Dec 17 2014

Bougainville News : Australia pledges k120 million to Bougainville in 2015

Australia’s Minister for Foreign Affairs, Hon. Julie Bishop MP, has pledged that her government will provide more than K120 million to the Autonomous Region of Bougainville in 2015.

It is expected the funds will be used for projects related to health, education, road infrastructure and social issues.Bishop made the announcement in Arawa on Tuesday 16 December as part of her two day tour of Bougainville.

“Australia comes as your friend,” Ms Bishop said, “I’m so impressed by the commitment and energy shown by the people of Bougainville to peace building.”

“The government of Australia will always be a partner and will support everything that is done for the good of Bougainville and its people.”

Dec 16 2014

Bougainville Development News: Kieta has a rich history that is now flying

“THERE CAN ONLY COME POSITIVE LEGACIES FOR DEVELOPMENT FOR BOUGAINVILLE AFTER OPENING OF KIETA (AROPA) AIRPORT.” Simon Pentanu reports

The Bombadier Q400 under the cloudless Bougainville blue sky after its naming, parked and patiently waiting in full bloom like the dancing Raggiana Bird of Paradise displaying its colour and plumage.Foto credit: Bruce Mallar, PBA Inc.

With the effervescent sea breeze from the Solomon Sea soothing sweats and high humidity under the tropical noon day sun this Bird of Paradise was aptly named Kieta after a township that needed a huge spiritual lift after it descended into the abyss of sorts as many famous places often do in the confusion and decadence resulting from human conflicts.

Much of the early history of what is now Kieta District may be offshore somewhere in Germany in a historical, anthropological or natural museum and some bits and pieces may well be in Canberra. The old site of Kieta was the first German settlement where ruins and remnants of the old township still stand by the shores that form the Kieta harbour.

PHOTO: A church tower and spire on pokpokisland. Foto credit: Simon Pentanu, PBA Inc.

The first Marist missionaries also landed here on August 7 1901 on Pokpok Island on a schooner that travelled from Faisi in the Shortland Islands in western Solomons. Kieta was also the headquarters of Bougainville District after the HQ was moved from Sohano Island near Buka. At the time Papua and New Guinea were jointly administered by Australia, the former German New Guinea as mandated territory under the United Nations and Papua annexed by Britain, as a protectorate or colony.

An old German reef marker that had lamp markers, at the outer mouth of entrance into Kieta Harbour. Able bodied men from Pokpok Island were employed to paddle soil and gravelmix in canoe loads from Uruna Bay to the reef and were used to mix the concrete to erect this monolith which still stands innocuously stuck on Pangaradomoto reef. Foto credit: Simon Pentanu PBA Inc.

Kieta has a lot of history than we might care to find out. The efforts made by the National Government, ABG and the Aropa landowners adds to its more recent history with the reopening of Aropa for Air Niugini to commence normal commercial services after 24 years in the abyss. Last Friday 12 December 2014 was history capped with a huge gesture on the part of PNG’s Independent Public Business Corporation (IPBC) and Air Niugini management to name one of its the Q400 aircraft Kieta.

Kieta today with Pok Pok Island (backleft) Photo Phil Staley

You can now fly back into the annals of history as Air Niugini resumes its service to Aropa (Kieta) this week.

As the Member for Central Bougainville Hon Jimmy Miringtoro MP said at Aropa, the opening is a huge relief for him and his people after many efforts over the last twelve years following the restoration of Peace on the Island.

Prime Minister Peter O’Neil and President John Momis in auspicious pose after unveiling the name of the aircraft Kieta after and as part of the opening of Aropa airport

Foto credit: Bruce Mallar PBA Inc.

Dec 16 2014

Bougainville News: Australian Minister for Foreign Affairs Julie Bishop visits Buka and Arawa

Australian Minister for Foreign Affairs Julie Bishop arrived in Buka on Tuesday after chairing the annual Australia-Papua New Guinea Ministerial forum in Port Moresby.

Ms Bishop was accompanied by Australian High Commissioner to PNG Deborah Stokes and other dignitaries from the Australian government.

Story from Papua New Guinea Today and Pictures from Aloysius Laukai and Ishmael Milton Palipal

Read all Julie Bishop/ Bougainville background notes and watch Video interview here

She was met at the Buka airport by the ABG Finance Minister Albert Punghau, Bougainville Regional MP Joe Lera and Acting Assistant Commissioner of Police in Bougainville Chief Superintendent Paul Kamuai at the foot of the plane before being led to the VIP lounge by the Kulubou cultural group dancers.

In welcoming the Australian minister ABG Health Minister Mrs Rose Pihei on behalf of the ABG thanked the Australian government for their long term assistance that has really helped in rebuilding Bougainville through the support in funding and human resource to see us through in our political future.

Ms Bishop said on behalf of the Australian Prime Minister and the government we want to see a peaceful, prosperous and safe Bougainville with a strong autonomous government as Australia and Bougainville are friends and we live in the same neighborhood.

“Since the conflict, Australia has provided continuous enormous support as we were witnesses to the Bougainville Peace Agreement and we want to assure that the BPA is implemented to the fullest extent,” said Ms Bishop.

“We were also supporting the Truce Monitoring Group (TMG) then the Peace Monitoring Group (PMG) from the outset and we have been focusing our support in the areas of education by providing new classrooms and teacher’s accommodation and we have already completed 20 schools in the region and in 2015 we will be looking at more schools,” said Ms Bishop.

She said health is another area of focus to roll out infrastructure to other hospitals and health centers so that people have better access to health care and we are also looking at improving the roads as most Bougainvilleans live within 7 kilometers away from the main roads for them to access service.

“We also put support in the Law and Justice issues with New Zealand and today we will be introducing the new pre-recruit education program for young Bougainvilleans have the opportunity to be involved in security for the people,” Ms Bishop said.

The recently concluded Operation Render Safe led by Australia that involved Canada, Sweden New Zealand, United States and Solomon Islands was also the support by Australia to help the people of Bougainville improves their livelihoods and that support will continue to see Bougainville achieve its destiny.

The delegation will be visiting Arawa to attend and launch the GIF funded mobile radio, then visit the Panguna Peace building strategy office, the women’s micro finance office.

And on Wednesday they will visit local women who form a part of road maintenance in Tinputs and then proceed to Buka to conclude Bougainville Womens Federation Forum (BWF), then a brief tour of the ABG parliament and finally the opening of the new police training center barracks at Hutjena before departing for Port Moresby.

More pictures from Arawa Below

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Dec 14 2014

Bougainville Development NEWS: Opening Aropa airport was Xmas gift for Bougainville’s future

“It was emotional, it was exciting, thought drenching, brain leavening, quite historical in many respects. After almost 24 years in disuse, a revamped and upgraded Aropa airport was re-opened last Friday 12 December 2014. With its new terminal buildings it is now ready for business. As usual it was marked by celebrations of sorts – political speeches, hand clapping, chanting, lamenting, shouting, smiles and laughter and ecstatic joy all around.

