Opinion & Commentary
Speaking with spirits: Papua New Guinea’s logging free-for-all
In May 2005 Papua New Guinea refused a $23 million World Bank loan designed to reduce the depredations of timber exporters and thus improve the long term sustainability of forestry.
A dozen reports have documented how forests have been torn out without adequate replanting, without benefit to local people and with egregious cheating on royalties that should have been paid to the government.
Masalai i tokaut — The Spirits Who Live High in the Mountains — added their voices (www.masalai-i-tokaut.com) in June 2002 to the reports of scandalous exploitation of PNG’s forests.
Month by month since then, they have documented how laws have been repeatedly broken to fell timber without appropriate licences and without adequate compensation to landowners or the public purse.
Failures to take account of local landowners’ concerns have been specified. Lists of immigrant workers brought in illegally to take jobs that PNG nationals could do, or should have been trained to do, have been posted.
Evidence of pay-offs to politicians and public servants at the highest level has also been posted but never investigated.
Back in the days of reasonable probity, the Government of PNG imposed a tax on timber exports to soak up some of the monopolistic profits being garnered by the (foreign) investors.
Tim Curtin, an economist working for the timber interests and reported in The National Port Moresby newspaper they part-own, describes this as the “World Bank-imposed export tax system”.
The World Bank’s 2005 forestry loan was a modest attempt to shift some of the monopoly profits from timber exporters to the local landowners and the Government of PNG and to provide some long-term viability for PNG forests.
Curtin supported PNG’s decision to reject the World Bank loan because he thought it was highly unlikely that the loan would generate sufficient tax for the interest and repayment of capital due on it.
Timber accounts for only some 5 per cent of Papua New Guinea’s total exports, but the timber companies’ total revenue from annual timber sales of more than $100 million is estimated at 60 to 80 per cent. That seems to be an ample margin to be tapped for repayment of a World Bank loan.
Logging camps do a profitable sideline in arms imports in return for ganja marijuana exports.
There is no doubt that the export volume could be increased, but how such an increase is to be attained is a crucial question.
The timber interests favour the creation of large softwood plantations so that PNG could follow the Swedish timber export model.
Sweden and Canada softwood timber exports are highly competitive, earning their investors reasonable profits and their governments tax revenues.
Softwoods could probably be grown in PNG. But given the vast differences in terrain and climate, clear-felling for softwood plantations does not strike any observer familiar with both PNG and the timber lands of Sweden and Canada as an obvious choice. Tropical forests in the Philippines, felled by some of the companies now operating in PNG because they have run out of indigenous forests at home, have been replaced by tough grasses on which cattle cannot feed.
From an economic point of view, replanting with tropical hardwoods, though it would have a longer gestation period, could be more profitable for local landowners and the government. Forests, in some areas, could be interspersed with cash crops.
In some areas partial replacement with oil palms should be attractive as Malaysia pulls out of that industry because of high wages, and Indian and Chinese markets beckon.
Exporters can continue to exploit PNG timber because communal land ownership denies subsistence farmers a voice, but enables the timber companies to pay off powerful “Big Men’ from the village to Port Moresby.
At least Curtin agrees that land reform is necessary for any forward progress.
Earlier this month, Prime Minister Sir Michael Somare announced a Cabinet reshuffle.
Its intent was to replace the Finance and Treasury Minister, Bart Philemon, who had worked hard for three years first to establish, and then to maintain, stability.
Admittedly aided by high mineral export prices, Philemon also succeeded because he reined in expenditures.
Forestry Minister Patrick Pruaitch is the fortunate candidate to succeed Philemon. Given his forestry record, Pruaitch is expected to be more generous with pre-election hand-outs than Philemon.
Memo item: Although Sir Michael considers that Papua New Guinea does not really need Australia’s aid, the annual nearly $500 million Australian taxpayers contribute to the Government of Papua New Guinea is equivalent to more than 25% of its budget.
Emeritus Professor Helen Hughes is a Senior Fellow at The Centre for Independent Studies
