Blog posts tagged with 'pt mag 9'

“Never waste a good crisis,” is a quote often wrongly attributed to Winston Churchill. In fact, it was Rahm Emanuel, chief of staff to former US president Barack Obama, who said it – about the global financial crisis. “You never want a serious crisis to go to waste,” he told a Wall Street Journal forum in 2008. “And what I mean by that is, it’s an opportunity to do things you think you could not do before.”

For at least 12 months, COVID recovery plans have been trending. Every business, government and NGO has tried to think up ways that their services, markets, customers, staff, clients and donors can use the pandemic-induced crisis to become better. 
This publication has already canvassed several COVID-related recovery assessments. These were perhaps premature – the pandemic has only recently arrived on some countries’ shores and is yet to transmit to others – surely reopening, recovery and rebuilding are thoughts for later, beyond the duration of the current crises.

Yet, charting a course to the future helps us in the present. We at Pacific Tenders plan to run a four-part series on the effects of the pandemic on the Pacific and what that post-pandemic future could look like. We’ll focus on different aspects of how the crisis affects our lives – economic, social (including health), political (government, legislation), and human (education, training).
Why is everyone talking about resilience?

Another trend is the use of ‘resilience’ to increase interest in everything from foreign aid packages, to hardware and equipment, to policy and training courses (and perhaps magazine articles!). Resilience is attractive. It’s a noble trait. It implies strength in adversity, courage to hold fast to values, depth to withstand shocks and pressure. It carries the sense that we grow stronger from a crisis, so that next time, we’re ready.

While donor conferences and forums promote new buzzword concepts such as green growth, the blue economy, resilient development and inclusive growth, my observation is that Pacific people have an under-appreciated existing and historical reservoir of resilience. Pacific islands and their inhabitants are not essentially or inherently vulnerable. Whilst they have always been exposed to environmental shocks, many countries which are now classified as ‘small island developing states’ (SIDS), were traditionally sites of resilience.

Previously strong inter-island relationships have been replaced with the idea and labels of remoteness, vulnerability, weakness and ‘least developed countries’ (LDCs). LDCs apparently need to ‘graduate’ to be ‘medium developed countries’ (MDCs), by meeting a range of complex criteria and performance standards, qualifying them for non-concessional finance, amongst other privileges. This counterintuitively incentivises countries to remain as LDCs. The terminology dismisses the value of national culture, natural wealth and resilience as a people. 

Instead of continuing to accept the labels of SIDS and LDCs, the COVID crisis has created an opportunity for Pacific Island countries to develop an interdependent sovereignty. This is not built on false hopes of latent economic strength, or heroically ‘taking our country back,’ but on sound and consistent strategy. This four-part Pacific Tenders series will present the situation and opportunity before us.

Part 1: Economic resilienceCOVID-19 just the start
Forget COVID for a minute - Pacific island countries had issues before COVID-19. And the crises won’t stop with COVID-19 – Solomon Islands faced internal unrest in November 2021; Tonga suffered the impacts of a volcano and tsunami in January 2022. Both are now dealing with their first community transmission covid outbreaks. 

And COVID-19 will not be the last challenge the Pacific Islands face. The threat of cyclones and earthquakes is ever-present. The looming reality of climate-change induced sea level rise may present liveability and livelihood challenges sooner than we think. Grabbing no headlines, but no less critical, is the challenge of updating and applying new building codes, specifications and testing standards to meet the impacts of a changing climate and material sources.

As well as ecological fragility, economic vulnerability is set up by popular labelling such as ‘smallness’, the remoteness effects on trade and a narrow reliance on bilateral donors. Donor mantras talk up infrastructure as the key to “reconnecting people, supporting improved health and sanitation outcomes, and stimulating economic activity and jobs.” While this is true, the pathway to providing and sustaining infrastructure in the Pacific will be different to other places. 
The question is – how can we leverage our advantages and strengths while increasing economic and political sovereignty? Asking and answering that question is an exercise in resilience.
Where will it bite?

The economic impacts of COVID-19 in the Pacific have been as varied as in other parts of the world. Some have lost livelihoods, some have lost income, some have lost loved ones, some have lost all three. In the crisis phase, there are very few ‘winners’. 