If the thrill and joy of opening Aropa at this time is a Christmas gift, the naming of the aircraft is a spiritual lift for Kieta township and for Bougainville. It’s great, it is the stuff that marks and makes history that is worth remembering.”

From Simon Pentanu who was on the first flight into the upgraded airport

I am thankful for the opportunity get on the inaugural flight to be among wiser and much stronger and more power-wielding politicians and bureaucrats on the historic flight. There was no way I was going to miss this for the world. I wanted to return home and land on the same turf where I took the second last flight out and away to Port Moresby 24 years ago. And going back a little earlier in history the old Aropa airstrip is also where I took my first flight on a TAA DC-3 in 1965 to begin high school on Buka Island. I cannot forget, the old work horse was the fastest thrill I ever had then with a landing on the way at the Wakunai grass strip before arriving on Buka Island.

The inaugural flight F400 PX4354 flew direct Port Moresby – Aropa. We arrived on the west coast and made our way over the Crown Prince Range to the other side above Loloho and took a slow flight path southwards along the coast above Arawa, Kieta, over Pokpok Island and then made the landing approach from the Koromira end in south touching down at 10.39am on the newly paved new-look Aropa Aerodrome.

The opening of Aropa means Bougainville is probably the only Province/Region with two aerodromes, one in Buka and now in Kieta (Aropa). As part of the reopening and renewing ceremony the F400 Dash was named Kieta. This once thriving township name now becomes a very recognizable part of the aircraft’s livery on one of Air Niugini’s domestic fleet. If the thrill and joy of opening Aropa at this time is a Christmas gift, the naming of the aircraft is a spiritual lift for Kieta township and for Bougainville. It’s great, it is the stuff that marks and makes history that is worth remembering.

The name is conspicuously poised providing a respectful distance between the Prime Minister and the President who both unveiled and named the aircraft.

Part of the excited but orderly crowd that welcomed the inaugural flight and witnessed the naming of the aircraft after their township.

If the naming required baptismal or christening rites as part of the ceremony, The President, a former priest adequately fulfilled both the purpose and occasion for this. If the naming and ceremony needed any political validation, the Prime of PNG and who is also the Prime Minister of Bougainville fittingly occasioned this purpose.

As you might imagine I am – and I would think many Bougainvilleans would be too – still over the moon that a long last Aropa is open for business. Landing at Aropa means it will take me less than an hour to get to the village as opposed to three and a half to 4 hours drive from Buka to Kieta. I can prepare lunch in Port Moresby and eat it in my house on Pokpok Island whilst it is still warm. Or, I can bring the famed local dish tamatama within a few hours of being prepared in the village on the flight back to Port Moresby to share with family and friends in the city while the pudding is still warm.

So there, another Day in the life, trials and tribulations of a Paradise that lost its head, its charm and its way as a promising place with so much to offer. But never mind. The past is gone, the future is yet to come. The moment to live and savour is now. It is time to make the most of it.

Commercial flights will begin in the coming days or weeks. May be Air Niugini can make the two routes to Aropa and Buka quite profitable in the country if it offers no-frills travel and targets volume and bums on seats at affordable fares that’ll allow more people to travel.

Flying over this enchanted Island is truly a sight to behold. Landing back at Aropa after 24 years was redeeming. Seeing the multitudes that converged to celebrate and adorn the opening was reassuring.

WE praise God.

Dec 14 2014

Bougainville News: Australian Foreign Minister Julie Bishop to address concerns on Bougainville visit

“Put simply, this vote will determine whether Bougainville pushes ahead for full independence or chooses to remain an autonomous region of PNG.

Yet the complexity of the issues in Bougainville, and as between the ABG and PNG, means that as the referendum date draws nearer, Bougainville will again inevitably feature prominently in Australia’s foreign policy considerations.

The process of negotiation between the ABG and PNG is fraught with difficulties as there appear to be deeply entrenched differences over the future of Bougainville, the possibility of reopening the Panguna mine and the direction of economic and social development.

I believe that this region should be Australia’s highest foreign policy priority and that is why I am spending as much time as I am able to do making contact, engaging with people, listening to them and talking about issues of concern.”

Julie Bishop speaking in 2012 after her trip to Bougainville : Has her views changed ?

Picture: Julie Bishop a friend of Bougainville for many years recently hosted Autonomous #Bougainville Government MPs Joan Jerome, Rose Pihei, Elizabeth Burain in her Canberra Office

Fresh from a trip to the International Climate change in Peru South America Australia’s Foreign Minister Julie Bishop will today travel to Papua New Guinea and Bougainville

The Minister will co-chair the annual Australia-Papua New Guinea Ministerial Forum, and Business Dialogue and travel to Bougainville where she will meet political and community leaders to discuss the implementation of the Bougainville Peace Agreement and visit Australian aid-funded projects in Buka and Arawa.

Speaking on Sky News Australia this morning (December 14) the Minster said she was concerned about the upcoming referendum on Bougainville independence .

Ms Bishop said Bougainville wanted a referendum on independence next year but she did not believe it or PNG would be ready for a referendum for some time. “I want to meet with the autonomous Bougainvillian government and talk to them about their expectations,” she said.

Asked if she was concerned about a resurgence of violence on Bougainville, Ms Bishop said that had always been a possibility.

“Unless the PNG government and the autonomous Bougainvillian government can sort out their differences and work closely together, I think it is going to be a challenge for Australia and New Zealand and other countries who are responsible, if you like, for this part of the world.”

SEE VIDEO of her interview HERE

Included in this post below are background information on Julie Bishop and her thoughts on Bougainville’s Future including

What was Julie Bishop saying about Bougainville in 2012 as opposition spokesperson?

Interview with Radio Australia about her Bougainville trip in 2012

Minister Bishop will be joined by the Minister for Immigration and Border Protection Scott Morrison, Minister for Defence David Johnston and Minister for Justice Michael Keenan.

“The participation of four senior members of the Coalition reflects the strength and depth of the relationship the Australian Government shares with our closest neighbour.” She said

Forum discussions will focus on key areas of bilateral cooperation, including defence and policing cooperation, the implementation of the Regional Resettlement Arrangement, how Australia is assisting PNG to host APEC in 2018, and strengthening PNG’s public service through improved education and training.

Minister Bishop said she look forward to co-chairing the annual Ministerial Forum Business Dialogue, which enables the business community to discuss with Ministers ways to further strengthen trade and investment links between our two countries.

Following the Ministerial Forum, Minister will travel to the Autonomous Region of Bougainville – the first visit to Bougainville by an Australian Foreign Minister since 2000.

End Press Coverage

Speaking in advance of trip a Bougainville elder had this word of advice for Julie Bishop

“Tell Julie Bishop many of us can understand where she is coming from (from Canberra in Australia) where political correctness is on the lips of politicians. But there are times when politicians are best advised not to come out in public space and view about Bougainville because there are others that will not understand encrypted political messages and even others that will see her as stifling a cause for which people lost their lives.

