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| Sir Julius Chan |
Former Prime Minister and New
Ireland Governor Sir Julius Chan explains why we need to correct PNG's mining laws as captured
in his address to the recently concluded regional stakeholder meeting on the “Review of the Mineral
Policy and Legislation And Development of Mining Sector Policies” in Kokopo,
East New Britain province.
The
review of Mining Legislation is long overdue in Papua New Guinea. It is something I have advocated for a number
of years, and I am pleased to see it finally on the agenda of National
Government.
My
only questions are this: how serious
Government is about this review? It
seems to have been carried out with very little urgency. I have seen very little in the way of radical
suggestions for changes in the way mining is done in Papua New Guinea.
That
will change today, for I must tell you that we need radical changes. I am not going to mince words. I am going to spend some time spelling out
exactly what problems we face and exactly how to correct, to address those
problems.
For
the truth is that our country is at a crisis point. If we do not correct some very serious faults
and failures in how we approach the extraction of resources such as minerals,
gas and oil we will not only continue to fail to deliver progress to our
people, we will put the very survival of our country at peril.
We
need a new vision for resource extraction.
We need to make some hard decisions, not just make little changes around
the edges. For example, we need to decide
that the people own the resources. Not
the government. Not outsiders. It’s the people. And we need to ensure that there is an
equitable distribution of the benefits – not only to landowners, the affected
areas, provinces and government, but to the entire nation. This is what our country cries for today, and
this is what we must provide.
But
to develop a strategy of sustainable prosperity, we must first understand the
mistakes we have made in the past and continue to make. Someone must tell this story or we will never
correct our mistakes. Today, I will
correct myself and tell that story.
Today, I will tell the truth. And
the truth is that we - the State, the people – have been duped. I know it is uncomfortable, but we must face
the truth. If we do not admit the truth,
we will never correct our errors.
We
all know Papua New Guinea is fortunate in having great stores of natural
wealth. PNG has been described as a
“mountain of gold floating on a sea of oil.”
We are blessed as few other nations have been blessed. Yet we have squandered this wealth, and in so
doing condemned our people to poverty, to being left behind while others
prosper.
Without
mincing words: our country has been systematically giving away its birthright. That is not rhetoric. It is literally true. We may be pardoned for having done this at
Self-Government, at Independence. But
after 38 years we should have no excuses.
We should have matured-we have not. But time is overdue for correction.
After
all, Papua New Guinea has had major resource extraction projects since before
Independence. But if we are honest we
will admit that all of these projects have failed. They have failed not because the resources
have not been extracted. They have
failed because they have resulted in no improvement in the lives of our
people. This is the truth.
How
has this happened? Well, the heart of
the Problem is the very Law we are discussing today: The Mining
Act 1992. That Act declares:
‘All
minerals existing on, in or below the surface of any land in Papua New Guinea,
including any minerals contained in any water lying on any land in Papua New
Guinea, are the property of the State’.
The
Oil and Gas Act 1998 makes a similar
declaration in respect of oil and gas reserves throughout PNG.
The
State has unilaterally wrested ownership of all wealth on or below the ground
from the people who owned those resources for forty thousand years. Today, I want to examine how we got to this
position, the consequences and outcomes of this development and, most
importantly, how we can correct the problems.
This
situation arose mostly by historical accident.
During the colonial period Mining and Petroleum laws were based on
Australian precedent and placed ownership of resources in the Administrator. Papua New Guineans were not consulted, did
not know, and did not understand this was the case. When copper and gold were found on
Bougainville in the 1960s, the Australian Administrator sent an
Anglo-Australian company, Rio Tinto (CRA) to open a mine. No consultation was ever considered necessary
with the traditional landowners.
However,
the people of Panguna protested and fought against the Colonial Administration
and Rio Tinto. In 1969, a Bougainvillean, in an article titled “Bek Long
Bougainville: Gavman I Pulim Mipela Long
Wanpela Rot Tasol”, neatly expressed what the people wanted when he said:
‘We
thank CRA for discovering our copper, and if they wish to help us mine it, it
is right that they should share in the profits.
But the copper belongs to us. It
is a tradition, a law throughout Bougainville, that the people own the things
in the ground, as well as those on top of it.’
