Because there was no PG when Oliver! was released. As per the Wikipedia article:
The ratings used from 1968 to 1970 were: †1 †2
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.
†1: Kennedy, Matthew (2014). Roadshow!: The Fall of Film Musicals in the 1960s. OUP USA. p. 183. ISBN 9780199925674.
†2: Life Magazine. May 30, 1969. p. 55.
