CHAPTER 10

PROVINCIAL GOVERNMENT

1. There is widespread discontent with the present distribution of power in our country, and a deep yearning among our people for a greater say in the conduct of their affairs. If the Committee's recommendation in Chapter 7, "The Executive", that the Constitution should explicitly vest power in the people, is to be more than legal rhetoric, then opportunities must be provided for our people to participate meaningfully in those aspects of government that directly concern them. The recommendations we make in this chapter are designed to provide such opportunities.

2. When Europeans first settled in Papua New Guinea, they did not find a political vacuum on the shores and plains, or in the mountains and valleys, of our islands. Our ancestors lived and worked in communities - villages, hamlets, clans and tribes - with their own forms of social organisation, appropriate to their needs. However, colonial rule has had an important impact upon the character and life styles of our people. It placed new requirements upon them. It ignored, or opposed, or sought to alter, our traditional forms of social organisation without proper consultation with our people. It deprived us of self-government, and even of self-respect. The proud independence of our local communities was replaced by dependence - upon the all-powerful representative of the colonial government, the kiap.

3. Colonial rule has brought peace between once-warring communities, roads and other forms of material progress. But the price of these changes has been the establishment of a system of government that has not made adequate provision for local initiative.

4. Nonetheless, our people have demonstrated an outstanding capacity to endure and to tolerate the oppressive and paternalistic policies of successive colonial rulers. The aspirations that underlie the discontent and yearning referred to in the opening sentence of this chapter provide a sure sign that their will has not been broken. But, the system of government that is Australia's legacy to us provides no real outlet for these aspirations.

5. In our Second Interim Report, we described the present system of government in Papua New Guinea as "highly centralized" and "bureaucratic". Our report continued:

All significant decisions affecting the lives of people in every part of the country are made in Konedobu. Such a system cannot motivate our people to become self-expressive through constructive and self-reliant involvement. On the contrary it can only stifle initiative as it has done in the past.

6. Since these remarks were made, we have received a report from two distinguished experts who were made available to the Committee by the Commonwealth Secretariat to act as specialist consultants on a number of matters of relevance to this chapter. Their report provided ample confirmation of our views. As Professors W. Tordoff and R. L. Watts themselves put it:

7. The many hundreds of oral and written submissions we have received on "Central - Regional - Local Government Relations" indicate that people in all parts of the country are dissatisfied with this state of affairs. Our people feel powerless and frustrated. Decisions that can and should be made locally are made in Konedobu. The structure of government bequeathed to us by our colonial rulers has placed power in the hands of public servants rather than the people whom this bureaucracy should serve.

8. Power must be returned to the people. Government services should be accessible to them. Decisions should be made by the people to whom the issues at stake are meaningful, easily understood, and relevant. The existing system of government should therefore be re-structured, and power should be decentralized, so that the energies and aspirations of our people can play their full part in promoting our country's development.

The importance of district-level government

9. The Committee has devoted a great deal of time, and much earnest thought, to its consideration of item (b) in its terms of reference, "Central - Regional - Local Government Relations and District Administration". We have asked ourselves fundamental questions about the proper distribution of power in our society, and carefully weighed the alternative answers. We have been assisted in our deliberations by specialist consultants from overseas, and by advice and special studies prepared for us locally. We have paid close attention to the submissions we have received. We believe that the recommendations contained in this chapter embody the views of the overwhelming majority of our people; that they provide the necessary safeguards for those minority groups who would otherwise be fearful for their own future; and that they are workable.

10. In our First Interim Report, we recorded the tentative conclusion that a clear majority view seemed to be emerging from the oral and written submissions we had received that government should be restructured and brought under political control at the district level.

11. In our Second Interim Report, we quoted both the Deputy Chief Minister, Dr. John Guise, Member for Alotau, and the late Leader of the Opposition, Mr. Matthias Toliman, Member for Gazelle, as early and forceful advocates of a system of elected district-level government. We also pointed out that the present Leader of the Opposition, Mr. Tei Abal, Member for Wabag has been a consistent supporter of this concept, and that it is in harmony with the themes underlying the government's Eight Aims, particularly decentralisation.

12. Approximately 200 discussion groups in all parts of the country responded to a paper which we prepared on this subject. Three-quarters of them felt that the present system of government at district level should be changed. And the same proportion favoured the establishment of a system of elected assemblies to govern at the district level. Overwhelming support for both of these views was expressed at public meetings which we attended throughout the country.

13. Last September, we reported that the people of Bougainville wanted interim arrangements to be made for the establishment of a form of district-level government, pending publication and implementation of our recommendations. Since then, support for the idea of district-level government has grown. Demands have already been made in half of the districts of Papua New Guinea for the establishment of district-level government without delay.

14. Our recommendation that a system of district-level government should be established in the Constitution is designed to achieve several ends at once: decentralization; greater participation in decision-making by local leaders; and greater co-ordination of developmental activities undertaken by government officers in the districts.

15. We have already explained how important we think it is that government should be brought closer to the people. Decentralization of government services will make them more accessible to the people they should serve. Decentralization of decision-making will make government more responsive to local wishes and needs.

16. Government activity in the districts will also become more effective if it is brought under local political control. In becoming involved in policy and decision-making at the district level, our leaders will become more closely aware of the limitations and difficulties encountered by government in the development of their areas. Public servants who work in accordance with the wishes of local leaders will become more effective because they will also be able to work in the name of these leaders. Their activities are therefore more likely to enjoy the full support and co-operation of the local people. And, a strong district-level government will provide a framework, and a stimulus, for the co-ordination of government activity in each district.

17. The Committee has received a number of submissions, and an amount of critical comment on its recommendations, which seem to run counter to what has been said above. The most serious of these counter-proposals have come from people who advocate some form of regional government for Papua New Guinea.

18. The advocates of regional government often seek the same ends as ourselves. They share many of our misgivings at the status quo, but they are, we believe, mistaken in the solutions they propose.