“It
is a tradition, a law...” And this was not the opinion of a simple Bougainville
villager alone. Percy Chatterton, a
member in the House of Assembly, supported the landowners’ position. He argued:
‘The
principle of State ownership is a figment of the imagination. No such principle exists. Under the common law of England we are told
minerals belong to the owner of the land under which they are found…’
I
want to emphasise what Percy Chatterton said.
“The principle of State ownership is a figment of the imagination….”
And
he is not alone. Professor Michael
Crommelin, an authority on Australian resource laws, supported this position of
landowner ownership. He said:
‘British common law, inherited by Australian
colonies upon white settlement, included a presumption that the owner of the
land is entitled to all that lies above and below the surface. Natural resources such as minerals were
regarded as part of the land in which they naturally occurred and accordingly
passed into private ownership upon Crown grant of the land.’
Despite
these arguments, in the end the Australian Statutory Law in place during
colonial times prevailed over both Papua New Guinea customary law and British
common law, and this was formalised in the Mining Act 1992.
But
let me be very clear. State ownership of
minerals violates both traditional PNG law and British Common Law. And the consequences have been disastrous and
irrefutable.
The
consequences of the arrogation of all mineral, oil and gas resources by the
State have been a massive giveaway of the national wealth of our country. This is no exaggeration.
The
State says it is the owner of all these resources. Not only is this counter to British Common
Law, it results in an absurd situation.
Why? Because the State, having
stolen the minerals, then gives away all
that wealth and then buys it back at
an exorbitant price. The Independent
State of Papua New Guinea has been incredibly inept. Let me explain. It is important that everyone understand what
has been going on.
First,
the State cedes exploration and production rights to foreign companies for next
to nothing. Insignificant license fees
are charged – often as little as K10, 000 – and royalties of 2% are
levied. But for this pittance the foreign developer gets full control of all the wealth that can be
taken from the ground. When a Mining
Lease is granted, the company effectively is given ownership of all the
minerals in the ground covered by the lease.
The
next step is for the State to seek equity in the project, usually 30% in a
mining project and 22.5% in an oil or gas project. But
think clearly about this. The State
has just given away the entire resource to a foreign company,
and now returns to buy what was already
legally its own property by spending K200 million or K300 million or even
more for a 30% interest in the project.
And to do so the State usually takes out a commercial loan that puts the
country further into debt, often at high interest rates. This increases our debt and the cost of debt
servicing each year. To pay for what we already owned, we have
borrowed. What a mess. What a mockery.
Worse,
if the State chooses not to take up equity, it is effectively giving away for nothing the wealth that it claims to
own, as it did in Lihir when I came to power in 1995, for the first time, I
insisted on the introduction of free-equity for Landowners. Not only this, but the State, by law, limits itself and the
people of PNG from owning majority shares in their own mineral resources.
To compound the situation, the State goes
further and creates conditions such as financial
capacity and technical experience
for a mining exploration license or development lease that prevent young Papua
New Guinean companies from competing with well-established foreigners for
exploration and development leases within
our own country. Basically it
deprives national companies because they neither have experience nor
capital. How exactly they are to
develop either without being given a chance to operate is never explained.
The results of all this are devastating. Today, thirty-eight years after Independence,
we have completely failed to realise the aims of the Second National Goal,
which is to achieve equitable distribution of incomes and other benefits of
development among individuals and throughout the various parts of the
country. Ownership in the mineral, oil or
gas is given away freely to
outsiders. If the State and the
landowners want a share they have to buy
it from the licensee since the licensee has become the new owner. Even
then they get nothing until a profit is declared, which, as Lihir demonstrates,
might take ten or twenty years. Meanwhile, the State and the people of PNG
subsidise foreign corporations extracting our resources by meeting their part
of the operational costs and debt and through all forms of tax incentive
schemes.
The result is clear: Waigani has grown
fatter each year, prices have skyrocketed, but the average citizen has not
really benefitted at all. Electricity,
water and sewerage, roads, housing, schools, public parks, and recreational
facilities all deteriorate. Unregulated
employment arrangements from extractive project sites have caused capital
flight draining both rural areas and the nation of much needed funds generated
by the resource projects.
