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PNG Constitutional Planning Committee Report 1974

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Constitutional Planning Committee Report 1974





The significance of Self Government and Independence


1.         When a country achieves Self-Government and Independence, its Constitution tends to be concerned largely with the tensions that exist at that time.  While it is important that these tensions - reflected as they are in Papua New Guinea in the demands for secession, autonomy, restrictions on powers of the national government, etc. - be taken care of, partly through constitutional provisions if necessary, pre-occupation with this problem can have one unfortunate consequence.  It is that the Constitution does not face up to the problems of the future, and this tends to defeat the great opportunities presented by Self Government and Independence.


2.         We believe that the significance of Papua New Guinea's attainment of Self Government and Independence is that, by transferring power into the hands of the people of this country, it gives us a chance to define for ourselves the philosophy of life by which we want to live and the social and economic goals we want to achieve.  If the Constitution is to be truly the fundamental charter of our society and the basis of legitimate authority, it should be an instrument which helps to achieve these goals and not one which obstructs.  Our Constitution should look towards the future and act as an accelerator in the process of development, not as a brake.  It should be related to the national goals that we leaders of this country are enunciating.  We have therefore framed our recommendations for the proposed Constitution with these goals in mind.


3.         A clear definition of Papua New Guinea's most fundamental national goals, and a statement setting out the implications of their acceptance for the ways in which the Government seeks to achieve those goals, is of great importance to the welfare of our people and to the effectiveness of the Constitution in promoting it.  Now that our country has become fully self-governing and its duly elected leaders have taken over virtually complete control of all internal governmental activity, the need for definite, widely known, long term objectives to guide them in their decision-making, is apparent.  With the need for development so widespread, it is crucial that national priorities be in accordance with these objectives.


4.         We leaders and people must know where we want to go before we can decide how we should get there.  Before a driver starts a motor car, he should first decide on his destination.  Otherwise his driving will be without purpose, and will achieve nothing.  We Papua New Guineans are now in the driving seat.  The road which we should follow ought now to be marked out so that all will know the way ahead.  The Committee believes that at present our country's leaders have a unique opportunity to change the existing foreign-imposed system of government, which is widely recognised as being inappropriate to our needs.  This opportunity must be firmly grasped.


5.         Now is the historic moment in our search for identity and self-fulfilment to take the necessary measures to make substantial changes in all of our institutions, to create new ones and to redirect development when things are fluid and tractable.  But for us to know clearly what measures should be taken, our objectives must be clearly established.

6.         The Committee has decided that, as the Constitution is the basic charter of the country, it is essential that it incorporates the fundamental national goals towards which the people and we leaders are working.  This should help to ensure that these objectives will become known throughout the country and provide a yardstick against which government performance can be judged.


What kind of society do we want?


The relevance of the Eight Improvement Aims


7.         Over the last two years, there has been much discussion about the kind of society that our people want.  There was a wide ranging debate on the socio-economic aspects of this topic in the House of Assembly last year resulting in the adoption by unanimous decision of certain fundamental guidelines for national improvement known as the "Eight Aims".  These are:


§         a rapid increase in the proportion of the economy under the control of Papua New Guinean individuals and groups, and in the proportion of personal and property income that goes to Papua New Guinea;


§         more equal distribution of economic benefits, including movement toward equalisation of incomes among people and toward equalisation of services among different areas of the country;


§         decentralisation of economic activity, planning and government spending, with emphasis on agricultural development, village industry, better internal trade and more spending channelled to local and area bodies;


§         an emphasis on small-scale artisan, service and business activity, relying where possible on typically Papua New Guinean forms of economic activity;


§         a more self-reliant economy, less dependent for its needs on imported goods and services and better able to meet the needs of its people through local production;


§         an increasing capacity for meeting government spending needs from locally raised revenue;


§         a rapid increase in the active and equal participation of women in all forms of economic and social activity;


§         government control and involvement in those sectors of the economy where control is necessary to achieve the desired kind of development.


8.         There are several basic principles which lie behind these aims.  These have been summed up in the ideas of Equality, Self-Reliance and Rural Development.  The Government has clearly stated its commitment to these aims in developing the country's human and natural resources to bring about improvement in the lives of our people, and there is general consensus on these principles all over the country.



9.         In evolving the National Goals and Directive Principles of Policy which we propose should be incorporated in the Constitution, we have taken full account of the Eight Aims.  The Goals and Directive Principles we recommend are broader and more comprehensive than the Aims in that they provide for the full development of our people, whereas the Aims emphasize the economic aspects of our society.  The Goals and Principles are generally consistent with the Aims but are more specifically aimed at achieving a free and just society in Papua New Guinea.


10.       We did not determine these national goals in a matter of days or weeks.  We have distilled them after a great deal of thought and discussion over the twenty-two months during which our Committee has been at work.  During that time, as we have mentioned in our Introduction, we held well over one hundred public meetings in all parts of the country, and we received thousands of submissions, verbally and in writing, many of which were concerned either directly or indirectly, with the type of society we should seek to build for ourselves.


11.       We believe that these goals, and the principles which should guide the government and our people in order to achieve them, express the needs and aspirations of our people in meaningful terms, and that they are stated in such a manner that people will readily understand and remember them.  The particular form in which they have been cast - spelling out the goals first, and then stating the goals and the principles - is intended to assist our people to fully understand and appreciate them.


12.       We consider that they should be given the widest possible publicity at all levels of government; in towns and villages; in schools and tertiary institutions; in churches and other organizations so that our people will become fully aware of them, discuss them and obtain a clear sense of the direction in which our country is heading.  It should give each man and woman a clear appreciation of the need for him or her to participate fully in the building of our new nation - a nation which is firmly based on equality and social justice.




13.       National Goals which we recommend should be incorporated in the Constitution are:-



















                        PAPUA NEW GUINEAN WAYS







14.       We do not take development to be synonymous with material progress.  For us the only authentic development is integral human development.  This means that we use the term development to mean nothing less than the unending process of improvement of every man and woman as a whole person.  We take our stand on the dignity and worth of each Papua New Guinean man, woman and child.  In effect, this means that integral human development must reach out to and enrich Papua New Guineans in every part of the country.


15.       All Papua New Guineans have an inalienable right to liberation and fulfilment through this process of development.  This right does not depend on our Constitution.  The Constitution is merely restating the right and explicitly confirming it.


16.       No particular area or grouping of people should be developed at the expense of another, materially or in other ways.  There should always be an equitable distribution and balanced sharing of all the benefits and opportunities the national has to offer.  For this type of development to come into being, it is necessary for such conditions to be created and to obtain throughout the nation at all times as to be conducive to that development.


17.       These conditions can only be brought about when the running of the country is in the hands of Papua New Guineans who cherish a genuine respect for the traditions of our country, and our people; who can distinguish those features of the peoples' traditions that should be retained from those that should be allowed to lapse; and who know how to discern what is good in what other nations and people have to offer to Papua New Guineans.


18.       The best judges, therefore, of what contributes to the full human well-being of the people of Papua New Guinea are to be found among Papua New Guineans themselves.  In probably no other matter is self-reliance more necessary.  The Government will always have its proper and key role to play in helping to create the conditions in which Papua New Guineans can thrive and enthusiastically pursue their own full human development.

19.       By tradition, Papua New Guineans are a spiritual people.  This fundamental tradition must always be respected and given the conditions of freedom to develop and to be enriched.  Closely tied with the spiritual and religious features of Papua New Guinea's traditions are the cultural elements of the nation.  Here we are in touch with the spirit of the people, with their roots and with their authentic creative genius, the nurture of which will ensure our true national identity.


20.       The social aspects of the life and progress of the people draw attention to how rich and deep is the meaning we give development.


21.       Our National Goals and Directive Principles are intended to provide guidance for the full development of our people.  People are the common denominators of progress, improvement and development.  This is why all social, political, cultural, religious and economic activity should be directed towards the personal liberation and fulfilment of every citizen.


22.       Although social progress is not synonymous with economic progress, economic development has meaning insofar as it promotes the well-being of the people in many of the important aspects of their lives as members of a community.


23.       Without political development of the people of Papua New Guinea, the genuine progress of the nation will be seriously hindered.  What is at stake is human freedom.  One main key to political progress is the increasing participation of Papua New Guineans at all levels of political activity.  This promotes human responsibility and enhances personal dignity as well as helping to safeguard personal freedom.


