JUSTICE Briefing note POOR for the Promoting equity and managing conflict in development February 2011 Volume 6 | Issue 1 66495 Public Land Governance in Solomon Islands By Shaun Williams1 In countries where a large proportion of the total 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 holdings, 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 public land In Honiara, urban land is public land. is governed. T Significance of Public Land Governance hroughout the developing world, the poor manage- ment of publicly held land has a profoundly nega- tive impact on the poor. This briefing note exam- Poor governance of public land within the Pacific region ines this problem in the Pacific nation of Solomon Islands, results in governments losing significant amounts of eco- where the colonial land legacy and the postindependence nomic rent that could otherwise be spent on the public ser- regulation of immovable property were particularly con- vices upon which the poor depend. These foregone rents sequential. Using estimates of urban contributions to GDP are frequently being captured by urban elites and native and and the share of GDP provided by land transactions, an nonnative entrepreneurs, the patrons of ineffective (and in estimate can be made of the economic significance of pub- some cases corrupt) administrators who secure opaque and lic urban land governance. Recent urban valuations, actual uncompetitive first-time grants of long, fixed term (most rent revenues and estimates of arrears, actual expenditures, commonly for 75 years) leases out of the publicly owned, and estimates of rents paid out (see box below) provide an estimated current rate of return to public land.2 After a description of the previous government’s plans to address 1 The World Bank, Justice for the Poor, Land and Natural Resources Governance the poor performance of the past, the note concludes with Advisor. 2 Estimates are used here because accurate records are inaccessible or unavailable— a suggested complementary strategy for how the World the broader governance implications of which are taken up below. Bank, including Justice for the Poor3 and other develop- 3 Justice for the Poor in Solomon Islands is a World Bank research and develop- ment program, part of a collaboration between Australia’s Agency for International ment partners, could assist the current government in ad- Development (AusAID) and the World Bank’s East Asia and Pacific Justice for the dressing this challenge. Poor Initiative. the world bank 2 Public Land Governance in Soloman Islands perpetual estates, which they can subsequently develop or warehouse. The latter practice restricts the supply of land, thereby inflating urban land prices and contributing to housing’s becoming unaffordable for the poor and for low- to middle-income earners.4 The economic injustice resulting from these twin prac- tices is something that governments in the region could do more to redress. Improving the governance of their own land is within the (albeit limited) capacity of regional governments, whereas “improving� the governance of the remnant customary land and attendant natural resources tenures has proved to be currently beyond many states View overlooking government administrative buildings, the High Court building and Central Bank of Solomon Islands. and, when attempted, has had limited social or economic Government is the top landowner as measured by SBD (SI$) value of public land. benefits.5 The 2010 Unimproved Capital Value of all land within the Honiara Town Council boundary has been estimated as The Colonial Legacy and Current Public $2.46 billion. Approximately $2.1 billion of this is believed Land Administration Framework to be public land subject to Fixed Term Estates. No one knows the value of public land outside Honiara. Several governments in the Pacific have recently come And government is the biggest landlord as measured to realize that not all their problems with respect to land by number of tenants. administration and management are related to customary It is estimated that there are currently approximately 7,000 land.6 While public land in most countries in the region tenants who hold Fixed Term Estates over public land in is just a fraction of the area of land that is managed by its Honiara alone. No one knows the total number of public owners in custom, it is invariably the most valuable and land tenants throughout the country. strategically located land. This was the land that was se- But government is not charging high enough rent. lected for expropriation out of indigenous estates by colo- Even at current, extremely low rents, in 2009 the govern- nizing metropolitan powers for economic exploitation by ment should have collected at least $3.2 million from les- sees of public land just in Honiara. However, that would their client investors and settlers. Despite preindependence have yielded a rate of return from public land in Honiara rhetoric, most of this land has subsequently been retained of only 0.181 percent per annum, much lower than for by many postindependent states.7 other landlords. As a British Protectorate from 1893 until 1978, Solomon Nor is government collecting the rent. In 2009, the government collected only $2.8 million in rent Islands customary land ownership was largely undisturbed,8 from public land across the whole country. The rate of re- except for the notorious practice of allocating “waste land� turn from public land across the country must be even lower than for Honiara. Arrears of rent owing to the gov- ernment by public lease tenants are approximately $24 4 Henry George, Progress and Poverty: An Inquiry into the Cause of Industrial million. Depressions and of Increase of Want with Increase of Wealth (New York: Robert Schalkenbach Foundation, 1879). See also K. Hoff, “Land Taxes, Output Taxes, Yet government is the biggest subtenant as measured and Sharecropping: Was Henry George Right?