PNG Growth Diagnostics StudyPolicy Recommendations

Aim: Inclusive Growth and Opportunities

Photo: P Barker

Photo: Rocky Roe

Photo: Rocky Roe

Background comments:•Need cautious with statistics in PNG; some relatively reliable, notably National Census (but now 11 years old), DHS, hopefully forthcoming HIES and some material from BPNG, but much care or recognise long lag•From Washington Consensus to Barcelona consensus: from complex Structural Adjustment Programs (like IRDPs of the 1970s and 80s at local level) hard to implement, so attempt to focus on key constraints •PNG shares various development constraints with other countries, but some unique characteristics, related to Dutch disease and Susuve Laumea’s ‘PNG Disease” – an industry in seeking to extort as much out of the system as possible in compensation claims etc!•This comprises some sketchy background recommendations, based upon the diagnostic study and feedback from business and the public, notably from CIMC development forums and sector committees etc; the idea is to encourage feedback from yourselves

•Need cautious with statistics in PNG; some relatively reliable, notably National Census (but now 11 years old), DHS, hopefully forthcoming HIES and some material from BPNG, but much care or recognise long lag•From Washington Consensus to Barcelona consensus: from complex Structural Adjustment Programs (like IRDPs of the 1970s and 80s at local level) hard to implement, so attempt to focus on key constraints •PNG shares various development constraints with other countries, but some unique characteristics, related to Dutch disease and Susuve Laumea’s ‘PNG Disease” – an industry in seeking to extort as much out of the system as possible in compensation claims etc!•This comprises some sketchy background recommendations, based upon the diagnostic study and feedback from business and the public, notably from CIMC development forums and sector committees etc; the idea is to encourage feedback from yourselves

Economic Scenario• Dominant rural population with limited access to markets or public services • Growing urban population seeking few opportunities and largely dependent

upon limited informal economy• Small formal sector – in enclave projects (with limited spin offs) and towns,

growing with overall economy, but inadequate job creation• Growing disparity and dissatisfaction, especially in face of wealth• Private sector should generate formal and non-formal employment and

income earning opportunities• Investment and growth largely driven by strong commodity prices, but also

some Government actions (including early reforms of 2000s and subsequent macro-economic stability, but growth inadequate and not-broad based)

• Government plays a major role in addressing constraints, macro-econ management sound (but must remain so), but micro/institutional performance & coordination poor, and current and future revenue do not leave room for wastage, so must be carefully targeted, coordinated and accounted for

• Dominant rural population with limited access to markets or public services • Growing urban population seeking few opportunities and largely dependent

upon limited informal economy• Small formal sector – in enclave projects (with limited spin offs) and towns,

growing with overall economy, but inadequate job creation• Growing disparity and dissatisfaction, especially in face of wealth• Private sector should generate formal and non-formal employment and

income earning opportunities• Investment and growth largely driven by strong commodity prices, but also

some Government actions (including early reforms of 2000s and subsequent macro-economic stability, but growth inadequate and not-broad based)

• Government plays a major role in addressing constraints, macro-econ management sound (but must remain so), but micro/institutional performance & coordination poor, and current and future revenue do not leave room for wastage, so must be carefully targeted, coordinated and accounted for

Governance• With law and order problems, inadequate and inefficient provision of public

goods and services (esp. transport infrastructure, power and utilities), corruption, and inadequate skilled persons available to the labour market as major constraints to business and investment (both larger companies and micro-entrepreneurs) need major reassessment and overhaul of public sector institutions

• Reinforce Separate functions of Executive, Legislature (Parlt) and the Judiciary

• Longer and shorter plans valuable, to set directions and coordinate, but need to be accurate and broad ownership

• Commitment to addressing governance (including corruption) issues must come from the top and command wide support

• Starts with wider community awareness and empowerment, to demand services, performance and accountability, not political handouts, undue compensation demands etc.