Sensitivities and knowing what to say, how to say it, when to say it and in the company of who to say it has played a major part in rebuilding Bougainville. It’s challenging and the people of Bougainville will say they don’t need the only LNP women Minister throwing too many spanners into the works in a male dominated work-shop designed and run largely by men. Julie is a friend of Bougainville but she is also Australia’s Foreign Minister.”

Background

What was Julie Bishop saying about her Bougainville trip in 2012 as opposition spokesperson

See Video Link Bishop and Rudd exchange comments about Bougainville 2012

The range of complex issues surrounding Papua New Guinea’s national election have been widely commented on by Australian media and politicians – some more helpful and diplomatic than others.

In the week before Easter I visited PNG – my second extended visit to the country in the past 9 months – accompanied by Queensland federal colleagues Senator Ian Macdonald, Jane Prentice MP and Ewen Jones MP.

We held discussions with Prime Minister O’Neill, senior members of his Cabinet, the Leader of the Opposition, the Chief of the PNG Defence Force, the Police Commissioner and the PNG Election Commissioner, amongst others, on the many and varied challenges associated with the election.

Papua New Guinea is a democracy and as a member of the Commonwealth of Nations is committed to regular parliamentary elections and strong democratic institutions, yet recent political events have been challenging.

Current indications are that the election will be held mid year with hopefully many of the constitutional issues surrounding the composition of the government and a dispute with the judiciary being resolved by PNG voters at the ballot box.

What is less well known is that there is another vote that will take place in the coming years in Bougainville, an autonomous region of PNG, that is potentially of far greater significance to PNG and the broader region than the general election this year.

The Bougainville Peace Agreement signed in 2001 between the PNG Government and the leaders of Bougainville brought a formal end to a civil war that had cost many lives in Bougainville over decades.

Bitter conflicts over land rights, the closure of the mainstay of the local economy in the Panguna mine in the late 1980s and a nascent secession movement has meant that Bougainville has presented a challenge to the fragile nature of PNG nationhood and its politics since PNG independence in 1975.

However, part of the 2001 Agreement, which was brokered in part by the Howard Government, provides for a referendum to be held between 2015 and 2020 on the question of Bougainville’s independence from PNG.

Various conditions must be met prior to the referendum, notably the disposal of weapons currently held in Bougainville and an acceptable standard of governance achieved by the Autonomous Bougainville Government (ABG).

Put simply, this vote will determine whether Bougainville pushes ahead for full independence or chooses to remain an autonomous region of PNG.

As Anthony Regan, a leading expert on Bougainville, has stated, the starkly different views that are held by Bougainville leaders and the PNG Government, gives rise “to possibilities of conflict over the referendum outcome”.

Aware of the challenges facing Bougainville and the importance of engaging with all relevant parties at the earliest opportunity, our trip to Papua New Guinea included a number of days in Bougainville to gain a deeper understanding of the complex web of cultural, social, economic and political issues that lie at the heart of the referendum question.

During our stay in Buka, we met with leaders of the ABG including President John Momis and Vice-President Patrick Nisira to discuss progress of the peace process, weapons disposal and economic development.

While the 2001 Agreement resulted in the destruction of many weapons used in the civil war, there are fears that a significant number of weapons are still held in the community.

Further, the military ordnance left in southern Bougainville by the United States during the Second World War in the Pacific is an ever present danger.

We made a seven hour round journey by boat and four-wheel drive to Arawa, the pre-civil war capital of Bougainville, to meet with people involved in the reconciliation process including members of the ABG Regional Administration and a representative from the Me’ekamui people, a tribe who had not taken part in the 2001 Agreement.

The reality of the civil war and the bridges that have to be crossed before the referendum can take place were brought home to me in our meeting with former members of the Bougainville Revolutionary Army, Sam Kauona and Ishmael Toroama.

Sam Kauona, a Bougainvillean but also an Australian Army trained former PNG Defence Force lieutenant and explosives expert, who became one of the most feared guerrilla fighters in the civil war, told me that he had been “rehabilitated” and that he was now committed to peace and reconciliation.

However he was also deeply committed to an independent Bougainville and he is not alone in his views.

We saw the work funded by Australia’s foreign aid program to improve basic infrastructure across the islands, as well as improving governance, education and health standards. However, the massive challenge of achieving an independent Bougainville should not be underestimated.

Whether the preconditions for the referendum will be met within the timeframe remains to be seen, but this will be a crucial test for the people of Bougainville and the PNG Government.

Australia must be, and be seen to be, deeply committed to the peace and reconciliation process in the lead up to 2015 and beyond.

Interview with Radio Australia 2012

JULIE BISHOP It is my first visit to Bougainville but it is part of a trip to Papua New Guinea and Bougainville, and I have brought a number of my parliamentary colleagues with me. And we arrived in Buka in Bougainville this morning. We have met with the Vice President and with the Chief Administrator and a number of senior officials. We will be staying overnight this evening and then going to Arawa tomorrow, we will spend another night in Bougainville on Thursday and then return to Papua New Guinea on Friday.

HELENE HOFMAN Did anything arise from the meetings that you had this morning?

JULIE BISHOP They have been very significant meetings because I have been given an update about the post conflict challenges in Bougainville. One issue that keeps being raised with me is the weapons disposal programs and the challenges ahead for the autonomous government to try and get the weapons containment under control.

Your listeners will be aware that there is a proposed referendum on independence to be held as part of the Bougainville peace process sometime before 2020, between 2015 and 2020, and one of the issues that must be confronted before the referendum can be held is the weapons disposal. And that is an issue that is really exercised in the minds of those in leadership positions here.

HELENE HOFMAN And you’re due to meet with President Momis tomorrow, is that something you’ll bring up with him or do you have other issues that are on the agenda?

JULIE BISHOP I will be meeting with President Momis in the morning. As well as the issue of weapons disposal we will be talking about peace and reconciliation post conflict. I also want to discuss the effectiveness of Australia’s aid program into PNG and Bougainville. I propose discussing with him some of the challenges that Bougainville faces in terms of its budget and the revenues that Bougainville is able to derive, and also some opportunities for opening the Panguna mine again and other mining and resource projects that are being considered here. And we will also talk about other ways to expand the economy and ways that Australia can assist through AusAID and other means.

HELENE HOFMAN President Momis has repeatedly said he would like to see more Australian aid for Bougainville, what is your stance on that?

JULIE BISHOP Well that is one of the reasons that I have come here in my capacity as Shadow Minister for Foreign Affairs and Trade, I want to understand far better the challenges facing the people of Bougainville. And that is why we are spending two and a half, nearly three days here so that we can meet people who are recipients of aid, understand whether it is having the desired impact.

