Downer’s unfortunate Pacific legacy

Alexander Downer (then Minister for Foreign Affairs) at the Pacific Islands Forum, seated with Kaliopate Tavola, then Fiji's Minister for Foreign Affairs (Credit: Sam Shepherd)
Alexander Downer (then Minister for Foreign Affairs) at the Pacific Islands Forum, seated with Kaliopate Tavola, then Fiji's Minister for Foreign Affairs (Credit: Sam Shepherd)
Written by Stephen Howes

In his recent opinion piece on the Australian Financial Review, former Foreign Minister Alexander Downer commends the opportunities now available to Pacific islanders to work in Australia. But, when he was Minister, Downer publicly opposed the introduction of a Pacific farm labour program. Instead, the Liberals gave rich-country backpackers generous visa incentives to work on farms, meaning that today, even though there is now a Pacific seasonal farm labour program, most of Australia’s fruit is picked by the young people of distant rich countries, rather than the young people of our poor neighbours.

Downer viewed the Pacific too much through an aid lens. In his Financial Review article, he defends successive Australian governments against the accusation that they haven’t taken the Pacific seriously enough by referring to our large Pacific aid programs. But that has been precisely the problem. We have been too slow to promote integration with the Pacific through non-aid instruments.

Yes, AusAID was committed to the Pacific, but it carried little clout with the rest of government. From that perspective, the absorption of AusAID into the Department of Foreign Affairs and Trade (DFAT) has been a huge positive, because DFAT has taken up the cause of the Pacific. Having both more clout with the rest of government, and being more sceptical of the value of aid, DFAT has been more successful at introducing non-aid instruments for the Pacific. And of course now it can play the China card, which gets everyone’s attention. This, combined with strong ministerial championing, explains the recent progress on Pacific labour mobility, and, just in the last few weeks, visa simplification.

And what of our aid to the Pacific? Has it really been as well-designed as Downer claims? The former Foreign Minister might have changed his tune on labour mobility (and on the Solomon Islands intervention he earlier publicly opposed and now defends), but he is nothing but consistent in his views on development and aid.

The two-part argument in his article – that “good governance is the key to economic development” and therefore that aid should focus on training – constitutes what could be called the Downerist approach to aid. The first argument is as orthodox as it is correct. But the second is as naive as it is wrong.

Tolerance for corruption

If training and advising (together, technical assistance) could fix problems of governance, the Pacific would be the best governed region in the world. But poor governance is not due to an absence of skills. It has its roots in dysfunctional politics, like the way politicians get elected, and their tolerance for corruption. Aid is notoriously un-influential when it comes to influencing domestic politics.

It is not just that technical assistance is so often a waste of aid. It can do actual harm. There is a workshop culture in the Pacific, with key officials so very often out of their office – often out of the country – on training programs or international gatherings. Aid, especially Australian aid, must take a large chunk of the blame for this.

The continuing focus of the aid program on fixing governance through technical assistance is as much part of Downer’s legacy in the Pacific as is our slow and late start on Pacific labour mobility. “Governance” became the leading aid sector under Downer’s reign. To its credit, Labor gave greater prominence to education. But Bishop cut education hard and, for all her rhetoric about the private sector, restored governance to the dominant position it held under her Liberal predecessor.

An effective aid program needs to accept the uneasy truth that donors have little influence over what, as Downer correctly says, really matters for development: the strength of domestic institutions. Of course, we should try to make a difference where we can, and no one would argue for a technical-assistance-free aid program. But, as a first approximation, we should do things that make sense given the current state of a recipient’s institutions.

China doesn’t always get it right, but one thing that makes its aid so attractive is precisely the pragmatism that it displays, which stands in stark contrast to the hubris we often show with our grand and patently unconvincing plans to strengthen institutions and crack down on corruption.

Whatever one thinks of China’s spreading influence, there is reason to hope that it is reducing Downer’s residual influence on our Pacific and aid policy. First, our desire to remain relevant is reducing the extent we view the Pacific through an aid prism rather than looking for alternative and more effective tools, such as labour mobility. And, second, the perception that China is winning the aid popularity contest may mean that we start taking a more pragmatic and less Downerist approach to our aid program.

This article was first published by the Australian Financial Review.

