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Much has been written about the failure (and few successes) of many parts of these reform programs, so there is no need to go over that again. But it appears that to some extent history is being repeated. With many Pacific islands now entering into a fresh wave of debt related budgetary problems it might be a good idea to look at what did, and did not, work in the past. There is now quite a degree of consensus amongst development economists that the ‘structural adjustment programs’ of the 1990s that were forced on many countries from Africa to the Pacific actually made matters worse, which is why they were followed by a huge program of debt relief.

Yet, it seems as if there is a lack of desire to learn from the past. Take Greece for example – the current ‘austerity’ package is just a re-labelled old IMF program – raise debt, raise taxes, slash Government spending, sell state assets and assume the economy will grow. But even here the majority of economists in Europe now accept that this has failed, and that Greece needs some debt relief.

So why is this relevant to Vanuatu and PNG today?

Instead of re-hashing the same failed responses, why can’t we look at what policies actually took struggling countries out of recession, and in the case of both Vanuatu and PNG into a period of unprecedented economic growth? To be fair neither PNG nor Vanuatu face the same problems today as they did in the mid-nineties. In Vanuatu the financial sector is much healthier and better run than it was before and in PNG, despite their current cash flow challenges, the long term prospects remain bright – so they are certainly not in a Greece-like situation by any means. But there are some similarities with the situation both countries faced in the past namely:

1. For both Governments the debt crisis is far bigger than the public understands and is the real driver behind the current budget problems and therefore revenue reforms


2. The past several years have seen a constant, almost relentless, effort by politicians and donors alike to undermine the civil service which is already under severe pressure having to deal with major crisis like cyclone pam in Vanuatu and the drought in PNG. 


3. There is a mistaken belief that introducing new taxes or raising taxes will raise revenue.


Let’s take a bit of a look at these issues.

How big is the Government debt?


Donors and politicians have been hiding the true extent of both PNG and Vanuatu’s debt problems for years. Let’s be clear, they may not have lied, they have possibly not broken any laws, but they have presented the data in ways that it has made it almost impossible for the average person to really know what is going on. Technical officials had warned for years that the design of almost every major infrastructure project in both countries for the past half-decade was seriously flawed in the financial sense – and history has repeatedly proven the civil servants correct. Every single project whether they be from international lenders, to the various bi-lateral Chinese projects have either had their costing significantly revised upwards or had the technical specification changed after they were signed – or have proven simply financially unviable. NONE of the projects has ever demonstrated where the Government revenue to pay off the loans would come from!

The World Bank debt model that was generously provided to the Pacific islands failed to account properly for debt servicing because it (in simple terms) assumes that the Government can just carry on borrowing domestically forever, and so does not need to worry about interest payments or domestic debt as they can be met by … yes even more borrowing! The model also is incorrectly designed so that it (perhaps unintentionally) assumes donor money can be used to pay off debt. This is simply incorrect and meant that the actual debt profiles of many Pacific islands are far more fragile than official documents suggest.
Once again the civil service had repeatedly warned that this and other similarly flawed analysis only served the people ‘selling’ the loans and not the nations ‘receiving’ the borrowing. But instead of heeding the warnings of the civil service numerous Governments first changed the law to allow for loans to be signed without Parliamentary approval, and then went about undermining the very civil servants that were trying to protect the nation.

The other problem is the size of the debts that are not shown in the budget papers. In technical terms these are known as ‘contingent liabilities’. So things like how much money is owned in terms of pensions, how many debts do the state owned enterprises such as airlines or power companies have and how much of that will the Government have to eventually pay. In both the case of PNG and Vanuatu these are likely to be very high indeed – so high that there is a reluctance to even try and work out what it is. In Vanuatu the case is slightly clearer as the Ministry of Finance does produce what is known as ‘accrual’ accounts and so in those documents they do try and have a guess at this figure and it is truly staggering! Sadly, most people will ignore it as simply another statistic in another boring report.

Undermining the civil service


When times are tough politicians love to blame previous Governments and civil servants whilst at the same time asking the latter to come up with solutions. In both the case of PNG and Vanuatu the civil servants did deliver – in the middle of the recessions that followed the 90’s structural adjustment programs the civil servants, usually led by the Ministries of Finance and Treasury, came up with a range of policies that combined making the economy more attractive, increasing revenue compliance (as opposed to raising taxes), re-structuring debt (so borrowing to refinance expensive loans and saving money that way) and then investing in projects with better financial rates of return (i.e. projects that they knew would generate more Government revenue then they cost of finance). These policies worked and both countries went through economic booms and the Government’s cash positions improved immensely. Sadly, the civil servants became a victim of their own success. The advice of the conservative civil servants was neither popular with donors who wanted to sell loans, nor politicians who wanted to spend money on their own pet projects – and so both countries saw a ‘purge’ particularly on their finance ministries. The private sector and public were blinded to what was going on because, particularly in Vanuatu, they failed to understand the economic reality of what was happening to such an extent that under the previous Vanuatu Government (many of whom are now in jail) their main source of advice seemed to come from a narrow subsection of the private sector who were perhaps more interested in their own short term interests than those of the nation. Sadly, this decline was not stopped by those in the donor community who also saw it as assisting their own short term ambitions of selling more loans or investing in areas that were not supported by the Government, but may have been supported by their capitals. The impact of this is being felt today where years of political and donor interference in these crucial areas has meant that the Government is critically short of the very skills it needs right now.

