In a country where 40% of the population live on less than a dollar a day the promise of untold wealth pouring into the country as its mineral resources flow out seems too good to be true. But for the mostly rural population scattered across PNG’s 600-odd islands this tantalising vision of accelerated development has turned out to be just that: a mirage.

Although mining and oil production has improved PNG’s balance of payments to the tune of more than $60bn since the country won independence 42 years ago, life for the seven million inhabitants has not changed significantly for the better—the country ranks 156 out of 187 in the Human Development Index, half of adults are illiterate yet one in four children still receive no schooling, and PNG is among the world’s 10 worst countries for gender equality, with two out of three women experiencing violence at some time and suffering worse access to healthcare and education.

Glenn Banks, of New Zealand’s Massey University, who has been studying PNG for more than 20 years, has written a report for the United Nations Development Programme warning of the ‘paradox of plenty’ haunting the fragile state’s economy. With a boom based on the extraction of gold, silver, copper, cobalt, nickel, crude petroleum and natural gas, PNG’s economic growth rate leads the world—it is predicted to increase by 20% next year.

However, as Banks points out in From Wealth to Wellbeing: Translating Resource Revenue into Sustainable Human Development: ‘Despite 14 consecutive years of economic growth, there has been little change in poverty levels in the country. In fact, the level of inequality in the country has increased.’

In a Radio New Zealand interview, Banks says: ‘Part of the difficulty is changing the embedded institutions and forms of governance. They become very past-dependent, to use the technical academic term, in that they become very stuck in their ways of operating, and shifting that mindset; shifting that way of thinking about the relationship between resource wealth and development is difficult.’

To this end, he recommends creating a mining ombudsman to protect the interests of Papuans: ‘Having an ombudsman at a very senior level who has the ability to draw on international experience, to draw on legal expertise, human rights expertise, and provide a conduit for people to actually bring grievances against the operators, against the state, against other elements in their community, or elsewhere, could make a huge difference.’

However, to the anonymous critic(s) blogging as PNG Mine Watch (originally Ramu Mine Watch), the UN report fails to expose the true scale of the problems and ‘attempts to further promote this destructive, violent and failed model of development’.

Nevertheless, Banks ends his Radio NZ interview on a cautiously upbeat note, pointing to an initiative on malaria as an example of how to use the presence of multinational corporations to the population’s advantage: ‘I’m reasonable optimistic that things are going to get better, that Papua New Guinea is going to be able to provide some benefits from this resources boom to the bulk of the population.’

For the blogger at PNG Mine Watch, however, recently released Australian cabinet papers written by the Department of Foreign Affairs and Trade in 1988-89 have proved depressingly prophetic, with the advice of the bureaucrats to focus aid on the agricultural sector being ignored in favour of backing for the extractive industries, which the blog alleges fuels such rampant corruption that half of PNG’s annual budget is stolen each year.

As the Australian cabinet papers made clear more than a quarter of a century ago, there was ‘little likelihood of the expected wealth from the mineral boom generating self-sustaining development for the population at large.

‘The difficulty for PNG is that mining/oil developments have few linkages to the rest of the economy and, being capital intensive, have little effect on employment (less than 1% of the total workforce). Additionally, although hundreds of millions of dollars may be involved, much of it is spent on capital equipment purchases outside PNG.

‘There is a sense that the good times should come to PNG, without concerted effort or preparation; expectations, fuelled by stories of untapped mineral wealth, are high and PNG’s political leaders are playing to this myth.’