Taxes well spent? The 2011 PNG budget
16 November 2010
BY MATTHEW MORRIS
TODAY, THE PNG government will set out its spending plans for the next year and beyond. There will be a lot of interest at the Budget ‘lock-up’ to hear the details of how the government plans to use taxpayers’ money.
A litmus test for the new plan will be how well it is funded. This doesn’t mean how many new initiatives the government announces, but whether the budget fully funds existing priorities and the basic services that are needed to meet its targets.
PNG has no shortage of plans, visions, strategies and policy papers. Some are good, some are bad. All suffer from poor implementation.
Despite all the plans, and despite PNG’s mineral booms, the sad truth is that Papua New Guinean incomes, adjusted for inflation, have barely risen since independence. We are told that government’s new plan is going to change all that – incomes will increase by one third from K3,430 this year to K4,638 by 2015.
The 2011-15 Medium Term Development Plan (MTDP) has not yet been released, but media reports give an indication of what it contains. The government will spend K36 billion over five years on a range of development initiatives to help create 315,200 extra jobs and sustain 8.5% growth per year to 2015.
1. How much does the MTDP cost and is it fully funded?
We don’t yet know what the government’s cost estimates are for the MTDP, but we do know how much elements of it cost because the numbers are in the partnership agreement that PNG and Australia signed in 2008, which already adds up to over K15 billion over the next five years.
How much will the rest of the development plan and ongoing government operations cost? Perhaps today the government will publish its cost estimates for the 16 “missing link” roads and four additional economic corridor national roads; the extra health facilities and personnel; and the expansion of tertiary education. (And these cost estimates will need to be built on top of the cost of existing service delivery.)
2. Will funds get to where they’re needed?
While allocating resources to development priorities is a necessary for success service delivery, it is not sufficient. Money needs to get to the frontline of service delivery: to schools, health centres, and local governments.
Yet sub-national levels of government that are responsible for delivery of basic services are not getting the funding that they need. And based on budget documents, recurrent funding for provincial governments has barely increased in real terms since 2005, stagnating at about K1 billion (or K150 per person).
The funding shortfalls are similar for the sectors. While funding for provinces has stagnated and funding for schools has fallen far behind need, the funding managed by the Department of Planning has shot up in recent years, reaching over K1 billion in the last budget. What guarantee does the government provide that these resources will reach front line service providers?
3. What safeguards are in place to prevent misuse of funds?
Given the ambitions of the government’s targets and the funding gaps that need to be filled, there isn’t room for funds to go missing. Funding needs to reach service providers so that they can hire teachers, build roads, train doctors etc. There isn’t room for waste or leakage.
Yet the past performance isn’t very comforting. The Commission of Inquiry into Finance estimated that K500 million went missing between 2000 and 2006 – and that was just from the Department of Finance. The Inquiry highlighted a catalogue of system failures, and unless these are being addressed, we should assume that similar leakage will exist in future.
Control of corruption has deteriorated sharply over the last decade, leaving PNG in the bottom 10% of countries in the world. Misuse of funds means less money for service delivery. If only 10 toea in each kina went missing over the next five years, that would still be a massive K3.6 billion – enough to rehabilitate and maintain priority national roads. And every toea is enough to education 30,000 children per year. What safeguards are being put in place to make sure money doesn’t go missing?
The coming few weeks will be exciting. The government will unveil both its development plan and how it will fund it. Today’s budget lock-up will be the first opportunity to ask Planning and Treasury about the efficacy of both the new plan and the budget. I hope there are some good answers. After all, the PNG public and businesses have a right to know how well their taxes are being spent.
Matthew Morris is a Research Fellow at the Crawford School and Deputy Director of the Development Policy Centre at the Australian National University.
Source: Papua New Guinea: Questions for the budget lock-up’ by Matthew Morris, Development Policy Blog, 13 November 2010
The question is not really about how well the sectors are funded. The question is really how well the money is going to be spent by the respective sectors that receive the appropriation.
The biggest problem we have in this country is that, though we have money, we actually do not spend money allocated according to what we plan and aim to achieve.
Yes! We do have plans but the question is how genuinely do we implement those plans?
Remember plans are only written concepts and ideas on paper. The practicality of implementing what is on paper is the core of the business. The issue we always overlook.
Moving further, the question concerns the capacity, effectiveness, efficiency, commitment and reliability of our government implementing systems.
Do our implementing systems work well and meet the expected output! At this moment the public service implementing machine is old, overweight and outdated.
Even though you give more money to this machine, it cannot work because it’s aging and its need an urgent major revamp.
For instance, of all the divisions of health in the 20 provinces, only four are working well in delivering what is expected from the money allocated to each of them. The other 18 have question marks written all over them.
Does this means that these divisions were not funded? if you go to the respective provinces and check the records of the HSIP account in the health divisions, you will find that big money is spent on vehicle maintenance, diesel, executive meetings and whatever - practically not hinted in the plan.
Likewise, the division of education in the 20 provinces. So much money has been dispatched to these divisions but there are still lots of questions that need to be asked on how these allocated funds have been spent.
Check also the provincial police headquarters. How do the provincial police commanders account for the money allocated to them each year. You will be surprised.
The provincial health advisers, education advisers and police commanders are playing the primary roles in what goes towards the achievement of the purpose and goals of the government.
They are equally as important as our political leaders. But the phenomenal thing is that we never scutinise and hold them accountable like we always do with our politicians.
Posted by: Gerald Tananu | 16 November 2010 at 03:31 PM
Absolutely we have the right to know how our taxes are being spent - where, how much, when and who are the beneficiaries?
Posted by: Gina Samar | 16 November 2010 at 01:38 PM