There is a mistaken belief that introducing new taxes or raising taxes will raise revenue

In both PNG and Vanuatu, the idea of raising VAT has been mooted as a way of collecting more revenue and in Vanuatu’s case even the prospect of introducing some sort of income tax. But several studies of tax reform in the Pacific have shown that at the end of the day new taxes simply do not actually raise more revenue – look at tax as a percentage of GDP before and after major fiscal reforms and you will see that in every case the revenue falls and then maybe recovers two to three years later.

The people and businesses of Vanuatu are suffering post cyclone Pam and the same goes for PNG post drought. Although there are no official figures it is almost certain that these events have resulted in a huge migration of people into the major cities and a significant increase in peri-urban poverty. Raising taxes will simply make both people and businesses worse off – this is exactly what we have seen in austerity hit Europe – so ironically by raising taxes you reduce investment and slow the economy down – at exactly the time you want to do the opposite.

In both PNG and Vanuatu it was the growth in the economy that led to increased revenues NOT THE OTHER WAY AROUND.

This is not to say there is not work to be done in terms of improving revenue compliance especially by reducing or undoing the various tax deals given by politicians over the years – but these more practical strategies seemed to be overlooked for the same ‘magic bullet’ of new or increased taxes that failed to work before.

So what did work?

First of all, accepting the reality of the situation – this means being honest with the people. The best example is Vanuatu where for many years successive Governments ran national consultation workshops that were eventually replaced by business workshops. In PNG the Government spent two years negotiating with the private sector in order to design a holistic fiscal reform program by bringing them into the debate. Whilst this can be a painful experience it enables the Government to get consensus on the way forward which is so critical, especially in Melanesia. Having an open and inclusive debate about the challenges also means that ordinary people will be more willing to accept some of the more challenging aspects of the reforms. But if there is to be such a debate the information presented must be seen to be honest and complete. This means not only being accurate but also presented in a way that ordinary people can understand and not technical babble that most people know is used to confuse and fool them into the wrong conclusion.

Secondly, cutting out unnecessary spending and eliminating various tax loopholes and subsidies will hurt some people and even though it is the right thing to do – this dialogue must be held in an open manner. In PNG one of the successes of the fiscal reform was when the private sector themselves were complaining that subsidies to one part of the economy was hurting another – and this made the policy debate from the Government side much stronger as it built a ground up demand for change in things which would have been more difficult to impose had they been done ‘top down’ by politicians.

Thirdly, there needs to be a significant element of debt re-financing. In both PNG and Vanuatu domestic and international lenders have over lent to the Government – this is very very risky as it means that in the future a failure by Government to repay will lead to a massive collapse in the financial sector and through that the general economy. This is one area where the international donors can and should play a role – instead of lending money for endless infrastructure projects that everybody knows could never be realistically re-paid it would be better to directly finance the Government to enable it to restructure its debt. The savings from this restructuring should then be used for critical investments in front line services such as health and education and also to maintain economically critically infrastructure structure such as roads and airports. Both the ADB and World Bank could be suitable partners if they could re-prioratise out of infrastructure and more into re-financing.

Fourth – the inevitable slight reduction in Government spending must be countered by a more direct and smarter use of the aid budget (in the short term) – this way the economies do not slow down at exactly the point in time when they need to expand. The only donors who have this capability and has successfully intervened in such a manner in the past are Australia and to a lesser extent the European Union. Whilst there may be many challenges in the current environment where the aid program appears to be driven by a small minority of Trump-esque angry white men from Foreign Affairs with the strategic foresight of a goldfish – the geopolitical reality is that Australia has already lost much traction in the Pacific and it needs to find a way back in. The close relationship between the people of Australia and the people of Pacific may not be mirrored in what we see in diplomatic terms but it shows that Australia (and New Zealand) will always remain part of the Pacific family and will need to be a part of any solution. So whilst interventions like PACER might currently seem like a dreadful piece of time wasting nonsense – the intention to develop more meaningful economic ties is correct, even if it has been poorly executed.

