PNG Risks Repeating Past Financial Mistakes, Says Allan Bird

 PNG could be heading back towards the financial problems that triggered the 1999 economic crisis unless the government protects the reforms introduced by the late Sir Mekere Morauta, according to East Sepik Governor Allan Bird.

The Governor says the recent transfer of statutory powers from the Treasurer to the Finance Minister effectively dismantles one of the key safeguards established under Sir Mekere's financial reform agenda and weakens the system that has governed public finances for more than two decades.

PNG Risks Repeating Past Financial Mistakes, Says Allan Bird

Mr Bird said the separation of the Departments of Treasury and Finance in 2002 was introduced after the country's financial crisis to improve accountability and strengthen economic management.

He said the reforms gave Treasury responsibility for economic policy, revenue collection and warrant control, while Finance focused on administering expenditure and delivering the national budget.

According to Mr Bird, the separation also reflected the increasing demands placed on government as the number of districts, provinces and public agencies expanded.

He said Treasury's authority over warrants prevented excessive spending by ensuring government expenditure remained within available revenue.

Mr Bird argued that safeguard has now been removed, opening the way for expenditure to grow beyond what the country can comfortably finance.

He also criticised the government's reliance on loan-funded infrastructure projects, saying debts incurred today would eventually fall on future generations of taxpayers.

Mr Bird questioned why the government chose to shift powers away from the Treasurer instead of replacing the office holder if confidence had been lost.

He said such changes reduce the Treasurer's role to little more than representing the country's financial position before international partners including Australia, the Asian Development Bank, the International Monetary Fund and the World Bank without having direct authority over public finances.

Drawing on an earlier example, Mr Bird recalled the abolition of the Chief Secretary's position in 2020 before it was later restored, saying the same approach appeared to be repeated with the Treasurer's statutory responsibilities.

He said leaders should understand the history behind Sir Mekere's reforms before making changes to institutions that were established to prevent another financial collapse.

"Perhaps this regression is necessary; if we return to 'full tucker box' mode, PNG's decline may accelerate to the point where we are forced to learn these hard lessons all over again."