PNG's PM defends govt budget deficit strategy

Transcript

Papua New Guinea's Prime Minister Peter O'Neill has defended his government's stewardship of the economy amidst criticism from a rejuvenated opposition.

Midway through the ninth parliament, Peter O'Neill continues to command a majority of around 90 percent of the 111 MPs.

As parliament winds down for the year, Mr O'Neill appears unconcerned about the re-grouping of the opposition which is warning that major challenges in the rest of the five-year term could be his undoing.

Johnny Blades reports.

Having just passed a record six billion US dollar budget, the O'Neill government is banking on projections of continued economic growth in extractives over coming years. However, the new Opposition leader, Don Polye, who was sacked by Peter O'Neill as Treasurer in March, says allowing the budget deficit to extend to about 880 million US dollars or 5.9% is reckless. He sees a developing situation where desperately needed district service improvement funds are no longer sustainable.

DON POLYE: The Fiscal Responsibility Act and the constitution itself have been breached by the Prime Minister himself time and time again, blowing the budget out of proportion, increasing debt levels and threatening macro-economic stability, so the next one or two years will have major economic challenges and financial dilemmas, therefore [government] cannot sustain the DSIP and other programmes in the districts.

But Peter O'Neill has defended his budget deficit strategy which is planned to run until 2017. He says people know the strategy is working because government is investing the deficit into key sectors like health, education, infrastructure and law and order.

PETER O'NEILL: And that is starting to produce results. The outcomes.. in terms of education, we've got one million more kids in school; we've got healthcare facilities now being rolled out all throughout the country where people never saw medicines, nurses and doctors for the past forty years; and the infrastructure of roads, ports and airports are being expanded all throughout the country.

The government's fiscal management this week earned plaudits from the United Nations Development Programme's country representative, Roy Trivedy.

ROY TRIVEDY: We've got a government which is making record levels of budget allocations for health, for education, for infrastructure, for law and order. A government that is also advocating against corruption and contributing much more to regional and global thinking on international development goals.

However he says that despite 14 years of consecutive growth, PNG is on track to fail all of the Millennium Development Goals on human development. Don Polye says Peter O'Neill's huge parliamentary support stems from being able to leverage access for MPs to the lucrative district funds. But he says MPs are seeing that this is untenable.

DON POLYE: There's also the unscrupulous business of giving business, economic as well as political assistance as scrutinised by those Members of Parliament and I think members will make some decisions to say, 'look what is happening is not in the nation's interest.' They understand that a large economy is a bigger factor that determines everything else into the districts and rural areas of PNG.

Peter O'Neill, meanwhile, has been referred to a Leadership Tribunal over allegations related to a controversial state loan. Mr O'Neill allegedly didn't follow the normal administrative process for approving the loan of 1.1 billion US dollars obtained from the Swiss bank UBS. The Prime Minister has welcomed the chance to defend himself, saying the loan was needed for the state to buy back shares in Oil Search which owns some of the key petroleum licenses in PNG. He adds that all the administrative processes were followed. He says his critics shouldn't get excited by the referral because he will be around for many years yet.