JUSTICE Briefing note POOR for the Promoting equity and managing conflict in development February 2011 Volume 6 | Issue 1 60064 Public Land Governance in Solomon Islands By Shaun Williams1 In countries where a large proportion of the to- tal land area is held customarily, reform questions around land and development often tend to focus on the customary estate. Evidence from Solomon Islands suggests that a focus on public land hold- ings, even when they are relatively small in land area, can yield outsized benefits. Publicly owned land regularly includes economically valuable land and urban land on which development pressure is high. In Solomon Islands, as much as 10 percent of GDP may be affected by how effectively urban pub- lic land is governed. In Honiara, urban land is public land. T hroughout the developing world, the poor manage- rent that could otherwise be spent on the public services upon ment of publicly held land has a profoundly negative which the poor depend. These foregone rents are frequent- impact on the poor. This briefing note examines this ly being captured by urban elites and native and nonnative problem in the Pacific nation of Solomon Islands, where the entrepreneurs, the patrons of ineffective (and in some cases colonial land legacy and the postindependence regulation of corrupt) administrators who secure opaque and uncompeti- immovable property were particularly consequential. Using tive first-time grants of long, fixed term (most commonly for estimates of urban contributions to GDP and the share of 75 years) leases out of the publicly owned, perpetual estates, GDP provided by land transactions, an estimate can be made which they can subsequently develop or warehouse. The latter of the economic significance of public urban land governance. practice restricts the supply of land, thereby inflating urban Recent urban valuations, actual rent revenues and estimates land prices and contributing to housing's becoming unafford- of arrears, actual expenditures, and estimates of rents paid out able for the poor and for low- to middle-income earners.4 (see box below) provide an estimated current rate of return to public land.2 After a description of the previous govern- ment's plans to address the poor performance of the past, the 1 The World Bank, Justice for the Poor, Land and Natural Resources Governance note concludes with a suggested complementary strategy for Advisor. 2 how the World Bank, including Justice for the Poor3 and other Estimates are used here because accurate records are inaccessible or unavailable-- the broader governance implications of which are taken up below. development partners, could assist the current government in 3 Justice for the Poor in Solomon Islands is a World Bank research and develop- addressing this challenge. ment program, part of a collaboration between Australia's Agency for International Development (AusAID) and the World Bank's East Asia and Pacific Justice for the Poor Initiative. Significance of Public Land Governance 4 Henry George, Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth (New York: Robert Schalkenbach Foundation, 1879). See also K. Hoff, "Land Taxes, Output Taxes, and Poor governance of public land within the Pacific region re- Sharecropping: Was Henry George Right?" World Bank Economic Review 5, no. 1 sults in governments losing significant amounts of economic (1991): 93­111. the world bank The economic injustice resulting from these twin practic- land. This was the land that was selected for expropriation es is something that governments in the region could do more out of indigenous estates by colonizing metropolitan powers to redress. Improving the governance of their own land is for economic exploitation by their client investors and set- within the (albeit limited) capacity of regional governments, tlers. Despite preindependence rhetoric, most of this land has whereas "improving" the governance of the remnant custom- subsequently been retained by many postindependent states.7 ary land and attendant natural resources tenures has proved to be currently beyond many states and, when attempted, has As a British Protectorate from 1893 until 1978, Solomon had limited social or economic benefits.5 Islands customary land ownership was largely undisturbed,8 except for the notorious practice of allocating "waste land" for The Colonial Legacy and Current Public use as industrial plantations.9 Since 1912, alienation of land Land Administration Framework from customary ownership has been the exclusive preroga- tive of government.10 Prior to this imperial legislative reform, Several governments in the Pacific have recently come to real- some