Port Moresby Chamber of Commerce and Industry  PO Box 1764, Port Moresby  6th Floor, Monian Tower, Douglas St. Port Moresby, Papua New Guinea  Ph: +675 3213077 or +675 3213254 Fax: +675 321 3251  Email: info@pomcci.org.pg website:www.pomcci.org.pg

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Although he's enjoyed success in stabilising the economy, Sir Mekere Morauta  has found out that achieving political stability is not quite so straightforward,  writes JAMES CHIN.

 WHEN Sir Mekere Morauta became Prime Minister in July last year, he was widely hailed as Papua New Guinea's "last hope".  The previous government, led by Bill Skate, had brought the country dangerously close to bankruptcy and the kina dived to under US30c. Facing an impending vote of no-confidence, Skate resigned.  Morauta won by a landslide on the floor of Parliament, keeping the PNG tradition of having more new governments created through the floor of parliament than through a general election.  Morauta's maiden speech in Parliament laid out his two main priorities - restoring the economy and bringing stability to the notoriously fluid PNG politics. Needless to say, the two are connected.  In the former, Morauta has achieved some degree of success. He re-established links with the World Bank and the International Monetary Fund. Both institutions had cut off links with the Skate Government.  Morauta also established a ''Friends of PNG" club led by Australia and NZ.  The flow of money from the multilateral agencies and an overdraft facility from Australia help pushed the kina back to the US32-35c range, even reaching the low US40c range for a short period.  When it comes to politics, Morauta's two big reforms were the Integrity of Political Parties and Candidates Bill and a reform of the electoral system  In the main, the integrity Bill sought to control the behaviour of the "yo-yo" Independent MPs.  In PNG it is not uncommon for an MP to be elected as an Independent and join half a dozen political parties before the next election.  In fact most elected Members in the last general election were Independents. The constant shifting of loyalties meant that no government was safe from a vote of no-confidence (other than the grace period of 18 months when a new government is formed and 12 months before a general election).  MPs regularly switch support in return for ministerial posts, perks and other financial inducements.  Under the Bill, political parties were to be the keystone in Parliament. The wings of Independent MPs were clipped (ie, they could not take part in the election of a prime minister or vote in matters of confidence).  Parties had be to properly registered and records kept with annual reports to the Registrar of Political Parties.  Party MPs had to vote along party lines and those who resigned had to face a tribunal to explain their resignations or sacking from a party.  If the tribunal ruled on the side of the party, a compulsory by-election would take place. In return for the tight control the state would fund political parties, including a grant of K10,000 for every MP the party claimed as its own.  In other words, maximum incentives were given to party MPs to stay with a party instead of shopping around.