Considering a spectrum of models and forecasts can help develop a likely picture. In January 2022, the International Monetary Fund (IMF) predicted that, “Global growth is expected to moderate from 5.9 in 2021 to 4.4 percent in 2022” primarily due to tightening monetary policy and supply shortages in the US and China. It is expected to slow further to 3.8 percent in 2023. It is worth noting that for so-called “low-income developing countries”, the slowing trend is reversed – up from 3.1 to 5.3 to 5.5 percent for 2021-2023.

Drilling into figures for the Asia-Pacific region, in December 2021, the Asian Development Bank (ADB) were forecasting growth of 7.0% in 2021 and 5.3% in 2022, though these figures are still skewed by the inclusion of China’s economy.
ADB’s forecast for the Pacific is for 0.6% contraction in 2021 and growth of 4.7% in 2022 – the strong rebound expected as COVID-19 outbreaks subside. Many infrastructure projects have been delayed by COVID, weighing on growth prospects. Unfortunately, inflation is also expected to be at around 3.5% in 2022.

Private sector and government take note – the short-term trend is for growth. The backlog of infrastructure projects should then sustain this further into the future. This will provide employment, as well as new infrastructure assets, which, if well planned, will support economic growth. Businesses respond to certainty and will respond positively to firm and substantiated plans. Expansion of trade and broadening the tax base should be allied to growth plans. 
Walk the talk

Economic and political sovereignty is not about going it alone. It’s not about shunning long-term partners. It’s about leading the conversation on priorities. Many Pacific countries do this well. Vanuatu’s upgrade of the main road network in Port Vila and the two international airports’ runways demonstrate this. Solomon Islands’ attraction of investments into ports, undersea cables and transport network upgrades demonstrate this.
An increase in sovereignty will come as the need to source foreign funds and expertise for investments and polices reduces over time. If money, materials and expertise are always forthcoming, no local sources will spawn or grow. Foreign funds come with strings (implicit or explicit) attached – these can be beneficial, but they can also reduce sovereignty. Policy settings need to find the balance between constraining foreign funding without dampening economic growth. This will encourage national businesses at all levels. 

If rebounding from COVID-19 is an opportunity to do things you think you could not do before, then this crisis will not be wasted. Sovereignty over borders kept COVID at bay in many Pacific countries and saved lives. Applying this selectivity over the investments that enter Pacific countries will enhance economic resilience.

PT Columnist- David Spring, Melbourne

“Never waste a good crisis,” is a quote often wrongly attributed to Winston Churchill. In fact, it was Rahm Emanuel, chief of staff to former US president Barack Obama, who said it – about the global financial crisis. “You never want a serious crisis to go to waste,” he told a Wall Street Journal forum in 2008. “And what I mean by that is, it’s an opportunity to do things you think you could not do before.”

For at least 12 months, COVID recovery plans have been trending. Every business, government and NGO has tried to think up ways that their services, markets, customers, staff, clients and donors can use the pandemic-induced crisis to become better.

This publication has already canvassed several COVID-related recovery assessments. These were perhaps premature – the pandemic has only recently arrived on some countries’ shores and is yet to transmit to others – surely reopening, recovery and rebuilding are thoughts for later, beyond the duration of the current crises.

Yet, charting a course to the future helps us in the present. We at Pacific Tenders plan to run a four-part series on the effects of the pandemic on the Pacific and what that post-pandemic future could look like. We’ll focus on different aspects of how the crisis affects our lives – economic, social (including health), political (government, legislation), and human (education, training).

Why is everyone talking about resilience?

Another trend is the use of ‘resilience’ to increase interest in everything from foreign aid packages, to hardware and equipment, to policy and training courses (and perhaps magazine articles!). Resilience is attractive. It’s a noble trait. It implies strength in adversity, courage to hold fast to values, depth to withstand shocks and pressure. It carries the sense that we grow stronger from a crisis, so that next time, we’re ready.

While donor conferences and forums promote new buzzword concepts such as green growth, the blue economy, resilient development and inclusive growth, my observation is that Pacific people have an under-appreciated existing and historical reservoir of resilience. Pacific islands and their inhabitants are not essentially or inherently vulnerable. Whilst they have always been exposed to environmental shocks, many countries which are now classified as ‘small island developing states’ (SIDS), were traditionally sites of resilience.

