Positive Incentives Still
pp. 37-38 · Read in the full issue
Needed For Commerce
How do we finance the development now being under taken in the Territory?
THE whole basis of the Territory’s solvency lies in the annual grant made by Australia. In recent years this amount has climbed substantially and it is evident that further steep advances in monetary grants will occur in the years immediately ahead.
In addition, or as part of a general scheme, there will probably be the necessity to establish and finance some sort of development organisa tion, such as a Rural and Industries Bank.
Figures since 1948 illustrate the way New Guinea has made increas ing demand on Australia. In that year, total expenditure was £2.7 million of which £l.B million came from Australia and the balance was raised internally.
By 1960, annual expediture was in excess of £l9 million, of which Australia contributed more than £l2 million.
Massive Help
Last year’s contribution by Aus tralia was £25 million of a total expenditure of £3B million, while this year the country is budgeting to spend almost £44 million, of which £2B million is in grants from Aus tralia.
While these figures demonstrate the massive support given to New Guinea development by Australia, they also show the increasing ability of the country to raise its own revenues—in total, if not in pro portion to the whole budget.
In addition to the grant from Australia, large sums, estimated as high as £l5 million a year, are being spent on such matters as defence establishments, civil aviation and other areas which were not included in the Territory’s public accounting system. Recent activity in these spheres suggests that this infusion of funds is likely to show a healthy increase in the near future.
Apart from the Commonwealth grant for 1963/64, the main items of revenue were £3.5 million from Customs duties, £3.3 million from direct taxation, and £2.2 million in miscellaneous receipts. These col lections are all estimated to rise by relatively small amounts in the current year.
The explanation for the smallness
of the increase at a time when major development effort is clearly called for is to be found in the Budget speech, made in the House of Assembly on September 1.
The Treasurer and Director of Finance, Mr. A. P. Newman, then disclosed the intention to bring down revised measures on direct taxation “as soon as possible”.
The reason for the delay in pre senting these measures, according to Mr. Newman, is the delay in an nouncement of the recommendations contained in the report of the World Bank.
It is certain that more money will have to be collected in taxes from the Territory, and it is expected that this will be done initially by attempting to impose taxation on a wider section of wage earners than at present. Here, however, there are two big problems: • The difficulty that will exist in collecting taxes from much of the indigenous population, when they become liable for tax. • Low taxation in New Guinea is one of the few real incentives
offering to attract people and capital to the country. A tax rise would take even that lure away.
Loan raisings, too, play a part in financing the operations of the Territory. In 1962 these amounted to £898,000, and in 1963 almost £1.7 million. Projected loan raising for the current financial year exceeds £3 million.
Of the projected expenditure for the current year, just on £27 million, or almost 63 per cent, of the total funds available, will go in depart mental spending. Half of that amount will go for salaries in the departments. In the previous year, departmental spending amounted to £24 million with £11.6 million going for salaries.
Spending on new works is scheduled to rise by more than 25 per cent, to £10.6 million. The main increase is a near trebling of the amounts to be spent on roads and bridges—from £841,000 in 1963/64 to £l.B million in tthe current year; and in sanitation, water supply and sewerage—up from £299,000 to almost £900,000.
Reflecting the shifting emphasis from social to economic develop ment, projected expenditure on re sidences, hospitals and schools is all (Over)
lower this year than last, but pro vision for offices and other buildings is up sharply.
External trading was at a new record level with exports totalling £20.5 million. However, imports soared by £7i million to a new record of £35.7 million, the increase being mainly in food, tobacco, clothing, metals and machinery.
Business Is Buoyant
Internally, business was buoyant, and remains so. Savings bank deposits reached a record level of £9.4 million compared with £8 million a year previously; trading bank deposits increased from £8.2 million to a record figure of £9.8 million. During the year, the number of local companies registered in creased by 121 to 752, with a nominal capital of more than £ll3 million.
Motor vehicle registrations, build ing statistics, postal revenues and shipping and airline movements are all rising, providing further evidence of the overall buoyancy of the economy.
As previously pointed out, however, without the Australian, or some equivalent, contribution, the economy of the country would be impossibly unbalanced, providing unarguable evidence of the urgent necessity to stimulate the productive capacities of the country and put it on the road to self sufficiency.
To do this, much more private capital needs to be attracted to the Territory. This can only be done by providing positive financial in centives, and tangible guarantees of security against political risks. The Administration has done much in this direction but more is still to be done.