We must not forget that the same laws will apply in the same national parliament and provincial houses of assembly. In the same national and district courtrooms, case law will grow and precedents will continue to be set in the absence of the hard questions that may never get asked about the blatant breaches in our society and adopted system of government.

From 2017 our leaders will (more than ever before) need the knowledge, political will, grace and patience to restore integrity, democracy and the rule of law as a national emergency in order for all else to be rebuilt without exception. The truth is a new government in 2017 will inherit inter-generational debt, a massive deficit and redundant parliamentary rules/standing orders governing important decision-making processes. Not to mention the crumbling sanctity of the National Executive Council (NEC) or cabinet.

They will realise that legislation set up in principle to provide robust governance mechanisms have been misunderstood or ignored by their predecessors. In 2017 a newly elected parliament will discover an exhausted public service, a manipulated police force, an angry defence force, and many broken Papua New Guineans with drought and income starved families and disrupted livelihoods.

Those elected Members of Parliament will find very drained state-owned enterprises, institutions and agencies incapable of operating with only a steady trickle of public funds to deliver wages, health & education or district support according to policies and promises of the past and present. They will find that the much promised revenues from oil and gas have been committed to paying off the current government’s unilateral decisions and therefore debt for unauthorised loans for generations.

New leaders in 2017 will need to navigate a global economic downturn of epic proportions with PNGs development and economic interests at heart. Our new leaders will discover that our broken service delivery system and our overheated economy will need more than elected candidates with tunnel vision.

Those elected will need to be legislators, not aspiring millionaires or public finance managers. Newly elected leaders will require an understanding of serious fiscal discipline, tax and industrial relations reform and economic modelling that reflect PNG’s economic conditions and our revenue-earning potential in sectors other than petroleum and energy.

PNG will need MPs who are humble yet extraordinary thinkers to guide monetary/fiscal, social, cultural and development policy simultaneously to aid a new-look holistic reconstruction strategy focused on understanding that our vast natural resources should never again be left to a single individual who knows no institutional, spiritual, executive or national boundaries. Those new MPs should be held to the universal promise that candidates seek election (and re-election) to be servants to their people not master manipulators of their resources.

All the hopes in online commentary revert to a single assumption that PNG will inevitably have free and fair elections next year. If all we do is dare to dream it’s no longer enough because we will inevitably get what we vote for yet again.

Photo: Sepik Wewak Urban Local Government facebook group

The first part of this blog was published last week. The following is part two:

However, the report fell short of proposing a mechanism to protect the rights of the informal economy participants. Subsequently, there is no mention of the need to properly organize informal economy participants and their activities into groups for the purpose of dialogue and consultation. Section 3(1) of the Informal Sector Development & Control Act 2004 provides for the administering authority to consult (if they wish to) with relevant ward committees, the police force and relevant government agencies responsible for health, physical planning and building, when declaring areas on which informal economy businesses could be conducted. However, experiences thus far have indicated that this has not been the case.

Even if this exists in some provinces there is little evidence to suggest that the administering authorities sought views from informal economy operators or vendors because informal economy, both its activities and operators, are disorganised. Furthermore, given the complexity and cross-cutting nature of the informal economy, provinces need to have special informal economy committees comprising of key stakeholders to deal with these issues. For instance, border provinces such as Vanimo see massive influx of cheap Indonesian goods into Vanimo town and the villages along the highway leading to Batas. These imported goods (with questionable content and quality) make up a large portion of the informal economy in Vanimo and the neighbouring villages. To protect consumers and ensure fair play, the provincial government or the Vanimo Town Authority will have to work with the Border Development Authority, customs, police, NAQIA and others. Therefore, the absence of such a mechanism will do little to change the status quo of the situation.

The report also did not highlight the need for a proper restorative justice mechanism to be in place to deal with cases of harassment and abuse inflicted by enforcers on informal economy participants. The Informal Sector law in its current form is silent on this matter. Section 3(6) of the law only goes as far as saying that “an operator (informal economy vendor/participant) aggrieved by the decision of the Administering Authority under section (4) and (5) may appeal to the District Court”. Yet for most informal economy operators or vendors the Village Court is the most affordable, reliable, reachable and dependable arm of the justice system since it addresses individual and community’s legal concerns through a typically PNG way. The District Courts can be utilized by an interest group or an entity representing the interest of informal economy vendors/operators. Therefore, the report fails to recognize that the infringements done by the informal economy participants (apart from the sale of drugs, counterfeit products and homebrew) are ‘economic crimes’ and not criminal offences that would require the ‘heavy arm of the law’. Thus section 4(2) of the Informal Sector law should be reworded or amended to ensure that the members of the police force are excluded from being appointed as inspectors to police the informal economy.