24.       Acceptance of equality among Papua New Guineans with their active participation in the affairs of the nation will mean a substantial contribution to integral human development.




25.       We are concerned by the way in which in the past development and modern institutions have alienated our people from one another.  Our schools have tended to make children strangers to their parents and their villages.  Universities have furthered this process of alienation.  At least until recently the whole education process was leading towards social stratification, increased difficulty in communication among members of a single social group, and a decline in the level of tolerance and inter-personal respect among our people.


26.       To reverse this process of alienation is not an easy matter.  We acknowledge this.  The present government has begun the task, but it is one of great magnitude and will involve constant effort for real change to be achieved.


27.       Education should be based on and should promote dialogue and co-operation.  It should foster integral human development and tolerance among our people, awaken their social conscience, their awareness of the essential dignity of man, and their appreciation of the need to stand up for their rights, both as members of the community and as individuals, in the face of pressures from foreign interests and arbitrary government.  It should help to develop a spirit of solidarity of one with another, and an appreciation of our inter-dependence.


28.       We cannot build a democratic, just society unless our children's education and all educational institutions are geared to achieving these objectives.


International solidarity


29.       In today's world it is essential for all countries - industrialised and developing alike - to have effective links with other states.  However, as our Government recognizes, a new state such as Papua New Guinea needs to look very carefully at the kinds of relationships it forms with other countries.  As a general rule we do not wish to become involved in formal alliances, or to become too closely linked with particular countries.  However, we do believe that we should clearly recognize our position as a country of the Third World, and actively support initiatives aimed at improving the present underprivileged position of developing countries.


30.       We recommend that our people should be encouraged and given greater opportunity, through education, the media and by other means, to increase their awareness of other emerging states.  They should then obtain a greater realization of the common problems of developing countries, and fully support the participation of our government in joint international measures aimed at strengthening the solidarity of these states in the fight for "the establishment of a new international economic order based on equity, sovereign equality, interdependence and co-operation to ensure economic and social development in peace and justice for present and future generations" in all countries, including our own.


31.       A number of developments in the United Nations Organization and in different regions of the world in recent years give reason for optimism that the first positive steps are being taken towards changing the present grossly unjust international economic system which allows wealthy corporations and countries to exploit the people and resources of developing countries.  We must play our part in strengthening the bargaining position of other developing countries and ourselves.


32.       The principle of international co-operation which we recommend is similar to one which was adopted, by the General Assembly of the United Nations in May this year, at a Special Meeting called to find a way to reform the present world economic order which is so dominated by the wealthy industrialized countries, and heavily weighted in favour of their interests.


            2.         EQUALITY AND PARTICIPATION


33.              As we have said in relation to the first goal - "Integral Human Development - Liberation and Fulfilment", the kind of society which we believe our people want to build is one


which is fundamentally based on the right of each one of our citizens, whether he or she lives in a village, a town, or a city, to fully develop himself or herself as a whole person.


34.       We recognize that people are not born equal either in the talents they possess or in their determination to use them to the best of their ability.  But everyone should have an equal chance to develop the talents he or she has whether they be in farming, teaching, the arts, technology or in any other field of human activity.


35.       At present the place in which a child happens to be born is an extremely important factor in determining the opportunities he or she will have of obtaining any education at all, of winning a place in a high school, of obtaining health and other government services and of being able to participate in the cash economy.


36.       This situation has resulted from the fact that some areas of the country have been very much neglected in the past - in their economic development and in the education, health and other services established there.  Not surprisingly this situation has given rise to wide-spread resentment and has been a major underlying cause of disunity at this crucial stage of our country's development.  The goal of achieving equality of opportunity and participation in our national life is not, then, something for which we may piously hope, but a vital necessity if we are to achieve genuine national integration.


37.       Our present Government is seeking to reduce these inequalities of educational and economic opportunities and access to other government services in different parts of the country, and we fully endorse this policy.


38.       But inequalities of opportunity as between different areas are not the only inequalities with which, as a nation, we should be concerned.  There is also emerging a class structure which did not exist before - well educated Papua New Guineans are tending to lose touch with their relatives in the villages, and gaining substantially greater opportunities to advance themselves than their village counterparts.


39.       We must take firm steps to prevent this situation developing further.  There is a clear need to reshape our society now before this emerging class structure becomes entrenched, so that all of our people have an equal opportunity to develop themselves; so that they can use their abilities to achieve personal fulfilment, and at the same time, make a full contribution to the welfare of the nation.


40.       We do not underestimate the difficulties we face in seeking this goal of equality and participation, but we are convinced that now is the time to direct all major policies toward this end.  Nothing less than a full scale effort will have any chance of success.  Despite the recent steps taken by our Government to redirect development in this manner, the effects of the development policies which were vigorously pursued by the Australian Administration during the second half of the nineteen sixties and into the seventies, aimed at achieving the maximum economic return in the shortest possible time, are widespread and not easy to reverse.


41.              But we must reverse these effects if we are to achieve this fundamental goal.  Without equality of opportunity the level of participation in the political process and in other aspects of the life of our nation will be uneven.  Those who have had the fewest


opportunities will not be able to adequately press for their rights as against others who are more educated, have greater mobility, and more experienced in making their views known and taken into account by the national government.  The more privileged groups will be in a position to dominate the less privileged and may well do so.  Such a situation must not be allowed to develop.  Action on a broad front must be taken now to begin about real equality of opportunity for all of our citizens.


Political and administrative decentralization


42.       Our political institutions must not only appear to be open to all citizens - they must in fact provide maximum opportunities for our citizens to be involved in decision-making that affects them.  In our country, which stretches over a substantial land area, includes many island groups, comprises a great number of different ethnic, cultural and language groups, and does not yet have well developed road links, we believe it is vital that political and administrative decision-making be decentralized to the maximum extent that is consistent with promoting and safeguarding the national interest.  That is one of the main reasons why we have given so much thought to the need for the establishment of a new level of government - "provincial government".


43.       In Chapter 10 "Provincial Government" we have spelt out this underlying philosophy and have set out our detailed proposals for putting it into practice.  But we would emphasize here that without a fundamental change in our present system of government, it will be virtually impossible for the goal of "equality and participation" to be fulfilled.  As we point out in Chapter 10, the present governmental structure, inherited from the colonial administration, is one of the most centralized in the world, giving maximum opportunity to public servants, especially at headquarters, to influence policy, and minimum opportunity to our own people to be meaningfully involved in their own government.  Most local government councils have not been able to provide a satisfactory avenue for the people's participation in their own development, as the councils have been dominated by the central administration for many years, and thus had much of their initiative and energy sapped.


44.       We are convinced that only by establishing this new system of provincial government at the district level will the undue dominance of centralized administration be broken, and the will of the people be adequately reflected in the policies and institutions of government in every part of the Papua New Guinean nation.


Equality of opportunity and equitable sharing of benefits


45.       One of the most accurate measures of the degree to which a society is meting he great challenge of attempting to achieve a just society is the evenness of the spread of the economic benefits of the country's development among those who live and work in that country.  Few countries have gone very far in meeting this challenge.  Even in the great majority of the most highly industrialised countries of the world the gulf between the richest and the poorest citizens is prodigious, and makes far less meaningful the fundamental rights and freedoms enshrined in he constitutions of some of these countries.


 46.       In many developing countries the contrast between the wealthy few and the mass of ordinary people, the great majority of whom are barely able to eke out a subsistence living, is even more stark.  Independent Papua New Guinea must be very different from this, and we have every confidence that it will be.


47.       In seeking to build an egalitarian society, Papua New Guineans have two important advantages that many other countries lack.  Firstly, we have no traditional ruling class whose members regard privilege and wealth as their rightful possessions.  Secondly, the vast majority of our people have significant land rights which they have jealously guarded over centuries, and which enable a substantial number of them to obtain a basic living, quite apart from any involvement they may have in the cash economy.


48.       The recent report of the Commission of Inquiry into Land Matters emphasized the need to ensure that our people are not deprived of their ancient land rights, stressing that Papua New Guinea does not want to see the emergence of a class of landless people as has occurred in so many other developing countries.