We have met with the Catholic Bishop today, we are now meeting with one of the Sisters, Sister Lorraine’s organisation out here in Chabai, and trying to understand from them what more is needed in terms of support for health, education, as well as infrastructure.

HELENE HOFMAN Have you had to field any questions about why the Foreign Affairs Minister Bob Carr hasn’t yet visited the region?

JULIE BISHOP I have certainly had to field questions in Port Moresby about Senator Carr’s recent comments concerning sanctions on PNG should an election not be held and I have been reassured on many occasions by every level of government in PNG that the national elections will go ahead as constitutionally required.

And so it is unfortunate that Senator Carr made those comments but he has admitted that they were wrong and I would encourage him to visit PNG and Bougainville as soon as he is able.

There is no substitute for actually spending time here. In the last eight months I have spent a week in PNG, I have spent time on the Solomon Islands and now another week in Papua New Guinea and Bougainville.

And so I believe that this region should be Australia’s highest foreign policy priority and that is why I am spending as much time as I am able to do making contact, engaging with people, listening to them and talking about issues of concern.

Dec 12 2014

Bougainville Development News : Aropa airport opens after 24 years

By Aloysius Laukai

The famous REBOINE, AROPA Airport in Central Bougainville officially opened for Business today by Prime Minister, PETER O’NEIL and ABG President, Chief DR. JOHN MOMIS amidst capacity crowd of what was estimated to be more than TEN THOUSAND people from South, Central and North Bougainville.

Photo above Ishmael

The airport was closed at the height of the crisis in 1990 and remained closed although the Peace Monitoring Group and several light aircrafts continued to land especially for Bank runs to Central Bougainville.

The opening was added extra flavour when three Airline Companies also flew in on the re-opening day.

The Once International Airport had the Airline PNG landing first then the Air Niugini’s Q 400 which was officially named KIETA to commemorate this special service into mainland Bougainville.

A plaque displaying this name KIETA was also unveiled by the Prime Minister PETER O’NEIL and ABG President DR. JOHN MOMIS this afternoon.

The Q400 carried the Prime Minister’s Official party whilst the Airline PNG carried Aropa Airport landowners who went to Port Moresby to complete the MOU on the future of the airport with the National Airport Corporation.

The other plane that landed today was the TRAVELAIR or the famous MANGI LO PLES which had the owner, MR. EREMAS WATOTO and several media team on it.

The opening ceremony was incident free although security was tight to make sure the opening went without any disturbance.

Dancers came from all over Bougainville

Speakers at the ceremony included the Minister for Communications, JIMMY MIRINGTORO, ABG President Chief DR. JOHN MOMIS and the Prime Minister PETER O’NEIL.

Comments from Peter O’Neil as reported by Brian Semoso

The PMs reply to President Momis struck the right cords with the masses.

“Mi no kam toktok politics. Mi no kam toktok independence, mi no kam toktok lo referendum. Mi kam lo opim airport blo yupla. Mi kam lo givim yupla wanem samting yupla bin laikim long taim yet. Na mi kam tu lo lukim wanem samting gen yupla laikim ba mi wokim. Hausik ba mi wokim, Rot ba mi wokim, schools ba mi wokim. Within the next two years , rot stat lo Kokopau na kamap long Arawa ba mi sealim blo yupla too..ba mi kambek gen planti taim bai yupla les lo lukim pes blo me lo Bougainville…”

Updated Reports 14 December

Prime Minister Peter O’Neill and ABG President John Momis officially opened the K10 million Aropa airport just after 1pm today.

The opening was witnessed by a high-powered delegation from Waigani of State Ministers, heads of State-owed Enterprises (SOEs) and Bougainville leaders in Port Moresby.

The ribbon was cut by the two leaders to mark the official unveiling of the Kieta aerodrome plaque.

In what was a historic yet significant event for Bougainvilleans badly affected by the 10-year Bouganiville Crisis which started in 1989, it was an atmosphere of mixed feelings for locals.

Locals were excited with this opportunity and joined the delegation to set foot on the tarmac of the new airport.

Soon after the opening, National Airport Corporation (NAC) officials had to remove excited locals from the tarmac, most just wanting to have a closer look at the three planes from Air Niugini, Mangi Lo Ples and Airlines PNG that took part in the inaugural flight to Aropa.
The Aropa airport for the moment can only take aircrafts the size of Dash 8 and Q400 or smaller.

Promoting the education revolution on Bougainville for 2015

Can you spare a few kina or dollars DONATE HERE NOW

Dec 11 2014

Bougainville Education and Health News: New report -A lost decade? Service Delivery and reforms in Papua New Guinea

“The positive results revealed by the survey not only show that progress in service delivery is possible in Papua New Guinea, but also show how progress can be made. A large chunk of the report is devoted to understanding the impact (or lack of impact) of recent reforms, such as free health and education, and the reasons for the differences and trends that we observe”

Launched at the ANU Canberra Australia by Mr Charles Lepani Papua New Guinea High Commissioner to Australia

Picture Colin Cowell Bougainville News; Canberra

DOWNLOAD THE REPORT HERE , A lost decade? Service delivery and reforms in Papua New Guinea,

How to make service delivery work in Bougainville and Papua New Guinea

A report based on two surveys ten years apart and two years of analysis has been by a team of researchers from the National Research Institute (NRI) and The Australian National University (ANU).

In 2002, the Papua New Guinea National Research Institute (NRI), in collaboration with the World Bank, surveyed some 330 primary schools and health clinics across the country, from the national capital to the most remote districts. In 2012, NRI, this time in collaboration with the Development Policy Centre at ANU, went back to many of the same primary schools and health clinics in the same eight provinces, this time surveying a total of about 360 facilities.

The end-product is a data set of unprecedented detail and depth in relation to service delivery in PNG. Indeed, very few countries around the world can boast of a panel survey of facilities of this type which enables comparisons to be made over time.

The NRI-ANU research team has spent the last two years analysing the data sets,

The report, A lost decade? Service delivery and reforms in Papua New Guinea, shows that PNG’s primary schools have expanded rapidly over the last decade, but that fewer services are now provided by its health clinics.

Since the difficulties of service delivery in PNG are already well-known, what is perhaps more interesting are the areas of progress shown in the report. There were 89 per cent more children enrolled in the average PNG primary school in 2012 compared to 2001. Whereas there used to be one girl at primary school for every two boys, now there is almost one girl for every boy. The number of teachers has grown by a third over the decade, and the share of female teachers has grown from a quarter to a half. The number of ghost teachers (teachers claiming pay but not actually working) has fallen dramatically. The average school has more and better classrooms, teacher houses and textbooks. More have drinking water and electricity.

Of course, PNG’s primary schools and – to a much greater extent – health clinics still face many challenges. A third of classrooms require rebuilding: the same share as in 2002. Class sizes have increased a lot, and there are broader concerns about the quality of education on offer. Though the number of children in school has certainly increased, absenteeism has risen.