The NCDC buai ban law demonstrated that administering authorities armed with additional powers can abuse it and in the absence of a voice and an appropriate restorative justice mechanism for the informal economy participants, the informal economy will be suppressed to a point where lives could be lost. Deaths relating to the buai ban have been well-documented in the media. Such actions would thereby defeat the whole purpose of the law. In saying that the law does provide sufficient space as captured under section 3, where the administering authority is required to “adequately notify and welcome feedback from the informal economy operators of its attempt to make changes/determination to the law”. The operator(s) on their part should respond within a set time frame or take the matter to the district court if not satisfied with the authority’s feedback. In addition, inspectors appointed by the administering authority as per section 5(2) should properly notify the informal economy operator/vendor of its decision or actions. However as alluded to earlier, with most of the operators/vendors lacking basic literacy skills and resources (funds) they would need someone to do this for them, or better still an entity like an informal economy market vendor association to represent their common interests and amplify their concerns in order to get the attention of the authorities or policy makers.

Increasing penalty fees and repealing section 18 of the Act, which has a list of laws and their clauses that were excluded, means that informal economy participants will be forced to comply with standards that may be too high for them, especially when most of these participants have very poor literacy skills and lack formal employment to supplement their meager incomes. While the intention is to put forth a progressive and rosy image of the city and urban areas, this should not come at the expense of people’s livelihoods. PNG is now a country that is already experiencing a widening gap between the rich and the poor amidst its most prosperous period in its 40 years of nationhood. Early indications are that the PNG LNG will not be as transformative as it was predicted to be. On the contrary, the emergence of the PNG LNG project has created more problems than solutions for this nation. The cost of basic household goods and services have dramatically increased while the government is being forced to make deals that could possibly cost this country a great deal. At a difficult time when this nation is heading into uncharted waters, the wisest thing to do for the PNG government is to lean on its strengths. The informal economy with almost 80-85% of its population engaged in myriad of activities is its strength. Through the good and bad times, it has helped this nation to ride out crisis after crisis. Giving it its long overdue consideration in the national agenda may well be a game changer for PNG.

Caption: Village men in the Trobriand islands (PNG) work on their carvings. Many informal sector participants are innovators and skilled survivalists. Photo by Ben Bohane – wakaphotos.com

Furthermore, if provided with the right environment, it could unleash entrepreneurialism and innovation that is abundant among many Papua New Guineans but lethargic due to lack of support. One should only take a bus ride to the infamous Gordon Market or travel up into the Kakaruk (chicken) Market in Goroka or elsewhere to witness the vibe of energy and salesmanship at play. This is what the law aims to nurture but in compliance with appropriate minimum standards to protect consumer welfare and generally minimize its negativity.

Yet the challenge will once again fall on the shoulders of the government to ensure that the intention of the law is realized. Already the government is urged in the report to step up and provide leadership in administering the law as well as providing essential public goods and services to encourage the development of the informal economy in PNG. So far the government has failed miserably in this area although it has introduced a policy and a law to address issues affecting the informal economy. This reinforces the sad reality that implementation and enforcement have always been a challenge for the PNG Government. Most Local Level Governments are struggling to function effectively in most areas of the country due to lack of support both in terms of resources and limited understanding of their functions and responsibilities. The report alluded to the fact that most LLGs that were consulted had no idea about the existence of the law although it is a national law.

At the national agency level the report found that no oversight was provided making way for administering authorities to make laws without alignment to the Informal Sector Development & Control Act 2004. In most cases administering authorities simply turned a blind eye on the law. For instance, in 2012 the courts making reference to the Informal Sector Development & Control Act 2004 restrained the Lae City Council from implementing its decision to close down informal markets in the city. In the case of National Capital District Commission (NCDC), buai producers and political leaders in Central Province issued threats challenging the legality of the buai ban law although this has not come to pass. If the ban was contested in the courts with reference made to the Informal Sector Development & Control Act 2004, the outcome could have changed the dynamics of the informal economy in PNG.

