The main focus of the new Structural Reform Programme (SRP) was ‘good governance’. The World Bank had laid down a SRP policy matrix which had 9 objectives, 39 first tranche conditions and 33 second tranche conditions. Civil society organizations gradually became more and more vocal in their objections to many of these conditions.
One of the fiscal measures adopted in the mini-budget of 1999 was the restoration of the log export tax. This came under fire from the Forest Industry Association (FIA), which predicted substantial falls in log production with consequent reductions in monthly foreign exchange earnings. A further review of the forest revenue system was called for by the FIA; this had already been signalled by World Bank. The 2000 budget addressed a number of conditions attached to the seventh of the SRP’s objectives, namely ‘to improve the management of the forestry sector to ensure sustainability and optimal returns to the country’.
Three other conditions called for NEC Decision 59/97 (on agricultural conversion and road-building projects in forested areas) to be rescinded. The first required a 5 per cent increase in the PNGFA’s budget and called on the government to disburse the allocation to forestry ‘in a timely fashion’. A further condition in the policy matrix was a moratorium on all new forestry licences and extensions until existing licenses and extensions had been reviewed for compliance with the Forestry Act and associated regulations. The independence and integrity of the National Forest Board had been called into question by the way the Kamula-Dosa extension in Western Province had been allocated.[2] The World Bank made it clear that a number of PNGFA decisions threatened the proposed new Bank-funded project. These included:
a major extension to the largest timber concession in Papua New Guinea through a process that bypassed normal procedures;
directions to provincial forest management committees to ‘fast-track’ a number of new logging operations;
amendments to the Forestry Act to legitimate the fast-tracking of approvals for logging operations;
the elimination of the SGS log export monitoring program for purposes of export tax avoidance;
reduction of the PNGFA’s budget allocation and staffing, undermining the Authority’s capacity to support major forest projects;
changes to the log export tax structure, resulting in logging firms paying virtually no tax; and
the withdrawal of a forest concession to The Nature Conservancy (in Josephstaal, Madang Province) and its allocation to a commercial operator (Choi 1999).
In the 2000 budget papers, the Papua New Guinea government accepted the World Bank’s dim view of the PNGFA’s recent performance:
Governance has been particularly poor in the area of forestry, with the side effect of promoting corrupt practices and undermining environmental sustainability in logging activities. The Government is committed to introducing a moratorium on all new forestry licenses, to ensure that proper procedures are followed, that logging practices are not carried out in an unsustainable way, and that landowners get their fair share of benefits from resource use (Papua New Guinea 1999, 18).
A World Bank forestry adviser (Choi 1999) saw a proposed Forest and Conservation Programme (FACP) as an integral part of the SRP. While there was a forestry component in this project (which also set up a $US17 million Conservation Trust Fund, financed in part by the Global Environment Facility), the focus appeared to be on a Landowner Development Options Unit (LDOU). A number of reviews of forestry and operating timber projects was carried out through the FACP, however the program was terminated by agreement between the government of Papua New Guinea and the World Bank, freeing the government to push for further large-scale commercial logging projects (some ten new projects were said to be in the pipeline).
PNGFA headquarters has produced a number of new draft policy documents — on reforestation, downstream processing and ecoforestry — but these have yet to be approved and implemented; since the suspension and dismissal of the PNGFA managing director in 2004, the PNGFA has effectively been in caretaker mode with many staff unsure of their futures and unsure of the organization’s direction. The National Forest Policy and the National Forest Plan have not been reviewed or revised since their creation fourteen years ago.
There have been further attempts to tinker with the Forestry Act, the most recent amendment approved by National Parliament having the effects of short-circuiting the consultation processes with both the provincial forest management committees and customary resource owners, and of reducing civil society’s voice on the PNGFA board.
[2] The Ombudsman Commission subsequently investigated the board’s decision to extend the Kamula-Dosa timber permit into the area already allocated to Wawoi-Guavi, against the recommendation of the Forest Service management.