Nevertheless, the positive results revealed by the survey not only show that progress in service delivery is possible in Papua New Guinea, but also show how progress can be made. A large chunk of the report is devoted to understanding the impact (or lack of impact) of recent reforms, such as free health and education, and the reasons for the differences and trends that we observe.

Getting finances to the service delivery front-line stands out as critical. A lot more funds are reaching schools today than health clinics. About 40 per cent of health clinics receive no external support at all (in cash or in kind), whereas nearly all schools receive the twice-yearly subsidy payments. And schools receive more than twice as much funding than they did ten years ago, even after inflation. What they have lost in school fees they have more than made up for through generous government support.

Local governance and supervision also matter. Schools have mature and increasingly powerful Boards of Management which provide local oversight. They receive community support through P&C Committees. And most schools are inspected.

Resolving workforce issues is also key. The Education Department has been able to hire new teachers, whereas many retired health workers continue in place since there is no-one to replace them. Significantly, about half the health workers we interviewed felt they were not being paid at the correct grade. That was true of teachers ten years ago, but now it is only 10 per cent. Again, progress is possible.

In summary, getting funding to the front line, providing community and administrative oversight, and sorting out human resource problems seems to be the secret for the success of PNG’s primary schools. It is a recipe that could be applied more to primary health care, perhaps starting at the bigger district-level facilities.

Regular monitoring of basic data across PNG is critical for understanding what is working, what isn’t working, and why. Without it, we will be in the dark about service delivery. We look forward to the discussion that we hope our report will generate. In our next phase of research, we’ll be going back into the field to undertake more detailed case studies to better understand the conditions required for service delivery success. And perhaps in another five years or so we’ll be able to further develop this unique data set by undertaking another nationwide facility survey.

The PNG Promoting Effective Public Expenditure Project

A lost decade? Service delivery and reforms in Papua New Guinea 2002-2012

Stephen Howes, Andrew Anton Mako, Anthony Swan, Grant Walton, Thomas Webster and Colin Wiltshire
October 2014
This report presents the results of a 2012 survey of 360 primary schools and health clinics across eight provinces in PNG, from the nation’s capital to its most far-flung and inaccessible regions. Many of the same facilities were surveyed at the start of the decade. By combining the two surveys, we can assess progress on health and education service delivery over time, and analyse the impact of important policy reforms.

Professor Stephen Howes is Director of the Development Policy Centre. Andrew Anton Mako was a Research Fellow at NRI for most of the duration of this project. Dr Grant Walton and Dr Anthony Swan are Research Fellows at the Development Policy Centre. Dr Thomas Webster is the Director of the National Research Institute. Colin Wiltshire is the Project Manager for the PEPE project at the Development Policy Centre.

Dec 11 2014

Bougainville Mining News: Momis tells PNG PM O’Neill “Panguna mine decision a matter for Bougainville

“I have today sent a letter to the Prime Minister reminding him that Bougainvilleans are deeply concerned about the future of mining in Bougainville, and determined to control it themselves, through the ABG.

The letter is attached to this statement. DOWNLOAD Momis – O’Neil re MGU Visit – Nov 2014

Download Minutes of meeting Minining Bougainville Minutes Page 1 and 2

MOMIS TO O’NEILL: PANGUNA MINE DECISIONS A MATTER FOR BOUGAINVILLE

President Momis said today that he was deeply concerned that Prime Minister O’Neill wants the National Government to control future mining at Panguna.

On Thursday 9^th October the Prime Minister held a three hour meeting with a team form the ‘Me’ekamui Government of Unity’ (‘MGU’). The meeting was arranged by the office of the Member for Central Bougainville, Hon. Jimmy Miringtoro.

The President said that the Autonomous Bougainville Government (ABG) has obtained minutes of matters discussed at that meeting, prepared by the ‘MGU’ team. The Minutes (attached to this statement) report the Prime Minister as saying:

‘Ok Tedi is your model to help you with mining in the future’; and

‘We have given the Western Province 20% ownership of Ok Tedi’; and

‘I will give 35% to Bougainville in any mining in the future’.

The President said: “The Bougainville Peace Agreement (BPA) states clearly that the main goal of Bougainville’s autonomy is to ‘empower Bougainvilleans to solve their own problems, manage their own affairs and work to realize their aspirations’.

Because of our experience of mining, mining was in the first set of powers that the ABG requested to be transferred from the National Government. “I told him that the idea of the National Government operating mining at Panguna (or anywhere else in Bougainville) is completely unacceptable to Bougainville.

Any attempt by the National Government to control mining in Bougainville could cause Bougainvilleans to lose all faith in the BPA. Many would refuse to work with the National Government any more.

They would want immediate independence. It would be a recipe for undermining, perhaps even destroying, support for the BPA. “I met with the Prime Minister on Friday 3^rd October (just six days before your meeting of 9^th October) and again on Tuesday 18 November. Both meetings discussed the Prime Minister’s views about Bougainville.

Yet he made no mention in either meeting of the views he expressed to the MGU team on 9^th October. “He must explain why he can express such dangerous proposals to the MGU, and refuse to discuss them with me.

Is he trying to divide the people of Bougainville?“If such views were expressed by the Prime Minister, they clearly have serious potential for undermining relationships between the ABG and the National Government.

“In the interests of maintaining a working relationship between your Government and mine, it is essential that the Prime Minister clarify his position on these issues.”

“This meeting was arranged by the office of Mr. Jimmy Miringtoro. The minutes indicate Mr. O’Neill wants the National Government to control mining at Panguna in the same way it manages Ok Tedi.

Other information available to me indicates that the Prime Minister also told the MGU group that the National Government proposes to purchase Rio Tinto’s shares in BCL to allow to control Panguna mining.

AUTONOMOUS BOUGAINVILLE GOVERNMENT

OFFICE OF THE PRESIDENT

Hon. Peter O’Neil MP 2 December 2014

Prime Minister of Papua New Guinea

Office of the Prime Minister

Morauta Haus

Waigani, NCD

My dear Prime Minister,

I have been advised that on Thursday 9^th October you held a three hour meeting with a team form the ‘Me’ekamui Government of Unity’ (‘MGU’), organised through the office of the Member for Central Bougainville, Hon. Jimmy Miringtoro, and attended by his Press Secretary, Mr. Chris Baria. Minutes (two pages) from that meeting, apparently prepared by the ‘MGU’ team, have been provide to my Government. They are attached to this letter.

You will perhaps be aware that this meeting, and the views reported by the ‘MGU’ team to have been expressed by you have caused great consternation to many Bougainvilleans. In the Minutes you are reported as saying:

‘John Momis is going ahead of me with important issues – PNG can’t allow that’.

Issues about ownership of Panguna land and resources, and the future of large-scale mining there, were a focus of the meeting. The Minutes report you as saying:

In this context you are reported as saying that you believe that mining powers and functions have not been validly transferred to the Autonomous Bougainville Government (ABG) and that the Bougainville Mining (Transitional Arrangements) Act 2014 is invalid.

