by BRIAN GOMEZ
The bureaucracy can hinder economic growth

It is pleasing to see the manner in which Chief Secretary Isaac Lupari is placing his stamp on his high office by trying to ensure good governance in the handling of various government payments, including royalty payments to landowners.
Without an effective bureaucracy it would be extremely difficult, if not impossible, for significant improvements to be made in the living standards of people.
This was a subject we discussed in Bottom Line last week with regard to the importance of microeconomic reforms.
However, the country can have the best laws in place and, indeed it probably does in some areas, but unless these are properly implemented and enforced, they are literally not worth the paper they are written on.
There have been too many cases of unauthorised payments being made to all kinds of individuals and groups, the latest being the case of the missing K8 million MRDC cheque for the Southern Highlands Provincial Government.
Besides an incident as blatant as this there have been numerous reports of all kinds of scams perpetrated with public funds.
Good rules and procedures will minimise this problem, although it is probably too much to expect their eradication in the short term.
These thoughts came to mind during the writing of my other regular column in The National, Asia Watch, when I discussed the case of Laos, not long ago one of the poorest countries in the world.
Laos is making remarkable progress. The country’s per capita income averaged only US$280 in 2000 or less than one third of the level in PNG at the time.
By 2005 it had risen to US$430. The communist government in Laos is targeting to reach US$700 to US$750 by the end of this decade.
This means that in the intervening period, the average Laotian will earn more than the average Papua New Guinean, mainly because of PNG’s pathetic economic performance during the “lost decade” of the 1990s.
There is no chance this will be any different because income levels are growing marginally in PNG and annual economic growth rates are likely to be around half the planned Laotian growth rate of 8%.
Besides the problem of having gone backwards over a significant period – as this column has explained before catching up is extremely difficult – much of PNG’s growth has been restricted to some key urban centres such as Port Moresby and Lae and some prime agricultural areas.
The big problem is that government revenues are not being effectively managed and this, to a large extent, is a problem that lies with the bureaucracy.
Health Minister Sir Peter Barter, who has decided not to contest the current elections, hit the nail on the head when he said many of the problems of the country’s health system was due to mismanagement and inefficiency of top bureaucrats.
There have been numerous newspaper stories to illustrate the truth of this – from periods when key drugs and medicines are not available not just in remote rural clinics but also at the big hospitals in every provincial capital.
Remember the episodes where nurses go on strike because industrial agreements have not been honoured, or interns who went on strike because they have not received their pay for six months!
As for that K8 million cheque – probably royalty payments made by oil companies for landowners or the provincial government – is it not ludicrous that such a cheque is collected by an individual?
Doesn’t the richest provincial government, at least in terms of its annual budget, have an electronic account where funds can be safely deposited and monitored?
I certainly did not intend to pick on the Health Department because, certainly, similar problems are encountered everywhere else in government, a good example being “ghost names” on government books. Every “ghost payment” is going into someone’s pocket.
There is another reason why it is very difficult for PNG to match the economic record of many Southeast Asian countries, where Laos and Vietnam are newcomers to the world of free markets and rapid economic growth.
This is a kind of systemic problem. Political leaders in PNG have to spend much of their time keeping coalition partners or even their own party members happy – in line with the nation’s democratic spirit.
Most Asian countries are ruled by tough leaders who generally have full control of their parliaments, and have little or no fear of opposition parties.
While there is a downside to such leadership, the upside is that most Southeast Asian leaders are able to focus their energies on national development and economic planning.
The bureaucrats in better managed neighbouring countries are largely carrying out the demands of their political leaders as best as they can.
Because PNG politicians have to spend so much time and energy fighting various political battles, it is even more imperative that the nation’s bureaucrats ensure the smooth running of government and provision of various services.
There have been suggestions of various positive changes, not least the latest directives from the Office of the Chief Secretary.
News reports have also suggested that this year many more teachers who have not reported for duty at their respective schools have been taken off the payroll. While this is a positive development, it is just as important that replacement teachers are found for these positions.