DEVELOPMENT IS ACCORDED TO POPULATION SIZE – O’NEILL

9th May 2017

Mr O’Neill said when his government came into office in 2012, one of his first meetings was with Governor Powes Parkop who put forward many of NCD’s expansion plans that were never implemented by the previous government.

Mr O’Neill said the previous government had so many expansion plans for city roads including basic services for its city residents, which never eventuated into tangible results.

However, everything changed due to the hosting of the SP Games in 2015, which became a game changer.

STH1
O’Neill cuts the ribbon to Officially Open the Sir Ruben Taureka Highway

Mr O’Neill PM described the project at the time to be three years behind schedule that had ailing infrastructure and could not even host an international event in the country. He said his government took a bold step and made a decision that was against all advice in cancelling the event.

He said it was an opportunity for the national government to deliver the infrastructure for a growing city like Port Moresby, which needed world-class facilities which overtime became a reality.

“Today you have stadiums you can be proud of that is comparable to stadiums anywhere in the world. You simply forget when you go and watch a rugby league match at PRL and forget where we came from. And you take it for granted that these some of the infrastructure weren’t even there a few years back. You forgot the hard decisions and hard ships we had to take in order for everyone to enjoy the facilities. Even our roads now are built to world class standards,” he said.

Mr O’Neill said people were complaining about the government spending too much money in Port Moresby and reminded everyone it was the government’s prerogative to plan and spend money that will bring much needed services to people, which was based on the size of the population in any given location.

“There is no other formula when you have a population like one million people living in Port Moresby city, offcourse you need to upgrade its infrastructure. I want to build a four – lane road in Pangia District but we only have 120,000 population there, so it does not make economic sense to build a four-lane highway there,” he said.

The Prime Minister said developments throughout the country concentrated on areas with the largest populations such as Lae, Mt Hagen and Kokopo.

“We fixed Lae city from a pot hole city to a cement city. We built a four-lane highway from Lae City to Nadzab. We are also building a four-lane highway from Kagamuga to Mt Hagen and onto Koltiga. We are also upgrading all the roads in Kokopo, its because of large portion of Papua New Guineans go and get services there.” he said.

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SO WHAT’S THE ALTERNATIVE?

By: Douveri Henao

The past couple of days, we’ve seen politicians and commentators rushing to the public to remind us that they made these predictions years ago the economy was tanking. They read the signs, saw the writing on the wall and as prophets of old, we did not respond. All true. But the people of Papua New Guinea don’t want reminders, they want solutions and this is the disappointment for the past couple of days.  
The only agreed consensus is kick out the current government and all will be well. Lets entertain the notion, but then what? How do you improve the economy? How do you turn the tide around?  

I’m of the view that any new leadership will be constraint by 2 factors to make meaningful change in the state of the economy in which all governments of PNG suffered. These are the inability for political institutions to reform the age-old patrimonial system and the lack of diversity in political ideology. 

PATRIMONIAL SYSTEM REFORM 
Respected thought leader in political science, Francis Fukuyama, makes the observation that patrimonial systems or in our case, wantok system, continues to undermine the ability for political institutions to grow into efficient organizations. Whereby meritocracy permits the best and brightest to formulate and execute public policy to the best of their abilities.  
The fiscal strategy of the current government has been underpin by the need to finance the patrimony. Over 12 billion kina has been given to sub national governments with limited capacity to absorb its use. While Waigani correctly claims its systems are able to deliver and execute projects of significance, no other government tier has the skills and resources. Therefore, this resource has largely fed the patrimony in an assortment of various schemes that have little impact to the constituency. 
There is also the bulging public service that is unsustainable and at most times, unproductive. It has cost the country 10 billion kina in this session of parliament. Public institutions have become villagers where CEOs have become chiefs and officers from there liking have become nobles and enemies have become commoners. So the nobles and the chief thrive on this healthy state bill to build there kingdoms and along the way, execute meaningful public policy.  
This Prime Minister and those before him have publically spoke of the rot that they have inherited in the public service. They have used various systems to mitigate patrimony and while some have been successful, many have not and its persistency undermines the fact that we need a different strategy.  
The key position is for the new leadership to work towards transitioning the current patrimonial political system to a robust merit based system not in the public service, but in the political system. Its ok to use wantoks, but use wantoks that know their stuff. Instill benchmarks to push productivity and inculcate a climate of vigorous science in building policy. This in turn can assist the public institutions to deliver the desired vision.  
THE NEED FOR DIVERSITY IN POLITICAL IDEOLOGY 

Every Prime Minister and current MPs as well as most political parties have subscribed for a strong socialist left leaning political platform. Big governments to bring social programmes to the masses, big governments to drive commerce, big governments to protect the community and big governments to bring jobs.  
While there is justification in this messianic approach due to market failures that undermine investment beyond Waigani and provincial capitals, it undermines other important players to participate in development. The efficiencies of the private sector and the enthusiasm of the civil society need to coexist and where possible, thrive.  
The new leadership needs to facilitate rather then participate and monopolize development. There are something’s that the public service and political systems isn’t built for and that limitation needs to be recognized.  
BEYOND 2017
We need political systems to be less emotional and more juiced up on the smarts. We need political systems to be more facilitative and less monopolistic.