 Coupled with the strengthening of political parties, the electoral system was to be changed as well. The most significant change was a switch from first past the post to a preferential system of voting.  First past the post has produced a Parliament that Sir Michael Somare, PNG's first prime minister, described as "full of rejects".  In the 1997 polls, only four of 109 MPs polled 50 per cent of the total votes cast in their electorates; two polled between 40 and 50 per cent; eight polled 30-40 per cent; 26 polled 20-30 per cent; 50 polled 10-20 per cent and 18 won with 1-10 per cent.  Of the total vote cast, only 19.8 per cent voted for the current MPs, while 80.2 per cent rejected them. In plain English, many PNG MPs simply had no political legitimacy.  The implications of both Bills, if passed, would be wide reaching and most probably would change the landscape of PNG politics by bringing a degree of political certainty and political legitimacy to those elected.  The first test for the integrity Bill came in August when it was passed by a huge majority. Even then many predicted that it was a hollow victory, as MPs would vote it down during the compulsory second reading. There was simply "no way" MPs would vote against their independence and ability to hop from one party to the next with impunity. This was the only commodity they had to "sell" and it was unlikely they would surrender it.  Before last Tuesday's vote, rumours were already circulating that the Bill had no chance given that many in the Government were unhappy with it.  Several Cabinet ministers had already made public that they wanted amendments made to the Bill - all designed to water down its effectiveness.  But it appeared that Morauta refused to accept all the amendments, believing that he could muster just enough support to push it through. To be sure, the Government took extraordinary precautions to ensure its passage, including flying back two MPs who were receiving medical treatment in Brisbane, just for the vote.  But no amount of planning could avert the inevitable - political sabotage from the inside. Michael Nali, the Trade and Industry Minister, together with Pangu Party leader Chris Haiveta, People's Action Party leader Ted Diro and National Party leader Paul Pora led the internal revolt. All these parties are part of Morauita's coalition Government.  JUST before the third and final reading of the Bill, Nali proposed a motion for Parliament to be adjourned till January 23. Morauta, who was counting on 82 MPs to support the Bill (which needed a two-thirds majority of 73 votes), managed to defeat the motion by 62 votes to 32. With no chance of the Bill succeeding, Leader of Government Business Vincent Auali successfully countered with a motion for an adjournment till November 13.  The Government will now have to decide if it wants to table the Bill again then. The November session of Parliament is usually reserved for the Budget.  For now, unless he resigns, Morauta will lead a Government where discipline is a scarce commodity.  The analogy often used is that while he may be the new driver in the ''PNG PMV" (bus), the passengers are the same ones as were in Bill Skate's bus. Almost all the present Cabinet members (including Morauta himself) were also ministers in the Skate Government.  What is clear is that the fate of the electoral Bill is linked to the fate of the integrity Bill.  If the integrity Bill clears the hurdle, then it is almost certain that the electoral Bill will pass as well.  Between now and then, only fools will try to predict what will happen on November 13 and the fate of the Integrity of Political Parties and Candidates Bill. PNG's other name - Land of the Unexpected - is an apt description of the politics in the country.

 Dr Chin is associate dean of social sciences at the University of PNG in Port Moresby. Email:  Jchin@upng.ac.pg

Papua New Guinea's Prime Minister, Sir Mekere Morauta, does not mince words.  Almost all the country's statutory bodies, he told
Parliament in exasperation a few days ago, were bankrupt. There is one shining exception.  And it's a surprise to some. When Orogen Minerals Ltd was set up four years ago, it took a lot of persuading to convince institutions in Australia and overseas that it could fly.

It would simply prove too much of a temptation to PNG politicians' notoriously itchy fingers, some analysts insisted. They would abuse the PNG Government's 51 per cent majority to plunder the minority shareholders and intervene relentlessly as a reflex part of their interminable power plays.

But that hasn't happened.  The company, into which the Government injected most of its mining and oil equity - it is entitled to a fixed percentage of each project under PNG law - has settled into a respectable slot just within the Australian Stock Exchange top 100 by
market capitalisation and is 65th in dividend yield.

Orogen, established under Sir Julius Chan, has survived two government changes without damage and has just come through its first significant shift in board membership and management in sound shape.  Veteran Australian miner lan Johnson, well-liked in PNG for his period there with CRA, has become a director, as has Sir Michael Bromley, arguably PNG's most powerful businessman, based in Goroka in the Eastern Highlands. And Francis Kaupa, an independent director since Orogen was founded and recently deputy chairman, has shifted roles to become chief executive. He has the task not only of mining the corporation but also, as a high-profile businessman, of bolstering overall market confidence in his country and in the capacity of Papua New Guineans to prove competent managers of investments. He succeeds Charles Lepani, one of PNG's best-known economists and administrators.  He brings to the job very different experience and an open, friendly style. Kaupa is a leading civil engineer who knows the mining and oil industries well and what it takes to build and operate resource projects in PNG's tough terrain - both physically and in relating to the many stakeholders.

He has also founded and run a very successful business of his own, from which he has stepped aside to run Orogen. He is a Highlander.  His family comes from Movi in the Chimbu province, but he grew up, like  many of PNG's leading figures such as Sir Michael Somare, in different parts of the country. Both their fathers were police.  Kaupa was born in one of PNG's most remote areas, Telefomin, near the wild border with West Papua. He was sent to Martyrs School, a church high school for boys - he remains a devout Anglican - then to the national high school at Sogeri just above Port Moresby and the University of Technology in Lae where he took civil engineering. Since then he has also almost completed a mining diploma from the Ballarat School of Mines. He won a scholarship from MIM, with whom he worked for 18 months at the Mt Isa mine, and was then sent by MIM to help supervise the development of a coal project near Townsville. Soon MIM started pulling back from its PNG projects and Kaupa shifted to Placer, working on the Misima and Porgera gold project  feasibility studies for a year out of its Sydney office. The discovery of Porgera's highgrade zone seven gold deposit clinched the mine's future and Kaupa was assigned to develop the adit, the underground section that targeted zone seven.  He also went on to supervise the upgrade of the road to the mine, across ferocious terrain.

