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29 August 2011

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A news item in The National caught my eye today and effectively provided an example of what might happen when some get rich and some don't:
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Locals attack MP and escort

DEFENCE Minister Guma Wau was reportedly attacked by a group of disgruntled people of his Dagle tribe, in Ke¬rowagi district, Chimbu, last week.

Several government vehicles, including police land cruisers, were smashed while escorting Gau.

He was allegedly distributing funds to people in the upper Dagle area a week ago.

Reports from Wau’s tribe said his own people at Moroma village complained that he had overlooked them and was distributing cash to others.

Angry villagers attacked Wau and people he was travelling with, resulting in several vehicles having their windscreens smashed.

The Kerowagi MP was not hurt but remained tight-lipped over the incident.

Chimbu provincial police commander John Kale confirmed the incident but did not give any details.

A quick bit of history is required to put this into some perspective and provide some balanced reason to the debate. And I agree, Martyn, your words are a bit strong and inflammatory.

When Papua was initially colonised by the British, western laws formed the basis of the laws developed for the fledgling colony.

This was necessary because of the diverse nature of the people of Papua in education, development, language and customs. Also, it was easy to apply something that worked elsewhere rather than to try and create something new.

This was then extended to the application of Australian laws when Australia was handed control of the Territory of Papua in 1906 after Federation.

The same principle applied after the First World War in the Trust Territory of New Guinea when Australia was granted the mandate by the League of Nations to control and govern the former German Colony.

With regard to natural resources, the principal was that the commodities were owned by the State which would grant licences to entities or individuals to extract those commodities for the payment of licence fees, royalties and taxes on profits.

That income would be paid into consolidated revenue from which a share of royalties would go to landowners and the remainder used on general government programs and infrastructure development including, where necessary, the landowning area.

Although the State could develop the resources itself, such as a socialist state would do, a western state utilises the capabilities and resources of private entities for the payment of licence fees, royalties and taxes on profits.

A private entity relies on the financial capacity of either its partners or shareholders. These will not put forward capital unless they understand the risk associated with the venture in exchange for potential earnings. This is the concept of risk and reward.

So here is the conundrum. Does the government bow to landowner pressure and change natural resources laws to provide a greater share to landowners to the detriment of the shareholders’ risk/reward equation?

Would this also preclude other developers from wanting to invest in resource exploration/extraction? If it did, then how valuable is the resource? Would its value or the weakness of internal and national security lead to a foreign intrusion to gain access to the resource?

Where is the happy medium that would provide an equitable return to the landowners upon whose land the resource lies, sufficient income to the government (not individual politicians) for government expenditure and sufficient incentive for investment in the ventures?

Can the landowners understand these principles sufficiently to strike that happy medium?

And finally, the Australian government has paid far more to PNG over the years through administrative costs and subsequent annual grants in aid than it ever received back through the various mining fees and taxes.

So, if it's not just an election ploy Peter, is it a desperate ploy on the part of the government to placate landowners? In either case it seems rushed and open to disaster.

You are also right in pointing out that the LNG project seems to have all the same elements that led up to the closing down of Panguna.

The Hulis appear to have the government over a barrel.

Indigenous Land Use Agreements (ILUAs) seem to be working well in Oz. They certainly keep the Native Title lawyers employed.

I've done research for a few ILUAs in South Australia and the largest problem is always identifying the correct traditional owners.

ILUAs started out as a sort of consolation prize if your Native Title claim couldn't get up but have evolved into useful mechanisms.

In Oz they usually involve all the interested parties, the traditional land owners, the state, the mining company and the pastoralists/farmers.

They are a model well worth investigating by PNG.

Thank you Peter. You've gone straight to the pith of the problem and enunciated a practical solution.

In doing so you’ve also touched on one of the contributors to PNG’s current law and order problem.

The fine print in any agreement with the landowners will have to sort out who gets what benefits now and on an ongoing basis.

Clan mapping and profiling might provide initial wealth distribution on a local scale however what about those on the periphery of any identified land or those who have moved into the towns and cities.

