The partial privatisation of Air Niugini will be the first in a series of privatisations. Opening the 2014 Papua New Guinea Advantage Investment and Infrastructure Summit in Port Moresby this week, Prime Minister Peter O’Neill said removing government ownership will reduce waste, inefficiencies and corruption.

Prime Minister, Peter O’Neill. Credit: Stephen Rae

The time has come, the prime minister told the conference, to reform the relationship between government and business, and the role of government in business.

‘There is  a mountain of evidence available now and I know many of you can attest to it, that the state’s involvement in many areas of business has been incompetent, wasteful to the extreme and in some areas, corrupt.

‘It not just frustrates me, it infuriates me that the scarce taxpayers funds have to be used to bail out incompetent businesses, year in, year out, since independence and I want to tell you it’s getting worse, not better.

The first SOE that O’Neill intends to partially privatise is the national airline, Air Niugini. It will be the first sale of a government owned enterprise since the Bank of South Pacific bought into and then merged with the PNG Banking Corporation, between 2002 and 2008.

Air Niugini is a good example of why government must review its ownership of businesses, he said, with the airline needing to raise hundreds of millions of dollars to re-fleet and restructure.

If the government continues to own Air Niugini, it would have to either provide the capital or guarantees the loans.

Saying he was expressing his own views (‘they are mine all mine, at least for now”), legislation introduced into parliament late last month provides the framework for private-public partnerships in delivering major infrastructure projects.

More sales

‘While the initial focus of the PPP will be for infrastructure, I want to see it expand further, with government and business working together on programmes in many other areas, just as it is done in many other countries.’

‘There is  a mountain of evidence available now and I know many of you can attest to it, that the state’s involvement in many areas of business has been incompetent, wasteful to the extreme and in some areas, corrupt.’

He said legislation will be introduced into parliament shortly, selling off 49 per cent of Air Niugini.

‘Again my personal view is that we should allow for 50 per cent privatisation, because it makes the private sector less nervous. It gives more confidence to potential investors, and of course less government interference.’

He said the government’s preference was for large superannuation funds to take up shares well as airline employees.

‘I accept that there are some service areas that must remain for now in government ownership and those areas that do not provide essential services can be disposed of without adverse impact on the community when we do so.’

“And with the conditions imposed on the part-sale, it makes sense to do it now, confident that the airline will continue to serve the community and doing so in a competitive environment.

Benchmark

Hot Croc Advertising’s Gary Aylward. Credit: Stephen Rae

‘I personally want to see this sale be a successful one, so we create a benchmark for future privatisations that will take place.

We need to separate essential services from those that are propped up businesses ‘that need to be disposed of’, he said.

The government, he said, had other priorities, such as delivering basic services.

‘I accept that there are some service areas that must remain for now in government ownership and those areas that do not provide essential services can be disposed of without adverse impact on the community when we do so.’

‘This needs to be accompanied by a significant downsizing of our central and provincial government bureaucracies.’

He urged the PNG business community to debate the issue and recommend the best way to achieve this.

Devolution

An attentive audience for the Prime Minister. Credit: Stephen Rae

O’Neill also said the most important contribution his government is making to developing the economy is handing over the delivery of basic services to district, local, communities and traditional leaders.

‘This needs to be accompanied by a significant downsizing of our central and provincial government bureaucracies.’

‘This is cutting waste, cutting duplication and cutting corruption. But above all, it is empowering our local communities and our local leaders.’

Christian churches are also being funded to help deliver education, health, training and family life support and this will grow, he said.