THE challenges faced by Papua New Guinea in managing its road network are shared with many other developing countries.
Road management, especially maintenance, has suffered from capacity constraints and underfunding.
Political incentives are important in explaining why successive governments have failed to allocate sufficient funding to road maintenance despite its positive economic return.
Development partners in response have advocated the commercialisation of road management through the establishment of an autonomous road agency whose road maintenance activities are funded by fees collected from the road sector.
The underlying purpose of such reform is the de-politicisation of decisions relating to funding and planning/implementation of road management activities.
The establishment of the Road Fund and the National Roads Authority (NRA) in PNG has had limited impact, given a lack of support and engagement by political leaders, as well as opposition among parts of the civil service.
Limited political engagement has been evident since parliament passed the National Roads Authority Act (2003), with the establishment of the NRA delayed by many years.
The Road Fund was also not created as originally proposed. Importantly, its revenue base was never expanded as had been intended, with funding in 2014 equivalent to less than 1.5% of total funding for road management in PNG.
This has meant that the Road Fund and the NRA are not in a financial position to maintain even the small portion of the national road network now under their responsibility. Both organisations effectively continue to function as pilots, and remain marginal to road management in PNG.
The PNG experience has parallels with that of other countries where governments have failed to establish autonomous road agencies. In the case of PNG, opposition appears to have emanated from central departments such as Treasury and Finance, which opposed revenue hypothecation due to concerns about lack of accountability and oversight.
There was also a view that establishment of the NRA would result in unnecessary duplication which would harm road management efforts. What was lacking was the support of powerful domestic political champions for the NRA.
The PNG experience clearly demonstrates that establishing a road fund is no panacea against political obstacles to road maintenance funding. Strong and ongoing political support is required for the establishment and expansion of an effective road fund and agency.
This suggests that road fund-related reforms are likely to be most successful where needed least, in countries where there is political will to reform road management, and that the corresponding impact of establishing a road fund should not be overstated.
The PNG Road Fund has achieved some successes notwithstanding its problems, the most notable being its ability to protect revenue in the Road Fund from misdirection. However, given the small scale of funds involved, this on its own does not justify the Road Fund and the NRA’s establishment.
Whether the National Transport Strategy results in an expanded role for the Road Fund and the NRA, in which the organisations are able to improve road management in PNG, remains to be seen.
The future of the Road Fund and the NRA is likely to be determined by the ability of competing ministries to influence elected political leaders. Central finance agencies are likely to continue their opposition to earmarking, a position that may be consolidated by concerns about the establishment of another infrastructure management organisation: the proposed Infrastructure Development Authority.
The Department of Transport and now (to a lesser extent) the Department of Works are likely to support the National Transport Strategy’s proposed expansion of the Road Fund, given the potential to secure future revenue for road maintenance.
What is clear is that the NRA will not be in a position to fulfil the role envisaged for it by the National Transport Strategy without reform of the revenue base of the Road Fund. This will require political support and engagement.
Should the government reverse its support for the National Transport Strategy and choose not to expand the Road Fund’s revenue base, it will instead need to ensure that adequate funding for road maintenance is channelled to road management agencies in future years. The roads sector in PNG will suffer if it pursues neither action.