19. Most of the submissions which we have received in support of the establishment of a system of regional government have come from individuals. Few of them have appeared at our meetings. And, they seem to have enjoyed no discernible support among members of the discussion-groups that were organized for us by the Government Liaison Branch. A few of the advocates of regional government have favoured the establishment of a federal system of government in Papua New Guinea. Experience in other recently independent states does not incline us towards recommending a federal system for Papua New Guinea. The overwhelming majority of our people favour the maintenance of a unitary state.

20. Advocates of regional government also differ among themselves as to the number of regions there should be, and where their boundaries should be drawn. Most of them seem to favour a total of four or five regions based on the regional administrative divisions of certain government departments. Generally, they favour Papua, the Highlands, the New Guinea Islands, and coastal districts of the New Guinea mainland, although they disagree as to the likely affiliation of the Southern Highlands in particular. Some proponents of regional government have sought to take account of Bougainvillean feeling by suggesting that Bougainville should be regarded as a separate region. It is clear that Bougainvilleans certainly do not wish to form part of a region embracing all of the five existing districts in the New Guinea Islands.

21. The Committee believes that a system of regional government is not unlikely to repeat those very shortcomings in the present system of government which the advocates of regional government tend to decry. The so-called regions of Papua New Guinea tend to embrace people as diverse as those found in the country at large. There are great obstacles to communication within the regions. To the ordinary villager, regional headquarters are likely to seem almost as remote as Konedobu. We are convinced that government must be brought much closer to the people.

22. One of the most powerful arguments against establishing regional governments concerns the impetus they would be likely to give to regionalism - to the exacerbation of tensions between different regions, particularly the Highlands and Papua. The Committee does not believe that the attachments and the identities of people who are beginning to think of themselves in regional terms should necessarily be discouraged. But, we do believe that it would be unwise to institutionalize these attachments. To endanger the present fragile form of unity in our country by providing inducements to local leaders to think in regional terms would be to abdicate the mandate we have from the overwhelming majority of our people to secure the foundations of a united Papua New Guinea.

23. No detailed arguments have been brought to our attention to support the concept of regional government. But, the submissions we have received seem to assume that there is a certain ethnic homogeneity to each region.

24. We are basically doubtful of any theory that fails to take full account of the diversity of our country at the local level. We distrust any attempt to employ a limited unity to divide us. The experience of a number of recently independent states, including Nigeria, should serve as a warning of the dangers attendant upon the establishment of a small number of large, politically powerful regions, in which ethnic sentiments serve as a basis for regional unity and deep national division.

25. Finally, we feel concerned lest the establishment of regional governments should divert the energies of potential national leaders into regional politics. Our country needs the services of all capable men and women. We cannot afford a situation to develop in which leaders' energies are devoted to activities that do not contribute to nation-building. A system of district-level governments should enable our people to avoid most of these pitfalls.

26. Earlier in this chapter, we draw attention to some of the positive advantages we feel are likely to result from the establishment of district-level governments. All of them require that power be vested in a representative body. An advisory body would lack the power to respond effectively to local desires. It would also lack the ability to ensure that developmental activity in each district would be properly co-ordinated. An elective assembly with substantial powers, including financial powers of its own, is essential if meaningful decisions are to be made at the district level, and if action is to follow those decisions.

27. Effective government at both the national and district levels requires that there be strong links with the villages. The government and development of our country depend upon the village people. We attach the very greatest importance to government at the village level. But, we do not believe that the Constitution can or should do more than facilitate the participation of village people in government, and encourage the national and district-level governments to respect our country's diverse local communities.

28. We are conscious of the important role that can be played by associations spontaneously formed by the people outside the framework of local government established by the central government. We anticipate that such bodies will be formed in parts of the country that presently lack them, and that support for them will grow. They are vital expressions of that self-esteem, self-reliance and desire for participation in development that we are determined to foster. We are, however, unable to foresee a situation in which these bodies might act as the main link between the national government and village people throughout the country. We believe that such bodies should seek representation on district-level assemblies as the leaders of a number have declared they will. But, much as we believe in self-reliance, we recognize that the people of many districts require some assistance in devising structures through which they might effectively participate in their own development and government. Hence, our proposal that a system of district-level governments be established without undue delay.

29. The people of an increasing number od districts are becoming ever more conscious of the interests and problems that they share. The district is more than a simple administrative unit. It is, in fact, an important political unit with much of the administrative infrastructure necessary for further political development. It is also a known quantity: it poses no new problems of identity.

30. Thus, the system of district-level governments we recommend should be capable of accommodating present demands for the granting of significant autonomy to particular parts of the country. It should, indeed, harness them to those important tasks of nation-building that lie before us all.

31. We recognize that the system of district-level government that we favour cannot be established overnight. But, there is a basis of existence from which the development of such a system can proceed, through stages we have recommended in the transitional provisions of this chapter. A start can and should be made at once. District-level governments can be set up without major dislocation to the present administrative system. Apart from a certain number of changes in the law, the most urgent requirements for this task are dedication to the goals we have specified - dedication shared by public servants and politicians alike.

A flexible system of provincial government established in the Constitution

32. The diversity of our country is one of its greatest strengths. We are fortunate that Papua New Guinea does not have large ethnic groups competing for power at the national level, and that our cultural heritage is nonetheless so rich and varied.

33. We must ensure that our Constitution recognizes the value of our diverse national heritage, and fosters its development. We must not allow a dull uniformity to be imposed upon our people in the name of unity. But, we must also ensure that our country's Constitution preserves and expresses those values and aspirations which we all share.

34. The system of district-level governments we propose opens up new opportunities for our people to become involved in determining how their affairs should be conducted. In recommending that certain parts of it should be entrenched in the Constitution, we seek to provide reassurance for minority-groups fearful for their future.

35. We believe that the system of district-level governments recommended in this Chapter recognizes the diversity of our country, while fostering co-operation. It provides certain guarantees, entrenched in the Constitution, for those who may be anxious at majority rule. It gives expression to certain values which Papua New Guineans share. It is flexible in that it provides for local variation, and is capable of accommodating change. Above all, it creates opportunities for those who would use them.