I said I would tell the truth. We have seen that the State gives away our
wealth, then pays exorbitant amounts to buy back what was already ours. We have seen that the State put up barriers to
preventing Papua New Guineans from exploiting their own resources. But these actions have even more far-reaching
effects.
The entire structure the State has created
not only squanders our wealth, it causes deep problems in our economy and leads
to the loss of huge amounts of capital every year in addition to the value of
the resources exploited. To understand
the full consequences of these actions I need to speak a bit about foreign aid,
foreign development assistance and the resource curse.
Eminent scholars such as Professor Richard
Auty and Professor Jeffrey Sachs have shown clearly that resource rich countries – such as Papua New Guinea – actually tend
to slow down, and sometimes even reverse, their rate of development when their
resources are exploited, while the resource
poor countries – such as Singapore or South Korea - have seen miraculous
growth. For some reason the existence,
and exploitation, of abundant mineral and oil and gas resources hurts the people of the countries in which
those resources exist. This is the
Resource Curse. Why does it happen?
One reason is the ownership structure of
natural resources. Professors Luong and Weinthal discuss four kinds of
ownership regimes, including:
·
State ownership with control;
·
State ownership without control;
·
Private domestic ownership; and
·
Private foreign ownership.
Of the four
ownership regime types it was found that private domestic ownership does
not cause the resource curse. That is,
if citizens of the country in which the resources are located own the
resources, then internal development and improvements in people’s lives
occur. It is that simple, because the
stakeholders can prepare and plan beyond the life of the mine.
On the other hand, private foreign ownership causes the worst case of the Resource
Curse. This is PNG’s ownership regime
type. All the smaller mineral projects -
Simberi, Wild Dog, Hidden Valley, Kainantu, Misima - have been wholly
foreign-owned with no landowner or State ownership. Large projects like Bougainville, Porgera, Ok
Tedi and Lihir are also under private foreign control, though the State and
landowners may have a little equity.
So the question is, if private ownership
is the best way to beat the resource curse, why has this form of ownership been
so rare? And why has private foreign ownership been so prevalent?
Professor Wenar says that international
law firmly establishes the resources of a country belong to the people of the
country, and no one can sell this property without authorization. But he also says “Whoever can maintain
coercive control over a country’s population…is recognized internationally as
legally authorized to sell off that country’s resources.” Essentially, a government monopolizing the legitimate use of force can exercise
control over the peoples’ wealth. Wenar
argues that this anti-market practice of ‘might makes right’ is a legacy of
colonialism and imperialism, and is not justifiable in today’s globalized
world.
The simple fact is that Waigani’s might has apparently made it right for the customary landowners’
rights to minerals and other natural resources to be taken by the State for
transfer to outside corporations. But
this is colonial thinking, and the colonial justification upon which State
ownership sits is no longer valid in the modern world. The people – the real owners of the resources
– are being impoverished while foreigners steal their wealth.
But
it is not just the ownership structure that causes problems in the resource
extraction industries in PNG. I said the
truth would set us free. This is the
truth. The entire “game” of foreign aid,
of development aid is not designed to help us.
Foreign aid is designed first and foremost to aid the country providing
the aid. This may sound harsh, but we
cannot begin to play the game until we understand the rules.
The
most basic rule is that the entire game is designed to benefit corporations and
companies in the lending country. This
should not surprise us. It is called
good business. But we cannot continue to
bury our heads in the sand and not see what is in front of us. For proof I offer the following.
In
most “developed” countries no foreign
company can own a majority in resource extraction activities. When Chinalco tried to buy 19% in Rio Tinto
of Australia, the Australian Foreign Investment Review Tribunal refused, saying
it was ”national interest” that Australians owned a majority of shares in
domestic natural resource projects.
Other countries regularly do the same.
But
those same countries apply different
rules to developing countries.
International investors and donors regularly persuade resource-rich
developing countries like PNG to take huge loans for major development
projects, which are both carried out and
owned by major corporations from the developed countries. The host countries are told the projects
will cause a ‘big push’ in economic development and speed up industrialisation
efforts. In reality, only the ruling
elites get richer, bolstering their political power. Most of the money goes to the foreign owners,
and the poor remain as poor and impoverished as ever, and are sometimes even
worse off after the life of the project.