49.       We believe all papua New Guineans want each one of our people to have a decent standard of living, with no citizen living in luxury, enjoying a surplus of the benefits produced by the hard work of ordinary people.  This aim is very much in keeping with the second of the Eight Aims, though it spells out more clearly the objective of substantial equality of incomes among all Papua New Guineans.


50.       As we said earlier, we are well aware that no two people are exactly alike, in personality, ability or initiative.  Some have more determination and drive than others.  Certainly the rewards which highly talented and hard working people receive should, in any system of government, be above the average level of incomes in the country, but consistently with the Eight Aims we consider that the disparities between those with the highest incomes and those with the lowest should be minimized as far as possible.  The Government should actively seek to increase the proportion of the economic benefits of our country's development which goes to those who have the lowest incomes, whether they be living in villages or towns.  We believe our people are firmly against "elitism" which is both unjust and undemocratic, and leads to the kinds of social problems which we are experiencing now in our main towns, where disparities in wealth are most obvious.


51.       We welcome and fully support the basis of the agreement recently reached between the Public Service Association and the Public Service Board for a flat pay increase for national public servants to take account of high inflation since their salaries were last increased.  The amount involved, namely $350 per year, is to be paid irrespective of whether public servants are in a high position or at or near the base of the public service salary range.


52.       The effect of such a salary increase is, of course, that the person on a lower salary benefits proportionately far more than does a person at a high level.  Thus the gap between those public servants in responsible positions who earn high salaries and those who earn low salaries is being reduced.  Already the ratio between the highest paid Second Division officers and the lowest paid Third Division officers has been reduced substantially since 1968.  At that time the ratio between these two salary levels was 1:13.  It is now 1:61.


53.       We believe that practical examples of this type of forbearance on the part of our more privileged people can have a significant and very beneficial effect on the attitude of all of our people (including the Government) to greater equality of incomes.  Such practical action carries far more weight than words can do.  We believe action must be taken on a wide front to deal fully with this basic problems of income inequalities, and the initiative which the Public Service Association has taken to apply the principle of reducing wage and salary differentials between the highest and the lowest paid workers in the private sector as well as in the Public Service, deserves full support.


54.       The incomes of expatriates should also be taken into account when looking at income levels in this country.  It is not enough to hold down the incomes of our own senior people, if those of foreign citizens living and working here continue to rise with the same rapidity as they have been doing in recent years.  There should be a firm policy on this matter developed immediately.


55.       In seeking to achieve greater equality in the sharing of benefits, our Government should be particularly conscious of the present wide disparities between the standards of living of people in the various districts.  To achieve this greater equality is an extremely urgent matter, but it will take a very substantial sustained effort to successfully change this situation.


56.       We recommend that it should be a constitutional principle that the number of citizens participating in every aspect of development should be maximised.  Thus co-operatives and general purpose corporations should be actively encouraged and promoted.  The relatively few large scale enterprises which we allow to operate here should involve as many of our people as possible, in various capacities;  not only as employees but as sub-contractors, suppliers, etc.  Projects of any kind should meaningfully involve the people of the area in which they are being carried out.


57.       The Government's recent legislation providing for the incorporation of land holding groups, and of groups that wish to involve themselves in development activities which are not necessarily linked with land, is a significant step in applying the directive principle which we propose, namely, that "the organization and legal recognition of all groups engaging in development activities should be facilitated".  It should help to stimulate more self help business activity - something which is urgently needed if we are to become more self reliant.


58.       We believe it is a strongly held view of our people that no citizen should be deprived of the opportunity of performing any beneficial task which he or she does well, and particularly that, in the economic field, for example, a particular activity should not be monopolised by a single company or person.  Our people are totally against allowing large enterprises, whether expatriate owned or Papua New Guinean owned to dominate a particular field of economic activity, such as operating fork lift trucks, taxis or road transport, or marketing produce, thereby effectively depriving individual citizens or small groups of citizens, of the opportunity to compete.


Equal status and opportunity for women


59.       We have also emphasized the importance of women being able to make their full contribution to the welfare of the country, on an equal footing with men.  In recent years women have played a significantly greater part in the country's national life - in politics, in business, in social and cultural activities.  But more effort should be made by government to hasten this development.  Obstacles to educational and other opportunities which face women at present should be removed, and insofar as it is within the power of the Government to do so, the difficulties facing women who wish to involve themselves in the affairs of the nation should be reduced.


Broad representation in official bodies


60.       Whilst we believe that it is of considerable importance that people chosen to fill positions of high responsibility in government such as in the National Executive Council, parliamentary committees and statutory authorities, etc., should be selected primarily on the basis of their personal qualities and experience, we recognize that another important factor should be taken into account.  It is a strongly held view among many of our people that as far as possible official bodies should be composed of persons who are "broadly representative of the various areas of the country".  If they are composed in this way the people of the different areas of Papua New Guinea will feel a greater sense of involvement than would otherwise be the case.  Particularly at this stage of our development, this is a vital necessity.


National languages


61.       We strongly recommend that the State clearly recognize Pidgin, Hiri Motu and English, as national languages.  Literacy in these languages should be actively promoted to encourage better communication between many different groups of our people, and enable them to participate more fully in the affairs of the country.


62.       Literacy in local languages should not, however, be discouraged as they should be safeguarded from falling into disuse.  Thus we envisage that as many as possible of our people will be multi-lingual.




63.       It follows from what we have said that it is a fundamental goal of our people that Papua New Guinea should make its own decisions, and that its sovereignty should not be reduced by external political, economic or military dependence; that national leaders should always be free to make national decisions.


64.       The economies of the developing countries of the world are in most cases strongly affected by foreign interests.  Papua New Guinea is no exception.  A study made last year by the Australian Government's Joint Intelligence Organization is reported to have found that almost two-thirds of the developed section of Papua New Guinea's economy is controlled by Australian companies and individuals.  And with the rapidly increasing extent of Japanese involvement in large scale economic activity here, it is clear that we Papua New Guineans at present control only a very small part of our own economy, and will remain in this subservient position unless firm action is taken to change the existing situation in a meaningful way.


65.       If Self-government and Independence are to have real meaning these milestones must be accompanied by a substantial measure of control by Papua New Guinea over economic enterprises throughout the country.  In the present circumstances this can only be achieved by developing solidarity between all peoples within the country and giving second place to relationships with outsiders.  It may well be that it will be necessary for us to forego some immediate material benefits which might be derived from dealings with outsiders, in order to enhance our own political sovereignty.


66.       Far too many countries of the Third World are forced, by economic relationships with industrialised countries, to build their societies more in accordance with the interests of the industrialised countries than with their own national wishes.  We firmly believe that Papua New Guinea must avoid a situation where foreign capital controls the destiny of its people.


67.       However, for many years Papua New Guinea's development has been steadily fitting into the type of development typical of many Third World countries.  This is seen as basically a matter of obtaining money for development activities.  To get this money, foreign investment (and foreign domination of the economy) is uncritically encouraged; inequality is often deliberately promoted so that there will be a band of rich people who (so it is argued) will reject their traditional obligations and retain money to invest.  This kind of development has generally not been successful elsewhere and has led to very serious social inequalities, but it is still dominant in Papua New Guinea.  It can be accurately called "dominant development".


68.       Other trends in this country are opposed to dominant development.  One such is the Eight Aims which we set out in full earlier in this Chapter.  Another trend opposed to dominant development can be seen in the growth of development groups such as the New Guinea Development Corporation, Kabisawali Village Development Corporation, the Hiri Hanua Development Corporation, the Bena Association and the Komge Oro Association.


69.       In comparison to these new trends, dominant development is much more effectively organised; it has a headstart, it is well entrenched and it has access to considerable resources and skills.


70.       The fact that dominant development is better organised and well established means that it is in a superior position to take advantage of new situations.  A most important emerging situation is "provincial government" which, in Chapter 10, we recommend should be established throughout the country as soon as possible.  We must be constantly aware of the danger of dominant development exercising an undue and improper influence on provincial governments, and take the necessary steps to ensure that such influence is firmly contained.


