Australian Prime Minister Julia Gillard met with PNG Prime Minister Peter O'Neill.

Australian Prime Minister Julia Gillard met with PNG Prime Minister Peter O'Neill. Photo: Andrew Meares

Papua New Guinea Prime Minister Peter O'Neill's call for a thorough rethink of Australia's aid policy towards his country deserves serious consideration.

On his first visit to Australia since his re-election in August, O'Neill delivered a thorough assessment of PNG-Australia relations and expressed his desire for a change in direction for AusAID.

Addressing the National Press Club on November 28, O'Neill began with a complaint about the Australian media's coverage of PNG. ''It frequently disappoints me that journalists with most limited knowledge about Papua New Guinea describe my country as a failed state or a failing state. This is just simply, totally wrong,'' he said.

''I have no problems with journalists being critical of my government or my country. There are times when we deserve it … but such sweeping claims are harmful and quite frankly they are also very hurtful.''

O'Neill's grievance is justified. PNG is routinely given short shrift by the Australian media except for natural or man-made calamities. Stereotypical images of PNG abound. Descriptions such as impoverished, primitive and wild are frequently used. With the noteworthy exception of the ABC, most media stick to the script: the Kokoda Track, AusAID, disasters and corruption.

In a forthright address, O'Neill did his best to dispel such negativity, stressing ''PNG is a nation with enormous opportunity - and a great future''. He told his audience that at least some of the responsibility for PNG's lack of development lay with Australia.

O'Neill said it was clear that pre-independence, Australia had not prepared Papua New Guineans for the challenge of running their own country. He said this failure was compounded by successive PNG governments not investing in training its bureaucrats and public servants. He then commented on the role of AusAID, which has long faced allegations of presiding over a ''boomerang'' aid program.

O'Neill said there was little to show for the billions spent since independence in 1975. ''What have we achieved? … Our social indicators are still very low.''

According to the Oxford Business Group, PNG's Human Development Index has fallen to 153 out of 187 countries in 2012 from 132 in 2003, with average life expectancy just 62.8 years and adults attending an average of 4.3 years of school. PNG's maternal mortality rate is among the worst in the world. In 2011, infant mortality averaged a record 42.05 deaths per 1000, only better than Afghanistan.

Access to clean water, immunisation and basic sanitation are still a distant dream for millions of its people. Education, jobs and basic healthcare are similarly out of reach for the majority. Given this, the fact that hundreds of millions of dollars of development funds are lost to theft, waste and mismanagement is a tragedy for millions in PNG.

O'Neill said where the money was really needed was in the areas of infrastructure - building and upgrading roads and bridges, ports and airports, education and training, through rebuilding hospitals and high schools, fixing and upgrading PNG's vocational centres and providing its universities with buildings, staff, study materials and expertise.

The problem is Australia cannot be sure money it provides for such projects will indeed be spent on them. Australia's fears of corruption and misuse of its aid funds are well founded. PNG's record on tackling corruption is abysmal, but even in this regard Australia is at least partly culpable.

Sam Koim, the chairman of PNG's graft fighting agency, Task Force Sweep, said during a recent visit Australian financial institutions were complicit in money laundering by corrupt PNG citizens. He said as much as half of PNG's development budget, about 7.6 billion kina ($3.5 billion) over the three years 2009-11 had been stolen, mismanaged or wasted in dodgy overseas investments, mainly in Australian real estate.

Koim called Australia ''the Cayman Islands of Pacific money laundering'', adding corrupt PNG citizens were never troubled by Australian authorities. Not a single dollar of suspect funds used by PNG politicians to buy properties in Cairns and Brisbane had been repatriated, he said. Neither had any action been taken against PNG leaders gambling away millions in Australian casinos. The government has now reportedly begun cracking down on suspected money laundering, and O'Neill was ''comforted and encouraged'' Australia was denying visas to PNG leaders suspected of corruption.

O'Neill's government will need to demonstrate its commitment to fighting what he called the ''cancer'' of corruption with concrete action, including prosecuting and jailing the guilty.

Despite the massive challenges O'Neill faces, there is an air of optimism in PNG since his re-election. As one senior PNG journalist accompanying him said: ''He's got the right policies and programs and is working really hard to implement them.'' O'Neill, and PNG, will need all the help they can get from Australia.

Sanjay Bhosale is a Canberra Times journalist.