Trunk Infrastructure is necessary for large-scale housing developments: Lessons from Duran Farm Housing Project Logea Nao Property Sector Development Research Program

Outline Background Objective of the paper Methodology Findings Way Forward Conclusion

Background Housing is a basic necessity (Bajari and Khan, 2005). Housing becomes a luxury good when we think of buying a house. Providing affordable housing for Papua New Guineans is becoming a concern for the government (Ezebilo, 2016). Expenditures associated with housing in major cities of PNG might make many households unable to afford food, clothing, health care and education.

A decrease in the supply of houses to the housing market relative to demand → increase in house prices. An increase in the supply of houses to the housing market relative to demand → decrease in house prices. Public servants who belong to the median Public Service Salary Scale cannot afford the lowest house rent in formal built areas of Port Moresby (Ezebilo et al., 2016; Ezebilo et al., 2017) Trunk infrastructure: pipe-borne water, proper road networks, electricity and sewerage.

Approaches to provision of housing The government provider approach Government agencies such as the National Housing Corporation (NHC) directly involve in building houses. The enabling approach Transfer of some responsibilities of government agencies to the private sector. Government agencies provide enabling environment for private sector to operate - build houses.

The enabling approach mimics public-private The enabling approach mimics public-private partnership (PPP) in housing delivery. PPP in housing delivery – Collaborative arrangement based on mutual understanding between public sector and private sector. The idea of PPP is in line with Public Management Theory, i.e. partnership help in addressing some weaknesses of the public sector through collaboration with the private sector.

PNG National Housing Policy, 1994 Goal of the National Housing Policy, 1994 To ensure that all Papua New Guineans have access to decent housing accommodation at affordable cost by the year 2000. Year 2000 was included in the goal to reflect the United Nations resolution at that time.

Objective of the paper To apply orderly development model in assessing housing delivery in Port Moresby using Duran Farm Housing Project as a case. To explore potential strategy for improving activities associated with housing delivery at Duran Farm Housing Project.

Methods Interviews with contractors involved in constructing houses at Duran Farm and an official of the NHC. Visits to Duran Farm for monitoring and evaluation of developments. Visits made in October 2016, February and July 2017.

Findings Lack of trunk infrastructure. NHC to oversee the introduction of trunk infrastructure. Several houses have been completed but not yet occupied. House prices range from K350,000 to K450,000. Most public servants might not be able to buy houses at Duran Farm.

It is not clear whether the housing program is for low-income, middle-income or high-income households. The development deviates from conditions required to meet orderly development. Current situation is costly to the State, building contractors and whole of Society.

Potential strategy to move Duran Farm Housing Project forward Provide necessary trunk infrastructure soonest. Review sales prices of the houses so that many public servants could afford it. Carry out quality checks on all completed houses prior to sale. Allow the private sector to drive the project. NHC to play only facilitating role. All

Functions of the NHC and private property developers in the Duran Farm Housing Project must be streamlined. Develop framework on maintenance of trunk infrastructure. Necessary trunk infrastructure must be introduced before constructing more houses at Duran Farm.

Private property developers might be willing to contribute toward providing trunk infrastructure. If private property developers contribute toward providing trunk infrastructure: They must be compensated through e.g. tax credit for an agreed number of years. The quality of trunk infrastructure provided by private developers must be evaluated.

Conclusion The Duran Farm Housing Project is a very good initiative from the GoPNG, which has the potential of reducing house prices in Port Moresby. The problems faced in Duran Farm are associated with planning, implementation and monitoring. The current status of the Duran Farm Housing Project is costly to the State, contractors and the society. Duran Farm Housing Project can be moved forward.

References For more information read: Nao, L., & Ezebilo, E. (2017). Trunk infrastructure must be established before houses are constructed: Lessons from the Duran Farm Housing Project in Port Moresby. NRI Spotlight Vol. 10, Issue 6. Ezebilo, E. (2016). Papua New Guinea’s drive to provide affordable housing: Are we ready? NRI Issues Paper No. 23, Port Moresby. Ezebilo, E., Nao, L., Hamago, L. & Thomas, M. (2017). Dynamics of market prices for residential properties in Papua New Guinea: Evidence from Port Moresby. NRI Discussion Paper No. 158, Port Moresby.

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The Papua New Guinea National Research Institute acknowledges and appreciates the support of the Australian government to its 2017-2018 Research Program.

THANK YOU FOR YOUR ATTENTION Logea Nao: logea.nao@pngnri.org Eugene Ezebilo: eugene.ezebilo@pngnri.org