36. We believe that the system of district-level governments we propose must meet present needs and provide for future aspirations. We have recommended that a number of statements of principle be included in the Constitution to make it quite clear that it should do so. And, to signify the break we believe must be made from the old colonial system of district administration, we recommend that the present districts be renamed "provinces", and that their governments should be known as "provincial governments".

Establishment in stages

37. We have already emphasized how important it is that the framework of the system of provincial government we propose should be established in the Constitution. We have also indicated that we believe that the system we favour cannot be set up at a single stroke. We therefore recommend that provision be made for provincial governments to be established in stages, and that the procedures through which they are first set up and then developed should be specified in the Constitution.

38. We envisage that provincial governments may be developed in three stages. But most of our recommendations are concerned with the third and last stage. It alone meets the real needs of our people.

39. We believe that Stage Three provincial governments should be established in all provinces as soon as possible. But, while arrangements are being made for the universal implementation of Stage Three, Stage One and Stage Two provincial governments should be set up - even before the Constitution comes into force.

40. In recommending that provision be made for provincial governments to be established in stages, the Committee is in no way implying that the various stages should be seen as long term alternatives to one another. The submissions we have received show quite clearly that our people envisage no alternative to what we have described as Stage Three provincial governments. We do not recommend that there should be any long term alternative to Stage Three. And, we warn against those who might seek to undermine our proposals by arguing - falsely - that the three stages we provide for can be seen as alternative answers to our people's needs.

41. Our recommendation that provision be made for the phased establishment of provincial governments must not be used as a blind for delay. It does not signify a willingness to wait, but an urgent commitment that a start be made at once to reorganise our country's system of government in accordance with our people's wishes.

42. We recognize that the implementation of our proposals may encounter administrative problems. That is why we have provided for a phased approach, which builds, where appropriate, upon existing Area Authorities. But, to ensure that the system of provincial governments we propose is established with a due sense of urgency, we recommend that the initiative for change should be constitutionally vested in provincial leaders. And, to make plain our intention that Stage Three provincial governments should be established throughout the country as soon as possible, we recommend that those provisions in the Constitution which deal with Stage One and Stage Two provincial governments should be transitional provisions.

The Provincial Assembly

43. We have demonstrated above how important it is that government should not only be decentralized but that it should also be brought under political control at the provincial level. We believe that it is vital that a body comprising directly elected representatives of the people should be established to exercise that control in each province. It should be called the "Provincial Assembly".

44. The Provincial Assembly should be the legislative and policy-making body for each provincial government. It should also have ultimate control over the performance of each provincial government's administrative responsibilities.

45. The Committee believes that the members of each Provincial Assembly should, in principle, be directly elected by the people. They should be answerable to the people at periodic elections.

46. At present, local government councils are represented on Area Authorities. The people of the various districts are only indirectly represented. The councillors who sit on Area Authorities were chosen to represent their wards at council level. They were not chosen by the people to represent them at district level.

47. A person who is an acceptable representative at one level of government may be quite unacceptable at another. Holders of political offices at each level of government should be separately elected. It is only as a purely interim measure that we recommend that the Provincial Assembly of a Stage One provincial government may be indirectly elected, like an Area Authority, until the first provincial elections after the Constitution comes into force are held.

48. The Constitution should, we believe, make general provision for the establishment of a directly elected Provincial Assembly in each province. The detailed arrangements should be spelt out in ordinary legislation.

49. The Constitution should provide a framework for provincial government. It should not be burdened with unnecessary detail. In proposing that the remaining recommendations in this section should be brought into effect through ordinary legislation, we hope that this framework will also remain flexible. The principles underlying our recommendations should be entrenched in the Constitution. But the National Parliament should have the power to vary the ways in which they are put into effect according to circumstance.

50. The number of representatives on each Provincial Assembly should be large enough to enable all major local groups to be adequately represented. It should not be so large that the assembly cannot function efficiently and with a minimum of formality.

51. The size we propose for each Provincial Assembly is one representative for every 10,000 people in the province, except that no Provincial Assembly should comprise fewer than 15 members. But, it must be possible, we believe, for the exact number of representatives in each assembly to vary somewhat from the standard so that provincial boundaries can be drawn to take account of local groupings (in accordance with the rules recommended in Chapter 6, "The Legislature"). The Committee recommends that the Electoral Commission provided for in Chapter 6 should be given the power to increase or decrease the number of electorates for each Provincial Assembly by a maximum of two.

Co-opted members

52. We have already stated our belief that holders of political office at different levels of government should be separately elected. We therefore see no reason to give members of the National Parliament the right to sit on Provincial Assemblies, nor to compel Provincial Assemblies to co-opt them. Members of the National Parliament are paid to act as full-time representatives of their people at the national level. Their energies ought not to be diverted into provincial politics, nor should Provincial Assemblies be required to give them a voice in a representative body to which they were not elected.

53. But, we do believe that communication and co-operation between political leaders at the national and provincial levels should be encouraged. We therefore recommend that each Provincial Assembly should be given the power to co-opt members of the National Parliament to sit and take part in debates in the assembly. However, members of the National Parliament should not be allowed to vote in Provincial Assemblies. They have no mandate from the people to do so.

54. Lest the members of a Provincial Assembly should seek to give greater voice to only one or a few of the members of the National Parliament from their province, we recommend that each Provincial Assembly should be allowed to choose only between co-opting all or none of the members of the National Parliament from the province.

55. Otherwise, there is no reason to allow for people to be co-opted to Provincial Assemblies. Our leaders are quite capable of making wise decision by themselves. They can consult whatever outside interests and experts they like. But, as the elected representatives of the people, they must accept responsibility for their own decisions. Members of Provincial Assemblies should therefore be able to discuss matters freely among themselves, unhindered by the interventions of outsiders. To provide for the co-option of other persons to membership of Provincial Assemblies would undermine the principle of representative government, which is their very basis.

Provincial elections

56. The Committee believes that provincial elections should be conducted in the same manner as elections for the National Parliament. We have given our reasons for the many procedures covered by this recommendation in Chapter 6, "The Legislature".

57. The qualifications of voters in provincial elections should be the same as those of voters in elections for the National Parliament. The qualifications for membership of a Provincial Assembly should be the same as those for the National Parliament, except that the deposit paid upon nomination by candidates in provincial elections should be only twenty-five dollars.

