Political Reforms – Bougainville Peace Agreement

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POLITICAL REFORMS – BOUGAINVILLE PEACE AGREEMENT, POLITICAL PARTIES AND PREFERENTIAL VOTING

A paper presented at the Seventh Mining and Petroleum Investment Conference
By: Joshua Kalinoe, Chief Secretary to Government,
Department of the Prime Minister and NEC

Introduction

Political and constitutional reform is an ongoing concern in any country where constitutional democracy is taken seriously.

Society changes. New pressures, problems and prospects arise. Fresh loopholes, gaps
jmand unintended effects appear in existing arrangements.

Issues giving rise to demands and decisions to press for reform move up the public agenda.

Specific proposals are made, debated and judged.

Choices are made. Resources are mobilized. Implementation follows.

Papua New Guinea is no exception.

The Constitution today is not what it was when it came into effect just over twenty-seven years ago. Nor are the other Constitutional Laws, the Organic Laws, through which provisions in the main body of the Constitution are elaborated and applied. They have been amended, subjected to judicial review, applied and, in some cases, regrettably, overlooked in many different ways.

Currently, a number of major reforms are being implemented.

Others are before the National Parliament awaiting debate and final decision.

Still other issues and options are being considered by the Somare-Marat Government, particular political parties and other political actors for legislative attention and possible action.

The Papua New Guinea Constitution is, therefore, unlikely to remain as it is for very long.

Somewhat paradoxically, recent changes to Constitutional Laws mean that Governments now have a real chance of remaining in office for a full five-year term. One result is that the politics of political survival is no longer as central to Papua New Guinea national politics as it has sometimes been in the past.

Reform has a better chance. As the Minister for Finance and Treasury, Hon. Bart Philemon, said in his Budget Speech last week, ‘Policy is now at the fulcrum of decision-making processes.’

Strengthening both the formal and practical supports for good government is one of the Somare-Marat Government’s five main priorities.

In Papua New Guinea, political reforms requiring addition or other amendment to the Constitution have a number of rather unusual features.

They are, in certain respects, somewhat easier to make than in countries where particular interests, such as the states of a federation, are guaranteed a special role in constitutional change – as in Australia. The National Parliament alone is generally responsible for making amendments to the Papua New Guinea Constitution.

The requirement that the support of specified absolute majorities must be obtained in order to make changes – from half plus one, through two-thirds to three-quarters of all Members - provides powerful encouragement for a bipartisan approach towards in political and constitutional reform.

Or - more accurately, in the multi-party environment that has generally prevailed in Papua New Guinea – nonpartisan or almost consensus support.

Proposals to amend the new Part XIV of the Constitution implementing the Bougainville Peace Agreement, which were added to the Constitution earlier this year, differ from all others in that they are subject to special, additional requirements – and safeguards for Bougainville, in particular.

These Bougainville-specific requirements are additional to the two-thirds absolute majority required in the National Parliament. They are generally the support of an absolute majority of members of the Bougainville legislature to be set up under this Part, and a two-thirds absolute majority for proposals to change the referendum provisions.

With more than 860 different language-groups, very great geographical and other differences, and a large number of political parties formed mainly in recent years, Papua New Guinea is a very diverse country. The unity we display in the midst of such great diversity often puzzles outside observers, who find it difficult to understand how we work towards a stable democracy in Papua New Guinea.

During our 27 years of independence, we have tried to refine the framework of decentralisation in successive changes to our Constitution and Organic Laws on provincial government. The laws and their purposes have not always come together due to practical difficulties and the reality of our capacity to manage devolved State functions.

Thus, reform is a continuing process in order to ensure the effective delivery of essential services.

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Bougainville Peace Agreement

Bougainville was the pioneer in pressing for decentralisation and establishing an early form of provincial government even before independence. Now, following the long period of armed conflict – and the deaths and injuries, damage and destruction of property, as well as the social disruption it caused – between 1989 and 1997, a special situation applies.

Following several years of political talks with Bougainville leaders, a special set of arrangements has been devised, set down in detail in the Bougainville Peace Agreement signed on 30 August 2001, and implemented in a Constitutional Amendment and a new Organic Law which were passed by the National Parliament earlier this year.

