Commentary » Planning of Budget Vital

Planning of budget vital

Setting out budget plans makes way for better choices on how money can be properly earmarked for projects in Papua New Guinea...


PLANNING the budget based on the actual cost of services is essential for the use of public funds in any expenditure program.

The prevailing high level of corruption in the public sector shows problems with the management and use of Papua New Guinea’s scarce resources. Research has shown mismanagement of resources which cuts across the public sector and people have gained heaps from our scarce resources at the expense of public interest.

In order to correctly appropriate public funds, initial systematic planning and budgeting for the ‘actual cost’ of services is crucial for public confidence, trust and accountability in using public funds and resources.

Planning within the timeframe and cost of services

Systematic planning based on the calculation of the actual cost of services can account for the ongoing controversy between the Department of Education and the Department of National Planning & Monitoring (DNPM), over the use of K230 million for the Rehabilitation Education Infrastructure (RESI) program.

Many Papua New Guinea schools earmarked for the infrastructure rehabilitation program have halted their programs. At the launch of the trust account for the RESI money, Minister for National Planning Paul Tiensten stated that many relevant agencies and the Department of
Education have not acted promptly to draw down the RESI money therefore causing the delay in accessing this money, which has resulted in it being transferred to DNPM.

The dealings and approaches of DNPM with the RESI funds could have been proper by way of giving funds directly to schools, if only the Department of Education and the schools that are earmarked for the rehabilitation program have coordinated well, based on plans provided by the schools.

Those earmarked schools’ participation in planning the budget based on the cost of infrastructure could have also facilitated an approach in the accountable use of resources at its appropriate designation, and the monitoring of RESI funds. As there is a prevalent level of corruption and mismanagement of resources in the public sector, the systematic planning and budgeting based on the actual calculations of the costs of services should have been done.

Budgets based on the actual cost of services

The idea to put designated funds into the trust account may not have eventuated if budgets were planned, based on the actual cost of the services or possibly linked to costed activities. Controversy over the K230 million education rehabilitation funds in the trust account is still a concern for students, parents and citizens. However, emphasis on planning based on the actual cost of the services for the current controversy over the use of RESI money should be encouraged.

The latest amendment to the Organic Law on Provincial and Local-Level Government (OLPLLG) 1995 reviews intergovernmental financial arrangements based on the equitable distribution of funds – the process that fosters financial distribution based on the actual
cost of service delivery. The concept of planning based on the actual cost of services is an important safeguard in this financial arrangement, whereby the money is given based on the actual cost of services.

Certainty in the proper use of resources is the essence of accountable budgeting. The focus in the National Development Plan for Papua New Guinea is about good governance, accountability and the wise use of scarce resources through anticipation, co-ordination and participation of all relevant agencies.

This proposition is that in the relevant agencies initial planning and budgeting is done based on the accepted cost of services in order to have access to the legally designated funds.

Reviewing the concept of bottom-up planning.

The concept of bottom-up planning is inherently community participatory, where people on the ground who are familiar with their community problems congregate together through the sharing of ideas and experiences, and collectively plan for the new action. The National Development Plan has emphasised and encouraged a bottom-up approach to all development.
The bottom-up approach was congruent with the concept of a decentralised system of government, whereby, political, administrative and fiscal powers are given to provincial and LLG governments’ for planning and accounting for resources through coordination and participation at the ground level.

A gap in participation created through a passive approach to planning by the schools earmarked for the RESI funds in collaboration with the Department of Education has allowed for the funds to be withheld at the national level.

Consistency in research and planning of the actual costs of services could have avoided the controversy regarding the RESI funds. The money could then have been correctly appropriated to schools earmarked for the 2009 rehabilitation program.

However, participation at the community level has been limited and infrequent and has been more associated with mismanagement and corruption at the highest level in the public sector. A co-ordinated approach and active planning by each school designated for the rehabilitation program could have filled the gaps between national agencies and the Department of Education.

A co-ordinated approach to accessing public funds

Research by the National Economic and Fiscal Commission on service delivery has shown that most of the money allocated for actual service delivery is often recosted for recurrent or administrative purposes. There is often overlap in mismatching of funds and functions, resulting in long-term misuse and misappropriation of public funds.

Systematic planning for public expenditure, especially for RESI funds could have been based on the tangible cost of the project and is the way forward for the accountable use of funds and the correct appropriation of public resources. Initially planning should also be done in respective agencies in order to be more considerate to projects as manageable, time bound and cost effective within the RESI program.

The role of the media in the country portrays the image of the public sector misappropriations which raises public concerns about the ineffectiveness of the public sector. Making submissions for funds without systematic planning is a move without a foundation. Also, lack of co-ordination between schools earmarked for the RESI program and the Education Department will allow agencies at the national level to interfere with the designated funds. This in turn leads to delays in many programs and projects. Research has shown that projects most often are incomplete during their implementation stage.

MICHAEL GEORGE is a cadet researcher with the Social and Environment Studies Division at the National Research Institute.

This article was published with permission from National Research Institute of Papua New Guinea. NRI website can be accessed at

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