EARLIER this week the malaita provincial assembly has seated and debated on its financial budget for 2018 and 2019 financial year.
During the debate the Hon Minister for finance out lined the whole assembly with its estimated budget for 2018 and 2019.
He said, there are important matters to consider about this budget.
“This budget is still an estimate and does not constitute the actual we expected. The main reasons were; government is yet to pass its national budget where we can finally gaze our figures and make appropriate calculations. Secondly, we are yet to complete this financial year as we are now closing to its end.
In the outlook of the budget before us, may I outline important component of the budget. The budget constitute five (5) main components and they are; Summary Estimates, Recurrent Revenue, Recurrent Expenditure, Capital Budget and Debt Servicing. As usual custom for all the provinces, we required to practice a zero balance budget, therefore, you will note that this budget has a zero balance at then of its surplus/deficit column.
The Summary Estimates shows total revenue, total expenditure, total capital budget and total Debt Servicing. At the outset Mr. Speaker, the total Revenue estimate for 2018 is $18,317,866. Of this figure, local revenue contribution is estimate at $3,000,000 whilst the rest is supplemented by the fixed service grant of $14,967,866. The rest is said to be complemented by Timber right and contributions from other sources.
The Summary Estimates shows interesting information regarding the revenue. That local revenue remains all throughout the last three financial years between $2 million to $3 million. For fixed service grant it has great increased from $11.9 million to $14.9 million and remains constant since 2016. Recently, the government proposed to cut the fixed service grant by half, but was intervene by the all the Provincial Premiers to the Prime Minister not to reduce the fixed service grant. Therefore, the good news is; we still had the fixed service grant intact.
The Summary Estimates also shows the overall expenditure for the province. The total expenditure for the financial year is estimated at $18,317,866. While an increase of spending in 2016 fiscal year, there seems a drop in expenditure for the last three years. This is a good sign. Its shows some controls and we are beginning to follow the budget lines.
On the capital budget, the estimate for 2017/18 is being brought forward for 2018/19. The Summary Estimates shows that there is a huge increase in the Capital budget since 2014. The increase is from $385,423 in 2014to $29,006,308 in 2017/18. This is a great success story for the MART Government. We hope this figures will continue to increase for this financial year and the years to come.
In debt servicing as shown in the Summary Estimates, the total figures stands at $2,717,769. The breakdown of the total shows NPF amounted to $952,756, our outstanding creditors amounted to $430,000 and PAYE amounted to $1,334,112.
Let me make some points here. First the province must budget for its debt servicing. Therefore, figures appears do not necessary constitutes that we have debt almagated to the estimate indicated, except for PAYE; the province has a substantial outstanding of debt accumulated. For NPF the actual paid to NPF does not appear to give us light of how the province has paid some of its dues. As Minister responsible for the Treasury, the province has reduced its NPF debt. We should have less than $200,000 remaining to clear the outstanding. For the PAYE, a consensus being reached to discuss the outstanding arrears with the Inland Revenue Commissioner to consider write-off as bad debt on the outstanding. This is to allow us to start fresh in paying PAYE for our workers.
The 2018/2019 fiscal year Budget Estimates had some important points to be considered. Firstly on the recurrent revenue, that we are 80 percent depend on the fixed service grant from the national government. Secondly, our continuation succession of the budget depends entirely on our performances in the finance. Particularly for the capital budget, that our access to the capital budget rest entirely on the outcome of the PCDF assessments, thus, in another word, our capital budget is finance by the PCDF funding in which it means we must qualify for the minimum conditions imposed on us. Except for the new proposed chamber financed by the MPGIS, our contribution to the capital budget is an allocation of $250,000 to recruit engineers and other technical expertise to support the implementation of our projects.
Considering my points above that 80 percent of our source depends entirely on fixed service grants means we are financing the overall budget with 20 percent, in another way, our contribution to this overall budget is only 20 percent.
By carefully assess this 20 percent; four (4) sectors strongly uphold the 20 percent contribution to our overall budget namely; the Work, Transport and Communication sector which estimated to collect $1,182,800, the Commerce which estimated to collect $311,400, the Forestry sector which estimated to collect $665,000 and local council which estimated to collect $430,000.
