Analysis of Anti-corruption Funding Discrepancies in the 2018 PNG Budget

The study examines the funding allocation and actual spending for anti-corruption organizations in the 2018 budget of Papua New Guinea, highlighting decreases in funding for crucial entities like FIU/FASU, Fraud Squad, ICAC, and Auditor General over the years, raising concerns about the government's commitment to combating corruption.

• Analysis
• Anti-corruption
• Funding Gap
• 2018 Budget
• PNG

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1. The Wrong Way to Close a Funding Gap: anti-corruption and the 2018 PNG budget Grant Walton Research Fellow Husnia Hushang, Program Officer Development Policy Centre, Crawford School of Public Policy, Australian National University. grant.walton@anu.edu.au

2. Introduction Last year we presented 10 years of government budgets and found a growing gap between allocations and spending for anti-corruption organisations This year we look at : the 2018 budget to reveal what has changed, how anti-corruption funding aligns to government rhetoric Reveals how well PNG government supports anti- corruption Are AC organisations worse or better off in 2018?

3. Funding for anti-corruption organisations: an update

4. Anti-corruption organisations Ombudsman Commission National Fraud and Corruption Directorate Auditor-General Taskforce Sweep/ICAC Financial Intelligence Unit/Financial Analysis and Supervision Unit

5. FIU/FASU will have less money under Bank of PNG than it had under RPNGC 0.90 0.80 0.70 0.60 Millions of Kina 0.48 0.50 0.40 0.28 0.30 0.20 0.10 0.00 2014 2015 2016 2017 2018 Budgeted Actual

6. Massive reductions for Fraud Squad Budgeted and actual, 2017 prices 2.00 1.80 1.60 1.40 1.40 Millions of Kina 1.20 1.00 0.80 0.66 0.60 0.40 0.20 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budgeted Actual

7. The ICACs future is looking dim Budgeted and actual, Taskforce Sweep and ICAC 2017 prices 30 25 Millions of Kina 20 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budgeted Actual

8. Auditor general facing further cuts Budgeted and actual, 2017 prices 35.0 30.0 25.0 Millions of Kina 20.0 16.9 15.0 10.0 5.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budgeted Actual

9. Cuts to Ombudsman Commission to stop in 2018 Budgeted and actual, 2017 prices 30.0 25.0 Millions of Kina 20.0 15.0 10.0 5.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budgeted Actual

10. The Ombudsman Commission is set to become the best funded AC org. Actual Spending (budgeted in dashed), 2017 prices 30.0 25.0 Millions of Kina 20.0 15.0 10.0 5.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ombudsman Commission Actual Fraud and Corruption Actual Auditor General Actual ITFS/ICAC Actual FIU

11. The funding gap is closing, but for the wrong reasons Total Anti-corruption Budget and Spending, 2017 prices 80 70 60 50 Millions of Kina 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budgeted Actual

12. EITI funding a silver lining EITI Budget vs actual, 2017 prices 4.00 3.50 3.00 Millions of Kina 2.50 2.00 1.50 1.00 0.50 0.00 2016 2017 2018 Budgeted Actual

13. EITI better funded than ICAC, FIU/FASU, Fraud Squad 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ombudsman Commission Fraud and AC Directorate Auditor General ITFS/ICAC FIU/FASU EITI

14. EITI helps close the gap, but funding still declines Total Anti-corruption Spending with EITI included, 2017 prices 80 70 60 50 Millions of Kina 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budgeted Actual

15. Now, AC underspends reflect other areas of government Actual Spending vs Budgeted for Whole Budget and A/C Organisations 140% 120% 100% 85% 80% 69% 60% 40% 20% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total budget Anti-corruption

16. Less available money will be spent on anti-corruption organisations Anti-corruption Spending as Proportion of National Budget 0.8% 0.7% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -0.1% Budgeted Actual

17. Thats still the case when decentralisation is taken into account Anti-corruption Spending as Proportion of National Budget minus provincial expenses 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budgeted Actual

18. AC spending is miniscule c/w broader Law and Justice Sector Anti-corruption vs Law and Justice Sector, 2017 prices 1,800 1,600 1,400 Millions of Kina 1,200 1,000 800 600 400 200 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Law and Justice (Budgeted) Law and Justice (Actual) Total AC Spending (Budgeted) Total AC Spending (Actual)

19. Anti-corruption rhetoric: an update

20. With less funding government has ramped up A/C rhetoric Gov t continues to promote commitment to address corruption Mostly this is being done through legal reform: Constitutional and Law Reform Commission Designing laws for the new ICAC Reviewing Organic Law on the Duties and Responsibilities of the OC 2018 Budget: Government aims to introduce bribery offences Passing of anti-money laundering and counter terrorism financing laws Amendments to Proceeds of Crime, Criminal Code and Mutual Assistance in Criminal Matters legislations How do we interpret this rhetoric?

21. Conclusions

22. Conclusions Significant cuts to anti-corruption organisations undermines the potential for keeping the state accountable. The good (OC/EITI) is outweighed by the negative (cuts to others) The gap between AC budgets and actual spending has closed, but for the wrong reason: severe funding cuts EITI funding is welcome, shows internal and external pressure can shape anti-corruption funding But, it does not diminish the overall trend of budget cuts

23. Conclusions Less available money is spent on anti-corruption organisations Are anti-corruption organisations being targeted for budget cuts? There is a gap between anti-corruption rhetoric and funding The government is proposing and passing new laws it can not enforce and introducing institutions it can t fund Need to better fund anti-corruption organisations before introducing new laws/institutions Keep your eye on the funding rather than the promise of laws/institutions.

24. Further information Blog: The wrong way to close a funding gap (2018): http://www.devpolicy.org/anti-corruption-and-the-2018-png-budget-20180214/ Discussion Paper: Walton, GW and Hushang, H (2017) Promises, promises: A decade of allocations for and spending on Anti-Corruption in Papua New Guinea. (17 July) Development Policy Centre and Developmental Leadership Program Discussion Paper No. 60. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3009987