58. While we believe that the qualifications for membership of the National Parliament and Provincial Assemblies should be the same, we consider that it would be wrong to allow a person to be a full member of a Provincial Assembly and of the National Parliament at the same time. It is impossible for a single person to represent a national electorate fairly and to pay proper attention to the needs of a part of it (that is, the provincial electorate) in a separate representative assembly simultaneously. Members of the National Parliament are paid to represent their people on a full-time basis. They should therefore give their undivided attention to their official duties. We have also made provision in this Chapter for members of Provincial Electorates to receive adequate remuneration for performing their duties. We believe that it would be wrong to allow a person to hold, or to be paid for, both of these representative positions at the same time.

59. It would obviously be most economical if national and provincial elections were held together. But, if they were, then our belief that no person should hold political office at the national and provincial levels simultaneously, would require that no person should be able to nominate at more than one level.

60. It is important that the best qualified people be encouraged to make themselves available for election as the people's representatives at all levels of government. A candidate who does not receive enough support to gain election to the National Parliament may be quite capable of winning a seat in a Provincial Assembly. An able member of a Provincial Assembly may be reluctant to risk all by standing for national office. The Committee therefore recommends that provincial elections should be held three months after elections for the National Parliament. In that way, we hope that the most capable people in each area will be available for election at both levels of government, while it should still be possible for the administrative preparations for both elections to be carried out together.

61. While there are many advantages to be derived from tying provincial elections to national elections as we have proposed, members of a particular Provincial Assembly may be faced with difficulties during their term of office which can only be resolved through the calling of fresh elections. We therefore recommend that each provincial Assembly should be able to dissolve itself if a majority of its members agree to a motion to that effect. That motion should be signed by at least five members of the Provincial Assembly, and the mover should give at least one month's prior notice of his intention to move the motion. The term of a Provincial Assembly that has been elected following such a dissolution should come to an end when the next provincial elections are held three months after a general election for the National Parliament (unless the Provincial Assembly has been dissolved again).

62. Otherwise, each Provincial Assembly should have the power to regulate its own procedures, and to decide upon its own powers, privileges and immunities. We have recommended below that a model set of Standing Orders be prepared to assist individual Provincial Assemblies in devising their own. We also believe that the powers, privileges and immunities of Provincial Assemblies should not be greater than those enjoyed by the National Parliament.

The provincial executive

63. Each Provincial Assembly will need a small executive body, which we recommend should be called the "Provincial Council". Subject to the overriding authority of the Provincial Assembly, the Provincial Council should be responsible for supervising the development and implementation of the provincial government's policies and programmes. It should control the activities of the provincial government's staff, and oversee their work between meetings of the Provincial Assembly.

64. The Committee has given careful consideration to the optimal size of the Provincial Council, and especially to the desirability of limiting its membership. We believe that it should be kept reasonably small in size. We recommend that it should, at most, comprise no more than one-third of the membership of the Provincial Assembly.

65. In recommending that a limit be placed on the maximum size of each Provincial Council, the Committee intends to facilitate decision-making by the political executive of each province. The limit should also help to keep expense to a moderate level, for members of Provincial Councils will need to be properly recompensed for what will be relatively onerous duties. Our proposed limit on the size of each Provincial Council should ensure that the provincial executive cannot dominate the assembly numerically.

66. There should be a person at the head of each provincial government who presides over all of its activities and acts as its representative in dealings with the national government and other provincial governments. We do not believe that a public servant can properly play such a role. The head of the provincial government must, we believe, be a political figure, chosen by the members of the Provincial Assembly from among their own number or elected directly by the people of the province.

67. We believe that the election of a political head of each provincial government is an integral feature of the whole system of provincial government recommended in this Chapter. The functions to be performed by the head of each provincial government will be essentially political. The office itself will symbolize the new order of decentralized political control we favour.

68. The head of the provincial government should be called the "Premier" - the first person of the province. The Premier should be a member of both the Provincial Council and the Provincial Assembly.

69. The office of Premier should be provided for in the Constitution, as the Premiers will we envisage, have a major role to play at the national level, particularly in resolving disputes between governments. But the manner in which each Premier is to be chosen and can be removed from office should be spelt out in the documents that establish each provincial government.

70. The Premier should, as a rule, be chosen by the members of each Provincial Assembly from among their own number. That method of selection has received the greatest support in the submissions we have received. But, in one district in particular, strong support was expressed for the view that the Premier should be directly elected by the people of the province. We therefore recommend that provision should be made in the documents establishing a provincial government for direct election of the Premier if two-thirds of the members of the first directly elected Provincial Assembly in that province vote in favour of such a system. We leave it to individual Provincial Assemblies to determine for themselves how their Premiers should be removed from office.

71. Our belief in the importance of decentralized decision-making leads us to refer further questions to the provincial level. In particular, we recommend that each Provincial Assembly should be free to determine for itself how its Provincial Council should be organized.

72. In some provinces, the Provincial Assembly may decide that particular responsibility for a subject or group of subjects should be allocated to individual members of the Provincial Council. Under this system, the Provincial Council would be like the ministry at the national level.

73. In other provinces, it may be more appropriate to vest executive responsibility in the Provincial Council as a whole, and for it to supervise the day-to-day administration of the province by meeting together in committee.

74. We prefer to leave it to each Provincial Assembly to choose for itself between these two systems, and to determine how the members of the Provincial Council should be chosen and removed from office.

Salaries, allowances and other benefits attached to elective offices

75. The Premiers, the Provincial Councils, and the Provincial Assemblies of the various provinces will have great responsibilities placed upon them under the recommendations made in this Chapter. They will have to devote a great deal of time and energy to the performance of their duties. The Premiers at least will probably be engaged full-time at their official duties. They should all be adequately recompensed for their work, in accordance with the National Goals and Directive Principles specified in Chapter 2. The great trust that all of these office-holders will exercise on behalf of their people will also require that they be bound by the provisions of the Leadership Code recommended in Chapter 3.

