Paita: Govt coming up with ‘Cost of Living Policy’

Main Stories
Samuel Bariasi
ACCORDING to the Economist Intelligence Unit, Hong Kong has risen three places to share the crown with Paris and Singapore in last year’s global ranking of expensive cities. What do Papua New Guineans think about their country, especially in Port Moresby? The National’s SAMUEL BARIASI reports.

HONG Kong and Paris are now tied with Singapore as the world’s most expensive cities to live, according to the Economist’s The Worldwide Cost of Living survey.
It reported that Hong Kong moved up three places globally to join Singapore, which has been the world’s most expensive place to live for the last five years. It is the first time that three cities have been tied for first place in the survey.
Paris, Singapore and Hong Kong are all seven per cent more expensive to live than New York, the benchmark city. The survey compares prices of 150 items in 133 cities. Asian cities make up four of the most expensive cities to live, and also four of the 10 least expensive.
What do Papua New Guineans think about the cost of living in their country?
The experiences of surviving in Port Moresby might differ from family to family, but just as life, no one can confidently say that living in PNG’s capital is easy. The people in executive positions might have a slightly different story to tell. But for the vast majority that earn around the minimum wage of K3.50 an hour, the figure on the pay slip will make you smile for only a few rapidly fading hours.
The expression of weariness is almost evident in many people in the workforce. As most would admit, the few days before payday can be frustrating sometimes.
As EMTV reporter Scott Waide puts it: “What appears to be a big salary is ripped to shreds by the reality of big city life.”
Say you are a family of four with a nett salary of K500 per fortnight. A daily dinner of rice and canned fish costs up to K15, maybe K20 if you want to add some vegetables.
In total, an average dinner cost in a fortnight would be more than K200, and that excludes breakfast and lunch! A standard room with common kitchen, laundry and bathroom facilities costs more than K100 per week with free water and electricity. An average home with two bedrooms costs between K650 and K1,000 a fortnight, excluding water and electricity costs.
The same cannot be said for a person who sells, produce or other items on the street or the market place. School fees, transport, leisure and family commitments leave income earners gasping and quick to run to their nearest banks, financial institutions and loan sharks.

Nelson Nema

Nema … tackle root causes of high cost of living
University of Papua New Guinea economics lecturer Nelson Nema said the most important need of Papua New Guineans was accommodation and “it is most expensive”.
“The influx of people into the city causes demand for goods and services to be in excess of supply. That is why everything, goods and services, is so expensive. Before trying to address the issues with cost, we have to look at the root causes of the increasing cost in the city. Unless we address the root causes of the high cost of living, the cost of living will continue to spiral up,” he added.

Israel Mudima

Mudima … relying on loans to support family
Bank of Papua New Guinea risk analyst Israel Mudima said one needed to be strong and determined to overcome the challenges of surviving in Port Moresby.
“I changed jobs three times just to get to a job that adequately provide financial support to my family. I never had the money for leisure activities and other commitments because I have been repaying loans half the time.
“Ever since I joined the working society, I have been relying on loans to help my parents pay for my siblings’ school fees and support my family,” he added.

Suzie Maki

Maki … value of kina keeps falling
Foreign Affairs and International Trade Department foreign services officer Suzie Maki said goods and services were indeed expensive today.
“From food items to transportation, renting a decent place or even owning a home are expensive and causing stress. I see that half of a family’s income is spent on food, both in the supermarkets as well on the local markets.
“Owning a home or renting a decent place is too costly in the big city as well. Family and cultural obligations, school fee loans, living in an extended household can cause stress if there is only one person working to make ends meet.
“Many are struggling and striving to make ends meet with whatever they have or can afford. Prices of goods have gone up while the value of kina keeps falling,” she added.

Stephanie Tommy

Tommy … salaries and wages not growing in tandem with rising prices
KPMG accountant Stephanie Tommy said she found it difficult to budget her expenses because of the fluctuating fuel prices.
“Cost of living is indeed very high (in Port Moresby). Prices of goods and services are increasing yet salaries/wages of employees are growing in tandem. You pay for parking that you have already been taxed. You pay for use of toilets and facilities and even for water in some restaurants and all these are free in most countries.
“As an accountant, I think the Government should really invest more on the local economy, especially in the agriculture sector. Markets and opportunities for our people should be created so that they are able to establish themselves to sell to a wider market including exports. I believe our country has so much to offer but we are not doing enough,” she added.