of the best land in the country had been acquired directly ize that not all their problems with respect to land administra- from customary land owners by traders, planters, and specula- tion and management are related to customary land.6 While tors. Subsequently, with the passage of the Land and Titles Act public land in most countries in the region is just a fraction [Cap 133] in 1969, these use certificates and "bush" titles were of the area of land that is managed by its owners in custom, converted into fixed term leases granted by the Protectorate. it is invariably the most valuable and strategically located Real interests in land in newly independent Solomon Islands were restricted by the new land law to customary land, Government is the top landowner as measured by perpetual estates, and fixed term estates. Public lands are SBD (SI$) value of public land. vested as perpetual estates in the Commissioner of Lands11 The 2010 Unimproved Capital Value of all land within the and held in trust by her for the benefit of the Solomon Islands Honiara Town Council boundary has been estimated as $2.46 billion. Approximately $2.1 billion of this is believed Government. Private property in land, other than customary to be public land subject to Fixed Term Estates. No one land, is created by the commissioner making a grant out of a knows the value of public land outside Honiara. perpetual estate over public land.12 These derivative interests, technically terms of years, are called Fixed Term Estates in And government is the biggest landlord as measured the relevant legislation. The Commissioner of Lands is also by number of tenants. responsible for approving all transfers of Fixed Term Estates It is estimated that there are currently approximately 7,000 tenants who hold Fixed Term Estates over public land in and for approving long subleases. Honiara alone. No one knows the total number of public land tenants throughout the country. But government is not charging high enough rent. 5 See R.D. Singh and M. Reddy, "Corporate Governance in Fiji's Native Land Trust Even at current, extremely low rents, in 2009 the govern- Board," Pacific Economic Bulletin 22, no. 2 (2007): 36­52; and also "Fiji Land ment should have collected at least $3.2 million from les- Board Seeks $13 Million In Back Rent," Pacific Island Report, September 27, 2010. 6 See Vanuatu Council of Ministers, Decision 60/2010: Stop the Sale of Public Land sees of public land just in Honiara. However, that would in the Two Main Cities, Port Vila and Luganville; and "Govt Lost $24 m in Dues," have yielded a rate of return from public land in Honiara Solomon Star, October 1, 2010, 3. of only 0.181 percent per annum, much lower than for 7 Vanuatu Land Reform Regulation 1980. 8 other landlords. This is in contrast to British colonies, where right of conquest vested sovereignty over all colonial territory in the Crown. 9 Waste Land Regulations (WPHC 240/98: KR no. 1 of 1904) defined "waste lands" Nor is government collecting the rent. as "land which is not owned, cultivated or occupied by any native or non native." In 2009, the government collected only $2.8 million in rent Most of lands declared as "waste land" under these regulations were inspected ex from public land across the whole country. The rate of re- ante by Resident Commissioner Charles Woodford from the deck of his cutter. turn from public land across the country must be even Author Judith Bennett wonders how the absence of owners could have been satis- factorily adduced from such a distance--surely an apposite example of how poor lower than for Honiara. Arrears of rent owing to the gov- evidence generates even worse policy. See Judith Bennett, Wealth of the Solomons: ernment by public lease tenants are approximately $24 a History of a Pacific Archipelago, 1800­1978 (Honolulu: University of Hawaii million. Press, 1986), 104. 10 Bennett, Wealth of the Solomons, 135. Yet government is the biggest subtenant as measured 11 Some, but not many, customary land owners have surrendered their customary interests in return for perpetual estates granted by the commissioner. See Land and by SBD rent paid out. Titles Act 1996, s60. Annually the government pays its tenants approximately 12 The Ministry of Lands, Housing and Survey is the line ministry with direct re- $100 million per annum in rent to sublease back its own sponsibilities for land administration. The Commissioner of Lands reports directly public land for government offices and facilities. Annual to the minister. The corruption risks implicit in this arrangement of powerful semi- technical offices (with no supervisory boards/appeal