Business and Development

Ar Somare Gilds His Image With

The Bougainville Brochure

From GUS SMALES, in Port Moresby

fhe Papua New Guinea Chief nister, Mr Somare, used an extra linary document in October to lounce the terms of a newly ;otiated agreement on the Bou nville Island copper mine, fhere’s little doubt that had he n announcing the same informa i 12 months ago the presentation □ld have been altogether different.

Somare then was a sort of ional idol, secure in the knowledge t he rarely had to justify his ions and that his undisputed ionalism was in the interests of country. Such an announcement months ago would have been lightforward, factual and in low despite its obvious national im tance.

Jut 12 months of wear and tear a new-nation government can ke a wealth of difference.

"he result was that the statement led on the Bougainville terms of cement emerged as a sort of bal colour brochure selling the acity, astuteness, infallibility and mright perfection of the Somare ilition brand of nationalism. The □al terms of the agreement •eared to have been put into the cment as a mere appendage.

Lven the Government Information ice which handled the statement cribed it to journalists as “an wer to statements from new itical groups”. The new political ups preach a loud-voiced “A black >ua New Guinea for black mans and New Guineans” policy ich is becoming increasingly lionable.

"hey are a fairly far cry from pragmatic sort of nationalism ch has generally emerged from Somare’s establishment. But they creating an emotionalism which put Mr Somare into a new situa i. le is feeling the reaction of the V atmosphere of nationalism which was largely responsible for creat in the first place. le is being forced to sell himself dly against the increasing clamour

of groups which see themselves as more nationalist than the govern ment. The Bougainville statement, with its big plug for the national strength of the government, was an obvious part of this reaction. Mr Somare is out to prove every op portunity that he and his followers can stand up to the world.

His basic political outlook today is neither more radical nor more conservative than it ever was, but it is the circumstances surrounding him that have changed. No longer is he the central figure of nationalism, and there is a natural psychological re action as well as a political one to prove his sufficiency.

His experience in government has shown him that the shouting of Third-World slogans is no substi tute for plain hard work, but he is finding he has to answer the slogan shouters on their own ground.

Before the new terms were an nounced, Mr Somare accused Bou gainville Copper Ltd of a “back door” approach to achieve what it wants in PNG.

But Papua New Guinea, and Papua New Guinea alone, would dic tate the terms of foreign investment inside its borders, he said.

Mr Somare was commenting on the company’s attempt during the negotiations to get the Australian Government to lend $230,000,000 to PNG. The proposed loan, which Aus tralia refused to provide, was to allow PNG to buy a controlling in terest in the big Bougainville mine.

Mr Somare had steadfastly re fused to comment on the final round of talks, but he broke his silence in a broadcast from the PNG National Broadcasting Commission, comment ing on reports of the approach which Bougainville Copper had made to the Australian Government.

His remarks suggested that PNG itself had not been aware of what was going on, although this is not borne out in other statements from Australia. There is every indication that Australia acted in close liaison with PNG.

Mr Somare’s comments made it abundantly clear however that his government was not at all anxious to have to buy a major share in the mine. All it wanted was a bigger slice of the earnings.

The Chief Minister said, “I suppose the company approached Australia because they thought Papua New Guinea was still some little colony that Australia looked after, I suppose the company thought that Australia could influence the decision of my ministry, but that is not so.”

Here are the detailed terms of the settlement: • The company will pay tax from

January 1, 1974, instead of 1978 or 1979, as under the old agreement. • The company will not be en titled to “accelerated depreciation” provisions which could delay tax payments. ® The company will pay an addi tional tax of 70 per cent on all in come exceeding $87.2 million annually. (Normal company tax in PNG is 33-1/3 per cent.) • The company will no longer have the right to exclude 20 per cent of its income. ® The company will be subject to ordinary income tax, import duties, stamp duties, vehicle registra tions, and other fees and charges which had been waived under the old agreement. ® The normal laws of PNG will apply to the company in matters concerning imports, exports, appro val of contracts, environmental pro tection and pollution control. © The company will pay 50 cents a tonne on production to establish an environmental rehabilitation fund. • Government directors on the company’s board will have veto powers over grants and donations made by the company. • The Bougainville Provincial Gov ernment will have policy control over the business advisory services operated by the company. • The company will guarantee that no new mines will be developed on Bougainville without approval by the Bougainville Islanders.