� World Bank Economic Review 5, no. 1 (1991): 93–111. by SBD rent paid out. 5 See R.D. Singh and M. Reddy, “Corporate Governance in Fiji’s Native Land Trust Annually the government pays its tenants approximately Board,� Pacific Economic Bulletin 22, no. 2 (2007): 36–52; and also “Fiji Land $100 million per annum in rent to sublease back its own Board Seeks $13 Million In Back Rent,� Pacific Island Report, September 27, 2010. public land for government offices and facilities. Annual 6 See Vanuatu Council of Ministers, Decision 60/2010: Stop the Sale of Public Land in the Two Main Cities, Port Vila and Luganville; and “Govt Lost $24 m in Dues,� rent rebates, rental subsidies (also paid to public land ten- Solomon Star, October 1, 2010, 3. ants), and maintenance on public servants’ housing are 7 Vanuatu Land Reform Regulation 1980. approximately $50 million. 8 This is in contrast to British colonies, where right of conquest vested sovereignty over all colonial territory in the Crown. Justice for the Poor Note 6 Issue 1 3 for use as industrial plantations.9 Since 1912, alienation These derivative interests, technically terms of years, are of land from customary ownership has been the exclusive called Fixed Term Estates in the relevant legislation. The prerogative of government.10 Prior to this imperial legisla- Commissioner of Lands is also responsible for approving tive reform, some of the best land in the country had been all transfers of Fixed Term Estates and for approving long acquired directly from customary land owners by traders, subleases. planters, and speculators. Subsequently, with the passage of the Land and Titles Act [Cap 133] in 1969, these use The Commissioner of Lands, on behalf of the Solomon certificates and “bush� titles were converted into fixed term Islands Government, holds the perpetual estate interest leases granted by the Protectorate. in nearly all land in Honiara and in the eight provincial headquarters across the country. Similarly, almost all of the Real interests in land in newly independent Solomon commercial agricultural land in Solomon Islands is public- Islands were restricted by the new land law to custom- ly owned. Consequently, the Solomon Islands Government ary land, perpetual estates, and fixed term estates. Public is currently the largest owner of perpetual estates and lands are vested as perpetual estates in the Commissioner therefore the biggest landlord in the country (see box). of Lands11 and held in trust by her for the benefit of the Solomon Islands Government. Private property in land, Benefits and Challenges of Good Land other than customary land, is created by the commissioner Governance making a grant out of a perpetual estate over public land.12 Improving land management and administration through- out Solomon Islands will be integral to any future devel- opment strategy. Globally applied rules of thumb suggest that land and building transactions typically comprise ap- proximately 15–20 percent of GDP, 70 percent of which is usually generated in cities.13 As nearly all the traded property in Honiara and provincial towns consists of fixed term estates over public land, as much as 10 percent of GDP may be affected by how urban public land is gov- erned.14 Firms and families hold fixed term estates over 9 Waste Land Regulations (WPHC 240/98: KR no. 1 of 1904) defined “waste lands� as “land which is not owned, cultivated or occupied by any native or non native.� Most of lands declared as “waste land� under these regulations were inspected ex ante by Resident Commissioner Charles Woodford from the deck of his cutter. Au- thor 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 evidence generates even worse policy. See Judith Bennett, Wealth of the Solomons: a History of a Pacific Archipelago, 1800–1978 (Honolulu: University of Hawaii Press, 1986), 104. 10 Bennett, Wealth of the Solomons, 135. 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 Titles Act 1996, s60. 12 The Ministry of Lands, Housing and Survey is the line ministry with direct re- sponsibilities for land administration. The Commissioner of Lands reports directly to the minister. The corruption risks implicit in this arrangement of powerful semi- technical offices (with no supervisory boards/appeal mechanisms, etc.) coming di- rectly under ministers were not foreseen by the architects of independence. See “Land Deals in Solomon Islands Could See Charges Laid Says Commissioner,� Radio New Zealand International, September 15, 2009, http://www.rnzi.com/pages/ news.php?op=read&id=49135. 