By PATRICK TALU
A LEADING Australian academic has suggested to the Government to adopt the “Alaskan Model” of revenue fund management to manage the country’s windfall revenues.
Professor Ron Duncan from the Crawford School of Economics and Government at the Australian National University made the suggestion last week at the PNG policy seminar in Port Moresby.
He said this year’s survey of the PNG economy by Jonathan Gouy, an economic consultant to the Government, raised questions about the mechanism established and the challenges faced in realising the objectives.
Prof Duncan said the Alaskan Model was a permanent fund set up to collect revenues from oil exports and suggested it was best for PNG to adopt the model.
“The fund must be invested outside Alaska and its purpose can only be changed by changing the State’s constitution.
“The earnings from the permanent fund’s investments are distributed quarterly and on an equal basis to all Alaskan citizens.
“All citizens have an interest in protecting the fund and it is said that it would be ‘political suicide’ for any politician to suggest changes in the management of the fund,” he said.
Prof Duncan said the major problem faced by the PNG Government was how to ensure effective use of the resource revenues received and what institutions or mechanisms to be adopted to ensure better use of the revenue inflows over the next 30 years.
“PNG does not appear to have such a constituency,” Prof Duncan said.
“I believe that the Alaskan Model is worth considering by PNG because the payment of fund dividends to all citizens would have strong benefits for the economy, with people saving a large proportion of the quarterly payments, which feeds into investment and economic growth.
“The implementation of the Alaskan Model in PNG will develop a widespread constituency for the good management of the invested funds.
“It should also develop a stronger public interest in Government expenditure, as the public would be paying taxes in the form of value-added tax from its expenditure of the dividends.
“It is quite likely too that the distribution of such funds to all citizens would lead to increased agricultural and rural productivity, and the flow of dividends to the bulk of the population in the rural areas would provide them with access to capital.
“This would give them the capital to develop their farm and other informal cash-earning activities,” Prof Duncan said.