This is where the Constitutional Law Reform Commission’s (CLRC) foresight in introducing a ‘modal law’ is important as it bypasses the difficulties that could have eventuated if a national law superimposes itself with no regard to the administrative set up of certain provinces like NCDC. By allowing provinces to have the freedom to make necessary amendments to the modal law to suit their unique situation, it is hoped that they will effectively control negative aspects and promote the positive side of their informal economy. By having the Department of Community Development & Religion as the lead agency providing oversight on the law, it is envisaged that the amendments will be made with due respect to the spirit/intention of the national law as well as in alignment with the national informal economy policy.

The department to its credit has already embarked on a restructure (with no progress as yet) that will see a new section dedicated to coordinating the implementation of the policy and the law. Yet questions are being asked if this arrangement will yield any tangible results. The department itself is still reeling from the leadership tussle which transpired two years ago which has seen the department fragmented into factions as staff took sides. The aftermath of this battle can still be seen today with most of its offices half empty and manned by only few dedicated officers. In this environment there is no guarantee that the law will hit the ground running once it is passed by the government. This is where the department with the aid of CLRC should explore options that will lead to the effective implementation and administration of the policy and the law. One option would be for the department to quickly work towards establishing a stand alone mechanism, like an office within its structure. Such a set up, apart from speeding things up, would allow the department to effectively reach out (going beyond its traditional role as a social welfare department) to other stakeholders whose mandate or policies are related to aspects of the informal economy policy and Act.

On the other hand the informal economy participants for their part, misunderstood the law the first time it was passed by parliament, subsequently giving rise to the proliferation of diverse sets of informal economic activities, some of which posed serious health and safety risks. This meant that balance needed to be found in the law to ensure that the growth of the informal economy is controlled to minimize its harmful effects. The informal sector law in its current form in fact advocates for this. This is contrary to the views that it ‘gave fire’ to the widespread chaos that is unfortunately the hallmark of PNG’s informal economy. The draft report to the credit of the CLRC, has reinforced this idea with penalties raised depending on the severity of the offence, which is determined by taking into consideration an informal economic business activity’s impact on the environment, hygiene, health, safety and the nature of the items sold such as whether it is addictive and other factors. Furthermore, it has inserted a provision to deal with betelnut-related issues which now imposes a much tougher penalty for irresponsible chewers.

(To be continued next week…)

Caption: Fresh produce at the local food markets in Port Moresby, PNG – John Conroy

The prevalence of corruption is the direct cause of pervasive poverty in our region. Some may contend that poverty is the cause of corruption. I hold a contrary view. I come from a country richly endowed with natural resources, yet the majority of our people live in abject poverty. Corruption is the direct cause of poverty in my country and the same goes for many Pacific island countries. The failure to meet most of the Millennium Development Goals (MDGs) is a testament to that.

The excess effects of corrut to that.

The excess effects of corruption does spread beyond the borders. They take the form of refugees, money laundering and other illicit activities. The digital world has changed the dynamics of the world map so that today, transactions can be conducted at the click of a keyboard or the tap of an iPhone. Our jurisdictional differences are becoming less of a barrier for those wishing to conduct illicit financial transactions.

Today, we are witnessing a growing trend, though not uncommon, whereby those in power use that power to enrich themselves and their cronies at the expense of the people. And when the anti-corruption institutions hold them to account, they refuse to submit. They use their powers and state resources to subjugate anti-corruption measures and avoid scrutiny. Most recently some of the most telling examples of threats to the rule of law, democracy, security and prosperity in our region include:

• The extraordinary efforts to obliterate anti-corruption forces to protect one person in Papua New Guinea;
• The acting President of Vanuatu pardoning himself and 13 other members of parliament after being convicted of bribery, even when the matter is pending sentencing; and
• The bribery scandal involving the Nauruan prime minister, his justice minister and an Australian phosphate company and the alleged actions by the Nauru Government to terminate the visa of the Chief Justice.

We have seen examples of how corruption transcends national borders, for example:

• The forgotten case of Australian companies and advisors implicated in diverting K100 million of PNG Motor Vehicle Insurance Ltd funds;
• The revelations by Australian authorities that at least AUD200 million of PNG corruption proceeds are laundered or invested in Australia every year;
• The recent findings of the Financial Action Task-Force that Australia is becoming a hotspot destination for property investment using illicit funds, mostly coming from Asia-Pacific countries;
• The recent revelations by SBS Dateline program of how Australian lawyers are involved in laundering corruption proceeds into Australia; and
• The recent revelations by Sydney Morning Herald of an Australian oil company, the Australian branch of an international bank and Australian lawyers involved in structuring a predatory loan arrangement.