71.  We should accept foreign investment only if it is in accordance with very strict controls, and to the extent that it does not overtax our capacity to cope with its direct and indirect effects.  We have specifically provided in a directive principle under this goal of "National Sovereignty and Self-Reliance" for full account to be taken of the skilled manpower resources which we have when we are deciding whether a particular foreign enterprise should be accepted.  We believe it is seriously detrimental to the long-term


interests of our people for large scale foreign enterprises to be established, employing substantial numbers of skilled expatriates, with our own people being involved only at the lower levels of management and operations for many years to come.  We are also aware, however, that too many foreign enterprises can attract a substantial proportion of our highly skilled people, whose numbers are very small at present, thereby diverting these people away from governmental activities which are more directly relevant to the needs of the country.


72.       Bringing foreign investment into our country at this stage of its development can be likened to using a bucket of water to fill a cup.  The cup can only contain a small amount of the water in the bucket and the excess water simply overflows and runs away, as do the benefits of excessive foreign investment.


73.       It is essential that we be highly selective as to the type of enterprise we allow into this country - not only should we very carefully consider whether the industry which a foreign company proposes to establish is in accordance with our national objectives, but we should thoroughly investigate the history of the company's activities in other countries.  We must not allow any foreign enterprise to operate in our country unless we can be sure that it will fully abide by our laws, and will not make any attempt to interfere with our political and civic affairs.


74.       Companies whose history shows that they have evaded substantial taxes by various unscrupulous means should not be allowed to operate here.  The recent allegations by the Leader of the Opposition, Mr Abal, (which the Government has recently agreed are correct) that certain foreign companies operating here have, by "juggling" their operations, evaded their obligations to Papua New Guinea, thereby costing this country millions of dollars in taxes, gives weight to this concern.


75.       On a different plane, we know there have been too many instances of undue influence or even outright manipulation of the governments of developing countries (and some industrialized countries also) by multi-national corporations sometimes backed by their home governments, to achieve their own ends.  Foreign corporations which have interfered with any other government or taken steps to try to bring the government of any other country to its knees by economic pressure, should not be allowed to operate in this country.


76.       Foreign companies which fall into either of the above categories, but are already operating here should not be able to obtain any new agreement with our Government, and consideration should be given to whether any existing agreement between the Government and such a company should be cancelled.


77.       We do not suggest that all foreign companies operate in this way, or that foreign investment in itself is necessarily bad.  But we are concerned to ensure that foreign investment is firmly controlled in the interests of the majority of our people.  When our economy is largely in the hands of foreign investors, as it is now, what real political power do we have, whether we are independent or not?


Impact of Multinational Corporations on development


 78.       The great problems which developing countries face in relation to the impact of the activities of multinational corporations, the largest and most powerful of the foreign investors, have been drawn together and analysed in a recent report (published on 9 June, 1974) prepared for the United Nations by a group of "eminent persons", concerning the "Impact of Multinational Corporations on Development and International Relations".  That Report (which we refer to below as "the Report" makes reference to the benefits which such corporations can bring to a country, but emphasizes the dangers to developing countries if they do not -


(a)        clearly spell out their national goals and priorities and their policies for the control and channelling of foreign investment; and


(b)       ensure that all foreign investment accords with those policies.


79.       The Report points out, on page 17, that multinational corporations generally continue to own and control the package of resources and capabilities which they introduce into a host country (the country in which they invest) -


            "They also tap resources on a world-wide basis and syphon them off to markets where profitable possibilities exist.  Their impact depends on the one hand on the nature of the package and the attitude and strategies of the multinational corporations, and on the other hand on the environment in which they operate.  For example, foreign capital may augment the resources of the host country and relieve bottle-necks in foreign exchange;  but it may also generate a series of large outflows in dividends and service payments.  New technology may improve the utilization of resources, but may not always be appropriate for local needs such as for employment creation.  Managerial and marketing skills may enhance productivity and the availability of goods, but they may also divert resources from where they are most needed to where they are most profitably sold".


80.       The Report stresses the importance of looking at the total impact of multinational corporations on the host countries, and indicates that these corporations can increase the degree of dependence of host countries rather than strengthening their economic position.


81.       As to the non-economic effect of these corporations on host countries, particularly developing countries, the Report says these are -


            "frequently as important as or even more important than the economic impact.  The effect of multinational corporations on the social institutions and cultural values of host countries may be especially striking if the tenor, tradition and stage of development of these countries differ considerably from those of the home countries.  For example, the "business culture", with its emphasis on efficiency, may be considered too impersonal in traditional societies.  The very cultural identity and the entire social fabric may be at stake, especially if multinational corporations attempt to transplant their own models of social development to the host country."


82.  The Report concludes that these problems are more pronounced in developing countries because most multinational corporations originate in countries with very different social and cultural backgrounds.  The fact that multinational corporations feel they can count


on the support of a powerful home country or on the co-operation of a broad service network, strengthens their economic power.


83.       Finally, the Report says, on page 18, that even in strictly economic terms, the benefits which the operations of multinationals confer on host countries is open to question.


            "Spurs by multinational corporations to productive activities do not always provide a basis for sustained and sound development.  Isolated foreign enclaves have few linkages with the domestic economy.  The extraction of natural resources may generate few processing industries or do little to raise the level of local skills.  Branch plants which operate purely as off-shoots of their parent companies, such as component manufacturers, are unlikely to integrate fully into the local economy.  Restrictions to competition may benefit the enterprise but not the individual countries in which its affiliates operate.  Export market allocation and tied purchases affect the foreign exchange gained or saved by the host country.  The attempts of host countries to raise taxes or to place limitations on foreign exchange remittances can be negated by vertically or horizontally integrated multinational corporations through transfer pricing and the use of tax havens."


            "...even if a host country increases its share of benefits from the activities of multinational corporations and enjoys high rates of growth, its income distribution may not improve or may even deteriorate.  Welfare standards for workers may be kept low, owing to weak or non-existent trade unions.  Consumers may not benefit from low prices.  High income obtained locally from the activities of multinational corporations may accrue largely to domestic elites associated with foreign interests.  The vigorous sales efforts of the affiliate on behalf of products usually consumed in high-income countries may cater largely to upper income groups and promote consumption habits beyond the means of a poor country and unsuitable for the development of local industries.  Basic needs of the population, such as food, health, education and housing, may be left unattended.  The location of activities of multinational corporations in the developing countries may be influenced by more stringent requirements for protection of the environment in developed countries."


84.       We have quoted extensively from this important Report because we believe the views expressed in it are very relevant to our own situation.  We have already experienced most of the detrimental effects both of foreign investment generally and of multinational corporations, in particular, to which the Report refers.


85.       We believe strongly that the preservation of national sovereignty and integrity is crucial to our country's future well-being and that the Government must take a strong stand now to restrict the flow of foreign capital into our country if we are not to be overwhelmed by the influence of excessive foreign investment.



86.       For this influence to be successfully contained, a thoroughgoing policy of self-reliance should be established to provide the basis of Papua New Guinea's attitude to foreign investment.




87.       The policy of self-reliance means various things:  it means self-sufficiency in basic products, but also greater participation by Papua New Guineans in the economy, and an emphasis on small-scale business activity.  We believe there is recognition throughout the country of the need for participation by the people in decision-making, and to open channels for the useful employment of the energies and enthusiasm of the people.  This is reflected in the emphasis in the "Eight Aims" on decentralisation and the typically Papua New Guinean forms of business activity.


88.       It is clear that our people want economic development, but not just any kind of economic development.  Our people are becoming increasingly aware that an obsession with economic development can lead to many harmful consequences; the disruption of traditional systems and values, the alienation of man, the exploitation of the poor by the rich, pollution of the environment and an unjustified depletion of our natural resources.


89.       We believe that there is broad consensus among our people that economic development should not bring about disparities in incomes, either as between individuals or regions.  Development above all, must be development of the people.  It should be based on our people's own talents and hard work and emphasize Papua New Guinean ways in the manner we have explained earlier in this Chapter.  True development is not to be measured by the Gross National Product.  The degree to which people throughout the country have the opportunity to achieve personal fulfilment is a much more meaningful measure of a country's development.  The total development of all our people, largely through their own efforts, should be our aim.




90.       This goal is based on four fundamental principles.  These are:-


1.         In considering the natural resources of Papua New Guinea, our human resources should be included.  Our human talent should be directed to providing benefits to the majority of the people.