Both the circumstances and the arrangements are unique in Papua New Guinea.

The Lincoln Agreement on Peace, Security and Development signed in January 1998 and the ‘permanent and irrevocable ceasefire’ that came into effect three months later, provided the basis for the progressive political settlement which has brought the Bougainville Peace Agreement to war-torn Bougainville.

Much of the groundwork was laid by the previous keynote speaker, Rt. Hon Sir Michael Somare, who led a bipartisan National Government Delegation in working through the issues and reaching agreement on many key points with a combined Bougainville delegation representing the Bougainville factions involved in the peace process.

The Agreement was finalised while another distinguished person, yet to speak at this Conference, Hon. Sir Moi Avei, was Minister for Bougainville Affairs.

In a remarkable display of unity and commitment to peace earlier this year, the National Parliament passed the new Part XIV of the Constitution and the new Organic Law on Peace-Building in Bougainville – Autonomous Bougainville Government and Bougainville Referendum to give legal effect to the Bougainville Peace Agreement by more than the two-thirds majority required, and without any votes against.

The Bougainville Peace Agreement has three main pillars:

• agreed arrangements for the phased establishment and operation of an autonomous Bougainville Government within the Papua New Guinea Constitution;
• a constitutionally guaranteed referendum among Bougainvilleans on Bougainville’s political future, including the option of a separate independence for Bougainville, with the outcome subject to the final decision-making authority of the National Parliament; and
• weapons disposal in accordance with a 3-stage plan prepared in close consultation with ex-combatant commanders

Autonomy - the new Part of the Constitution and the new Organic Law for Bougainville provide a framework of requirements for good governance within which Bougainville will make its own Constitution establishing the autonomous Bougainville Government.

In essence, this Government will begin with at least the same powers, functions and resources as Provincial Governments have elsewhere in Papua New Guinea.

It may take over responsibility for other powers and functions after a years notice to the National Government.

In addition to establishing a legislature, executive, financial procedures etc., the Bougainville Constitution may provide for constitutional offices, as well as courts able to hear civil and criminal cases within the range which applies to the National Court. The Supreme Court will still remain the highest court of appeal.

A joint supervisory body, consisting of representatives of the National and autonomous Bougainville governments will co-ordinate the implementation and resolve disputes.
Powers transferred must be used with respect for Papua New Guinea’s international obligations and human rights guaranteed in the Constitution and by international law.

There will be two lists of powers and functions, which can be delegated by agreement.

One list provides for the National Government to keep responsibility for defence, central banking, foreign relations, immigration, quarantine, telecommunications, posts and international civil aviation, shipping and trade. The National Government will consult, and facilitate participation by, the Bougainville Government in specified areas; future treaties intended to alter the agreed autonomy arrangements will apply only by agreement.

The other list specifies the autonomous Bougainville Government’s powers and functions.

Powers and functions not on either the National or Bougainville list will remain with the National Government, and then be assigned following the same principles.

A short Annex I have prepared for this paper outlines how the new arrangements will apply to mining and petroleum investment.

The Annex is intended to meet the professional interests of people attending this Conference.

It has no necessary implications at all as to the possibility, the timing or the circumstances of activity resuming in either the mining or petroleum sectors in what is still a sensitive situation on the ground.

Under the Bougainville Peace Agreement and implementing laws, privatisation will have regard to the agreed autonomy arrangements.

The Criminal Code will continue to apply in Bougainville, unless the National Government agrees to change.

The autonomous Bougainville Government will be able to set up its own Public Service, Police and Correctional Institution Services (CIS) in stages (the additional costs will be shared). They will be required to maintain certain links and common standards within the State Services, including a single industrial relations system, recruitment on individual merit, display of National emblems, and swearing oaths of allegiance to Papua New Guinea.

The State Services will continue to operate in Bougainville within their areas of responsibility, and recruit nation-wide. The Bougainville Police will continue to have access to specialist services and support from the Royal Papua New Guinea Constabulary – (forensics, criminal investigations, etc.), and enforce National laws.