Australia’s ‘Boomerang’ Aid should be directed into PNG National Budget

By: Bernard Keane 



Who profits from our foreign aid?: the ‘technical assistance’ making business rich

Australia’s “boomerang aid” has been making corporate Australia very rich for years.

“Boomerang aid” is the name Michael Somare claims he invented to describe the propensity of Australian aid to PNG to end up back in Australia, courtesy of highly-paid Australian consultants and firms specialising in “technical assistance” in the delivery of aid projects. For a small number of firms, it has provided a taxpayer-funded path to massive success.

“Technical assistance” is a billion-dollar business funded by Australian taxpayers. This year, we will spend $4.3b on foreign aid. Under the Government’s commitment to increase foreign aid to 0.5% of Gross National Income, that is scheduled to rise to $8-9b in five years’ time.
Technical assistance over the last decade has accounted for 40-50% of the entire aid budget.
A small number of Australian firms have done very well from this:

* Coffey International, the Chatswood, Sydney-based “global professional services consultancy”, garnered over $300 million in contracts in calendar year 2009 alone, Ausaid records show;

* Cardno ACIL secured at least $270 million, as did GRM, “a leading international development management company”;

* Queensland companies GHD and JTA International, both reaped over $100 million.
Boomerang aid has long been a basis for criticism of AusAID and our entire foreign aid program, particularly in relation to PNG, our largest aid recipient. In 2003, Michael Somare suggested over 60% of Australian aid simply went to Australians or Australian companies.
That year, the Senate Foreign Affairs, Defence and Trade References Committee considered the issue as part of its report on Australia’s relationship with PNG and the Pacific, saying that the “most common concern raised with the Committee in relation to the delivery of aid was for the tendency for AusAID to use consultants, typically from Australia which lead to the perception of ‘boomerang aid’.” 
A number of submissions to the committee raised the issue, including those from the Business Council of PNG and from Oxfam Community Aid Abroad.
In response, AusAID rejected any criticism, declaring the “Australian aid program ensures that PNG citizens benefit from commercial opportunities, skills formation and capacity building.”
Papua New Guinea through its planning Minister Charles Abel recognized this gap in the Australian Aid and has proposed to negotiate the new AID Agreement.

“We would like to see a larger proportion of the budget actually going into hard, tangible, on-the-ground outcomes,” he said.

“Budgetary support will assist in programs and activities that the Government is trying to achieve and that alone will achieve a lot more positive outcomes than what’s going on at the moment,” 

Aid to be effective needs to be channeled into PNG’s national budget as opposed to being distributed by Australian Technical Assistance Team.

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Papua New Guinea asks Australia to fund health, education during ministerial forum

BY PAPUA NEW GUINEA CORRESPONDENT ERIC TLOZEK –THU MAR 09 11:19:03 EST 2017
Australia’s increasingly tricky relationship with Papua New Guinea could be about to get more difficult.


PNG’s Government has asked Australia to directly fund its health and education spending after it suffered a severe economic downturn and was forced to make major budget cuts.

PNG used the 25th ministerial forum between the two countries to ask Australia to shift its $500 million of annual aid away from narrowly-focused programs and into helping fund its health, education and infrastructure priorities.

Planning Minister Charles Abel said the shift was something that had been discussed for some time.

“The Papua New Guinea Government has sent a signal at this meeting of our desire to move by 2020 into a budget support arrangement where the program is channelled more directly through the PNG budget process,” he said.

Australia is the dominant contributor of aid to PNG, providing 68 per cent off its development assistance.

Mr Abel said that money could be having a bigger impact.

“We would like to see a larger proportion of the budget actually going into hard, tangible, on-the-ground outcomes,” he said.

PNG’s Major Events Minister Justin Tkatchenko said the request arose out of concerns about the effectiveness of Australia’s aid program and the amount of money that is spent on contractors and technical assistance.
“Budgetary support will assist in programs and activities that the Government is trying to achieve and that alone will achieve a lot more positive outcomes than what’s going on at the moment,” he said.

The request came as a surprise to the Australian ministerial delegation.

It also came after PNG suffered a major drop in revenue that forced its Government to slash spending, particularly to health services, but Mr Abel rejected suggestions it was linked to PNG’s cash shortage.

“It’s a policy-based directive that has come from a series of documents … it’s not a knee-jerk reaction,” he said.

Request catches Australian ministerial delegation off guard
Australia’s aid partnership with PNG is due to be renewed this year, so the Government was already evaluating the program.

