The National,Wednesday 07th December 2011
FINANCE and Treasury Minister Don Polye yesterday brought down PNG’s first K10 billion budget aimed at lowering the cost of living for people and improving their welfare.
He did so against a backdrop of uncertainty with the Supreme Court decision due on Friday.
However, Polye confidently declared that the government of Prime Minister Peter O’Neill would survive to implement its budget.
True to its theme, sharing the wealth and empowering our people, the budget was tilted heavily in favour of the people, giving
personal income tax relief to people by lifting the tax-free threshold from K7,000 to K10,000 (all who earn up to K10,000 a year will not pay income tax).
The budget also provided:
*Tariff relief on basic commodities such as meat, flour, pasta and shoes and key business imports such as steel and other infrastructure inputs;
* K1.3469 billion to improving education;
* K712.5 million to improving health;
* K679.7 million to improving law and order; and
* K281.8 million to improve transport infrastructure.
Polye said the total cost to government of the tax concessions would be K105 million which, he said, were “modest, yet ensure adequate funding for expenditure priorities such as tuition fee free education and the 2012 general election”.
A total of K330.5 million had been allocated for the election next year.
The biggest losers will be tobacco and alcohol companies who suffer a large tax measure of 15%.
“These products harm our society,” Polye said.
“We want Papua New Guineans to spend the money they get from our tuition fee free education policy and our proposed tax cuts on things which will help improve the quality of their families’ living standards.”
The two new provinces of Jiwaka and Hela had completely missed out.
Companies using the Highlands Highway would be asked to pay a 1.25% for emergency repairs of the highway from Lae to Koroba and Wabag respectively.
Total revenue and grants would be K10,560.3 million which was K1,232.1 million higher than the 2011 original budget estimate of K9,328.2 million.
Tax revenue was projected at K8,519.7 million, an increase of K622.9 million from the 2011 estimates. Non-tax revenue was expected to be K520 million while project support grants for 2012 were expected to be K1,390.5 million, K135.6 million lower than the estimated level for 2011.
The kina had been appreciating against the Australian dollar and this is expected to decrease revenue by K400 million, Polye said.
Expenditure for 2012 is expected to be K10.5 billion with K6.1 billion in recurrent budget and K4.4 billion in the development budget.
The key drivers of expenditure next year are tuition fee free education, the 2012 elections, health, law and order and infrastructure.
By far the biggest slice of the cake, as expected, goes to education. Apart from the K649 million for tuition fee free education including the K300 million from the 2011 supplementary budget, K47 million has been allocated for education infrastructure development. Australian aid will also contribute K27 million.
The budget funds 6,700 new teachers to work in the provinces, grants K13 million increase in the basic education function grant to provinces and supports K24.5 million for teachers colleges, technical schools and vocational schools. Universities received a substantial increase of K10 million in their recurrent expenditure.
From the development budget, K130.5 million had been allocated to infrastructural development in all universities.
Funding was also provided for the reintroduction of Natschol which would provide 10,000 students with a living allowance.
In all, the government had allocated K1.954 billion, or 18.5% of the total budget to education.
Support for next year’s general election, at K330.5 million, was estimated to be more than four times the cost of the 2007 elections.
“This is a worthwhile investment to maintain our democracy and allow our people to choose their leaders,” Polye said.
Of the total, the Electoral Commission was allocated K180 million, police got K105.1 million, Defence K35.8 million and Correctional Services received K9.6 million.
The government also provided K180 million towards the 2015 South Pacific Games.
Each of the 89 districts in PNG received K2 million each (K187 million in total) from the development budget for rural and feeder roads.
Umbrella benefits sharing agreement commitments also received K170 million while K130 million would be parked in the National Development Bank to assist small and micro businesses.