Many of these examples have highlighted how the people who have been exposed in these corruption scandals have no trouble transferring and living off their ill-gotten gains. With access to Australia, for example, many have access to quality health care and education whilst at home the robbed majority continue to suffer in abysmal conditions.

In saying this, I am also conscious of the fact that in most developing countries, apart from simple survival corruption, most of the high-level corruption are facilitated by and benefit those in power. If corruption-free and good governance are the values and standards we want to see reflected in our neighbourhood, we should live for and fight for their worth. Although it may come at a price. Few may not like it, but the victimised majority will appreciate our efforts. Based on my personal experience, I can vouch for this.

Australia, as member of the G20 and the OECD among others, has obligations under various international treaties, memberships and agreements. Most countries in the Pacific have adopted the UN Convention against Corruption (UNCAC). While progress has been made to establish an APEC Network of Anti-Corruption Authorities and Law Enforcement Agencies, I am unaware of a regional framework in the Pacific Islands Forum to combat corruption and money laundering. Perhaps that may be an agenda for the next forum leaders discussions?

So the question is, when does corruption in one country really become a matter for regional leaders?

One can trumpet the robustness of its own domestic mechanisms but if that ‘robust’ system is not detecting and combating corruption and money laundering more widely, then that system is a problem in itself. Or is it just a case of lacking political will to act?

This is an extract of Mr. Sam Koim’s presentation to the Voices for Justice conference held at Parliament House, Canberra on 13 October 2015.

Today, it is easy to assume that it is a case of ‘the same old story.’ Simply replace Chan with Somare, and Skate with O’Neil. With falling oil prices, the government is short of liquidity and trying to mortgage the future of its people for cash today; the kina is in decline, and the Central Bank holding back foreign currency. High inflation and the effects of another El Nino event are ramping up food prices.

But some things are different now. For starters Port Moresby is a cosmopolitan city, so physically transformed it is barely recognisable from what was only twenty years ago. Despite all of the challenges, the economy has managed to absorb a population that has more than doubled since independence. There is a significant middle class of Papua New Guineans who are educated, vocal and more than capable of both demanding change, and also determining what that change should be. Even a casual glance at social media shows the depth of talent and debate.

Whilst it remains true that much of the development benefits have been focussed on Moresby, and too little outside of the capital, the country remains blessed with immense cultural and mineral wealth. It also remains a country where hope, courage and luck can always improve the situation. The question is whether these ingredients are enough to enable the country to overcome its current challenges?

As always, there is a core group of observers who seem to view the current economic and political malaise as a hopeless situation. Today’s story – whispered in private or told via social media, but never quite openly discussed – is that through the egregious use of the nation’s wealth in order to benefit the few in Waigani, Prime Minister Peter O’Neil has managed to establish the sort of ‘de-facto’ dictatorship nobody thought possible in a Melanesian state. With next to no political opposition at home, the Manus detention centre has been a brilliant mute on Canberra. As has been the notion, held by some in the Australian capital, that a stable semi-authoritarian regime in Port Moresby is preferable to a government that changes often – albeit democratically. No matter how hard the prime minister may prod DFAT, they are simply unable to respond. With such a free hand, O’Neill has managed to enhance his reputation with his regional neighbours. His international standing will continue to be bolstered as PNG prepares to host the APEC summit in 2018.

O’Neill has managed to keep a hold on power by raiding the numerous cash pots available to the government and by mortgaging the country’s future resource base. This strategy has so far enabled the government to run debt defying budget deficits. The plan to fill the current hole is a combination of a half billion dollar foreign currency loan, the sale of shares to landowners in the National Petroleum Company PNG (NPCP) and potential revenue from the sale of Oil Search to Woodside. Any money raised through the takeover over of Sustainable Development Program (SDP) will be a bonus. These funds are necessary to continue the superficial building (and rebuilding) of roads and other infrastructure in the capital and also funding the K10 million district funds overseen by MPs; thereby keeping the crony capitalists and political elite satisfied.

However, in the same way that much of the analysis twenty years ago was overly simplistic and lacking in context so too is this story. For starters it is hard to place the entire blame for the current state of the economy purely on the current government. Many previous administrations pursued similar strategies, just perhaps not as effectively. Also very few economist predicted the rapid decline in commodity prices or the drastic impact of El Nino on agricultural production. Were it not for these factors, some of the current economic constraints, especially in terms of limited liquidity, would not be as severe.