‘Ok Tedi is your model to help you with mining in the future’; and

‘We have given the Western Province 20% ownership of Ok Tedi’; and

‘I will give 35% to Bougainville in any mining in the future’.

I also understand that you suggested to the MGU group that they should consult with me and my Government about the issues that you discussed with them. While I welcome that advice, I have grave concerns about the above your reported views. Amongst other things:

I understand that in this context you proposed that the National Government purchase shares held by Rio Tinto in BCL and control future mining operations at Panguna, similar to arrangements with Ok Tedi.

Given the various decisions made since January 2008, jointly between the National Government and the ABG (through the Joint Supervisory Body), about the transfer of mining powers to the ABG, and the multiple efforts made by the ABG to consult the National Government about development of the Bougainville Mining (Transitional Arrangements) Act 2014, it would be a matter of the gravest concern if you did in fact express the reported views concerning the transfer of mining powers and the Bougainville Mining (Transitional Arrangements) Act 2014.

There are few issues of greater sensitivity to Bougainvilleans than those concerning the future of mining in Bougainville. A key goal of autonomy recorded in clause 4(b) of the Bougainville Peace Agreement(BPA) is to ‘empower Bougainvilleans to solve their own problems, manage their own affairs and work to realize their aspirations’. In the light of Bougainville’s experience of mining, it is no coincidence that the first set of powers that the ABG requested to be transferred included mining

Bougainvilleans regard it as essential that all decisions about future mining be made by the ABG, on behalf of all Bougainvilleans. The concept of the National Government operating mining at Panguna (or anywhere else in Bougainville) – whether on a basis like Ok Tedi or on any other basis – is completely unacceptable to Bougainville

Any attempt by the National Government to control mining in Bougainville could cause most Bougainvilleans to lose all faith in the BPA, and to refuse to work with the National Government any more. Many would want to seek immediate independence. It would be a recipe for severely undermining, perhaps even destroying, support for the BPA.

I met with you in Port Moresby on Friday 3^rd October (just six days before your meeting of 9^th October) and again on Tuesday 18 November.

In both meetings our discussion focused on your views about issues concerning Bougainville. Yet you made no mention at all in either meeting of the views you advanced in the meeting on 9^th October.

It is difficult for me to understand how you could have been unwilling to discuss with me the views you are reported to have stated to the ‘MGU’ team on such important, sensitive and potentially divisive issues.

If such views were expressed, they have serious potential for undermining relationships between the ABG and the National Government.In the interests of maintaining a working relationship between your Government and mine, it is essential that you clarify your position on the matters raised in this letter, and that you do so as a matter of urgency.

Dec 8 2014

PNG News: The challenges of fighting corruption in Papua New Guinea

The challenges of fighting corruption in Papua New Guinea

By Sam Koim

This is a truncated version of Sam Koim’s presentation made at The Australian National University on 27 November 2014. The full podcast version of his speech can be found here. Sam Koim’s visit was sponsored by the State, Society and Governance in Melanesia program and the Development Policy Centre, ANU. NOTE: Bougainville News Australian editor Colin Cowell attended

Sam Koim is Chairman of the multi-agency, anti-corruption body Taskforce Sweep and Principal Legal Officer at the Department of Justice and Attorney General, Papua New Guinea.

I would like to share with you some of my experiences in fighting corruption in Papua New Guinea. My story is not unique. Stories like mine are unfortunately replicated across far too many countries around the world. I have dedicated the last few years to combatting corruption in PNG. My journey, though dangerous at times, and uncomfortable and unpleasant for my family, has been personally rewarding in ways that I could never have imagined.

The challenges of fighting corruption in PNG

The challenges of combating corruption in a resource rich, communal, yet diverse cultural setting such as PNG, are multifaceted. Here I outline some key factors that make the fight against corruption in PNG challenging.

The first challenge is cultural. In PNG the big man syndrome – the perception that leaders in responsible government positions are beyond reproach because of their elevated status in society – shapes relationships. There is also a lack of national consciousness. Many people think in groups, such as tribes, instead of as a country. Because of our communal living, an attack on an individual is seen as an attack on the group. Sometimes corruption rewards the group, hence the group is ready to defend the corrupter.

Others believe that corruption is a behavioural pattern that always appears as a consequence of institutional failure. Yes, that is true. But I see corruption as a behavioural pattern built over time because of a lack of foundational, values-based education. Corruption is a human condition, and we have to study how to train up a child in an appropriate way to respect himself and respect others and their property. People must be taught to do the right thing.

PNG suffers from poor demand for accountability. Owing to the fact that the majority of Papua New Guineans are illiterate, there is little awareness of the public’s right to demand better goods and services. The public also does not have the information available to hold the government accountable. We need a Right to Public Information Act that would allow citizens to have access to public information.

There are also a number of legal issues that undermine the fight against corruption. The judiciary provides oversight to the enforcement of the law. Those who genuinely feel that their rights are denied or the process was improperly invoked can seek a judicial review of that decision: that is allowed under the system of justice we have. However, it amounts to an unnecessary interference in law enforcement when lawyers engage in legal ingenuity to fish for grounds to get their clients off the hook at all costs, regardless of the true facts. To compound the problem, the judicial process is long-winded and if the court has been misled, cases can be trapped in the convoluted judicial process, frustrating law enforcement.

PNG also suffers from a number of legislative gaps. There are obvious examples where public officials openly display the proceeds of corruption. We need an unexplained wealth legislative framework to conduct a means test on those public officials.

The fight against corruption is further undermined by structural weaknesses in state institutions. Political patronage is one of the factors that has, over time, weakened state institutions to such an extent that the line between the bureaucracy and politicians is blurred.

The PNG Auditor-General continues to produce report after report detailing the abject failure of the PNG public service to prevent misuse of public funds. The Parliamentary Public Accounts Committee has noted in multiple reports that most of the public service now spend so much time and energy actively engaged in fraud and corruption that they have little time or incentive to actually deliver services at all. Quite literally, in some departments almost every officer is engaged full-time in attempting to extract public funds out of government accounts.

In PNG, there is a new trend whereby institutions of government, independent institutions, are influenced to abuse their own roles just to preserve a few individuals. That erodes public confidence in state institutions. People then resort to informal means of addressing their issues.

The structural changes required to address this situation requires a total re-think of the way that public funds are disbursed and services are delivered in PNG. Without a proper diagnosis of the causes of institutional failures, a new set of structural reforms that will subject the bureaucracy to more political control – including proposed reforms to allow MPs to appoint their own departmental heads – could be disastrous. Institutions of government need to be appropriately empowered with the necessary resources and skilled manpower to fight corruption.

Fighting corruption is difficult because of the complex nature of corruption itself. Higher levels of corruption, such as grand corruption, are complex in nature and need specialised skills to uncover. Sometimes the fight against corruption is a double-edged sword. When you uncover certain trends and deal with them, they can develop into more complex forms to tighten their grip.