Previously strong inter-island relationships have been replaced with the idea and labels of remoteness, vulnerability, weakness and ‘least developed countries’ (LDCs). LDCs apparently need to ‘graduate’ to be ‘medium developed countries’ (MDCs), by meeting a range of complex criteria and performance standards, qualifying them for non-concessional finance, amongst other privileges.

This counterintuitively incentivises countries to remain as LDCs. The terminology dismisses the value of national culture, natural wealth and resilience as a people.

Instead of continuing to accept the labels of SIDS and LDCs, the COVID crisis has created an opportunity for Pacific Island countries to develop an interdependent sovereignty. This is not built on false hopes of latent economic strength, or heroically ‘taking our country back,’ but on sound and consistent strategy. This four-part Pacific Tenders series will present the situation and opportunity before us.

Part 1: Economic resilience

COVID-19 just the start

Forget COVID for a minute - Pacific Island countries had issues before COVID-19. And the crises won’t stop with COVID-19 – Solomon Islands faced internal unrest in November 2021; Tonga suffered the impacts of a volcano and tsunami in January 2022. Both are now dealing with their first community transmission covid outbreaks.

And COVID-19 will not be the last challenge the Pacific Islands face. The threat of cyclones and earthquakes is ever-present. The looming reality of climate-change induced sea level rise may present liveability and livelihood challenges sooner than we think. Grabbing no headlines, but no less critical, is the challenge of updating and applying new building codes, specifications and testing standards to meet the impacts of a changing climate and material sources.

As well as ecological fragility, economic vulnerability is set up by popular labelling such as ‘smallness’, the remoteness effects on trade and a narrow reliance on bilateral donors. Donor mantras talk up infrastructure as the key to “reconnecting people, supporting improved health and sanitation outcomes, and stimulating economic activity and jobs.” While this is true, the pathway to providing and sustaining infrastructure in the Pacific will be different to other places.

The question is – how can we leverage our advantages and strengths while increasing economic and political sovereignty? Asking and answering that question is an exercise in resilience.

Where will it bite?

The economic impacts of COVID-19 in the Pacific have been as varied as in other parts of the world. Some have lost livelihoods, some have lost income, some have lost loved ones, some have lost all three. In the crisis phase, there are very few ‘winners’.

Considering a spectrum of models and forecasts can help develop a likely picture. In January 2022, the International Monetary Fund (IMF) predicted that, “Global growth is expected to moderate from 5.9 in 2021 to 4.4 percent in 2022” primarily due to tightening monetary policy and supply shortages in the US and China. It is expected to slow further to 3.8 percent in 2023. It is worth noting that for so-called “low-income developing countries”, the slowing trend is reversed – up from 3.1 to 5.3 to 5.5 percent for 2021-2023.

Drilling into figures for the Asia-Pacific region, in December 2021, the Asian Development Bank (ADB) were forecasting growth of 7.0% in 2021 and 5.3% in 2022, though these figures are still skewed by the inclusion of China’s economy.

ADB’s forecast for the Pacific is for 0.6% contraction in 2021 and growth of 4.7% in 2022 – the strong rebound expected as COVID-19 outbreaks subside. Many infrastructure projects have been delayed by COVID, weighing on growth prospects. Unfortunately, inflation is also expected to be at around 3.5% in 2022.

Private sector and government take note – the short-term trend is for growth. The backlog of infrastructure projects should then sustain this further into the future. This will provide employment, as well as new infrastructure assets, which, if well planned, will support economic growth. Businesses respond to certainty and will respond positively to firm and substantiated plans. Expansion of trade and broadening the tax base should be allied to growth plans.

 Walk the talk

Economic and political sovereignty is not about going it alone. It’s not about shunning long-term partners. It’s about leading the conversation on priorities. Many Pacific countries do this well. Vanuatu’s upgrade of the main road network in Port Vila and the two international airports’ runways demonstrate this. Solomon Islands’ attraction of investments into ports, undersea cables and transport network upgrades demonstrate this.

