Interview: Peter O’Neill

How is the economy likely to respond to liquefied natural gas (LNG) coming on stream in Papua New Guinea for the very first time?

PETER O’NEILL: Abundant resources of hydrocarbons and minerals gave PNG opportunities in the past. Unfortunately, those huge surpluses were not fully used for the benefit of our people, mainly due to bad management and poor leadership. It is the third time that history knocks at our door and this administration is fully aware that we cannot miss this opportunity once again. Without digging into the past much longer, I can say that the country has matured in many of its management aspects, not only on a macroeconomic level, but also in public service delivery and political affairs. Of course much remains to be done, but we all feel that things are coming together in PNG and that, finally, we are working together as a nation.

All in all we are in a much better position now than we were 15 or 20 years ago when we became an oil-producing nation. Inflation and interest rates are stable, but, moreover, we now enjoy a stable government and parliament with a solid majority. We are aware that time has arrived for us to take some historical actions.

How is the government planning to rebalance the country’s distribution of wealth and bridge the gap between the haves and have-nots?

O’NEILL: One could argue that Papuan New Guineans are wealthy in their own right since they have ownership of the land, but, clearly, that is not enough as we are not in the business of chasing easy solutions. The role of the government is to build bridges so to speak, making sure that people receive the right training and have access to capital and skills that can create employment opportunities in the future. In practice it means allocating funds where it matters the most, which in PNG are the rural communities, given that these areas account for 80% of the population. As much as 20% of our entire budget was allocated to provinces, districts and rural communities in 2013 in order to reform the educational and health systems and improve law and order.

The same is true for 2014. These are basic issues for any administration, but here in PNG, incredibly enough, it has never been done systematically.

For the first time in a number of years these policies are having a direct impact on the standard of living of our people, which creates enthusiasm and a sense of belonging that is fundamental for achieving our national goals.

Does PNG need political or business leadership in order to realise its full potential?

O’NEILL: A political leader should have a very clear idea of where they are heading and the rest will just follow if they feel that the direction is right. We as an administration are trying to provide this leadership, especially by making sure that the government stays focused in the process.

Too many times in the past we seemed to have set our course as a nation, but then got lost along the way. I suppose that coming from the private sector has given me that discipline, as it allows one to get used to the ups and downs that are inevitable along the way. Any businessmen will relate to that, I am sure. My goal as a prime minister is to bring these best practices into the government as well.

To what extent can the private sector contribute to the achievement of government goals?

O’NEILL: The private sector is quite resilient in this country. This was proved during the difficult years of the global financial crisis, or, more recently, following the slump in world commodities’ prices.

Despite these global downturns, our economy has continued to grow at an exceptional pace and the private sector has a lot to do with it. My hope is that now they can see the consistency in the government’s policies, which are set to promote the private sector as an engine of growth, especially by supporting public-private partnerships and small and medium-sized enterprises.

In the 2014 budget for instance, we have not introduced any new taxes on salaries and wages, and review of the of the PNG taxation system is still ongoing. The Central Bank and Treasury are issuing treasury bills to fund the deficits.

Confidence within the private sector is currently as high as it has ever been. Returns on investments remain significant, despite the overall limitations of the market place.

What level of economic diversification has been achieved, and what mechanisms and sectors are expected to help sustain growth?

O’NEILL: First of all, we will have to maintain a GDP growth rate of 6% in 2014, meaning that all sectors of the economy will need to perform strongly, including agriculture and manufacturing. This is achievable, especially if we implement the programmes that we set forward in the 2013 budget.

When we came to power in 2012 we realised that the entire public service machinery was on the verge of collapsing and making them understand our goals has been a challenge in itself. I recognise that implementation in infrastructure development has been slow, as we often had to go back to the drawing board for many of these projects; however, a number of these will be coming on-line in 2014.

In 2014, we should expect a lot of activities that are not strictly related to the PNG LNG project, which, after all, represents only 3% of our GDP.

The fact that the project has nearly been completed does not surprise us. We have planned our budget accordingly, giving significant priority to other sectors of the national economy in order to sustain growth, especially by investing in infrastructural projects in agriculture, tourism, health and education.

Where do you envision PNG to be economically positioned 10 or 15 years from now within the South Pacific region?

O’NEILL: First of all I would like to see our people finally enjoying a good standard of living; we should become a population that is highly literate and can count on a reliable health sector. I want Papua New Guineans to be proud of this country, and confident of its position within a new world order.

This is probably one the last societies in modern time that has jumped from a traditional way of living into modernity in a single generation. 40 years since independence, we had Papua New Guineans piloting an Airbus A380, the world’s largest passenger airliner, while our scientists made headways in top universities around the world. If we could have achieved that much in such a short time in the past, I do not see why we cannot achieve those changes that are needed to transform this country into a major regional player, especially considering that we have now a much bigger economy at our disposal. As the largest Pacific Island country, we look forward to sharing our experiences and natural resources with our neighbours.

We are highly focused on increasing trade and investment with the rest of the world and other Asia-Pacific Economic Cooperation (APEC) member countries to enable a quality standard of living. I strongly believe that the APEC community can do much more to address the issues of climate change and provide sustainable measures for the smaller island economies. Younger generations of Papua New Guineans are coming out of villages with a hunger for knowledge, eager to enjoy what the rest of the world takes for granted, but I would like to see them becoming better citizens in the process as well. We are coming late into the game and perhaps we will keep making mistakes along the way, but we truly hope to make this country a better place. After all, we have the resources and the will to do so.