mechanisms, etc.) coming rent rebates, rental subsidies (also paid to public land ten- directly under ministers were not foreseen by the architects of independence. See ants), and maintenance on public servants' housing are "Land Deals in Solomon Islands Could See Charges Laid Says Commissioner," approximately $50 million. Radio New Zealand International, September 15, 2009, http://www.rnzi.com/pages/ news.php?op=read&id=49135. The Commissioner of Lands, on behalf of the Solomon outside Honiara will require further work on the Ministry of Islands Government, holds the perpetual estate interest in Lands, Housing and Survey's existing database, which cur- nearly all land in Honiara and in the eight provincial head- rently does not include important information fields like par- quarters across the country. Similarly, almost all of the com- cel areas or expiry dates of fixed term estates. Revenues from mercial agricultural land in Solomon Islands is publicly public land extracted from the public accounts reveal that the owned. Consequently, the Solomon Islands Government is rents collected from public land throughout the country were currently the largest owner of perpetual estates and therefore very low.17 Lack of competitive bidding for first grants of the biggest landlord in the country (see box). long fixed term estates carved out of the publicly owned per- petual estate, statutory rent reviews that have been skipped, Benefits and Challenges of Good Land failure to maintain valuation rolls, and weak collection prac- Governance tices have all contributed to poor returns (see box). Improving land management and administration throughout The Strategy of the Solomon Islands Solomon Islands will be integral to any future development Government strategy. Globally applied rules of thumb suggest that land and building transactions typically comprise approximately As a result of advice18 provided by Justice for the Poor, 15­20 percent of GDP, 70 percent of which is usually gener- the new Solomon Islands Government is well aware of the ated in cities.13 As nearly all the traded property in Honiara importance of improving the administration and manage- and provincial towns consists of fixed term estates over pub- ment of its lands. In a significant ministerial policy state- lic land, as much as 10 percent of GDP may be affected by ment made during the inaugural meeting of the ninth par- how urban public land is governed.14 Firms and families hold liament, an incisive program of land revenue enhancement fixed term estates over most--but not all--of this public was flagged by the new Minister of Lands, supported by the land. All grants of fixed term estates are subject to weakly en- prime minister and the Minister of Finance of the incom- forced development covenants, which, in combination with ing Solomon Islands Government. This proposed reform the absence of a capital gains or effective property tax, create agenda was also endorsed by the Opposition spokesperson distortional disincentives that prevent the market from reallo- on lands, a former leader of the Opposition in the previous cating these interests to more efficient users. In addition, the parliament, and other leading members of the Opposition.19 national accounts reveal that despite being the biggest land- This bipartisan political support for reforming past mis- lord in the country, the government pays in excess of SI$100 management of public land augurs favorably for success million per annum rent to its own tenants (see box). in tackling this challenge even if the government, for what- ever reason, should change before substantial results can Unfortunately, despite its obvious economic and social be achieved.20 significance, public land holdings have not been separately recorded since 1976, when the registration of title replaced Soon after taking office, the new National Coalition for the old system of registration of deeds.15 This amalgamation Reform and Advancement Government launched a compre- of registers meant that information about the extent, location, hensive Policy Statement.21 In addition to flagging several and value of public lands--the minimal information base that all property managers need--has become less acces- sible, constraining the capacity of officials to properly man- 13 This estimate is used here and frequently elsewhere because accurate, disaggre- age the government's most important assets. For example, gated GDP data are unavailable for Solomon Islands or for many other small island states. the distribution of economic and social returns from public 14 Solomon Islands GDP in FY2009 was US$658 million, giving it a ranking of 178 land holdings cannot be accurately calculated or properly ad- out of 192 countries. See http://siteresources.worldbank.org/DATASTATISTICS/ Resources/GDP.pdf. justed for inflation or for changes to market value over time. 15 Public land is defined by the Land and Titles Act 1996, s2(1) as "land which is The World Bank's land policy and administration anchor, the shown by the register to be vested for a perpetual estate in the Commissioner for Agriculture and Rural Development Unit, has recently devel- and on behalf of the Government." 