2.         The basic concept in our society with regard to use of natural resources is that one generation holds and uses resources in the capacity of trustee for future generations.  We, the generation of today, cannot squander our country's resources.  We would clearly be failing in our responsibility if we sold our resources to foreigners for our own short term benefit, without regard to the needs of generations after us.


3.         The resources of the world are limited.  Our country and its resources are finite.  For the sake of those who come after us, we must strictly limit the speed with which we exploit our natural resources.  We must also replenish them as far as possible; (for example by replanting with new trees after mature trees have been cut down by a timber enterprise).


4.      Our ancient animistic belief is that everything has a spirit.  While this belief should not frighten us from "subduing the earth" for our collective benefit, it



should remind us that blind destruction fo the environment will lead not only to pollution but to the "death of the earth" which is vital to our nation.


91.       Making the best use of the talents of our people, in the interests of the nation, is clearly of the highest importance.  Particularly at our present stage of development when skills among Papua New Guineans which can usefully be applied to the modern "sector of productive activity are scarce, we need to channel those skills into activities which will most affectively promote the welfare of our people.  At the same time, the skills of the people in all kinds of traditional activities should be encouraged and further developed.


92.       We believe that the people of Papua New Guinea, both of today and tomorrow, should be continually aware that in striving to improve their human lot they should not make the mistake of blindly destroying their rich natural environment - the land, the rivers, the sea, the fish, the animals, and the birds.  Use of these resources should be weighed carefully against the real cost to the country in terms of the damage which will be caused to the whole way of life of the people living in the vicinity of a particular project, the destruction of land, rivers and wildlife in the course of the operations of, for instance, a large mining or timber enterprise, the need for the integral development of man which also concerns spiritual, psychological, cultural and social development.


93.       It is true that man can create a new landscape through reshaping the environment.  But this should be done only with full regard to the natural scenic beauty of the environment.  Man is inclined everywhere to use the modern tools of technology to demonstrate his mastery over matter.  We believe that our mountains, our rivers and our valleys should not be destroyed for short term material benefits.


94.       Historic sites, our objects of spiritual significance, for example, carved wood, spirit houses, etc. should be protected against deterioration and destruction.  Everyone in our country should develop a true sense of pride and appreciation of our history and the objects which depict our yearnings, our struggles and our achievements.


95.       We should develop a sense of respect for all our natural resources and the environment.  We should not be afraid to use those resources to contribute to our development, but should be sure not to over-use them to the extent that they are rapidly exhausted, especially at this stage of our history when it is foreign interests who gain by far the most benefit from the exploitation of our natural resources.  Our needs should be weighed against the needs of our children, their children and the generations which follow them.


96.       The Government's recent establishment of the Ministry for the Environment is a welcome step towards the creation fo effective institutions and policies for the adequate protection and improvement of the environment.


            5.         PAPUA NEW GUINEAN WAYS


97.       In Chapter 4 of our Second Interim Report dealing with Provincial Government, we said-


"When Europeans settled in Papua New Guinea, they did not find a political vacuum on the shores and plains, and in the mountains of our islands.  Our ancestors had well organised, self-sufficient communities or wanples, clans and


tribes, to meet the needs of their times.  The price of the impact of Western colonisation has been the sapping of the initiative of our people."


98.       The process of colonisation has been like a huge tidal wave.  It has covered our land, submerging the natural life of our people.  It leaves much dirt and some useful soil, as it subsides.  The time of independence is our time of freedom and liberation.  We must rebuild our society, not on the scattered good soil the tidal wave of colonisation has deposited, but on the solid foundations of our ancestral land.  We must take the opportunity of digging up that which has been buried.  We must not be afraid to rediscover our art, our culture and our political and social organizations.  Wherever possible, we must make full use of our ways to achieve our national goals.  We insist on this, despite the popular belief that the only viable means of dealing with the challenges of lack of economic development is through the efficiency of Western techniques and institutions.


99.       We should use the good that there is in the debris and deposits of colonisation, to improve, uplift and enhance the solid foundations of our own social, political and economic systems.  The undesirable aspects of Western ways and institutions should be left aside.  We recognise that some of our own institutions impose constraints on our vision of freedom, liberation and fulfilment.  These should be left buried if they cannot be reshaped for our betterment.


100.     At the heart of our feelings is the Papua New Guinean human person.  Full use should be made of the talent, skills and the abilities of our own people.  We must place an unswerving trust in papua New Guineans and their wisdom.


101.     Our insistence that development should take place primarily through Papua New Guinean ways, should not be understood in its narrow, structural sense.  What we mean is that since development is a process of growth in our people, it must take place through and in our human persons.  Our social, political, economic and religious organisations are external manifestations of our human depth.  Any development that is pursued outside our humanity is externally imposed and is inherently non-conducive to our true human development.


102.     Development must take place through our people.  It must be a process.  It must not be a prefabricated, predetermined set of answers, formulae and solutions by foreigners to the problems and hopes we alone can feel and yearn for.  Technology, scientific discoveries and institutions of the most recent times can, in many respects, be inappropriate for us.  Proper development should take place through institutions and techniques that are not only meaningful to us, but also recognize our human dignity and enhance it.


103.           Development through our ways should not be thought to involve stagnation.  Papua New Guinean ways, contrary to a commonly held view, not only of foreign citizens but of our people also, are not stagnant and closed.  Our ways have always been open to external influences.  It is this inherent openness which has enabled us to achieve so much in such short time and adapt to the new structure which has existed since Europeans first arrived here.  Our ability to cope with new demands, our ability to readjust our ancient ways to new needs, have enabled us to develop, though not in the manner which we are now



striving for.  It is this ability which is the centre of what we call "Papua New Guinean ways".


104.     This ability to accept new ways is evident in the manner in which our people are quietly accepting the demands of a modern nation.  There is the danger, however, that in so doing, we, as a people and as a nation, might become borrowers only.  There is the danger that we might discard our ways or place them in subservience.  No matter how hard we try to copy foreign ways, we will always end up being second-rate unless we make full use of our own traditions and institutions to achieve our national goals.


105.     It is inevitable that we should make intelligent use of foreign ways.  But we should do so only after we have set our national goals and priorities.  The second step is to determine and make sound use of our own resources, both human and material.  We should use foreign ways only to supplement our own resources.  This is self-reliance.  This is self-respect.  It is our way, a Papua New Guinean way.  It is a matter of our survival as a people to preserve our identity and still keep abreast of the changing times.


106.     In this goal, we seek to promote our traditional ways such as participation, consultation and consensus and a willingness of privileged persons to voluntarily forgo benefits to enable those who are less privileged to have a little more.  The example we have given earlier of the attitude of the Public Service Association to salary rises is a good example of this.  We do not claim that these values are exclusive to papua New Guineans.  However, they are inherent in our people.  Among friends, our way of life was to come to decisions by a long process of consultation and consensus.  This process is the central element of true democracy and government by common will.  This is a process which is most conducive to social harmony, co-operation and common good.


107.     This process may appear to be costly in time and in money.  It is our firm belief, however, that if these processes of true mass involvement are not undertaken by our people, then in the long run, the new political institutions which we have either inherited or which the Committee has recommended in this Report will not take root.  The result would be even more costly.  Participation should grow out of commitment.  Any commitment should grow out of an understanding fo the real needs of the people and the measures being taken to meet these needs.


108.     Consultation and consensus are inevitable where people recognise the need to depend on each other.  They are based on respect for the individual and his dignity.  Faced with real and pressing demands of one kind or another, we may despair and resort to drastic steps.  And yet, the success of our labours will ultimately depend on the extent to which the masses understand our strategies and are able to identify with these.


109.     Our colonisers have paid little regard to these values.  They imposed their "government" their democracy, their institutions and their will with little or no regard to our own values and institutions.  This way is a blatant denial of our humanity.  By their practices, they have to some extent changed the natural growth of our human development and our organizations and forced them into positions of subservience.


110.           We refer to the systems of local government we have inherited.  There can be little doubt that the effect of local governments has been, in some places, to reduce if not destroy the


power of the traditional leadership and government structure.  A serious consequence has been the division of life into things political or governmental and things economic.  Traditionally, life consisted of an integrated approach to our daily tasks.  Law and morals, religion and spirituality, economics, politics and government were practised as a single system.  In our societies there was not the word "responsibilities".  We knew only of "responsibility and authority".  Thus, whilst certain "big men" or "women" or chiefs assumed authority and responsibility, on the whole, men, women and children from a very early age assumed responsibility and authority.