76. In Chapter 6, "The Legislature", we discussed at length the problems to be encountered in setting the salaries and other conditions of members of he National Parliament. The same considerations apply in respect of members of Provincial Assemblies and their executives.

77. We therefore recommend that the salary and other conditions attached to the offices of Premier, member of the Provincial Council and member of the Provincial Assembly in each province should be set by the Parliamentary Salaries Tribunal provided for in Chapter 6, sitting with two independent persons chosen by the Provincial Assembly of the province concerned. These two independent persons should not be members of the National Parliament, nor of a Provincial Assembly; nor should they be employees of the national or provincial governments. Their presence should ensure that the salaries and conditions attached to the various political offices specified are set so as to take adequate account of local circumstance.

The distribution of powers and functions

78. The many hundreds of submissions we have received from all parts of the country have provided ample confirmation fo the view expressed in our First and Second Interim Reports that there is a strong ad widespread demand in Papua New Guinea that political power be decentralized. This has been made clear in the responses of discussion groups to a number of questions we asked them in order to ascertain where they felt primary responsibility for a range of governmental functions should lie. Their submissions indicate that they see an important role for provincial governments in relation to education, health, agriculture, public works, and other governmental activities. The thousands of people who addressed us at public meetings spoke to similar effect.

79. The Committee's deliberations on the distribution of powers and functions between the national government and provincial governments have been among the most difficult and time-consuming of all. But, the recommendations we make on this distribution are what give this entire Chapter meaning.

80. We cannot claim to have completed our work on this subject. We know what powers and functions our people want brought under the control of provincial government; and our own objectives are clear. But, even after our own lengthy and careful deliberations, and participation in a number of detailed discussions with government officers, we must nevertheless confess that the list of powers and functions which we believe should be ..... in each level of government requires some refinement. That refinement will require considerable technical expertise.

81. However, the recommended distribution of powers and functions, which we have appended to this Chapter, should not be left to legal or other technical experts to refine on their own. The distribution of powers and functions between various levels of government is a matter in which technical considerations often have a profound effect upon substance. That is why we have recommended that a special body comprising four members of this Committee should be appointed to work with expert consultants in preparing the legislation which gives effect to the recommendations in this Chapter. We must not allow the very substance of our recommendations to be dissolved in technical questions at the end of our work.

82. We have agreed very strongly for the decentralization of power to the provincial level. We must also do what we can to ensure that relations between provincial governments and local government bodies in their areas do not replicate those that have pertained between the national government and the districts under the colonial system we have inherited. Decentralization should not stop at the district or provincial level. The communities in which most of our people live, and the organizations through which they conduct their affairs, have an important role to play in our country's development.

83. If the system of provincial government we favour is to represent a real break from the recent past, then provincial governments will have to demonstrate genuine respect for the wishes and practices of the communities in their areas, as well as those of bodies exercising governmental functions at the local level.

84. We refer deliberately to "bodies exercising governmental functions at the local level" rather than local government councils. Frustration with the existing system, and a desire for self-expression, has led a number of groups of people in various parts of the country to organize themselves independently of the official local government system. Many of them deserve the same respect and protection as local government councils. We recommend that provision should be made for their official recognition.

85. But, while we do not wish to undermine the autonomy and operations of effectively functioning local government bodies, we believe that responsibility for government at the local level should, in principle, be vested in the next highest level of government, that is, in provincial governments. The national government should not deal directly with local government bodies, except with the consent of the relevant provincial governments. Provincial governments should assume responsibility for the organization and conduct of local government in their areas. The Constitution should protect the existing rights and powers actually exercised by local government bodies before the Constitution comes into force, but each Provincial Assembly should otherwise be ultimately responsible for government at the local level. In a small province, this may mean that existing local government bodies may combine with the provincial government.

86. Very few of our people have advocated the continuance of the present Area Authority system. They prefer to be governed by directly elected representatives at the district level. Many complaints have also been made, including some by members of Area Authorities, at the powerlessness of the present Area Authorities. That is why the distribution of powers and functions is of such great concern to us. The fate of the new system of decentralized political control recommended in this Chapter depends upon the powers and functions that are placed under the control of provincial governments. They must be substantial if our people are to have faith in the new system.

87. We have appended to this Chapter a proposed division of powers and functions between the national and provincial governments. It comprises three lists.

88. The 'A' list comprises those powers and functions over which the national government should, we believe, always retain final control. Responsibility for the conduct of our country's foreign relations and defence should be vested exclusively in the national government if the integrity of Papua New Guinea is to be safeguarded. The efficient and equitable development of the country requires that the national government retain the final power to make national policies concerning natural resources, health, education and public works, for example, although provision should still be made for provincial governments to participate meaningfully in policy-making on all of these subjects.

89. Responsibility for the National Executive Council and the National Parliament belongs, by definition, to the national government. Certain other institutions, for example the National Cultural Centre and the National Library, should also be national responsibilities, as their names would imply, but provincial governments should be encouraged to play a part in the establishment and operation of local branches. Certain aspects of financial policy, postal and telecommunications services, and the keeping of some records, are also properly national responsibilities. But, the complete 'A' list must be examined with care if the full ramifications of the proposed distribution of powers and functions are to be appreciated.

90. The need to safeguard the integrity of Papua New Guinea, to develop the country efficiently in the interests of its citizens, and to ensure that its international responsibilities are fulfilled, have all played a part in determining which powers and functions of government we have recommended for inclusion in the 'A' list,. So have the views of our people, and a proper sense of which services the national government ought itself to provide for the people of all provinces.

91. We believe that the national government should strive to the utmost to see that its responsibilities even in relation to powers and functions that appear in the 'A' list are exercised in close consultation with provincial and local authorities. The police, for example, should work in close accord with provincial governments, and the senior police officer in each province should be encouraged to consult regularly, and to co-ordinate his officers' activities, with the provincial government.

92. The 'C' list comprises those powers and functions which should be vested in provincial governments by the Constitution. This list represents the bare minimum of those powers and functions which we believe should be placed under the control of provincial governments if there is to be a real change from past practice. It is intended to provide a guarantee to all provincial governments that they will always have certain powers at their disposal, unless the Constitution is amended. The 'C' list is a gesture towards the future rather than the realization of our ultimate intentions.

