Bigger state control of assets won't help PNG grow
The program was titled Preying on Paradise. There should be a law
against it -- not just the preying but setting up the notion of
"natural" PNG as a place of Rousseauian perfection, from which the
fall is all the more devastating.
If only, this paradigm of paradise hints, the place had been left
untouched, like Eden.
Australia's closest neighbour, just a canoe ride away, does host most of
the 41 species of the enchanting birds of paradise. It is a beautiful country,
from its Highlands -- with Mount Wilhelm reaching 4509m -- to its 600 tropical
islands. Its people are warm, friendly and talented.
But it is not and never has been paradise. In the pre-outside-contact
days, there were too many tribal fights and deaths at childbirth, and life
spans were too limited, to qualify. More recently, people's hopes before and
through independence, of a rapidly improving standard of living, largely have
been dashed.
The Four Corners program focused, quite reasonably, on corruption. Not a
new story for PNG, or for anywhere. But corruption is indeed a particular
scourge there, reinforcing the sense of helplessness felt by many ordinary
citizens that the best they can aim for is to make ends meet.
Corruption is not going to be removed altogether, there or anywhere. But
the effort needs to be made. Prime Minister Peter O'Neill is the most powerful
politician to have emerged in the country since founding father Michael Somare.
O'Neill put in place a young Western Highlands lawyer, Sam Koim, to run an
interim anti-corruption operation until he could get through parliament an
Independent Commission Against Corruption, Hong Kong style.
Like Hong Kong, PNG -- with a similar population -- has an elite who
pretty well know each other, making such a task more challenging. But it has
worked devastatingly well in Hong Kong and, if genuinely independent and
formidably well equipped, would cut swathes through PNG's top political and
bureaucratic ranks.
Many believe corruption has been the main cause of the debilitating
levels of more general crime, which in itself inhibits broader-based economic
growth including job creation, beyond the resources sector. Standard &
Poor's sovereign ratings associate director Craig Michaels says that
"because of the law and order problem, resources is the only sector that attracts
foreign investment".
Ultimately, O'Neill chiefly will be assessed, as he well appreciates,
not by how cleanly he governs -- though this of course does matter -- but by
whether living standards at last start to rise to meet people's rightful
expectations.
If he can keep driving the economy at pace, then the benefits may start
to flow more broadly at last. And this will bring the added benefit that
members of the PNG elite may feel that if there's enough in the pool for them,
whether they have their hands on the political levers or not, they can work
together, or at least, to cease their constant internecine struggles.
To date, O'Neill has done well, setting up the country for a more
determined drive towards faster and broader development, hopefully one that can
deliver jobs at last. That's what makes his move last week to nationalise Ok
Tedi mine -- without yet naming any compensation payment -- the more puzzling.
He has engaged in the most bitter war of words with former prime
minister and former central bank governor Mekere Morauta, who became -- to
O'Neill's irritation, without seeking his approval -- chairman of Ok Tedi and
of its 63 per cent shareholder, the Sustainable Development Program trust.
Australian National University professor Stephen Howes, who is probably
Australia's leading development economist, , lists five risks resulting from
the unprecedented nationalisation: to the operation of the mine under state
control; to the credibility of the government, which has been planning a
long-term sovereign wealth fund; to the use of Ok Tedi dividends; and to the
SDP projects and its $1.5 billion long-term fund for the people of Western
Province for when the mine closes.
The fifth risk Howes lists is to the reputation of the government and of
O'Neill himself as a business-friendly PM.
Morauta's own reputation stems in part from his successful privatisation
of PNG's biggest bank. It would be odd, and unrepresentative of O'Neill's own
views and his undoubted qualities, if he were to become sidetracked into carving
out a bigger role for the state, which has fouled up so much of its core
responsibilities in PNG.
O'Neill's Trade Minister Richard Maru has just blocked the partial
takeover of New Britain Palm Oil by Malaysian company Kulim, saying that 90 per
cent of the economy is controlled by foreigners: "As a responsible
government we're going to take some very drastic steps to create more
opportunities for own citizens to enjoy the wealth of our nation."
That's the old story -- seeking to regain a paradise that has never
existed. PNG's wealth needs to be created -- by joint efforts involving foreign
capital and expertise -- before it can be shared.
This article was first published on The Australian on the 26th of September 2013