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Stephen Howes

Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

4 Comments

  • Ironic that Mr Downer opposed any help to aid the Royal Solomon Islands Police in 1999, when requested, and when early intervention with a short-term transfer of military personnel and assets could easily have prevented the so called ‘ethic tension’ becoming the lengthy civil conflict that it became and which brought the Solomons to its knees, resulting in a total collapse of the economy, the loss of lives and the collapse of the SIAC government.
    The eventual intervention of the Regional Assistance Mission to the Solomon Islands (RAMSI) which Mr Downer reportedly now has hailed, cost the Australian taxpayer many millions of dollars and the loss of two Australian lives needlessly.
    With Australian assistance to the local police force in early 1999 the uprising could have been quickly put down and the SIAC government have continued in office to carry out the reform programme it had begun to introduce before the internal conflict was initiated.
    “Policing a Clash of Cultures’ (Amazon Kindle Book shelf)

  • Thank you Stephen for an interesting blog-post. I think that there is much to be commended in what you say here.
    The idea of ‘good governance’ in the context of aid and development has always been somewhat unanchored, lacking a measure of its applicatory relevance. Broadly speaking the institutional focus of the ‘good governance’ concept has been based on an identification of the institutions which are assumed to be supportive of the Pareto-efficient allocation of resources as found in the advanced economies, especially that of the USA. One example of this line of thought in the development context is this World Bank paper discussing the minimal role of labor market contracting among African farmers. The authors assume that because the idealised (market-driven hire and fire) model is not realised in African family-based subsistence farming practice the developmental remedy to the situation is ‘institutional strengthening’ of a ‘good governance’ character – that the institutional and legal framework of labor contract law be improved, thereby bringing actual practices into better alignment with the idealised economic model.
    You are correct when you describe the Chinese approach to infrastructure development and aid as pragmatic. To understand Chinese pragmatism I think it useful to examine Chinese analysis of the China transformation and the extent to which Chinese analysts see relevance in the China experience to the development issues and problems of low-income countries. In addition to the writings of Wen Tiejun and his associates the analysis of Yi Wen is instructive. Yi Wen proposes a multi-stage model of development with interesting features, including non-linearity. Among the topics Yi Wen discusses is the role of corruption and political patron-clientelism during the early stages of the economic and political transformation process. Yi Wen makes the important point that the elimination of corruption can only be a late development stage issue (as in the UK and USA) because comprehensive political/legal control of corruption carries a very high transaction cost that an early stage developing state simply cannot afford. The implication that ‘corruption’ and ‘clientelism’ is a necessary feature of early development stages is left open.
    To a considerable extent Yi Wen’s discussion of China’s development mirrors the discussion that took place in the late soviet period among Russian economists. This discussion concerned the ‘system-forming character of capitalism’ in the economies of Taiwan, Korea, Vietnam, Lao and Japan (see N.A. Simoniya and V. Sheinis). The discussion focused on the diverse ‘multistructurality’ characteristic of low-income countries.
    That there isn’t a single path, runway and take off to development is also underscored by the Korean economist Keun Lee. Here is a topology-based path analysis that can be contrasted with the standard linear regression analysis found in neoclassical economics.
    China’s BRI (and the AIIB) will enable the Pacific Island countries to achieve at least some of their development goals, as they choose to conceptualise them and in accordance with their political and fiscal capabilities and capacities.

    Vailala

  • Thanks Stephen for this retrospective account of Downerist paradigm in the Pacific back then.

    As we move into the modern world with increased innovations in all aspects of our lives, we do so within the landscape of foreign relations. What used to be the thinking around Pacific nations as the last frontier is now a geopolitical power-playing field.

    During Downer’s reign, Pacific island nations were not that significant, and simple jobs like fruit picking in Australia was given to other well affluent countries. Australian aid to the Pacific nations was through a “boomerang” model. Now things have changed and former policy thinkers like Downer have moved on; a new breed of leaders has emerged not only in Australia but in Pacific nations as well. The new generation would see the boomerang model as obsolete and court new aid givers. One obvious development is the attraction of Chinese soft loans into the Pacific.

    This would also mean re-shaping Pacific foreign policy from Canberra. One obvious approach would be to increase and give opportunity for the Pacific nations to participate in the Australia seasonal labour scheme. However, China’s soft carrot approach is not for Pacific islanders to work in Chinese rice fields but it still attracts the Pacific nations. Canberra’s thinking about Pacific nations needs a better and smarter approach.

    The critique on improving governance systems to address corruption in Pacific nations is a relevant investment with Australian aid. However, much of it has not succeeded, as there are inherent ideological misfits that would not change quickly but it is what gives a unique identity to the islanders. The Pacific nations will remain a fragile and vulnerable political and economic zone in the Asia Pacific region while the geopolitical competition between capitalism and liberalism players increases in the future.

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