The infrastructure honey pot will leave only a happy few with sticky hands

Prime Minister O’Neill has committed his government to another round of big spending in order to “improve” national highways, telecommunications and power supply. 

At face level, this policy statement has domestic and international appeal.

Domestically remote communities, and businesses alike, suffer increased costs owing to poor transport corridors, and underperforming information-technology infrastructure.

Internationally we have witnessed major donors like Australia, shift emphasis from frontline services to infrastructure, arguing it will create the engine for economic growth, thus amplifying national wealth, with a presumed (and questionable!) trickle down effect.

But this is all economic ‘theory’ violently torn from the political reality of the nation. In the absence of a major transformation in procurement, fiscal management, transparency and oversight, this next wave of state spending will face a number of barriers preventing economic theory from turning into lived reality:

• There will be an absence of serious cost-benefit analysis of proposed infrastructure, that would meet international standards of rigour. As a result, significant sums will potentially be invested in infrastructure that fails to deliver promised levels of growth.
• Infrastructure will potentially be used to pork-barrel certain electorates.
• The cost of infrastructure projects will balloon owing to a culture of kickbacks and rigged awards.
• Infrastructure will not be monitored to ensure it is of adequate quality.
• Funding for long-term maintenance will not be secured.

We have also documented here on PNGi the significant conflict of interest infrastructure spending has triggered in the past, owing to the stake which the Prime Minister and his business partners have had in the construction sector.

For instance, when Prime Minister O’Neill owned Wild Cat Developments Limited it won, or was awarded, a wide range of infrastructure contracts, leading to enormous growth in the company’s fortunes, before it was sold to the wealthy Australian businessman, Sir Theophilus Constantinou. We have also pointed to the profits accrued by O’Neill’s close business partners the Cragnolinis as a result of his government’s infrastructure policy.

Of course, it is impossible to comment on the legality of these awards, as there is no online tender system, documenting the award and contract process; nor is the Auditor General’s Office in a state where it can provide rapid oversight of such spending.

Which is another danger. In the absence of any public tender database, it is difficult for any external oversight to be brought to bear on the new wave of infrastructure spending.

There is no doubt public spending on infrastructure will boost corporate profits for a select few, it is much less likely it will trigger broad based economic growth.