Given that any product or resource must logically be piped or moved a considerable and vulnerable distance through other landowner’s land, how will the security of the pipeline or road be guaranteed?

Look at what is happening in Nigeria. Dutch Shell isn’t very happy at the moment.

Look at the illegal roadblocks being put up around the country already. The LNG company can helicopter in supplies and a workforce but that solution won't work for the product.

Wasn’t it Abe Lincoln who is quoted as saying: "You can please some of the people some of the time, all of the people some of the time, some of the people all of the time, but you can never please all of the people all of the time."

What happens if there is a future contest over resource distribution? Who will sort the foreseeable problems between the ‘haves and the have nots’ or will this not be a problem? (Ahem!)

Aiting klostu wanpla bengbeng ikamap nauia. Nugut wanpla birua ikamap bihain sapos wanpla wantok mangalim samting bilo narapla wantok. (The probability of this whole concept of resource ownership becoming a new age cargo cult is rising. Let’s hope it doesn’t lead to wholesale clan warfare between PNG wantoks over envy and jealousy.)

This is a concern that I was attempting to raise previously.

" I still maintain that the whole concept is a ploy leading up to next year's elections." No Phil, 'fraid not.

What the PNG governmment is faced with is a universally held position by the traditional owners that their customary title outweighs PNG constitutional law.

I don't think the issue has been sufficiently explored to predict early action by Parliament.

What I can predict is that unless the Hela traditional owners get a fair shake, they will simply kick the bucket over (work shutdowns, roadblocks etc.) until they do. Just like Francis Ona started out.

The government has over half its operational policemen stationed in or near the Southern Highlands in anticipation of 'unrest'. Most are being paid extra allowances by the developers.

What this means, of course, is that the Talaseas can march into Kimbe and burn a significant part of the service infrastructure without interferance.

Lets face it, the government cannot afford to provide the level of security which the developers' demand (against the landowners) without leaving the rest of the nation significantly under-resourced, as is presently the case.

It is very doubtful that even the present high level of 'protection' which the Police Force is providing would be sufficient to prevent total shut down of all development activity, if the Hulis decide to exert their power on the ground.

There have been significant criticism of several former ministers whose answer was to 'throw money at the landowners'.

This poorly coordinated exercise created some headaches but achieved the aim of 'keeping the landowners interested', allowing the early works at Hides, Kopi and Port Moresby to be advanced.

Now that this source of revenue has seemingly dried up, the heat will be turned up by the traditional owners for alternate and significant recompense for the 'real' value of their resource.

What does that mean?

Well firstly, the transfer of national government and provincial gvernment equities to traditional owners. That might just about do it.

On the other hand, the writing is on the wall for developers, get very friendly with your landlords, the traditional owners.

Follow the Australian resources industry model of entering into direct negotiations with and executing direct agreements (they call them ILUA's) the landowners, specifying every single little thing that needs mutual agreement.

That way, the developer would not require 'protection' from his landowners and Mr Wagambie could redeploy some of his scarce manpower, to the Nation's security against our home grown terrorists, the 'white collar' criminals who have bled the country dry for decades.

Don't rely on any government promises, because they might not be able to deliver in the face of significant intransigent people power.

A developer must have excellent relationships with its 'landlords' if long term peaceful operations are to be practicable.

Now is the time for PNG people to look for honest hard-working men and women, who you can really trust to do the right thing by the country, to be elected to the next parliament.

You need them to oversee the huge mining developments taking place in the country, to make certain the royalties and income from these mines is used wisely for the good of the whole country.

The money must be allowed to trickle down to the poorest village people in the most isolated villages in PNG.

They need to be well educated men and women who have a broad understanding of good business ethics and are well versed in the law.

They need to have the confidence to meet with the mining companies on an equal footing.

They need to be able to understand all the concepts and terms used in the mining contracts that they will have to sign.

They need at the same time to be humble and have a genuine love of all the tribal groups in PNG. They must think nationally.