The private sector and the donors, smelling loans, have been falling over themselves to be the lender of choice and have therefore deliberately not been up front with the government for fear of losing business. Australia has been almost totally silent in terms of the underlying economic situation, with the exception of a few advisers within government. The government itself, meanwhile, simply points to recent GDP growth rates as a sign that things will get better. It has been left to a few independent thinkers to point out that ‘you cannot eat GDP growth’ and that current levels of borrowing has a price that the people of Papua New Guinea just cannot afford – inflation.

There is a phrase used amongst Pacific civil servants – policy moonwalking – which, like the famous dance by Michael Jackson, refers to when the policy of government appears to be moving forward, but in fact is actually going backwards. It appears as if O’Neill’s policy moonwalkers have failed to accept and adapt to the radical change in circumstances. Rather they continue to pursue the strategy of relying on short term financing in the vein hope that things will get better. These analysts are correct in that the country still has many long-term assets that can be mortgaged, but they have missed the fact that with oil prices falling so sharply this strategy can actually be a trap – in that the more you borrow now, the more desperately you have to borrow in the future. The price is inflation, which is fuelling the looming crisis. By printing money to finance the massive deficits, the government has reduced the value of the kina, and this is what has made imports such as rice more expensive. While the economists and academics can argue all day, the reality is that what people can afford to eat has drastically decreased. You don’t need to be an economist to forecast the situation – simply ask any Papua New Guinean. The drought and frost in the highlands has made the situation worse, and while the foreign owners of the hydroponic farms might be benefiting, the population are suffering and this will eventually lead to frustration, anger and potentially violence.

It is unlikely the ‘foreign bond’ of half a billion dollars can be issued unless, like the UBS loan, it is secured against a national asset. At this stage it is not clear what that asset would be. In the same way the government’s financial expectations of the sums of money they would receive from the landowners taking an increased equity in NPCP seems far removed from the financial reality, and all indicators are that the landowners are receiving rational private advice in this regard. So with the state owned enterprises seemingly in debt, and the Central Bank and government building up short term liabilities, the most likely outcome is that – despite the long term outlook for the country being sound – in the short term the government will have no money and inflation will get worse. The potential debt burden is made even worse by the hidden liabilities in terms of debts owed by government entities that don’t yet have audited accounts, but which could still be a drain on future budgets.

There will ultimately have to be some sort of political ramification. What the trigger will be nobody knows, but the tension amongst the rural and urban poor is noticeable. The prime minister might have control over the heads of the army and the police, but if civil servants and people are seriously poor – as seems evident now – the people of Papua New Guinea can and will effect democratic change. Whether it be a motion of no confidence, based on the fact that O’Neill can no longer deliver the financing necessary to keep political stability, or a result of the numerous court actions against him, or a massive turnover at the polls – something will have to give.

As the poor increase in numbers and go ever more hungry, while the political elite continue to flaunt their wealth on the streets of Moresby, the real concern is whether this change will be brought about civil or political unrest.

The goal to influence the way political parties choose their candidates in Papua New Guinea is set to go before parliament in the coming weeks. If the Bill is considered favourable by the male-dominated 9th parliament of Papua New Guinea the existing laws will be amended before 2017 so that political parties in choosing intending candidates must consider a percentage of women as fully endorsed contenders. This means that by law 10% of candidates nominated by registered political parties must be women endorsed and financially supported as any male candidate, in the extravagant and regularly explosive process of national parliamentary elections in PNG.

The equal participation of women and men in public life is one of the key concerns of the 1979 United Nations Conventions on the Elimination of All Forms of Discrimination against Women (CEDAW) of which Papua New Guinea is a signatory. The under representation of women in parliament is central to the international community’s push for this obligation to be ratified by member countries whose histories of equitable representation have been weak. Papua New Guinea has ratified the CEDAW convention but effective implementation and inadequate reporting pose challenges for the aspirations of the resolution.

It is widely accepted that 30% representation of women parliamentarians ensures critical mass – anything less may risk the loss of momentum in the attitudes of the voting public regarding the viability of having more women in parliament.

If the Bill is passed and brought into law in PNG a few things would need to change. For example, if a registered political party is endorsing 80 candidates, under the new laws that party would need to endorse 8 women in 8 separate open or regional electorates.

But 2 female members of PNGs parliament have expressed views questioning the thinking behind the planned changes to law. Hon. Delilah Gore, PNGs Minister for Religion, Community Development and Youth, herself a recently elected MP, suggests that basic preconditions exist for all intending candidates irrespective of gender. Minister Gore’s view is that the law disadvantages political parties and fails to allow women to prove that they are capable leaders first. Gore who claimed victory over the Sohe Open electorate in PNGs 2012 parliamentary elections says ‘women should demonstrate true leadership before they are mandated by the people.’ But the view that entry conditions into political life for women is impartial in PNG is being disputed by one community representative who is optimistic that the reforms could be the beginning of a cultural shift.

