KPMG’s creature in East Timor

The Age
Saturday, December 1, 2007

Insight

Building a tomorrow

Daniel Flitton, Dili, East Timor – Daniel Flitton is diplomatic editor

It’s a long way from Spring Street to the violence-scarred streets of Dili, but Steve Bracks is passionate about his surprise role helping put a fledgling nation on the road to successful government.

XANANA Gusmao looms in the doorway and pushes his way into the small Finance Ministry office in Dili. A crowd of hungry public servants mill around outside, piling plates with food from tables in the corridor. The former resistance leader, now East Timor’s Prime Minister, is taking a lunch break from delicate negotiations on the country’s budget. He spent the earlier part of the morning with his new adviser – Victorian ex-premier Steve Bracks.

Bracks, meanwhile, has slipped off for a meeting with East Timor’s Inspector-General to talk about civil service reform. It is all part of an unlikely and unexpected partnership that has sprung from Bracks’ surprise decision to step down from state politics in July.

“I felt there was a contribution I could make, one I uniquely could make as a practising politician who’d led a government for eight years and using that experience for the new Prime Minister,” Bracks says. Having abandoned his usual suit and tie, he moves through Dili’s tropical heat with open-necked shirt and his sleeves rolled up. “It comes from the point of view of a very equal relationship, a past premier to a current prime minister,” is how he describes working with Gusmao. “It’s frank, it’s open.”

Bracks left politics at the age of 52, and has since taken up a lucrative part-time role with accounting giant KPMG. But it was a surprise request to help East Timor’s new Government that kindled his passion. He had visited Australia’s fragile northern neighbour twice as premier. When East Timor’s new leaders visited Melbourne, they regularly made courtesy calls on the Victorian premier.

Bracks is now offering Gusmao advice on the challenges of running a government – everything from ensuring the public service has the resources and independence it needs to offering an encouraging word during tough times.

Bracks is a volunteer in this role, flying up to Timor every few weeks to meet Gusmao, government ministers and myriad international organisations working in East Timor since the country voted for independence in 1999. Last month, on Bracks’ third trip to Dili since taking his new job, The Age obtained exclusive access to these meetings for a first-hand look at the many development challenges in East Timor.

After closely contested parliamentary elections, Gusmao managed to stitch together a coalition government in July this year. The main opposition, Fretilin, the party which once revered Gusmao as a father figure, got the highest proportion of the vote but not a majority of seats. Gusmao’s minority Government is an alliance of four parties – the kind of difficult political position Bracks well remembers from his own first term after toppling Jeff Kennett.

Last year, riots in Dili and violence elsewhere forced thousands to flee their homes. A tense political stand-off between Gusmao, then president, and his one-time Fretilin colleagues saw Australian and New Zealand troops again return to the beleaguered nation, along with a greatly increased United Nations presence. East Timor is now calm, but the international troops are staying this time. The UN is still the main police force, while more than 100,000 Timorese, or close to 10% of the population, live in makeshift camps scattered across the countryside.

At first, Bracks seems out of place in this scarred city. Burnt-out building frames stick out precariously. The roads are crumbling and the power goes on and off throughout the day. What would a politician from a developed society know about problems in a newly independent developing nation? But Gusmao insists Bracks has valuable experience to offer. “I’m not a politician,” Gusmao says, stubbing out a cigarette in a saucer of peanuts. “I’m not an administrator, I’m not a manager. I was a fighter. And now that we are committed to change things in the country, I believe his skills will make a big difference, he will be very helpful.”

In one meeting, the two men discuss plans to build a department to support the prime minister. The few staff in Gusmao’s office are overworked and already flagging. Regular face-to-face discussions with ministers are a must, Bracks says, and Gusmao has now instigated a regular Monday morning cabinet meeting. It’s a robust exchange, with Bracks willing to tell Gusmao what he might not want to hear, and Gusmao willing to say no to advice.