And Martyn, I hope you get time to go down to the National Library to read up on PNG history. You could start with the old Encyclopedia of PNG - edited by Peter Ryan.

I agree with Phil. Yes Phil, it's all about the elections.

I know these pollies dont care much about the people. But this may be the only opportunity for the landowners to gain their rights.

However, I see an opportunity for a much fairer deal for indigenous landowners.

You state that, "There has to be a split of some sort that keeps the landholders' happy. Royalties should go to landholders, to the government to be used all over PNG and to a reserve fund for future use."

Your suggestion is really good except that ownership rights must also be transferred to the landowners.

There might be some semantics at play here, Paul.

The mines at Wau and Bulolo were privately owned by Australians and they paid dividends to Australian shareholders.

The administration collected royalties and taxes that went into the revenue of New Guinea.

It is not right to say that the revenue from the mines was used to fund the development of the mandated territory. Most of the money went into Australian pockets.

I think the aircraft thing is about the highest total weight of cargo carried per annum anywhere in the world.

With respect to Panguna, if you look at the records it is patently obvious that the Administration, the government in Australia and the company (possibly on the advice of the government) went out of its way to ignore the landowners.

I don't think any of this is a reason to embark on anything as crazy as handing everything over to the landholders.

PNG is still a nation in name only; in reality it is still a conglomeration of tribes. If it were a nation such a move might be plausible.

There has to be a split of some sort that keeps the landholders happy. Royalties should go to landholders, to the government to be used all over PNG and to a reserve fund for future use.

I still maintain that the whole concept is a ploy leading up to next year's elections.

Hi Martyn - You’re right about my concern for your nation and its people. I just hope that our two nations can develop together and not grow apart due to misinformation.

To say that Bulolo was the busiest airstrip is quite possibly misleading. Exactly what made it the busiest airstrip 80 years ago?

It can’t have been the number of passengers transiting through the airstrip. It can only be the number of flights it took, in a very limited timeframe, to deliver the giant gold mining dredges in the many pieces they were broken down into in order to deliver them.

I suggest that the situation in the 1920’s and 1930’s in the Wau/Bulolo area was different to the situation in the 1970’s and 1980’s in Bougainville.

Should the people of the Wau/Bulolo area now resent the fact that 80 years ago resources from their area were partially extracted and used to fund the administration of the mandated Territory of New Guinea on behalf of everyone in the then Territory? Certainly they had no say in the original decision.

Clearly, with the benefit of hindsight, the landowners of the Panguna minesite have genuine concerns that don’t appear to have been considered when the decision was made to develop the mine 40 years ago.

Again, they appear to have had very little say in the original decision that was made ostensibly on behalf of the new nation of PNG to help it become self sufficient in funding.

Most people want the resources of the nation to be used to help the nation’s people. How this might occur is however in the eye of the beholder.

People often don’t connect the provision of public services with the requirement to somehow fund these services. Yet without funding, these services don’t happen.

So to say that Australia 'stole' PNG resources is going too far. Australia has contributed a large lump of resources every year since 1975 and before to help augment the PNG government and the provision of public services everyone needs and wants.

I suggest that Australia and her taxpayers have contributed considerably more resources to PNG than it perhaps is given credit for.

Is the development of natural resources for the benefit of the nation disadvantaging those people who traditionally own the land these resources happen to be on?

Well that may depend on whether you are the landowner or one who doesn’t have any natural resources.

It may also depend on whether the development and any financial returns are properly managed on behalf of the nation. That’s entirely a different matter.

I think, Tanya, you will find that your "cut throat global playing field" is being challenged by events such as the London riots and OpBART in San Francisco.

And, Paul, I know you're passionate about PNG and care a lot more than some of our pollies. And many Aussies do likewise, like KJ for example.

I'm just saying that if Bulolo was once the busiest airfield on earth... what happened to all the wealth?