Mr Somare said he considered the points gained by his government in the negotiations had won “a tremen dous improvement”. He said the negotiations had been carried out against a background of recognition that foreign interests must not dominate the economic affairs of

Png.

It’s hard to escape the conviction, too, that the newly-arising political groups have nothing to offer above what Mr Somare’s government has already offered.

The groups are largely composed of men very similar in outlook and background to Michael Somare, although some perhaps a bit younger.

Many of them if they had started early enough could now be in exactly the same position as he is.

But he beat them to the start, and now they are trying to catch up by claiming a “stronger” breed of nationalism. It’s a last-minute sprint for the second prize, with the un voiced hope that the first prize could be available if the leader stumbles.

The talks which led to the newly announced settlement began in April.

Mr Somare had at first been reluc tant to make any move which might frighten away future overseas in vestment, but as the pressures of nationalism mounted at home he pushed for a renegotiation of the agreement.

This became possible on a govern ment basis after PNG achieved self government in December last year.

Samoan trust estates

under fire

From FELISE VA’A in Apia Western Samoa’s Public Accounts Committee accused the Western Samoa Trust Estates Corporation administration of “incompetency, mis administration and corruption” in a report submitted to the Western Samoa Parliament.

The fault was mainly with regard to debts owing to the corporation by commercial firms, private persons and government departments of $86,025.30 at February 28 this year, and by the corporation’s board members and staff of $81,263.19 for the same period, a total of $167,288.49.

Comparative debt figures for pre vious years were: $209,047 (1973)* $122,772 (1972); $117,074 (1971) and $55,671 (1970).

The Controller and Chief Auditor, Mr T. Overhoff, alleged in the report the deteriorating situation was due to the action of the general manager, Tupuola Nuuausala, “permitting the corporation’s funds to be used ille gally for his own purpose up to a sum of $21,862.”

The report alleged that most of this sum was used by Tupuola to finance the construction of a number of boarding houses.

In an interview with the Samoa Times, Tupuola denied there was anything illegal in his use of WSTEC funds because the funds were openly debited to his account.

He said staff members were per mitted to borrow money from the corporation provided they paid it back eventually. This had always

been a tradition within the cor poration.

The extent of borrowing is one thing. The declining profit margin is another. Occurring together, they prompted the Public Accounts Com mittee to recommend “that govern ment immediately make drastic changes in the membership of the board of directors and executive staff in management of WSTEC”.

The profitability of the corporation during 1970 and 1971 averaged 5.35 per cent. Total funds used averaged about $2.5 million.

However, the corporation’s profit ability in 1972 declined drastically to a mere 0.5 per cent “representing a net profit (excluding soap factory) of only $14,963 derived from the employment of funds and capital of over $2.5 million,” the report said.

“With the inclusion of soap fac tory profits of $34,808 (utilising funds and capital worth $100,000), the overall profitability of the cor poration in 1972 was only 1.9 per cent on the employment of funds and capital of over $2.6 million.”

Profits declined in copra exports by $5,294 in 1972 compared with $71,206 in 1971 and there was a $41,518 loss in cocoa exports in 1972.

A drop of over 50 per cent was recorded in the profitability of the corporation’s engineering shop.

Biggest headache was the sharp decline in the profits from copra and cattle. These constituted a sub stantial section of the corporation’s activities, contributing in 1969 48 per cent of the net profit earned but declining to an average of 38.5 per cent for 1970 and 1971. By 1972 the profit margin had been reduced to 16 per cent.

The Public Accounts Committee expressed its concern at the “over killing” of WSTEC cattle. This over killing had negated the natural in crease of the herd estimated at 20 per cent per annum.

Overkilling had become so bad that by 1973 there were only 7,513 cattle in the WSTEC herd, compared with 11,280 in 1955.

The committee alleged that the administration of WSTEC lease land was most inefficient; rentals were not paid in advance as required, no action was taken when rentals were due for review and re-assessment, little or ineffective effort was made to collect outstanding rents.

After the report was tabled in Parliament, the government asked Tupuola to retire, which he refused to do, saying that the government was bound to retain him under con tract.

He threatened to take the matter to

art if the government forced him t.

