members elected by District Local Government Councils at their conferences. The upper House would need to include some members who would explain Administration actions and this could be done by Official Members, nominated members who are not officials, or specified elected members representing Ministerial office holders (or perhaps Assistant Ministerial Members). The second House might be a House of Review only without power to initiate legislation, but with power to delay for six months and with full power of debate, and committees.

Another possible change in connection with the House of Assembly which might usefully be discussed relates to the selection of Ministerial Office Holders. It has been suggested that electors in some constituencies are disgruntled with their members on grounds that when they are appointed to Ministerial Office they no longer present the wishes of their constituents. There may be scope for a more direct method of selection by the House–although the Government should retain the power to allot portfolios.

These and any other matters concerning the composition of the House of Assembly could be discussed in the Select Committee on the basis that Official Members promote the proposal for a House of Review to replace the regional electorates. Otherwise Official Members would ensure that the various possibilities are fully appreciated by elected members but would not canvass any specific conclusions.

Ministerial Member system

The Papua and New Guinea Act is drafted to make possible progressive devolution of authority to Ministerial Members and of Assistant Ministerial Members. Section 24 of the Act authorises the Minister to determine from time to time 'the matters in respect of which the holder of an office is to perform the functions of a Ministerial Member or an Assistant Ministerial Member'.⁵

Section 25 provides that functions of Ministerial Members and Assistant Ministerial Members are determined by arrangements approved by the Minister. These include 'to take part in the formulation of policies and plans of proposals for expenditure in relation to these matters and in the direction of the activities of the Department of the Public Service dealing with those matters'. Section 25 also authorises them to represent or assist in representing the Administration in the House of Assembly and in the case of Ministerial Members to make recommendations to the A.E.C.

Approved arrangements provide at present that Ministerial Members are responsible with the Department Heads for overall departmental activities and for framing policy proposals including proposals for expenditure⁶ (management and public service aspects being the sole responsibility of the Departmental Head). These arrangements do not, however, devolve functions to the extent to which this may be done under the provisions of the Act. It would be within the scope of the legislation for Ministerial Members to exercise their functions so that they stand between the Departmental Head and the Administrator. Nor do the functions of the Ministerial Members cover the whole permissible non-reserved area.

lf there is any feeling on the part of elected members that the present arrangements are inadequate a Select Committee could examine–

(i) how the Ministerial Offices, i.e., both Ministerial Members and Assistant Ministerial Members, are getting on under the present arrangements and whether they are exercising all the authority which the present Ministerial approvals envisage them having, in the Executive Council or in the Departments.

(ii) whether the Select Committee considers they should be given increased responsibilities by variation of the existing arrangements.

It would be quite contrary to Government policy if a back-lash demand for self-government developed because it was felt that the Ministerial Member system did not give the Ministerial Members the opportunity to exercise adequate functions in the Departments, in the A.E. C. and in the House, which was envisaged by the previous Select Committee and by the Commonwealth when it set up the present arrangements.

The power to approve arrangements as to portfolios and functions is vested in the Minister. If proposals are made to review the working of the Ministerial Member system within the present approved arrangements these would be discussed in the Select Committee. If there is a proposal for variation in the arrangements themselves Official Members should suggest that the Select Committee should discuss these with the Minister.

Annexe

Basic Government policy is–

• the choice of their future form of government is one for the people of the Territory;

• changes which the majority of the people do not want will not be imposed on the Territory;

• it is the prerogative of the Territory people to terminate the present Territory status and take independent status if they wish to do so. Should the people wish to remain in association with Australia after self-determination this will require the agreement of the Australian Government of the day;

• so far as decisions by Australia are required as to the nature of possible future forms of association that would be acceptable to Australia, such decisions cannot be made now, but should be made at the appropriate time by the Government of the day in the light of the circumstances then existing.

Gaps

• The Revenue Gap.

- 63.7% of all Government expenditure in the Territory is supplied by the Commonwealth.

