Think tank calls for PNG Govt to reprioritise its spending

Transcript

The director of Papua New Guinea's Institute of National Affairs says the government needs to reprioritise its spending if it's to get any benefit from the lucrative Liquified Natural Gas or LNG project.

Paul Barker says the government is spending a lot of money on low-benefit infrastructure projects in Port Moresby, with little investment on core services such as education and healthcare

He told Jamie Tahana that he's hoping the budget, scheduled for November the 18th, will see the government refocus and prioritise education, healthcare and law and order.

PAUL BARKER: Certainly we have a booming GDP growth rate related to the LNG development, which just came on stream, started exporting in May of this year, but the social indicators in PNG are still very poor and really the distribution of the benefits of this major, and even other major resource projects, is fairly limited so it really is crucial that the country finds ways to spread those benefits and to minimise the negative impacts that are associated with major resource projects.

JAMIE TAHANA: What's happening with it currently?

PB: Well, for this year and for next year really there will virtually be no additional revenue coming in from the LNG and so in the meantime the Government has been heavily borrowing to support its deficit financed budget including to fund some major construction projects that are going on which are in a way to maintain the level of economic activity and jobs in the post-construction phase of the LNGs.

JT: And once that revenue does start trickling in, we draw the case of the 1990s where there were a few booms but socially nothing changed. To learn from those lessons what would the Government do in coming budgets?

PB: Well, that's right. In the 1990s PNG also experienced a very high growth rate and during those years there were exaggerated expectations of the benefits and of course underestimation of the fact that the country had lost all the revenue effectively from the Bougainville copper mine and several of the new projects that were coming on stream were not going to be providing revenue for many years to come. So there were high expectations, high levels of expenditure often on relatively unproductive projects, and limited investment into what are the core functions of government and these of course are providing law and order, education, health services and of course core infrastructure, roads, and transport, to enable the other aspects of the economy to go ahead.

So what we have been doing of late - yes some of these priorities have been highlighted by the Government and yet some of those projects seem to be heavily overpriced, many of them are into major periurban and urban roads - some of which them seem to have relatively little utility and some very expensive sports facilities which we know from experience around the world these grand sports facilities, as in Athens with the Olympic Games facilities, are left sitting there moribund afterwards so have very little subsequent economic, let alone sporting, benefits. So it is really critical for the government to prune down its level of expectations and expenditure into grand or even white elephant projects and one would have to say that includes sort of massive investment for APEC 2018 facility. It really needs to focus on what will really enable the economy to be more sustainable and to provide broader base economic benefits, income and jobs, across the country including to the rural areas where the majority of the population lives and in the provinces and at the same time into investment in education and skills and health services, which as from a study recently undertaken over the last 10 years it was found to have deteriorated across the country.