But Foreign Minister Julie Bishop said Australia did not know PNG would make the request.

“That’s apparently a matter that’s been discussed within the PNG Government, it’s been raised with us today and we’ll consider it,” she said.

The change harks back to the way Australia used to deliver aid in PNG, by funding its budget directly.

But Australia stopped doing that in the early 1990s because of concerns about corruption and mismanagement.

Those concerns have not gone away.

Ms Bishop said any change to the aid program would need to meet Australia’s accountability standards.

We want to ensure that it’s transparent, that it’s value for money and it provides the kind of outcomes that will see economic development and prosperity here in PNG,” she said.

“And of course we must be answerable to the Australian taxpayer.”

The Government fears those taxpayers are becoming increasingly sceptical about the benefits of foreign aid.

Questions over how aid spending is getting to people who need it
The timing of the request, as PNG tries to weather a severe economic downturn, makes it even harder to sell.

Australia has given $5 billion in aid over the last decade, but has been changing its approach for the past few years.

The Australian Government, which has consolidated delivery of its programs into a Papua New Guinea Governance Facility, will be investing more in infrastructure and is seeking more partnerships with agencies like the World Bank and Asian Development Bank to deliver soft loans.

Such changes reflect a broader shift in aid spending, but also an attempt to make a bigger impact and force the PNG Government to comply with the strict standards for governance and program delivery required by multilateral agencies.

Australia also agreed to focus more on private-sector growth and trade, which would help protect and increase the $6.8 billion PNG-Australia trade relationship in the face of threats from China.

But the non-government organisations working in the aid sector have criticised that approach, saying PNG is a clear example of a place where economic growth has not delivered much benefit for disadvantaged people.

Despite 15 years of continuous growth, PNG still has one of the lowest levels of GDP per capita in the region.


Manus issues causing tension
It might not say so publicly, but the PNG Government has also been recently displaying frustration with Australia in other ways.

There has been tension over the Manus Island detention centre, particularly over the need to close it to comply with a PNG Supreme Court ruling.

People within the PNG Government say they are frustrated about the impact of the centre on PNG’s reputation, the political risk to the current Government, and the social issues that the day release of detainees has created on Manus Island.

That frustration has been accentuated by a delay in Australia delivering a promised $200 million redevelopment of the Angau hospital in Lae, which was agreed upon as part of the Manus Island deal.

Detainees at Manus Asylum Seekers Detention Center

Australia argues the delay is due to the PNG Government withdrawing its promised contribution, but PNG said it told Australia two years ago to just “get it done”.

Recent allegations that the medical company that runs the clinic at the Manus Island detention centre failed to obtain proper registration and breached a raft of other PNG laws — something strongly rejected by the company — could be seen as PNG putting further pressure on Australia to hasten the centre’s closure.

There has been no shortage of people noting the detrimental effect of the Manus Island deal on Australia’s ability to negotiate with PNG, but with the urgency increasing to close the centre by October, PNG could be looking to squeeze even more benefit out of its relationship with Australia at this time.

That has left Australia with a problem for both its aid program and its diplomatic relationship with the most populous and arguably most influential country in the western Pacific.

Kumul Telikom Holdings – Right Stepping stone for Papua New Guinea

By: Jonny Andrews

Telecommunications is the ‘Heart-beat’ of every thriving economy!

How does one disrupt and conquer a nation? They simply break down the communication between all important Government utilities and department. Put them into a state of confusion and slowly conquer and take control.

Sound familiar???

The advised Papua New Guinea has been getting in the past of ensuring competition and to separate the Telecommunication entity has been flawed! It has resulted in the State communications entity competing against itself and ensuring that the real competitor succeeds!

The birth of Kumul Telikom Holdings is the realization that we have lost the plot and the need to get back on track is imminent! Kumul Telikom Holdings is the ‘Stepping Stone’ on improving the Telecommunication system in the country. 

It provides for a SINGLE Board that ensures the DataCo, BMobile and Telikom Management works effectively, do no compete against each other and provides a roadmap that actually provides greater benefit to the country.

Well done PNG Government!


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Consolidation of SOEs right move: Barker

March 6, 2017The NationalMain Stories

 Article Views: 169

The recent consolidation of telecommunication State-owned enterprises under Kumul Telikom Holdings “is the right way forward”, according to Institute of National Affairs executive director Paul Barker.

Barker, pictured, told The National that this arrangement would be ideal if complemented with effective management that resulted in enhanced competition in the sector for the benefit of businesses and rural areas.

“Consolidation of the domestic network and linking the key gaps, notably the Northern network with the Hides-Port Moresby link, while rationalising the multitude of State-owned entities, is the right way forward, so long as the best professional board and capable, innovative but prudent management is in place,” he said.

“Operations also be accountable and transparent.