93. The powers and functions in the 'C' list tend to concern matters that are mainly of provincial or local concern. Many of the powers and functions specified are the local aspects of national policies. They are the basis upon which the system of provincial government recommended in this Chapter should be founded, and from which it should grow.

94. The real key to the future of provincial government is the 'B' list. It comprises those powers and functions which may be transferred to provincial governments, either in part or in whole, by agreement between the governments concerned. The powers and functions on the 'B' list represent the grey area between the minimum guarantees provided by the 'C' list, and the fulfilment of our hope for a decentralized system of government with as much power as possible devolved upon provincial authorities.

95. It is impossible to prepare a complete list of governmental powers and functions. As society changes, so do the activities in which governments become involved. We do not regard the lists of powers and functions appended to this Chapter as definitive. The 'A' list provides a minimum framework for development within a unitary state. The 'C' list guarantees a minimal autonomy to provincial governments. The 'B' list is as accurate an approximation of the outstanding powers and functions of government in Papua New Guinea as we have been able to secure. It should properly comprise all of the powers and functions of government other than those in the 'A' and 'C' lists. It is, in intention, a residual list, and we recommend that final responsibility for all of the powers and functions listed in it, and for all otherwise unspecified powers and functions of government, should be vested in the national government. That responsibility should be delegated to, or devolved upon, provincial governments to the maximum practicable extent.

96. The descriptions of the 'A', 'B' and 'C' lists that appear in this narrative can do no more than set forth our intentions in rather general terms. There is no substitute for reading the lists themselves. They should, we believe, be embodied in a Schedule to the Constitution.

97. In proposing that responsibility for certain powers and functions should be vested in the national and provincial governments by the Constitution, we have not sought to erect barriers to co-operation between these two levels of government. It is, in fact, our firm belief that the national government and provincial governments must work closely together if the system of government proposed in this Chapter is to serve our people effectively.

98. We have already said that we believe that the national government should do what it can to provide opportunities for the involvement of provincial governments in law - and policy-making. We recommend that the Constitution should explicitly direct the national government to do so.

99. But, if that direction is to work effectively, then provincial governments must be required to exercise their law - and policy - making powers in accordance with the Constitution and with laws and policies that the national government may make under it. When responsibility for powers and functions that appear in the 'A' or 'B' list, or are otherwise residual to those in the 'C' list, are devolved upon, or delegated to, a provincial government, that provincial government should exercise its responsibility so that it does not come into conflict with national laws or policies.

100. There may also be occasions on which a provincial government may wish or agree to hand over some of its responsibilities to the national government. We believe that legal provision should be made for it to do so.

101. We recommend that the national government should be allowed to devolve or delegate responsibility for its powers and functions upon a provincial government, and for the reverse to take place, in accordance with law. But, care must be taken to prevent either level of government from casting its responsibilities upon the other without proper consultation or compensation. We therefore recommend that the agreement of the national government and the provincial government(s) involved be secured before either may delegate or devolve its responsibilities upon the other. If the governments concerned cannot agree, then the government which makes the delegation or devolution should be responsible for any consequential costs incurred by the government to which responsibility has been transferred.

102. This provision will obviously be very important when provincial governments are first established. If the transfer of powers and functions is to be more than mere show, then provincial governments must have access to adequate resources to exercise their responsibilities. The national government should ensure that provincial governments receive enough money to maintain existing services. It should be required to transfer control over revenue-sources or to make grants accordingly. Increases in such services should be met from the provincial governments' resources (including grants from the national government).

103. We have recommended above that the Constitution itself should vest responsibility for certain powers and functions in provincial governments, and that it should provide for and encourage further decentralization. We have not so far dealt with the ways in which the 'A' and 'C' lists, or the residual powers (including the 'B' list) vested in the national government, might be changed.

104. We have recommended in Chapter 6, "The Legislature", that the National Parliament, should have the power to alter the Constitution, and we have specified the procedures through which we believe that this power should be exercised. The Schedule containing the proposed distribution of powers and functions appended to this Chapter should be open to alteration in like manner.

105. While we believe that the power to alter the Constitution should be vested in the elected representatives of our people as a whole, we know from experience that politicians at the national level are unlikely to seek to transfer their powers to subordinate levels of government. That is why we have recommended that the 'C' list should be entrenched in the Constitution. It is also why the recommendations we make concerning alteration of this Schedule facilitate the placing of additional powers and functions under the control of provincial governments, and make it harder for those who would concentrate power at the centre to get their way.

106. The 'C' list is, as we have said, a minimum guarantee. We do not believe that it should be reduced. If it were easy to subtract powers and functions from the 'C' list, then it would not be an effective guarantee. The system of provincial governments we propose would be no more than a shell. We therefore recommend that powers and functions should be removed from the 'C' list only if three-quarters of the members of the National Parliament support a bill to that effect.

107. The 'A' list is unlikely to require substantial alteration. It provides a framework for national government, additional to the residual powers and functions of the national government. We therefore recommend that alterations to the 'A' list (whether additions or subtractions) should require a two-thirds majority in the National Parliament.

108. The real cutting-edge for decentralization beyond the 'C' list is likely to be the devolution or delegation of responsibility for powers and functions in the 'B' list. But, additions to the 'C' list should be encouraged. We therefore recommend that the support of a simple majority of the members of the National Parliament should be sufficient for a bill to add powers and functions to the 'C' list to pass.

109. Our recommendation that alterations to the Schedule should be made in the same way as alterations to the body of the Constitution should provide sufficient safeguard against the hasty passage of ill-considered bills.

110. By way of a footnote to the above, we should perhaps explain why we have not made specific provision for alteration of the 'B' list. The powers and functions on the 'B' list are, in essence, residual powers. They comprise those powers and functions which do not belong on the 'A' or 'C' lists. The potential range of the powers and functions in the 'B' list can only be increased if the 'A' or 'C' lists are altered; it can only be decreased by addition to either of those two lists. The preceding recommendations provide for all of these possibilities. There is therefore no need to make specific recommendations concerning alteration of the 'B' list.