In 1990, Kaupa said, "I'd had enough. I could see my hairline receding. I wanted a break at home". He went back with his wife, Estelle, who is now administering his engineering business - a university classmate is managing it - to his home village in the Highlands to grow coffee, the ubiquitous cash crop there.  They bought 2,500 coffee trees to plant.  " I only lasted two weeks," Kaupa said.  A mate of his, Nat Koeala, who had built a modest airline, was talking on a Friday night at the bar of the Papua Club, the favoured drinking hole of the business establishment in Port Moresby, with Chevron's general manager. Chevron was eager to find a PNG company to build roads to its Southern Highlands oil fields. "The next morning," said Kaupa, " I was working in my coffee garden when I heard a helicopter overhead.  We rarely saw them there, except at election time with politicians.  Someone yodelled down the valley that I was wanted. It was one of Nat's Pilots.  He told me Nat had sent him to find me."

He seized the opportunity, set up Francis Kaupa & Associates, won the tender and scent much of the next decade driving roads through PNG's unforgiving Highlands. He had just briefed his team at 5am one day when he received a call from then mining minister Masket langalio, urging him to accept a directorship with Orogen. His name was already in the submission going to Cabinet later that day and Kaupa agreed not to let langalio down. Kaupa is adamant that he has never aligned himself, however, with any political party since his youthful support for the late lambakey Okuk, a fellow Chimbu and a policeman colleague of his father.  'There's not too many of us in PNG who opt out of politics," he said.  He has enough to occupy himself, maximising the return to his shareholders from substantial stakes in all PNG's resource projects except Ok Tedi, and Lihir - which Orogen quit for a profit of about $80 million. And on the horizon is the Ramu Nickel venture, of which Orogen owns 31.5 per cent, and 23 per cent of the $7 billion gas pipeline project to supply the coastline of Queensland down to Brisbane.  Kaupa is unfazed by such challenges.  He's seen off enough already.

YOUR article “Business welcome net statement cautiously” is amusing and interesting. Already the business sector can clearly see the kind of infrastructure cost one runs into to provide one’s own internet gateway. It means internet competition will have to fund their own communication link overseas and have their customer links to their own customers. Tiare currently leases a 2MB/s satellite bandwidth to  Australia which is proving to be expensive. I wonder how many ISPs are able to lease expensive 2MB/s links overseas? And how will the ISPs have their own customer lines? The current customer lines belong to Telikom. It takes a lot of money to be in the Telikom industry and besides all the customer lines belong to Telikom. One wonders how the internet tariff will be down?