The National Government will monitor the Bougainville Public Service, and inspect and audit the Bougainville Police and the Correctional Institutions Service. The Bougainville Police will be funded through conditional grants and will not develop the equivalent of an armed Police Mobile Unit. The Bougainville CIS will not have high-powered weapons.

The particular sensitivities of the post-conflict situation in Bougainville (one of the unique circumstances that distinguishes Bougainville from other parts of Papua New Guinea) are recognised in mutual commitments regarding the Papua New Guinea Defence Force (PNGDF), and provision for Bougainville officials to participate actively in PNGDF activities in Bougainville.

After withdrawal under the agreed weapons disposal plan, the Government will consult the autonomous Bougainville Government before finalising any plans for the PNGDF to develop facilities, a base or a permanent presence in Bougainville. The RPNGC Police Mobile Units can be redeployed there only by consensus.

Bougainville will continue to make a fair contribution to National Government costs; a revenue-sharing formula will apply after fiscal self-reliance.

The tax powers available to the autonomous Bougainville Government will include all existing taxes except company tax, customs duties and 70% of value-added tax (VAT) until fiscal self-reliance.

The autonomous Bougainville Government will be able to adjust personal income and company tax in Bougainville by up to five percentage points from the national rates only after fiscal self-reliance has been achieved.

The National Government will provide unconditional grants for the recurrent costs of the autonomous Bougainville Government until the autonomous Bougainville Government achieves fiscal self reliance.

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The point at which fiscal self-reliance is achieved is when revenue from company tax, customs duties and 70% of VAT are greater than recurrent costs.

The autonomous Bougainville Government will also be guaranteed conditional grants for restoration and development, and may be offered other conditional grants.

The National Budget for 2003 honours the commitment for the National Government to provide an Establishment Grant to help fund the setting-up of the autonomous Bougainville Government by allocating the first of two tranches, each of K5 million, for the purpose.

Once it is set up, the autonomous Bougainville Government may obtain foreign loans subject to Central Bank approval, and secure foreign aid which does not reduce aid already available to Papua New Guinea (provided there are no overriding foreign policy considerations).

The Auditor-General will continue to audit the use of the National Government grants.

The entire set of arrangements will be subject to review every five years.

Conscious of the interest the arrangements for Bougainville have aroused in other parts of Papua New Guinea, the National Executive Council has decided to set up a process for considering separately the wider implications that the agreed Bougainville autonomy arrangements might have for other parts of the country.

Between 10 and 15 years after the establishment of the autonomous Bougainville Government, the effectiveness of the agreed arrangements will be publicly tested in Bougainville in the guaranteed referendum for which the Bougainville Peace Agreement and the implementing laws provide.

Weapons Disposal – Much of Bougainville is now at stage 2 of the agreed weapons disposal plan, which must be concluded and verified by the United Nations Observer Mission in Bougainville (UNOMB) before the Constitutional Laws to implement the agreed autonomy and referendum arrangements become operational.

The target-date for concluding stage two is 24 December, 2002.

Verification and certification by UNOMB will follow.

Any shortcomings in implementation will delay the establishment of the autonomous Bougainville Government and elections under the Bougainville Constitution which is currently being prepared.

When stage 2 is completed satisfactorily, a decision on the final fate of the weapons is to be made within four-and-a-half (4½) months.
In the meantime moves are underway to seek United Nations’ support for UNOMB to remain and complete its assignment in 2003.

The Governments which contribute to the neutral, regional Peace Monitoring Group - Australia, Fiji, New Zealand and Vanuatu – are being asked to allow it to remain on into 2003 too, so it can continue supporting efforts to build security and mutual confidence on the ground.

Organic Law on the Integrity of Political Parties and Candidates

The Law has two broad objectives:

• to strengthen the political party system, and
• to reduce instability in governance.

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Political Parties - Since the inception of universal voting for Parliament in 1964, voters have tended to be attracted by the qualities of the individual rather than allegiance to political parties. I might venture to say that our current Prime Minister has been almost unique in combining both personal appeal and party organisation - and has consequently has been elected again as Prime Minister for the third time after seventeen years of volatility in Papua New Guinea’s party system.

