Need for new audit authority

 By REX KIPONGE

Governments exist to make a tangible difference to the lives of their country’s citizens and residents. Consequently Papua New Guinea, like many other countries, is placing greater emphasis on service delivery through the PSIP, DSIP and LLGSIP policy. 

The national government emphasises the need for good governance and actively managing for better results, improved outcomes and best value for money in the use of public funds.

Government spends billions of kina each year from the national budget in the provision of goods and services that are needed to deliver public policy and business objectives. Good public service outcomes depend on good procurement. Properly planned and effectively executed procurement is essential for all agencies.

It is timely now for the National Gov­ernment to sanction an independent body to carry out district-wide audit of the District Services Improvement Programme (DSIP), Provincial Services Improvement Programme (PSIP) and LLG Grants in the country. The audit must be thoroughly carried out to measure the economic be­nefits and social impacts in the district. 

Every year substantial amount of funds are allocated to each districts aimed at service delivery through DSIP and now the PSIP and LLG grant coming on board, which started rolling out this year .

The outcome of the audit report will determine future direction and a way-forward for the national government in these policy areas. 

Such an independent audit exercise will identify grey areas for review and improvements so that the objectives of PSIP, DSIP and LLGSIP policy can be achieved in terms of service delivery at the district level.

Why audit?

The purpose of the independent audit is to check the “bottom line” of development work in the district: Not “PSIP, DSIP and LLGSIP policy making a profit?” but “PSIP, DSIP and LLGSIP policy making a difference?” in the lives of the people and transforming the districts. 

Through auditing, the national gov­ernment can: Review progress; identify problems in planning and/or implementation; and make adjustments so that the DSIP policy is actually “making a difference”.

The audit should not be limited to financial audits only. The PSIP, DSIP and LLGSIP audit will be a periodic assessment of overall achievements in the service delivery area. 

The audit must examine what has been achieved or what benefits and impacts has been made in terms of national government’s objectives of the policy, and whether the intended objectives have been accomplished. An independent team is to evaluate processes to analyse how the po­licy itself operates, focusing on problems in service delivery. 

Another area will be the evaluation of cost-benefit or cost-effectiveness to assess DSIP Policy costs (monetary or non-monetary), in particular their relation to alternative uses of the same resources and to the benefits being produced by the policy.  

The audit team will evaluate the impact to determine whether the programme had the desired effects on lives of individuals, communities, and district in infrastructure developments, and whether those effects are attributable to the policy intervention.

The audit is to place more emphasis on impact evaluation as it look at evidences whether the policy intervention did made a difference to the problem situation PSIP, DSIP and LLGSIP policy was trying to address. 

In other words, was the policy and funding arrangements useful? 

In the Sunday Chronicle, Treasury Secretary Dairi Vele said, and I quote: “We need to look at the effectiveness and performance of the individual Members of Parliament and the local level governments on how well they have spent their District Services Improvement Programme (DSIP) funds”.

He went on to say; “We have put more money into the provinces and districts for 2014 so that we get more from them but still there is nothing for them to show”. (Sunday Chronicle page 3, October 26, 2014)

The other important area is the effectiveness. The effectiveness of the DSIP policy will be measured against the extent to which the project development achieves the specific objectives sets out in the policy document. 

If, for example, the policy document sets out to improve the delivery of services to all the districts in the provinces, did it succeed?

The Auditor-General’s Office of Papua New Guinea’s 2012/2013 DSIP audit report contains some key findings which must be verified by the independent audit body. 

PSIP, DSIP and LLGSIP policy at present

At the Governor’s conference in Kavieng, New Ireland, Prime Mi­nister Peter O’Neill announced a staggering K2 billion as the total money spent so far in each of the electorates. 

In this year’s budget, Minister for Finance James Marape hinted that next year the 2015 national budget will still be district focused. The government is expected to present the 2015 National Budget in Parliament during the November sitting, and get the budget bill passed using its numerical strength.

Based on the current funding allocation and arrangements of DSIP funds, each district receives K10 million per year. 

Previous funding allocation was K5 million per year.  

The national government allocates K5 million to the province as Provincial Services Improvement Programme (PSIP) funds as sector allocation for each districts. 

If a province has five districts, that is equivalent to K25 million going to the province under the PSIP policy.  Allocation per provinces is K5 million multiplied by the number of districts in the province. For example: Morobe – K5 million x 9 districts = K45 million. 

Not only that but starting this year the O’Neill Government, for the first time, allocated K500,000 to each of the LLGs as LLG grants.

Let’s do a simple analysis taking a random district as an example with three LLGs for a year. 

The above table shows a simple analysis as an example of the types of funds spent in each district for service delivery. 

If we estimate by country, it would be over K7 billion in one term of parliament.

On average, population in a district is around 40,000 to 45,000 with a total landmass of approximately 5000 to 10,000 km2. 

A Member of Parliament has access to approximately K85 million in his/her term in parliament. 

This is the real situation we have in PNG under the current DSIP funding arrangements. 

By now all districts should be transformed to a certain degree. 

It is sad to see the current state of affairs in some districts in PNG. 

There are still missing road links between LLGs and district headquarters.  

In other districts, there are roads, but rural airstrips are closed due to lack of attention by MPs. 

Where are all the millions of kina meant for service delivery going to?

Our social indicators are still high, pointing to poor education and health sector infrastructure. 

Many of the children do not go to schools or are school leavers and children not attending schools. 

There are no proper health facilities and people, especially mothers, and children are dying of curable diseases. 

What is happening to all the funds injected into the districts for service delivery?

The Office of Rural Development must play a proactive role in conducting physical inspections and provide factual reports of the projects being implemented in the district. 

They must monitor and evaluate the impacts of developments and update the national government on the benefits of the PSIP, DSIP and LLGSIP policy.

It is not the national MP and the JDP&BPC’s role to provide inspection reports of projects they implement in their own electorate. 

Their job as the state institution responsible for administering this policy should act like watchdogs in each district on projects funded under DSIP funds and provide comprehensive reports based on tangible projects. 

The department is the eyes and ears on the ground for national government, especially Finance department as custodians of funds. 

How can the impact of PSIP, DSIP and LLGSIP be measured without proper audit of the developments from the district level?

The O’Neill Government must sanction a team to conduct thorough audit in all the districts to measure the impact of PSIP, DSIP and LLGSIP policy.

 There is no point in continuing to inject millions of kina for service delivery without measuring the benefits and impacts economically and socially.

It is sad to see daily struggles faced by people in the districts and communities of PNG. 

There is lack of accountability, abuse and misuse of DSIP funds for other purposes than intended its purposes as pointed out in the 2012/2013 DSIP Audit Report by Auditor-General’s Office of Papua New Guinea.

The O’Neill Government must be careful in handling the situation in terms of funding for PSIP, DSIP and LLGSIP programme. 

Otherwise the government might be creating financial monsters at the expense of service delivery, while there is nothing to show in the districts. 

• Rex Kiponge is a former employee of Office of Rural Development – now the Department of Implementation and Rural Development