BY MARK THOMSON
MY FATHER, REG, Director of Child Welfare in the former TPNG Administration, considered David Fenbury a friend and colleague. He spoke often of David's views and insights on local government.
As I came to consider these matters in my later role as AusAID Counsellor responsible for governance activities, I read Fenbury’s monograph, Practice Without Policy, and found in it an incisive critique of Australian colonial policy toward local government.
The failures of the Organic Law on Provincial and Local Level Government are manifold, and they manifest themselves differently from province to province.
In this context I took a snapshot of New Ireland in 2000. What follows is an excerpt from my overview:
During the years of the colonial administration government planning became increasingly centralised. The processes of government happened in isolation from the large majority of the population. People had little say in decision-making and remained largely disengaged from and unaffected by the formal sector.
The devolution of powers under the first ‘Organic Law’ on provincial and local government was an attempt to redress the colonial situation. Although a decentralised ‘superstructure’ was put in place, centralised decision making processes were retained and a complex and unwieldy three-tiered financial management system was installed.
The system lacked a mechanism to monitor plan implementation and progress. It was essentially a ‘top-down’ planning model with limited participation by local representative bodies and communities.
However, elements of the first organic law were an advance on the colonial system. A regulatory and legal framework was established to govern the administration of public sector monies and other resources at the local level. A management system for the delivery of public sector services such as health and education at the provincial level was established.
Unfortunately, insufficient attention was paid to planning and resource management, personnel development, monitoring of service delivery and other quality controls.
The machinery of government became increasingly dysfunctional - poor resource utilisation; lack of user group consultation; poor communication between the various planning levels; little extension work done in rural areas; financial shortages; and lack of incentives to stimulate productivity at all levels.
Under the reform officials from provincial sector divisions (health, education, primary industry etc.) are deployed at the district and sub-district level under the authority of a District Administrator and a Sub District Manager respectively. Their role is to assist planning coordination, to provide technical advice, to manage extension programs, and to monitor and evaluate performance. The roles and responsibilities of each level are defined under the organic law and set out in an administrative handbook.
Enabling legislation was to be enacted for each province to provide a regulatory and legal framework to govern the operation of the organic law, including planning and funding submission processes and enforcement of accountability provisions.
The rules, regulations and by-laws enacted under the first organic law were deleted and have not been replaced by a revised empowerment and accountability regime at the local level. This appears to have seriously undermined the operational effectiveness of the reform
Two sources of funding are available to districts under the provincial budget system:
• Provincial Government income (derived from internal revenue sources such as land tax, vehicle registration fees, mining revenue and a component of the VAT)
• Grants from the National Government appropriated to two major expenditure items:
1. Recurrent budget – (salaries and other administrative operational costs)
2. Grants to Provincial Government general budget.
Under the organic law district budgets are supposed to be paid directly to the Office of District Treasurer, operating under the Provincial Government Accounting System (PGAS). District Treasurers come under the authority of District Administrators but are directly responsible to the National Department of Finance and Treasury.
Whilst this system may work in provinces where District Office infrastructure is adequate to manage the requirements of a treasury function, the majority of districts cannot fulfil their budget management responsibility because of poor facilities and unreliable power supply.
When asked to articulate their priorities district level officials will invariably mention District Headquarters infrastructure. The reason being that without the capacity to manage a treasury function the operation of the organic law will continue to be seriously weakened, as provincial planning processes over-ride district level priorities.
As one sub-district level official put it, without a district treasury function there is “too much hijacking of resources at the provincial level”. In order to rationalise and standardise financial management under PGAS the FMIP has identified the upgrading of District Headquarters to include a treasury function a high priority.
Not surprisingly, another priority is the enactment of an enabling framework by Parliament. Without this there is too much opportunity for people to subvert the planning process and to “take advantage of politicisation of the LLG process”. The same official bluntly said the legal section of the Department of Provincial Affairs must give this area urgent attention.
New Ireland Province provides an interesting window on to the working of the organic law at province, district and local levels.
In 2000 I made the following recommendations to AusAID, which were largely ignored:
• Where practicable activity designs should build in capacity building and change management components targeted at the lower levels of government in the provinces. Positive engagement at this level will greatly assist empowerment of local planning processes. Existing activities within the health and education sectors include components that are having a positive impact at this level. It is important that new activities complement the approach adopted by projects working at the local level and /or upgrading national systems with implications for local level operations.
• The AusAID Post could maintain an up-to-date information base on the progress of the organic law reforms at the provincial level. A based staff could familiarise themselves with the operation of the organic law in their allocated province. This information would be very useful to design, appraisal and monitoring exercises focussed on local level issues.
• AusAID should take every opportunity to encourage the relevant GoPNG authorities to push through an enabling framework for the organic law. The lack of an appropriate regulatory and legal framework is greatly undermining the effective operation of the reforms.
• AusAID should continue to adopt a nationally integrated and coordinated approach to governance issues associated with the fiscal arrangements between the Centre and provinces, whether under the organic law or RDF system of revenue sharing arrangements under mining agreements.
• AusAID should continue to support management strengthening at all levels of government, with an emphasis on the simplification, standardisation and rationalisation of planning and resource management systems across all coordination and line agencies.
• AusAID could consider support to upgrade district administration infrastructure to enable treasury functions to be incorporated into district headquarters. One key factor in the failure of the organic law financial management system is the inability to manage district level funds locally. Equally important is support for ongoing in-service training of financial managers at every level of government to ensure public funds are managed in accordance with the requirements of the reform and the Public Finances Management Act.