13 This estimate is used here and frequently elsewhere because accurate, disaggre- gated GDP data are unavailable for Solomon Islands or for many other small island states. 14 Solomon Islands GDP in FY2009 was US$658 million, giving it a ranking of 178 out of 192 countries. See http://siteresources.worldbank.org/DATASTATISTICS/ The Honiara Golf Course and Ranadi Industrial area. Resources/GDP.pdf. 4 Public Land Governance in Soloman Islands most—but not all—of this public land. All grants of fixed The Strategy of the Solomon Islands term estates are subject to weakly enforced development Government covenants, which, in combination with the absence of a capital gains or effective property tax, create distortional As a result of advice18 provided by Justice for the Poor, disincentives that prevent the market from reallocating the new Solomon Islands Government is well aware these interests to more efficient users. In addition, the of the importance of improving the administration and national accounts reveal that despite being the biggest management of its lands. In a significant ministerial pol- landlord in the country, the government pays in excess icy statement made during the inaugural meeting of the of SI$100 million per annum rent to its own tenants (see ninth parliament, an incisive program of land revenue box). enhancement was flagged by the new Minister of Lands, supported by the prime minister and the Minister of Unfortunately, despite its obvious economic and social Finance of the incoming Solomon Islands Government. significance, public land holdings have not been sepa- This proposed reform agenda was also endorsed by the rately recorded since 1976, when the registration of title Opposition spokesperson on lands, a former leader of replaced the old system of registration of deeds.15 This the Opposition in the previous parliament, and other amalgamation of registers meant that information about leading members of the Opposition.19 This bipartisan the extent, location, and value of public lands—the mini- political support for reforming past mismanagement mal information base that all property managers need— of public land augurs favorably for success in tackling has become less accessible, constraining the capacity of this challenge even if the government, for whatever officials to properly manage the government’s most im- reason, should change before substantial results can be portant assets. For example, the distribution of economic achieved.20 and social returns from public land holdings cannot be accurately calculated or properly adjusted for inflation or Soon after taking office, the new National Coalition for changes to market value over time. The World Bank’s for Reform and Advancement Government launched a land policy and administration anchor, the Agriculture and comprehensive Policy Statement.21 In addition to flag- Rural Development Unit, has recently developed and suc- ging several ambitious, “fundamental� reforms, includ- cessfully trialed a tool for assessing and monitoring gov- ing constitutional amendments to ensure that customary ernance of land in member countries. This tool identified land is made more “accessible� and “available� (which the existence of an inventory as a prerequisite for the good would be very difficult to achieve),22 and several radi- governance of public land.16 cal (and potentially destabilizing) social reforms such as the codification of customary law,23 the Policy Statement However, work recently done by an internationally also sets out some more feasible housekeeping goals, tax recruited valuer employed by the Honiara City Council has provided a crude estimate of the unimproved capital value of all public land in Honiara. Calculating the value 15 Public land is defined by the Land and Titles Act 1996, s2(1) as “land which is of public land outside Honiara will require further work shown by the register to be vested for a perpetual estate in the Commissioner for and on behalf of the Government.� on the Ministry of Lands, Housing and Survey’s existing 16 “Land Governance Indicator-12. Identification of public land and clear manage- database, which currently does not include important in- ment: Public land ownership is justified, inventoried under clear management re- formation fields like parcel areas or expiry dates of fixed sponsibilities, and relevant information is publicly accessible 17 One of the major commercial banks operating in a prime location in the cen- term estates. Revenues from public land extracted from tral business district of Honiara, for example, pays a rent for the site of less than the public accounts reveal that the rents collected from US$280 per annum. 18 Based on a joint analysis by the author and Solomon Islands officials. public land throughout the country were very low.17 Lack 19 Hansard Parliamentary Debates, National Parliament of Solomon Islands, of competitive bidding for first grants of long fixed term September 30, 2010, http://www.parliament.gov.sb/files/hansard/9th_session/1st_ Meeting/30th%20September%202010.pdf. estates carved out of the publicly owned perpetual estate, 20 Since independence, only the Sikua Government, 2007–2010, has served its full statutory rent reviews that have been skipped, failure to term. 21 Ibid., Policy No. 4.1.1. maintain valuation rolls, and weak collection practices 22 Ibid., Policy No. 4.2.1. have all contributed to poor returns (see box). 