“Real rather than superficial competition is needed, but it’s not logical for that competition to be between ill-resourced State-owned entities but between a stronger, single telecommunications State-owned entity and the other players.

“Consideration of selling off or part sale of the State-owned entity may be considered to increase capitalisation and capacity but the State retains an important role in this space as regulator, encouraging and requiring competition, and ensuring priority services reach the wider communities of PNG, as well as enabling businesses across the country to function, including in rural areas.”

Barker highlighted the need to upgrade Government-owned telecommunication infrastructure with possible adjustments to increase bandwidth from submarine cables.
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MINISTER ABEL CLARIFIES THE KUMUL CONSOLIDATION AGENDA
Wednesday February 22, 2017 –Minister for National Planning, and Acting Minister for Public Enterprises and State Investments   Hon. Charles Abel today called a media conference to clarify the Government’s main policy priorities through the Kumul Consolidation Agenda.

Minister Abel stated:

* At the outset, our focus should be on ensuring that all relevant boards and MDs/CEOs of the SOEs are in place and addressing all operational issues;

* The government’s overarching objective is to progress the social and economic well-being of the citizens of Papua New Guinea;

* This includes promoting an efficient enabling environment (policies, regulations and legislations) for private sector as the primary generator of wealth and job creation to flourish;

* Government generally only intervenes in the private sector as an active participant when private capital or entities will not and the particular service is vital or strategic;

* The Kumul Consolidation Agenda is intended to improve synergy, coordination and efficiency to the National Government’s participation in commercial activities;

* This includes the aggregating of related Government companies in different sectors such as Telecommunication, energy, agriculture, etc;

* The Department of Public Enterprises is to provide policy development and oversight in concert with the Minister and Cabinet. It is not to get involved in project development. Any such projects are to be handed over to the relevant subsidiary companies or ceased;

* KCH is to oversee the implementation of government policy through the respective subsidiary companies including the most appropriate corporate structuring in relation to the non-mining & petroleum related majority owned government companies;

* This government policy includes capital structuring to involve private capital and management as much as possible;

* KCH should cease developing numerous business projects and only get involved in project development for large scale strategic capital projects on behalf of the sector specific subsidiaries;

* All government companies should generate an adequate return of capital; and

* All government companies should be restructured in order to free up resources and introduce efficiency into the economy unless there is a particular strategic interest or private capital cannot be attracted.

In closing Minister Abel said that KCH needs to regroup and refocus on the job ahead and he was confident that it has a solid foundation of sound corporate governance that would expose and address weaknesses, and identify opportunities if and when they arose.

“I have assumed the role of caretaker Minister of this important Ministry with only two months before the National Elections.”

“In that short period of time I intend to create focus and clarity, and highlight the synergy between National Planning and the three entities – Kumul Consolidated Holdings, Kumul Minerals and Kumul Petroleum.”
Sources:

http://www.thenational.com.pg/consolidation-soes-right-move-barker/

http://www.kch.com.pg/minister-clarifies-consolidation/

Woman candidates take Parliament training

By: Roslyn Peter

Parliamentary training for woman candidates interested in contesting the PNG NGE 2017 is a great idea and gives an insight for our woman. This is a concept that would ease the elected woman into her seat in Parliament.

But one thing that should be continuously taught throughout the Parliament is ‘Financial Management, Ethics and Responsibility’

What we have seen time and time is mismanagement of finance and the lack of leadership responsibilities in our elected leaders.

Good leaders are easily lead astray when given power and when put under pressure from their colleagues. This makes their job of governing their electorate much much difficult.

Our mama dated leaders need constant and effective training to help them in their electorates and also help them with their responsibilities.

Getting financial training and management training should be the TOP priority for intending candidates and not just for our woman ..
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By: Post Courier
FIFTY women candidates who intend to run for the 2017 National Election have been selected to participate in a week of training on parliamentary processes.
In a highly competitive process, participants from 22 provinces were selected from more than 200 applicants and will be trained on critical national policy issues, parliamentary processes and campaign strategies from March 6-13 this year in Port Moresby.
The United Nations Development Program (UNDP) PNG acting resident representative, Ms Tracy Vienings said UNDP was proud to be supporting the Practice Parliament for the second time in Papua New Guinea.
“We believe it is important to ensure that PNG women have the opportunity and ability to actively participate in politics.
“With only three women MPs out of 111 in Papua New Guinea’s current parliament, women continue to be under-represented as political leaders and elected officials,” she said. 

Highly qualified candidates from doctors to village women and women from other sectors of the community applied for PNG Practice Parliament for Women training, highlighting just how many women are keen to represent PNG and be active in political life.


The program aims to empower intending candidates to prepare themselves in the lead up to upcoming national elections in April 2017.
The program, organised by the UNDP in coordination with the Office of Integrity of Political Parties, National Parliament and Department of Community Development and religion, will culminate with a practice session in the Parliament chamber on March 13.