• Requires literacy, access to information (FoI). Treasury made some progress, but mandatory information required right down to Districts and local services

• With law and order problems, inadequate and inefficient provision of public goods and services (esp. transport infrastructure, power and utilities), corruption, and inadequate skilled persons available to the labour market as major constraints to business and investment (both larger companies and micro-entrepreneurs) need major reassessment and overhaul of public sector institutions

• Reinforce Separate functions of Executive, Legislature (Parlt) and the Judiciary

• Longer and shorter plans valuable, to set directions and coordinate, but need to be accurate and broad ownership

• Commitment to addressing governance (including corruption) issues must come from the top and command wide support

• Starts with wider community awareness and empowerment, to demand services, performance and accountability, not political handouts, undue compensation demands etc.

• Requires literacy, access to information (FoI). Treasury made some progress, but mandatory information required right down to Districts and local services

Mechanisms for better governance and coordination

• Realistic Plans and their wide acceptance –including fiscal, debt strategies etc and adherence to PFMA etc; then need to apply these plans or refine them if (like DSP/MTDP now) they have major unrealistic components (from inadequate consultation)

• Clear definition of functions & responsibilities - limited duplication, between national institutions and between national and Sub-national (DPLGA/PLSMA making useful progress here)

• Adequate budgets for essential State recurrent functions (police, education, infr maintenance, health – as per NEFC), based upon detailed inventories and costings

• Once that’s funded then fund priority upgrades, new facilities etc• Explore best ways of service delivery and what govt should do itself and

what others can perform better (right sizing, public sector reform, privatisation/part-privatisation, competition, PPPs and other ways to secure private investment

• No off-budget public funds – although some dedicated levies/funds maybe justified for some authorities (e.g. some routine maintenance, research)

• Inventory and control over compensation arrangements and up front and correct identification of genuine landowners

• Realistic Plans and their wide acceptance –including fiscal, debt strategies etc and adherence to PFMA etc; then need to apply these plans or refine them if (like DSP/MTDP now) they have major unrealistic components (from inadequate consultation)

• Clear definition of functions & responsibilities - limited duplication, between national institutions and between national and Sub-national (DPLGA/PLSMA making useful progress here)

• Adequate budgets for essential State recurrent functions (police, education, infr maintenance, health – as per NEFC), based upon detailed inventories and costings

• Once that’s funded then fund priority upgrades, new facilities etc• Explore best ways of service delivery and what govt should do itself and

what others can perform better (right sizing, public sector reform, privatisation/part-privatisation, competition, PPPs and other ways to secure private investment

• No off-budget public funds – although some dedicated levies/funds maybe justified for some authorities (e.g. some routine maintenance, research)

• Inventory and control over compensation arrangements and up front and correct identification of genuine landowners

Addressing corruption• Minimise opportunities for corruption (avoid sole discretion, use

electronic mechanisms, ensure checks and balances – boards, internal auditing etc)

• Consult, finalise and approve National Anti Corruption Strategy, and ensure it has teeth and applied

• Adequate funding, independence and teeth for inspection services (e.g. licensing bodies), official watchdogs (AG, OC, maybe ICAC, Police, PP) and reinforce role of legislature (including PPAC)

• Public awareness and ownership of processes and public assets etc, nature of corruption, where to report abuse (Whilstleblower legislation)

• Publicly release and implement recommendations of past inquiries • Make leader’s assets etc public information

• Minimise opportunities for corruption (avoid sole discretion, use electronic mechanisms, ensure checks and balances – boards, internal auditing etc)

• Consult, finalise and approve National Anti Corruption Strategy, and ensure it has teeth and applied

• Adequate funding, independence and teeth for inspection services (e.g. licensing bodies), official watchdogs (AG, OC, maybe ICAC, Police, PP) and reinforce role of legislature (including PPAC)

• Public awareness and ownership of processes and public assets etc, nature of corruption, where to report abuse (Whilstleblower legislation)

• Publicly release and implement recommendations of past inquiries • Make leader’s assets etc public information

Addressing Law and Order problems

• Starts with creating income-earning and employment opportunities and keeping living costs down (but reducing crime in turn it is essential for business & investment esp. by small and micro investors)

