 Good afternoon, everyone My name is Tom compass I'm the director of the Crawford School of Public Policy, and it's my pleasure to welcome you here this afternoon To this special special event this special lecture Before we begin, let me take a moment to acknowledge the traditional owners of the land that we meet on and Pay respect to their elders past and present I'm going to introduce the acting vice chancellor in a minute to introduce our special special guest speaker Before I do that, let me just take a minute to personally thank your excellency for coming here today back to ANU Gordon if I might Gordon was a student in what was called the National Center for Development Studies back in 2000 2001 which has now become the Crawford School of Public Policy. So I am Unabashedly proud to call you one of my alumni So very happy to have you here Very straightforward format after after the The address by his excellency is offered to answer a few questions If that's okay Good, and then there's a special alumni reception afterwards in the heavily bull center. So to get started, please let me introduce the Acting vice chancellor and the deputy vice chancellor research of research professor Margaret Harding. Thank you Thank you Tom Your excellency Madam Lilo distinguished guests Ladies and gentlemen It's really an enormous pleasure to be here today and have the opportunity to Welcome a very esteemed and your alumnus back to speak to her and meet with you today here I'm an ANU as many of you will be aware. We often Talk of the leadership positions that many graduates move to After they leave here, we value and really admire and Look to the contributions of our alumni all over the world And you are great ambassadors for the quality of the education and the experience We give you here at the ANU here And it's really an enormous pleasure to see the great contribution of so many of our alumni in the world at large to their home nations and Professor Sorry Prime Minister Lilo, of course could hardly be you know a better example of the type of Alumnus that we are proud of and we showcase representing the Australian National University Tom has already alluded to some of his history and association with the ANU But after graduating in 2000 with a master of development and administration From what is now the Crawford School of Economics and Government Mr. Lilo was elected to the National Parliament of the Solomon Islands in 2001 Dedicated to strengthening his country's economy Mr. Lilo had a paper published through the ANU Asia Pacific Press that was entitled Hard Times Ahead issues and reform in Solomon Islands Public Finance Which was presented at the Pacific updates on Solomon Islands, Fiji and Vanuatu in June 2000 In the 10 years following that time he has served in a number of key roles Including the Minister for Finance, Minister for Justice and Legal Affairs Minister for Environment and Conservation and Prior to his election as Prime Minister last year he served again as the Minister for Finance and Treasury It's an honour to have him return to the University today To discuss the future of the Solomon Islands economy and please join me in welcoming the Honourable Gordon Lilo Thank you acting wise, Sanchela For those remarks, I'd like to join Professor Tom Compass also to Acknowledge and recognise the indigenous owners of this land And in particular for Giving a space for the National Australian National University to be built on this land Distinguished guests, ladies and gentlemen First allow me to say how delighted I am to Visit parts of this beautiful country in the last three days At the invitation of the Australian government It has been a busy schedule, but I'm delighted that the Australian National University is also part of this visit Air New is not new to me And it is indeed a privilege to come back to my alma mater I still have some fond memories of this place But this afternoon as the Prime Minister of Solomon Islands It is an honor To address such a distinguished audience in such an esteemed institution as you know The Air New has over the years ably educated many students in the Asia Pacific region Who have gone on to play important roles in their countries And the region at large And it is a privilege to be part of that expanding group of people To continue to save public policy and thinking in the region It is therefore only appropriate That I take this opportunity to say how appreciative I am of this esteemed institution But for this afternoon's address I wish to talk a little bit about my country, Solomon Islands And highlight some of the challenges that we face And the attempt to address this as we move forward in the future Some of these challenges are common Even universal But from my observation the solutions that are grounded in Local context and our detail are more sustainable And a suitable title for my paper then is Common Challenges, Unique Solution Ladies and gentlemen, first let me paint a picture of Solomon Islands to give context to my talk Solomon Islands gained political independence from Great Britain in 1978 Some 34 years ago And when the state was formally established The stage was however already crowded with clans tribes, language groupings And other constituents Many of these are semi-autonomous groups exercising their own rules and authority Over their territories and constituents And since then the state has attempted to exert positive control over these groups which make success The imaging country