And both of you missed my point. I wrote above:

"The Bougainvilleans saw their fight as a fight for justice on behalf of all Papua New Guinean landowners. They wanted to be paid for their copper ore instead of just receiving compensation payments for the destruction of their cultural, spiritual and environmental heritage"

Pay people for the extraction of gold, copper, nickel etc, not just compensation for land, as is the case. That will happen once ownership is transferred to landowners.

I believe there is a bias here and elsewhere that drives the arguments that Papua New Guinean landowners should not own the minerals. Some of them are addressed in the article below

http://medicmangi.blogspot.com/2011/08/mining-bastards-are-bluffing.html

I agree with you both that leadership has been lacking in PNG at national, sub-national and local levels. I've alluded to this in my second last paragraph:

"Once the Australians and their Papua New Guinean compradors saw fit to steal from indigenous people, they set the precedent for the destruction of indigenous nations and their resources."

Ive also stated in my article that the state, i.e., PNG, has failed its people:

"The western created puppet state failed to protect the rights of its people and chose instead to side with foreigners."

It baffles me that a system that has been failing the people for over 36 years can be defended by people who believe that "there is no place for the old brand that retreated into the "hausman" for inspiration, nor for those that consult Wikipedia".

Since when did it become the mandate of companies and businesses to develop this nation? Profit is the name of their game, even back in the 1920's.

I blame our leaders for not getting the best deal for us. It's true we did not know 15 years back what we know now.

In the age of information, we need a new brand of leader who know the game as it is played in the ruthless, cut throat global playing field.

There is no place for the old brand that retreated into the "hausman" for inspiration, nor for those that consult Wikipedia.

Steven - The ‘truth’ is that whatever anachronistic and emotive claims are made today, the circumstances of 80 years ago may be very easily and conveniently overlooked by those who want to promote what might turn out to be a personal (and currently unsubstantiated) view.

Who was it who said that the bigger the lie, the more people believe it?

Martyn - A good topic that really needs more detailed research.

History is a strange animal with most modern day historians falling into the trap of attributing modern day philosophical thoughts to previous events, leading to editorialising the issues instead of just simply accepting that those events occurred within the mindset of those times.

A good starting point for matters relating to the early history of mining in PNG would be Hank Nelson’s book 'Black, White and Gold' which traces the early history about mining in both Papua and New Guinea from the late 1800’s.

The book is based on extensive historical research and covers the first gold mining enterprises in the Milne Bay area, the later discoveries in the Northern District and the subsequent discoveries of gold in the Wau Bulolo areas.

Some of the observations made do not sit easily with current progressive thinking, however Hank Nelson has overcome this thorny issue by simply reporting the events of the time without any sermonising.

Some interesting facts emerged. Once the locals realised the benefits arising from being alluvial miners themselves, many of these early PNG entrepreneurial miners won substantial rewards for their endeavours which by today’s standards being regarded as being very wealthy men.

Martyn - My countryman, I do support your statement about Australia ripping off PNG. This is very true.

The statement on Wikipedia is misleading. As we all know, Wikipedia is not a reliable source. The truth is that Australia has ripped PNG's vast gold at Bulolo.

Bulolo was the busiest airfield in those days, all our gold went to Australia. PNG had less development during that time.

Their interest was not to develop PNG and its people, they want gold to develop Australia. We should not deny the fact. Tell the truth because everybody is aware of that.

“The truth is that Australians were ripping off Papua New Guineans big-time at Bulolo in the late 1920s.” Those are pretty strong words Martyn.

My understanding is that the gold extracted from Wau / Bulolo went to pay for the Administration of the Trust Territory of New Guinea (but not Papua).

At the time, the price of gold was set at a fixed price, not like today’s open market prices.

If you were to contrast Australia’s role in administering New Guinea for the then League of Nations (and, after the Second World War, the United Nations) with other administering countries (perhaps very close to home), you might be prepared to concede that it wasn’t all that bad, given the times and the circumstances.

Certainly there were mistakes made and things could have been a whole lot better. If only we all had the benefit of hindsight however when decisions were made?

In 1975, your country took on the responsibility for your nation. Maybe you should look at events closer to home for some answers?

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