Opposition: Money plan a waste

THE opposition says the 2013 Budget is unsustainable and contains a lot of wastage and unproductive expenditure, running into millions of kina.
It said such a budget would not stimulate the economy.
Shadow minister for finance and treasury Joseph Lelang said over the years, favourable international market prices of PNG’s major export commodities had contributed to the economic and revenue growth. But it was no longer the case as the country continued to maintain a high expenditure structure when it could not afford it.
“It is an irresponsible budget that fails to capture structural shift and changes that are happening to the country.”
Lelang said many industries in petroleum, agriculture, manufacturing, transport and storage sectors were affected by the global downturn as it affected their profit and performance.
“The appreciation is no longer helping either,” he said.
“PNG’s growth has been revised downwards from 9.2% in 2012 to 4% in 2013, which is contracting.
“How effective is the large budget deficit when it comes to stimulating the economy? Very minimal because, despite an expenditure growth of 23.4%, growth is halved to only 4%.
“This is very low, so the 2013 Budget of K13.03 billion has little impact on growth,” Lelang said.
He said the -7.2% budget or K2.5389 billion deficit would only have destabilising factors on the economy while rise in inflation was guaranteed, with the executive borrowing and with too much money chasing fewer goods.
Although the total stock of debt was K11.3682 billion in 2013, there were other state liabilities like the K3.8 billion IPIC loan and the K2.1 billion in unfunded surplus that continued to impact on the budget, Lelang said.
He said the K224 million payout was appropriated to meet the obligations to pay the state’s shares.
Lelang said the opposition supported the tax reviews but more should be done about continual evasion and avoidance of taxes.
He said the tax amendment and the 2013 Budget deficit would trigger inflation pressures in the country, although inflation projections would rise to 8%.
Among the wastages he pinpointed was the K100 million allocated for feasibility studies.
He said several controversial projects such as the Konebada Petroleum Park and the re-allocation of K2 million for projects should be investigated.
Lelang said the opposition supported the rural intervention and funding allocations.
He said the 2013 Budget could not be sustained and, therefore, a commitment to reform and restructuring the expenditure side of the budget, domestic debt and broadening of tax base became important.