111.     Now, at this juncture of our development, we can do no less than to insist that the directive principles we have enunciated above should be renewed.  We should seek to imbue all of our people with enthusiasm to work in the interests of the nation.  They should be sufficiently motivated so that they are prepared to voluntarily accept the new authority required of them by new responsibilities.


112.     Unless we revitalise those practices of participation, of consultation and consensus, and sacrifice for the common good, we are continuing the colonial process of holding our people subservient.


113.     True democracy will not work until our people in every village and hamlet accept that they cannot be free and independent unless they actually think something, say something and take action about what should happen to their own lives and those of the people of our country.  If we do not take development into our hands, we will become apathetic, disinterested, disillusioned and eventually destroyed.  We will inevitably depend on others to supply us with answers to our problems - answers which only we, ourselves, are equipped to give.


114.     We recognize our ethnic diversity and its varying forms of cultural expression as positive strengths.  Despite our apparent differences, we are united in common spirit.  All our people were deeply spiritual.  Our technological achievements are similar.  At this time, we can proudly claim that though in languages and in external forms of cultural practices we are diverse, we are, in essence, one people.  We are a "nation" within a nation, perhaps a model for a future world government.


115.     Foreigners often say, "but there are so many differences.  What are the Papua New Guinean ways"?  We recognize the legitimacy of this question.  However, it betrays a lack of appreciation of what a Papua New Guinean person is.  Our ways emphasize egalitarianism and commitment to the community.  They recognize the individual as a member of his community.  We place great stress on our obligations to our extended families.  We share our wealth.  We view life in an undivided total picture.  These ways of thinking and acting should be encouraged, even in the face of the great emphasis of Western thinking on artificial differentiation between things spiritual or sacred and things physical or profane.


116.           We see the darkness of neon lights.  We see the despair and loneliness in urban cities.  We see the alienation of man from man that is the result of the present machine orientated economy.  We see true social security and man's happiness being diminished in the name of economic progress.  We caution therefore that large-scale industries should be pursued only after very careful and thorough consideration of the likely


consequences upon the social and spiritual fabric of our people.  Great emphasis, we believe, should be given to small-scale, artisan services and business activity.  That man should live decently in conditions fitting to his dignity is an objective we cherish.  We believe that that humanity can be achieved in simplicity.  There is overwhelming evidence to suggest that a significant number of people who live by the fruits of multi-million dollar multi-national corporations live in misery, loneliness and spiritual poverty.  We believe that since we are a rural people, our strength should be essentially the land and the use of our innate artistic talents.


117.     We should not be misunderstood.  We are not here urging our people to become a nation of woodcarvers and banana-taro producers.  What we say is that secondary and tertiary industries should be pursued only to supplement and to support our primary industries.  Many of our people must, in time, become commercial entrepreneurs, capable of dealing with giant industries.  But we should proceed in that direction with caution, and ensure that, in respect of each new large-scale enterprise it is conclusively established that the net benefit of the enterprise to Papua New Guineans as a whole will far exceed the net detriment in terms of our national goals and directive principles and to our human persons.


118.     Our ways emphasize the needs of the community.  We exercise our rights in the context of our obligations to our community.  We consider our village and tribal units as our greatest elements for common care and support.  Modern corporations, companies and business houses in our country should use the "tribal spirit" to create a sense of solidarity and responsibility.  In our village and tribal units, no-one is a master and no-one a servant, no-one is an employer and no-one an employee.  Most of our societies are classless and egalitarian.  This does not mean that, in earlier times, we were lawless or that we lived in anarchy.


119.     Social obligations and customary las governed our lives.  We should redirect the government departments and the private sector to that "tribal spirit" which is and can still be vital in efficiency, maximum output and eventual fulfilment.


120.     Our rich variety in the cultural and artistic forms of expression should not be confused with our common unity.  Making use of our ways, is a living process which places it beyond question that all material development is necessary only if it enhances the inherent good in ourselves and our social, religious, political, cultural and economic forms of organization.  The fundamental premise is that we are a people.  We are a race.  We are a nation.  It is through our ways that we should grow.




  1. We are well aware that it is one thing to establish inspiring goals for the nation, and sound principles to guide the government and our people in seeking to achieve those goals, yet quite another for effective steps to be taken which are directed towards achieving those goals.  Clearly the Government of the day, as well as the people themselves, must be committed to taking the necessary action, much of which will be difficult, since it means confronting powerful vested interests and reducing their dominant position.  We have had clear evidence of this in the course of our work.  We fully realize that no Constitution can supply the necessary political will to ensure that all activities of the State and its institutions are directed towards the achievement of the goals of the nation, as we have recommended in this Chapter.  That is something which only the people and the leaders can provide.  As we make clear in Chapter 3, "The Leadership Code", we believe a heavy responsibility rests with our leaders in this regard, as they are in the best position to see clearly the way ahead, and it is they who make the crucial decisions which set the nation on its course.


    122.     It is possible, however, for a Constitution to contribute to the direction taken by the people and their government.  To the extent that this is practicable, we have tried, in our recommendations, to facilitate the implementation of the Directive Principles in this Chapter, which, in turn, are aimed at promoting the achievement of the National Goals.  Thus, our recommendation that all activities of the State and its institutions should be based on the Directive Principles and directed towards achieving the National Goals is designed to help to reorient the thinking and attitudes of everyone who is a member of an elected body or who works in a government department, institution or authority;  and to redirect the policies of those bodies towards the Goals.


    123.     Such a reorientation cannot be achieved overnight.  The slowness with which the Eight Aims are being accepted and acted upon is some evidence of this.  However, we believe that if both the people and the leaders work together to follow the Directive Principles, keeping the Goals steadily in view, there is good reason to be optimistic about the extent to which our objectives will be achieved.


    124.     Naturally, it will not always be possible to proceed in a straight line towards the achievement of the goals.  There will be times of stress and difficulty when short-term measures to deal with particular situations will be necessary.  However, everyone should still be able to keep the goals and principles in mind, and endeavour to take fresh steps towards implementing them as soon as circumstances permit.


    125.     Our third recommendation is more specific than is Recommendation 2 (to which we have just referred).  It is mainly directed to the courts and other tribunals which decide cases involving different interests.  We propose that, like other institutions of government, they be guided in carrying out their functions by the National Goals and Directive Principles.


    126.     By this we mean that the courts and other tribunals should, in interpreting the law, in the procedures they adopt for the hearing of cases, and in other aspects of their work, try to give effect to the goals and principles.  In some cases this will not be possible.  If, for example, an Act of Parliament has been passed which clearly cuts across a particular goal or principle, a court may be unable conscientiously to give any other reasonable interpretation of the provisions of the Act than that it conflicts with the goal or principle, but is nevertheless a valid law.  However, where the meaning of a particular law or rule of law is unclear or ambiguous, the courts should give an interpretation which is consistent with the goals and principles, not contrary to them.


    127.           The Committee appreciates that cases will almost certainly arise in which there will appear to be conflict between, for example, a human rights provision in the Constitution and a directive principle.  In such a case, giving a proper interpretation of the provision in question will not be an easy matter, but we do not see the duty of the court in such a


    case as being significantly different from that where a provision in an Act of Parliament appears to be contrary to a common law principle of "public policy".


    128.     We have recommended also that the Government (and here we mean all levels of government - national, provincial and local) and all institutions of government (including the universities and other educational or statutory bodies) should make specific reference to the goals and principles indicating their relevance to national policies and programs such as the Development Plan and the Budget.  Already this is being done to some extent in relation to the Eight Aims.


    129.     In a note to this Recommendation we refer to a Recommendation we have made in Chapter 5, "Human Rights and Obligations, and Emergency Powers", for the establishment of a body to review all existing legislation and policies with a view to bringing them into line with the National Goals and Directive Principles as well as with the Human Rights and Obligations recommended in that Chapter for inclusion in the Constitution.  We propose in that Chapter that this body should be the Law Reform Commission, the establishment of which Cabinet has recently approved, or a special committee comprising Papua New Guinean public servants, and perhaps politicians also, with appropriate skilled staff and possibly outside consultants.


