Inept treasurer, incompetent Budget, why PNG will suffer.

by MITCH RENAGI

Budget week should be a triumph for any self-respecting Treasurer - it should cap all his efforts over the past 12 months and lay out a rosy future for the next 12.

Unfortunately for Ian Ling-Stuckey and his team of highly-paid foreign advisers, this Budget week has been a disaster, lurching from one crisis to another.

His disastrous performance has shredded the Marape Government’s economic reputation. He and his advisers should resign, and failing that Marape should sack them.

Ling-Stuckey’s failures are inexcusable.

First, he missed the Budget sitting day by 24 hours. 

Then when he did get around to delivering the Budget a day late, he did not table the all important Volume 1, Economic and Development Policies. In effect, the Budget has not been tabled.

Neither Vol 1 nor his Budget speech have been posted on the Treasury web site as of Monday morning, so the public does not have access to the information that will guide people’s lives and the nation for the next 12 months.

The Opposition is due to make its Budget Reply tomorrow, yet the Treasurer has denied it the information it needs to do so, and to represent the interest of the people.

This is not just incompetence and negligence on the part of Ling-Stuckey and his advisers, it is an attack on participatory democracy.

All this came on top of the news that a new type of tax - based on the market power of a corporation - is being introduced.

The new discriminatory taxes on BSP and Digicel are a cash grab that will be passed on to consumers - BSP and Digicel customers. It will have massive flow-on effects, including on superannuation funds, cutting payments to retirees.

Who’s next - SP Brewery? Any company with dominant market share is vulnerable.

Ling-Stuckey has failed the public in his secrecy surrounding this tax. New measures of such magnitude and importance need to be carefully explained well in advance so that the public understands them and supports them.

The sectors affected must be consulted and sensible outcomes agreed to.

But as in so many of his portfolio areas, the Treasurer has not bothered. No media. No statements to Parliament. No public awareness campaign. No mention in the 2022 Budget Strategy released only a month ago. No consultation with business. No availability of policy documents in support of such a far-reaching tax.

Importantly, no consultation with the superannuation funds, whose members will face savage cuts in their retirement payouts, and the telecommunications sector, whose customers will face ever-higher mobile phone and internet costs.

The taxes will also discourage responsible corporate investment in Papua New Guinea of the type urgently needed to discourage the cowboy money flowing into and out of the country.

Ling-Stuckey should tell the people of Papua New Guinea who suggested this huge tax grab - K190 million a year on BSP and K95 million a year on Digicel, with the prospect of much more to come.

Was it his highly-paid Australian adviser Paul Flanagan, who has usurped the role of Treasury and its Papua New Guinean experts? Was it the World Bank or IMF or ADB? Was it Treasury, or IRC? Papua New Guineans have a right to know who devised this tax. Does the Treasury Secretary, whom Ling-Stuckey and Flanagan have been undermining, support the Budget in total?

The Treasurer should explain why Papua New Guineans are being TOLD - not asked - to accept a massive new attack on their family budgets. They should also be told why it was introduced now rather than after appropriate public and corporate consultations associated with the long-awaited rewrite of the Tax Act.

But it is not just the new tax that is an attack on Papua New Guinea families. The entire Budget is lazy and irresponsible and a continuation of the economic and financial policies under which both this and the previous governments have brought ruin to Papua New Guinea.

It is yet another typical Marape high deficit Budget. Revenue is K16.19 billion and expenditure is K22.17 billion.

The Marape Government will have to borrow K6 billion next year to cover the gap. Yes, you heard right - another K6 billion will be borrowed in 2022!

The level of public debt will increase to K52.76 billion, or 51.9% of GDP. This is as bad as anything produced during the O’Neill Government’s 10 years in office, and the trend will continue for the next five years at least. Debt interest repayment is estimated at K2.34 billion, up 2.36% on 2021. All Ling-Stuckey’s sweet talk about lowering the debt burden is demonstrably nonsense.

The reason for yet another disastrous Marape deficit is uncontrolled expenditure increases - in 2022 13.1% to K22.2 billion.

The K16.2 billion in revenue is an overall increase of 18.4% on the 2021 Supplementary Budget.

Both revenue and expenditure estimates rely on some very wild assumptions - for example the higher revenue is predicated on the reopening of the Porgera and Simberi mines, and much higher dividends from State-Owned Enterprises. The estimated  22% growth in GST revenue far outweighs the estimated 5.4% growth in GDP. There is no explanation of how this miraculous feat is to be achieved. Nor is there any explanation how Ling-Stuckey and his advisers arrived at the GDP growth figure - other analyses put it at 4%.

The revenue estimates are more likely to be rubbish than not.

The  same with expenditure - Treasurer Ling-Stuckey has made a lot of noise about bringing public service wages under control, but he has AGAIN failed to do so. The Budget estimates Compensation of Employees at K6.05 billion, up 5% on 2021.

In addition, 2022 being an election year means expenditure restraint is likely to be thrown out the window. For example “Miscellaneous” makes up 12.1% of total expenditure by sector at K2.6 billion. As this is listed as “Operational” expenditure, this is clearly an election slush fund.

There is also very little publicly available information on the potential impacts of coronavirus, likely as in past years to be the biggest single influence on the Budget.

Ling-Stuckey puts the increase in expenditure at 13.1% - it is likely to be above that because no attempt has been made to eliminate the economic and financial foundations of wasteful and irresponsible expenditure.

All in all, this is a dishonest election-year Budget that increases the financial burden on Papua New Guineans.