became what the late prime minister of Solomon Islands Solomon Mamaloni described As a nation conceived but never born This remains a fundamental character of Solomon Islands at independence As it is today and will be in the foreseeable future But in the 1990s The term arc of instability entered the political discourse Referring essentially to weak states That are unable to control their affairs And that are at risk of terrorist influence or penetration And although the terminology describing the situation may have changed The fundamental reality remains Mamalonis in the notion described by late Mamaloni as the unborn state In the above situation state-based democracy national consciousness national solidarity And even political direction become difficult to achieve The second the Solomon Islands economic base remains Narrow today Just as Charles Woodford observed in 1893 before the islands were declared British are protected Mr. Woodford told them that plantations would form the mainstay of the economy And consequently plantations were developed Indeed today the Solomon Islands Supports one of the biggest plantation estates in the region The estates were formerly owned by liveable brothers But have now been sold to the Russell Islands Plantation Estate Limited And in the late 1980s and early 1990s The economy turned to logging for its economic base Mr. Woodford would have been quite surprised Logging became popular because of easy access to cash often brought in by Asian loggers The low capital outlay And a quick return on investment If you can describe lobing as an investment made it a lucrative choice Not only for the entrepreneurs But their local promoters and partners Succeeding governments have attempted to devise if I into agriculture mining fisheries And manufacturing But to this day logging is still a major contributor to the country's export earnings Ladies and gentlemen, I mention one more aspect of the Solomon Islands as a background And that is the misfit between the introduced Westminster system of government administration And those that existed in Solomon Islands Contestation exists between formal institutions And informal institutions And between the power structures of these institutions Professor Corrine Care described this as akin to Fitting a square peg into a hole or a round hole I paint that background Not to justify any failures or shortcomings on the part of any institution But to understand The reasons for our challenges to date More importantly Such realities will continue to be relevant as we define And craft public policy in response to current challenges In 1998 As many of you know Solomon Islands descended into a social unrest In what is now commonly called The ethnic tension Thanks to Prime Minister Howard And the Pacific Island Forum then In 2003 The regional assistance mission to Solomon Islands of Ramsey For short was assembled Sent to Solomon Islands and as they say The rest was history But since Ramsey's intervention Law and order had returned And the country was being rebuilt Next year 2013 Ramsey will market stand Anniversary But more importantly The intervention force will be drastically scaled down Bearing in mind that although institutional capacity Had been restored The context in 2003 Remains somewhat the same In terms of the economic challenges The Ramsey transition Must be managed responsibly To ensure sustainability Of peace Issues such as Euron employment Absence of economic infrastructure And institutional leadership remain Significant challenges That must inform Transitions into That must form transition Into the post Ramsey period And the government's view Which has been consistently expressed Is that Transition must be task bound And not time bound This is important to ensure sustainability Of peace for Solomon Islands And the region Ladies and gentlemen macroeconomic And even fiscal management Continues to be a challenge in Solomon Islands This is not a noble observation Many observe this And many attempts of public And institutional reforms Are carried out to varying Degrees of success But the chronic problem lies In weak institutions, processes And personnel The mechanism for determining, monitoring And assessing the use of public funds And resources still remain weak And to add more difficulty Many of the people tasked to operate These processes lay capacity Worse still They too are often tempted to operate The system for their own ends However, through fiscal policy management Since 2010 The buffer zone for foreign reserves Have improved, reducing risk That are due to financial fluctuation Affecting the international price Of export commodities The government, with the help of Ramsey Has increased capacity In financial management and monitoring This tighter control over spending As well as improvement In revenue connection Will be responsible for some revenue growth Into 2012 Improved macroeconomic And fiscal management Since 2003 Has also provided the impetus To expand the economic base Currently, several onshore Processing fish plants Have been established And some more are in the pipeline Agricultural development And small-scale manufacturing Are also making some progress Mining also presents And currently, the only operating mine At Goldreach continues to generate revenue But the government is looking at the prospect Of developing a large nickel mine On the islands of Isabel and Chosal Hopefully sooner Than later But recently the courts have cleared the way For the government