• Ensure police funding and numbers match population growth (apply review recommendations and update); training, standards and accountability (and caution on direct private funding/use of police – )

• Independent police (and prison etc) appointments, but also independent mechanisms for appeal and dismissal

• Funding for Courts, magistracy and entire system • Reinforce community responsibility and systems

• Starts with creating income-earning and employment opportunities and keeping living costs down (but reducing crime in turn it is essential for business & investment esp. by small and micro investors)

• Ensure police funding and numbers match population growth (apply review recommendations and update); training, standards and accountability (and caution on direct private funding/use of police – )

• Independent police (and prison etc) appointments, but also independent mechanisms for appeal and dismissal

• Funding for Courts, magistracy and entire system • Reinforce community responsibility and systems

Transport Infrastructure• Focus on adequate funding for maintenance of roads (K620 m) and other transport

infrastructure (incl rural airstrips), based upon routine inventory and priorities, then upgrades etc

• Clarity or responsibilities, core functions of Transport dept re coordinated planning, rural airstrips (maintenance/supervision, inspections)

• Core functions of Works (and NRA for restored highways), reinforce technical support unit for LLG/community infrastructure

• Funding for retaining core professional staff • Full road tax to NRA• Public involvement and benefits from local infrastructure (roads, but also power etc) • Ways to attract/retain private investment and management/ownership of transport

infrastructure (commercialised main airports, ports), use of PPPs etc• Role of logging roads/standards etc to be public infr.• Explore ways to encourage competition and more affordable consumer costs (Ports,

Air-services); keep airport charges affordable and realisitc (don’t over-charge 3rd level operators – which cause little runway wear and tea and providing essential rural services)

• Freight subsidies to remoter locations and government air-sea charters for service provision

• Focus on adequate funding for maintenance of roads (K620 m) and other transport infrastructure (incl rural airstrips), based upon routine inventory and priorities, then upgrades etc

• Clarity or responsibilities, core functions of Transport dept re coordinated planning, rural airstrips (maintenance/supervision, inspections)

• Core functions of Works (and NRA for restored highways), reinforce technical support unit for LLG/community infrastructure

• Funding for retaining core professional staff • Full road tax to NRA• Public involvement and benefits from local infrastructure (roads, but also power etc) • Ways to attract/retain private investment and management/ownership of transport

infrastructure (commercialised main airports, ports), use of PPPs etc• Role of logging roads/standards etc to be public infr.• Explore ways to encourage competition and more affordable consumer costs (Ports,

Air-services); keep airport charges affordable and realisitc (don’t over-charge 3rd level operators – which cause little runway wear and tea and providing essential rural services)

• Freight subsidies to remoter locations and government air-sea charters for service provision

Other Core Infrastructure• Water and sewerage –rollout investment upgrade of urban and rural water

supplies and urban sewerage; rationalise institutions and make more cost effective; PPPs or other mechanisms for private; learn lessons (e.g. ADB project and bureaucratic delays in project impl) investment/management. Maintain inventory and routine technical support for rural water supplies (and health and sanitation education); better coordinate donor support

• Electricity – immediate maintenance, restoration and short term upgrades; bring in private capital, to supply and sell (including major companies with own generation) competitively (not over-priced BOT), progress with longer term planning options and do not shun landowners, but work with/supply them (as with NBPOL, Digicel etc model)

• ICT – roll out competition between firms and encourage inter-technology competition; extend to internet (using VSAT, and maybe future broadband), subsidise for remote areas for education/information &other service functions and local business opportunities; encourage add-on services to existing ICT infrastructure with supportive and not unduly restrictive regulations (e.g for mobile banking etc); ensure independence of ICT ergulator, look for ways to cut costs (e.g merge NICTA-ICCC)

• Water and sewerage –rollout investment upgrade of urban and rural water supplies and urban sewerage; rationalise institutions and make more cost effective; PPPs or other mechanisms for private; learn lessons (e.g. ADB project and bureaucratic delays in project impl) investment/management. Maintain inventory and routine technical support for rural water supplies (and health and sanitation education); better coordinate donor support