Amused Observer
Boroko

THE Port Moresby Chamber of Commerce and Industry has cautiously welcomed moves by the government to cut the costs and improve the efficiency of Internet services. Chamber president David Conn said there was still “an awful lot of water that has to flow under the bridge before we will see any significant reduction in usage charges”. Mr Conn said that in communication and information terms, this was the way of the future and PNG did not want to be left behind.  “PNG has to ask itself why the costs of Internet and telephone provision are declining worldwide while here, they are extremely expensive and apparently on the increase,” he said. Prime Minister Sir Mekere Morauta said last Tuesday that the government would be liberalising PNG’s Internet industry by amending the Telecommunications Act.  Sir Mekere said the exemption would allow Internet service providers (ISPs) to set up their own fee structure and also choose who brings the internet services to the country and how.  He said the National Executive Council had approved a proposal that guidelines be prepared for the deregulation of the entire telecommunications, once the legal monopoly expired at the end of the year. Mr Conn said the announcement might stampede Tiare, the government gateway for Internet traffic into and out of the country, into reducing their costs to the ISPs.  However, he said these might not be passed on while the ISPs and Telikom failed to reach an understanding on co-location of facilities in exchanges, a trend developing world-wide, versus lengthy fibre links to ISP premises.  “We have all seen the problems Telikom has faced, at least twice now, with the security of the major fibre optic link from the Gerehu facility “ We trust this is not a cynical exercise to make extra money at the expense of obvious efficiencies,” he said. He said that the major question that has to be posed is on the overall efficiency of the Telikom service.  “Everyone blames the gateway provider, Tiare, but in most cases their problems have stemmed from Telikom created problems or inefficiencies. “The now infamous ‘48 hour shutdown’ was the result of a decision made by Telikom on changing providers, and had nothing to do with Tiare. “I doubt whether allowing new gateway companies into the market place will solve these issues, they still have to buy their bandwidth from Telikom. “The problem with this business is that everyone, including Telikom who are losing money in other areas, has seen how profitable it can be and they have jumped in and beaten it almost to death while it is still in its infancy.” Mr Conn said there were many people, even at high levels of government and the bureaucracy, who assumed every business in this country was making millions, merely because they were in business. He said they failed to understand the huge setup costs, the high cost of finance, the difficulty of attracting venture capital to PNG, a predominantly unskilled workforce, coupled with an already difficult and expensive business environment.  “The regulatory authority, Pangtel, has a mandate to ensure Telikom maintains and improves its performance standards, yet we are now told they want to jump on the bandwagon with new licensing fees, and at one stage even talked of licensing end-users. “It is Pangtel’s job to control Telikom and force them to ever-higher levels of efficiency, not join in the feeding frenzy to share the spoils of this new industry.”  Mr Conn said the industry was vital for business growth in Papua New Guinea and costs would only come down when the Internet component of Tiare was fully privatised.  “We welcome this first statement by the government as it clearly shows someone in there realises the importance of the development of this sector and has a vision of what PNG needs to aspire to. “New technology businesses must be given time to grow and now that the government of the day has seen the potential gains for the country as a whole, it has a significant role to play in providing that efficient and competitive environment “ Telikom must allow it to grow as, in the long-run, widespread usage is a must and will inevitably lead to higher profits for them,” Mr Conn said. The industry also welcomed the announcement cautiously last week. They said any moves to reduce prices was welcomed but most said they wanted to be consulted on any such changes so their views were heard.
 

THE Port Moresby Chamber of Commerce and Industry has expressed concern over the confrontation between soldiers and members of the police force in Boroko over the weekend. Soldiers went on a rampage in Boroko on Saturday after police shot dead a soldier who was suspected to have been involved in an attempted armed hold-up and stealing of a car from a family at a service station.
Businesses at Boroko were forced to shut as a result of the disturbances. Some shops were damaged and looted by members of the public taking advantage of the confrontation between the two forces. Businesses however resumed on Monday after order was restored, with the Government announcing an investigation into the death of the soldier and the resulting confrontation. In its weekly electronic newsletter, the chamber said it was "gravely concerned" that the civil disturbances which occurred at the Boroko Police Station spread and affected business trading around Boroko, with the inevitable "opportunists" joining in the fracas. "We maintain that members of, supposedly, disciplined forces should allow due processes of the law to take their course," the chamber said. "We fail to see the sense in PNGDF officers allowing soldiers to march into a crowded shopping centre. We feel this raises serious questions on the command structures within the army which need to be addressed by the Government, and the location of a large barracks in such a central position within the city boundaries. "POMCCI is trying to establish a solid link with the NCD Police HQ so that we can be briefed on exactly what is going on and advise our members accordingly for the safety of their premises and staff."

 RIO Tinto has slammed an Ok Tedi-style class action over alleged human rights abuses and environmental damage at its now closed Panguna copper mine on Bougainville Island as "without foundation". Under an obscure US law, Seattle-based lawyer Steven Berman yesterday filed a class action in the US District Court of San Francisco on behalf of villagers adversely affected by the mine and the 10-year civil war which followed its closure in 1989.

The action alleges mining and processing operations destroyed the environment of the island, and subsequently the traditional livelihoods of local people. The suit also alleges Rio "stepped in and assisted" PNG troops fighting the rebels, including the provision of helicopters, turning the PNG army "into their private police force". But Rio dismissed all allegations outright.