to make progress In the grant of the mining rights To the developer And in that regard It may be worth mentioning that in June This year, the Solomon Islands Became a member Of the Extractive Industry Transparency Initiative or the EITI This is an international framework For reporting mining revenues And it is a positive step In developing good operational And management structures for the industry Based on international best practice We have learned Many lessons from mining countries That have made mistakes And Solomon Islands must begin the new industry With very high international standards Let me now touch a little bit On mobilizing of customary land assets For development The government, since independence Have talked about mobilizing customary land For development Yet land remain locked under customary tenure And since May 2012 The government Through the customary land policy Management unit Has consulted with traditional land owners To open up their land for development The owners of large tracts Of land deemed suitable for agriculture Tourism of other developments Are asked to record their land details Under the land recording act We have identified areas in Malayta Gordo Canal in the western province For This initiative And I'm pleased to say That responses to this program have been positive And it is hoped that in the later Half of the year For active land recording programs Will commence in the selected provinces Following this Investors can be invited to Assess the feasibility of these land blocks For their investment But the weak leadership of customary land Owner groups need to be strengthened To ensure that They speak with one voice This it is hoped will create Certainty and predictability For the investor That is in Germany it is also fair to say That political parties in the Solomon Islands Are only active during general election periods After that they remain dominant Again till the next election Weak political parties led to what has been Termed locally as grasshopping Which denotes crossing the floor Of parliaments by parliamentarians Without regard to political ideology In response to that the government Has funded national consultations To examine structures and processes Of improving political stability And integrity Provincial consultations in the provinces Had been made And a national convention Had taken place in July this year Which brought together eminent leaders From the region and the leaders of the country The report and recommendations are now Before cabinet And soon a decision will be made On the implementation of some of these recommendations It is hoped that this measures Will create the institutional environment For political stability and integrity With regards to Improving the electoral process Some progress has also been made Towards a new water registration For 2014 general election Recruitment and training of personnel Establishment of provincial operation Offices, water registration Centres and equipping them Have now begun after the recent By elections for our two Constituencies this month And the new water registration Is expected to be completed In 2013 in preparation For the 2014 general election There are also some minor Legislative amendments That are being prepared Which will improve the electoral process Ladies and gentlemen What is also observed In the seeming disconnect between Government at the central government And at the provincial or constituency Is a matter of worry and concern to us And to date Public funding through the current system Has not been experienced Or witnessed at the community Or village level This reinforces the notion That the government is a foreign institution And to add present the government Is considering a structure which connects The central government directly With the constituency The concept that we are working on Is the constituency development authority Which we believe Will empower And mandate Local communities To be able to implement Community development And Enter into meaningful development Within the constituencies This is also intended to encourage The spirit of enterprise at the constituency level The experience in the last three decades A system of government Closer and meaningful to the local community Is designed Finally, ladies and gentlemen I believe there is some work to be done Towards improving aid coordination In this in years International and regional Arrangements had been signed To ensure aid effectiveness In our case We have launched what we call The national development strategy 2011 to 2020 The development assistance from partners Will be based on the priorities At line in this strategy Development We believe the development assistance In Solomon must align itself With the national development strategy To achieve the national goals As outlined in that document Ladies and gentlemen In conclusion, I will say this That the Solomon Islands Continued to face many challenges But despite this We continue to deal with the issues And create a viable future For tomorrow's generation Some of the challenges are common to all And for regional We believe that We can depend on the bilateral And multilateral efforts So that we can inform Have a well-informed Solutions That are based on the local context And the detail of which We can work through With our local communities Once again Allow me to thank The Australian National University For giving me this opportunity To share with you some of the challenges That Solomon Islands face And