Indeed, corruption flourishes in secrecy. Those who are aware of corrupt activities going on in their organisation rarely report for fear of reprisal. PNG needs, but is yet to have, whistleblower protection legislation in place. PNG also lacks a vibrant media with investigative reporting to utilise the freedom that is guaranteed under the Constitution. The growth of social media has now opened new opportunities for exposing corruption.

Corruption is also transnational making it difficult to address. Cross-border corruption and money laundering are becoming common, yet are rarely curtailed because of jurisdictional and sovereignty issues.

A recent report by the One Campaign suggests that the developing countries of the world lose a trillion dollars every year to illicit financial flows. All of which end up in banks and as assets in stable economies in the developed countries of the OECD. Yet in 2013, countries in the OECD only contributed US$134.8 billion in overseas development aid to developing countries.

We need support and courage

High-level corruption mostly involves politicians, hence fighting corruption requires genuine and consistent political support at the highest level in order to succeed. Fighting corruption is a politically-charged battle, which is won through genuine political will. In order to have trust in the political will, the provider of that “will” must run a clean government.

The fight against corruption cannot be successful without support from non-state actors. We need an independent and vibrant civil society, media and union organisations who provide unbiased criticism to corrupt activities. We need a group of civic-minded citizens who must rise-up and care enough to do something about the prevalence of corruption.

The fight against corruption must never be thought of as one-way traffic. Corruption does fight back. In ideal societies, you would expect that individuals who are the subject of corruption scandals will own-up and submit themselves to the established processes. But in PNG, we are facing ingrained resistance to accountability, whuch is adding another layer to the challenge.

As a result, fighting corruption in an environment like PNG needs not just consummate professionalism, but courage. There are two elements of that courage. First, we need courage to pay the price. Many people fear retribution, be it the fear of losing their job, perks and privileges or being alone or losing their lives. In a small country where the job market is limited, the government is the major employer and contractor. Those who control the systems may be part of a group: you try to attack a group and you become their enemy. Second, we need to be clean: the corrupt cannot fight corruption. They will dig your grave and hunt you to your tomb. If you have no skeletons in your own closet, you will not fear anybody.

From my experience, when you raise the anti-corruption temperature in a country like PNG it starts to make people uncomfortable. If the temperature is too hot and you get a bit too close to the sun, you get burnt. PNG needs more men and women of courage to stand up for their country, even at a personal cost. Honesty can be costly, but you have to stay the course.

God bless.

Sam Koim is Chairman of the multi-agency, anti-corruption body Taskforce Sweep and Principal Legal Officer at the Department of Justice and Attorney General, Papua New Guinea.

Dec 8 2014

Bougainville Government News: Budget obligations to Bougainville not met by PNG Government

2015 National Budget and Commitments to Bougainville

OBLIGATION’S NOT BEING FULFILLED BY NATIONAL GOVERNMENT

President Momis said today that he was very unhappy that the National Government had not fulfilled its obligations to Bougainville in the 2015 Budget. While recognising and appreciating a significant increase in the unconditional operating grant the President noted that the development budget contributions were at least K30 million less than was expected. Other factors including the slow payment of taxes by the IRC and the failure to increase the Restoration and Development Grant (rDG) will impact on Bougainville’s development.

Disappointing Reduction – Special Intervention Fund Grant reduced by K30 million

“At the Joint Supervisory Board meeting in early July 2014 the National Government and the ABG agreed to go to mediation over the disputed calculation for the Restoration and Development Grant. Our respective figures for the arrears of RDG and the annual RDG payment are a long way apart. However, at the JSB the National Government offered to pay K30 million of RDG arrears in the 2015 Budget. They have done this, but at the expense of cutting the K100 million Special Intervention Fund (SIF) grant from K100 million to K70 million, ‘said President Momis.

In February 2011 the then Prime Minister Sir Michael Somare and then Treasurer Peter O’Neill agreed with Bougainville to pay K500 million SIF over five years at K100 million per year. “This promise has been broken in the 2015 Budget. This will put the ABG in a very difficult position in 2015. The ABG has agreed with the National Government a number of large and significant projects using the SIF grant. All of these have started and most have forward obligations in to 2015. With the K30 million reduction in forecast funding the ABG will not be able to maintain the current project profile. Continue new phases of projects such as the Buka Ring Road, water and sanitation improvements in Arawa and Buka and the sealing of the Arawa to Kokopau Road and the Arawa to Buin Road will be impossible,” the President.

2013 SIF K50 million not paid

President Momis also said that the ABG also urgently requires the National Government to pay the second K50 million instalment of the 2013 SIF grant. “Contracts have been signed and project started on the basis that the National Government would meet this 2014 Budget commitment. These projects are all agreed with the National Government. There are no surprises in the cash flow requirements which have been with National Planning for months”

Disputed Restoration and Development Grant not increased – Mediation must start

While the two governments disagree on the RDG calculation the President said that the National Government should have increased the RDG in 2015 from K15 million, the figure for the last six years, to a much higher figure. “Even on the National Government’s own calculations, which the ABG disputed, the RDG should have been K43 million. This is a constitutionally unconditional guaranteed grant arising from the Bougainville Peace Agreement, said the President. “This leaves the ABG with little choice but to initiate the mediation which both governments agreed on. I cannot sit by and let the arrears mount at an alarming rate when Bougainville needs this funding for ts development.”

IRC payments

Under the Peace Agreement the Internal Revenue Commission is required to pay to the ABG all Group Tax collected for employees in Bougainville and 30 percent of GST collected in Bougainville. The ABG has received nothing from the IRC since July. The President has written to the Director General of the IRC Ms Betty Palaso asking for an explanation and for the urgent remittance to the ABG of payments that are due.

It is frustrating and troubling when these road blocks kept being thrown up. These are not new budget claims or new programmes. They were agreed in 2001. I have asked the Bougainville Treasury and Finance Minister to meet with his National Government counterparts to seek explanations for these events” said the President.

“As I have said on many occasions and will continue to say, the Bougainville Government is asking for nothing more nor nothing less than its entitlements jointly agreed by all parties to the Bougainville Peace Agreement in 2001. It takes the two governments working together to bring peace and stability to Bougainville and to maintain it.

Update

ABG finalizes budget planning

The Autonomous Bougainville Government (ABG) will convene in Arawa on Wednesday and Thursday this week to work on the ABG 2015 Budget.According to ABG Acting Chief Secretary Chris Siriosi, the Bougainville Budget Forum will involve primarily the leaders of Bougainville including the ABG cabinet, members of the Bougainville House of Representatives, Council of Elders…, District and Departmental executives.

“The budget forum this week is basically to allocate the budget to the priority plans that the ABG in consultation with the different levels of leadership had identified and compiled in the first budget forum held mid this year in Arawa,” Mr Siriosi said.