Finally, both donors and politicians need to start to re-build the trust of the current and former civil servants. The good news is that many of the excellent local civil servants who drove the reform of the nineties in both PNG and Vanuatu are still in country either retired or working as private consultants. There is now also a new cadre of bright young people with immense talent in both countries civil services and so the skills and knowledge are there. Recent elections in Vanuatu have also seen a greater number of these entering into politics which is also a positive sign. The good news is that history does show that you can get out of such an economic mess if you get support from the people and that, especially in Melanesia, can only come from an honest and inclusive debate where solutions come from ‘within’.

So it really would be a great shame to ignore the skills that exist in-country in both the public and private sectors and instead go for an ‘externally’ driven ideology of a tax based magic bullet that history has shown will not work.

Government is complex, and funding what it does is difficult. No one want to pay more taxes. Everyone wants more and better social services and infrastructure. Someone has to pay for it. Over the past few months, the Vanuatu Government has been reviewing its tax structure. At the same time, the finishing touches are being put to a new National Sustainable Development Plan. Together these should define the country’s development aspirations, and how they will be financed. Drawing on 36 years of bitter-sweet experience, and in light of the new global development agenda and goals, these processes warrant detailed scrutiny and an inclusive national conversation. To be meaningful, that conversation needs to be informed by relevant research and analysis, and be contextualised to the reality on the ground.

So what is the reality? First, we need to be clear that Vanuatu alone cannot afford to fully implement either its own national development plan, let alone the new global goals. Indeed the current tax review is not premised on improving services such as health and education, but is in response to the pressing need to repay loans taken out by successive governments. In a 2013 discussion paper, the Pacific Institute of Public Policy flagged growing concerns with money being borrowed for ill-conceived projects, and lending based on flawed analysis and predatory practices. Lamenting on past mistakes helps learning for the future, but does little to solve the current problem.

What we need now is a detailed examination of all the options available to get the government out of its predicament. The revenue review task force is rightly examining a range of measures, including perhaps the most controversial – the introduction of corporate and personal income tax. However, as we await the report of the task force, and in the absence of rigorous independent analysis, the conversation remains steeped in hearsay and the advocacy positions of various interest groups.

The main business lobby group, the Vanuatu Chamber of Commerce and Industry, has made its position very clear in terms of the income tax. It has recently released a report from the Lithuania based Lewben Group (the parent company of one of the chamber’s members, the Pacific Bank), which strongly advocates against income tax, and instead recommends raising taxes on consumers by increasing the rate of VAT and selling assets to pay government debt. Disappointingly, this report is bereft of analysis. There is no study of tax scenarios, who they would impact, or how much would realistically be collectable given loopholes, administrative capacity, and so forth. The learning to draw from other countries/territories is limited given the comparison of significantly different circumstances and structure of economies. And perhaps not surprisingly, the report totally excludes any discussion on subsidies, exemptions and tax breaks currently enjoyed by segments of the private sector.

None of this is to suggest an income tax as the silver bullet. If our policymakers are to make informed decisions, we need to draw out and discuss the facts. How much would a personal or corporate income tax raise given most formal employment is in the public sector (i.e. government essentially paying itself) and the inherent difficulties of enforcing company tax? How long would it take to make a return, if any, on the investment to establish and manage a tax collection system? How would a VAT increase impact on the besieged tourism industry, and a population struggling to make ends meet? How can existing revenue compliance be enhanced, including closing loopholes, cracking down on avoidance and ending non-performing subsidies and exemptions? How can the range of small fees and charges be rationalised to reduce the cost of collection, and improve the ease of doing business in Vanuatu? In light of revenue concerns, how should we proceed with trade agreements, such as PACER Plus? Similarly, the sale of government assets needs to be considered as a financing measure rather than a revenue measure, and bearing in mind it was tried under the ill-fated Comprehensive Reform Programme (CRP) and did not work. The question here is how can the major state owned enterprises contribute to the budget, like the National Bank, and not draw from it, like Air Vanuatu? This suggests a problem of management and interference, rather than ownership.

In order to fully address these questions, we need to go back to the reason we are in this mess. Is it more a problem of poor borrowing and spending than one of revenue? To guide where we are in terms of revenue collection, how do we compare to like economies on the measure of tax as a percentage of GDP? If expenditure is part of the problem, how can it be part of the solution? What non-revenue measures can be enacted to ease the current situation, including: refinancing, debt forgiveness, cutting back on poor spending decisions, reviewing existing contracts, and instating strict contracting/procurement processes? Can we avoid repeating mistakes into the future by putting a moratorium on new borrowing?

Given how serious the financial situation appears, raising VAT might not be avoidable but this should not be a stand alone measure nor simply coupled with a fire sale of state assets. Importantly, it would need to be combined with impact mitigation for the poorest and most vulnerable in our communities by enacting strategies such as reducing small business license fees, reducing or eliminating school fees and raising the minimum wage.

Just as government is complex, there is no simplistic solution to the current predicament. An informed national conversation will help us navigate the complexities, and empower the government to instigate reforms in the best interests of the people they represent.