What, then, actually happened in the past seventeen years? With a tendency for voters to vote for on the basis of individual candidates’ personal qualities rather than political parties, a large number of independents have been voted into Parliament at successive elections. They were accordingly free to ally with one party or another, or to remain independent, as circumstances determined.

The numbers of MPs in the larger parties tended to swell with new recruits from among the independents joining the core of successfully endorsed candidates after a general election.

These fickle alliances caused instability in the party system and for the Government-of-the-day.

The recent Constitutional Laws on the Integrity of Political Parties and Candidates are intended to strengthen the political party system by ensuring that individual Members of Parliament become much more active players in the political process in Papua New Guinea. This is generally a feature of the Westminster system of government which we have adopted in Papua New Guinea.

Under the new Organic Law, political parties have to be properly registered to endorse candidates. If they are successful in obtaining representation in Parliament, then each political party receives funding of K10,000 per Member per year from the government to assist them to organise themselves properly.

There are also obligations under the Law for political parties to report their financial affairs every year to the Registrar of Political Parties.

Political Instability – The law has been designed to reduce political instability and unnecessary changes of government. It is also part of the reform process to improve the integrity of leaders and government, and strengthen government institutions, including the highest – the National Parliament.

To encourage political parties to endorse women candidates a registered political party, that does so, will get 75% of their expenditure reimbursed by the State if a female wins 10% or more of the votes. This reimbursement does not apply to the personal contributions female candidates may make to their election expenses.

The three critical areas in bringing stability to our parliamentary democracy are as follows:

1. When voting on a vote of No Confidence, all MP’s in a party must vote in accordance with a resolution of the party. Individual members of a party cannot vote on their own volition. If they vote outside of the party decision the Speaker cannot count their vote.

The same will apply to a vote for a Prime Minister during the term of Parliament, either because the Prime Minister resigns or is, for some other reason, not able to continue as Prime Minister and a new Prime Minister has to be appointed.

2. When voting on the annual budget, all MP’s in a party must similarly vote in accordance with the resolution of the party. If an MP chooses to vote differently from the party position the vote is not valid.

3. When voting on a constitutional amendment, the same rule applies.

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In all three cases a recalcitrant member is deemed to have resigned from his party. The Party President has to refer the MP to the Registrar of Political Parties, who can then refer the MP to the Ombudsman Commission.

The Ombudsman Commission can approve such resignations under certain conditions or, refer the MP to a Leadership Tribunal - which could result in the Member losing his seat and a subsequent by-election.

A Member can abstain from voting without incurring such penalties.

MP’s who choose to remain independents will also be restricted in their voting rights in the same three areas. If an independent Member chooses initially to vote in favour of the appointment of a Prime Minister, then he or she must continue to support the Government’s position in the three different kinds of votes already mentioned.

Outside of these three areas – where the roots of political instability are thought to lie - an MP will be free to vote on all other matters with no restrictions.

Independents can join political parties at any time after the appointment of a Prime Minister. If they do, then they come under the same rules as Members who were elected with a political party’s endorsement.

Forty-four political parties registered for the 2002 general elections.

The number of parties has since diminished.

The process of rationalisation and reduction in the surviving number of political parties is still going on.

Private Funding of Political Parties – Under the new Organic Law, Papua New Guineans, individuals and companies, will be able to contribute to registered political parties as much as they want. There is no limit. Non-citizens, both individuals and companies, can only contribute to a particular political within a limit of K500,000.

In cases of both kinds, political parties must lodge a declaration stating all sources from which they have received financial support.

Invitation to form government – In relation to the formation of government after a general election, the new Organic Law addresses the problem of what is widely described as “horse- trading”.

With the strengthening of political parties, it is likely that the number of candidates receiving formal endorsement will grow. When the election writs are returned, the Electoral Commissioner advises the Governor-General which political party has won the most number of seats – and the Governor-General then invites it to try to form Government.

If the political party invited does not have the numbers to form government on its own, it can try to put together a coalition with other political parties and independents in order to form Government. This political party is the only one able to nominate a Prime Minister when the National Parliament first meets. If it party is able to get over 50% support, then it will form Government with those it has invited to join.