"We categorically reject all allegations of human rights abuses and environmental damage on Bougainville," a Rio spokesman said yesterday. "And our view is that this issue should be resolved in PNG, not in a foreign court by foreign lawyers running the case on a contingency basis."

Asked whether Rio had ever assisted PNG troops in any way, the spokesman said "absolutely not – and Bougainville Copper never even had any helicopters".

Rio subsidiary Bougainville Copper operated the Panguna mine from 1972 until 1989, when attacks from Bougainvillean rebels seeking independence from PNG forced it to evacuate and abandon what was then the world's biggest open-pit mine. Until a UN-backed ceasefire was implemented last year, the PNG Government continued to actively engage the secessionist Bougainville Revolutionary Army. The suit claims the war resulted in the deaths of at least 25,000 Bougainvillean civilians.  Mr Berman filed the action under the US Alien Tort Claims Act, which allows foreign nationals to sue US companies alleged to have violated international law. Though Rio is headquartered in London, the Borax subsidiary is registered in California. Mr Berman claimed a fair trial in PNG would be impossible, while courts in Australia and the UK do not recognise such cases. Mr Berman will be assisted by Melbourne-based Slater & Gordon, now suing BHP for the second time over damage caused by its Ok Tedi copper mine in PNG.

Rio is expected to argue US courts have no jurisdiction in the matter.

PAPUA New Guinea Prime Minister Mekere Morauta yesterday staked his political future, and that of his nation, on tough new legislation aimed at stabilising parliamentary politics and encouraging the election of more female MPs. The passage of the constitutional amendments and a new law on the integrity of political parties and candidates is expected to be a test of Sir Mekere's political skills and his mid-term support within his coalition government.  Speaking before the tabling of the bill, Sir Mekere said political instability had been the key factor holding back PNG.  "This constitutional amendment and accompanying legislation are an answer to the cries of our people for parliament to do its legal duty and its moral duty by legislating for political integrity and stability," Sir Mekere said.

The reforms, originally provided for in PNG's founding constitution 25 years ago, are primarily aimed at ending the opportunistic votes of no confidence that have plagued every PNG government since independence. They include provisions penalising any MP wanting to change parties mid-term and the strengthening of parties through a system of registration and public funding.  IIndependent MPs, who in the past have frequently decided the fate of governments, will be severely restricted in how they vote in prime ministerial elections, votes of no confidence, constitutional amendments and matters relating to national budgets.

In a sorry comment on Papua New Guineans' faith in their male politicians, financial incentives are also to be provided to parties who run women candidates. Other provisions designed to clean up PNG politics include a requirement for full disclosure of sources of political donations and the barring of party officials from holding public office. A separate electoral system bill also being planned by the Morauta Government will replace PNG's first-past-the-post voting system with a preferential one, to eliminate the problem of minority MPs..

Because of the high number of candidates contesting seats in PNG, only three MPs in the house hold their seats by a majority of the votes cast. The PNG Opposition has pledged its support for the reforms, which follow months of public debate and consultation through a bipartisan Constitutional Development Commission, which helped formulate the legislation The deputy chairman of the commission, Opposition MP Jacob Wama, said the Prime Minister needed to be given credit for his commitment to enacting the long-overdue legislation.

"There are a lot of problems with the current political system and it is high time we did something about it," he said.

AT the risk of treading where angels fear to tread against a rampant unionist in full flight and an Editor who, like my mother-in-law, will always have the last word (but hopefully will print my response verbatim), I wish to take exception to your recent Editorial accusing the Chamber of being "ill-attuned" to the social needs of its employees and your rather colourful header in the "Letters Column" of Aug 10 "Chamber not truthful on wage ".

Before I make my final comment on the matter of minimum wages, I suppose it is obligatory here to state that this is not a personal attack on Mr John Paska, nor indeed the PNGTUC whom he represents. I would also stress that I am president of the Port Moresby Chamber of Commerce and purport to speak on their behalf, not the Papua New Guinea Chamber of Commerce to whom we are affiliated. Many of the businesses affiliated to POMCCI would strongly object to the allegation that they are socially ill-attuned to the suffering of their employees.