—

About the authors:

Derek Brien is co-founder and executive director of PiPP. In recent years his focus has been on advising regional governments and agencies during the international negotiations that gave rise to the new global Sustainable Development Goals, and he is now working to support their implementation. Born in Ireland, he grew up in Australia and has called Vanuatu home for the best part of the last decade.

Nikunj Soni is co-founder and board chair of PiPP. He has worked extensively on economic and public financial management issues across the Pacific since 1996. He currently provides senior public financial management advice to the governments of Timor-Leste, Papua New Guinea and Sierra Leone. He has an MPhil from Oxford.

Total expenditure is budgeted in 2016 to be slightly below the 2015 level. But it is still 50 per cent above 2012 levels. (With the change in accounting rules, it is difficult to make comparisons going back before 2012.) That’s massive growth. So what is the problem? There are three.

The first is a big shift in allocations. Since 2012, there have been big increases in interest payments (due to increased borrowing), payments to MPs through district and provincial funds, payments to schools (in lieu of school fees), and compensation to employees. Deduct these and there is an 18 per cent increase in spending compared to 2012 to fund everything else, which includes critical things like maintenance and church health spending. That’s the “discretionary spending” shown in Table 1 below. (It is not actually all discretionary but A to D cover major items that are inflexible (wages), obligatory (interest), or top government priorities. “Discretionary spending” covers everything else.) 18 per cent sounds like a reasonable increase, but it is before inflation. Adjust for inflation, and the 2016 budgetary allocation for what I’m calling discretionary spending actually falls slightly relative to 2012.

Table 1: Comparing expenditure in 2012 and 2016

 Source: 2016 budget analysis. Inflation (CPI) between 2012 and 2016 is estimated at 22.7%. Table 9 of the 2013 budget gives the 2013 education subsidy payment.

The second problem is revenue. The budget assumed that 2016 revenue would equal that of 2015. Given the slowdown in growth, this is realistic. Indeed, things may be worse, given that the oil price is below the level assumed in the budget. (The budget assumed an oil price of USD$54, up from $52 late year. In fact, oil prices are much lower. The UK Brent crude, for example, averaged $53 per barrel last year, and only $31 a barrel so far this year.) Unfortunately, 2015 revenues were not the K12.5 billion estimated at the time of the 2016 budget. In fact, according to the final numbers just released, they were only K11 billion. It is hard to predict what will happen to non-tax revenue, but it seems reasonable that the K788 million shortfall in tax revenue in 2015 (final figures compared to revised estimates) will flow through into 2016. So that’s another (roughly) K800 million shortfall.

The third problem is borrowing. PNG needs to raise K2.1 billion in net borrowing this year to meet its budget targets. Domestic sources are limited, and the budget assumed K2.8 billion in a sovereign bond: almost 20 per cent of total spending. But that plan has apparently been shelved, presumably assessed as infeasible, leaving a huge hole in the government’s financing plans. PNG can borrow more domestically than it assumed in the budget, but will find it difficult to fill the gap entirely. Let’s say the government doesn’t retire K1.5 billion of domestic debt as originally planned, but is unable to increase net domestic debt either, due to limited market appetite. This would leave a funding gap of K1.3 billion (K2.8 minus K1.5 billion).

That means there could be, because of the estimated revenue and borrowing shortfall, K2.1 billion less to fund the budget. If we assume all shortfalls fall on the discretionary category of spending, that means that the maximum expenditure on that category is only K5.6 billion instead of the budgeted K7.7 billion: a 27 per cent shortfall, as Table 2 shows.

In summary, take out interest costs, wage costs and a couple of areas of priority spending, and the budget for everything else is back at 2012 levels after inflation: that’s Table 1. But, as per Table 2, even the modest allocations for many items can’t be met because of revenue and borrowing shortfalls.

Table 2: Funds available for “discretionary spending” in 2016

         
Sources: Table 1, and the text.

Of course, these are just predictions and guesses, but they do give a good sense of the situation PNG is in. Its current fiscal problems are due to the big shifts in the way the budget is spent, an inability to finance the deficit and much lower than expected revenue receipts. The fall in commodity prices is certainly a major factor behind PNG’s current fiscal woes, but the situation is exacerbated by the big spending initiatives of recent years – the large payments to schools, the funds to MPs, the rapid growth in the salary bill, and the big increase in borrowing.

What needs to be done? There are no easy answers. Expenditure reforms are needed. Nothing can be done about the interest bill, but the other “non-discretionary” items could in fact be put on the table. Reform options include a freeze on salary increases, further cuts to district and provincial MP funds, and cuts to the school subsidy program. Revenue reforms should be re-examined. And a new borrowing plan is needed. Given the difficulties accessing both foreign and private commercial markets, PNG may need to turn to the multilateral system and negotiate a package of funds in return for reforms.

Finally, the government left it until very late last year before it introduced a supplementary budget. These numbers suggest that another supplementary budget will probably be required this year. It would be better to bring it down sooner rather than later.

