The Papua New Guinea inter-government minister, Sir Peter Barter, says the decline in services on Bougainville is in part due to a public service which is too big.
Sir Peter's comment comes after the province's governor, John Momis, warned that the continued decline in public services was jeopardising the peace process.
Mr Momis also said the administration was only receiving a fraction of what it needs.
But Sir Peter says some staff who are not productive have to be laid off.
"I don't want to mention the number of public servants that are being paid over there, because it's astronomical, but it's happened over a 10 year period, or 11 year period where people have stopped working, but they've continued to be paid, and this is consuming a very large proportion of the budget."
Sir Peter Barter.