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A good piece looking at testing out the key premise of the famous Harris-Todaro two sector model versus the available data. You might want to also check out the report on the National Audit of the Informal Economy. I was involved in the exercise. It provided a comprehensive up to date analysis of the PNG's informal economy. The study was funded by the PNG Government with assistance from the EU and UNWOMEN. Unfortunately a lot of the recommendations in the report are still yet to be implemented. The following are some of the key findings which will be of interest on the subject of this blog. 1) How big is the informal economy? This can be looked at in a number of ways. Looking at the average turnover and the number of enterprises involved, it seems likely that the informal economy is currently worth around PNGK 12 billion per year, around 20% of Gross National Development Product (GNDP). However if the mining sector is taken out of the calculations it is closer to 30%. Then if the agricultural produce that is currently excluded from the cash economy is added, the informal economy is worth about 60% of non-resource GNDP. It is also possible to measure the size of the informal economy in terms of the number of workers. Based on the audit findings it seems that over 80% of working adults are employed in the informal economy. However the audit shows that even those who have wage employment in the formal sector are heavily involved in the informal economy after hours, so it likely that the informal economy provides around 90% of incomes to local households. 2) What are the component activities? It is notable that a large proportion of vendors sell betel nut, sometimes in combination with other goods. Betel nut presents a management challenge within PNG’s urban areas, arising from dental health as well as broader environmental health considerations. However, removal of this form of trade would obviously create great economic hardship. Many workers in the informal or formal economy have more than one source of income, and apart from trade there is involvement in backyard food production as well as letting out rooms. A surprising finding from the research to date is the extent of informal money lending carried out by informal economy workers, involving up to 23% of workers (in Port Moresby) as a main or secondary activity. This involves some lending to formal sector workers in between pay days. The interest rates are very high - commonly 50% per fortnight - but there are also huge risks that debts will not be repaid. Those in the informal economy work long hours, commonly more than 45 hours per week. 3) Who is involved? Over 20% of workers in the informal economy have previously worked in the formal economy. The movement from the formal into the informal economy seems to be largely a matter of choice, with the attraction being better potential earnings as well as more regular (daily) earnings. The phone survey indicates that many workers in the formal economy also work in the informal economy to earn additional income 4) What resources are used? Another surprising result is that a major part of informal economy activity takes place in residential areas: within the house or the backyard, on in the street. The exception is in East New Britain where local regulations restrict this activity, and where coincidentally recorded incomes are lowest. The economic activity that takes place within residential areas is important for economic survival and has implications for settlement planning as well as regulation The audit findings suggest that markets only account for around 10% of workers in the major urban areas, though they are more dominant in most other localities. Comments suggest that more vendors would like to work in markets, where they consider they could earn more, but many markets are already crowded beyond capacity. This is limiting their economic performance as well as the wellbeing of the workers. The cost of doing business seems to be increasing over time as transport and fuel costs rise and higher fees are charged for some workspaces. Access to wholesale goods is also becoming increasingly chaotic in the larger urban centres, with resulting instability as well as escalation in pricing. 5) What are the outcomes for households? Net profits appear to be in the region of PNGK 300-500 per week which is more than double the minimum wage in the formal sector. However, while the earnings from individual enterprises appear to have increased, the involvement of “unpaid helpers” means that these incomes are spread over a number of people. Men working in markets appear to earn more than women, but this does not apply to workers in residential areas. Check out the link for more information on the survey: https://inapng.com/wp-content/uploads/2024/02/National-Audit-of-the-Informal-Economy_Main-doc.pdf

I'm interested. When is the next recruitment??

Naomi, brilliant. Inspirational.

Always enjoy your writings!

You are right, Celsus.

Hi Dominique, really glad to hear it resonated with you!

Thank you for your post. They are spot on and confirmed my own experience with SIDS even a successful one in attracting finance such as Seychelles. I would love to catch up with the authors either in Canberra or online.

The fact that PNGDF isn't given the amount of privileges in Australia which ADF will enjoy here in PNG has all the hallmark of neo-colonialism. If the treaty is challenged in court as Michael has mentioned, I'm of the view that the argument will revolve around 'infringement of PNGs sovereignty.' It might end before it begin, or follow the same path as how the AFP were kicked out last time. On the bright side, PNGDF needs capacity building, not to mention the infrastructures that will remain with us in future in the event that the treaty is repelled.

Thank you. Yes, that's the main idea. To draw attention from leaders in that area and the PNG Govt to address service delivery in Polopa.