A closer look at those indicated sectors shows they have strong support to our local revenue. The Works sector actual collection from 2014-2017 shows collections ranges from $170,165 to $474,785. By some common sense the amount indicated above is a huge increase compared to the actual.
The increase stemmed from Passenger Levy, new proposed areas namely the gate taking at the front wharf and the upcoming market gate taking. To enlighten the house, the wharf pass and market gate pass are new areas of revenue collection. Current MART Government is working on a strategy to increase our overall performance on revenue collection.
For the commerce, most of the revenue comes from business licenses mainly within the Auki urban areas. The actuals from 2014 to 2017 shows we have great potential to collect more from the business houses. We are working on a revenue strategy to improve collection on other sectors such as rural canteens, retails from sub-centers and rural liquor outlets.
In the same note for Forestry the actuals from 2014 to 2017 we have been collecting good revenue from this industry which ranges from $606,800 to $1,299,083. We are tightening collection in areas therefore; we have sent a team comprised of the Police to take stock on all logging camps. Information gathered more than 15 logging camps operate from the areas visited. Southern region is yet to be visited. We believe there could be more than 20 camps around Malaita.
The same also to be noted for the local council, that actuals from 2014 to 2017 shows we collected revenue ranges from $418,899 to $598,970. This is meanly from the market sales. We are anticipating increase for market in this financial year as soon we will introduce the gate pass fees, parking fees when the market fencing is done. This year will also begin enforcing the Market Ordinance which should be completed by now at the Attorney General Office in Honiara.
We regards to Expenditure as expressed in the Summary Estimates earlier, MART Government is trying to reduce and control its expenditure. The MART Government will continue to ensure we control our spending and will also demand from the administration to produce a monthly financial standing of the provincial government to monitor the financial status of the province.
There is a matter I should inform this house about, which obviously will have an impact on the budget. In implementing the MART Policy of local governance, the Ministry of Local Governance and Community Development will be recruiting 15 Community Liaison Officers (CLO) for 15 wards. These 15 CLOs their salary at L5 will be met by the province. Their operation costs will be supported by the Ministry of the Provincial Government and Institutional Strengthening (MPGIS).
Whilst the rest of the divisions maintain a low budget six (6) divisions consume larger proportion of the expenditures namely: Office of the Premier with a budget of $1,177,433, the Provincial Assembly with a budget of $2,687,808, the Administration with a budget of $1,734,660, the Finance & Treasury with a budget of $1,302,258, the Works, Transport & Communication with a budget of $1,088,517 and the Local Council with a budget of $1,260,908.
Note there is quite a substantial increase for the Administration Division. This increase was due to a plan to retire some of our old officers which will cost $300,000.00 and to hire a consultant costing $69,100.00 to study the recommended MICL Model to revive the Statutory Authority to begin operation on creating investments for the province.
For the capital budget, there is no new capital investment for 2018/19 budget. Note on your Capital Summary that the whole capital budget of $12,647,326 for 2017/18 is carry forward for fiscal year 2018/19. Therefore, there is nothing new for 2018/19 capital budget.
We have received advises from the Ministry of Provincial Government & Institutional Strengthening (MPGIS) that capital budget SIG allocated for all the provinces is $10,000,000 thus, a $40,000,000 cut from the $50,000,000.
Currently national budget is yet to be approved as the parliament continues to debate the budget. If the proposed SIG $10,000,000 is approve we could have serious problems with our PCDF projects.
Some MPAs had complaint that their projects have not included in the 2018/19 capital budget. Please note there is no new project for 2018/19 budget. Lack of funding from national government to transfer funds to our PCDF accounts for 2017/18 projects made us to carry forward all projects for the financial year 2018/19, whilst the capital budget for our new projects intended for 2018/19 is still debate and be passed at the national parliament.
Once we have the approved figures we will call for a supplementary budget to include your project for 2018/19 to be implemented.
I shall request the understanding of the MPAs on this matter as it is not our problem but a problem of the national government because these funds comes from the national government. Our Premier who has met with all other premiers on this issue can enlighten the house on this matter.