This post is republished with permission from the Development Policy Centre

Photo: Gone Adventurin

In the peaceful north Pacific, a different type of migration has been continuing steadily to the United States for two decades. Visa-free access to the United States enjoyed by citizens of the Federated States of Micronesia, Marshall Islands and Palau has dramatically impacted islanders from these three north Pacific nations in ways both positive and negative. This provision in the Compact of Free Associations with these countries—that gives Washington control of the defense of this vast region, as well as access to an important military installation in the Marshall Islands—has worked as a safety valve for island economies and governments that do not have the ability to provide jobs, education and health care opportunities to meet population growth.

Most of the ‘conversation’ about migration from the islands to the U.S. has focused on the out-bound for obvious reasons: There are estimates that upwards of 40 percent of all Micronesians and Marshallese now reside in the United States and its territories, such as Guam. There is a lot of negative, particularly in Guam and Hawaii where high costs of housing have fueled homelessness, and the large concentrations of islanders in these relatively small populations have in recent years resulted in their being a target of racism and discrimination. Yet, a similar demographic on the mainland U.S.—in Northwest Arkansas, where an estimated 10,000 Marshall Islanders reside in a tri-city area—has been largely positive, with islanders being actively recruited by huge poultry packing companies. Meanwhile, in the western state of Oregon, which has thousands of Micronesians, Marshallese and Palauans scattered in various cities, the island community formed the Compact Action National Network, which has successfully gained Oregon State Legislature adoption of important legislation for resident islanders.

Islanders living in the U.S. mainland do better economically, no doubt because of the lower cost of living in many locations in which islanders have chosen to settle. A small percentage of these out-bound migrants run afoul of the law in the U.S., illegal behavior that often results in deportation and a red-flag status preventing them from returning to the U.S. Deportations have escalated, mirroring the increase in the number of citizens of these three nations living in the U.S. While the number of deportees was generally single digit annually in the early- and mid-2000s, it has risen significantly. In 2015, 70 Micronesians, 23 Marshallese and 11 Palauans were deported from the U.S. Since 2003, the Marshall Islands is averaging 16 deportations annually, with a spike in 2013 to 37. While these numbers are small on a global scale, they are big for small island populations, and have had some negative consequences at home.

An editorial in the October 2, 2015 edition of the Marshall Islands Journal commented on an assault by two attackers that sent a young man to the hospital with a broken jaw and other injuries. ‘The two gentlemen administering the jaw-busting were…deported from the United States for engaging in unbecoming activities,’ the editorial noted. This incident offered ‘a view of the dark side of Marshallese easy visa-free access to the U.S. It is as though we take large groups of our citizenry and transport them off to the States and then, after a period of time, the bad actors are weeded out and returned to Marshall Islands: American employers are beneficiaries of good Marshallese labor while Marshallese citizens here are “beneficiaries” of bashed-in jaws. Is there something wrong with this picture?’

But the in-migration is by no means entirely negative. The Compacts with the Federated States of Micronesia and the Marshall Islands that came into effect in 1986 (and in Palau in 1994) allow islanders to serve in the U.S. Armed Forces. For many young islanders, the U.S. military is their ticket off the island and opens opportunities for post-service education. In fact, by the 2000s, recruitment on a per capita basis from the Compact nations (as well as American Samoa) greatly out-paced enlistment rates of Americans.

An increasing number of U.S. military veterans are returning to Majuro to work. During the past year, we’ve seen demonstrations of what Marshallese veterans with 20 or more years of service bring to the table when they are put into positions of authority. Robson Almen, a ‘lifer’ with over 20 years in the military, retired several years ago, applied for and was hired as the Marshall Islands Chief Electoral Officer in 2014. He established a plan with a timetable and proceeded to implement it in the lead up to the November 2015 national election. It was one of the smoothest-run elections in decades that contrasted sharply with the chaos of the 2007 vote. An editorial in a December edition of the Marshall Islands Journal praised Chief Electoral Officer Almen and Electoral Administration ‘for an efficiently managed national election. In contrast to some past elections, there were very few problems associated with the recently concluded vote.’

In the November national election, Majuro voters elected Kalani Kaneko to serve in the 33-seat parliament. Kaneko retired in 2015 after 20 years of service in the U.S. Army. After President Hilda Heine was elected in late January, she named Kaneko as the minister of health. Solving long-standing problems at the ministry, and in particular Majuro hospital—which suffers from chronic doctor, nurse, medicine and supply shortages—is a Herculean task. Kaneko does not have a health background. What he brings to the table is 20 years experience working in the U.S. Army that inculcated an appreciation of leadership, accountability, systems, and time management. These are the mostly missing ingredients at the Ministry of Health that Kaneko is now working to develop.