16 "Land Governance Indicator-12. Identification of public land and clear manage- oped and successfully trialed a tool for assessing and mon- ment: Public land ownership is justified, inventoried under clear management re- itoring governance of land in member countries. This tool sponsibilities, and relevant information is publicly accessible 17 One of the major commercial banks operating in a prime location in the central identified the existence of an inventory as a prerequisite for business district of Honiara, for example, pays a rent for the site of less than US$280 the good governance of public land.16 per annum. 18 Based on a joint analysis by the author and Solomon Islands officials. 19 Hansard Parliamentary Debates, National Parliament of Solomon Islands, Sep- However, work recently done by an internationally re- tember 30, 2010, http://www.parliament.gov.sb/files/hansard/9th_session/1st_ cruited valuer employed by the Honiara City Council has pro- Meeting/30th%20September%202010.pdf. 20 Since independence, only the Sikua Government, 2007­2010, has served its full vided a crude estimate of the unimproved capital value of all term. public land in Honiara. Calculating the value of public land 21 Ibid., Policy No. 4.1.1. ambitious, "fundamental" reforms, including constitutional substantial urban and rural areas have no access to electric- amendments to ensure that customary land is made more "ac- ity, roads, or water, limiting potential economic use. Various cessible" and "available" (which would be very difficult to government agencies holding land have limited incentives to achieve),22 and several radical (and potentially destabilizing) ensure its efficient utilization (see box above). social reforms such as the codification of customary law,23 the Policy Statement also sets out some more feasible house- The Justice for the Poor program focuses on improved keeping goals, tax reform aimed at raising more revenues and government capacity for evidence-based decision making diversifying the revenue base,24 and efforts to take stock of and policy dialogue in the context of legal and institutional underused public land.25 complexity. As part of this program, Justice for the Poor has undertaken public land administration and management stake- The National Coalition's Policy Statement was followed holder mapping that demonstrates the wide range of agencies by a Policy Translation Document,25 which highlights the key and stakeholders that will need to engage in responding to the strategic actions that will be implemented by respective min- impacts of maladministration and mismanagement (see table istries to achieve the government's overall policy objectives. below). The scale of effort that will be required to fix these The strategies identified therein include nationwide consulta- problems necessitates a new whole-of-government, public-pri- tions to seek citizens' views on how government could bet- vate partnership approach. The institutional architecture need- ter use its own lands26 and the establishment of a taskforce, ed to address the issues under consideration by the new gov- with donor support, "to reform land rents and valuations and ernment includes parliamentary oversight, through the Public enforcement to make rates (sic) a source of Government rev- Accounts (Standing) Committee or a new select committee; enue and to ensure that there are incentives in place for prime government leadership in the form of a Cabinet Subcommittee land to be used efficiently rather than horded or purchased by for Public Land; and, most importantly, a public-private part- speculators."27 nership structure, such as a Public Land Administration and Management Implementation Task Force, comprising the per- The World Bank's Potential Support manent secretaries of key ministries,31 land services profes- sionals, private sector representatives, and community leaders. The World Bank's global land programmatic experience Such a body would bring together the country's major land- demonstrates that land administration and management are lords and tenants, providing a forum for disseminating