Budgeting for self-reliance

Papua New Guinea’s first budget after independence in September will include wide-ranging measures to reduce reliance on Australian financial a id.

The budget, to be brought down late in September, was expected to inelude an effective Australian aid component of about $lBO million which would be something like half the total figure. But at the same time it is likely to include brand-new policies to ensure that future reliance drops off sharply.

Although Australia is still prepared

to subsidise heavily the budget for the next two years followed by “sympa thetic” budgetary aid policies for an indefinite period, the sustained degree of reliance is worrying senior mem bers of the PNG Government, Senior ministers believe they must cut back drastically on Australian props if PNG is to be independent in fact as well as in name, The result is a new approach to budget policies which gives top priority to projects seen as breeding self-reliance.

The new policy will mean a cut

back in many long-established items of expenditure inherited from Austra lian concepts but no longer seen as extremely important in an indepen dent PNG.

The Treasurer, Mr Chan, had to argue strongly in cabinet for the changes. Some of his fellow ministers were reluctant to adopt any pro gramme at independence which sug gested on the surface that the economy was running down.

They believed cut-backs would re flect on the foundation independence government, and could lower morale and political stability at a crucial period.

But Mr Chan believes the long-term dividends will far outweigh any imme diate critical impact.

Under the new budget policies, every item is given a priority rating on a scale determined by a new organisation known as the Budget Priorities Committee.

The priority is allocated according to the degree to which each activity is likely to reduce external depen dence, to increase the personal in comes of the people at large and to improve services to the people.

There is no suggestion yet, how ever, that PNG plans any radical change in its methods of raising revenue.

Mr Chan said two years ago that alternatives to income tax were being studied, but the studies did not materially affect last year’s budget and are unlikely to affect this year’s.

The emphasis of change will be on how the money is spent rather than how it is raised, but with the long term goal of requiring increasingly smaller amounts of external aid.

Meanwhile, Mr Chan has written to all heads of departments calling for greater operational efficiency.

He wants them to prune spending to the bone and to increase the utilisa tion of skills and equipment already available.

Another timber

project in PNG

Yet another timber project in Papua New Guinea is expected to get under way following the signing of a KlO million agreement by the PNG Government and Sagarai Lumber Pty Ltd. The 160,000 hectares to be de veloped are in the Milne Bay and Central District. The forest is esti mated to hold 3.4 million cubic metres of log suitable for sawn timber and veneer, and about four million cubic metres suitable for bulkwood.

There will be employment for

about 900 local people, whose p< will be about K 1 million a yea Royalties are expected to yield aboi K 420,000 annually for the gover ment, and K 140,000 annually for tl owners of the forest.

PNG could lose

half-million kina

Papua New Guinea could lo: about half a million dollars in ove due income tax after Independem Day, because laws which allow PN civil debt judgments to be enforce in Australia were no longer effectb after independence.

The tax office said in Port Mores! that the money was owed by Austr lians who had left PNG, and !

Australian companies which earn* money from PNG but had no fixe assets there.

At June 30 the amount involve was close to one million dollar Privately-owed amounts totalle 5600,000, and company-owe amounts totalled $300,000. Much < this money was now being collecte but about half of it was likely to 1 outstanding by Independence Day.

Australia could correct the sit ation by introducing special legi

ation to recognise the enforcement )f PNG civil debt judgments after ieptember 16.

There was no indication as Sep ember 16 approached of the Austra ian Government’s attitude towards egislation of this nature.

3k Tedi strike

nay be big one

The Frieda-Tifalmin-Ok Tedi area a the remote west of New Guinea Imost next to the border with Irian aya, could rival Bougainville in opper production. Early tests sug est a much higher grade of copper —between one and five per cent, ompared with Bougainville’s .5 per ent, but the size of the deposits is nknown.

But hopes of a viable proposition epend on the results of future assays.

Tie tests in no way indicate the lability of any mining operation.

Tie best that can be said at this stage > that the discovery is “highly promis ig”. .

This discovery was made by a team xploring on behalf of Ok Tedi De elopment Co, which was formed by ic PNG Government, after it failed 3 reach agreement with the US wned Kennecott on share arrange lents for any ultimate mining ven ire.

Should mining prove a commercial reposition a tremendous infrastruc ire will be required to support it. his will be an expensive proposition, > say the least, for the area is most ifficult of access in PNG.

Fhe Wales to open

i PNG subsidiary

The Bank of New South Wales as formed a subsidiary company to ike care of its business in Papua few Guinea when that country be ame independent. Known as the ank of New South Wales (PNG) td, it will trade under that name ■°m October 1. It will have an uthonsed capital of KlO million and paid-up capital of K 4 million.

Provision has been made for ventual local equity, but in the leantime the company will be a 'holly-owned subsidiary of the Wales”. The first board comprises ir John Cadwallader, chairman of ie Bank of NSW; Sir Robert Nor ian, director and chief general lanager; Mr Kitto, assistant general lanager; Mr L. J. Ritson, chief lanager of PNG; and Mr L. Mac herson, deputy manager in Port loresby. Two PNG residents will xm be appointed to the board.