I didn’t have any intention of thinking about economics a
few weeks ago when I was on a cruise ship, the Sun Princess, visiting Papua New
Guinea and the Solomon Islands. It just happened.
If you spend a lot of
your life thinking about anything you find interesting you don’t necessarily
stop doing that just because you are enjoying a holiday. That is what I tell
myself anyhow.
One of the reasons people go on cruises, like the one I
recently enjoyed, is to see something of the culture of the people in the countries
they visit. That isn’t important to everyone. Some people are more interested
in scenery, bush walking, swimming, diving etc. Others just want to enjoy the
amenities offered by a floating hotel.
A substantial proportion
of people on our cruise were interested in local culture and history. That
judgement is based largely on attendance at the lectures offered on those
topics. There were not many spare seats available in the theatre seating a few
hundred people – my guess is about a quarter of passengers attended the
lectures. In addition, videos of the lectures were also available for viewing
in passenger cabins.
Of course, when cruise ship passengers visit any small
community they don’t get to observe people going about their normal daily
activities. The arrival of the cruise ship disrupts normal activities. People
who usually spend their time gardening, fishing or making handicrafts become
merchants, guides and entertainers. Inevitably, the role of tourists as
consumers and potential benefactors influences the culture they observe.
I don’t wish to imply that the cultural experiences we were
offered were not authentic. The cultural festival staged for our benefit in
Alotau provided a sample of traditional singing and dancing. The houses we saw
on Kiriwina Island were places where people lived; the gardens provided food
that people relied on for subsistence; the canoes we saw were normally used for
fishing. I didn’t get the feeling of visiting a theme park that I had at times
a few years ago on an Alaskan cruise (that was nevertheless enjoyable).
Some houses on Kiriwina Island
Of the places we visited, on Kiriwina lives of the people have been least affected by western influences. Even there,
however, a group of village children, who were dressed traditionally, were
raising money from the tourists by singing “Twinkle, Twinkle Little Star”. When
I suggested to my guide, a year 10 student at the local school, that this song
was part of a universal culture, he expounded eloquently on the importance of
preserving local culture. I agree with him and hope tourism will help to
preserve local culture. For my guide and most locals, however, the highest
priority in obtaining money from tourists was to help fund education.
Wherever we went, people were raising money to fund local
schools and pay school fees. From what I have heard when I was working in PNG a
few years ago, the funds raised from tourists do not all end up being used for
the purpose for which funds were donated. However, there is no doubt that
education is widely seen by parents as a way for their children to obtain a
better future. The children in some of the groups performing for tourists on Doini
Island seemed to be doing a good job of raising money by entertaining tourists
whilst also helping to preserve local culture.
Children on Doini Island raising funds to build a new classroom
The main reason why the government does not do more to fund
education and health services is because PNG is a low-income country, lacking
the tax revenue base that would be required to fully fund schools and basic
health services. Politicians have promised to increase funding but have not
delivered on those promises. If taxes were raised that would have an adverse
impact on incentives - including incentives for village people to become
involved in the market economy - and be unlikely to raise much additional
revenue. Misuse of public funds is a serious problem, but it is unrealistic to
expect that a huge pool of public funds would appear to fund education and
health services if corruption could be eliminated.
During our visit to Rabaul I witnessed a discussion of
education funding that left me feeling frustrated. The participants were an Australian
tourist and a local tour guide. The discussion occurred on a small bus taking a
group of tourists to see the area that had been devastated by the eruption of Mount Tavurvur in 1994.
Visiting a volcano at Rabaul
When our guide told us that she felt fortunate to be able to
take on casual work as a tourist guide to help pay for the education of her children,
the Australian tourist expressed the view that the PNG government should be paying
for education. She went on to tell everyone how incredibly lucky we were in
Australia to have a government that paid for education, health services and
pensions.
Other passengers remained silent, but a man sitting in the
front seat next to the driver looked over his shoulder to see who the woman was
who was doing all the talking. Unfortunately, I didn’t have the presence of
mind to ask the vocal tourist how she thought our government funded education,
health services and pensions.
As the cargo cult dies out in PNG, the magic pudding cult has
continued to grow in Australia, apparently now even seeking converts in PNG.
Virgin Coconut Oil Rabaul
The same tourist bus provided us with an opportunity to see
a small manufacturing plant making Virgin Coconut Oil. I don’t know
whether the product has the health benefits that are claimed for it, but the
process by which the oil is extracted from fresh coconut meat looks as though
it should produce a better product than the oil manufactured from copra exports.
Preparing coconuts for oil extraction
Manufacturing plants like this one may have potential to
generate more income for local communities than is possible by exporting copra.
Copra awaiting export at Rabaul
If I let my imagination run wild it even seems possible that
the manufacture of virgin coconut oil in Rabaul could be an example of the kind of development that could play an
important role in enabling more widespread economic opportunities to emerge in
PNG in the years ahead. If that can happen it might even be possible for
village people to purchase better and more secure access to education, health
services and the other things they want.
Coming back to earth, the manager of Virgin Coconut Oil
Rabaul mentioned that the business had obtained assistance from a government
agency serving grower interests, the Kokonas Indastri Koporesen (KIK). A question
that raises is why such assistance is necessary if the venture has potential to
be profitable and provide more attractive remuneration for labour than is
otherwise available. I don’t know what services the KIK provided in this
instance, but I am sure that in a more normal market economy those
services could have been provided by commercial enterprises with relevant
technical knowhow, marketing links and other relevant resources. So, what prevents
potential commercial partners, including foreign firms, from linking up with
local firms to undertake ventures of this kind?
The underlying problem, as I see it, is that the profit
motive doesn’t work very well in an economic environment where investors have
reason to fear that profits are not safe from potential predators, including
some within government. The assistance provided by KIK to processing
enterprises is valuable in demonstrating the potential for value adding
activities, but does not address the underlying problem.
It is difficult to see
how the underlying problem can be solved in the near future. It will take a lot more than just announcement of economic policy reforms. Meanwhile, perhaps
greater economic opportunities could be generated if the KIK and other
commodity boards were given a more explicit role to facilitate additional investment
in agriculture and related processing activities.