One of Gusmao’s biggest challenges is spending money. The nation’s coffers are overflowing with the massive windfall from East Timor’s rich oil reserves, worth about $100 million a month. Already, an estimated $1.8 billion is stashed away in the bank earning interest.

But the still fragile government bureaucracy has trouble allocating funds to much needed projects, whether improving roads, fixing the power supply, or simply deciding where the money is most urgently required.

Gusmao intends to make administrative reform the key priority in the coming year, to create an effective public service able to carry out government plans. “It is like a disease,” he says of the difficulties matching the right people in the public service to the right positions. Endless hours are wasted drawing up plans that don’t tackle the country’s main problems.

Bracks is convinced the first year of the new Government is a critical time to lay the foundations for building East Timor and escaping the violence that has haunted the country for more than three decades. The population is rapidly expanding, with more than half under 18 years of age. Many of these children of an independent East Timor are languishing on the streets, forming gangs out of frustration. Youth unemployment is running at more than 40% for urban males. The problem of bored young men boiled over in the riots of April and May 2006.

Bracks ticks off a list of basic amenities needed: “Power, water, sanitation, communications, housing – all are issues of primacy . . . and if not resolved will mean there will be long-term, sustained and embedded unemployment because there won’t be investment of any significant nature.” To punctuate the moment, the power cuts out for a few seconds in the midst of one meeting. The Timorese minister carries on as if nothing has happened.

Close observers of Timor’s politics point to the failure of the previous government to build proper institutions of government. Elected as East Timor’s first prime minister in 2002, Fretilin’s Mari Alkatiri resisted the devolution of power and decision-making. Only a trusted few had the authority to act. As a result, the budget was unspent year after year as development projects languished. Officials were not given authority to spend money. But jobs were doled out as a reward for allies, swelling the ranks of the public service from the 12,000 recommended by international agencies to twice that figure. Many people were either ill-suited for their position or simply didn’t turn up to work.

Bracks and Gusmao have agreed to create a public service commission to monitor the bureaucracy’s independence. If officials are idle or politicised, the temptation to pocket oil money will grow. So Bracks wants to strengthen the agencies that probe government corruption, too. He wants the new Government to give resources to the opposition. Keeping Fretilin engaged in the political process is essential, to keep the Government accountable and ensure the whole system is not again torn up and reinvented.

But getting opposition support is a huge challenge. Gusmao’s mystique as a resistance hero has been tarnished by the political fray, and Arsenio Bano, Fretilin’s deputy president and an MP, is suspicious about the public service changes. “You know, if you want to do the reform, you have to have something in place already,” Bano says. “The reform that they try to portray is replacing the civil servants, politicising the civil service.”

Bano says Gusmao should look instead at forming a national unity government with Fretilin. Yet this is said with little conviction. Bano appears to be settling into the role of an opposition spokesman. Gusmao’s performance is unsatisfactory, he says, and a plan to distribute rice to every public servant is bad policy.

Bracks acknowledges his public sector proposals will take time. In the short term, the Government needs to show improvements in people’s everyday lives – “timelines” and “early deliverables” are terms Bracks repeats often.

But he is clearly relishing his new political influence. He sees the adviser role as an intensive one for the next few months, and then less regular for at least a year. He is hoping to place an Australian specialist in Gusmao’s office to drive progress on civil service reform.

Bracks also has found a pet project to promote. On a mountain overlooking Dili, he plans to restore a broken down tribute to Australian soldiers trapped on Timor during World War II and the locals who aided them. He also hopes to upgrade a school next door.

In the meantime, though, he continues to advise Gusmao, on public and personal priorities.

Bracks: Will you have a chance to get away? A holiday?

Gusmao: Maybe next year. In August.

Bracks: Not until August? That’s late next year. You need to go earlier. But Gusmao has plans. “If we have an independent public service, to make rules, to regulate all of this,” he says, waving his arms around the room, “I can retire tomorrow.”

Daniel Flitton is diplomatic editor

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