According to Ms Vienings, this training will develop women candidate’s skills not only in campaigning for elections, but also in engaging with policy issues that are critical to PNG’s future.
“That is the role of an MP, and we want to help women prepare to become elected representatives,” she said.
The 50 participants were selected by a screening committee, and were also cross-checked with the Electoral Commission to ensure each participant filled in a Form 29 to contest the 2017 elections.
The final list of participants is available below and on the Facebook page: “PNG Practice Parliament for Women 2017 <https://www.facebook.com/PNGPracticeParl2017/&gt; .
http://www.postcourier.com.pg/Stories/women-candidates-take-parlt-training/#.WLcwQ8vXef1

Advance Australia unfair

By Emma Larking on February 10, 2017



Operation Sovereign Borders poster (Wikimedia Commons)Australia is pouring money into a system that targets the vulnerable in our region, and it is doing so with considerable secrecy and scant regard for the costs.
Recent evidence of its profligacy came in a report from the Australian National Audit Office claiming the immigration department spent $2.2 billion on offshore detention programs without going through adequate processes to ensure value for money, and without appropriate oversight of contracts for services.


The report found contracts had been entered into in haste to give effect to government policy decisions, and the result was higher than necessary expense for taxpayers and significant reputational risks for the Australian Government and the department.
Australia’s offshore detention camps are now notorious, but less is known about other attempts to curb irregular migration. Yet Australia invests heavily throughout the Asia-Pacific to ensure that irregular migrants – including asylum seekers – never arrive on its shores.
The Australian public has a right to know how the Government is spending public monies, to what ends and with what results. The public also deserves an explanation of how spending on border controls fits with other regional policy initiatives. These include justice programs designed to promote the rule of law, strengthen judicial independence, support national human rights institutions and counter violence against women and children.
In countries throughout the Asia-Pacific region, Australia provides funding and infrastructure to establish border controls, and personnel to draft new migration laws and policy frameworks. Members of the Australian Federal Police, defence force personnel and immigration department employees collaborate closely with their regional counterparts, often working in-country. The Australian Navy and Secret Intelligence Service are engaged in operations to intercept asylum seekers and stop people smuggling.
As well as the detention centres in Nauru and Papua New Guinea (PNG), Australia also funds detention centres in Indonesia. It funded the Nauruan and PNG Government’s defence in cases challenging the constitutionality of the detention centres. It also funds international agencies to process and oversee irregular migrants and refugees living in the community in Indonesia, Nauru, PNG, and until recently, Cambodia. Frequently, aid funding is linked to agreements to enhance border controls, repatriate nationals who have fled the country, or establish detention centres or refugee resettlement programs.
It is impossible to obtain clear financial costings, but a conservative accounting suggests Australia has spent well over a billion dollars annually since 2012 on these efforts to prevent irregular migration. With no boats known to have made landfall on Australian territory since late 2013, this might be considered money well spent – albeit a large pot of it. But what are the other costs associated with this secretive regime? There is the suffering of individuals trapped in countries where they are persecuted or live in limbo without rights. But there are also broader implications for Australia and the region.
In its collaborations with Cambodia, Iran, Nauru, PNG, Sri Lanka and Vietnam, Australia has aligned itself with authoritarian regimes implicated in serious human rights abuses. 

The funding it provides in exchange for support on irregular migration strengthens and entrenches these regimes. Australia is promoting the securitisation of irregular migration in the Asia-Pacific, putting it on what Josiah Heyman calls ‘a war footing’. In the process, the power of executive governments is enhanced, along with their immunity from public scrutiny and control. Throughout the region, rights activists have expressed dismay over these developments.
Australia’s refusal to open its borders to displaced people is also viewed with disdain by communities that are poorer and less well equipped to assist. Deni ToKunai, a political commentator in PNG, says the 2013 agreement to establish an Australian-funded detention centre contributed to “a boiling resentment [among many in PNG] against Australia and the Australian people never before seen by this generation”.
This resentment is unlikely to evaporate. PNG’s Supreme Court may have ruled the detention arrangements unconstitutional, but there are still hundreds of people living in the centre, and building work is underway on a new ‘transfer’ centre funded by Australia.
How Australia’s irregular migration policies interact with other forms of regional policy engagement has not been publicly explained or defended, but the former are inconsistent with other goals, including advancing the rule of law. Regional justice programs are unlikely to gain traction while Australia continues to fund detention and control regimes that perpetuate violence and operate outside the purview of the law. Instead, they may well contribute to regional perceptions of Australia as a nation of selfish and self-serving hypocrites.

http://devpolicy.org/advance-australia-unfair-20170210/?utm_source=Devpolicy&utm_campaign=07c434825b-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_082b498f84-07c434825b-312063401

Time to Increase PNG’s Debt to GDP ratio to its “Optimal Level”

By Government Insider

In a previous article, we raised a question “Is PNG bankrupt“? and we compare its debt-to-GDP ratio with other countries. This article follows from the previous one……

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Few issues in politics and economics are nowadays more discussed – and less understood – than public debt. Many raise their voices to urge for reducing the debt, but few explain why and in what way reducing the debt would be conducive to a better economy or a fairer society. And there are no limits to all the – especially macroeconomic –calamities and evils a large public debt is supposed to result in – unemployment, inflation, higher interest rates, lower productivity growth, increased burdens for subsequent generations, etc., etc.

