Islands Business - Politics: PUBLIC SECTOR REFORM BIGGEST CHALLENGE

But govt continues to avoid it: Philemon

Lisa Williams-Lahari
Peter Costello, Australia’s treasurer, was not the only bean counter feeling besieged with questions on leadership rather than economics at the Honiara Forum Economic Ministers Meeting 2006—Papua New Guinea’s Bart Philemon was also facing questions over similar leadership tussle-type issues on the home front.

Bart Philemon... sacked as Treasurer while attending FEMM in Honiara.

His ambivalence when the news of his axing as Treasurer was announced just as FEMM ended, showed the change in fortune was far from unexpected.

“I’ve been quite happy with what has been achieved in my time as Treasurer, and I’ve demonstrated that tough positions on some issues can work. That honesty has cost me my job,” he says.

As for his successor Sir Rabbie Namaliu, Philemon said he was confident the now-pending legislation he had put together, including a fiscal responsibility act, aimed at tackling excessive spending and supporting macro-economic growth, would survive his dismissal.

Even if those proposed legislations fail, they are bound to form the policy arguments around which Philemon plans to base his candidacy at the 2007 general election.

Beyond the FEMM rhetoric of good governance and accountability in our Pacific economies, Philemon knows more than most on how closely linked to politicking the work of growing economies can be.

“You simply can’t have a good economic base without politics being addressed,” he says. The turbulence of the mid-90s ended up driving PNG’s dollar into the doldrums; “and the indicators show the impact on the economy quite clearly”.

More so than other members of the Melanesian sub-region that host the richest natural land-based resources in the Pacific, PNG’s potential as a Pacific addition to Asia’s tiger economies has yet to shine.

Philemon says the economic tiger within PNG may be sleeping. But it has every potential to roar, not just to the Pacific but also to the rest of the global economy.

“It’s the people that need to be built up. We have the resources on the ground, but people need to be aware of the benefits and strengthened.”

He says the poor track record so far shows some serious lessons have been learnt. He is keen to see FEMM’s ‘partner’ observers take on a more active role in sessions around FEMM.

His words would strike a chord in the heart of those observers, and none would be more impressed than UN’s Resident Co-ordinator Richard Dictus, who noted that critical attention for youth, HIV, and other population issues are necessary pre-requisites for economic growth.

“PNG has a very serious problem with HIV/AIDS and it’s an economic issue. But it’s first of all a serious health burden and is also a discussion covering many other sectors,” says Philemon.

He says most would accept the idea that people make growth happen and if they have HIV/AIDS, then health and education impacts are quickly felt at economic levels. But like other officials at FEMM 2006, he is quick to point to the intersectoral basket for relief.

“Yes, we need to learn to bridge the issue of economics with all other cross cutting issues; or we will lose out.”

Back in familiar territory, his speech to FEMM on PNG’s economic performance over the last decade detailed the turnaround from little economic growth, falling GDP and exchange rates, double-digit inflation, and rising public debt and budget deficits.

Structural economic reforms, tight fiscal policy and favourable external commodity prices helped stave off a downward spiral. But Philemon was met with opposition from his own ranks over plans to open up state-owned enterprises to private sector investment and the need to keep an eye on spending.

He says the direction towards supporting a macro-economic approach to growth helped bring in the first PNG government to serve a five-year term and ensured the political stability needed to implement ‘painful’ and politically risky public sector reforms which often lead to unfavourable election results for implementing governments while benefitting their political replacements.

His speech to FEMM 2006 took the twist of acknowledging the good work done by the former Morauta government, which had allowed the Somare administration to benefit. He was keen to highlight the need for disciplined fiscal policies to rein in spending aimed at political point scoring.

He’s been openly critical of the lack of momentum by the Somare Government in continuing reform programmes which began under Morauta. He says the much needed public sector reforms are the single biggest challenge PNG continues to avoid.

With a population of over 5 million employing around 70,000 public servants, “all the resources go into their salaries and there’s nothing available for public investment. We need to target strategies relating to the public sector and close down those services that would better thrive in a private sector environment.”

The pain of rightsizing, which is more politically neutral than downsizing, has been deliberately avoided by the government, says Philemon; and will continue to be deferred until after the 2007 elections.

Is rightsizing, which often means sending people home, a word he would feel honestly comfortable with using?

“It’s a word that in PNG has not found its practical meaning. It’s wishful thinking which still needs to be tested out for us.”

He notes the best time for public sector reforms would be just after the election, with whoever wins having a year to kick in the reforms and a long lead-in time to heal the pain towards some positive results before the next round of political campaigning begins.

Whether or not he will be part of the government administering that bitter medicine towards healthier economic results remains to be seen.