by BRIAN GOMEZ
Money talks for free education

THE tasks involved in managing any country are formidable, especially in developing countries, where funding constraints can be severe.
At a broad level, the critical task of any government is to carefully apportion funds to various activities – from government administration to the provision of public goods and services such as education and health.
During the course of the past four years, there has been a massive change in the ability of the PNG Government to take charge of the future of the nation’s six million people.
Some may argue that this is only the temporary result of windfall Government revenues from one of the world’s greatest mineral commodity booms, bringing to question the decades-old view that countries dependent on export of primary commodities will suffer declining terms of trade.
In layman’s terms, what this means is that although the country may export more in volume terms, the value of those exports are undergoing a relative or
real decline.
In the meantime, prices of imports are rising inexorably.
In actual fact, the terms of trade had begun to favour commodity exporters like Australia and Papua New Guinea even before the latest upsurge in prices because the prices of many manufactured goods has been falling at an even faster rate.
Part of this phenomenon has been due to China’s role as a global exporter of relatively cheaper industrial products.
But this was also evident in the electronics fields, where computer power is said to be virtually doubling every six months, while prices are either falling or remain about the same.
Many mineral commodities such as copper, zinc and nickel have already come off their record highs but most economists and analysts anticipate that they would remain at relatively high levels at least for another year or two.
This is perceived to be the time needed for supplies from new mines or expansion of current operations to catch up with rising world demand.
In fact, the burgeoning demand from China and India, both of which have economies that are growing very fast, will ensure that metal prices would remain much higher than in much of the 20th century because this new demand would add to the steady requirements of more advanced economies in the United States and Europe.
There is another reason why Papua New Guinea is likely to continue to enjoy the step-change I referred to earlier, in terms of the increased Government capacity to provide goods and services to the people.
This is because even though prices of copper, gold and oil may fall somewhat in the years ahead, we are now seeing a significant inflow of new investments and the start of many new projects after a virtual drought in activity over the past decade.
The fiscal regime for these projects is likely to remain unchanged – and the investment climate attractive – even though a new government could come to the fore in the coming election.
This regime already takes into account the interests of various stakeholders and has been widely recognised as a system that is starting to work well in the national interest.
One important factor that has to be borne in mind is the danger that so-called ‘windfall’ earnings used for recurrent Government expenditure could create a sustainability issue, when commodity prices fall to more normal levels.
This requires a cautious approach towards future public expenditure increases.
These thoughts provide the background for the purpose of this article – the vital need for this and succeeding governments to properly prioritise their budget expenditures for the maximum good of the people.
Regular readers of this column would be aware that I have previously argued that free education has been an unrealistic goal, but would like to suggest that it is now time for a big leap forward in the
education arena.
It has been widely recognised that Papua New Guinea is not expected to meet most of the Millennium Development Goals set by the United Nations, including the idea of achieving full primary education.
It seems the National Government now has adequate funds to consider a staggered implementation of free primary education but has probably not given adequate consideration to this issue.
Implementing six years of free education, even on a staggered basis, will not be an easy task because 25% to 30% of children now are unable to attend primary school. This means that provision of free education will also entail huge expenditures in the building of new school facilities.
Nevertheless, this fundamental human right cannot be ignored and serious consideration must be given to the earliest possible opportunity to enable all children of school going age access to at least six years of education.
The 2007 Budget papers suggest total Government spending on education this year is approximately K551 million or just over 10% of total Government spending.
The recurrent basic education budget, which does not include the wages component, only amounted to K100 million versus K136 million for tertiary education.
This seems to reflect a wrong set of priorities but may have been inevitable because of a lack of adequate financial resources and a concurrent need to maintain a relatively robust tertiary sector.
Many developing countries spend up to double this proportion of the budget on education with the Philippines on 17%, Malaysia 20% and Thailand 27%. Even India and China managed 12% and 13% of their total budgets respectively.
The likely growth in PNG’s budget revenues for the remainder of this decade and beyond makes it imperative that the Government considers possibly a minimum of three years compulsory and free education starting next year and a commitment to implement six years of free education by 2010-12.
It is beyond the scope of this article to quantify likely costing for this but it seems likely the Government would have the financial capacity for such a programme.
There are many people who argue against free education on various grounds, including the proposition that people should pay for the privilege.
Such arguments do not hold water for the simple reason that some 80% of the population is made up of subsistence farmers, many of whom do not have adequate access to cash to pay for such services.
The latest assessments by the World Bank of the numbers of people living in poverty suggest the proportion has escalated from 37.5% in 1996 to 54% in 2003.
Under this definition, these people consume up to 2,200 calories per adult a day with some allowance for basic non-food expenditure, which more or less equates to being below the international poverty line of US$1 a day.
The time for excuses is past.
A national basic free education policy needs to be implemented, overriding the haphazard and arbitrary provincial government schemes that are now in place in some areas.