Policy making since independence[1]
After independence there was little immediate change in forestry policy. The forestry sector thus operated under two very different laws: the highly interventionist Forestry Act and the relatively laissez-faire Forestry (Private Dealings) Act. Under the Forestry Act, only the state could acquire timber rights from customary owners, under a standard TRP agreement. Customary owners received a set royalty but had no say over the way the resource was logged. In contrast, the Forestry (Private Dealings) Act permitted customary owners to sell their timber privately; the usual procedure was for a ‘landowner company’ to acquire timber harvesting rights from customary owners and then sell these rights on to a foreign logging company. Provided there was ministerial approval, loggers could operate without a timber permit and with minimum state supervision (Taylor 1997, 249).
However, changes were taking place in the forestry sector. From the early 1980s, virtually all of the existing Australian interests in logging in Papua New Guinea were taken over by Southeast Asian interests who brought to Papua New Guinea and to the sector their own ways of doing business. Though small groups of Papua New Guinean entrepreneurs among customary resource owners were kept happy by their close association with these foreign logging interests, there gradually arose a chorus of complaints and accusations of gross mismanagement of the extractive timber industry. These were augmented by vocal environmental groups and other NGOs, which began to emerge in Papua New Guinea at this time, and by their international partner NGOs, who began campaigning internationally against degradation of Papua New Guinea’s unique environmental and biodiversity legacy.
This resulted in setting up in 1986 of a Commission of Inquiry into Aspects of the Forestry Industry. The Commissioner, Justice T. Barnett, began work in 1987 and by July 1989 had produced some twenty volumes and a Final Report. The Barnett Inquiry documented a timber industry out of control, characterized by pervasive corruption, rampant transfer pricing, and reckless logging practices. A detailed list of recommendations included:
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the formulation of a national forest policy;
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the enactment of revised forestry legislation;
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the establishment of a single forestry service under national control;
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full involvement of provincial government in provincial and national forestry planning;
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the inclusion of detailed requirements for sustained-yield forestry and environmental protection in every permit over land intended for future forestry use;
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provincial governments to have powers to veto projects in their own province;
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outside recruitment of experts to lead planning initiatives, resource surveys, monitoring of operations, marketing control and effective on-the-job training for local officers;
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formal consultation arrangements between national, regional and provincial bodies to prepare and update national and provincial plans;
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the full involvement of landowners and provincial governments prior to allocation of permits in discussions of desired future land use and the conditions to be imposed on the developer by the timber permit…;
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the National Forest Development Programme (i.e. harvesting projections) to be revised drastically downwards;
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outside assistance to be sought to enable an accurate professional survey of all forest resources;
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no future allocation of any area unless resource survey information and social and environmental impact reports are available and a detailed project-specific management plan for sustainable yield forestry (if appropriate) is in place;
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a review of all existing permits to introduce appropriate management conditions, revise harvesting rates, and reform logging practices;
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a new approach to improve the effectiveness of the monitoring of operations;
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a system of three-yearly review and assessment, on a company-by-company basis, to involve all aspects of operations, environmental damage, performance of permit conditions and marketing practices;
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radical changes to reduce transfer pricing, based on the Commission’s very detailed investigations into this problem;
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far greater insistence on up to date and efficient local processing and the introduction of reprocessing techniques;
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a major increase in benefits for landowners and more effort to ensure that permits and licences protect their interests;
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the enforcement of conditions of permits which are designed to promote the interests of the local community (Barnett 1992, 104–107, reproduced in Filer et al. 2000, 13).
In addition, the Barnett Inquiry put forward a list of names for prosecution for various criminal and leadership offences, and recommended a series of measures to clamp down on political corruption.
The incoming government began to implement the recommendations in 1988. A new National Forest Policy was approved in 1990; a new Forestry Act was passed in 1991 and gazetted in 1992; and the Forestry (Private Dealings) Act was removed from the statute books.
The new Forestry Act incorporated the Papua New Guinea Forest Authority (PNGFA) as the responsible body for timber industry regulation under a National Forest Board; this had previously been an Office, then a Department, of Forests. As in the old act, the state reserved to itself the monopoly on the right to enter into a Forest Management Agreement (FMA) with customary forest owners. Once a FMA was agreed upon, the National Forest Board selected a registered logger to implement it. The act also required the development of a National Forest Plan, to which all forest activities had to conform. This was done through the National Forestry Development Guidelines (see below), a development program and a statement of annual allowable cut. Provincial forest development plans were also required, and provincial forest management committees were set up to make recommendations to the National Forest Board.
The FMA process, summarized in Figure 11.1, involved several steps (see Kwa 2000 for a detailed discussion). Of these, the three most contentious were the requirements for a ‘development options study’, the ‘formation of land groups’, and ‘corporate formation’.
In the early days of the formulation of the National Forestry Development Guidelines, the development options study was the first step. It involved taking a look at what resources a community or group of communities controlled, and recommending whether forestry or some other kind of resource development would be best suited to the area. If forestry were the best option, the next steps could be taken. However, the PNGFA felt this requirement would be too time-consuming and costly, and it was moved down in the process, to a point where the decision to proceed with a forestry project had already been taken. As a result, the development options studies undertaken to date have been very limited and virtually useless.
The new Forestry Act required participation by customary resource owners either through the formation of land groups, according to the procedures set out in the Land Groups Incorporation Act, 1974, or by the agreement of 75 per cent of the customary owners. Without knowing who all of the customary owners are, it has been impractical to follow the latter practice. Nor has the formation of incorporated land groups (ILGs) gone smoothly. Logging companies paid minimal funds for forestry officers to undertake the work required to identify and incorporate ILGs in as short a time as possible. Sometimes they hired people to pay customary owners to put their names down as ILGs, just to complete this requirement. In some (perhaps many) logging projects there has been a high degree of complicity between logging companies and principals of ‘landowner companies’, resulting in superficial adherence to the legal requirements.
The formation of corporate structures has been another area of concern. Before the FMA process came into being, partly as a result of the previous ‘private dealings’, ‘landowner companies’ had been created which were often headed by a local entrepreneur (frequently a provincial or national MP) who was not representative of the interests of the majority of customary resource owners (see, for example, Wood 1997). Almost invariably, the leadership of these organizations supported ‘their’ logging company in any disputes between loggers and individuals or communities from the areas in which they logged. Typically, they maintained a high lifestyle, usually in the provincial capital or in Port Moresby, supported by landowner company funds.
The new Forestry Act required landowner companies to register with the PNGFA and, in so doing, conform to the act’s requirements with regard to the representativeness of their membership lists, sound and transparent management of company funds, and so on. But when the PNGFA began trying to implement this requirement of the act, landowner companies and their logging company allies raised such a political storm in the media that the minister at the time, Andrew Posai, suspended that part of the act. To our knowledge it has not been reactivated.
[1] This section draws on the work of Filer and others, especially Filer (1997b) and Filer, Dubash and Kalit 2000).