THE Government has handed down a whopping K7.5 billion budget for 2010, but significant challenges lie ahead in its implementation and staying within the allocations. Inadequate implementation or overspending can quickly put the country in serious financial difficulties.
The budget document is a plan. It forces the Government to plan and allocate its resources. It identifies any shortfall in revenue and provides some lead-time to develop strategies and solve problems before they evolve into financial crises.
Budgets are also excellent communication devices as they incorporate financial and operating goals, thereby communicating expectations and priorities to the Government agencies. Not only does the budgeting process monitor the performances, it communicates expectations and priorities and provides a tangible parameter on which to base financial decisions.
PNG’s thinktank, the National Research Institute, has described the budget as “well focused on priority service areas” but reiterates our sentiments that effective implementation is crucial. NRI director Dr Thomas Webster says whether it will be a balanced budget is yet to be seen.
“By the books, it’s balanced but, in the implementation, if it goes over then that’s a surplus budget,” he said. “But if we don’t collect enough, then it would be a deficit budget.”
He pointed out that the recurrent budget contains salaries and operational costs for most national and provincial government agencies. There are existing problems with their performance. The development budget proposes additional programmes with funding for various programmes or activities.
Our concern is that an already overburdened and weak government machinery is being put under more pressure to implement the budget and realise the expected outcomes. To ensure effective implementation, the Government must address several issues relentlessly.
There are problems with a weak public service that needs improvement in training, orientation and motivation. The budget proposes various activities to improve human resources under the “public sector workforce development” programme initiatives and housing.
Training and recruitment of cadets, among others, will help to improve the quality of the performance of the public service. But is this enough to get the public service to perform effectively?
The second area is institutional linkages. At the moment, most Government agencies work in isolation. The budget proposes projects where national agencies are doing some things under both recurrent and development budgets, provincial government departments are doing things mostly under the recurrent budget and district administrations are responsible for a large share of the development budget.
The intended beneficiaries are the rural communities of PNG.
“This is not likely to happen and I suspect that most expenditure will serve organisational and individual interests rather than that of the wider public,” Dr Webster observed.
But there is room for better coordination of programmes and activities between agencies and between different levels of government to get better outcomes from the efforts and financial expenditures.
Dr Webster said effective linkages needed to be created by the central agencies pushing the line agencies to link their activities more constructively and effectively with provincial and district administrations.
Key national agencies have responsibilities for some activities but how do these activities link up with similar programme activities at provincial and district levels? We believe there needs to be a synchronisation of activities so that maximum benefits can be gained from these efforts and financial inputs.
Ministers whose portfolios have been allocated large amounts of money, K100 million or more, should be expected to make regular progress reports to Parliament and the people.
The Treasurer presented a 2008 Budget Outcomes Report. This was an excellent move and we hope that he will do the same for the 2009 budget.
Ministers should also make detailed reports on expenditures following the Treasurer’s report. This will ensure transparency and accountability as well as push agencies to effectively use the monies allocated and citizens can expect maximum benefits.
The goal of budget implementation is to become astute at assessing the impact of variances and to know when to implement steps to correct any deviation from the plan. The budget and its implementation are of significant value to the Government and to the people of PNG, who are desperate for change.