Finance

111. Unless they have adequate funds at their disposal, provincial governments will be ineffective. Without final control over certain sources of revenue, they will be powerless.

112. Both the national government and provincial governments should have the financial resources to carry out their respective responsibilities. The allocation of revenue to both levels of government should be appropriate to the distribution of powers and functions. We believe that the Constitution should vest final control over certain revenue-raising powers in provincial governments. Without that control, provincial governments may be unable to undertake programmes of their own.

113. An overwhelming majority of the submissions made to us on "Central-Regional-Local Government Relations" expressed support for the view that provincial governments should be able to raise money by collecting taxes and licence fees from the people in their provinces. The Committee is of the same opinion, and has consulted a number of experts as to how it might best be put into effect. We believe that our recommendations on the allocation of revenue between the national government and provincial governments provide a workable framework for the system of provincial government recommended in this Chapter.

114. Certain major taxes should remain under the control of the national government if our country's economy is to be efficiently managed and its vital interests are to be properly secured. They comprise both direct and indirect taxes. They are taxes which are most appropriately levied on a nation-wide basis, and taxes which may be collected most effectively by the national government. We recommend that the power to raise the following taxes should be vested by the Constitution in the national government:

§ royalties on minerals, timber, fish, oil, natural gas, and private hydro-electric projects.

The power to raise all of these taxes should be exercised only in accordance with law, as we have recommended in Chapter 9, "Financial Control".

115. In addition to the major sources of revenue listed above, the national government should be responsible for the negotiation of foreign aid, foreign loans and medium - as well as long-term domestic loans. Papua New Guinea's economic relations with the outside world, and governmental indebtedness at all levels, should, in principle, remain under the ultimate control of the National Parliament.

116. The most important potential sources of government revenue in Papua New Guinea will therefore be under the control of the national government. Provincial governments will have to rely upon the national government for financial assistance if they are to carry out their responsibilities properly. This assistance may take a number of forms:

§ the unconditional allocation of shares of revenues raised by specified taxes; and

§ the unconditional allocation of shares of a pool of revenues raised by the national government.

The national government may also secure loans on behalf of provincial governments.

117. The Committee believes that grants made by the national government to provincial governments should, in principle, have as few conditions attached to them as necessary. And, the conditions attached to grants should never be unreasonable.

Sources of revenue under the control of provincial governments

118. The Committee has already emphasized how important it is that provincial governments should have revenue-raising powers of their own. The national government should provide provincial governments with adequate financial assistance for them to perform their lawful functions in a manner consistent with the National Goals and Directive Principles recommended in Chapter 2, but they should not be unduly dependent upon it. We recommend that authority to raise specified forms of taxation and to levy fees for certain kinds of licences should be vested in provincial governments by the Constitution.

119. The Committee has thought very carefully about the revenue-raising powers which might be placed under the final control of provincial governments. We believe that our recommendations provide a framework within which the spirit of self-reliance might be fostered in the provinces without contributing to the preservation or growth of inequalities between them. The implementation of our recommendations should also induce provincial governments to act in a financially responsible manner: under the proposed arrangements, they will make decisions concerning not only the expenditure of national government funds - both grants and loans - but the use of their own revenue-raising powers.

120. We recommend that the Constitution should give provincial governments the authority to impose and to collect the following taxes:

121. All of these taxes can be readily and cheaply collected by provincial governments. A decision to impose any of them - and a decision to impose a land tax or a tax upon the sale of agricultural produce in particular - would raise issues of considerable political sensitivity. We believe that such issues can best be resolved through close consultation between the body responsible for the imposition of these taxes and the people directly affected. All of these taxes should be levied in such a way that local economic and agricultural conditions can be taken into account. For these reasons, we recommend that final control over these sources of potential revenue should be vested in provincial governments.

122. In recommending that the power to levy particular taxes should be vested in either the national or provincial governments, the Committee does not mean to imply that any or all of these taxes should necessarily be imposed. Our recommendations are intended to provide a framework within which individual governments may exercise their legal powers according to the needs, wishes, and financial resources of their people. In our opinion, it would be inadvisable for a provincial government to impose a tax upon land. Land taxes are unacceptable to our people. But, insofar as government at any level should have the power to levy a land tax, we believe that it should be provincial government.

123. In addition to the power to raise revenue through levying the taxes listed above, provincial governments should have the power to issue, and to levy fees for:

124. Provincial governments should have no difficulty in administering these licensing powers. The fees raised should provide a small, but useful, income for provincial governments. The power to issue these licences should enable provincial governments to regulate a number of important activities in their areas. Armed with these licensing powers, provincial governments will be able to see that their people are adequately served by mobile traders, hotels, transport facilities, and theatres, for example, and that local entrepreneurs and joint ventures are provided with opportunities to participate equitably in the economic life and development of the provinces.

125. The Committee also recommends that fines and fees levied in provincial courts (the present "District Courts") should accrue to provincial governments. Court fees and fines should be imposed with due regard to local circumstance. The revenue they yield should be used so as to benefit the province in which each court sits.

126. The Committee has sought to secure the financial position of provincial governments by recommending that the power to raise the taxes and to levy the fees listed above should be vested in provincial governments by the Constitution. But, we are only too well aware of the ways in which the central governments of other countries have used their powers of taxation so as to restrict effective access by lower levels of government to sources of revenue that are legally theirs. We are concerned lest a similar situation be allowed to develop in Papua New Guinea. We therefore recommend that the Constitution should state quite directly that the revenue-raising powers of the national government should not be employed so as to limit the effective use by provincial governments of theirs.

127. Co-operation between governments is also important if their various taxes and fees are to be equitably and efficiently levied. The national government may need help from provincial governments to ensure that its taxes are properly administered at the local level. Provincial governments may need help from the national government, or from one another, in collecting taxes and fees that they have imposed. We recommend that the Constitution should say quite explicitly that the national government and provincial governments should co-operate in the collection of lawfully levied taxes.

