Canberra, 15 July 1966
Confidential
Grant for Papua and New Guinea Administration in 1966/67
The Minister is seeking an initial Commonwealth grant for Papua and New Guinea of $72.9m. in 1966/67, plus approval of a further unspecified grant during the year to meet additional salary costs for overseas and local officers expected as a result of arbitration decisions.
The initial grant sought represents an increase of $10.9m. or 17.6% above the grant for 1965/66. This is well in excess of the rate of increase in the grant over the last couple of years, namely of the order of $6m. p.a. or about 11%.
There are some inescapable commitments to be met in 1966/67 including the establishment of tertiary education institutions and the Development Bank and special measures for the Police, etc .. These are expected to add about $5m. to Territory expenditure. As we see it, some additional increase in the grant can be justified on the grounds of ensuring reasonable growth.
While the Submission states that priority is being given to expenditures to strengthen the productive potential of the Territory and advance the indigenous population, there is nevertheless a decline of economic-type expenditure from 32.4% in 1965/66 to 31.4% in the proposed Budget. On the other hand, the percentage of Social Service expenditure is expected to go up by almost 2% of the total Budget. This, of course, is out of harmony with the World Bank Report, {which} the Government has accepted as a guide, and which has stressed the importance of building up the economic side and the need to contain expenditure on non-productive activities. We think that Ministers should give particular consideration to this aspect.
Ministers might also consider whether the marginal increase of 0.2% in the proportion of total expenditure to be met from internal revenue and loan raisings is a realistic upper limit.
Clearly the Commonwealth grant will have to be increased this year by at least $5m. The fact that further supplementary assistance is likely to be needed during the course of the year to meet additional salary expenditure suggests that something less than the total amount now sought is warranted. No doubt the Treasurer will have a specific figure to recommend.
[NAA: A5841, 349]
1 R.P. Deane, Assistant Secretary, Economic Policy, PMD.
2 Document 47.