An increase in sovereignty will come as the need to source foreign funds and expertise for investments and polices reduces over time. If money, materials and expertise are always forthcoming, no local sources will spawn or grow. Foreign funds come with strings (implicit or explicit) attached – these can be beneficial, but they can also reduce sovereignty. Policy settings need to find the balance between constraining foreign funding without dampening economic growth. This will encourage national businesses at all levels.

If rebounding from COVID-19 is an opportunity to do things you think you could not do before, then this crisis will not be wasted. Sovereignty over borders kept COVID at bay in many Pacific countries and saved lives. Applying this selectivity over the investments that enter Pacific countries will enhance economic resilience.

(Honiara International Port (photo credit: Solomon Islands Ports Authority)

(PT Columnist, David Jacobs Spring, Melbourne) 

Those who work in the Pacific know the predicament of attempting to make scant data look robust. The Pacific Infrastructure Maintenance Benchmarking Report, launched in February 2022 by the Pacific Region Infrastructure Facility (PRIF), is a case study of this quandary.

The aim of the report is modest – to “raise the profile of infrastructure maintenance.” No doubt it has already achieved this, through the engagement of the various authorities and ministries in the self-assessments which form the raw data for the study. By launching and further presenting the report, the profile of infrastructure maintenance will again be promoted.

The report attempts to analyse the current level of ‘maturity’ of maintenance planning, funding and practices in the Pacific against an objective standard. It does this by selectively choosing from three international standards, then collecting data on 37 measures from voluntary respondents to surveys, sent out by the authors. The results are aggregated to draw conclusions and a series of recommendations for further studies, national governments and donors. These are grouped under three themes: accounting, planning and budgeting, and funding capital maintenance. The common thrust is apparent.

The report tacitly acknowledges the difficulty of their undertaking. The phrases,” studies have validated”, “it is accepted” and “experience tells us that” are indicative of the scarcity of available historical data or relevant studies into infrastructure maintenance in the Pacific.

The study was conducted during the COVID-19 pandemic, which no doubt made primary, in-country data difficult to obtain. Data collection was presumably limited to remote sources, which is a hindrance to effective engagement in the Pacific.

What the report accomplishes

The great strength of the report is in the development of a maintenance maturity assessment tool. Drawing on elements of three international assessment frameworks, the authors derive their own tool, one well suited to the infrastructure challenges faced in the Pacific region. While the framework is recognisably a developed nation style construct - taking a universal approach to definitions, aspirations and requirements - its value will be the opportunity it presents for long term benchmarking.

The report draws on a bank of reports into the various sectors over the past decade. Some of these reports are familiar within the industry and ministries, for example, the National Infrastructure Investment Plans (NIIPs), Medium-Term Expenditure Framework (MTEFs) and national strategic plans. This assists recognition and thus lends legitimacy to this report.

The report relies heavily on the analysis of financial statements and records. This is a rational approach, as effective infrastructure maintenance funding is a function of finance flows. It is likely to be as a result of the relative availability of this data, as public records.

Shortcomings

This is a PRIF report. Its underlying assumptions and purpose are known It strikes a paternal tone at times, consistent with the implicit reference to Australian or international standards as being a benchmark to which “PICs” can and should aspire. This criticism can be overlooked as a function of PRIF culture.

However, there is a mismatch between the quality, scope and scale of data assessed with the certainty of the recommendations. The self-assessment surveys were conducted primarily in Micronesia, and the Solomon Islands. There were some contributions from Samoa, Tonga and Fiji. Summarising the results to apply across “the Pacific” in such circumstances is not representative.

The report relies on references from as far back as 1988. Not that infrastructure maintenance principles have changed much in 30 years, but the perception is of a report that lacks relevance for today’s context - maintenance challenges and innovations. In addition, the use of GDP data only up to 2019 and government reports from 2014 and 2015 to support case studies, obscure current status or true progress.

