Gende is losing its virginity in the name of development
Momis manages expectations about referendum outcome

PNG budget shifts massive funds from provinces to Waigani

Port Moresby 181110
Port Moresby this week. Constituency politician alert: You're losing your discretionary  funds and they're coming home to Uncle Pete


NOOSA – In an expansionary budget that Papua New Guinea may not be able to afford, the biggest winner was…. the people….

No, just kidding. The biggest winner was the centralised administrative sector says Paul Flanagan, an economist who includes amongst his specialisations a close familiarity with Papua New Guinea.

In what at first glance looks like a perverse budget outcome, there was a transfer of nearly K1.1 billion from provinces and districts, effectively removing the discretionary spending previously controlled by governors and constituency MPs.

Despite drug and medical equipment shortages and escalating disease problems, the health sector was cut by 2% after allowing for inflation. And education received only a 1% increase, at odds with the government’s planning commitment to massively hike the number of teachers.

To me, this just doesn’t compute as being commensurate with the challenges facing PNG and is at total variance from the interests of the PNG people.

Flanagan sums it up as “a transfer of power to the central government and away from the provinces” and observes that “the political ramifications will be interesting.”

At least interesting, possible incendiary. Waigani doubles down on its neglectful approach to the people to favour what can only be seen as the best interests of a small cadre of politicians and cronies who really run the country.

“Taking a longer-term perspective from 2015 to 2019,” Flanagan writes, “there have been real cuts in transport of 36%, education of 30%, health of 17% and law and justice of 17%.

“The big longer-term winners have been utilities, debt servicing, the economic sector and administration.”

Note ‘debt servicing’ – those loans come with a big budget price tag.

“Actual expenditure patterns have often not matched the policy language,” observes Flanagan.

In saying this, he also points out that price changes mean that a 2015 kina could buy 26% more that it does now. Even a 2017 kina could buy 11% more.

But by far the biggest change in this budget is the cut of nearly K1.1 billion, or 26%, in the allocation to provinces which is transferred to the central administrative sector.

The budget documents explain that this funding has been transferred to the Department of Implementation and Rural Development.

“The political implications of this are uncertain,” Flanagan says. “From a budgetary perspective, this is just a transfer of funds. From a political perspective, there are more significant implications."

He writes if such a shift happened in Australia “it would cause a massive rift in Commonwealth-State relations”.

A signature policy of the new O’Neill government in 2011 was a large increase in providing more funds to local MPs and governors to spend in their constituencies.

It reflected O’Neill’s views at the time on the benefits of increased decentralisation. Now, it seems, those views have been abandoned along with the slashing of provincial funds.

“There have been serious doubts about whether K10 million [to each parliamentarian] was too much, whether it has been well spent and whether there has been accountability for this expenditure,” writes Flanagan.

“Possibly the transfer could be seen as a good administrative move for fiscal accountability given poor reporting under previous systems, but it is a very interesting and politically sensitive change.

“A national government minister now in charge of this funding, rather than governors and local members. Possibly expect fireworks.”

Flanagan also remarks that the budget “was clearly disappointing for its 1% real cut in health funding [which] is hard to reconcile with the proposed massive increase in the number of health workers."

He plausibly points out that “the 17% real cut in funding over the last five years may have contributed to the outbreak of polio and increasing incidence of tuberculosis and malaria.

Flanagan also says that “talk of ‘free health’ has always been a fiction with an allocation of only K20 million a year since 2012.

“Recent reports indicate parliamentarians have suffered from this deception when seeking even basic anti-malarial drugs.”

So K1.1 billion is returning to the central government at a time when revenue is scarce in PNG. Looked at against this backdrop, it's probably no surprise.

What will be a surprise is if these funds  are redistributed in a more efficient and equitable way so the vast bulk of the population benefits.

Given the O’Neill government’s track record, there’s no point spending more than a nanosecond pondering whether that might happen.

Read Paul Flanagan's full analysis here (it's quite technical)



Feed You can follow this conversation by subscribing to the comment feed for this post.

Chris Overland

This unexpected transfer of funds is an implicit message for John Momis and Bougainvilleans that any promise of "autonomy" in the forthcoming referendum will be worthless if the province is effectively starved of the funds required to give effect to its decisions.

Putting trust in the word of the current government is like assuming that a crocodile approaching you is merely smiling and obviously harmless.

Lindsay F Bond

Summing up, O'Neill led pack expected the count to be troughed up...err...coughed up for those who side with O'Neill in PNG Parliament chamber. None would want to spoil that party.

Sumting downing flow from trough...err...back-off will roil expect-ants.

Summing then will then tend to drift across the chamber.

Philip Fitzpatrick

One of the tactics that the politicians of Papua New Guinea rely upon is the fallibility and short life span of public memory.

The way it works is fairly simple. When an uncomfortable truth is revealed about their behaviour they resort to bluster and threats and, if that doesn’t work, stalling in the courts until everyone gets bored and forgets about it.

The stalling in the courts is even relied upon as a regular source of income by a whole cadre of lawyers with questionable morals. That income is also usually supplied from the public coffers.

Prime minister Peter O’Neill is a master of this sort of tactical deception. It’s not his invention because there are many precedents for its efficacy but he has refined it to a fine art.

There are a couple of ways by which it can come unstuck.

The first is the pursuit of the issue by statutory bodies set up to monitor such things. Task Force Sweep was one of those.

Peter O’Neill soon realised how dangerous Task Force Sweep was to his nefarious dealings and quickly cut off its funding. In a similar way he has resisted the setting up of an Independent Commission Against Corruption.

That he defunded Task Force Sweep and refuses to advance an anti-corruption commission is like a flashing neon sign telling everyone that this prime minister and his government have a lot to hide.

The second way the tactic can come unstuck is through a conscious effort by the media to pursue anything it perceives as questionable in the way the government behaves.

It is one of the main reasons why any nation claiming to be democratic needs a strong and healthy media sector.

We have many fine examples of brave and dedicated journalists in Australia bringing the government to account. The most recent example was the journalism leading to the banking royal commission.

In the USA, President Trump’s campaign against the media tells us that he has something to hide and, as he pursues it, his credibility is taking a hammering.

In Papua New Guinea the mainstream media has been tamed by the government and the vested interests of business. Strong and brave investigative journalism has ceased to exist.

This is exactly how Peter O’Neill and his cronies want it.

The only place where there is a minor irritant that defies his control is social media. He is happy to let that mostly go however, because he knows that at best social media only reaches about 10% of the population.

Of that 10% a good proportion is represented by his cronies among the elites anyway.

Issues like the inexcusable squandering of public money on the APEC circus while people suffer in poverty without medicines and while schools are closing down and teachers not getting paid will be quickly forgotten.

Nobody is going to set up a Maserati watch to see where those unnecessary and expensive automobiles end up.

No doubt plans are being made to ship them to the driveways of the substantial residences the politicians own in places like Cairns but who is going to follow up that if the media is nobbled and ineffective?

And no doubt there will be many grandiose scams emerging from APEC after the professional talkfesters of the world have departed for the next party.

Peter O’Neill has already hinted at major announcements to be made. More roads to nowhere and more kina of debt no doubt.

Who will monitor these new outrages?

No one, of course. They will just tumble into the far reaches of public memory like everything else.

This switch in the way funding is allocated to the provinces is a classic case of O'Neill realising he cannot control the process and must therefore centralise it.

Its a kind of Waigani/Provinces seesaw that's being going on for years that people have long forgotten about.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)