People usually care a lot about public sector budget deficits and debts, and are as a rule worried and negative. Drawing analogies from their own household’s economy, debt is seen as a sign of an imminent risk of default and hence a source of re-probation. But although no one can doubt the political and economic significance of public debt, there’s however no unanimity whatsoever among economists as to whether debt matters, and if so, why and in what way. And even less – one doesn’t know what is the “optimal” size of public debt.

papua-new-guinea-gross-public-debt-percent-of-gdp

Insert: PNG Debt to GDP ratio since 1997

Through history public debts have gone up and down, often expanding in periods of war or large changes in basic infrastructure and technologies, and then going down in periods when things have settled down.

Public debt is not like private debt. Government debt is essentially a debt to itself, its citizens. Interest paid on the debt is paid by the taxpayers on the one hand, but on the other hand, interest on the bonds that finance the debts goes to those who lend out the money.

Today there seems to be a rather widespread consensus of public debt being acceptable as long as it doesn’t increase too much and too fast. If the public debt-GDP ratio becomes higher than X % the likelihood of debt crisis and/or lower growth increases.

But in discussing within which margins public debt is feasible, the focus, however, is solely on the upper limit of indebtedness, and very few asks the question if maybe there is also a problem if public debt becomes too low.

Whatever the problems of low public debt or high public debt, most economists would agree that the optimum level of indebtedness would be 50%…….maybe it’s time Papua New Guinea increase theirs as well.

 

Cost-Benefit Analysis for Public Funds use in Papua New Guinea

by: Jonny Andrews

 

In government and private sector decision-making there are always competing priorities for limited funds. Many of our local Governments and sometimes the National Government tend to fund projects without doing a Cost-Benefit Analysis. The purpose of doing a CBA is to allow competing policy priorities to be compared in a consistent way, and for their economic, social and environmental impacts to be assessed.

In all areas of policy, the function of the CBA is to assist policymakers to identify the best way to deliver the strategic objectives of governments.

Government funds for investment in infrastructure and public policy initiatives are limited. These funds come at a significant cost to Papua New Guinea, through taxes collected by state entities. If governments had not collected these taxes, the funds would have been available to private individuals and businesses to spend, save or invest.

One example is in the development of our cities. Cost–benefit analysis can help to achieve the strategic aims of a holistic metropolitan plan by weighing up the economic, social and environmental impacts of different transport infrastructure options and identifying the best approach for the long term.

 

What are the essential elements?

  1. Cost–benefit analysis needs to be future looking

A good cost–benefit analysis will guide decision-making in the best interests of current and future generations by taking a long-term view those factors in economic and population growth over time.

The CBA methodology also allows for the consideration of future benefits and risks that are largely unknown or difficult to quantify.cost-risk-benefit

Governments have to pursue policy priorities where there are unknowns – because they are seen to be in the public good or because they are necessarily based on future assumptions. The CBA discipline can help policymakers to wrestle with intangibles and communicate assumptions and judgements in a transparent way.

Uncertainty about the future is no reason to avoid a CBA. In fact it makes the case for undertaking rigorous and transparent CBA even stronger.

 

  1. Cost–benefit analysis needs to be objective

Objectivity is critically important when determining the expected costs and benefits of a policy or project. CBAs (both private and public) often fail because future costs are underestimated and future benefits overstated, due to a tendency for ‘optimism bias’.

Independent assessment is a good way to build objectivity into the CBA.

Objectivity also requires that the main findings are based on a realistic ‘central case’ that depicts the most likely outcomes for costs and benefits in the future. It is then fine to test alternative outcomes under best case and worst-case scenarios.

 

  1. Cost–benefit analysis needs to consider implementation risks

Cost–benefit analysis ensures implementation risks can be identified and assessed upfront so they can be factored into a project’s implementation program. CBAs can be applied to capital projects as well as major policy and change management initiatives.

 

  1. Cost–benefit analysis needs to be easily understood so it can be subject to a degree of contestability

A CBA needs to be straightforward and readily understood by a wide range of people. The idea is not for them to be ‘black boxes’ for technicians but tools that people can use to look at priorities and contest them.

Finally; Investment decisions by governments need to be based on robust assessment of their future costs and benefits to ensure they are making the best use of taxpayers’ funds and deriving the maximum benefits for society.