Our businesses have been in the frontline every day for the last 5-6 years of some of the toughest economic times this country has faced and that they have survived, actually driven increased urban employment and not created a greater pool of unemployment in what Rowan Callick described as the "business environment from hell" is something which continues to amaze me.

Of course, the PNGTUC would have the uneducated believe our businesses are exploitative, involved in capital flight and that this is all a World Bank plot, but the reasonable, thinking Papua New Guinean knows the truth and realises an environment which is conducive to business and investment is the only way to sustained economic and social development. If all our businesses were such exploitative capitalists, why would they not be paying the minimum wage to employees?

The law would allow it. The fact is that urban samplings of non-formal sector employees and self-employed persons conducted in 1990 and 1998 by Professor Paul McGavin, Theodore Levantis from ANU and our own INA showed average net earnings per week had risen from K28.62 to K60.13. Mr Paska makes several references to the POMCCI submission to the Minimum Wages Board (MWB).

I take it, as POMCCI made no submission, he is referring to a submission made on behalf of the PNGCCI by Mr Bob Bolling. Therefore none of the "sensational comments" he refers to can be ascribed to the Port Moresby Chamber and much of the criticism aimed personally at me refers to matters I did not raise, so I do not wish to respond. On the accusation of inconsistency, I contend that POMCCI has not wavered in its belief that a "significant" increase in the minimum wage will have a negative effect on the current trend of economic recovery.

To drive PNG back to the high wage economy which was reversed by the 1992 MWB determination, by acceding to the demands for 50 per cent to 200 per cent increases we have heard, will be a backward step.

We do agree with the PNGCCI submission for a K7-K10 per week increase, not a percentage increase which could set a precedent, for the lowest paid group and we have never stated otherwise. The POMCCI has never stated we support a K60 a week minimum wage and, in fact, the reason for my previous correspondence was to rebut this statement attributed to Mr Kandakasi.
Using figures from the last official wage survey conducted in conjunction with INA in 1998 and using the BPNG employment index series, employment grew 14.4 per cent in manufacturing, 22.1 per cent in commerce, 19.8 per cent in services and fell 2 per cent in construction.

Rather more than the "marginal increases" conceded by the PNGTUC. In marked contrast, before the 1992 MWB determination, employment from 1988-93 in manufacturing rose 12 per cent, commerce fell 13.1 per cent, services rose 0.1 per cent and construction fell 3.3 per cent.
If the PNGTUC would like to publish the results of its survey we would be happy to have a look at these and comment.

POMCCI applauds the government's submission on the increased minimum wage which shows restraint in these still-difficult economic times. We feel the pieces are falling into place for economic recovery and urge all parties to partake in this process in a considered, impersonal and constructive manner for the benefit of all sectors of our community.

David A. Conn, MBE,
President,
Port Moresby Chamber of Commerce & Industry

I am writing in response to the Port Moresby Chamber of Commerce and Industry president, David Conn's statement on the Minimum Wage (The National, Aug 4).

The question of whether the PNG Chamber of Commerce and Industry supports a rise in minimum wage can be easily ascertained.  I have a copy of the Port Moresby Chamber's submission to the 2000 Minimum Wages Board (MWB). Item one of page 2 of their submission proposed that the board "grant to lower paid workers, those earning less than K60 per week a set increase which we believe should be in the range of K7 to K10 per week.  There should be no percentage increase which might be seen as grounds for a general wage increase".

Under page 11, where they dealt with specific matters raised in the terms of reference, the following is what the chamber said in relation to the same matter.
"…  The Chamber would like to be able to propose that this (the minimum wage) should be increased to respond to the inflation, which has occurred.  However, the capacity of the country to pay due to Balance of Payment restraints means a less generous award is required.  So while the Chambers believe there is nothing inappropriate with the method by which the 1992 Minimum Wage was set, reality in the form of Balance of Payment constraints must force the Board to make a less generous determination than the CPI inrease:.

