Comments

Agree.

Thanks for this post, Jo! Related to this, in case you (and other readers) haven't seen it already, Devex and PSI recently <a href="http://psiimpact.com/wp-content/uploads/2015/06/Devex-infographic_FINAL.pdf" rel="nofollow">released results</a> of a survey on 'what the next generation of development professionals will look like'. However, I was disappointed to see there's no specific mention of cross-cultural competence, either as a key 'approach' or a 'soft skill' that development professionals will need.

Yes, it will but it is worth it. We know from the accommodation trial that there is virtually zero interest in this sector in hiring SWP workers. I don't see why tourism would be different to accommodation. So good to get backpackers out of horticulture -- where a significant number of employers are already interested in hiring SWP workers -- into accommodation and tourism.

Thanks for the article Stephen. Do you think that the shift of backpackers away from horticulture to tourism will mean that any expansion of the SWP to tourism, construction, and aged care (as demanded by the Pacific Island Countries under PACER-Plus negotiations) will undermine Pacific employment in those sectors?

While the withdrawal of Australian commitments to the 3MDF Fund in Myanmar is extremely regrettable, there are serious inaccuracies in the following sentence that should be corrected: "One can imagine the dismay the Australian decision would have caused on the part of the Myanmar Government, which had fought long and hard to keep the scheme going after a premature and politically-driven US Congress decision in 2005 to withdraw from an earlier version of the program, the World Health Organisation’s Global Fund." First, there was no such entity as the World Health Organisation’s Global Fund. The author is probably referring to the Global Fund to Fight AIDS, Tuberculosis and Malaria, which has nothing to do with WHO. Second, the US Congress had nothing to do with the decision by the Secretariat of the Global Fund to withdraw from Myanmar, an action recommended by the then Principal Recipient in Myanmar, the United Nations Development Programme. Third, following the withdrawal of the Global Fund, a group of donors (including Australia) established the Three Diseases Fund for Burma, the forerunner of 3MDG. I was a member of the 3DF Board and it is quite an exaggeration to say that the Myanmar Government " fought long and hard to keep the scheme going." Indeed, between 2006 and 2012, the Government was hostile to the Fund because it did not channel funds directly to the Government. It obstructed access to field sites, tried to cancel the first annual review, and stationed security officers outside Board meetings. Obviously, the political climate has changed and 3MDG is now welcomed by the Myanmar Government. Australia's abrupt withdrawal from the Fund is short-sighted and will indeed affect relationships with the Myanmar Government and fellow donors. But let's ensure that views are based on the facts.

Thanks Terence for an excellent critique. I remember being quite sceptical when I read Booth's blog post - you've done a good job of outlining some of the problems with such economic determinism. An argument that I find very convincing, and which is of increasing popularity (and one that you flag briefly), is that different forms of governance are appropriate for different stages of development. It is hard to imagine that the same institutions are needed in both (i) the 'catch-up' stages of economic development, where the key objective is to accumulate capital and move toward the technology frontier, and (ii) later stages of development where research and competition are more important. Yet this is what much of the debate on institutions and growth has assumed - as have the many cross-country regressions linking growth to different measures of institutional quality. David Dollar has <a href="http://www.eastasiaforum.org/2015/05/31/what-institutions-do-asian-countries-need-to-keep-growing/" rel="nofollow">just written</a> on this very theme. This is also a point made by Acemoglu and Robinson in Why Nations Fail - i.e., that 'extractive economic institutions' can achieve growth to a point (as did USSR), but that later stages of development (beyond a certain level of GDP per capita - around $8000) require 'inclusive economic institutions'. I'm not convinced by their argument that Chinese growth will stagnate due to the absence of 'inclusive economic institutions' - to me seems too much like wishful liberal thinking, conflates economic institutions with political institutions, and assumes that there is only one model of 'inclusive instutitions' (periodic democratic elections for key leadership). But I do accept their broader argument that different institutions are needed for different periods of economic development.

Thank you, John, for the article. I agree with Bal on the concern regarding influx of foreign entities who are using 'street sellers'. It is not only that, they themselves are also selling at 'buai' stalls as we go further into the provinces. The sad thing is, those in the informal economy do not know their rights. How can we get the message to the 'everyday' PNGean, about their rights?

Thank you Bal and Dorothy for your responses. I concur with Dorothy that due to the absence of the policy it really affected the enforcement of the Act. Apart from that as was highlighted in the article we also recognised from the outset (during the review process ably led by Dorothy and her team) that the lack of ownership at the national level has led to stagnation. Now that the Department of Community Development & Religion is the lead implementing agency of the National Informal Economy Policy it is hoped that they also play a leading role in the administration of the amended Informal sector law. How are we going to achieve that while taking into consideration the Organic Law on Provincial & Local Level Government is something that CLRC has been doing its best to develop a way forward. I am sure they are already at the cusp of finding a solution. Aligning the policy with the law has not been easy and I can tell you (as a member of the review working group) CLRC is doing its very best to make the law more effective than the last. We also note that in trying to make the enforcement effective the administering authorities (particularly the provincial and local level government) do have adequate resources to enforce it unlike the currently status quo. This could mean that there could be an increased focus on how the new District Development Authority (DDA) will assist the respective LLGs to enforce this Act. These efforts have to be backed up with alot of civic awareness and training so that these administrators know their roles and responsibilities. However, we also realise that the lack of participation and ownership by the informal economy participants has led to endless conflicts and other problems. Therefore, CIMC through the informal economy sectoral committee is proposing that we organise the informal economy participants into associations/chambers so that they can be able to have a voice. The UNWOMEN/NCDC Safe Cities Market Project provides a great platform for doing this. Furthermore, these voice mechanisms can play a pivotal role in funneling important information (such as the Informal Sector Development & Control Act) to its members so that atleast we accomplish some sense of "order". We are hoping if that can be factored into the new law or made as one of the major policy recommendations for government's consideration. Bal, your concern on child labour is something that I believe CLRC is taking into consideration. There are also other efforts from International Labour Organisation and Department of Labour and Industrial Relations to develop a child labour policy. This will complement the Lukautim Pikinini Act that was recently passed. All in all because of the complexity of the issue the law is not able to cover all areas of concern. Yet there will be recommendations made that would have an impact on the financial sector and other areas as per the policy directives.

