“The big picture outcome numbers for the 2017 Budget look too good to be true – and they are. The Final Budget Outcome (FBO) released by the PNG Treasury on 14 March- the 83 page detailed document after a premature speech by the Treasurer last month – raises massive questions about credibility and trust. There is over K1 billion in fake accounting to hide the O’Neill/Abel government’s budget failings. The real budget deficit has blown out yet again, undermining the promises of the Alotau II Accord and the 100 Day Plan” said the Shadow Minister for Treasury and Finance Ian Ling-Stuckey.

“Over 80% of the increase in revenues and grants between the Supplementary Budget and the budget outcome are due to donor in-kind contributions of K471.8m. However, not a single toea of this increase appears on the expenditure side thereby artificially reducing the true size of this government’s budget deficit. This is an accounting impossibility as increased donor revenue should exactly equal increased expenditures.

“There is also a very confusing claimed cut in education expenditure of K522.6m shown in Table 20 which appear as an alarming but fake expenditure cut. This would have been an extraordinary cut in support for the education of our young people – from K1,092.5m down to only K557.6m. Like other figures in this fake FBO, this is unlikely if not impossible. It appears this is in fact largely a transfer into a trust account as reflected by a K504.7m payment for TFF in Table 19. The cut of K557.6m is included in the government new 2017 expenditure figures, but the payment out of the trust account does not appear. These tricks seem to have been needed to support the lies that the new government is really doing something to address the budget crisis facing the people of PNG. Such apparent lies mean an independent audit of the budget is required” said the Shadow Treasurer.

“The government is also simply hiding massive failures to pay bills on time to make the deficit look better – the clearest example is mandated superannuation expenditure has been reduced relative to the Supplementary Budget by K229m (Table .D1 (i) of K404m in SB to K175m in FBO). This is a shameful action against loyal public servants that have given up a lifetime of service to the government. Other unpaid bills simply don’t appear.

“The government is reclassing some K100m in debt overhead costs (unclear whether UBS or Credit Suisse or other sources related to the Sovereign Bond) and putting increased debt costs to “goods and services” rather than increased debt interest costs. In reality, the costs of government debt has increased to over K1.6 billion. The fear is that these increased costs are for shady “fee” deals rather than interest costs. Such fee payments increased from K16.2m in 2016 to K109m in 2017 (FBO Table D (ii)).

“I am very sad to say that the latest FBO is a political document that does disrespect to the generally professional public servants in the PNG Treasury. It raises serious questions about the political imperatives of manipulating the true state of PNG’s economy and budget. This FBO unfortunately requires a truly independent accounting assessment – and this needs to be done outside of PNG firms given the government’s influence and threats of cutting contracts if the good news storeys are not produced.

“This FBO reveals other tactics to hide politically sensitive information to the PNG public. There used to be information on DSIP trust accounts provided in Appendix 2 of the FBO. This used to show opening balances, payments into and out of these accounts, other Non DSIP deposts, and the remaining balances. This FBO simply shows 89 lots of 5 zeros – 445 blank figures to hide what was going on in these payments up to the fraudulent 2017 election and payments thereafter to government politicians relative to opposition politicians. The government will claim these amounts have been transferred to district Treasuries – but why hide these important details from the people of PNG?” asked Mr Ling-Stuckey.

 Hon.Ian Ling-Stuckey,CMG.MP
Shadow Minister for Treasury & Finance

26 March 2018

All of these FBO tables are available from the Treasury website: http://www.treasury.gov.pg/html/national_budget/files/2013/budget_documents/Related%20Budget%20Documents/2017%20FINAL%20BUDGET%20OUTCOME.pdf

Grants on the revenue side are in-kind donor grants. These increased in the FBO by K471m between the 2017 SB and 2017 outcomes. Grants on the expenditure side also include grants from the government to sub-national levels, mainly the DSIP. The DSIP cutbacks reduced such expenditure grants dramatically (by 80%). However looking at the 2017, there was an actual fall in expenditure grants even beyond these DSIP cuts in the Supplementary Budget, reflecting no effort to show the in-kind expenditures of the additional donor grant in-kind revenues. This is sloppy accounting.

On education, there are cuts in funding of K522.6m shown in the Supplementary Budget. The most generous interpretation is that these funds were transferred to a trust account. However, these trust account expenditures do not seem to appear in any other expenditure line – this transfer does not represent an actual cut in expenditure – just some fancy accounting games.

Superannuation contributions have also been slashed by KK229m – from K404m to K175m.

DSIP funding has been buried. All figures are now simply zero. More transparency in this area (now accounting for some 10% of the budget) would be appropriate.