UN helping all in PNG to harness benefits of resource wealth
New Zealand academic looks at how Papua New Guinea can ensure resource wealth used to benefit all the people.
A New Zealand academic is working with the United Nations Development Programme to look at how Papua New Guinea can ensure its burgeoning resource wealth is used to improve people's living standards.
PNG is home to some huge resource projects, the largest the multi-billion US dollar Exxon-mobil LNG scheme due to come on stream next year.
Massey University associate professor of development studies, Glenn Banks, says they have been focussing on why such a resource rich country has the Pacific's lowest levels of human development, the highest rates of poverty and infant mortality, and the lowest rates of literacy.
Don Wiseman asked Dr Banks why PNG continues to fall behind in this way.
GLENN BANKS: It's not necessarily a countrywide decline. And I think that's one of the things about Papua New Guinea, is that it is so diverse. You've actually had some provinces that have done reasonably well in the social indicators.
DON WISEMAN: Why have they done well?
GB: Why have they done well compared to others? I think it comes down to capacity at the provincial level and the ability to actually... Some provinces - East New Britain is one, for example - where the provincial government has been very effective in terms of using its money well, in terms of applying its money to the right sorts of sectors. So I think that's the first point to make - there's a lot of bad news, but it's not necessarily bad right across the country. The second point I think would be around service delivery. Papua New Guinea, it's a big country - it's got 7.1 million people in it. To deliver health and education, basic services, in that kind of environment where 85% of the people are living in rural areas, and some of those people - quite significant numbers - are a day's walk from the end of the road, it is very difficult for the government to actually deliver services. That's not to say that it's all down to that. Clearly the capacity of government has declined over the last decade or so, in fact probably going back two decades, and the ability to actually take money into government departments and deploy that where it's needed in terms of delivery of health and education services is actually fairly poor in many parts of the country. The third point I guess I would make is that being a resource-dependant country like PNG has been for the last three decades or more, there are particular problems with being a resource-dependent country in terms of volatility of prices for the commodities that you're exporting, which has impacts on volatility of revenue flows to central government. So it is actually quite hard to plan, even in the medium term, when commodity prices can jump from $500 an ounce for gold 10 years ago to $1,600 three months ago back down to $1,300 currently. So those sorts of factors, the three of them all lined up, are a large part of the reason why they haven't been able to translate that resource wealth into broadbased sustainable forms of human development.
DW: Yet there are other countries in similar situations economically that have been able to do that.
GB: Yeah. There are certainly countries - and part of this work I'm doing is looking to some of those other countries and trying to see if there are lessons that we can take from those and apply to the policy settings in PNG.
DW: Alright. You've been working with the United Nations, so what are those lessons?
GB: The United Nations Development Programme, UNDP, have just recently come up with a strategy for extractive industries and human development and they sort of break it down to four key areas that they think need to be given real priority in terms of translating resource wealth. The first is around trying to make sure that you get the legislation and policy and planning frameworks right. By legislation they mean looking after the property rights of men and women, local communities, giving them effective say within the resource development process and then the second part is around making sure that exploration and extraction of minerals takes place with a deliberate focus on human development. And that means trying to break down some of the relationships between companies and communities, giving communities a lot more voice, a lot more say, in how they access the sorts of benefits they can access in terms of grievance mechanisms around the problems that are created by the mining companies and so on. The third element of the UNDP framework is around prudent revenue collection and management. So it's actually looking at making sure you've got the right sort of fiscal regime in place. On that score Papua New Guinea doesn't do too badly. And then secondly the management of that resource venue. There, one of the key things that UNDP advocates for, and certainly a global lesson, is sovereign wealth fund, trying to channel your resources into a fund which not only provides revenue for the immediate priorities, but also looks longer-term at investment of some of that revenue wealth, so translating your natural resource wealth into a longer-term financial investment. The fourth element of that is around investments in human, physical and particularly social capital. So trying to channel government revenue, as we were talking about before, into effective health and education services for the population to build up the human resources of the country, invest in infrastructure and look at ways in which civil society can be a more vibrant actor in the economy and society.
DW: In the end, though, it comes down to I guess the quality and probity shown by the leadership, doesn't it?
GB: It does, and, again, you can point the finger at Papua New Guinea and say that there have been, and are, significant on-going concerns around corrupt practices at the highest levels of government. Taking a more positive view of that, there has been, in the last 12 months or so, the establishment of some anti-corruption initiatives - a Task Force Sweep - which has uncovered hundreds of millions of dollars worth of what they regard as suspicious transactions. In the context of Papua New Guinea one of the things about recent development there has been the real politicisation of development. And it's almost, given the nature of the electoral system, given the nature of the cultural basis under which elections take place, whereby big men in the Highlands, in particular, are reliant on their local kinship tribal connections to get themselves elected, what's that meant is that feeding back through that chain the politicians have increasingly demanded a greater share of the government budget to apply in their own district on the development projects that they want to see, arguing that government hasn't been able to effectively deliver health and education, therefore give it to the politicians and see if they can do any better.
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