Thank you Dorothy for making clear some important things that are worth considering.

Thank you Busa and John. One of the attributing factors in the lack of effective implementation of the Informal Sector Act 2004 was the fact that the Act was passed in the absence of a policy document to guide the implementation. Ideally, policy must precede enactment of law. The Act was left in a vacuum, there was no ownership unlike most laws which are usually parked under respective departments for administration purposes. With the National Informal Economy Policy (2011-2015) now in place, the relevant adjustments can be made including clearly defining the role of a government agency at the national level, which is now the Department of Community Development & Religion. In any decision concerning law making or reforming them, practical application of the law is crucial. Informal sector/economy is cross sector - from a political front, Dept of Provincial Govt could be the national agency; from the economic front, Dept of Trade, Commerce and Industry could be that national agency. Whichever agency it is, that agency must have the capacity and resources to administer implementation of the law. Definition of terminologies is also critical to make that distinction between SME and informal businesses. Other challenges also exist - how does one come up with a comprehensive law that caters for both rural informal economy and urban informal economy; to what extent can provinces legislate on informal economy in their provinces consistent with their law making powers under the Organic Law on PG and LLGs; CLRC's law reform proposal on the Informal Sector Act can only propose amendments that are practically viable in terms of implementation. But clearly defining the roles of the responsible national agency and the Administering Authorities (LLGs) will definitely alleviate some of the obstacles in terms of implementation and enforcement.

I think the point is that we shouldn't punish countries for helping their neighbours - especially in response to a natural disaster. Surely we should encourage such thinking in developing countries? It's what you *do* when your neighbours face a devastating emergency. It's not the same, but isn't Hockey's logic akin to cutting a retiree's pension as a penalty for giving to charity?

Thanks again for your insights, Paul. It seems the writing is on the wall. You have focussed on the macro-economic imperatives, could you perhaps provide some comment on the micro-economic impacts of the changes around the corner? The business community is rife at the moment with rumours of an impending and significant depreciation of the kina in response to these issues. I’ve heard as low as US$0.15 which is pretty scary stuff for a bloke trying to run a business. What would be the impacts of this? The inflation rate you mention in your analysis would obviously go through the roof as so many goods and services we rely on are imported. I guess the coffee, oil palm and other primary producers will be better off in some ways but their costs in terms of fuel, fertilizer, spare parts, machinery and what not would increase substantially. Could also be a boon for tourism – if other policies such as no visa on arrival for Australians did not get in the way. Of course, Indonesians can now get visa on arrival but I wonder how many of them come here for a holiday. But what about construction companies? All the “projects” the government boasts about. Would they suddenly become unaffordable or twice as expensive? What if I wanted to build a house, would it now cost twice as much for everything from iron roofing to solar panels and suchlike. I’m also wondering about the Oil Search, Exim and other off-shore loans. I guess the repayments would rise significantly in kina terms – how would that impact? Would it also mean if the government decided to sell the Oil Search shares they would have a huge windfall of kina as the kina value of the shares would increase substantially? And then tell everyone what smart economic managers they are. The big boys would not have the same issues they are experiencing currently in sending money out of the country so would that suddenly mean huge amounts of cash leaving the county? Especially in the early stages as they try to get in early? How would this impact? And what about the small girls and boys, all the thousands of urbanites struggling on the minimum wage when suddenly the pmv fares go up significantly along with the price of rice and tinned fish. Are we looking at the possibility of conditions leading to social unrest? Will already exorbitant rents go up even further? What will happen to interest rates? Will my current bank loan at 15% interest (in good times!) suddenly be even more of a burden, or will rates go down? Gee, when Australia had the GFC it seemed a good time for the little person – low interest rates, government handouts and stimulus, low fuel costs, high dollar. I know I’m no economist but I’m worried and can’t help thinking if there are other solutions to current issues rather than the blunt instruments proposed. Such as … 1. Education savings: re-introduce project fees. Amend free tuition to 25% tuition fee subsidies to urban schools (where parents are wage earners), 50% to rural schools and full subsidy to remote schools (where there are few wages earners). Might also help reverse the urban drift. 2. A freeze on govt. spending in general. Much of it is wasted anyway. 3. Outlaw personnel emoluments using the govt PGas system. This may be where the huge unbudgeted increase in this area has come from over recent years. People getting around the Alesco system. 4. 50% reduction in DSIP & PSIP for a year or two. 5. Fast track some big projects and bring on another construction phase 6. Look at the tax being paid by some of the largest companies. Introduce a resource tax or suchlike. 7. Sell the shares! Politically impossible, I know, but it seems a shame when the populous pays the price for the mistakes at the top end of town. Some of your readers may have other thoughts. Thanks again for the ongoing comment.