re- interconnected functions, therefore representing a "whole-of- search and technical advice and for stakeholder participation government" challenge. Thus catalyzing interagency coordi- in crafting a mutually beneficial way forward. nation will be a main focus of any future technical assistance provided by the World Bank. All public sector agencies are To realize this comprehensive land reform menu, or any major users of public land, not just for their operational sites other reform agenda the recently elected government may but also because of the universal entitlement of civil servants devise, objectives will have to be prioritized, sequenced, and in Solomon Islands to public housing assistance. This hous- resourced through the formulation of a joint agency, multi- ing assistance is coordinated through the Public Services stakeholder strategic implementation plan. The World Bank Commissioner and legally mandated to the Office of Prime is in a position to contribute to that goal by assisting the lead Minster and Cabinet, but budgeted through individual minis- terial allocations.28 22 Ibid., Policy No. 4.2.1. The World Bank Group's current recommended strategy 23 24 Ibid., Policy No. 4.3.4.1 (e). Ibid., Policy No. 5.1.11. for Solomon Islands identifies "improving public adminis- 25 National Coalition for Reform and Advancement Government, "Policy Transla- tration and management of public resources" as a strategic tion Document," January 2011, unpublished. 26 area for future support. It also notes that better information Ibid., 34. 27 Ibid., 50. about, and improved management of, public land and natural 28 The entitlement is prescribed in General Orders Chapter H [103] and is estimated resources have the potential to contribute to growth in the to cost the Solomon Islands Government in excess of SI$50 million per annum. See box above. short, medium, and long term.29 29 World Bank, "Interim Strategy Note for Solomon Islands for the Period FY10­ FY11," Report no. 53496 (Washington, DC: International Finance Corporation, Recent research from the World Bank argues that land 2010), http://go.worldbank.org/ENGJBN3FP0. 30 World Bank, "Solomon Islands Growth Prospects ­ Constraints and Policy Pri- costs and availability are already constraining business orities," Discussion Note no. 57795 (Washington, DC: World Bank, 2010), http:// growth in Honiara. In addition, the increased mobility of go.worldbank.org/VHEGNYYOJ0. 31 The current government has already announced its intention to create a smaller, people and goods, as well as the development of agglom- revenue-focused, interministerial taskforce comprised of officials from the Ministry eration economies, will depend on the more efficient use of Lands, Housing and Survey, Economic Reform Unit, Inland Revenue Division, and allocation of urban and rural land.30 Poor town planning and Treasury Department of the Ministry of Finance and Treasury, Attorney Gener- al's Chambers. See National Coalition for Reform and Advancement Government, and zoning and limited infrastructure investment mean that "Policy Translation Document," January 2011, 50. Table 1: Public Land Stakeholder Map Agency Responsibility Ministry of Lands, Housing and Survey Line ministry Ministry of Justice and Legal Affairs Includes: Office of the Registrar General, within which the Registrar of Land Titles is located; Attorney General's Chambers, which have responsi- bilities with respect to dealings in public property, contracting on behalf of the Solomon Islands Government; and Solicitor General, which represents the Commissioner of Lands and the Solomon Islands Government more generally in court cases involving land and rents. Ministry of Finance and Treasury Accounts for management of and revenues from public assets. Ministry of Provincial Government Supervises and supports provincial governors who can also hold perpetual estates in trust on behalf of the Solomon Islands Government and can grant fixed term estates out of them, notably in provincial headquarters. Ministry of Infrastructure Delivering land services such as roads. Ministry of Home Affairs Responsible for local government and therefore, for "secure(ing) consis- tency and continuity in the framing and execution of a comprehensive policy for the preservation of amenities and the orderly development of land other than customary land throughout Solomon Islands in accordance with Local Planning Schemes."a Town and Country Planning Boards are established under the relevant act for each province and for Honiara City.b Ministry of Public Service, Prime Minister & Legally mandated to oversee universal housing entitlements of public Cabinet