CBA is one of the key tools that can assist in the development of evidenced-based policy if it is conducted with transparency and objectivity. It provides a framework for weighing up different impacts

 

PNG Sovereign Wealth Fund – O’Neill Legacy

by Julia Daniel

Throughout the course of Papua New Guinea’s Independence until today, Papua New Guinea has had its share of resource revenue. The Bougainville Copper Mine had generated millions if not billions of revenue for the National Government. The Misima Gold Mine, Porgera Gold Mine, Tolokuma Gold Mine, Lihir Gold Mine have all poured their resources in the Government. In additional to that, PNG was blessed with Copra, Coffee and Cocoa which it had exported.

However, the past leaders of Papua New Guinea had failed the country. They all have succumbed to the “Dutch disease” and have not prepared the country for a rainy day.

In February 2012, Peter O’Neill having learnt from all the observations as Finance Minister in the Somare Government, passed a Law for PNG to established its first ever “Sovereign Wealth Fund”

What is a “Sovereign Wealth Fund?”

According to Wikipedia “A sovereign wealth fund (SWF) is a state-owned investment fund investing in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Sovereign wealth funds invest globally. Most SWFs are funded by revenues from commodity exports or from foreign-exchange reserves held by the central bank.

Some sovereign wealth funds may be held by a central bank, which accumulates the funds in the course of its management of a nation’s banking system; this type of fund is usually of major economic and fiscal importance. Other sovereign wealth funds are simply the state savings that are invested by various entities for the purposes of investment return, and thapng-swft may not have a significant role in fiscal management.”

The Papua New Guinea Sovereign Wealth Fund (PNG SWF) will consist of a number of Sovereign Funds. The Legal ownership of the sovereign wealth fund is the Independent State of Papua New Guinea.

The objectives of the fund are to support the long-term social and economic development objectives of the State provide a means of saving for the future generations and facilitate the macroeconomic stabilization of the Papua New Guinea budget and the economy.

The Sovereign Wealth funds currently have two parts;

  1. Stabilization Fund
  2. Savings Fund

National Research Institute (NRI) after conducting a research into this Law gave its support of the establishment of the PNG SWF and further recommends that the Sovereign Wealth Fund also include an “Infrastructure Development Fund” in addition to the 2 funds.

The Revenue Flows for the PNG SWF will begin in the first quarter of 2017 according the Treasury Minister Hon. Patrick Pruaitch who gave a budget speech in August 2016. “Mr. Speaker, I am pleased to confirm that revenue will start to flow to PNG’s Sovereign Wealth Fund in the first quarter of next year. In 2016, revenues flowing into the Stabilization Fund will be drawn down into the Budget to fund key priority policy areas.

This landmark legislation was passed in July. I thank all members for their bipartisan support of the PNG Sovereign Wealth Fund. Designed as a long-term investment vehicle, the Sovereign Wealth Fund will serve PNG for decades to come, reducing PNG’s vulnerability to external shocks, such as the current fall in commodity prices.

The Sovereign Wealth Fund has been designed to provide the highest standards of accountability and good governance. Funding has been allocated in 2016 for appointment of an experienced and well-qualified Board and a SWF Secretariat. In 2016, the Government will issue the Board with its investment mandate and Government expectations on management of funds.” – Patrick Pruaitch

Papua New Guinea will really start to reap the benefits of the PNG SWF once revenues start to flow into the funds.
The onus now is for the Government to setup a transparent and stable management of the fund without political interference.

 

  1. http://www.businessadvantagepng.com/papua-new-guinea-sovereign-wealth-fund-coming-in-a-nick-of-time/
  2. http://pacificpolicy.org/2014/09/pngs-sovereign-wealth-fund-still-too-many-loose-ends/
  3. http://www.swfinstitute.org/swfs/papua-new-guinea-swf/
  4. https://www.google.com.pg/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwjxkLqV9vvOAhVBmZQKHeJADgwQFggfMAE&url=http%3A%2F%2Fwww.treasury.gov.pg%2Fhtml%2Fpublic_debt%2Ffiles%2F2013%2Fswf%2Fpng.swf_public.info_%252022%2520Feb%25202013.pdf&usg=AFQjCNF7Sgy9WSOJn-hL21xrClS02KITJg&bvm=bv.131783435,d.dGo

 

 

Stability Vital for Papua New Guinea

by The Patriot

July 28, 2016

In this commentary, I will discuss how social responsibility can either promote or sabotage the ongoing vision currently implemented by the government.

The content of this article is to remind our readers who are easily persuaded by individuals, groups and associations that spread animosity and hate on Facebook Groups and Pages under the context of promoting good governance to change the leadership of the country.