also our vision and plans To move forward into the future I also wanted to Thank the Government of Australia For organizing this official visit And making it possible for me To make this ledger here Distinguished guest that is in general Men, I thank you all for listening Yes, sir So as agreed, the Prime Minister Is happy to take some questions From the audience for about 15 or so 20 minutes Yes Prime Minister, John Blacks from the ANU here Thank you for an excellent presentation Ramsey has In years What's changed that you now feel confident That you can do without it Well, I think we have been able To Build A good, you know, positive Train and engagement Within our own, you know, society For instance, you know We would say that Law and order is an important Aspect In building up a stable society It would see that Over the past 10 years Since the engagement of Ramsey We have been able to see a good development Of Our society moving together More integrated And one event that I think Would attest to that is the recent Festival of Pacific Arts I could not go any other Period beyond that than the Festival of Pacific Arts In which we have Minimal resources exerted In this force There is basically no military on the street But that we have been able to have Locals Running the street Ensuring that we don't have Any other Sorry to say, the Ning-Nong around the street You know, to cause disturbances And I must say that, you know, we have been able To have a trouble-free festival You wouldn't be able to have that Some 10 years ago We didn't post the conflict You would still have to have Some slight incidents Of social disturbance We didn't have one at all Except that There was a little boy who was so hungry Went to the stall and said, look Can I have that food? But they didn't respond to him So he decided to have himself But that was for him from a little boy For a very good purpose He was so hungry He said, you know, there is A good integration of the society Satish Yes, I don't have the right numbers With me But obviously The projection so far Is that by 2015 Logging would decline It would decline But for the moment It has been About 60, 70 percent Of the whole capacity Of the economy The taxable capacity of the economy Has been generated out of logging And we are so Mindful about that I made a point About moving into mining Which is You go to find a way to transition The economy There is no other better way To do it than this But at the same time We need to get into More sustainable development Like tourism Encouraging more development Into the fishery sector You will find That one of the first Country that has taken Strong action in ensuring That we get maximum Benefits out of the Tuna industry Under this vessel day scheme We have actually stopped The operation Last year Put out on tender The vessel day Provision for the country And had been able to Fetch a good price for it In fact Out of my memory But I think it was something Around 5000 And we have been going around The world telling them This is the best ocean resource management Strategy that we can do To make sure that This came out of The parties to the narrow agreement My real worry is that There are some members of the parties To the narrow agreement that are not Taking tough and serious action In pursuing the vessel day scheme It's a simple economic concept On ensuring that Here is the resources That we have But because of the International law of the sea You cannot You don't have the exclusive Rights to price the tuna But we can do it through this Vessel day scheme arrangement Which I myself technically I slipped out of my mind how it works But there is a formula That it is based on But it works very well What it means is that We have ended up with this scheme That has enabled us to be able to Take control of the pricing of that Vessel day scheme Which for the last 40 years For the last 40 years We have paid little regard to it Neglectly did It should be the main driver for Economic growth for the Pacific Island countries There's never Instead we have concentrated on other issues And have ended up Missing the very sector that is generating Growth throughout Asia and Europe And so I was a bit worried about What it means for us to drop the Vessel day scheme And if we are going to do that We basically Just have to end it up Pulling back the fate of the Small economies in the Pacific Island I would like to see you again I would like to see you in the Informalization Federalism stands Related to what you were saying about Mining and the move Towards In relation to Avoiding some of The problems That you spoke about You deal with the Political or the Decentralization issue At the moment We are now into about Fifth draft of our federal Constitution Fifth draft But Some people say Some negative Think about that As far as we are concerned We have never negotiated a Constitution in the past We basically went and took A ready-made Constitution So perhaps it's a good time for us To get engaged Get the country and the people In the whole process of Making their own Constitution Making their own Constitution We are now up to We have established The The Constitutional Congress Drums have been Seculated And To all the provinces We are yet to get a feedback from All the provinces And we would call On The experts now The Constitutional law And other Relevant experts To look into How it will shape out How it will shape out And the whole format of The drafting But What it means is that It still