But, if that political party cannot obtain majority support to form Government, then other nominations can be called for Prime Minister and the right to form Government.

Some commentators remark that the integrity of political parties and candidates cannot be legislated. Others say that the steady application of the law will bring about incremental improvements in the stability of Parliamentary politics in Papua New Guinea.

Preferential Voting

National Parliament in January 2002 amended a Constitutional Law, the Organic Law on National and Local-Level Elections, in order to introduce a form of Limited Preferential Voting in any national elections held after the returns of writs in July 2002, including by-elections and the next general election, which is due to be held in 2007.

Prior to 1975, an optional preferential system was used in Papua New Guinea. It was replaced by the first-past-the post-voting system at independence. The Limited Preferential Voting following the recent changes requires voters to make a mandatory selection of three choices in preferred order.

If three preferences are not marked on the ballot paper, it will be invalid. If more than three choices are marked, the first three will be accepted for counting.

The first-past-the post system attracted numerous candidates. The average number per electorate has increased from 6 in 1972 to 26 in 2002.

Many Members were elected with less than 10% of the votes cast in their electorates.

In the 2002 general election (with 6 more electorates to be contested), nearly 75% of sitting MP’s lost their seats.

As mentioned earlier many independents were elected. Political parties with the financial resources were able to build up their numbers by enlisting their membership.

The limited preferential system is expected to produce better representation, and encourage candidates to stand with the endorsement of political parties rather than as independents. There is also the hope that the dynamics of campaigning for preferences will involve more cooperation between candidates, rather than the conflict – and winner-take-all behaviour – seen among candidates in the past.

The system will be to the test at the first by-election, which is likely to be held some time next year.

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Conclusion

The Government of Papua New Guinea represents a small resourceful nation of 5.2 million people characterised by great ethnic and geographic diversity over a wide area. It continues to address the issue of decentralisation and empowerment in all provinces, not least in Bougainville.

Doing so is not only a sensitive exercise in empowering the people but a test of our capacity to handle power in the best interests of improving the lives of our people. We have the sovereign responsibility to do so entrenched in the Preamble of our Constitution.

Historically in Papua New Guinea, post-conflict situations, from the smallest to the largest, have progressed towards sustainable peace as a result of growing awareness among the people that problems have to be recognised and something can be done about them. This is happening in Bougainville. It will also happen in the Southern Highlands and other Highlands provinces.

The resilience inherent in the diverse cultures of the people has prevented the collapse of our democratic institutions, including the National Parliament, the executive arm and the judicial system.

The Government is giving a lot of attention to capacity building and public sector reform with special focus on Provinces, Districts and – through “bottom up” perspectives - the communities at village and settlement level.

Electoral reform will be a continuing process. The Government sought the advice from a Commonwealth Expert Group of persons experienced in elections to review the 2002 general election. A report has already been received from this group with a number of sound recommendations to be adopted by the Government for implementation.

All of Papua New Guinea’s reform efforts will be progressed incrementally, drawing on practice and experience, through legislative changes and administrative reform brought about by “joint creation” between the people and the State.

In conclusion, let me, therefore, say that good governance is not an idea that has to be imposed or imported as far as contemporary Papua New Guinea is concerned. Its main principles are already enshrined in the Papua New Guinea Constitution. Their precise application has evolved through amendment, judicial review and practice over the past twenty-seven years. Papua New Guinea is committed to promoting good governance in exactly the terms of the theme set for this Conference – by “Meeting the Challenges”.

My paper has focused on political and constitutional reforms – the framework within which the particular challenges for the mining and petroleum sectors are being addressed. These challenges include adapting policies, administrative arrangements, the fiscal regime and other requirements to the challenges of optimizing the benefits from both sectors for every level of government and all parts of society in Papua New Guinea in the particular circumstances of the twenty-first century.

Some of these challenges are already being met, as I have tried to show in my paper. Others lie ahead.

It is Papua New Guineans’ shared determination to continue ‘Meeting the Challenges’ that makes the theme of this Conference both important and timely.

