The Mining Boom in Papua New Guinea goes Boom

January 18, 2016Papua New Guineaby East Asia Forum

Things are unraveling quickly in Papua New Guinea.

The Papua New Guinea (PNG) government has finally admitted that PNG’s revenue surge has ended. As long as PNG’s mining boom lasted, Prime Minister Peter O’Neill could build parliamentary support by allocating constituency funds to each member of parliament’s (MP) district. So how will restricted funds impact upon O’Neill’s political position and the stability of the government?

O’Neill’s majority currently stands at a seemingly impregnable 100 of the 111 MPs. But the cost of the 15 million Kina (US$5 million) allocated to district MPs in 2015 has meant that he has been unable to deliver landmark policies such as subsidising schooling and free primary healthcare. With district funds now cut by a third and expenditures slashed, 2016 will test whether O’Neill can maintain his current political dominance or whether economic stresses and legal challenges will become political crises.

For most of 2015, as in 2014, PNG politics centred on O’Neill’s financial actions. Allegations of poor governance have become the basis of legal cases that, hypothetically, could lead to his dismissal. Despite O’Neill’s apparent supremacy, these issues dominated public comment throughout 2015; associated cases could place the judiciary in conflict with the executive — as happened in 2011–12.

In early 2014, the government took out a US$1.2 billion loan from UBS bank to buy shares in oil and gas company Oil Search, but failed to seek the necessary approval of parliament. Treasurer Don Polye refused to sign off on the borrowing and he was sacked. He now leads the small opposition.

The loan (via a near-bankrupt state-owned enterprise) has drawn criticism because the shareholding creates a conflict of interest, given that the state is the national regulator. In 2015, the Ombudsman Commission urged the public prosecutor to make O’Neill face a leadership tribunal for poor governance, a case he is still fighting.

A second financial matter involved the payment, allegedly on O’Neill’s instruction, of 72 million Kina (about US$24 million) to Paraka Lawyers for unauthorised invoices. In mid-2014, the then police commissioner refused to exercise a court-issued arrest warrant against the prime minister. O’Neill is also fighting this case in court.

The case has led to factionalism within the police. The former police commissioner was replaced and sentenced to three years in prison for contempt of court. In addition, O’Neill defunded the Investigative Task Force Sweep, which had gained several major convictions, though many of its cases investigating alleged corruption are continuing.

The fluidity of PNG’s political parties, and the resulting shakiness of its governments, is notorious. In the hope of creating some stability, since 1991 the constitution has prevented a vote of no confidence for a ‘grace’ period of 18 months after a prime minister is elected. In 2013, O’Neill persuaded his well-funded MPs to extend the ‘grace’ period to 30 months.

This amendment was challenged as unconstitutional by then opposition leader, Belden Namah. In a unanimous decision on 4 September 2015, the Supreme Court found the 2013 restrictions on votes of no confidence were unconstitutional.

The decision may be a case of the Court reasserting itself after the bruising it received in December 2011 and in 2012 when the O’Neill government twice defied the court’s rulings that O’Neill’s parliamentary takeover was unconstitutional and Sir Michael Somare was still legally prime minister.

Two more ongoing legal cases could have a major impact on PNG politics in 2016. One case is an opposition challenge to the government’s blocking of two attempted votes of no confidence in late 2015.

Another pending case, led by MP Belden Namah, challenges the constitutionality of the incarceration without charge of nearly a thousand asylum seekers in PNG, who are held at the behest and expense of the Australian government.

The detention arrangement receives little publicity in PNG but it is quite clear that the PNG government is reluctant to resettle more than a few of the hundreds deemed ‘genuine refugees’. The Australia–PNG regional processing centre on Manus Island has received widespread international criticism, especially at the UN Human Rights Council.

It is possible that the Supreme Court could rule the entire project unconstitutional — just as it did with Australia’s Enhanced Cooperation Program in 2005. If Namah’s case fails, there will be another constitutional challenge alleging human rights abuses at the detention centre led by lawyer Ben Lomai on behalf of over 200 asylum seekers.

The PNG state — including the often undisciplined and violent police — lacks effective control of much of the country. O’Neill is under constant criticism for his government’s failure to deliver basic services and meet any of the UN’s Millennial Development Goals. O’Neill seems defensive and accuses critics of opposing the national interest.

He has also moved to restrict international oversight, banning two Australian journalists and passing a government edict that requires all foreign advisers be contracted to and controlled by the PNG government as of 1 January 2016. There have been some tensions in relations with Australia, and the edict will likely rupture some aid programs.

PNG’s government rushed the 2016 budget through in November, and then adjourned parliament for four months. A vote of no confidence is possible until early August, but not likely — PNG politicians have a talent for withdrawing from the brink of crisis. Further, PNG is already gearing up for the 2017 elections.

Opposition Leader Polye warned about early campaigning, saying ‘If these trends continue, I am afraid our country is on the verge of kleptocracy’. Despite the prevalence of ‘money politics’, some 60 percent of sitting MPs usually lose out in national elections.

How PNG’s money politics plays out in the context of restricted funds and persistent legal challenges will help shape domestic politics in 2016. It could well be a turbulent year.

PNG politics after the boom is republished with permission from East Asia Forum

blog comments powered by Disqus