The people of Papua New Guinea have derived no measurable benefit from the resource boom, unlike the populations of all other resource-rich nations.

A World Bank study shows that while the PNG economy achieved rapid, resource-driven growth from 2009 to 2017, multiple measures show levels of poverty remained the same and are among the worst in the world.

The study’s findings highlight the failure of the PNG state to provide basic services to a large share of its population, despite both the flow of resource-derived taxation and rising levels of foreign aid.

As PNG also ranks at the bottom of Transparency International’s corruption measures in the Pacific region, lack of governance is a recipe for social instability.

The World Bank surveyed 16,000 households across most regions in the country between 2016 and 2018. It found that 39.3 percent of the population were living on less than World Bank’s international poverty line of US$2.15 a day (at 2017 prices).

This was almost identical to the 39.7 percent found to be below the poverty line in a smaller, but still comprehensive, World Bank survey of 4100 PNG households in 2009.

The World Bank also looks at other indicators of poverty, including whether adults have completed primary school, whether children are enrolled at school and whether people have access to electricity, basic sanitation and drinking water. Approximately 42 percent of the population lives in a household with poor school attendance; 61 percent does not have access to good drinking water; and more than 80 percent has poor access to electricity and sanitation.

On this multi-dimensional measure, 74.5 percent of the PNG population is in poverty, ranking the country 120th among 122 where the World Bank has conducted similar studies. It is on par with Chad, Malawi and Niger. There was no improvement in any of the non-monetary measures between the two surveys.

‘The fact that PNG has some of the highest share of deprivations anywhere in the world is surprising given the relatively large level of resource-related economic activity occurring in the country’, the World Bank said.

PNG has rich and developed resources of oil, natural gas, gold, copper and nickel. Between 2010 and 2017, the country averaged annual economic growth rates of just under 4 percent, peaking at 10 percent in 2014. Export revenue and business investment were rising rapidly.

Because of the resources boom, the GDP per person soared. After allowing for inflation, there was a 29 percent gain between 2009 and 2017, when it reached US$2333. This was about the level of Ukraine, Honduras and Laos at that time. However, the level of monetary poverty in these three countries was only 6.6 percent, while the broader World Bank measure of poverty, including access to education and services was 8.9 percent.

The countries with similar levels of poverty to PNG—Niger, Chad and Malawi—have GDP per person of only US$500 or less. Other countries with high levels of poverty had all achieved significant improvements in at least four of the five non-monetary measures of poverty, as had other low income, but resource-rich nations.

While the resources sector accounts for about 30 percent of PNG’s economy, it is a relatively small employer. Spillover benefits to the rest of the country would depend on either the resources sector stimulating activity in other economic sectors or on the government redistributing its increased revenue through payments or improved supply of essential services. Neither has occurred in PNG.

The study notes that in addition to the flow of resource-based taxes and royalties, the PNG government has also benefited from increased foreign aid from both Australia and the United States in response to ‘geopolitical’ concerns, meaning Chinese influence.

The study does not analyse the reasons for PNG’s failure to share the benefits of the resources boom, beyond speculating that the poorly developed non-resource private sector was unable capitalise on the boom. That low levels of education, or ‘human capital’, limit the population’s ability to take advantage of economic growth. And ‘a host of governance issues’, including what it termed ‘clientelism’, or the exchange of political favours for monetary returns, limits the effectiveness of administration.

Transparency International surveys have found that corruption is worse in PNG than anywhere else in the Pacific. They found that 96 percent saying members of parliament and staff government leaders’ offices were involved in corruption, while 82 percent said bribes were needed for business to secure government contracts. The survey found 54 percent had personally paid a bribe to get a service in the previous 12 months, while 57 percent had been offered a bribe in an election.

Australia has long been the principal source of foreign aid to PNG, and successive Australian governments have worried about the nation’s social and political stability.

The Australian government’s offer of $400 million in support of its Pacific Policing Initiative at last month’s Pacific Island Forum meeting followed a similar initiative in a security agreement with PNG late last year. That included a contribution of $200 million to strengthen the PNG judiciary, police and correctional services.

It may take more than policing to contain the social pressures building as a result of the failure of the population to receive any benefits from resources sector, however. The disastrous experience of Bougainville’s conflict over Rio Tinto’s copper operations 30 years ago provides a historic parallel, social instability may get worse if the benefits are not provided to the people they are designed to help.