• Electricity – immediate maintenance, restoration and short term upgrades; bring in private capital, to supply and sell (including major companies with own generation) competitively (not over-priced BOT), progress with longer term planning options and do not shun landowners, but work with/supply them (as with NBPOL, Digicel etc model)

• ICT – roll out competition between firms and encourage inter-technology competition; extend to internet (using VSAT, and maybe future broadband), subsidise for remote areas for education/information &other service functions and local business opportunities; encourage add-on services to existing ICT infrastructure with supportive and not unduly restrictive regulations (e.g for mobile banking etc); ensure independence of ICT ergulator, look for ways to cut costs (e.g merge NICTA-ICCC)

Lands• Automatic mechanisms (e.g. auction, rather than Land

Board selections)• Accountable Lands administration (Nat Lands Authority,

with all staff recruited afresh) • Rationalise between Land board/tribunal, urban physical

planning board etc• Implement reforms on alienated land admin; Need

secure land title, not multiple title• new facilities, records publicly accessible • Land reform process to empower customary landowners,

not dispossess (with conversation from customary title under 99 year State leases) using discretionary powers to corporate or outside entities; this is land alienation, and lacking Free and informed consent

• Automatic mechanisms (e.g. auction, rather than Land Board selections)

• Accountable Lands administration (Nat Lands Authority, with all staff recruited afresh)

• Rationalise between Land board/tribunal, urban physical planning board etc

• Implement reforms on alienated land admin; Need secure land title, not multiple title

• new facilities, records publicly accessible • Land reform process to empower customary landowners,

not dispossess (with conversation from customary title under 99 year State leases) using discretionary powers to corporate or outside entities; this is land alienation, and lacking Free and informed consent

Human Capital /Education• Staff numbers/facilities to match needs –based upon population (as per Census –

village book)• budget to meet minimum costs and equitable (as per NEFC concept)• Transparent budget and oversight, including District and individual school allocations

and plans posted at local level Pay and conditions; how to retain in remoter rural areas

• Staff status and morale (mobile banking access, leave fares etc)• UBE and literacy targets; roll out programme (donor coordination, private sector, tax

credits)• Affordable access to international quality education materials (including affordable

computer/internet access- VSAT-ocpc etc, but access to books etc first)• Tracking/stats (teacher, student etc)• Retention and balance male/female students • Technical & Vocation Training• Major investment/reinvestment; focus on technical and business skills, esp. to

empower for likely skills needed for foreseeable future , and especially to be flexible, for agriculture/marketing/literacy/numeracy-accounting, also catering etc. ; encourage employers to invest and use/upgrade own facilities and accredited apprenticeship schemes etc; respond to survey needs on reliability etc not simply technical, to encourage local (rather than overseas) staff recruitment etc. Work with private sector for needs, but also for needs of micro-enterprises and the informal economy/rural production and entering the cash economy

• Staff numbers/facilities to match needs –based upon population (as per Census –village book)

• budget to meet minimum costs and equitable (as per NEFC concept)• Transparent budget and oversight, including District and individual school allocations

and plans posted at local level Pay and conditions; how to retain in remoter rural areas

• Staff status and morale (mobile banking access, leave fares etc)• UBE and literacy targets; roll out programme (donor coordination, private sector, tax

credits)• Affordable access to international quality education materials (including affordable

computer/internet access- VSAT-ocpc etc, but access to books etc first)• Tracking/stats (teacher, student etc)• Retention and balance male/female students • Technical & Vocation Training• Major investment/reinvestment; focus on technical and business skills, esp. to

empower for likely skills needed for foreseeable future , and especially to be flexible, for agriculture/marketing/literacy/numeracy-accounting, also catering etc. ; encourage employers to invest and use/upgrade own facilities and accredited apprenticeship schemes etc; respond to survey needs on reliability etc not simply technical, to encourage local (rather than overseas) staff recruitment etc. Work with private sector for needs, but also for needs of micro-enterprises and the informal economy/rural production and entering the cash economy

Health• Must recognise that access to income (and awareness) key to improved

health, not just issue of health service provision; but likewise improved health and nutrition valuable for improved econ opportunities