The point is, both Almen and Kaneko have an understanding of accountability and systems management from their tenure in the Army, and because of their decades of experience in the military system, they do not seem to have difficulty implementing requirements that lead to improved services to the public while relegating family relationships to a backseat in government service. While opportunities for jobs, health care and education have been the main motivating factors pushing Marshallese and Micronesians to leave to the U.S., in recent years the decline in service by a corruption-riddled government workforce is negatively impacting quality of life for many island residents, and increases motivation to migrate.

President Heine in her inaugural address to parliament in February this year emphasized the need for government workers to improve services for the public. Kaneko, Almen and other U.S. military veterans who have returned to the Marshall Islands are showing how direction, purpose and motivation can be used to engage government workers to deliver services at a higher level.

All of this emphasizes that as dramatic as these north Pacific nations’ experience is with out-migration, it is not a one-dimensional situation of people simply fleeing their islands for greener pastures. It is changing lives of many islanders who have moved to the United States, many for the better, some for worse. But it is also beginning to bring back people with decades of experience that they are putting to work for the benefit of the public.

Caption: Marshall Islands Chief Election Officer Robson Almen (second from left during tabulation of votes from the November 2015 national election) is one of a number of U.S. military veterans who have been returning after years of service in the military to work in key positions in government.

In 2015 cyclone Pam devastated Vanuatu, with Tanna being one of the worst-hit islands. Women bore the brunt of the devastation, forcing them to seek out new ways to survive. A realisation began to dawn that it was time for them to stand up and speak for themselves. After numerous meetings with women groups, the first ever Tanna Women’s Forum was held in October 2015. Over 1,200 attended the meeting where women demanded change to a political system that held them down, tied them in poverty, and gave them no opportunity to speak out. It was a breakthrough moment as many of these women have lived under threat all of their lives.

The women put their heads together and agreed it was time someone took the lead. I was nominated. The women agreed that I would contest the next general election scheduled for late 2016. Just days later the government announced a snap election, effectively wiping out our time to put together an election campaign. We moved ahead anyway with membership numbers now standing at 3,700. We had much confidence that we would secure one of the seven seats in the Tanna open constituency.

With very little time to prepare, I took on the challenge with much confidence. That as a solid membership of women we could succeed, and that even if we failed to win a seat, we would learn valuable lessons from the snap election experience that would better prepare us for the next general elections in 2020. I had so much confidence. I wasn’t thinking of losing; our hopes based on the registration figures signed by women across the island.

Crossing controversial territory

The first obstacle was informing community leaders of our decision to field our own candidate – a woman. Working with a chief that I have close ties to, a community meeting was arranged whereby I would declare and launch my candidacy. No one uttered a word, except a female friend who stood up, and much to my surprise, said ‘I am not in support of women being electoral representatives in parliament, and I am also against the policy of reserving seats for women’. I took this understandably as coming from someone speaking from her heart, but it also confirmed that the notion that women ‘do not belong in parliament’ were not held by men alone.

With no financial backing (other than two small personal contributions totalling 15,000 vatu) I had to dig into my own pockets to fund the campaign. I must say the election process is very expensive, with transportation in Tanna costing 20,000 vatu per day. We hired six public transport vehicles for the campaign.

We managed to visit (and revisit in some cases) 19 communities, speaking with roughly 700 men and women. Our slogan was Hemi Taem! (It is time!).

Taking centre stage during the campaigns was the most challenging. The questions and comments raised by communities were not difficult to answer, but there were also tricky ones coming from those who perceived us to be defying kastom.

‘You have not killed a fly or an ant, how can you prove that you can work like men in parliament. You are nothing but a woman.’

‘Our custom and culture perfectly points out your place – which is to look after the children, and mine (male speaking) is to do the talking. Where is your respect for this kastom? Are you from Australia that you don’t know our kastom? Who has given you this right to contest?’

‘Maybe we can vote for you in the provincial council election, but not to parliament.’

‘Our fear right now is the domestic violence law; we do not want our women to take those laws into their own hands.’

‘We don’t want to vote for women, because we don’t want women to have the right over us men.’

‘We don’t want our women to vote for women. If they do, we will divorce them.’

In a lot of places, prior to our campaign meetings, there would be community meetings most held in the nakamal where ‘consensus’ was often reached for all community members to vote for a particular candidate. In some cases, I wasn’t allowed to go and campaign – even to speak to just the women. In one case, some women called me and said, ‘Mary, please don’t come to our community as you will not be allowed to speak here’.

Discrimination and the threat of violence

The campaign revealed that culture is a main contributor to the limitation of woman’s influence in politics. I’ve seen how a lot of people are reluctant to vote for a woman. We did not receive discrimination from men alone, but women also. The discrimination we received was more on emotional violence. Discrimination against women in the society was very obvious at the time of campaigning and we observed how discrimination was somewhat based on a woman’s age, her marital status, her level of education and economic status. And as such, a woman may not be considered to be valuable or worthwhile if she does not fit the collective representation of both men and women.