    Investment Code


    130.     Earlier in this Chapter under the heading "National Sovereignty and Self-Reliance", we indicated our concern that unless a clear-cut policy in relation to foreign investment is spelt out and rigorously implemented there is a serious danger that our national integrity will be undermined by foreign influences.


    131.     We believe that in order to give Papua New Guinea's foreign investment policy maximum publicity and effectiveness, it should not simply be in ordinary legislation but in a schedule to the Constitution (though we do feel that it should nevertheless be as easy to change as is an ordinary law).


    132.     The Committee is aware of the arguments that foreign investment policies should not be incorporated in a law because this is too difficult to do in an explicit manner, and also because to do so would be to reduce the flexibility of approach which the government needs in this field.  We find these arguments unconvincing and consider that they seriously underestimate the political importance of spelling out for all to see, the basis on which foreign investment is acceptable in our country.


    133.     The Committee does not propose that the foreign Investment Code which it recommends should be able to be enforced in a court.  It should be treated as a set of firm guidelines which the government should adhere to except in very unusual circumstances, in which case it should justify its action by stating its reasons in parliament.


    134.           By having our country's policy on foreign investment spelt out in this way and given the force which provisions of the Constitution should have, we believe foreign investors are likely to take thee guidelines more seriously than they would do otherwise.  This is an important factor as we believe it is far better for all concerned if potential foreign investors know exactly where they stand rather than be left in a state of uncertainty because of the degree of flexibility which exists in the Government's foreign investment policy.  The Report on the Impact of Multinational Corporations on the Development Process and International Relations (referred to below as "the Report") to which we referred earlier in this Chapter, as we interpret it, implicitly supports this view.


    Contents of the Code


    135.     The great majority of the provisions in the Code we recommend already form part of existing government policies either in relation to foreign investment generally or to agreements for the exploitation of natural resources or mining agreements.  In these circumstances, our comments here are mainly directed to those provisions which do not already form part of government policy.


    Non-interference in Papua New Guinea’s affairs


    136.     The first provision we recommend is designed to protect Papua New Guinea’s national integrity and its independent foreign policy.  In particular, we propose that foreign investors be prohibited from interfering in the affairs of our country.  There have been too many Third World countries where giant foreign corporations have interfered in their political affairs, assisting and even inspiring the violent overthrow of democratically elected governments either by direct means, or indirectly through the government of the country in which they are based.


    137.     The Report, on page 28, has this to say on the issue -


                "One of the reasons the subject of multinational corporations came to world-wide attention was the exposure of an attempt by one of the largest corporations to overthrow the elected Government of a developing country (the International Telephone and Telegraph Corporation in Chile several years ago).  Such incidents are uncommon but, in a number of cases, multinational corporations have actively promoted political intervention in the domestic affairs of host, particularly developing countries..."


                "It is obvious that such intervention is incompatible with the long-term existence of multinational corporations in host countries and clearly infringes upon national sovereignty.


                Action by multinational corporations in the political field can take less direct and obvious forms.  In home countries, they may attempt to influence foreign and domestic policy by utilizing their broad financial power and their often close relationship with government cadres.  They can lobby for or against Governments of host countries, depending on whether or not they receive specially favourable terms of treatment.


                In host countries, the affiliates of multinational corporations can seek to influence government policies in undesirable ways.  Being closely connected with domestic groups favouring foreign investment, they can use their own or their parent company's resources to support particular political parties of their choice and they can rally against groups advocating social reforms."


     138.     In order to try to ensure that this type of activity does not occur, the Report recommends that host countries should clearly define the permissible public activities of the affiliates of multinational corporations (companies controlled by multinational corporations, such as Bougainville Copper Limited) and also provide for penalties for breaching the defined rules.  It further recommends that the financial contributions of multinational corporations, as well as of others, to interest groups, should be regulated and disclosed.  Our recommendations in Chapter 6, "The Legislature" deal with the latter aspect of the above recommendation in the Report and, in fact, go further in that a complete ban on contributions by any foreigner to a political party is proposed.  In Chapter 3, "The Leadership Code", we have made a number of recommendations aimed at trying to ensure that our leaders do not become involved with foreign business interests in any way, or accept any gift from such interests.


    139.     We consider there is a need for constant vigilance to ensure that these foreign corporations do not put improper pressure on our elected leaders, or bribe them in order to achieve their own ends, and these recommendations reflect this view.  The Government should certainly also give urgent consideration to the need to clearly define the limits of other public activities of foreign investors.


    140.     The type of industrial activity in which a foreign investor is involved is also an important consideration in this regard.  There is obviously a great difference between having a foreign company manufacture soft-drink on one hand and having such an enterprise enriching uranium on the other.  We believe there are significant implications for the host country's foreign policy and national integrity in the latter case.


    Investment must make important, positive contribution to national well-being


    141.     We believe that a particular foreign investment should only be acceptable if, on balance, it will make an important, positive contribution to the well-being of citizens generally, and will not have serious adverse effects on citizens in the area in which the foreign enterprise is to be located.


    142.     From the experience of people in a number of parts of the country, it is clear that people in the area in which a foreign enterprise is located can suffer very serious effects from a large operation carried out by a foreign corporation, and in any event, the benefits of the particular enterprises to our people as a whole, given the terms of the agreement made with them, are not always apparent.  Foreign investment for its own sake should be totally rejected.  Any foreign investment project must clearly provide substantial benefits for our people generally if it is to be permitted to proceed.  The disruption to the life of the people in the area of the operation and the extent to which the surrounding environment is to be affected should be regarded as of the greatest importance, and the whole project considered in light of those effects, which should be thoroughly researched before any operation is approved.


    Benefits to Papua New Guinea to be maximized


    143.           We have recommended that in respect of industries involved in the exploitation of our natural resources (which include the mining, timber and fishing industries) the benefits



    which Papua New Guinea obtains both at the national and local levels are to be at the highest level consistent with the foreign investor continuing its operation.


    144.     Natural resources are in very great demand in today's world, and countries which possess them in abundance are, we believe, in a strong position to make hard bargains with foreign investors for the exploitation of those resources.  If a particular foreign investor does not accept the terms on which we are prepared to make an agreement, we believe that we can afford to wait for another investor who is prepared to accept them, especially as our skilled manpower resources, and general capacity to absorb large-scale foreign investment, is already stretched to the limit.


    Foreign investors not to be treated more favourably than nationals


    145.     We have also recommended that foreign investors should not receive more favourable treatment from the Government than do national investors.  We believe it is quite wrong for foreign investors to be given special privileges which are not open to Papua New Guineans.  This is a reversal of proper national priorities.


    146.     Foreign investors are in a far stronger position than are our own nationals to establish themselves in new enterprises here.  They usually have a large organization behind them which has long experience in the particular industry and can provide highly skilled staff and sophisticated technology to enable the enterprise to entrench itself and begin making profits in a short space of time.


    147.     Our own people have no such advantages.  It usually takes a very long, using trial and error methods and semi-skilled staff for a Papua New Guinean enterprise to become viable.  Even then it is certain to be on a very much smaller scale than an equivalent foreign enterprise, and much less able to effectively compete with such an enterprise.


    148.     There is a good deal of evidence both here and overseas to the effect that providing tax free holidays, reduced taxes and tariffs, setting special low rates of charge for power or services do not provide commensurate benefits for the host country.  Both the Report (on Multinationals) and the recent Report to the Australian Government by Mr T M Fitzgerald on "The Contribution of the Mineral Industry to Australian welfare" confirm this.  We have noted the Government's recent decision to begin to move away from the previous policy, inherited from the colonial days, of giving preferential treatment of this kind to foreign investors.  We consider that only in the interests of decentralisation can preferential treatment be justified and, even then, we do not see why preference should be given to foreign investors as against citizens.


    Papua New Guinean Equity


    149.     We recommend that the equity of the Government and of citizens should be maximized in the case of all large-scale enterprises for the exploitation of natural resources;  that this equity should normally be as great as possible and should constitute at least a majority shareholding.  This proposed provision is in line with the resolution passed by the House of Assembly in November, 1972 in relation to mining enterprises.  We believe it should be extended to all enterprises for the exploitation of natural resources, as similar considerations apply to these other industries.


