Managing the economy

IN your paper the other day was a low-key report of a statement by Minister for National Planning and Monitoring Richard Maru which deserved bold headlines or front page news.
The minster admitted that the government was doing a poor job of looking after the welfare of the present eight million people of this country; that the current levels of economic growth are lower than the population increase and this will lead to even worse outcomes and declining living standards; and that by 2050, on present projections, the population will grow to be 25 million, and if there is no breakthrough, chaos will reign.
He is right in calling for faster economic growth.
With good management an economy in PNG’s state of development can achieve a 4 to 5 per cent per annum rate of economic growth for many years, but it takes good management.
Compare South Korea and Singapore and PNG since independence for ‘the successful’ versus ‘the unsuccessful’.
He is wrong in not calling for a concerted effort to lower the population rate to about 1 per cent per year.
Adopting the successful 1+1+2 policy that India has adopted would be a good place to start.
Minister Maru would be well advised to read Lee Kuan Yew on the subject – if he has not already done so.
Successive governments have ignored or rejected the policy advice of economists and business people who should deliver economic growth in favour of idealists and Marxists, pursuing utopian dreams, which a 3 per cent-plus population growth will destroy.
This goes right back to the pre-independence period.
PNG is now a high-tax country for the law-abiding and wage earners, while the provision of government services is both poor and very highly priced.
If the tub is over flowing, the first thing to do is turn off the tap.
Another trouble is that far too many homes in PNG do not have a tap.
Good examples of unrealistic thinking occur everywhere – with rice particularly.
Root crops are the answer, not rice, and government efforts to switch peoples’ preference is required.
The worldwide trend to city living has already hit PNG (as you have noticed) and already the cities are verging on being unmanageable.
Draconian policies need to be adopted to manage the situation fairly, but realistically. Lagos, Rio and Karachi are not desirable models.
LNG and mining do not provide many jobs and are useful aids to progress (from the royalties and taxes they produce) but they will not solve the problem. Far more innovative ways are restored.
We cannot know whether Asia will still be as hungry for LNG in 2050 as it is today.
In the last parliament, Ken Fairweather did focus on population, but except in his Sumkar electorate he was largely ignored.
A 3 per cent rate of population growth is a net figure of 3 per cent, this means the crude birth rate is around 4.5 per cent per annum, which means there has to be places in schools for 4.5 per cent more children than in the previous year and this occurs every year.
A 4.5 per cent per annum increase works out to be a more than doubling of the school age population in 16 years.
This alone is a daunting capital cost for both new schools, staff housing and for teacher training.
To this must be added the cost of hospitals, aid posts, roads and bridges, water supplies and with such a huge increase in population, vastly improved of sanitation will be required.
PNG are not good savers so the cost of housing must also be factored in.
But to deal with the employment issue, a vast amount of capital is required to fund jobs – only so much can be raised on the world market.
PNG has to fund a lot of this capital itself.
Focusing on the country’s predicament of a far too rapid population growth and laggard economic progress and, particularly, the ways to solve them is a serious obligation not only of the politicians but also of the media.
Remember that a wise farmer does not overstock his land.

R.W Bolling