It is not for me to point out to the Board the somewhat diametrical and inadequate treatment of the issue by the chamber.  What is evident and is of significance to the MWB hearings is that the chamber in fact supports an increase in the minimum wage. This is consistent with nearly all submissions received from all other groups including non governmental organisations, members of the public, unions, Pangu Party and, of course, employers. The only other employer group that I am aware of that submitted for a retention of the current status quo is the Employers Federation of PNG.  Interestingly, this group has admitted openly for the records (as have the chamber) that their members are paying above the current minimum wage rates ranging from K80.

What this means, of course, is that the current minimum wage is effectively redundant as much as it was redundant from its inception.  Therefore it has no purpose other than that it is a political statement of the government's endorsement for wage injustice, exploitation, poverty and economic deprivation.

I note also Mr Conn's admission that the chamber had previously supported a K60 a week minimum wage.  The question is , how many times will the chamber alter their position on this issue.  Perhaps they may wish to take a leaf out of their counterparts, the PNG Employers Federation, on the issue of consistency on wages. It would have saved the unnecessary barrage of rhetoric evident throughout his letter,.  Notwithstanding, the chamber's entire submission in my view is presumptions at best and lacks supportive data.

Sensational comments such as "It would blow the country apart" (page 9), or, "Frittered right away" (page 9), or, "indications are that for premium residential properties that rents are down 15 to 20%, for middle level properties about 10 to 12% and there has been little or no change in demand for lower value properties implying there has been trading down" (page 9) are hardly the stuff one would consider to be serious economics. In any case minimum wage earners do not live in rented properties for obvious reasons. This is not a personal attach on David Conn.  However, when one initially argues for K60/week increase, then alters it to K7 to K10 week in the same submission, then calls for any wage increase to be pegged to inflation levels, which incidentally have gone close to 100 per cent since 1992, then still in the same paragraph points the board to balance of payment constraints, and then further leads the board to make a "less generous" increase than the CPI increase, you have to wonder what the message is that one is trying to get across.

I mean, is David Conn really serious about the impact of a 100 per cent wage rise, which he cautions against considering aggregate CPI movements since 1992 put it close to 100 per cent if not more ?

In our view what the employers and government have done to the national economy and to workers and their families falls short of scandalous.  Once again they are on the warpath issuing baseless scare-mongering tactics about the impact of wage rises on the national economy.  If there was on iota of truth that forcefully substantiated the objectives of the 1992 determinations, then we might rest our case.

The fact however, (based on government figures) show that there has been only marginal increases much of which cannot be attributed to the 1992 Minimum Wage Determination. On the other hand, profit margins have soared, (the evidence is there to show this) with little investment on the domestic front.  The fact that there has been minuscule reinvestment back in the economy is reflect4d by the stunted job growth. This can only mean one thing, that businesses are siphoning big chunks of money offshore at the expense of PNG jobs and economic livelihood.  And the government supports this ?

If we return to the chamber's proposal for a K7-K10/week increase, it gives no basis whatsoever for this figure except an erroneous reference to balance of payment constraints.  The chamber argued that a K10 increase paid to the lowest one-third of employees would have a K35 million increase on imports which it cautions, the balance of payments could not afford.

In making this erroneous statement, the chamber is presuming that all of the extra wages would be spent on imports.  The contrary is however, the reality.  This is that lower paid workers spend a higher proportion of their income on local consumption than higher paid, rich families who spend heavily on imports at supermarkets. Minimum wage earners use local markets, buy Besta tin fish, and other mostly locally made products. It is the rich who consume ore imports, be they food, clothes, 4WD or other luxury items as well as sending their children to Australia for education. In other words it is the majority low to middle income earners who support the domestic economy from which the rich squeeze off more than their fair share in proportion to their inputs.  It is therefore clearly misleading to say that 100 per cent of any wage increase will flow to imports.

Lastly, the presumed impact on balance of payments is exaggerated.  Bank of PNG reports for instance show that in 1999 total imports were about K2.7 billion.  The K35 million referred to by the chamber is only 1.3 per cent of this, which is clearly insignificant. Moreover, the balance on current account was K319 million.  We contend that the balance of payment problem is to be located not in the current account but in the next outflow of private capital or capital flight out of the country depriving PNG of job opportunities the very issue that the chamber and government purport to be concerned about.

John Paska,
General Secretary,
PNGTUC
Port Moresby

 

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