And the nation ends up owing more and more money, which it has borrowed
at high interest rates in order to purchase equity in resources we have given
away.
This build up of debt is encouraged by
Export Credit Agencies, arms of foreign governments that provide
government-backed loans, guarantees and insurance to domestic corporations for
investments in developing countries.
Their purpose is not to provide
development for the recipient countries, but to promote their own country’s exports and foreign investments. These include the U.S. EX-IM Bank, the
British Export Credit Guarantee Department, and the Australian Export Finance
and Insurance Corporation (EFIC).
ECAs account for 80% of gross capital
market financing in the world’s seventy poorest countries. They account for the single largest source of
Third World Debt; their interests are the
interests of corporations in the US, UK or Australia, not PNG. And ECAs structure the loan agreements in
ways designed to improve the ability of companies from their country to
penetrate and benefit from the economies of the developing countries. They have clearly been very successful in
this in PNG, where they gain near-total ownership of projects for their
companies for a mere token payment of licensing and related fees. Again, this should not surprise us. It is part of the international game of
business and capital. But don’t you
think it is tine we stop being amateurs and learn to play the game?
This is the real situation we face. We are engaged in a massive international
competition for capital and wealth. The
players are the most powerful governments, the largest multinational
corporations. They are wealthy,
sophisticated and ruthless. We have some
strength, namely our natural wealth. But
to this point the State has played the game as if we were amateurs who do not
know or care about the rules. And we
have allowed the professionals to cheat us mercilessly. It is time for PNG to learn to play the game.
What can we do to change the
situation? We need to develop a
strategic approach to resource exploitation in Papua New Guinea that does four
things.
First,
it must return control of the resources to the people.
Second,
we must develop a professional and effective organisational structure to manage
and oversee the minerals and oil and gas sectors in PNG.
Third,
we must devise ways to ensure the benefits of resource extraction flow to all the people of PNG – not just the
State and the landowners.
Fourth,
we must ensure that those equitably distributed benefits continue to flow long after the mines have closed, that there is sustainable prosperity for the people of
Papua New Guinea.
The
first step is to insist on majority ownership of all resource extraction
projects in the country. This is already
done in countries with what are recognised as “advanced” resource extraction
regimes and legislation – like Norway and Botswana and Chile. It should be done in Papua New Guinea. The Mining Act must be revised to return
ownership to the people who live on the land or to the provinces in whose
territory seabed extraction is done.
Second, we need
to replace the current confused structure of control of mineral and oil and gas
activities with a rational and professional organisation. MRA, MRDC, Orogen, Petromin and others are
all working at cross-purposes. We need two
central bodies. One body should be
responsible for managing the process of mapping and identification of
resources, negotiation with companies for licenses and monitoring of the
operations once they are underway. The
other body should be a kind of Mining Investment Haus that professionally
manages all State incomes from mining activities and ensures that the use of
those funds work to the benefit of all the people of Papua New Guinea.
The
body that controls the granting of licenses and is responsible for monitoring
extraction activities needs to be given specific powers under legislation that
will strengthen the position of the State and people of PNG in the resource
sector, including the following:
·
First, all contracts should include
state control over levels of exploration and rates of extraction. We have
allowed exploration whenever companies propose it, and we have allowed
companies to determine without consultation the rate of extraction (for
example, the expansion of Lihir under the Million Ounce Plant Upgrade). We need to control these factors. This is regularly done in other countries.
Therefore, we
should revise the Mining Act 1992 and Oil and Gas Act 1998 to give the state
control over the rate of exploration and extraction. We should allow only enough extraction to
guarantee sufficient income to meet our development needs. Too much income invites misuse and exhausts
our resources more quickly than if we moderate the pace. Slowing the pace of exploration and
extraction will reduce the negative economic effects from huge infusions of
income as well as damage to other sectors of the economy.
·
Second, the state should shorten the
duration of licenses in general. This
will give greater control over the resource and force the companies to come to us more frequently if they wish
to continue to operate.
