The PNG government is reviewing existing laws to revert ownership of resources on, as well as under the land and seabed to the traditional owners.
Greg Anderson, Executive Director of PNG's Chamber of Mines and Petroleum has already warned that this will scare off investors and it'll be disasterous for the country's economy.
Doctor Colin Filer, Convenor of the Resource Management in Asia-Pacific Program at the Australian National University, says PNG is likely to end up with a messy piece of legislation and court challenges.
Dr Filer is speaking here about the move to hand ownership of resources in PNG back to traditional owners.
Presenter: Sam Seke
Speaker: Doctor Colin Filer, Convenor of the Resource Management in Asia-Pacific Program at the ANU
FILER: Well it will make the industry very nervous indeed for reasons which Greg Anderson has already outlined to you. But bear in mind, that the proposals that are circulating are not only changing the mining act, but the oil and gas act as well, and other legislation, like the land act, for example. So there are knock on affects in various sort of parts of the economy potentially there.
SEKE: What do you see happening in PNG if the government went ahead with these legislative changes?
FILER: Well, I mean we're not far out from an election. I don't think that the kind of changes they're talking about could be sensibly made before the election is conducted, because all you would get is some appallingly messy piece of legislation, which would not make sense and everybody would all end up in court, and while the court case was going on, the election would be held and who knows what the new government would decide to do about it.
SEKE: Now the Executive Director of PNG's Chamber of Mines and Petroleum Mr Anderson has actually said that the industry would consider an advertising campaign against the bill, which he described to the Australian media anyway, as "driven by short term populism and regionalism". It's worked here in Australia where the mining industry had campaigned and toppled Kevin Rudd over the mining super tax plan, now in PNG, it's handing back ownership of resources to the people - now what level of confrontation do you see ahead of...I mean in PNG, between the miners maybe on the one hand and the government and resource owners on the other?
FILER: Well I don't know whether the industry up there is going to mount an advertising campaign, but it probably will if this is a serious proposal. People are always publishing full page adverts up there about all sorts of things and so in fact full page newspaper advertisements are used even more in Papua New Guinea as a sort of form of political dialogue than they are here in Australia.
SEKE: The people PNG and in fact I think all over the Pacific islands always believed that the land is theirs - all of it you know and the rivers and the reefs and the sea as far as the eyes can see - they've been living on them and using them for thousands of years. Now don't you think this is what maybe the proposed amendment is trying to recognise?
FILER: Well, the ownership of land, the ownership of customary land is well entrenched in legislation and in the constitution and everybody recognises that. The question about stuff under the ground, there are only two countries in the world at the moment where landowners can be the owners of sub surface mineral resources and that's in the United States and Canada to a certain degree. There is no country in the world that I know of which grants ownership of sub surface mineral resources to customary landowners whose rights must be said have not yet been established anyway. Because nobody knows who they are until such time as a process of landowner identification takes place.
SEKE: Now do you see maybe other Pacific Islands doing the same if the PNG government went ahead and actually legislate to recognise the ownership of resources, that it actually belongs landowners?
FILER: Mmm, that's an interesting point.
SEKE: I'm saying this especially when they're also talking about the sea bed, and a whole lot of other Pacific Island countries are now joining the queue to develop their underwater mineral resources.
FILER: Well again, sea bed is not in any jurisdiction normally regarded as kind of the property of customary landowners or any private landowners. It basically belongs to that state, OK, and there are even international agreements about that, like the UN Convention of the Law of the Sea. And in Papua New Guinea, the rights of customary owners to the sea have basically been limited to fishing rights under the Fisheries Management Act, which doesn't mean that customary owners own any sea bed. It just means that they own the customary right to fish within a certain distance of the shore.
SEKE: But the thing is that, they don't actually recognise that they don't own the land under the surface, six feet under the surface and also the sea bed.
FILER: Well as I say, I'm not aware of any country in the world which recognises the private ownership of sea bed, whether customary ownership or any other ownership.
SEKE: On that point as well, Simon Ekanda, a landowner representative from the PNG LNG gas project in the highlands, his view is that the Constitution recognises the customary law which recognises that landowners own what was underneath and on top and above the land. Now mining is taking place on their land and they will continue to be left out, well he's saying anyway, and be beggars in their own country now this is quite sentimental but that's how he put it anyway. Do you think he's got a point there?
FILER: Well, you've got to remember that Simon is talking about the gas project, it's not talking about mining per say. They're two different sectors. But in the legislation under both the Oil and Gas Act and under the Mining Act, there are provisions for landowners to receive a certain minimum share of the royalties, which the state collects in its capacity as the notional owner of those resources. So what's actually happened over the years is that the government has kind of conceded sort of partial ownership of sub surface resources by customary owners, by giving them a share of the royalties, which they collect as kind of the legal owners as it were and that share has actually been increasing over the years through different development forum agreements and the customary owners of the development licensed areas have actually received enormous cash payments as a result. So they're far wealthier than most rural people in Papua New Guinea, which is why a lot of rural people in Papua New Guinea would love to have a mining project or a gas project or an oil project on their land just so they can collect this nice big revenue stream from the royalties.
SEKE: Now the mining minister, he's saying that under the proposed legislative changes, the government will be a regulator, and not investor and regulator as it is now. Isn't that what the government should be doing, regulating rather than being directly involved as an investor?
FILER: In holding equity in projects, but that's a very different issue. I mean there's been a long debate about that and so people like the World Bank, for example, think that the government should not be a holder of equity in these extracted industry projects, but should simply regulate them. And at one stage the government did actually sell off its equity and basically adopted a policy that it would no longer invest in projects. But the last government decided that it was going to reverse that policy, so the Somare government said, no, no, the state should hold equity in all these big mining and oil and gas projects. OK but that's a different issue, that's nothing to do with ownership of the resource, that's about whether the government should be an investor and a regulator or just a regulator and not actually invest in these projects.
SEKE: Now what other options do you think there are for responding to concerns raised by the landowners on maybe ownership if not equitable sharing of benefits from the resources?
FILER: Well, as we've seen, in some cases, like the Ramu project for example, landowners ended up with I think 60 per cent of the royalties which the government was collecting, which was a pretty substantial share. I suppose now they're saying kind of a part of the point of this to say that landowners should receive 100 per cent of royalties as they do in the forestry sector, for example. But you could sort of then say well, the government has a right to tax that royalty stream, so the government could impose a tax on those royalties, say 40 per cent, 50 per cent, 60 per cent and the situation would be exactly the same as it is now, apart from the general confusion created by threats to change the legislation.
SEKE: Now Greg Anderson, the executive director of the PNG Chamber of Mines and Petroleum also expressed concerns about creating a dual system here. He's got a point there, do you think?
FILER: Well, his concern about that, the minister's undertaking that kind of changes to the legislation would not be retrospective, which is, of course, normally the case, because the government has made agreements to allow these projects to go ahead under the previous legislation. You can't retrospectively change everything without making the state liable to pay huge amounts of compensation to developers for breaking agreements. But what he's saying is that kind of you can't really insulate the previous agreements from new changes to the legislation, because the landowners under those agreements will start to claim the same rights as would be granted to landowners under new agreements, under new legislation, so it would destabilise the existing relationship between landowners, companies and the government under existing agreements.
*You can also listen to Radio Australia - Pacific Beat on this interview at, http://www.radioaustralia.net.au/
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