While is it tempting, and desirable in some ways, to aggregate data and findings across the “Pacific” and even across all types of “infrastructure” or even sectors, the value of doing so is limited and may even be counter-productive. State owned enterprises (SOEs) operate under different incentives and governance schemes than do public works and infrastructure ministries. The problems faced in Kiribati may not be at all similar to those faced in Tonga. Vanuatu’s Ministry of Infrastructure and Public Utilities may not consider the findings based on Micronesian SOE’s particularly useful. Ultimately, national governments and SOEs will use the information as needed.

The recommendations appear to broadly miss the operational context into which they should supposedly be implemented. The first recommendation for action is to improve the coding of maintenance expenditure across infrastructure (Section 5.1.2 (a)). Obviously, the order of the recommendations does not reflect their relative importance because there are diminishing returns to be gained from ‘more accurate’ accounting. Having more accounting codes can provide the appearance of accuracy, providing a false confidence but without making next years’ forecasts or budgets any more accurate. Worse, the increased administrative burden of this practice will not encourage the diligent cost coding of actuals, thereby moving forecasts even further from reality. The rationale for this, to “convince politicians …that the amount being spent is not sustainable” (i.e., it’s too low), is noble but unlikely to be compelling.

The other side of the same unconvincing coin is the recommendation to increase funding for capital maintenance (Section 5.3). Pacific country infrastructure ministries hold relatively low political prestige, funding limitations will remain. These realities are a reflection of cultural values and are wisely approached with due respect.

The opportunity

Conducting an extensive, high-profile, publicised report such as this is a key opportunity to not only raise the profile of infrastructure maintenance, but to be a constructive part of that ongoing conversation. Some aspects of maintenance across the Pacific missing from the report that would improve its relevance are:

• Recognising cultural values that place a greater emphasis on social relationships than financial efficiencies
• The private sector is mentioned as a service provider of maintenance, but can play a much more active role in the planning and quality of outcomes
• The benchmarking of maintenance costs. While this can’t be accurately obtained from the publicly available financial statements, the data is known and available. The wisdom of publishing it is debated amongst the procurement establishment. On balance, greater transparency of these metrics would assist in estimating and identifying procurement anomalies
• Consideration of administrative burden – trade-off required between re-directing the team to do more data management compared to the value derived
• Many infrastructure ministries in the Pacific are ‘supported’ by programs funded by PRIF members such as DFAT and ADB. Discussion of the successes and failures of these past interventions would balance the implication that the “areas for improvement” can be fixed by further interventions
• Discussion on how to achieve quality standards. The specification, testing and verification of construction (maintenance) materials and equipment is an area of inconsistency, requiring expertise and funding support
• Gender equality. Every opportunity should be taken to pursue public assets, spaces and workplaces that are inclusive and raise the profile of the value of women’s involvement and participation in the planning and delivery of infrastructure
• As noted above – innovations in maintenance practice to be explored and applied, not just in the area of technology and digital asset management systems

The report notes ‘perverse incentives’ which legitimate the build-neglect-rebuild logic. These are only increasing, as geopolitical competition across the Pacific intensifies. Even if aid money is flowing, the volatility of donor funding can make it impossible for recipient governments and businesses to engage in long-term planning and sustainable spending.

Nonetheless, this dynamic can be leveraged by national government ministries/SOEs, if some of the recommended planning practices are implemented. Use of donor funds for capital expenditure (as recommended) would enable a backlog of un-maintainable assets to be brought to a maintainable standard. If governments/SOEs can combine this planning with a reckoning of the level of routine maintenance funding that national coffers and tariffs (not donors) can actually afford, a consistent level of service is achievable into the future.

A benchmark?

So, is it a benchmark report on Pacific infrastructure maintenance? If the report was positioned as a starting point, that would be an accurate title. The report’s Preface refers to it as a ‘baseline’ study, and that best reflects its character. It does provide an albeit-limited viewport into the current status of maintenance practice across parts of the Pacific, as of 2021.

Benchmarks are stable, standard, triangulated data points for surveyors to rely upon. To achieve this metaphorical benchmark status, the maturity assessment will require up to three more years’ consistent data collection, using the self-assessment and additional, more robust methods. The data to objectively evaluate the 37 key requirements for maturity does exist and could be obtained, through a similarly engaging approach as that employed for the self-assessments.

This will set up the assessment as both a central repository of data and enable meaningful comparisons – that is, benchmarking.