Fhe government did force him out the convenient method of having i Head of State make an order ter nating his services.

In the meantime, Tupai Lee is ing general manager, and, accord ; to reliable sources, several teams outside experts are studying ways improving WSTEC’s services.

lauruan public

srvants unhappy

Fhe Nauruan Workers Organisation which the republic’s public servants ong has protested to President mmer Deßoburt about the delay implementing the Kelly Report on irgin of Skills which was designed improve the sliding scale of salaries, [n a letter to President Deßoburt, NWO complains that the Cabinet > taken no action although the >ort was submitted nearly a year ), and that the Cabinet has appoint a commission to consider salary reases for ministers and MPs ile the question of the NWO’s ges structure revision remains in :yance. ‘We view this lengthy inactivity with at concern and we can only say t any further delay does not help morale of Nauruan public vants,” states the letter which is ned by Allan Thoma, NWO’s )uty chairman, Deiye, the retary, and Christmas Bam, the asurer. fhe letter adds, “It is not fair nor litable to your people especially to ise who rightly should benefit from > report to delay this matter then”

orfolk companies

n tax charges

>ix companies registered in Norfolk md were fined in the Special leral Court in Sydney on October for having failed to lodge income returns between 1970 and 1973. lilar charges against 18 other npanies were adjourned to Nov ber 21 on the application of their msel, who said the returns had n lodged. It had been said the

returns were not in order, and the firms wanted to put them in order.

The firms dealt with were Hartley Miltons Ltd (three charges), Pangona Ltd (four charges); Pangona Con sultants Ltd (two charges); Anne Gould (Holdings) Ltd (two charges); R. W. Gould (Distributing) Pty Ltd (two charges); and Ula Ltd (two charges). In each case a fine of $4O was imposed, plus $6 costs.

Mr G. Smythe, SM, said the 1901 Income Tax Assessment Act, as amended, applied to Norfolk Island.

He ordered the companies to file returns on or before November 11.

Mr D. P. Wall, who appeared for the Commissioner of Taxation, said when the cases were before the court in September, the companies had formed a complex tax avoidance scheme “involving millions of dol lars”.

Receiver for New

Guinea tea growers

Mount Hagen Tea Growers’ Pty Ltd, which is facing a number of financial problems, in September invited a receiver-manager to take over.

Dr John Guise, PNG Agriculture Minister, said the tea industry was of considerable value to the develop ment of the country. It earned more than $2.5 million in export income, and employed a work force of 5,000 to 7,000 in an area where there was little alternative employment, except coffee. Mount Hagen Tea Growers employed 1,000 people and processed tea grown by about 100 smallholders.

Dr Guise said he hoped the ap pointment of a receiver would enable the company’s plantation and factory to continue to grow and process tea.

Mixed feelings on

dollar devaluation

Devaluation of the Australian and NZ dollars by 12 per cent on Sep tember 25 was warmly welcomed in the Islands—at first news because it immediately reduced import prices.

But later there was disappointment when it was learned that some Aus tralian manufacturers had slapped a 12 per cent increase on the price of their goods.

However, Fiji expects a big reduc tion in its import bill as Australia and NZ provide about 50 per cent of imports.

A spokesman for the W. R, Car penter group in Fiji said that his company, because of prices increases in Australian and New Zealand goods when those countries revalued their currencies, turned to the US,

Canada, Britain and Europe for cheaper goods. But the devaluations might make it worthwhile to switch back to Australian and New Zealand suppliers.

Freight rates, where they are quoted in Australia and New Zea land dollars, will be cheaper for all island groups, except Papua New Guinea. The Australian rates to PNG will be unchanged, while NZ rates may go up a little.

Fiji firm and

workers join forces

Mainline Constructions (Fiji) Ltd suspended work on the Coral Gardens Hotel at Korolevu, Fiji, when the developer, Coral Gardens Hotel Ltd, was unable to pay $400,000 in progress claims. Then, workers on the hotel site decided to stage a “sit in” till they received wages due to them, after which they and Mainline Constructions joined forces and formed a joint committee to administer the occupation.

Mainline Constructions (Fiji) is jointly owned by Carpenters and the Mainline Corporation of Australia, the latter in receivership. Mainline Corporation is the majority share holder in Coral Gardens Hotel Ltd.