remains An issue Of absolute Priority to the country Where People still have a popular view That We should move Into A federal Setting of Government Which is state government And A federal parliament But at the same time We Want to ensure that Making the machinery to work Must be Feasible For the country And I don't want to Go through Saying what would be the outcome Of the Constitutional Congress Because there is a body that has to be respected But as it stands right now There are key indicators That we need to point to And one is that The popular view To move into state government system That still stands And secondly Whether or not That system would be Feasible for the country And that we will not go down the path That it will affect The economy And the unity of the country So that's where We are at the moment on that On the mining thing Yes, I mean In terms of proximity Logically, we would be looking at Papua New Guinea And that's exactly What we are doing right now Talking to Papua New Guinea We have learned That Papua New Guinea, for instance Have moved into establishing a sovereign fund Where Resources Windfall resources From the mining sector Can be Invested for future Generation To help And sustain future Operation of the economy And that is exactly the mode of Fiscal operation that we are doing right now We have changed from A Basically cleaning up the basket system Of budgeting to We have worked out A fiscal buffer in our budget Where this is where we begin To Pick resources out And put into the budget annually So in our budget system We Have arrived at a strategy That the French engine of this year We have agreed that we will Make sure that We should have at least about 180 million as a buffer To Keep the fiscal position of the Government floating into the future Next year it will Increase incrementally I mean the whole Rational behind this is that You've got to invest into Into the future and there are Unforeseeable situation That can happen into the future That if it happens where will you Where will you tap into To help support delivery of services Into the community And so that principle We have seen it working And I am confident that We can have that As a way to Have that Reflected in the way that we are managing Procedure out of our mining sector Australia and New Zealand are also Important to the region. They are What I call is the Important connectivity to the International Arena We have The small economies in the Pacific That You can't just go directly into The international arena. You will get seen In the international arena. So you need that buffer To be able to Build your capacity In dealing with issues of Trade for instance Or investment Assessing What comes along with investment flows And capital flows From the international market into The small countries in the Pacific. Australia and New Zealand plays That very important role. There are Some leaders that think otherwise About that purely from the political Angle. I don't see it in That way. Coming to the sub-original Of The MSG Some of the MSG Other countries that In a way the only countries that Have got good capacity To be able to generate good Investment and economic growth Because of the abundance of the Natural resources that they have There are other states in the Pacific that are Basically welfare states But The MSG is not just a It is a political grouping It is a grouping that Says a common They say a common Issues with them In terms of The resources, the culture And so forth. I believe that If the MSG can be Strengthened in that way They have the potential to provide A good prospect For Economic opportunities to other Countries in the region. That's how I see MSG. A lot of people see MSG as a way To diminish the powers Of the foreign countries And in a way to stage A contest on Australia And New Zealand. I don't think so. You will see that increasingly MSG have been able to Meet The issues of Cultural heritage Resource management Skill workers movement These are all economic issues They are non-political. It's all about Building a strong economic base Which Obviously it can be done Through the bigger forum It can be done through the bigger Forum. But I think it Can be better managed Through that regional arrangement The university I would like to ask you a question About the support of your government Exactly what the reasoning is for And what the implications are For your relationship with USP? Will the USP campus Which has been promised for a long time Is it going to come Or will there be a close relationship Between the new university and USP? Why at this stage Is it important to have a National University? As you know that the biggest Or the second biggest country Feeding the USP, Solomon Islands I can understand why A lot of people Are Quite worried about Solomon Islands Establishing their own National University I think we need to see from The angle of an education system Must be absolutely complete You cannot have A country that has a half Done education system If you have a population You must feed it right to the end That is exactly what Solomon Islands is trying to do We have a good base In feeding up to the primary Elementary education And that we cannot Continue to have a system where We have to trim off people to fall off And then build up in all these Unemployed groups Better tessary Education path I think you need to see it from That very simple fact USP I believe Can become a higher An advanced or post-graduate You know education