Friday, March 31, 2023

MP slush funds used to take care of energy in PNG

The extra cash, the extra likelihood of an incumbent ruling occasion’s success at elections.

After winning a new term because the Papua New Guinean Prime Minister in August, James Marape has busied himself rewarding members of parliament and strengthening his coalition.

One reward was an all-expenses paid journey to Brisbane in September for 72 MPs to attend the annual PM’s 13 rugby league match between PNG and Australia. Towards extra urgent growth wants, the journey value greater than K3 million. The match noticed PNG thrashed by Australia 64 factors to 14.

One other reward has been to increase the province and district companies enchancment program (P/DSIP), or what are usually described as MP slush funds, from K8 million to K10 million, the highest amount ever. This cash has develop into an embedded element of PNG’s politics, primarily permitting particular person MPs to dole out money to favoured tasks and maintain a constituency on facet. The emphasis on these province- and district-level funds has come on the expense of national-level planning.

Excessive petroleum prices rising authorities income has enabled this newest enhance to the funds. Authorities has opted to spend the extra income, as an alternative of investing in its legislated sovereign wealth fund (not operational) or decreasing its deficit (presently 5.4 per cent of GDP).

DSIP funds have elevated the importance of district MPs relative to provincial MPs. District MPs (96) outnumber provincial MPs (22) greater than 4 instances and comprise 81 per cent of parliament.

There have been three falls in DSIP fund ranges and these dips partially clarify the modifications in authorities that adopted.

DSIP funds contained inside the growth funds rise and fall with authorities income. Destructive financial shocks trigger a fall in authorities income, and DSIP funds are diminished to accommodate the shortfall. As DSIP funds are used to take care of governing coalitions, a dip in DSIP can dissolve the coalition. In some situations, DSIP funding was additionally withheld from the opposition.

Although launched in 1984, DSIP funds first grew to become an effective political tool in 1999, when the quantity elevated above K1 million. Within the chart beneath, I exploit DSIP funds at (nominal) present costs as reported DSIP spending fails to account for inflation. The chart additionally exhibits total DSIP spending as a share of presidency expenditure. This has

been unstable however has trended carefully with DSIP funds disbursed to particular person MPs.

The spikes in DSIP funds had been attributable to rising log and low costs (1994), introducing the worth added tax (VAT) and Financial institution of PNG financing expenditure (1999), excessive log and mineral costs (2006), and a push to decentralise public spending to sub-national governments (2013).

Since 1999, there have been three falls in DSIP fund ranges. These dips partially clarify the modifications in authorities that adopted.

The primary fall in DSIP ranges occurred in 2002. Facing pressure from the World Financial institution to discontinue DSIP funding, then PM Sir Mekere Morauta diverted a part of the DSIP funds to training. This, together with financial difficulties and unpopular reforms on the time, led to Sir Mekere failing to return as PM following the elections.

The second fall in DSIP funds occurred in 2009 throughout the international monetary disaster, dragging on with low international mineral prices in 2010 and 2011. By August 2011, Peter O’Neill was elected PM by parliament following incumbent Sir Michael Somare’s sick well being, resulting in a constitutional crisis the place there have been two PMs for seven months.

The third fall in DSIP funds occurred in 2018 when a large earthquake hit, and spending was diverted to earthquake aid. In Might the next 12 months, O’Neill was ousted in a profitable vote of no confidence.

Sustaining DSIP funds at K8 million per district MP in 2020 additionally appeared to assist Marape survive a vote of no confidence. This, along with adjourning parliament sitting days, stored his occasion relatively intact (23 per cent of parliament) and brought back coalition members who had defected.


DSIP funds additionally partially clarify how government finances allow the incumbent ruling occasion to succeed at elections. This enhances the speculation put ahead by several commentators on the 2003 amendments to the Natural Regulation on Political Events and Candidates (OLIPPAC) mandating that the occasion with the very best quantity types authorities, resulting in the incumbent ruling occasion returning efficiently within the 4 earlier elections.

The success of the incumbent ruling occasion at elections would ideally be measured by the speed at which that occasion’s district MPs had been re-elected. This isn’t potential as a result of information for events in parliament (given MPs change events) previous to 2017 is missing. Another measure is the incumbent ruling occasion’s election success rate (the ratio of wins to endorsed candidates). This measure is justified because the incumbent ruling occasion is often the largest party in parliament, and a excessive share of its MPs had been re-elected in latest elections.

Within the chart above, a powerful, constructive correlation will be seen between DSIP funds (within the 12 months prior) and the incumbent ruling occasion’s success charge at elections. The incumbent ruling occasion loved extra electoral success when it doled out extra DSIP funds. Although election occasion information exists for only six of PNG’s ten elections, because the 2003 OLIPPAC amendments, the incumbent ruling occasion loved the very best election success rate of any occasion and returned to authorities.

Marape is protected by the grace interval that ends in 2024. By then and within the absence of a unfavorable financial shock, Marape’s use of DSIP funds will doubtless see him survive votes of no confidence and full this time period.




Maholopa (Maho) Laveil is the inaugural FDC Pacific Fellow on the Lowy Institute.

Primary picture by way of Flickr person The Commonwealth

This article first appeared in The Interpreter, published by the Lowy Institute.  

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