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Old 14-03-2003, 08:25 PM
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STATE OF THE NATION

Quote:
Many rural villagers believe their quality of life is now worse
than it was 20 or so years ago.
Papua New Guinea is struggling to survive as a viable nation. The economy has stagnated, and the outlook for growth is bleak. Abundant mineral resources—large deposits of gold and copper and substantial oil and natural gas reserves—and generous levels of foreign aid have created ‘windfall’ incomes (economic rents) that have led to waste and corruption.

Rent-seeking has subsidised the rise of a small political elite and overblown central government at the expense of investment in infrastructure and diversification of the economy. The non-mineral sectors, in particular agriculture, have been hurt by high exchange rates maintained for two decades through the hard kina policy.

Transport and communications have been neglected. Roads have become impassable in rural areas where some 85% of the population live. Government provision of basic education and health services has collapsed outside the capital.

The lack of progress is reflected in PNG’s social indicators, which are closer to those of Sub-saharan Africa than to the rest of the Asia Pacific region in terms of population growth, fertility rates, school attendance, and infant and maternal mortality statistics (see table 1 below). Less than 10% of the population is employed in the formal sector, and the number of young people without jobs is appalling.

Most people depend on subsistence farming and some cash cropping for survival. Life expectancy, the most reliable indicator of development, is the lowest in Melanesia by more than 10 years. Malaria and tuberculosis are making a deadly comeback while the alarming rise in HIV/AIDS infection rates is the highest in the Pacific.

Today’s conditions are mainly the product of structural imbalances in the economy that existed at independence, and of conventional policies that failed to correct them.

In the past 25 years, per capita GDP has barely risen (figure 1 below).

What growth has taken place has been concentrated in the mining and petroleum sectors, but their ‘enclave’ nature means a relatively small labour force. The contribution of the non-mineral sectors to the economy (agriculture, fisheries and forestry) has stagnated over the past decade (see figure 2 next page) despite a larger workforce, indicating very low rural incomes. Such lopsided development has mainly benefited urban elites.

As far as rural villagers are concerned, anecdotal evidence suggests that many believe their quality of life is now worse than it was 20 or so years ago.

Quote:
Unless the legitimacy and authority of central government is restored, PNG risks degenerating into a patchwork of local fiefdoms contested by strongmen and criminals.
Declining living standards have been accompanied by a severe and prolonged degradation of public institutions. Corruption is both ‘systemic and systematic’, as former Prime Minister Sir Mekere Morauta put it—systemic because it has invaded the whole process of policymaking and decision-making, and systematic because it is organised and often highly sophisticated. Nepotism is entrenched at the highest levels. The arbitrary appointment of clan members or political cronies to public office, regardless of merit, has politicised and destabilised the bureaucracy and stateowned enterprises, most of which are running at a huge loss.

This has starved the economy of funds and, ominously, undermined the most fundamental role of government—the protection of life and property. Law and order have broken down, and crime rates (fuelled by high unemployment) are soaring.

Control over parts of the Highlands is uncertain. Unless the legitimacy and authority of central government is restored, PNG risks degenerating into a patchwork of local fiefdoms contested by strongmen and criminals. This scenario is already being played out in the oil-rich Southern Highlands, where lawlessness and violence dominate.

It is now spreading to other parts of the country so that PNG is becoming close to ungovernable.

The deteriorating state of the nation is a far cry from more optimistic expectations at independence in 1975. Today some older Papua New Guineans look back nostalgically on the colonial period as a time when government was stable, progress was steady and infrastructure worked.

By electing PNG’s first post-independence prime minister Sir Michael Somare again, people appear to be expressing a desire to restore legitimacy to government—to go back to the early postcolonial ‘honeymoon’ period when the first Somare government inherited institutions that were to be the basis of development.

But the ‘father of the nation’ faces an enormous task to pull the country back from the brink. As PNG enters its 28th year of independence, failure to lay the foundations for a turnaround in its fortunes would dissipate hopes for the future.
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