·
Third, the state should legislate its
right to participate in any future licenses including
a carried interest in each license until commercial discoveries are made. This is standard practice in Chile and
Norway. In Norway this includes a
“sliding scale” allowing a greater share in future if fields prove
commercially viable and this has led to the local interests controlling nearly 80% of all commercial oil operations
and associated revenues.
·
Fourth, this body should be responsible
for closely monitoring and auditing the operations of mining companies to
ensure they are reporting earnings, profits and expenses accurately. Failure to do this has cost the State, and
the people, billions. It is simply
incomprehensible to me that Lihir Gold was able to operate for over ten years
without declaring a profit, yet the company overall made billions. This is a fundamental failure of the State to
effectively monitor the operations of the mine.
Once
the people and the State have control over ownership of resource extraction
activities, we need to give careful attention to the ways in which the funds
realised are used. This is for two
reasons.
First,
if we use the funds properly we will ensure the benefit flow goes to all the people of the country, and not
just to a privileged few or not just to the landowners. Second, if we make expenditures in the right
areas we will avoid the worst effects of the resource curse. We know the greatly expanded incomes from
resource extraction can have a number of negative effects. They can cause severe contraction of other
sectors, such as agriculture and manufacturing; they can lead to the wasting of
income on corruption and patronage, the weakening of export competitiveness in
agriculture and other sectors, and they can lead to the ignoring of the real
needs of the people. If we are wise we
can control these negative effects.
Therefore,
the second body, controlling the use of the revenues from mining and oil and
gas activities, needs to be able to control both the level and the use of
income. How can we do this? There are a number of strategies.
·
We already discussed one way of
controlling levels of income – control the level of exploration and extraction
so not too much extraction occurs at once.
However, even then incomes will still be high with potential negative
effects.
·
A second strategy for controlling income
flows is to control the revenues available to the state by “ring-fencing” most
of them. In Chile, Norway and Botswana
the state places – by law – most of the income into an independently managed
sovereign fund. By law the state can use
only 5 – 10% of the total income for budget purposes. The rest is placed in the fund for the
post-resource generations. We need to
use such an approach, replacing the present ineffective and politically
controlled MRDC with a more efficient and independent body.
We
also need strategies for the use of
those revenues. Again, there are several
things we can do:
·
First, we should increase the direct
returns to the landowners and provinces where operations are located. Part of this will be done through ensuring
local ownership of mines. We should also
dramatically increase royalties and ancillary benefits paid to landowners and
provinces. Royalties paid in Norway and Botswana, for example, are at least ten
percent while in PNG the level is a mere 2%.
·
Another way to improve use of revenues
is to even out expenditures on major
public works. Governments tend to fund huge public works programs when resource
prices and incomes are high. These
levels cannot be sustained when prices drop, and they have the unintended
consequence of increasing prices for key goods.
Major public works should be
carried out, but they should be done gradually in a long-term development plan,
not all at once in a way that floods the market, driving up prices. Effective long term planning is critical.
·
A final improvement in the use of revenues is to ensure the entire population benefits from the
revenues. The most efficient way of
using large sums of income without
putting upward pressure on prices of goods and services is to fund social
areas of expenditure. Free health care,
free education and old age and disabled payments are some ways of doing
this. We can also provide funds for
training and retraining of people for productive jobs.
If we design
these two agencies properly we will meet the goals I discussed above: to ensure the benefits of resource extraction
flow to all the people of Papua New
Guinea, and to ensure those benefits continue
to flow even after mine closure, thereby at last bringing sustainable prosperity for all our
people.
The key to all
of this is to return ownership of the resources to the people. Once that is done we have the potential to
establish a mining and oil and gas regime in PNG that is progressive, works to
all our benefits and provides sustainable prosperity for all the people long
after the mines and oilfields are exhausted.
To achieve the goals I have discussed
above we need to make the following changes to the Mining Act 1992:
1.
A declaration that property in all
minerals and hydrocarbons existing on or under the land or water throughout PNG
belong to the customary owners of the land or to the provinces in the case of the
sea, to be developed, owned, extracted, processed and exported by national
companies, the majority of whose non-transferable shares are held by Papua New
Guinea citizens.
2.
