Paul Barker, the executive director of the Institute of National Affairs (INA), has said that all resource projects need to be examined and assessed. This assessment applies to both extractives and significant renewable energy projects like hydropower.

The INA director said this was crucial as projects must provide a net benefit to the nation. Resources should create jobs and increase revenues and economic benefits, but this needs to be balanced against the environmental impact and costs related to extraction.

Barker said, “For some projects, the costs, including the risks, are excessive, and the projects should not proceed. Others provide net benefits but still must ensure high standards, minimise negative impacts, and at least offset those impacts which are unavoidable, at least with a 10 per cent environmental gain, as is being increasingly applied around the world.

“Other issues with resource as well as agricultural projects, is to mitigate negative economic effects from fluctuating commodity prices upon the overall economy, public revenue, and expenditure.

“It also includes stabilisation of future fund arrangements, also to sanitise inflationary and currency impacts which would undermine the competitiveness and viability of the other sectors, both for export-based industries, such as agricultural crops and export crop value adding and for that matter also tourism, as well as import replacement activities, such a fresh produce supply, and various manufacturing,” he said.

Barker noted that Papua New Guinea’s extractive sector had a long and extensive history, and this had resulted in a significant impact on the landscape and local communities.

“Invariably, it also has an impact on local livelihoods from agriculture and the natural environment. Substantial jobs are generated, directly or indirectly, although for gas, largely during the relatively brief construction phase,” Barker said.

“The main contribution from the extractive industries is their contribution to public revenue, notably from tax revenue (including from salaries and wages taxes) and therefore the State’s capacity to perform its functions of providing reliable public infrastructure and services, assuming that the state plans, manages and accounts for those funds prudently.

“With extractive industries relatively short-lived, by the nature of their ore base, or pocket of oil or gas, but also in the face of changing global demand, as with hydrocarbons, as they’re phased out in favour of cleaner and more renewable energy sources, it is critical that their positive impacts during their limited lifespan is maximised (and equitably shared between investors and other stakeholders, including the State, landowners, and other mine-affected communities),” Barker said.

Image source: 2022 Budget Analysis, Institute of National Affairs