• Adequate minimum & equitable budget allocation for primacy health to Provinces etc (to meet minimum costs – as per NEFC concept)

• Focus on preventative (good nutrition, immunisation, women’s awareness/literacy and empowerment, bed nets etc)

• Focus on primary accessible health services (don’t overburden weak transport systems and base hospitals) and better coordination (Health Authority reforms valuable, but need consensus on priorities and more coordinated implementation/management)

• Restore routine staff training e.g. nurse schools etc• Routine funding for staff, medicines etc• Records/stats• Tackle priority challenges, main killer diseases (malaria/ pneumonia, TB,

HIV/AIDS) and esp. main MDGs – atrocious Maternal and Child mortality rates etc

• Explore ways to gain economies of scale in hospital, learn from private sector models (include private capital into specialist centres, cross subsidisation affordable health insurance – e.g. Bangalore hospital service)

• Must recognise that access to income (and awareness) key to improved health, not just issue of health service provision; but likewise improved health and nutrition valuable for improved econ opportunities

• Adequate minimum & equitable budget allocation for primacy health to Provinces etc (to meet minimum costs – as per NEFC concept)

• Focus on preventative (good nutrition, immunisation, women’s awareness/literacy and empowerment, bed nets etc)

• Focus on primary accessible health services (don’t overburden weak transport systems and base hospitals) and better coordination (Health Authority reforms valuable, but need consensus on priorities and more coordinated implementation/management)

• Restore routine staff training e.g. nurse schools etc• Routine funding for staff, medicines etc• Records/stats• Tackle priority challenges, main killer diseases (malaria/ pneumonia, TB,

HIV/AIDS) and esp. main MDGs – atrocious Maternal and Child mortality rates etc

• Explore ways to gain economies of scale in hospital, learn from private sector models (include private capital into specialist centres, cross subsidisation affordable health insurance – e.g. Bangalore hospital service)

Note on Agriculture Needs• Agriculture remains dominant in PNG economy, esp. for the majority and

will remain so for foreseeable future, despite substantial urban drift; need to give focus to sector’s needs to enable it and rural areas to perform and not squeeze out rural population; access the key factor; i.e. roads, but also other communications and even access to micro-finance (largely for savings, but for credit for some, remissions etc.)

• The economy needs diversification – spreading benefits from LNG-Mining, towards agriculture and enhanced broad-based opportunities, requiring coordinated and focussed help. Govt institutions and sector support (NADP) etc largely ineffective and mismanaged (restored roads/communications, law and order, a part)

• Social Safety Net: wantok system under pressure notably in urban areas; need to explore effective social support mechanisms, esp for the more vulnerable, geared to providing a stepping stone to help them help themselves. DCD has little or no human and financial resources (nil from only donor) – this unsatisfactory; in many countries this a major area of public expenditure

• Agriculture remains dominant in PNG economy, esp. for the majority and will remain so for foreseeable future, despite substantial urban drift; need to give focus to sector’s needs to enable it and rural areas to perform and not squeeze out rural population; access the key factor; i.e. roads, but also other communications and even access to micro-finance (largely for savings, but for credit for some, remissions etc.)

• The economy needs diversification – spreading benefits from LNG-Mining, towards agriculture and enhanced broad-based opportunities, requiring coordinated and focussed help. Govt institutions and sector support (NADP) etc largely ineffective and mismanaged (restored roads/communications, law and order, a part)

• Social Safety Net: wantok system under pressure notably in urban areas; need to explore effective social support mechanisms, esp for the more vulnerable, geared to providing a stepping stone to help them help themselves. DCD has little or no human and financial resources (nil from only donor) – this unsatisfactory; in many countries this a major area of public expenditure

Can PNG meet the aspirations of all its young people into the future, or marginalise the bulk in an increasingly polarised society of haves and have-nots?

those with access to jobs, income and services and those without? And maybe those dispossessed of their land by shady deals by unscrupulous officials with

outside speculators and faceless businessmen?

Photo: P Barker