Failing to deliver

Could land be the solution to Papua New Guinea’s service delivery dilemma?

Ron Duncan, Chris Banga

Development, Economics and finance, Government and governance | The Pacific

21 November 2018

If PNG is to improve the supply of health, education, and other key services at the local level, there must be more demand for it by individual households, Ron Duncan and Chris Banga write.

In 2014, Papua New Guinea’s Parliament amended a law to change the way development funds are distributed at the district and local level.

The change saw the establishment of District Development Authorities (DDAs) – legal entities that can enter into contracts for works and services, hold property, sue, and be sued.

A DDA is responsible for any service delivery functions and other responsibilities specified in a national Ministerial Determination (a legal document that sets out the responsibilities for each level of government with respect to the funding and delivery of services). DDAs were rolled out in most districts across PNG in 2015.

Under the new arrangements, part of the provincial budget may be allocated to districts, and the district administrator – also now the chief executive officer of the DDA Board – may be delegated power by the relevant minister over district services such as law and justice, education, health, infrastructure, water supply, and agricultural extension.

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However, the DDA does not replace the provincial government and cannot perform any of its functions in a way that is inconsistent with the plans or work of the provincial government.

A DDA board, to which the CEOs/district administrators report, is chaired by the district’s Open Member. Open Members appear to be setting up DDAs quite differently from each other.

These differences, if continued, will likely make it more difficult to establish benchmarks for monitoring and comparing district performance in PNG.

Efforts to improve service delivery in PNG by devolving activities to the provincial or district level have long suffered from a too-frequent problem: a mismatch between the allocation of responsibilities to the periphery authorities, and the flow of funds from the central government to allow the peripheries to do their job.

Thus, it appears that no matter how responsibility is devolved, PNG will see no improvements in service delivery unless the national government finds a way to transfer funds with more reliability.

Principal/agent problems are always likely in the devolution of responsibilities and funds. However, the opportunities for such problems have been reduced with the establishment of DDAs, as it mostly cuts out one level of government: the provinces.

However, the controlling role of the Open Member in the new process creates its own set of problems.

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Some of these may be reduced through improved transparency and adoption of inter-district competition stimulated by the use of ‘carrots’. Peer pressure is a useful mechanism for boosting performance.

It is unlikely that ‘sticks’ in the form of sanctions will work in PNG due to what we call the ‘small country’ problem – the likelihood that appointments to work units, or to the agencies overseeing work units, will be close relatives of those making the appointments.

The DDA Act has created a huge demand for skills at the local government level, which means a reversal of a long-term process whereby skills have gravitated from the periphery to the centre because of central control over revenue streams. Ironically, hiring at the local level has been made more difficult by the ineffectiveness of service delivery, in particular education, over so many years.

Many of the problems experienced in the supply of services may be counter-balanced by creating more demand for better governance in service delivery.

The PNG government has developed a Consultative Implementation and Monitoring Council (CIMC) to develop local skills to monitor all aspects of the service delivery process. The CIMC, in turn, has implemented the Budget Tracking Initiative to assist communities to understand clearly the government budget processes and be able to monitor the expenditure of the allocated funds. However, we suspect that this will be a long process that will experience difficulty in maintaining pressure on the relevant authorities.

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Thanks to a 2009 legal revision, Papua New Guineans have the possibility of holding secure, long-term leases to customary land. When this right is exercised, individuals will own an asset (the leasehold to land) and the value of services delivered by governments, such as infrastructure and education, will be capitalised into the value of their land.

This means that the demand for effective delivery of services should increase. Individual households will have an incentive to monitor how effectively the funds that are budgeted for such services are spent. At the same time, the growth of individual leases to customary land should complement the CIMC’s efforts to improve the effectiveness of government expenditure on services.

If more and more Papua New Guineans hold a long-term lease on which an investment has been made and a business built, they will have a continuing interest in seeing that the services that add value to their asset are delivered and delivered effectively.

This shift will likely take considerable time. But without it, the future will look very much like the past.

This piece is based on the authors’ article in the Asia & the Pacific Policy Studies journal, Solutions to poor service delivery in Papua New Guinea. All papers in the journal are free to read and download.

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