Port Moresby Youth Leader Stanley Arako thinks the proposed additions to the current law on political parties and candidates would allow women to ‘establish their own stronghold and even push to outnumber men in the hausman’ (a reference to parliament) increasing the likelihood for more women to be represented in PNGs male-dominated legislature. But while laws can regulate behaviour within institutions such as political parties, attitudes of the voting population towards overall leadership criteria remain elusive. After 8 general elections since independence in 1975, only 6 women have successfully claimed victory. Delilah Gore was one of three women who beat impossible odds to be declared a Member in the same parliament in 2012.

Getting more women into parliament will rely on institutional reforms such as the ones proposed here by Dr Alphonse Gelu, PNGs Registrar of Political Parties. As the engineer of the proposal Dr Gelu makes an important distinction as to the intent of the new provisions that he says will impose new standards on the electoral choices for voters and regulate the discretion of political parties.

Money politics in the electorate in PNG is the game changer behind whether or not the laws will have the intended effect of increasing women’s representation in parliament. If we consider that on one level political power is sustained by a focus on wealth and its distribution in PNG and that politicians need capital to gain votes and reward supporters, then adding the missing voices of women to the mix could have the contrasting effect of diluting the ‘Bigman’ promise of rewards in exchange for an altered dynamic in the electorate under the leadership of women. More equitable representation in theory could stop the tide of entrenched patronage under the ‘Bigman’ system that continues to undermine institutional processes with the effect of crippling service delivery mechanisms and debilitating effective and efficient government. In practice unless the low numerical strength improves the participation of women legislators in discussions, parliamentary proceedings will continue to be weak. Gender-just and gender-sensitive policies will assist women to overcome the obstacles that their male counterparts rarely face, such as social and cultural barriers.

An injection of new laws more broadly focused on the legitimacy and attainment of political power through merit and policy driven agendas must also be considered in this space.

Could this be the beginning of a different game changer necessary to stop the tide of entrenched patronage in PNG?

If the Bill is passed into law the net effect could be that scouts of political parties looking to endorse viable candidates will be required by law to consider a selection of genuine female candidates with the greatest chance of claiming victory over their male counterparts. The legal provision will create 3 vital conditions: i) a natural selection process where leadership skills of female candidates are assessed and prioritized ii) a search for sustainable and feasible strategies to maintain electoral support iii) a nomination process that includes a more representative selection of potential leaders who reflect the configuration of PNG society.

Political parties that don’t nominate the statutory quota of women to contest elections will risk deregistration. If the penalty for non-compliance is cancellation from such a lucrative race will party leaders influencing their members on the salience of this bill be inclined to support it?

The point is there is a distinct absence of a culture of implementing deliverable and sustainable political party platforms and achievable policy strategies that are consistent with the underlying principles of transparency and accountability in the electorate that favor rational policy processes and ideals that transcend individuals and their whims.

Another youth leader in a Port Moresby suburb, Kaipu Kero Pirisa says no special advantage needs to be created for women as ‘the current level of competition in the general election was just and fair and should not be altered through legislation.’ Pirisa’s concern is that ‘financially weaker parties would simply be deregistered if women chose not to seek their endorsements.’ The impact of the new laws could be that by bringing provisional seats into law,the starting point for political parties to be viable contenders is one where women who form half of PNG society are considered viable natural nominees for leadership roles. This takes into account their diverse capabilities and the responsibilities they already implement in society.

The fluid nature of support for political parties in PNG hinges on the availability of electoral funds and the capacity for election campaigns to be run with great fanfare and with identifiable party leaders who have the appeal of celebrities. The changes to the OLLIPAC laws will need to withstand the pressure of money and the large sums of it that are already beginning to swirl around political circles in the lead up to the 2017 National Parliamentary elections.

The optimism of community leaders suggests that the reforms could pave the way for a cultural shift that would allow women to strengthen their base in the seat of power in Waigani.

When put to parliamentary debate at the end of May, setting this long term priority will need the genuine support of politicians, who must ensure that decisions taken are carried out without political interference. If the reforms are to be sustainable this policy agenda must be delegated to the highest political office, to be better insulated from political or electoral pressures.

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. 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.