The PNG 2005 budget should place top priority on economic growth

This creates a response from everybody - “gee isn’t that terrible”. Not enough consideration is given the fact that nothing is actually lost if no project eventuates. Literally there is nothing to tax.

But imagine what would have been gained if NBPOL was starting to spend K100 million on new palm oil plantations in East Sepik, Sandaun or in Western province. Over time thousands more jobs would be created and taxes paid, not just on imported equipment, but on company profits. Last year NBPOL paid the National Government K20 million in company tax, not counting the taxes paid by their employees and on imported items and the K4.5 million in dividends it paid the West New Britain Provincial Government.

What about the intangible benefits caused by NBPOL putting Papua New Guinea on the world map as one of the most technologically advanced companies in its field - in terms of its research activities, its environmental initiatives and the scope of its integrated oil palm operations. The fallacious arguments used to kill key parts of Sir Michael’s agricultural initiatives were the same ones previously used to jack up taxes on the mining and petroleum sectors, chasing most investors away. Why come here when you are faced with less taxes in Australia, the US, Canada or Indonesia?

Fortunately because those laws were changed in the first year of the Somare Government, the mining sector now faces its healthiest outlook for 10 or 20 years.

Exploration spending is up - almost every toea of it is used locally - and a variety of mining projects are being developed. The government budget must look beyond the agricultural incentives - they may take longer to generate interest this time - in its push for increased economic growth. Providing some seed capital for worthwhile ventures in various parts of the country could be one idea. This could be in the form of provision of rice seedlings or other potential crops to farmers in appropriate places around the country.

Urban councils, such as NCDC, could be encouraged to consider ways of using more labour and companies could be provided with tax breaks to hire more workers.

Beyond such initiatives it will be difficult to achieve much, for as long as the private sector shies away from the commercial banks' onerous interest rates. Only the foolhardy would borrow when they have to face interest rate charges of 14 per cent annually when inflation is running close to zero and deposits are only earning an average of 1.5 per cent. But this situation will improve unless the banks decide to downscale their operations!