Paul Barker

Barker … Port Moresby geographically isolated from others
Institute of National Affairs director Paul Barker said the high cost of living in Port Moresby was partly the result of the capital being relatively isolated from much of the rest of the country, largely as a result of geography (with a major mountain range just inland and running the length of the country) making other regions with food crop surpluses relatively inaccessible.
“With local growing conditions in the vicinity of the capital relatively poor, coupled with its relatively long dry season and generally poor soil, it is partly the result of the limited state-owned land acquired during colonial times.
“There is limited land for developing affordable housing in a fast growing city. It is also partly historical, in that PNG had a relatively short history as an independent nation and only limited and brief engagement in developing public infrastructure, education and services,” he added.
Barker said the failure to manage public utilities efficiently over the years and invest in new plant and equipment to keep up with growing demand, for example for power, public and private housing, telecommunications, market facilities and wholesale (and deconsolidation) facilities for fresh produce, and the like, were also the cause of “high cost of living”.
“For example, there was good early investment in hydro-facilities from Rouna (1 to 4), but then a lack of maintenance and further investment, and Elcom/PNG Power instead were pushed into high cost interim power supply arrangements, from Moitaka and Kanudi, which drove up the cost of  power for businesses and private consumers.
“With unreliable power, all businesses also had to install back up power generating capacity, further raising costs. The same with water and sewage operations that were profitable under the National Capital District (NCD), and then Eda Ranu was established. It should have continued to be profitable and able to partly cross-subsidise other NCD operations or other water supply operations under Water PNG but, instead, the new company contracted out operations to an overseas operator, with high management costs, uncompetitive supplies of plant and equipment, and again costs were pushed up unnecessarily.
“Unlike Lae and other centres, where more goods are locally produced or able to be transported competitively by road, nearly all NCD’s goods are shipped in from overseas, or other remote parts of PNG. Ports PNG operates a profitable port on a monopoly basis.
“Briefly, there was some competition with Curtain Bros running a second port in NCD, although it was largely serving a separate market for specific goods. In any case, Ports PNG bought out the Motukea facilities (seemingly for some unjustified high price) and the limited competition was concluded again and NCD continued to suffer from uncompetitive port charges, combined with the high domestic shipping costs for produce coming by vessel from Lae, or by airfreight from Hagen and elsewhere in the Highlands.
“Finally, the level of crime, or threat of crime and corruption, also raise business costs, with the need for costly security systems and services,” Barker said.

Rainbo Paita

Paita … ‘Cost of Living Policy’ being mooted
Finance and Rural Development Minister Rainbo Paita said his ministry also oversee the rates and costs of goods and services under the Public Finance Management Act (PFM Act) that provided consultation with the Treasurer.
“By notice, change of any fees and charges are determined by the effects of inflation and other cost of living increases.
“We are putting together a policy called the ‘Cost of Living Policy’ which will try to highlight the cost of living in certain urban centres in the country.
“We will start with four areas (including Port Moresby).

“This policy will come about this year. My department will sponsor a study that will assess differences in cost of living in urban and rural areas in the country.
“This study will compare the cost of living in our rural and urban areas,” he added.
He said the study would help the Government to equip the people with the knowledge of how to deal with the high cost of living.
“A financial inclusion programme will be implemented to try and equip Papua New Guineans with financial literacy to enable them to make choices beneficial to them instead of burdening themselves,” he added.

4 comments

  • Government could start some businesses for communities, especially in agriculture and livestock and fisheries sectors. The people can manage these businesses and sustain themselves as well as pay taxes back to government.
    This source of income will improve standard of living for the people.

  • It’s about time we invest more in agricultural sector and aslo boost SME sector. Only means to survived the increasing of living.

  • This country should relook and redefine its public Finance procurement systems to cut down on some of the lengthy communitation channels which expedites huge public investment program funds seemed to have no Perminent impact on our people at the sub national and regional areas around the country

Leave a Reply