He added that the National Government and Bougainville’s various development partners have announced their budget ceiling for Bougainville which now leaves the Bougainville leaders and bureaucrats to determine allocation of the Autonomous Region’s 2015 budget.
He announced that from the 29th to 31st December, the Bougainville House of Representatives would be in parliament session to debate and decide on the ABG 2015 Budget.

“The passing of the ABG 2015 Budget will be the culmination of the work that starts tomorrow and ends on Thursday,” Mr Siriosi said.

Update 2

PNG’s 2015 budget – first impressions

Papua New Guinea must get public finances back on track if the country is to avoid macroeconomic instability and wasted resource revenues.

By the government’s own admission, Papua New Guinea sits at a crucial point: its public finances must get back on track if the country is to avoid macroeconomic instability and wasted resource revenues.

In July, the government released an unhappy report about the state of public finances. Poor or heavily politicised budgeting was expected to result in a budget deficit considerably larger than planned. The report said that on top of overoptimistic revenue projections, the better part of 1 billion Kina was at risk, expressing fears about LNG revenues being directed away from the budget, uncertainty concerning scheduled equity sales and questionable state-owned enterprise revenue projections.

Since then, the government has been working behind the scenes to pull things back into line. In an apparent effort to buy itself some time, the government quietly avoided publishing their regular Budget Strategy Paper in September, an obligation set out in the Fiscal Responsibility Act.

Now the projected 2014 budget deficit has reportedly moved to a much more respectable level of about 5.9% of GDP (K2.5 billon), more or less in line with projections laid out in the 2013 and 2014 budgets. Some serious work was needed to rectify the problems in the original 2014 budget. By this measure at least, the 2015 budget could be called a success.

But acute financial stresses are being felt.

But acute financial stresses are being felt. A recently leaked government circular illustrates the pressures arising from such a prolonged period of deficit spending. The document announced that the Secretary to Treasury was to ‘cease all warrant releases (except for personal emoluments), effective immediately’. The government is effectively asking departments not to commit to anything and give back unspent cash, well over a month before the end of the year. Behind the scenes, officials are looking for short-term solutions to cash flow challenges.

Longer-term solutions must rely on sustained political commitment to fiscal consolidation.

2014 Budget: Eleventh hour revenues and a spending jigsaw

Despite concerns expressed in June, 2014 revenues have managed to meet their original estimate in the 2014 budget, dragged over the line by an eleventh hour increase in some revenue sources. This looks to have been the result of hard work mixed with a dose of luck.

The Treasury’s concerns about a risky K600 million-asset sale were justified. It didn’t happen in 2014, nor has it been penciled for 2015. Given the risks involved, it’s hard to imagine why such as large revenue figure was earmarked for 2014–except to provide greater latitude for spending.

Less worrisome was the fear that all LNG dividends would be diverted from the budget. It appears that dividends are reaching the budget. Revenue in 2014 will be supported by LNG dividends worth over PGK 400 million. However, it is not clear, whether resource revenues are being diverted away from the budget., The lack of transparency around the UBS agreement still continues to cause a lot of uncertainty. To give faith in the good management of resource revenues require a much greater degree of transparency and dialogue.

Personal and company tax revenues were both doing well by mid-year –in part due to compliance efforts– but not well enough to counter shortfalls elsewhere. The Treasury was also concerned about the reliability of State Owned Enterprise revenues. Over the last few months the situation has changed for the better. Improved tax and SOE revenues reportedly added PGK 320 million more than anticipated, and have helped fill the hole.

Government spending is also expected to come in at a similar amount to original budget estimates. To achieve this, the government has done some serious rearranging to accommodate new items: PGK 204.3 million in increased interest costs, PGK 250 million for the South Pacific Games, PGK 60 million for Lae City Roads, PGK 75 million for National Capital District Roads and PGK 40 million for PNG power. This reportedly has been paid for by a savings drive. We know from the 2014 Supplementary Appropriation Bill that money was moved from various departments, capital and trust accounts, giving the government another PGK 1 billion to play with. Whether this is a savings drive or collecting money that has been unspent is unclear, but it has allowed the government to deal with overspend without deepening the deficit.

2015 Budget: looking ahead

In the budget books, Treasury has laid down the challenge ahead, noting that the budget situation is central to macroeconomic stability:

Recognizing that continues large deficits are not sustainable, the government has adopted to ease growth in expenditure to more sustainable levels…This will involve controlling expenditure and be assisted by increased revenues flows…reducing the deficits to sustainable levels will also enable the government to better respond to future external shocks

In 2015, the government plans to reduce the deficit to 4.4% of GDP. This is a larger deficit than previously planned, but it would put the PNG government on track towards a balanced budget over coming years. This will bring the debt to GDP ratio down to below 30% as required in fiscal plans. This is vital to avoid exacerbating borrowing problems and driving borrowing rates upwards.

Since the deficit has been left for longer that initially envisaged, greater cuts to spending are now needed to bring things back into line. The government is planning huge cuts in spending in 2016 and 2017. Planning two consecutive years of sizeable cuts and relying on notoriously volatile resource revenues is optimistic, to say the least. To implement this, the government must build political consensus around these plans. It will be hard to convince political actors to buy in to the ‘end of the expenditure boom’ as elections loom.

Pencilling in equity sales as revenues, as happened in 2014, was a mistake. In 2015, a huge PGK 2.5 billion from the sale of landowner equity in LNG is delegated to pay down debt. The government plans on financing the deficit through this sale to landowners. This will not be easy. Neither should it be rushed due to financial pressures. Yet if it is not possible to make this transaction, interest rates must increase and borrowing will become even harder, perhaps causing even more cash-flow problems. It is not clear how much the government can realistically pin its hopes on external borrowing. But they certainly cannot rely on the central bank printing press without storing risks for the economy.

Plans to cut the budget deficit hinge on decisions around the Sovereign Wealth Fund and the flows of resource revenues. The budget offers a good start with a brief update on the sovereign wealth fund, however, the veil of silence must be lifted to allow these issues openly to be discussed. In the four years running from 2016 until end of 2019 only about 4% of the resource revenues will be saved. The rest will be used to support the government budget and help the government to reel in the deficit.

The amount earmarked for saving may be too small, not only because little is saved for future generations but also because it doesn’t leave an adequate buffer for price fluctuations. The risk of wastage or misappropriation should be hedged against as well. In this budget, LNG revenues seem to have allowed an expansion in district programmes –likely controlled by MPs. This risks wasting resource revenues. More concrete plans for protecting resource revenues and earmarking specific amounts for investment are will be necessary if long-term stability is to be achieved. But the government has stifled these discussions through its silence.

PNG has made great strides in bringing the headline figures back into line. Cash-flow and financing challenges are likely to continue, however. More credible plans and safeguards are needed to protect natural resource revenues from financing waste. Presenting agreeable numbers is not enough; there must be sufficient political buy-in to deliver these plans.

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Monthly Archives: December 2014