Mr. Speaker, I direct my question to the Minister for State Enterprises.
It is usual in the conduct of public finance that taxes due and payable to the state are initially received into Consolidated Revenue by the Treasury or Finance Department. The expenditure requirements of government departments and agencies to implement approved government programs are then allocated through the annual budgetary processes. This is the model practised widely throughout the world.
The principal reason for this practice is to allow governments to ensure that fiscal policy is in harmony with monetary policy, together promoting a sustainable macroeconomic framework and stability. By allowing other agencies to independently collect revenue and expend, the government weakens the sharpness of fiscal policy. In addition, the government loses control over the revenue and expenditure of agencies.
The Somare Government has departed from this widely accepted model and developed a uniquely NA variation where Independent Public Business Corporation (IPBC), under your personal control, receives dividends payable to the state for the government’s shares in commercial enterprises such as the Bank of South Pacific, Oil Search, Be Mobile, Telikom, Air Niugini, PNG Power, PNG Ports, etc.
People’s money, public money, due and payable to the state, in hundreds of millions of Kina have been paid to and received by IPBC in the last few years.
My questions are:
- What public finance management justification can you give to explain the Somare Government’s variation to the accepted model?
- A small portion of the money received by IPBC has been passed on to the Treasury. Can you outline the dividend policy agreed between Treasury and IPBC in determining how much of this money should flow to Consolidated Revenue?
For example, on 14th July last year you were both the Treasurer and the Minister for State Enterprises. You could hardly present a cheque publicly to yourself, so the Prime Minister stood in for you as Treasurer to receive a cheque for K36.5 million from you as Minister for State Enterprises, as dividend from IPBC to the state.
Five days earlier, on 9th July 2010, IPBC was paid a dividend of K42.8 million for its shares in the Bank of South Pacific.
- What reason can you give for only 85% of the 2010 BSP dividend being passed on to Treasury?
- Can you tell us what IPBC has done with the remaining K6.34 million received from BSP?
- Who vets the expenditure of the monies kept by IPBC?
- Can you tell us what the total dividends paid to IPBC have been in the past 3 years, detailed by enterprise?
- Can you tell the people of Papua New Guinea what the expenditure of IPBC has been in the past 3 years?
On handing over the cheque to your father last July, you said that the sum of money reflected how well state enterprises were performing under your stewardship. You neglected to tell the public that ALL of the money you handed over came from one source, the Bank of South Pacific. I can assure the nation that it is not you, Minister, who can take credit for BSP’s profitability.
My final question is this:
- Why is it that the model that has been adopted for IPBC is unique to IPBC? Why does the Department of Mining for example not receive and retain the taxes and dividends from OTML, Barrick Gold or Lihir Gold Limited, decide itself what it wants to spend, and decide itself if it will hand over any remaining funds to Treasury? What is so special about IPBC that it should determine its own expenditure and how much of the revenue it receives it will pass on to the rightful owners of that revenue, the people of Papua New Guinea?
The questions I ask are of great importance, given that IPBC will receive over 12 billion kina of people’s dividend income from the LNG project. Under your model, IPBC will have sole control over this money, without being subject to government budgetary processes.
Mekere Morauta KCMG MP
Member for Moresby North-West