1. The emerging middle classes of PNG, Solomon Islands and Timor- Leste: implications for development and democratic consolidation. Associate Professor Michael Leach Dr Julien Barbara Dr John Cox

2. Context Region in transition, economic, social change Increasing resource rents Increasing talk of MC in policy circles Anecdotal but very little empirical evidence To the degree MC exists and is significant, lots of assumptions about how it behaves But also significant potential as an emerging social group

3. Aims To examine the political and developmental significance of new and emerging ‘middle classes’ in Papua New Guinea (PNG), Solomon Islands and Timor-Leste – The relevance and utility of the concept of the middle class in PNG, Solomon Islands and Timor-Leste? – character and composition of new middle classes of the region, and differences across countries? – the role of new middle classes in processes of political change, including its significance in processes of democratic consolidation; and – the developmental significance of the emerging middle class, including its significance in policy formulation and developmental aspirations.

4. Background Wide global interest in the emerging middle class and development – case of Asia – Emerging discourse in Melanesia and Timor-Leste Middle class considered important to developmental outcomes, political settlements, and, in contested ways, democratisation – Standard rendering is economic/consumption significance – Middle Class consensus – Natural democratic affinity?

5. Background Little critical analysis of the utility of the concept in Timor- Leste and Melanesia – Region characterised by economic and political under-development, high social diversity, rapid urbanization, rural subsistence economies, range of post-colonial fragilities; – Melanesian society framing – urban elites/subsistence grass roots – Struggles to account for new economic aspirations socio- economic/cultural change, Relevant to understanding broader processes of political and developmental change

6. Significance and Approach Assess the conceptual value of the notion of an ‘emerging middle class’ in this distinct regional context Improve understanding of the variegated nature of ‘elite’ interests in the region by focusing on emerging elite groups in three regional states – Interviews case history, sectoral case studies Scope and Composition – Definitional issues – Conceptual relevance New middle classes and attitudes to development challenges – economic aspirations – consumption patterns – Developmental orientation New middle classes and democratic consolidation? – political values, collective action – Links with traditional elites – Links with political decision makers

7. Case Studies Timor Leste Oil revenues account for 94 per cent of state revenue Small, urbanised and potentially fragile commercial middle class, dependent on government infrastructure and construction development contracts, ‘rentier-state’ Ex-veterans favoured in these contracts, but also some ‘conflict entrepreneurs’ Modest jobs growth has likewise been driven by the expansion of public sector employment, now estimated at 40,000. National Strategic Development plan (2011, 202) cites the need for extensive public investment to promote a local business sector as a long- term development strategy. – Large projects to attract international investors – Smaller projects to foster local entrepreneurial class Middle class roles as intermediaries (Khan 2010) between the state and local communities, new forms of patron-client relationships

8. Case Studies Solomon Islands – High aid dependence – Importance of public sector – Limited non-state formal growth – Small urban middle class excluded from politics – Middle class as “intermediary class”?

9. Case Studies PNG What about the rest of the public servants? Post-Courier, 1 Apr 2009 …It looks like 80 per cent of our wealth is being enjoyed by 20 per cent of the population. Is this what the preamble of the Constitution of Papua New Guinea Speaks about “We assert by virtue of that authority that our national wealth, won by honest, hard work be equitably shared by all’’? A simple public servant …finds it very hard to survive with his family in a city like Port Moresby... He or she either borrows or is forced by the circumstances to engage in fraudulent activities. I’m not talking about making wealth at the expense of the country but survival.