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Post by Vincent Moses, PNG News Group.

2019 Supplementary Budget Fixes Legal Problem

“In his transparent attempt to try and lure the O’Neill forces over to join his Opposition, the current Opposition Leader is making some fundamental mistakes when he claimed that the 2019 Supplementary Budget was illegal during the last week of the parliamentary sitting last week.

First, if he actually does his numbers, by getting O’Neill across to his side, he may find that O’Neill will take his job.

Second, he needs some fundamental guidance on the law by someone familiar with the basics of the Constitution and the budget.

Third, rather than shooting from the hip, he should recognise that the 2019 Supplementary Budget actually made the 2019 Budget legal” stated Treasurer Ian Ling-Stuckey.

“The Opposition Leader, on Wednesday 15 October, in a long and rambling set of what he claimed were 6 questions but were actually 11 questions (a typical error for the Opposition Leader), claimed the Supplementary Budget was illegal.

A five page set of misleading and misconceived questions was handed across. In answering these questions, it is clear that they were based on some very fundamental misunderstandings.

The questions really just demonstrate the Oppositions inability to understand the basics of the Constitution, of the Public Finance Management Act, and of legal precedent.

So he is correct that the 2019 Supplementary Budget was all based on the Consolidated Revenue Fund. But then he demonstrates his carelessness. For he confuses the Consolidated Revenue Fund, with the Consolidated Revenue Trust Fund, a bank account held by the IRC.

This is just one word – the addition of the word “Trust” – but it is a crucial word. If he had actually checked his facts, he would know the 2019 Supplementary Budget refers to the Consolidated Revenue Fund which is the most important public money account in our nation.

It is mentioned in our Constitution. It is a key part of the Public Finance Management Act (PFMA). It is the account that receives all funds in our nation, whether they be taxes, excises, fees, charges, or loans (loans are paid into the CRF under Section 9(f) of the PFMA).

So the Consolidated Revenue Fund includes funding from loans and other forms of financing according to our Constitution and the PFMA.

However, he then starts jumping up and down and begins talking about a bank account held by the IRC and Customs with a different name and with a narrower source of financing. This is a totally different fund. The Opposition Leader got it wrong.

“The Opposition Leader also needs to understand legal precedent and the difference in how words are used.

As we all know, the same word can have different meanings. So one needs to look at the context, including precedents, in understanding a word. These words at the beginning of appropriation bills are standard “Being an Act to grant and appropriate out of the Consolidated Revenue Fund a…“

For appropriation bills, the word “grant” means “authorises” or “gives permission”.

So the 2019 Supplementary Budget, as required under the laws of this nation, must ensure that the delegated Minister, the Treasurer, gives permission for the release of funds from the Consolidated Revenue Fund, and then this release of funds must be spent (or appropriated) according to the programs set out in the budget appropriation bills.

Now the Opposition Leader then tries to mislead Parliament by claiming that the word “grant” can only refer to a gift or something different to a loan. This is entirely the wrong meaning of the word in PNG’s appropriations.

As mentioned earlier, the Consolidated Revenue Fund, as defined in the Constitution and under the PFMA, includes all sources of funds including loans and borrowings. His carelessness in adding words and misunderstanding words just undermines his credibility.

“So what did the 2019 Supplementary Budget do? At the policy level, it recognised that the years of economic mismanagement under O’Neill was going to force this nation to continue down an unsustainable deficit and debt path.

So the first step was to be transparent and recognise that there was K1,874 million in hidden expenditure pressures and cost-overruns relative to a fake 2019 Budget. On the advice of NEC, the Parliament then agreed to introduce cuts of K1,482 million to reduce the size of the deficit.

These were very real and painful cuts. Despite fixing up 80% of these cost-overruns, it was just not feasible to cut the last 20% to get back to the unrealistically low 2019 Budget levels.

So there was still K392 million extra required to synchronise the fake 2019 Budget figures with the reality of expenditures even after massive cuts. Given that revenues are falling at the same time as expenditures are rising, these additional funds or appropriations will have to be financed from borrowings.

NEC approved this additional financing. This additional financing will be paid into the Consolidated Revenue Fund (not the Consolidated Revenue Trust Fund controlled by the IRC and Customs).

The appropriation act will then grant (authorise) permission for these funds to be spent in the ways set out in the appropriation act.

“Indeed, the 2019 Supplementary Budget so understands the requirements of our Constitution and the PFMA that it actually appropriates into the Consolidated Revenue Fund K11.1 billion to make principal payments on our loans.

This important appropriation requirement was carelessly, if not, incompetently, left out of the 2019 Budget. Principal payments on our loans, including repayment of Treasury Bills for 2019, have actually been illegal.

This big addition to 2019 Supplementary Budget actually makes the 2019 Budget legal.

“So who has been misleading the house and who should be dismissed?

Is it my actions as Treasurer, cleared by the best legal minds in our nation before being presented to Parliament, of working to fix the economic mismanagement of the O’Neill years, and fixing the illegality of the 2019 Budget?

Or is it the Opposition Leader who has so seriously misled this house with his carelessness in adding and misunderstanding words?

His carelessness undermines his credibility” stated the Treasurer Ian Ling-Stuckey.

Hon. Ian Ling-Stuckey,CMG.MP
Minister for Treasury
22 October 2019



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