• The Trade Gap.

- Ten years ago, exports paid for more than half of imports. In 1967/68 export earnings were only sufficient to pay for 40% of the cost of imports.

- Development expenditure tends to result in higher import requirements in the short run. Much of the aid funds for development are spent on imports, particularly on machinery and other capital equipment.

- As development projects mature, export income should accrue and make a positive contribution towards narrowing the trade gaps.

• The Investment Gap.

- Savings are scarce in the Territory

- The capacity of the people to accumulate capital is very limited.

- Funds from outside sources largely finance the growing volume of investment by private enterprise demonstrating confidence in the Territory's economic situation and its political stability.

- Efforts to attract overseas investment funds are continuing and will be intensified because private enterprise is needed to develop the natural resources while the Government provides the economic infrastructure and the social capital (roads, schools, hospitals, etc.).

- The Government actively seeks aid for the Territory from international sources (World Bank, UNDP).

- The gap will continue until overall economic expansion raises the people's income and earning capacity so that they can save and invest these savings.

• The Manpower Gap.

- The Territory has insufficient trained indigenous people to staff key posts in public administration.

- Approximately one third of all public service officers and employees of a total of about 19,700 are expatriates.

- In the public service the number of local officers in professional, administrative and clerical positions more than doubled between 1967 and 1968 but for some time to come the gap will have to be bridged by skilled people from elsewhere and especially from Australia.

• The Education Gap.

- New institutions have been set up (Institute of H.T. Education,⁷ Bulolo Forestry School, Vudal Agricultural College, Papuan Medical College, P.N.G. University) but the needs are vast and great problems remain to be overcome.

- The output of qualified indigenes will lag several years behind enrolments. Although University enrolments in 1969 are about 470 of whom about 300 are indigenes, it will not be until the end of 1970 that the 1966 enrolment of 58 students, (subject to drop-outs etc.) are expected to qualify.

Self-government

• Government sees Ministerial membership system as a realistic method of giving elected members a say in executive government which recognises these gaps.

• The Act is drawn to make possible progressive devolution of functions to Ministerial Members or other political office holders.

• Self-government should be seen as involving a fully blown Cabinet with a Chief Minister controlling major fields of power.

• Self-government does not in itself mean full independence. At the stage of self-government Australia might retain control of certain 'special subjects'–but in the self-governing area local decisions would be taken by elected members who are Ministers on the basis of responsibility to the local legislature.

• It would be a matter for decision at the time of self-government which powers would be classed as 'special to Australia,' e.g., internal security, external affairs, judiciary. At self-government the Territory may elect for full independence but the door has been left open for negotiation at that stage for some form of association with Australia. This might be a constitutional association or one based on a treaty. It might merely mean remaining internally self-governing while remaining a Territory of Australia.

Note 1

It should be noted that if the Select Committee recommends self-government and the House of Assembly adopts the recommendation, a constitutional commission (cf. Malaya where the Commission included Judges from U.K., India, Pakistan and Australia) in this field would have to be appointed to draw up a {draft} constitution. This would take some time and would involve discussions at many levels with many people.

Note 2

(a) Independence means sovereign independence but does not preclude the existence of a treaty.

(b) Self-government means responsible government in which elected Ministers exercise responsibility in the full sense to the House of Assembly for internal affairs. Constitutionally the country remains a Territory of the Commonwealth.

(c) Self-determination is the exercise of an act of choice where the Territory by some means elects whether it wishes to move to

- independence

- negotiate with Australia for some form of association, or

- make no change.

The Government view is that the best time for self-determination is when the Territory has self-government.

[NAA: A452, 196911135]

1 Document 283, which is in fact dated 9 June.

2 Ellipses in this document are in the original.

3 See footnote 2, Document 204.

4 See Document 258.

5 Sections 24 and 25 are quoted in the editorial note 'Changes to the Papua and New Guinea Act'.

6 See Document 197.

7 That is, Higher Technical Education.