Budget a fast money scheme: Oppn

THE Opposition has described the 2010 Budget as nothing more than a fast money scheme and an inflation time bomb.
Shadow Treasurer Bart Philemon said the track record of the Somare-Temu Government, particularly the Treasurer in the management of the two full annual budgets of last year and this year, did not give us much hope for a revolutionary change in this budget.
“In fact, many of us, having observed the outcomes and trends, are suspicious and worried that again we will be deceived, disappointed and disturbed by the final outcome of the 2010 Budget.
“The 2010 National Budget gives our people false hope and expectations.
“It is a calculated strategy to mislead our people into believing that they can trust this government to deliver on its Budget promises.
 “We are well aware of the significance of the PNG LNG project but the Treasurer has failed to tell us what type of activities associated with the construction phase will occur as well as the total labour force and supply content.”
He said the Government intended to raise K5,735.3 million, an increase of 18.8% on the 2009 revenue estimate.
“This increase, says the Treasurer, will result from profit and employment growth from the start of the PNG LNG project as well as higher taxes from higher commodity prices, particularly for oil and copper.
“I can understand the latter but new taxes from profit and employment growth related to the PNG LNG project is what I find hard to comprehend.
“Is the Treasurer telling us that the PNG LNG project will be making profits during the construction phase? I don’t think so because the first LNG sale is scheduled for 2014, at least three Budgets away, from when gas sales revenue starts flowing in.”
Mr Philemon said tax revenue was likely to be minimal during the main construction phase because the project operator and contractors were exempted from paying the Goods and Services Tax, import duties, foreign exchange clearance and interest withholding tax.
He said the “Government says the main priority of the budget” was to promote sustained economic growth by empowering and transforming the rural economy.
“But how can this objective be achieved if 70% of the total expenditure is directly or indirectly related to consumption activities?”
He said for example, K2,122 million would be spent in Waigani and a further K989 million on provincial administrations.
Mr Philemon said nothing had changed proportionately in this trend.
He said the Government had the opportunity to implement the public sector reform programme (PSRP) in 2003 but failed miserably because its priorities were – and still are – elsewhere.
He said the Government also planned to deposit K568 million in the Trust Accounts to finance what the Treasurer described as special investment or high priority development expenditure.
“This will bring the total trust funds to K3,078.7 million if the balance of K2,510.7 billion is not spent before the end of the year.
“That is why, the Opposition has a new name for the Government’s trust accounts: we call them ‘fast money scheme’.”
He said under this scheme, the Government could draw down money anytime it wanted to go on a shopping spree, without any compliance to financial management regulations and processes.