servants. Ministry of Agriculture Large-scale public holdings in agricultural land. All other public sector agencies Major users of public land, not just for their operational sites but also for staff housing budgeted through ministerial allocations. Land professionals Lawyers, valuers, surveyors, and real estate agents provide professional services to landowners, tenants, buyers, and sellers. Private sector Solomon Islands Chamber of Commerce and Industry represents most commercial users of public land, including commercial banks. Community leaders Church leaders and customary authorities, including chiefs, women, and youths. a Town and Country Planning Act [Cap 154]. b Ibid., s4 and s5. land agency in developing, with other stakeholders, evidence- by Pamela Dale, Kristen Himelein, Denis Nikitin, and based policy options for the new administration, options that Angie Bexley, Volume 5, Issue 1, June 2010 focus on innovative institutional coordination architecture to · Women, State Law and Land in Peri-Urban Settlements support strategizing on the scale required. on Guadalcanal, Solomon Islands by Rebecca Monson, Volume 4, Issue 3, April 2010 Other Justice for the Poor Briefing Notes · Expanding State, Expectant Citizens: Local Perspectives on Government Responsibility in Timor-Leste by David · Leasing in Vanuatu: Findings and Community Butterworth, Volume 4, Issue 2, February 2010 Dissemination on Epi Island by Milena Stefanova, · Women's Access to Land in Kenya by Andrew Raewyn Porter, and Rod Nixon, Volume 5, Issue Harrington, Volume 4, Issue 1, January 2010 4, November 2010 · Contracts, Land Tenure and Rural Development · The Lay of the Land : Land Access and Dispute in Timor-Leste by Rod Nixon, Volume 3, Issue 3, Resolution in Timor-Leste by Pamela Dale, Kristen November 2009 Himelein, Denis Nikitin, and Angie Bexley, Volume 5, · Mapping Indigenous Communal Lands: A Review Issue 3, June 2010 of the Literature from a Cambodian Perspective by · Youth Perspectives on Community, Trust and Conflict Daniel Adler, Jeremy Ironside, and Mean Ratanak, by Pamela Dale, Kristen Himelein, Denis Nikitin, and Volume 3, Issue 2, October 2009 Angie Bexley, Volume 5, Issue 2, June 2010 · Coercion to Conversion: Push and Pull Pressures on · Trust, Authority, and Decision Making: Findings from Custom Land in Vanuatu by Justin Haccius, Volume 3, the Extended Timor-Leste Survey of Living Standards Issue 1, March 2009 · Legal Aid Days as a Research Tool: Experiences from · Indonesia's Revitalization of Legal Aid (RLA) Program: Northern Kenya by Benita Ayuko and Tanja Chopra, Strengthening Legal Services for the Poor by Matthew Volume 2, Issue 4, September 2008 Zurstrassen, Volume 1, Issue 5, November 2007 · "Leh Wi Tok for Change Wi Village": Community · Barriers to Justice in Sierra Leone by Pamela Dale, Dissemination of Research Findings by Gibrill S. Volume 1, Issue 4, September 2007 Jalloh and Lyttelton Braima, Volume 2, Issue 3, May · Informalizing the Formal: Labor Relations in 2008 Cambodia by Daniel Adler, Volume 1, Issue 3, August · Legal Pluralism and Equity: Some Reflections on 2007 Land Reform in Cambodia by Daniel Adler, Doug · Promoting Women's Rights by Indigenous Means: An Porter, and Michael Woolcock, Volume 2, Issue 2, Innovative Project in Kenya by Tanja Chopra, Volume April 2008 1, Issue 2, July 2007 · The Price of Tourism: Land Alienation in Vanuatu by · Working with Local Researchers by Ryann Manning, Milena Stefanova, Volume 2, Issue 1, January 2008 Volume 1, Issue 1, June 2007 What is Justice for the Poor? Justice for the Poor (J4P) is a global research and de- velopment program aimed at informing, designing, and supporting pro-poor approaches to justice reform. It is an approach to justice reform that: · Sees justice from the perspective of the poor or margin- alized · Is grounded in social and cultural contexts · Recognizes the importance of demand in building equi- table justice systems · Understands justice as a cross-sectoral issue Justice for the Poor in Solomon Islands is part of the AusAID-World Bank collaboration on the East-Asia and Pacific Justice for the Poor Initiative. This Initiative includes work in Solomon Islands, Vanuatu, Papua New Guinea, Timor-Leste, and Indonesia, as well as on regional the- matic activities. Contact us at j4p@worldbank.org and visit our Web site www.worldbank.org/justiceforthepoor for further information. Justice for the Poor Briefing Notes provide up-to-date information on current topics, findings, and concerns of J4P's multi-country research. The views expressed in the notes are those of the authors and do not necessarily reflect those of the World Bank.