That the landowners on or under whose
land the minerals are found, and the Provincial Government in whose province
the resource is located, hold at least 51%
interest in the resources, with the remaining 49% shared between National
Government and a national mining or hydrocarbon company such as Petromin or
National Petroleum Company of PNG.
3.
That the current structure of regulation
of mining in the country and of the management of incomes from mining be
radically revised to establish two bodies, one for the former function and one
for the latter. The first body, to take
the current functions of MRA, should be given the following powers:
a.
The ability to regulate the levels of
exploration and the rates of extraction.
Only sufficient extraction should be allowed to provide income to meet
our development needs as contained in a sound long-term development plan. This should include the ability to vary the
levels of extraction on an ongoing basis even during the life of a specific
mining lease.
b.
The ability to shorten the duration of
licenses in general.
c.
The ability of the state to participate
in any future licenses including a carried interest in each licence until
commercial discoveries are made.
d.
The responsibility to closely monitor
operations to ensure that financial statements accurately reflect actual
earnings, profits and expenses.
The second body,
the one to manage the use of incomes from resource extraction, should be tasked
to carry out the following functions:
a. “Ring-fencing”
the majority of income realised from resource extraction activities. Most income should be placed in a dedicated
fund and by law the State should be able to use only a specific proportion of
those funds for current expenditure. The
rest should be maintained in the fund for use of future generations.
b. Use
of revenues should be “evened out”.
Expenditures levels should be determined by a pre-established long-term
development plan. Large public works or
other programmes should not be “added on” during periods of high prices for
minerals or oil and gas because these activities will not be sustainable when
prices drop.
c. A
formula should be developed by which the revenues realised from resource
extraction activities are distributed to all the people of the country. The revenues realised by the State should be
returned to the provinces and landowners from which they originated, but a
certain proportion – perhaps 50% - should be distributed to other parts of the
country that do not have active resource extraction projects. These funds should be distributed only in
line with development plans and strategies formulated for long-term
development.
4.
The management and operation of a mining
project should be contracted to a foreign company for an annual contractual fee
only if operational and managerial
experience or expertise is needed and not available in-country.
5.
The discovery of a commercial mineral
field by a foreign or PNG company with a majority of shares held by foreigners
does not entitle the discoverer to apply for development licence, but a right
to a minority holding and first preference in managerial or operational
services.
6.
All exploration and development costs
incurred by a foreign company be reimbursed from the gross profit of the
operation at a rate of interest to be established by law.
7. Townships
must form part of a project development program and the use of temporary camps
and fly-in-fly-out arrangements should be regulated so capital generated by the
project remains within the local economy
I
know that this sounds like a complex approach.
But the simple fact is that mineral extraction is a complex industry. And we in Papua New Guinea have failed to
recognise this, and in the failing we have failed our country, our people.
We
must return control of the fruits of the earth to those who have lived and
died, worked and sweated on that land.
Failure to do so will only continue the shameful practice of sending our
wealth to other countries for their enrichment while we impoverish our own
people. If we do nothing, we will remain
amateurs trying to play in a game with professionals.
There
is one more step we can take to strengthen our position in this high stakes
international contest and ensure the wealth of our land works to the benefit of
our people and not some group of outsiders.
There is one more way to put power back in the hands of those who should
rightfully have power over the wealth of our land.
National
Goal and Directive Principle No. 2 calls for all citizens to have an equal
opportunity to participate in, and benefit from, the development of their
country. Accordingly, it calls for -
·
an equal
opportunity for every citizen to take part in the political, economic,
social, religious and cultural life of the country; and
·
the creation of political structures
that will enable effective, meaningful participation by our people in that
life, and in view of the rich cultural and ethnic diversity of our people for
those structures to provide for substantial
decentralization of all forms of government activity…
This
is clear. This is our Constitution. Therefore, the New Ireland Provincial
Government and People of New Ireland demand substantial
decentralization of all forms of government activity, beginning with the power to own all natural resources within New
Ireland and control, regulate and manage their extraction, production and
marketing. This should be the goal
for all provinces in PNG. The State must relinquish and decentralize substantial
control over natural resources to the provincial level.
