“Today in Parliament I asked the Treasurer to explain a massive blow-out of nearly K1 billion in the government’s payroll payments to public servants and teachers. This Budget blow-out once again demonstrates the PNC Government’s incompetence in managing the nation’s public service payroll. There are reliable reports from the 2019 Budget process that senior public servants estimate the cost over-run in 2018 would be K944 million, or nearly K1 billion. This would be a massive cost over-run of over 20 per cent, or one-fifth, of the initial budgeted amount. No wonder they can’t pay teacher’s on time with such budget mismanagement” stated the Shadow Minister for Treasury & Finance Ian Ling-Stuckey.

”The government payroll is the largest single cost item in the budget, even larger than the massive public debt interest costs being imposed on the people of PNG. The Treasurer promised as part of his so-called 100 day plan, as point 3, that the new government would get the government payroll under control. The 2018 Budget estimated that the size of the Payroll, also known as Compensation of Employees or CoE, was K4,137 million for 2018. However, as part of the budget process, the September Outturn Report from Round 3 indicated payroll was expected to reach over K5,062 million in 2018. More specifically, the government was informed that there was an expected salary over-run of K944 million, nearly one billion Kina of incompetent budget management.

“This pattern of budget incompetence in managing the payroll was evident from two earlier facts. First, the 2018 MYEFO revealed that there was an additional K418 million paid in Section 4 Transfers on 4 January 2018. These massive payments were described as “To offset salary overrun” – a clear example of simply delaying a payment, until the very start of 2018, to make the 2017 deficit look better. Second, the Treasurer has admitted that they did not actually budget for the 3% salary increase promised earlier to teachers and public servants. Funds of K213 million were finally allocated in the middle of the year to meet this known cost. This is a two-faced government that makes big promises and then fails to put the actual costs into the budget planning system. When the political pressure becomes too great, they then include them in the budget. However, when they don’t like the inevitable impact on the government’s bottom line, its deficit position, it then sweeps such costs under the carpet by delaying such salary over-runs into the next year” stated the Shadow Treasurer.

“The 2019 Budget will reveal whether the Treasurer will once again play tricks by under-reporting the extent of this budget over-run, and then simply sweep the figures demonstrating incompetence into salary over-run costs to be paid in the following year. Possibly he will play games by saying the salary blow-out will be less because he will stop people paying over-time – I hope the people working on his budget and APEC including the police know that the Treasurer is planning not to pay them any over-time! The 2019 Budget will also reveal whether the government is fully budgeting for the costs of teachers and other workers including those promised in the 2018-2022 Medium-term Development Plan. There is a need for a new coalition government that actually knows how to manage a budget” said Mr Ling-Stuckey.

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

 8 November 2018

Details

Initial 2018 Budget Compensation of Employees (CoE) allocations. There were minor variations to this figure, such that the MYEFO claimed the CoE 2018 Budget allocation was K4,153.6 million (page 63), the 2019 Budget Strategy said the MYEFO figure was K4,163.0 million and later Round 3 figures claimed it was K4,118 million.

2018 MYEFO revealed massive salary over-runs – these four lines show combined salary overrun payments of K418 million made on 4 January 2018 – clearly simply deferrals from costs incurred in 2017 and an example of budget games.