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From Extraction to Inclusion FROM EXTRACTION TO INCLUSION CHANGING THE PATH TO DEVELOPMENT IN PAPUA NEW GUINEA FROM EXTRACTION TO INCLUSION CHANGING THE PATH TO DEVELOPMENT IN PAPUA NEW GUINEA Acknowledgements This report is a joint publication between ACT NOW!, Jubilee Australia and the Oakland Institute. Author: Luke Fletcher Editors: Eddie Tanago & Frederic Mousseau Graphic Design: Amy Woloszyn Maps: Mellie Musonera Charts: Dina Hopstad Rui Acknowledgements: We would like to thank the following people for their advice and assistance with various drafts: Effrey Dademo, Kate McDonald and Emily Mitchell. Cover Photo: Walking into Nogoli, PNG Highlands © James McIlraith / University of Otago Attribution: You must attribute the work to ACT NOW, Jubilee Australia and the Oakland Institute. Non Commercial: You may not use this work for commercial purposes. Photo page 10: Walking into Nogoli, PNG Highlands © James McIlraith / University of Otago Photo page 29: Bath and laundry in Turubu, East Sepik © The Oakland Institute Photo page 42: PNG LNG site © James McIlraith / University of Otago Photo page 56: Sausi Village, Madang Province © The Oakland Institute Photo page 70: Working on the road to Tari, PNG LNG construction phase © James McIlraith / University of Otago Licensing: This work is licensed under the Creative Commons Attribution 4.0 International License (CC BY-NC 4.0). You are free to share, copy, distribute, and transmit this work under the following conditions: ABOUT US ACT NOW! is a community advocacy organisation based in Papua New Guinea. Its vision is for a ‘gutpela sindaun blong olgeta’ (a just and equitable society) that embraces PNG’s rich and diverse cultural and biological heritage and is based on the principles of sharing, communal land ownership and environmental stewardship. P.O. Box 5218, Boroko 111, NCD, Papua New Guinea www.actnowpng.org [email protected] Jubilee Australia (full name: The Jubilee Australia Research Centre) engages in research and advocacy to promote economic justice for communities in the Asia Pacific region and accountability for Australian corporations and government agencies operating there. PO Box 20885, World Square, NSW 2002 Australia www.jubileeaustralia.org [email protected] The Oakland Institute is an independent policy think tank bringing fresh ideas and bold action to the most pressing social, economic, and environmental issues. PO Box 18978 Oakland, CA 94619 USA www.oaklandinstitute.org [email protected] ACT NOW!, Jubilee Australia and the Oakland Institute, October 2020 TABLE OF CONTENTS EXECUTIVE SUMMARY ..................................................................................................................5 FIGURES ..............................................................................................................................................7 ABBREVIATIONS ...............................................................................................................................8 INTRODUCTION ............................................................................................................................. 9 PART I: THE STORY OF PNG’S DEVELOPMENT CHAPTER 1: THE EVOLUTION OF A DEVELOPMENT PATH ...........................................................10 1.1: Independence and its Challenges .................................................................................................. 11 1.2: Two Choices for a Development Path ........................................................................................... 12 1.3: The Expansion of the Mining Sector ............................................................................................14 1.4: The Expansion of the Forestry Sector ............................................................................................16 1.5: The Two Principles of ‘Development by Extraction’ ......................................................................19 CHAPTER 2: TRENDS IN PNG’S HUMAN DEVELOPMENT ............................................................. 21 2.1: Economic Growth: GDP and its Limitations .................................................................................22 2.2: Living Standards, Poverty and Inequality ......................................................................................23 2.3: The Human Development Index ...................................................................................................24 2.4: Access to Basic Services ............................................................................................................... 26 2.5: Child and Maternal Health ............................................................................................................27 PART II: THE PARADOX OF WEALTH WITHOUT DEVELOPMENT CHAPTER 3: ENCLAVE ECONOMIES ................................................................................................ 29 3.1: Resource Extraction and Exports ...................................................................................................30 3.2: Resource Extraction and GDP ....................................................................................................... 31 3.3: Resource Extraction and Employment .........................................................................................32 3.4: The Lack of Multipliers ..................................................................................................................34 CHAPTER 4: REVENUE COLLECTION, MANAGEMENT AND SPENDING ..................................... 35 4.1. The Contribution to National Revenues ....................................................................................... 35 4.2: Mining, Oil and Gas Companies: Tax Avoidance ........................................................................36 4.3: Logging Companies: Tax Evasion ..................................................................................................37 4.4: Dodgy Loans and Spending Sprees ..............................................................................................39 4.5: Disappearing Foreign Exchange Reserves ................................................................................... 40 4.6: Revenue Misappropriation and Spending ....................................................................................41 PART III: THE LOCAL PICTURE CHAPTER 5: ECONOMIC AND SOCIAL IMPACTS ............................................................................42 5.1: Direct Economic Benefits ...............................................................................................................43 5.2: Infrastructure Development and Services ................................................................................... 44 5.3: Internal Migration and Foreign Workers ......................................................................................45 CHAPTER 6: ENVIRONMENTAL IMPACT ......................................................................................... 46 6.1: The Environmental Impacts of Mining .........................................................................................47 6.2: The Steady Destruction of One of the World’s Great Rainforests ...............................................48 6.3: The Environmental Impacts of Logging and Oil Palm ................................................................. 51 www.oaklandinstitute.org | www.jubileeaustralia.org | www.actnowpng.org 3 CHAPTER 7: CONSENT, CONFLICT AND HUMAN RIGHTS ............................................................52 7.1: Customary Land Alienation and Natural Resource Extraction .................................................... 53 7.2: Free, Prior and Informed Consent ................................................................................................ 53 7.3: Human Rights and Conflict ...........................................................................................................54 PART IV: SECURING A BETTER FUTURE CHAPTER 8: THE ECONOMY OF THE PEOPLE ................................................................................56 8.1: The Strength and Resilience of Agriculture and the Rural Economy ........................................... 57 8.2: Agricultural Policy: Opportunities and Constraints .....................................................................58 8.3: Customary Land Under Threat ......................................................................................................59 8.4: Strengthening the Agricultural Sector ..........................................................................................61 CHAPTER 9: SUSTAINABLE EXTRACTION ...................................................................................... 62 9.1: A Resource Curse? .........................................................................................................................63 9.2: Institutional Changes to the Minerals and Forest Governance Regimes ....................................63 9.3: The Limits of Reform: Minerals ....................................................................................................65 9.4: A Moratorium on New Mining and Petroleum Projects ..............................................................65 9.5: Principles of Sustainable Forest Management ............................................................................ 66 9.6: A Ban on Round Log Exports ........................................................................................................67
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