institution In the Pacific region It's capable of doing that It's capable of doing that They've already started doing that They've expanded their infrastructure They have got themselves into The training program And I think the emphasis In that regard Would better prepare More Post-graduate And advanced training Scholars out of the Pacific region Into the international market So in a way I don't see it as a way Of threatening the existence of It will feed better Candidates for higher Education training At a post-graduate level And If we do it properly You know through like for instance What we are doing, Fiji is doing it Samoa is doing it In the Solomon's we are doing it I'm sure that we can have a better Prospect of feeding the post-graduate Market To be Married out by USP But Look at it in a way That There's a country of Half a million people 600,000 We believe that we are around 600,000 We didn't quite make our senses Well recently But We had to look at a country That we need to build a strong Social Socially connected Society Then the education system must be completed We can't live with an incomplete Education system Simple as that Well I believe so Because as you know that the only country In the Pacific that I've actually enacted A protected areas legislation In Solomon's There is a strong commitment to show That we are serious about A conservation program That Are well attached to the local community And It's good that we have live and learn I think I've met you before But I would encourage you To work more closely with the community In building a strong Community network In doing this conservation program Because that's What has actually failed in the past That we tend to Throw a design Program of conservation to the Communities And have not connected it to them Taking control of the ownership In the way that they will manage them Yeah that's fine It will be quite a lot I mean Right now You are looking at a mining That is You know if we Get to settle some of the issues that we have With With the local communities We should be able to hit at least about 130,000 ounces You know export capacity But at the moment we are just Barely hitting about 80,000 Ounces But even at that level It is still a very feasible one And one that We can look at in terms of Holding a gap Or filling in that gap That will be left If there's going to be a decline in logging Over the next three years Up to 2014-2015 But At the same time We have the nickel mining On Isabel and Choichel There will be 10 times bigger than the gold Mining Now the worrying thing is really Managing the resources that will flow out of it We have Bought ourselves on a program To try to deal with the community Not buy them off But engage them Put more infrastructure Connecting them to the market Build a more social structure And governance at the community level So that they can take charge of their Responsibility to manage The The mining development Social management issues So to speak But As you know that There are challenges That always associated with this And some Domestically Can be generated Others are externally Generated And most of the time They Land there Their agenda And this is one other thing that We are trying to get it right now Is to deal with the environmental issues So that We can deal with it In a more Effective way By engaging all other parties And even Getting the communities themselves And the Better Transparent Solution Arrangement Rather than a small problem A bigger solution A machine to deal with In the end we disrupt everything So that's the kind of approach that we are taking Thank you One more question And They are very much in the heart of the MSG Agenda You cannot remove West Papua The MSG agenda We will treat them Just as it's important as The member countries themselves We have done that So Cautiously in the case of And we believe that We will find a way to engage With other Interested parties to be able to advance The cause of West Papua And I know that there are Some very glaring reports that have come out About the human rights issues in West Papua These are realities that we need to Deal with But I believe that the better connections That we have with Australia And I am pleased that For instance in this case Where a prime minister from the Melanesian spirit group has been given The honour to be a guest We will provide an opportunity for a one To one discussion With the leaders of Australia And New Zealand So that we can take At least a minimal step In addressing some of these human rights Issues In the field like yours We will all want Everything to be done But in the field that I am in We have to Put them through some screening And that's exactly what I have to do But it is still very much In the heart of Melanesian On the Chinese Influencing to the region I think they have a space in the region We should not unnecessarily Raise our alarm about the presence Of Chinese in the region They have been around They will be around They have shown what they are capable of Doing in terms of resolving problems That are facing countries And that's exactly What Saravanan is doing right now We are opening up on trade And investment with China Painful to the other Chinese That we are dealing with But we are massaging them well Because that is what It requires to be done Don't ask me what that massaging means I know How Complicated it is to Get such an explanation In this kind of an audience like this But That's how far we can deal with it Thank you