The
people of New Ireland claim that National Government in Waigani has failed
since Independence to direct the development of the nation in line with the
National Goals and Directive Principles. Development should take place
primarily through the use of Papua New Guinean forms of social and political
organization. Instead development has
taken place, and continues to take place, through outside companies with no
concern for PNG social and cultural forms. Their motivation is their own
profit, the power to control local economies for their benefit, and perpetual
control over the wealth they find in the ground.
The
Papua New Guinea system, in contrast, is informed by community values,
community survival, and community welfare.
The individual finds fulfilment, self-worth and self-satisfaction in
aligning his or her interest with that of his or her community. He or she is a part of the whole.
We
argue that companies substantially owned by Papua New Guineans should be given
preference to build our roads, bridges, wharves, or develop our forestry,
harvest our marine products, or extract our minerals, oil and gas. A company
wholly owned by the people and government of New Ireland will explore, extract
and produce all natural resources on New Ireland.
Since
decentralization is called for under National Goal No. 2 of the PNG
Constitution, we ask for nothing new. We
demand powers to own, regulate and control the extraction of natural resources
at the provincial level.
There
are those who will argue that we do not have the capacity to do this. There are those who argue that in order to
exploit our resources we must give control to outsiders. This is not an argument, it is an
excuse. If it takes time for us to
develop capacity, so be it. The
minerals, the oil and gas, will remain in the land. They will not be exhausted for the benefit of
outsiders. And as we develop our
capacity we will develop our ability to exploit those resources for the benefit
of our people, our country.
I
know I have tried to cover considerable ground here today. But this is our main opportunity to have
input into a legislative regime that is central to the equitable development of
our country. We need to understand the
origins of the perverse system by which the State has arrogated ownership of
all minerals, oil and gas on and under the land and sea. We need to understand that this flies in the
face of traditional Papua New Guinea understandings and British Common
Law. We need to understand how the
Mining Act of 1992 and the Oil and Gas Act of 1998 have violated not only
traditional and British Common Law, but the Constitution itself.
I have discussed the consequences of
these violations of customary and Common Law.
I have shown how the wealth of this country is siphoned off to foreign
centres with only scraps and garbage left behind. I have detailed the flight of capital
occurring every day, every week, every month and every year under the present
regime.
And
I have shown how we can correct this situation.
Above all we need to return control of the resource to those who live on
the land. We also need to establish
professional and independent bodies to, on the one hand, regulate exploration,
licensing and operations and, on the other hand, ensure the incomes realised
are used effectively for all the people of the country, including future
generations. I have detailed the
legislative changes we need to make to achieve these goals.
I
want to be very clear. This is not a
protest. My purpose is not to protest
against the actions taken by outside countries and corporations. No. My
purpose is to bring knowledge, truth to the discussion. The truth is we have been involved in a high
stakes contest for wealth and capital.
That is the game we are playing, and we have not even bothered to learn
the rules of the game. Unless we
understand the rules, we have no hope of winning the game. We will continue to be the laughingstock, the
doormat of the league.
Ultimately
what I am suggesting is that it is time for us to get smart. We need to go to school, to learn what other
countries have done to improve the outcomes for the State and for the people,
and to become professional players of the game rather than amateurs. Up to now we – the State, the provinces, the
people – have never really been a team. We have been a collection of self-seeking
individuals and groups. And the result
has been that at the end of the game – every time - the foreign interests go
home with the trophy and with the cash.
I
hope I have helped today to explain what is at stake. More than this, I hope I have helped explain
how we can all play a part in a radical transformation not only of mining and
oil and gas, but of the very future of our country. It has involved acknowledging some bitter
truths, but we must clearly face our challenges. I have done this for one reason only. By accepting the truth, by gaining the
knowledge we can transform Papua New Guinea- and the people of Papua New Guinea
- into winners. That is our task.
And
we should not think we cannot do it. We
need only open our eyes. We have people who can stand up with the best in the
world, and when we do not we will take our young and bright minds and create
such people. In New Ireland we are
already funding post-graduate scholarships for our best and brightest. Every province in the country, and the State
itself, should do the same. We need take
a backseat to no country.
We
must not rest until Papua New Guinea becomes a side in this international
contest for capital and wealth to be contended with, a side to be respected, a
side to be feared. Then, and only then,
will we be able to look our people in the eye and restore trust in our
leadership and government.