23 Ibid., Policy No. 4.3.4.1 (e). Justice for the Poor Note 6 Issue 1 5 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. reform aimed at raising more revenues and diversifying The World Bank’s Potential Support the revenue base, and efforts to take stock of underused public land.24 The World Bank’s global land programmatic experience demonstrates that land administration and management The National Coalition’s Policy Statement was fol- are interconnected functions, therefore representing a lowed by a Policy Translation Document,25 which high- “whole-of-government� challenge. Thus catalyzing inter- lights the key strategic actions that will be implemented agency coordination will be a main focus of any future by respective ministries to achieve the government’s technical assistance provided by the World Bank. All pub- overall policy objectives. The strategies identified therein lic sector agencies are major users of public land, not just include nationwide consultations to seek citizens’ views for their operational sites but also because of the universal on how government could better use its own lands26 and entitlement of civil servants in Solomon Islands to public the establishment of a taskforce, with donor support, “to reform land rents and valuations and enforcement to make rates (sic) a source of Government revenue and to 24 Ibid., Policy No. 5.1.11. ensure that there are incentives in place for prime land 25 National Coalition for Reform and Advancement Government, “Policy Transla- tion Document,� January 2011, unpublished. to be used efficiently rather than horded or purchased by 26 Ibid., 34. speculators.�27 27 Ibid., 50. 6 Public Land Governance in Soloman Islands management stakeholder mapping that demonstrates the wide range of agencies and stakeholders that will need to engage in responding to the impacts of maladministration and mismanagement (see table below). The scale of ef- fort that will be required to fix these problems necessitates a new whole-of-government, public-private partnership approach. The institutional architecture needed to ad- dress the issues under consideration by the new govern- ment includes parliamentary oversight, through the Public Accounts (Standing) Committee or a new select com- mittee; government leadership in the form of a Cabinet Subcommittee for Public Land; and, most importantly, a Incomplete Rugby Stadium at Town Ground. public-private partnership structure, such as a Public Land Administration and Management Implementation Task Force, comprising the permanent secretaries of key min- istries,31 land services professionals, private sector repre- housing assistance. This housing assistance is coordinated sentatives, and community leaders. Such a body would through the Public Services Commissioner and legally bring together the country’s major landlords and tenants, mandated to the Office of Prime Minster and Cabinet, but providing a forum for disseminating research and techni- budgeted through individual ministerial allocations.28 cal advice and for stakeholder participation in crafting a mutually beneficial way forward. The World Bank Group’s current recommended strat- egy for Solomon Islands identifies “improving public ad- To realize this comprehensive land reform menu, or ministration and management of public resources� as a any other reform agenda the recently elected government strategic area for future support. It also notes that better may devise, objectives will have to be prioritized, se- information about, and improved management of, public quenced, and resourced through the formulation of a joint land and natural resources have the potential to contribute agency, multistakeholder strategic implementation plan. to growth in the short, medium, and long term.29 The World Bank is in a position to contribute to that goal by assisting the lead land agency in developing, with other Recent research from the World Bank argues that land stakeholders, evidence-based policy options for the new costs and availability are already constraining business administration, options that focus on innovative institu- growth in Honiara. In addition, the increased mobility of tional coordination architecture to support strategizing on people and goods, as well as the development of agglomer- the scale required. ation economies, will depend on the more efficient use and allocation of urban and rural land.30 Poor town planning and zoning and limited infrastructure investment mean that 28 The entitlement is prescribed in General Orders Chapter H [103] and is estimated substantial urban and rural areas have no access to elec- to cost the Solomon Islands Government in excess of SI$50 million per annum. See box above. tricity, roads, or water, limiting potential economic use. 29 World Bank, “Interim Strategy Note for Solomon Islands for the Period FY10– Various government agencies holding land have limited in- FY11,� Report no. 53496 (Washington, DC: International Finance Corporation, centives to ensure its efficient utilization (see box above). 2010), http://go.worldbank.org/ENGJBN3FP0. 