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ANNEX - MINING AND PETROLEUM INVESTMENT UNDER THE NEW CONSTITIONAL ARRANGEMENTS FOR BOUGAINVILLE

Note: This outline is provided simply in order to meet the likely professional interest of people attending this Conference.

The talks which led to the Bougainville Peace Agreement were not concerned with such questions as whether, when and on what terms investment in mining and petroleum might be welcome in Bougainville again.

The issues involved are often very sensitive on the ground.

The following outline carries no suggestions at all concerning the readiness, will or ability of Bougainville leaders and communities to consider expressions of interest from potential explorers or developers.

It has no necessary implications as regards the acceptability or viability of proposals for investment in mining or petroleum exploration or development proposals on the ground.

1. When the United Nations Observer Mission in Bougainville, Papua New Guinea (UNOMB), verifies and certifies that stage two of the agreed weapons disposal plan has been completed (and guns are held in secure, central containers with one of the keys held and the containers supervised by UNOMB), the new constitutional framework for the autonomous Bougainville Government will come into operation.

2. The constitution for the autonomous Bougainville Government will come into force when the National Executive Council endorses it as being consistent with the Papua New Guinea Constitution.

3. Elections will follow.

4. The autonomous Bougainville Government will then become responsible for a wide range of agreed powers, functions and resources.

5. It may subsequently seek the gradual transfer of others on the list of those which Part XIV of the Constitution and the Organic Law made under this Part identify as available to Bougainville.

6. The powers and functions on the Bougainville list include responsibility for mining, oil and gas, as well as environment.

7. In the case of foreign investment, a special set of requirements and procedures will apply following the transfer of responsibility to the autonomous Bougainville Government. Thus -

• applications must comply with the National Government’s ‘reasonable foreign investment requirements for Papua New Guinea as a whole’;
• the relevant arm or agency of the autonomous Bougainville Government will be able to accept or refuse them – and to apply conditions to them – at its absolute discretion;
• the National and autonomous Bougainville Governments will consult and co-operate at every stage of the process, including the resolution of any disputes; and
• there will be joint and ongoing review of foreign investment policy , and the resolution of such differences as may arise.

8. The area in which the autonomous Bougainville Government will have authority is the land, sea-bed and waters (subject to international rights of innocent passage) up to three nautical miles out to sea.

9. The Bougainville Peace Agreement provides for the autonomous Bougainville Government and the National Government to agree to equitable arrangements for sharing revenues for exploration and development activities in areas of sea and sea-bed associated with Bougainville further out.

10. As the list of the National Government’s functions and powers makes clear, significant issues of considerable relevance to possible future activities in relation to the mining and petroleum sectors will remain with the National Government after the new arrangements take practical effect – in some cases, with carefully defined opportunities for Bougainvillean participation.

11. They include central banking, currency, customs, industrial relations and international trade.

12. Applications for work permits and employment visas for Bougainville will be referred for recommendation to the autonomous Bougainville Government - which may also add occupations and industries for which they will be not be issued for Bougainville.

13. Courts (other than Village Courts) set up under the Bougainville Constitution will operate within the National Judicial System.

14. Existing international agreements will continue to apply (the Bougainville Peace Agreement provides for the autonomous Bougainville Government to have a role in the negotiation or implementation of other international agreements).

15. The fiscal regime will allow the autonomous Bougainville Government to impose a range of taxes and fees based on those which have been available to provincial governments generally.

16. A special set of measures will apply after Bougainville achieves fiscal self-reliance, enabling the autonomous Government to vary personal income and company taxes by up to five percentage points in either direction from the national rates.

17. Though the new Organic Law reserves VAT to the National Government, the situation has been complicated by the recent Supreme Court decision that it is unconstitutional and its likely replacement by a National Goods and Services Tax.

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POLITICAL REFORMS – BOUGAINVILLE PEACE AGREEMENT, POLITICAL PARTIES AND PREFERENTIAL VOTING

A paper presented at the Seventh Mining and Petroleum Investment Conference
By: Joshua Kalinoe, Chief Secretary to Government,
Department of the Prime Minister and NEC