Treasurer Charles Abel has received National Executive Council endorsement for his 100-Day Economic Recovery Plan, but it will fail through lack of support from Prime Minister Peter O’Neill, the Leader of the Opposition, Hon. Patrick Pruaitch, said today.

Mr. Abel has spelled out eight “Road Rules” for his key strategies but Mr. O’Neill has already made a mockery of the first important Rule, “Small, efficient government”.

Almost at the same time this goal was proposed, Prime Minister O’Neill has announced that his 33-man Cabinet will be assisted by nine Vice Ministers, each of whom would be given some special responsibilities.

“For Mr Abel’s first rule, ‘Small, Efficient Government”, one can already insert, “Bigger, Less Efficient Government,” Mr. Pruaitch said.

The Opposition Leader also noted that Mr. Abel has not spelled out a single measure that would help downsize Government, so we can be sure the 9 Vice Ministers will do their bit to increase the numbers of allied political support staff and bureaucrats.

Mr. Pruaitch said the outcome of policies and plans that were not clearly thought through will mean the economic mismanagement of the last five years will continue in coming years because of incompetent leadership and public borrowing that is out of control.

He said there was some small signs that Mr. Abel may have understood the extent of the mismanagement that has occurred.

First, is his acceptance that the Government must have a goal of “Living Within Our Means” after a five-year borrowing spree that raised K17 billion, including the UBS loan.

Second, was his promise to cut the ratio of the 2017 budget deficit to Gross Domestic Product to 2.5% in the Supplementary Budget to be introduced shortly in Parliament. Borrowing would be reduced simultaneously to meet the requirement of the Fiscal Responsibility Act by maintaining a 30% Debt to GDP ratio.

“It would be impossible at this late stage to reduce the Deficit from 3.8% of GDP as projected in Treasury’s Mid-Year Economic and Fiscal Outlook report, and to bring down Debt to GDP from the projected 34.9% level.

“Even if the coming Supplementary Budget comes up with these bottom line figures, they are certain to be reversed when the Final Budget Outcome is released early next year.

“There is nothing in the 100-Day Plan to suggest any attempt to reduce total public-sector costs; the only focus is on increasing of revenues which tends to be a longer-term goal.”

The plan to squeeze Government agencies and State-Owned Corporations for greater funds will not work, Mr. Pruaitch said.

“While I was Treasurer in the last Government, Kumul Petroleum insisted their dividend payment was in the form of a loan that government had to repay and Kumul Consolidated only managed to pay its ‘dividend’ by taking a large loan from Bank South Pacific.

“Unless Mr Abel can significantly cut expenditures in the near-term PNG’s current economic crisis is likely to worsen in the coming year.”

 

HON. PATRICK PRUAITCH CMG, MP

Leader of the Opposition

29th August, 2017