Every government mandated to serve its people in PNG has had to manage a smear campaign that was propagated by persons with a political agenda or affiliation.   The general public, continue to become victims of deception and lies shared on social media. It has become a norm when a government is sworn into parliament, there is always an opposition working to discredit its vision. No one seems to notice that a lot of information uploaded anti-Government Facebook Groups are 20 % truth and 80 % lies.

We were destined to achieve big things in the last 40 years, unfortunately economic prosperity continues to be crippled and plagued by individuals, associations and groups with self-interest and ego. Many successive governments have had to succumb to smear campaign tactics and eventually replaced.

A lot of good things past governments would have achieved for our country did not eventuate because of instability.

Finding Stability in the Midst of Change

In 2012, The Alotau Accord was signed in Milne Bay Province by over 90 MPs to form the current government coalition aimed at delivering on millennium development goals (MDGs) and incorporated into the PNG Vision 2050. Its aim is to grow all sectors of the economy.

We must learn to give credit where its due. The PNC led government contributed immensely to various health, education, sports, communications, agriculture, infrastructure development on schools & roads, and also financial investment portfolios in the country.

We can accept or disregard negative content shared on social media. It is important as to whether we allow PNC and its coalition partners to complete a full term in parliament, or join the hate campaign to discredit the hard work that ongoing or achieved.

Therefore, when we join closed groups on Facebook, we have a responsibility to contribute meaningfully and fairly as members without succumbing to biased opinion.

Individuals who misinform people are dangerous. We cannot allow ourselves to believe ill researched and biased content disseminated on social media by authors with no political experience and leadership quality.

We must be wary of any intending candidates who share content aimed to discredit MPs in parliament.

We must also note that our people are accustomed to expectations in life, which has been an integral part of our culture for many years. For example, we expect our in-laws to pay bride price. We expect compensation payments by those who offend or hurt us. We expect our elders to represent us during family and community events.

We expect this government to do everything for us.  We fail to realise the enormity and sacrifice our PM goes through every single day. He has to juggle between his office responsibilities, political parties, ministerial portfolios, the public service and international trade and bilateral relations.

It is his prerogative to do so on a daily basis because every meeting with an individual(s) on matters of national importance requires collaboration on achieving something.  Every government needs partners to deliver on its goals.

Many times, we do not realize how we are part of the equation in helping to support the government in our own little ways.

We would rather sit and watch government partners in Ausaid, JICA, UNDP, WHO, UNICEF including diplomatic corps do all the work on behalf of us.

Public servants work to ensure vital services are rendered in the rural parts of the country. Religious groups or representatives lead out in church programs to help educate our people on Christian values and principles. NGOs in country co-ordinate and manage workshops on literacy, financial inclusion, community development and gender based issues. Sports Administrative bodies promote sporting codes and manage development sporting programs in our schools and communities with aim to empower our young generation through community initiatives. Families are also partners, and instil values at home. Teachers are also considered partners that help educate future leaders, businessmen and women, public servants, civil servants, sports ambassadors, foreign diplomats, teachers, religious instructors and also responsible citizens in society.

It is our job to influence our peers and those around us to be thinkers and respect our government at all times. This government is working to ensure aging infrastructure is maintained. We then accused them on exuberant building and maintenance costs because we believed information disseminated on social media that targeted certain companies, including the PM. The government continues to strengthen its bilateral ties with international partners and neighbour countries. We then label them as thieves for stealing and wasting taxpayers’ money.

Our government continues to roll out free education and we complain about the shortage in job opportunities. We expect so much but and offer little or even worse, nothing at the end of the day as partners in helping the national government.

There is still a lot of work to be done in the rural areas, however we will sit and complain. This government can and will do so, if we allow them to continue without disruption.

In the last 15 years, we experienced over 8 % growth despite the down turn on global commodities that affected the trading of our kina against the US dollar in 2016.

We accused our government of reckless spending, yet fail to understand a simple business principle that if we are to grow, we must take financial risks to grow our investment portfolios.

Here’s an example; a customer purchases a brand new vehicle at the car dealer. Prior to the purchase, the customer is persuaded by a family member, or friend on the best brand to buy. The customer obviously would have done his or her own homework on what brand suits his or her needs. All brand new vehicles have warranty and pass assurance quality tests to be road worthy.

The lesson to be learnt from such a scenario is how an opinion is only an opinion, and not a fact.

People will use facts and figures to persuade our decision, however we cannot believe everything  posted on various Facebook groups.

Between January and June this year, unsubstantiated articles were shared about our economy facing bankruptcy, which never eventuated. Many of these ‘wardrobe’ scholars do not understand the complexity on how financial markets operate and how economic models are built to sustain loan repayments, as vital investments for our country.

Our decisions can either support individuals and organisations scheming on removing our current PM, or we can simply remove these so called experts on our forums. We must support this government and help it achieve the desired results it set out achieve during the formation in 2012.

We need stability, not instability.