Budget bold, innovative, daring

THE first inclination we have is to criticise the 2013 Budget, but we will not.
We will not because the 2013 Budget is bold.
It is innovative.
It is daring.
It has departed from some well-worn and, therefore, better known paths and wherever that happens, the natural reaction is to oppose the new intrusions.
For one, it is a deficit budget, accounting for no less than 7% of total appropriation, or K2 billion.
For another, it is a budget that actually plans actual spending over five years, not just one year.
And, it is a budget where politicians are leading from the front, rather than stepping in at the last minute to announce the end result of bureaucrats’ efforts.
Time enough left for judgment of whether these daring approach will bear fruit or not. For now, let us focus on the intent behind this change.
For years, governments have been forecasting balanced or even surplus budgets. That assured the country of responsible fiscal management. Invariably, these sell-intended forecasts had ended up with soaring deficits.
This is the first government which has boldly stepped up with a plan to bring down a deficit budget. Not just next year’s but a series of them running into 2017. It plans a budget surplus only after 2017.
It is telling the nation: “Hey, we will spend K2 billion more money than we collect next year. And we will spend more than we make for another three straight years running. Only in the sixth year, will we make some surplus money.”
That is quite some commitment. Either it is downright foolish or it has taken a great deal of thought and projecting.
Alarm bells start ringing when people hear the word “deficit”, but PNG is not alone with this sort of money plan. It has been happening for years in many countries, the mother of them being the United States of America.
Deficit budgeting puts more money into the economy, even if borrowed, so long as there is capacity to extinguish the debt readily enough. The principle is that if more money is pumped into the economy, it should in turn stimulate the economy and make it grow.
In Papua New Guinea’s case, there is capacity to repay the debt, so long as it does not become insurmountable. 
With the PNG liquefied natural gas (LNG) project coming on stream in 2014, and with many mining ventures likewise entering production phase, there will be a steady flow of money into the country within three to five years’ time. That is the timeframe for this money plan.
PNG also has tremendous capacity for economic growth. All it requires is the correct stimulus.
That growth potential lies dormant in the 97% of land that is presently not listed as a wealth-creating asset or as capital in the economics of PNG.
That growth potential lies in the productive capacity of the bulk of Papua New Guineans who live and work the 97% of this land and, therefore, are also not counted as contributing to the gross domestic product of PNG.
Now, if PNG has grown to this size, economically and financially, through the mobilisation of only 3% of alienated land and through revenue from the few pockets of licensed resource development projects scattered around the country, think of what potential there is out there if much more of the land were brought into the formal economy.
Think of what potential that exists out there if more of the youthful population was also engaged in the economy.
This is what this budget has dared do. It is trying to empower, to embolden and to include the “lost citizens” into the formal economy.
It is going out into the provinces big time this year. No less than K1.492 billion is provided next year in direct funding to the provinces, the districts and the council wards around the country.
A massive K6 billion is earmarked for nation-building productive infrastructure development over the next five years.
A K500 million stimulus package has been handed over to Papua New Guinean businesses along with enabling concessions and protective laws to grow PNG entrepreneurs over the next five years.
This budget and any other budget or plan will be in vain if the oversight mechanisms are not in place, if management is sloppy, if graft and corruption gnaw away at all the bold programmes.
But … nothing risked, nothing gained. There is a lot at risk here and a lot to be gained as well.