Focus on core functions, govt told

By NATHAN WOTI
THE Government needs to focus on its core functions and help bring down the cost of doing business in the country, according to an economist.
Institute of National Affairs executive director and economist Paul Barker said in recent years, the businesses sector had suffered an array of challenges from high global energy prices to the pandemic, poor infrastructure, law and order and corruption, deficient education and health services, severe shortfall in foreign exchange and growing risk factors related to policy uncertainty.
“The best thing Government can do is not to try to dictate to markets or producers, and certainly not try to get into setting up, running and owning businesses, which it is largely no good, except through hands-off investments through a Sovereign Wealth Fund,” he said.
“The 1990s was a period of severe economic instability, partly around a succession of new projects and exaggerated expectations, combined with loose economic management and a severe decline in governance and accountability.
“The 2000s provided some restoration in economic and fiscal stability, which enabled enhanced conditions for private investment and job growth.
“The 2010s reverted to weaker economic and fiscal management, again partly associated with unrealistic expectations of revenue and growth.”
Barker said economic and employment growth ground to a standstill partly as Government spent heavily on urban projects and pursued initiatives for it to be more directly engaged and controlling business activities.
Barker said instead of focusing on creating the conditions for private investment by domestic and foreign investors, large and small, the Government was increasingly trying to encroach and own and run enterprises, and by borrowing heavily, creating greater uncertainty and squeezing businesses and households out of the foreign exchange market, while failing to pay its own dues, both to businesses and to critical public utilities such as PNG Power Limited.
Meanwhile, Barker said the Government was its own biggest impediment to achieving positive outlook and growth.
“It seems that the Government is lost in its own rhetoric, talking of massive growth and taking back, even while it is Government itself that is the major impediment because its failing to focus on its core functions and failing to provide the needed stability and confidence for the real drivers of growth and employment, while adding to disruption and uncertainty,” he said.