Because there was no PG when Oliver! was released. As per the Wikipedia article:
The ratings used from 1968 to 1970 were:[8][9]
Rated G: Suggested for General Audiences
Rated M: Suggested for Mature Audiences – parental discretion advised
Rated R: Restricted – persons under 16 not admitted, unless accompanied by parent or adult guardian.
Rated X: Persons Under 16 Not Admitted
While the film might be on the stronger side of a G, it probably wasn't harsh enough to warrant an M rating.