    Progressive transfer of control to Papua New Guinea


    150.     In the interests of achieving greater control of our economy, we recommend that provision be made in investment agreements for control of foreign enterprises to be progressively transferred to Papua New Guinean hands.  here are various devices by means of which this can be done, and we believe this should be a very high priority in Papua New Guinea's foreign investment policy.


    151.     The Report (on Multinationals) on page 47, refers with approval to the work of the Atlantic Community Development Group for Latin America (ADELA).  It says -


                "Formed by many corporations from a number of countries, none of which has a large share of the capital, its purpose is to engage in joint ventures with local private or public capital, and to start new industries.  It gradually relinquishes its investment once a project is well established and makes new investments with the resources thus released.  Such an arrangement has favourable effects on the balance of payments of the host country: the capital, instead of being repatriated at the conclusion of an investment, is reinvested in the country.  The technology and managerial skills which the investor provides are also switched to new fields as nationals take charge of the established industries."


    Dispute settlement


    152.     In keeping with the principle of national sovereignty, we recommend that all agreements between the Government and foreign investors should provide for disputes between these enterprises and the Government to be settled by Papua New Guinean courts in accordance with domestic laws.  The Report (on Multinationals) provides support for this position.  It says, on page 33 -


                "...once an affiliate of a multinational corporation is established in another country, home country laws should cease to govern its behaviour, and only host country laws should apply."


    153.     The Government's present investment policy in this regard is similar to this recommendation.




    1.                     "WISHING to be guided in our lives by our worthy customs and Christian principles,


                                        WE, THE PEOPLE OF PAPUA NEW GUINEA, set before ourselves these goals and principles.




















                PAPUA NEW GUINEAN WAYS













    (1)       Everyone should be involved in our endeavours to achieve integral human development and each individual should seek fulfilment in his or her contribution to the good of all.


    (2)       Education should be based on and should promote dialogue and co-operation.  It should foster integral human development and tolerance among our people and encourage among them a spirit of solidarity and interdependence.


    (3)       All forms of beneficial creativity and culture, both of individuals and groups, should be encouraged.


    (4)       Improvement of the level of nutrition and of the standard of public health is essential to enable our people to attain self-fulfilment.


    (5)       The people of Papua New Guinea should increase their awareness of, and solidarity with, the peoples of other emerging countries, with a view to the establishment of a new international economic order based on equity, sovereign equality, interdependence, common interest and co-operation to enable people everywhere to achieve full development.


    (6)       The family is the fundamental unit of Papua New Guinean society and every step should be taken to protect and promote its moral, cultural, economic and social standing.






    (1)       Every citizen should have an equal opportunity to take full part in the political, economic, social, religious and cultural life of the country.


    (2)       To provide for effective and meaningful participation by the people in their own development, a structure conducive to such participation must be evolved.  In view of the diverse nature of Papua New Guinea and its peoples, that structure must provide for substantial political, economic and administrative decentralisation.


    (3)       Every effort should be made to achieve equalisation of incomes and equal distribution of the benefits of development among individuals and different areas of the country.


    (4)       Every citizen should have equal and effective access to all governmental services and legal processes.  Therefore, strong emphasis should be placed on equalisation of services among different areas of the country.


    (5)       Women should be able to participate equally in all social, political, religious and economic activities.


    (6)       The number of citizens participating in every aspect of development should be maximised.


    (7)       The organisation and legal recognition of all groups engaging in development activities should be facilitated.


    (8)       No citizen should be deprived of the opportunity to perform any task that is beneficial and that he or she does well and, in particular, no citizen should be deprived of such an opportunity because of the predominance of another.


    (9)       Every citizen should be able to participate, either directly or through a representative, in the consideration of any matter affecting his interests or the interests of his community.


    (10)     The State should, as far as possible, ensure that official bodies are so composed as to be broadly representative of citizens from the various areas of the nation.


    (11)     The State should endeavour to achieve literacy in Pisin, Hiri Motu or English, and in "tok ples" or "ita eda tano gado".


    (12)     Marriage rests on the equality of the rights and duties of both spouses and responsible parenthood is based on that equality.






    (1)       Leaders should be committed to the National Goals and should ensure that they are always able to freely make decisions in the national interest.


    (2)       The government should be responsible for the planning of social and economic development, based on principles of social justice, in the best interests of all Papua New Guineans.


    (3)       Internal interdependence and solidarity among citizens and between provinces should be vigorously promoted.


    (4)       The bulk of commercial enterprise and production should be controlled by citizens and the government.


    (5)       The entry and use of foreign investment capital must be subordinate to the goal of national sovereignty and self-reliance and, in particular, be geared to internal social and economic policies, and to the integrity of the nation and its people.


    (6)       The government should take strong and effective measures to control and actively participate in the national economy and especially to control major enterprises engaged in the exploitation of natural resources.


    (7)       Economic development should conform to the skills and resources that can be provided at any given time by citizens and by the government.


    (8)       Papua New Guinea's sovereignty must not be undermined by political, economic or military dependence on foreign countries or foreign capital.  In particular, no investment, military or foreign aid agreement or understanding should be entered into that imperils the self-reliance and self-respect of the people and state of Papua New Guinea, or their commitment to these national goals and directive principles, or which may lead to substantial dependence upon or influence by any single country, investor, lender or donor (or any group of countries, investors, lenders or donors).






    (1)     The natural resources including land, forests, birds, animals, fish, water, sea, air and minerals should be used wisely in the interest of the integral development of all citizens throughout Papua New Guinea.


    (2)     The environment and its sacred, scenic and historical qualities should be conserved and replenished for the benefit of posterity.


                PAPUA NEW GUINEAN WAYS




    (1)   To achieve our goals, there must be a fundamental re-orientation of the institutions of government, commerce, education and religion towards Papua New Guinean forms of participation, consultation and consensus.  This re-orientation should be combined with a continuous renewal of the


    responsiveness of these institutions to the people, and a willingness on the part of those adversely affected by these changes to forgo disproportionate benefits for the good of all.


    (2)     In economic development particular emphasis should be placed on small-scale artisan, service and business activity.


    (3)     The cultural, communal and ethnic diversity of our peoples is recognized as a positive strength.  There should be fostered a respect and appreciation for traditional ways of life and culture - including language - in all their richness and variety and a willingness to apply these ways dynamically and creatively for the tasks of development.


    (4)     Traditional villages and communities should exist as viable units of Papua New Guinea and every step should be taken to improve their cultural, social, economic and moral quality.




    2.         All activities of the State and its institutions should be based on the directive principles and directed towards achieving the National Goals set out in this chapter.


    3.         The goals and principles as a guide in judicial interpretation


    (1)        All courts and other adjudicatory tribunals shall be guided in the exercise of their functions by the National Goals and Directive Principles.


    (2)        Except to the extent provided for in this recommendation, the National Goals and Directive Principles shall not be directly justiciable.  However, these goals and principles should not be regarded by any court, other adjudicatory tribunal or institution of government as being of less weight than other directly justiciable provisions.


    (3)        Government (including institutions of Government) should make specific reference to the National Goals and Directive Principles indicating their relevance to national policies and programmes such as the Development Plan and the Budget.


    Note:   (i)         To exemplify the manner in which Clause (1) of this recommendation is intended to be applied as an aid to interpretation, we envisage that where the meaning of a constitutional provision is in question, or there is doubt as to the constitutional validity of any law or administrative action, or there is ambiguity in any law, or no particular law or principle of law appears to apply to the circumstances involved in any matter before a court, the court will give an interpretation which is consistent with the National Goals and Directive Principles rather than an alternative interpretation.


    (ii)        In Part 1 of Chapter 5, Human Rights and Obligations, the Committee has recommended that the proposed Law Reform Commission, or another body comprising Papua New Guinean public servants, and possibly politicians also, with appropriate skilled staff, and outside consultants (if needed), be established to review all existing legislation and policies with a view to achieving their conformity with the National Goals and Directive Principles in this chapter and the Human Rights and Obligations in Chapter 5.


    4.         Investment Code


                An Investment Code as set out in the schedule to this Report shall be included in the Constitution in the form of a schedule.


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