Michael Kabuni’s recent analysis of the Pukpuk Defence Treaty raises important questions about sovereignty, militarisation, and Australia’s strategic intent. His warning—that the treaty could backfire—deserves serious reflection. But it must now be answered from a citizen-centred position that recognises both the National Government’s authority over foreign policy and the citizens’ right to accountable implementation. The real issue is not whether PNG should engage with Australia, but "how those engagements are governed" once signed. 1 Respect for the National Mandate Foreign policy is the constitutional prerogative of the National Government. Papua New Guinea cannot and should not fragment its international voice. Prime Minister Marape and the National Executive Council have the lawful authority to negotiate and sign treaties. Citizens must respect that sovereignty. Yet signature is only the first act of governance. The daily work of translating any treaty into budgets, contracts, and projects falls to public officials—national and provincial—and this is where history shows our failures. 2 Where Past Agreements Went Wrong Manus Province knows this story too well. During the ANZUS era, Lombrum was traded for access without benefit to locals. Decades later, the Regional Processing Centre again turned Manus into a host site rather than a partner. Money flowed, but accountability evaporated. Provincial businesses were excluded, and the promised development legacy vanished. The problem was not foreign partnership itself—it was the **absence of enforceable governance mechanisms** binding our own officials to transparent performance. 3 The People’s Expectation: Justiciable Accountability The Pukpuk Treaty must therefore be implemented under rules that make every official—appointed or elected, national or provincial— "justiciable" for performance. The Constitution’s Eight Point Plan, the National Goals and Directive Principles, and the Basic Social Obligations give moral direction, but they are not enforceable in court. That gap between moral duty and legal accountability is where public trust is lost and corruption grows. Closing that gap is now essential. Performance-Based Contracts under the "General Orders" already exist. They set Key Performance Indicators for departmental heads, CEOs, and administrators. But those indicators rarely include treaty-specific obligations such as: - timely publication of procurement information; - compliance with local-content requirements; - adherence to environmental and social safeguards; and - transparent reporting of counterpart funding. Every official whose work touches the Pukpuk Treaty must have these duties written into their contracts and reviewed quarterly. Failure should trigger sanctions under the "Leadership Code" and the "Public Services Management Act." 4 Provincial Integration—Especially for Manus The "Organic Law on Provincial and Local-Level Governments" gives provinces clear legislative powers over trade, industry, and local economic development. Those powers do not challenge the National Government’s foreign-policy role; they complement it by ensuring that implementation on provincial soil benefits the people who live there. Manus therefore has both the right and the responsibility to establish instruments such as: A Manus Development Corporation (MDC): a provincial commercial arm to hold equity and negotiate joint ventures. The Provincial Procurement and Partnership Board (PPPB): a gatekeeper to certify local-content compliance before any contract above K2 million is approved. A Local Partnership Protocol (LPP): binding all contractors to hire, train, and purchase locally, and to contribute to a community infrastructure fund. Embedding these mechanisms inside the treaty’s implementation schedule does not weaken national sovereignty; it strengthens it by distributing responsibility. This is "governance for the people by the people." 5 From Secrecy to Transparency Kabuni is correct that the treaty has been discussed largely among elites. That must change. The principle should be simple: "no agreement that affects citizens should be implemented in the shadows." Every contract signed under the treaty should be uploaded to an "Open Contracting Portal" accessible to all Papua New Guineans. Payment certificates must be tied to quarterly performance reports published on that portal. “No Portal, No Pay” should become a rule across government. The Auditor-General and Ombudsman Commission must be mandated to audit and investigate treaty-related expenditure annually. Their findings should be tabled before Parliament and the Provincial Assembly. This transforms public oversight from sentiment to structure. 6 The Role of Citizens Citizens are not spectators in foreign policy. Our taxes, land, and resources sustain these partnerships. We must understand that "sovereignty is shared work"—the National Government signs, the provinces operationalise, and the people monitor co-creation. Civic organisations, churches, and youth groups in Manus and other provinces should use public data to track: - Self-employment numbers of local residents; - value of contracts awarded to local firms; - delivery of promised community projects; and - compliance with environmental obligations. When citizens are informed, manipulation loses its grip. 7 Avoiding the Trap of Sentiment Some voices frame the Pukpuk Treaty only through fear—fear of Australia’s influence, fear of militarisation, fear of loss of independence. These concerns are real, but they must not become paralysis. The danger is not partnership; it is poor governance. A treaty built on transparency and measurable accountability will not backfire. A treaty executed in secrecy and self-interest will. The difference lies entirely in our own systems of implementation. 8 Defining “Governance for the People, by the People” Governance for the people means that every kina spent and every commitment made under the treaty can be traced to a public outcome: self-employment opportunities, training, or infrastructure that improves lives. Governance by the people means that provincial institutions, local leaders, and civil society are not passive recipients but active participants in decision-making and monitoring. When the National Government negotiates in Canberra, it speaks for PNG. When the treaty is executed in Lorengau or Lae, it must perform for Papua New Guineans. That is the bridge between authority and accountability. 9 The Way Forward 1. Align Performance Contracts: All officers linked to treaty implementation must have KPIs on transparency, local participation, and fiscal discipline. 2. Enforce the Leadership Code: Any misuse of authority or conflict of interest in treaty projects must trigger immediate investigation. 3. Legislate Transparency: Mandate the Open Contracting Portal and annual audit publication. 4. Empower Provinces: Adopt by-laws establishing MDCs and PPPBs to operationalise local benefits. 5. Educate Citizens: Launch civic programmes explaining the treaty’s purpose, rights, and oversight channels. The Pukpuk Treaty is not, in itself, the threat. The risk lies in whether our officials and institutions apply the same discipline to implementation that our soldiers apply to defence. PNG’s strength will not be measured by the number of foreign ships in its harbours but by the honesty and efficiency of the officers managing those agreements. Thank you Michael Kabuni for his caution, but move the debate from fear to function. The National Government holds the constitutional pen; the people hold the moral ledger. Every official—national or provincial—must now be judged by the same standard: performance, transparency, and loyalty to the citizens they serve. That is how sovereignty becomes real. That is governance for the people, by the people - The Manusian Way.

The treaty have both positive and negative outcomes that we will soon encounter . Australia may be concern about its border corridors, but that does not mean we sign this treaty. Australia and PNG have been together for a for a centaury since Australia's Independence in 1901. Australia and PNG are naturally allied! This defense agreement is a treat to PNGs economic growth and security itself. In case of a conflict, Australia will surely use PNG because of this defense agreement. Australia achieve is agenda, so lets wait and see Chinas agenda!

I concur this observation.