PNG treasurer's criticism of PM indicates protracted, electorally driven political conflict and reduced government stability

Papua New Guinea's prime minister Peter O'Neill speaks to the media during a press conference in Port Moresby on 8 April.

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On 31 March, Treasurer Patrick Pruaitch criticised the Papua New Guinea government's economic management, stating that Prime Minister Peter O'Neill was responsible for government overspending. Pruiatch said that total government debt has reached USD6.6 billion, an increase from previous government estimates made in January 2017, which placed the debt at USD5.9 billion. The debt-to-GDP ratio is now estimated to be 32.6%, exceeding the 30% limit imposed by the Fiscal Responsibility Act. Although a senior member of the ruling coalition, Pruaitch is the leader of the National Alliance Party, and his decision to criticise O'Neill is likely to have been intended to build his own profile ahead of the election.

Economic issues will be central to the upcoming elections. PNG continues to benefit from a wealth of natural resources, including copper, gold, and other minerals, as well as oil and gas. The government receives a large share of revenue from the extractive industry, which has contributed to the country's GDP rising sharply from USD4.6 billion in 2002 to USD22.0 billion in 2014, according to IHS Markit. However, the contrast between the large revenues from the extractive industry and the failure of the national and local governments to provide improvements in infrastructure and service delivery has contributed to a fractious atmosphere ahead of the 2017 election. The government's decision to cut spending on healthcare and education provoked widespread public opposition during 2016.

Papua New Guinea will hold national and local government elections between 24 June and 8 July. The newly elected parliamentarians will then vote to elect the next prime minister. Ahead of and throughout the elections, there is a high risk of violence catalysed by the heightened political contestation. In certain areas, such as the Highlands, tactics to secure votes can include ghost voting, underage voting, intimidation, and coercion. Violence is also likely to occur in areas where resource development is taking place, including commercial or mining sites in rural areas. In the 2002 elections, significant levels of violence were recorded throughout the country, including threats, intimidation and the hijacking and destruction of ballot boxes.

The violence is unlikely to become widespread, in part due to the efforts of the PNG Defence Force (PNGDF). According to IHS Markit sources, the PNGDF will be deployed from April to July during the election process to provide logistical support to the Royal Papua New Guinea Constabulary (RPNGC), and then again at the end of August in areas where there is a high risk of retributive violence following the announcement of results. The PNGDF benefits from significant support from Australia, which provided support to the RPNGC to help ensure security during the 2007 and 2012 elections. Key to this support are two Bell 212 light utility helicopters leased from the Australian government, Balikpapan-class heavy landing craft, and four Pacific-class patrol boats. One of the PNGDF's primary tasks will be to provide logistical support. With its two helicopters, it will patrol the border between Indonesia and PNG to attempt to limit the smuggling of weapons. It will also co-ordinate with the RPNGC to assist in the logistics of transporting ballot boxes and electoral commission officials safely to the remote areas of the country, whether in the Highlands by helicopter and four-wheel drive convoys or around the small islets with PNGDF patrol boats and landing craft.

Outlook and implications

Government stability will be reduced by the electoral process, especially as politicians are likely to dispute the results, and may engage in protracted legal challenges. This means that government processes, such as the approval of mining licences, may face delays during the period while the government is in flux.

Despite the allegations against O'Neill, he appears well-positioned to be re-elected, particularly given his repeatedly demonstrated ability to form coalitions and secure the support of independent MPs. If O'Neill does stay on, this would be only the second time since the country's independence that a serving prime minister has returned to the position in consecutive elections. However, if O'Neill does retain power, public discontent is likely to increase. As such, during his second term there would be increased risk of social unrest in Port Moresby and other large towns, as well as in rural areas.

However, O'Neill's re-election would also provide a basic measure of policy and government stability. In particular, O'Neill has been largely support of the extractive industry, and such an approach would be likely to continue. If opposition leader Don Polye were to be elected, this may signal greater spending on social services alongside heightened efforts to address corruption. However, Polye was previously a senior member of O'Neill's government from 2011 to 2014, and he would also be likely to continue the PNG government's pro-business attitude toward foreign investment.