30 World Bank, “Solomon Islands Growth Prospects – Constraints and Policy Pri- orities,� Discussion Note no. 57795 (Washington, DC: World Bank, 2010), http:// The Justice for the Poor program focuses on improved go.worldbank.org/VHEGNYYOJ0. 31 The current government has already announced its intention to create a smaller, government capacity for evidence-based decision mak- revenue-focused, interministerial taskforce comprised of officials from the Ministry ing and policy dialogue in the context of legal and insti- of Lands, Housing and Survey, Economic Reform Unit, Inland Revenue Division, and Treasury Department of the Ministry of Finance and Treasury, Attorney Gener- tutional complexity. As part of this program, Justice for al’s Chambers. See National Coalition for Reform and Advancement Government, the Poor has undertaken public land administration and “Policy Translation Document,� January 2011, 50. Justice for the Poor Note 6 Issue 1 7 Other Justice for the Poor Briefing Notes • Legal Pluralism and Equity: Some Reflections on Land Reform in Cambodia by Daniel Adler, Doug • Leasing in Vanuatu: Findings and Community Porter, and Michael Woolcock, Volume 2, Issue 2, Dissemination on Epi Island by Milena Stefanova, April 2008 Raewyn Porter, and Rod Nixon, Volume 5, Issue • The Price of Tourism: Land Alienation in Vanuatu by 4, November 2010 Milena Stefanova, Volume 2, Issue 1, January 2008 • The Lay of the Land : Land Access and Dispute • Indonesia’s Revitalization of Legal Aid (RLA) Resolution in Timor-Leste by Pamela Dale, Kristen Program: Strengthening Legal Services for the Himelein, Denis Nikitin, and Angie Bexley, Volume Poor by Matthew Zurstrassen, Volume 1, Issue 5, 5, Issue 3, June 2010 November 2007 • Youth Perspectives on Community, Trust and • Barriers to Justice in Sierra Leone by Pamela Dale, Conflict by Pamela Dale, Kristen Himelein, Denis Volume 1, Issue 4, September 2007 Nikitin, and Angie Bexley, Volume 5, Issue 2, June • Informalizing the Formal: Labor Relations in 2010 Cambodia by Daniel Adler, Volume 1, Issue 3, • Trust, Authority, and Decision Making: Findings August 2007 from the Extended Timor-Leste Survey of Living • Promoting Women’s Rights by Indigenous Means: Standards by Pamela Dale, Kristen Himelein, Denis An Innovative Project in Kenya by Tanja Chopra, Nikitin, and Angie Bexley, Volume 5, Issue 1, June Volume 1, Issue 2, July 2007 2010 • Working with Local Researchers by Ryann Manning, • Women, State Law and Land in Peri-Urban Volume 1, Issue 1, June 2007 Settlements on Guadalcanal, Solomon Islands by Rebecca Monson, Volume 4, Issue 3, April 2010 Other J4P Publications on Land • Expanding State, Expectant Citizens: Local Perspectives on Government Responsibility in • Historical Tensions at the Gold Ridge Mine, Timor-Leste by David Butterworth, Volume 4, Issue Solomon Islands. By Daniel Evans, Pacific 2, February 2010 Economic Bulletin, Vol. 25, No. 3 (2010). • Women’s Access to Land in Kenya by Andrew • Wan Lis, Fulap Stori : Leasing on Epi island, Harrington, Volume 4, Issue 1, January 2010 Vanuatu, by Raewyn Porter and Rod Nixon, J4P • Contracts, Land Tenure and Rural Development Research Report, September 2010. in Timor-Leste by Rod Nixon, Volume 3, Issue 3, • Arguing �Traditions�: Denying Kenya’s Women November 2009 Access to Land Rights, by Andrew Harrington and • Mapping Indigenous Communal Lands: A Review Tanja Chopra, J4P Research Report, January 2010. of the Literature from a Cambodian Perspective by • Simplified Handbook on the Government of Daniel Adler, Jeremy Ironside, and Mean Ratanak, Sierra Leone’s New Operational Procedures and Volume 3, Issue 2, October 2009 Guidelines for the Diamond Area Community • Coercion to Conversion: Push and Pull Pressures Development Fund (DACDF), January 2009. on Custom Land in Vanuatu by Justin Haccius, • Towards Institutional Justice? A Review of the Work Volume 3, Issue 1, March 2009 of Cambodia’s Cadastral Commission in Relation to • Legal Aid Days as a Research Tool: Experiences Land Dispute Resolution, October 2006. from Northern Kenya by Benita Ayuko and Tanja • Justice for the Poor? An Exploratory Study of Chopra, Volume 2, Issue 4, September 2008 Collective Grievances Over Land and Local • “Leh Wi Tok for Change Wi Village�: Community Governance in Cambodia, October 2006. Dissemination of Research Findings by Gibrill S. • Land Disputes: Finding Justice through Collective Jalloh and Lyttelton Braima, Volume 2, Issue 3, Action, World Bank Newsletter, Cambodia Country May 2008 Office, September 2006. 8 Public Land Governance in Soloman Islands What is Justice for the Poor? Justice for the Poor (J4P) is a World Bank global analytical and operational program that supports the emergence of equitable justice systems. It is an approach to justice reform that: • Focuses on justice from the user perspective; • Values evidence-based approaches grounded in context; • Recognizes the importance of demand in building equitable justice systems; and • 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 Ini- tiative includes work in Solomon Islands, Vanuatu, Papua New Guinea, Timor-Leste, and Indonesia, as well as regional thematic activities. Contact us at j4p@worldbank.org and visit our website 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. the world bank