Personally, I was able to endure a male-dominated political campaign period, but stories of threats of violence experienced by some women have just been unbearable. There are many of such accounts, ones that I share with a sad heart. This is one woman’s account of the threat she received from her partner the night before the poll.

I was already in bed pretending I had fallen asleep for some hours, but my husband came up and woke me up. He held a knife to my throat and demanded that I tell him who I was going to vote for. I was so afraid, I did not speak. He told me to speak or else he would beat me. I started crying. I was short of breath and was shaking. I cried out, “please help me … someone listening outside, please help me!” But nobody came to my rescue because they were afraid of my husband. He pushed me down, punched me again on my stomach and head, and said he was giving me a chance to speak or else he would beat me up. He knew of my intention to support women in this election. I begged him to let go of my throat or I was going to die, and I promised him that I was going to vote for the candidate of his choosing.

Another woman also had a similar story.

I saw you talking with those women, but I have stated clearly stated my rules and you have to follow them. We are going to vote for a male candidate and not for any woman. If you fail my words and I find out the numbers at our polling station, I will make you pay for it.

Other women were reportedly threatened by their partners to show candidate photos after they had casted their votes to prove they voted for a particular candidate. In some polling station, men threatened to divorce or physically torture their wives if results showed a significant number of women’s votes from that particular polling station.

A way forward

Political parties, as we know, are the most important institutions affecting women’s political participation. Even though our group knew we could have more support (moral and financial) from political parties if we ran under one of them, we still made the hard choice of running as an independent candidate. We had a few reasons for this, with the main one being that bigger political parties filed their candidates in advance, leaving no space for women to contest under their ticket. Secondly, women still have a long way to learn about the processes and lobbying involved in politics.

In spite of the challenges women continue to face, I see a new generation of powerful women flourishing in Tanna. Women with a strong sense of identity and power. Through our journey, many have come to understand that participation in the electoral processes involves much more than just voting. It is time to exercise the democratic rights that have either been ignored or violated over the last 36 years. Through our journey in politics, many have come to appreciate that through political participation women can have the freedom to speak out for the first time in the island’s history, which they’ve done through campaigning, assembling, associating and participating.

I have seen the power of ordinary women who have stood up against injustices to say they are tired. I have seen the faces of those who shed tears because of so much ill-dealing and threatening within their homes and communities. We have started a journey where we will continue to celebrate the united power of women who have taken the first steps to uncovering the multiple forms of discrimination and injustices. We shall continue to seek the empowerment of women to a level where they can think and speak for themselves.

We must not forget that the same laws will apply in the same national parliament and provincial houses of assembly. In the same national and district courtrooms, case law will grow and precedents will continue to be set in the absence of the hard questions that may never get asked about the blatant breaches in our society and adopted system of government.

From 2017 our leaders will (more than ever before) need the knowledge, political will, grace and patience to restore integrity, democracy and the rule of law as a national emergency in order for all else to be rebuilt without exception. The truth is a new government in 2017 will inherit inter-generational debt, a massive deficit and redundant parliamentary rules/standing orders governing important decision-making processes. Not to mention the crumbling sanctity of the National Executive Council (NEC) or cabinet.

They will realise that legislation set up in principle to provide robust governance mechanisms have been misunderstood or ignored by their predecessors. In 2017 a newly elected parliament will discover an exhausted public service, a manipulated police force, an angry defence force, and many broken Papua New Guineans with drought and income starved families and disrupted livelihoods.

Those elected Members of Parliament will find very drained state-owned enterprises, institutions and agencies incapable of operating with only a steady trickle of public funds to deliver wages, health & education or district support according to policies and promises of the past and present. They will find that the much promised revenues from oil and gas have been committed to paying off the current government’s unilateral decisions and therefore debt for unauthorised loans for generations.

New leaders in 2017 will need to navigate a global economic downturn of epic proportions with PNGs development and economic interests at heart. Our new leaders will discover that our broken service delivery system and our overheated economy will need more than elected candidates with tunnel vision.

Those elected will need to be legislators, not aspiring millionaires or public finance managers. Newly elected leaders will require an understanding of serious fiscal discipline, tax and industrial relations reform and economic modelling that reflect PNG’s economic conditions and our revenue-earning potential in sectors other than petroleum and energy.

PNG will need MPs who are humble yet extraordinary thinkers to guide monetary/fiscal, social, cultural and development policy simultaneously to aid a new-look holistic reconstruction strategy focused on understanding that our vast natural resources should never again be left to a single individual who knows no institutional, spiritual, executive or national boundaries. Those new MPs should be held to the universal promise that candidates seek election (and re-election) to be servants to their people not master manipulators of their resources.

All the hopes in online commentary revert to a single assumption that PNG will inevitably have free and fair elections next year. If all we do is dare to dream it’s no longer enough because we will inevitably get what we vote for yet again.

