PORT MORESBY – Sir Mekere Morauta has said “very loud alarm bells” should be ringing in the Papua New Guinea government’s ears after the treasurer Charles Abel and finance minister gave widely variant versions of the country’s revenue shortfall so far this year.
Treasurer Sam Basil had said the government was “slightly behind on revenue” after the first five months, at K974 million – or 19% - less than budgeted, while a few days later finance minister Charles Abel said revenue was down by K2 billion.
“Who is right?” Sir Mekere asked, adding, “And whether the revenue shortfall is K974 million or K2 billion, neither figure is ‘slight’.”
Speaking in parliament this week, the former prime minister said the shortfall indicated that the budget was “way off mark, bordering on useless”.
He said the economy was stuck “in a recessionary gear” with GST and corporate, mining and petroleum taxes all down.
To make matters worse, State enterprises were not performing, paying only K100 million of the budgeted K500 million in dividends.
When the treasurer revealed that expenditure from January to May was K4.5 billion, three percent higher than expected, but lower than the K5 billion released by Treasury, Sir Mekere’s rhetoric went into full flood.
“Why is Treasury issuing warrants without cash to back them up?” he asked. “You may as well write warrants on toilet paper. At least toilet paper has some other utility.
“Clearly, the budget assumptions and settings cannot be relied on.”
Sir Mekere also pointed out that essential items of expenditure directly affecting the welfare of the people and the effectiveness of provincial governments were not fully funded. He proposed that expenditure needed to be cut on non-essential services, and abuse, wastage and corruption better addressed.
In the course of his detailed response to the economic statement, the former prime minister also expressed his disappointment that the PNG Treasury had no account of foreign aid receipts for the year so far.
“It seems you are asking foreign governments and institutions to provide the figures; how strange,” he said.
“Three things are clear: the government is not in control of foreign aid; the government is not managing foreign aid properly; and foreign aid is not integrated into the budget.
“Its use now does not necessarily reflect the country’s development priorities.”
Sir Mekere said the economic statement highlighted four significant issues: the non-mining sector of the economy is not in good shape; the revenue assumptions of the budget are over-optimistic and expenditure levels unsustainably high; the gulf between revenue and expenditure is widening; and the budget needs to be repaired and restructured to be more realistic.
He said a supplementary budget was needed to protect core services in health, education and law and order, build income-generating infrastructure, stimulate the non-mining sector and pay contractors and suppliers.
“Your statement indicates that treasury is regurgitating to you the same advice that resulted in the situation we’re in,” he said.