Photo: Sepik Wewak Urban Local Government facebook group

Photo credit: Dan McGarry / Vanuatu Daily Post

We have been in this situation before

In the mid-nineties the nation had a similar problem with the runway at Bauerfield airport. In the end the government corporatised the airport (it used to be a department) and created Airport Vanuatu Limited (AVL). The idea was that a corporatised AVL would not suffer the same political problems as the former government department. The Civil Aviation Authority (CAA) was also created to provide regulatory oversight of the industry.

The government also borrowed money from the European Investment Bank to fix the runway – in theory this loan was to be paid back by the new AVL, which (if run properly) should be profit-making. In reality, however, AVL remained political, was poorly run (in a financial sense) and never re-paid the loan. As a result the government had to reduce the available budget for critical services (e.g. health and education) and infrastructure maintenance to service this and other loans.

There have been sensible solutions on the table before

By about 2008 the developing problems with the management of the airport were well known to technical officials, and a series of solutions were discussed. The most relevant one being to look at combining three critical elements:

• Improve runway maintenance
• Look at a longer term solution for the runway and associated infrastructure required to meet ICAO standards
• Further privatise the AVL via some sort of PPP modality.

A lot of technical work and funding was organised for this via the Ministry of Public Works and by about 2010 funding was available through the IFC, AusAID and others for a combination of grants and, if necessary, a small loan for this program of works.

In the short term the problem is not financial – it is to do with maintenance of the airstrip

If the current airstrip can be shown to be properly maintained it should be enough for all of the current carriers to resume flights – however – for this to happen there will need to be evidence of a proper long term solution. This does not require any sort of a loan, fundamentally, it requires proof of better management. There are some small urgent repairs required on the more heavily used parts of the runway but it should be possible to quickly do this in the short term within existing resources.

A longer term solution does not need to bankrupt the country

There is plenty of evidence that clearly shows Vanuatu cannot expect to service even the current portfolio of external loans, let alone take on more borrowing. So there is little or no sense in borrowing enormous sums that cannot be paid back as all this means is that the future budgets for maintenance, health, education will be cut and so it will only mean the problem gets worse.

However, the most important works are remedial and can be done for a cost of under a few million dollars using concessional financing. More importantly, these funds can then be used to leverage grants (that don’t have to be paid back) to support the long-term management of the airport.

In the medium term a 150 meter buffer zone in the runway strip might also be cheaper than a brand new runway. This will cost some money and need landowner talks, however, it may be the cheapest option that allows for an “instrument approach” which will certainly alleviate many of the concerns of the airlines.

So given all of this is there any way forward?

The immediate priority must be to get a sensible runway maintenance program in place such that airlines can fly into Port Vila. Then the original IFC proposal for further privatisation of AVL should be re-looked at. This is likely to involve a financial restructure of AVL, and this is where the World Bank and others such as IFC could help within the scope of what they have already agreed to do with the government. Rather than lending impossibly large sums to the state they could provide targeted financial and managerial support to the new privately run AVL.

Recent history also shows that the level of representation has decreased alarmingly, with the total vote of winning candidates dropping to a low of 36 per cent in 2012. This figure rebounded slightly this year (41%) partly because fewer candidates ran. However, it still means more people voted for candidates who did not get elected than those who did.

Vanuatu election timeline 1979-2016

With the number of parties contesting the 2016 election (35) at an all time high, it is interesting to note that since independence a total of 33 political groupings (plus independents) have been represented in the national legislature. Of those, 19 have been represented in two or more parliaments. Previous analysis has shown remarkable similarities in the policy platforms of parties, especially those that formed as break away factions of the established independence-era parties.

Share of parliamentary seats

Democracy in Vanuatu is seemingly delivering a kind of micro federalisation. While this is reflective of the reality on the ground, it does not bode well for nation building and presents a significant challenge for parties to consolidate or grow their share of the popular vote. In the most recent election, only four parties secured over five per cent of the popular vote (i.e. total vote for all of their candidates) and most saw their vote share decline from the previous election. Some countries set a minimum threshold of five percent for a party to take a seat in parliament.

Share of popular vote

There seems to be widespread acceptance that the electoral roll is inaccurate and needs updating. The state of the roll means the turn out figures are unreliable. However, when we look at the number of votes cast compared to the last election, it is evident that voter numbers were down across the board.

Votes by constituency

Throughout the campaign we heard many candidates and voters alike discuss the need for political reform. There is a clear need to re-set the system to address the representation and stability issues, and to give the government of the day a mandate to get on with the task of governing the country. The challenge for the political actors is to connect with what the people want, while building a national debate about the development needs of the country – and then for the parties to respond to these needs.

In the meantime, the country awaits the parliamentary vote next week to find out who will be the next prime minister.

Vanuatu Prime Ministers 1980-2016