Expenditure, investment and administration of provincial government funds

128. The Committee believes that provincial governments should be free to exercise their revenue-raising powers and to spend lawfully obtained funds as they may determine within the framework of the law. Provincial governments should keep their own accounts, prepare and implement their own budgets, and be responsible for recurrent expenditures incurred in the performance of their lawful functions. They should also have the power to undertake projects costing no more than $50,000 each on their own authority.

129. We have sought to safeguard the national government's interests in respect of the provinces' financial administration by recommending in Chapter 9, "Financial Control", that the Auditor-General's powers of inspection and audit should extend to provincial government accounts. The Auditor-General's reports should be tabled in the National Parliament, and should be examined by the Permanent Parliamentary Committee responsible for the scrutiny of public accounts. We also recommend that the national government should remain responsible for major capital projects (that is, projects that cost more than $150,000 each). Provincial governments should be responsible for capital projects of an intermediate size (that is, projects that cost between $50,000 and $150,000 each), but such projects should be undertaken only if the national government's approval has first been obtained.

130. Provincial governments should have the power to charge for goods they may supply and for services they may render. They should also be able to conduct commercial enterprises, and to make investments for profit.

131. Provincial governments may exercise these powers for a variety of purposes: to finance their lawful activities; to accumulate reserves; to foster local enterprises; or to provide services that would otherwise not be available. Again, we do not mean to imply that provincial governments should necessarily exercise any or all of these powers. Some provincial leaders may be reluctant to allow their provincial governments to do so. We recommend that these powers be placed at the disposal of provincial governments to use as they see fit and the law provides.

132. Provision should be made for the establishment by provincial governments of non-renewable resource trust funds. Money allocated to provincial governments from royalties raised by the national government on the exploitation of our country's non-renewable natural resources should be placed in trust in such funds. Provincial governments should receive compensation for the disturbances caused by mining, drilling, and other like projects in their areas. Non-renewable resource trust funds should be established to provide security for the future.

133. In line with the proposal in the preceding paragraph, the Committee recommends that a special grant should be made to Bougainville for the establishment of a non-renewable resource trust fund. The impact that the copper-mine has had upon Bougainville warrants the payment of substantial compensation.

National government grants

134. The Committee has made repeated reference earlier in this Chapter to the vital role that the national government will have to play in financing the activities of provincial governments. We have recommended that the authority to levy certain major direct and indirect taxes should be vested in the national government. We have proposed that the national government should be responsible for raising all foreign loans and for securing medium-term and long-term domestic loans for provincial governments. Foreign aid will pass, in the first instance, to the national government.

135. Provincial governments will not be able to finance all of their activities from the revenue sources which we have recommended should be placed under their control. We have not sought to make them financially self-sufficient. Provincial governments will have to rely upon the national government for financial assistance.

136. The Committee believes that the national government should make grants rather than loans to provincial governments. It should attach as few conditions to its grants as necessary. The national government should not seek to dominate, nor to manipulate, provincial governments. It should make grants to provincial governments to enable them to develop and carry out plans of their own.

137. The recurrent expenditures of provincial governments should generally be met, we believe, from funds made available in the form of unconditional grants from the national government. These grants should be allocated according to the following criteria:

§ conservation, restoration and improvement of the human and physical environment; and

138. Each provincial government should receive enough money to meet essential expenditures incurred in the performance of its lawful functions. Money for this purpose should be allocated to each province according to need. The needs of each province should be determined by the size of the population its government serves, and the relative costs involved in providing that population with essential services. These costs tend to vary with the geographical size of each province. It costs more per head to provide certain services to people in the Western District, for example, than to people in more densely settled areas. We therefore recommend that money granted to provincial governments on the basis of the needs criterion should be distributed according to the population and area of each province.

139. Provincial governments should receive grants from the national government, on the same basis as that specified in the preceding paragraph, to be used for minor capital projects. These are projects valued at no more than $50,000 each, which provincial governments should be able to undertake n their own authority.

140. Some parts of our country contribute more to government revenue than other parts. Proper regard should be paid to this fact when grants are made to the provinces. We recommend that money should be granted to provincial governments in accordance with the principle of derivation, that is, money should be returned to the various provinces in the same proportion as they have contributed to the national government's revenues. This principle should be invoked so as to take particular account of the royalties levied on natural resource projects, and of each province's contribution to revenue raised through the export of agricultural produce.

141. The national government's policies and activities may affect various parts of our country in different ways. Some provinces may have to bear a disproportionate share of the costs and burdens of national development. We believe that money should be allocated among the provinces to provide compensation for the differential impact of national government policies. Provinces which suffer certain disadvantages in contributing to the overall development of Papua New Guinea should receive compensation.

142. The Committee believes that all of our people should have equal access to government services. They should be able to share equally in the fruits of development. We believe that money should be redistributed among the provinces in order to assist provincial governments to make services as readily available to people in the less developed parts of the country as they are to the rest.

143. Indicators such as the following should be taken into account when money is allocated among the provinces according to the equalization criterion:

§ estimated retail sales of private trade stores and co-operative stores per head of population;

§ expenditure by the Public Works Department and local government bodies per head of population; and

144. These eight indicators are no more than proximate measures of development. They provide only a very rough guide to the relative need for money to be granted to particular provinces to equalize their development. We believe that they should be refined and adapted to the circumstances that are likely to prevail when the system of provincial government recommended in this Chapter is in full operation. We therefore recommend that the set of indicators outlined above should be referred for further consideration by the four-member body which we have proposed should oversee the preparation of legislation to give effect to the recommendations made in this Chapter.

145. Provision should be made for money to be granted to provincial governments to further the wellbeing of the nation as a whole. The inclusion of national welfare in the list of criteria for the allocation of grants to provincial governments would enable the national government to provide financial support for provincial governments in the national interest. The national welfare criteria should be invoked so that grants are made by the national government to assist provincial governments to play a full part in developing Papua New Guinea in accordance with the recommendations contained in this Report.

146. The human and physical environment of our country should be protected from unnecessary destruction. Money should be granted to provincial governments to assist them to conserve the beauty and wealth of our physical surroundings as well as the spiritual and bodily wellbeing of our people. Provincial governments should receive financial assistance to restore the environment when it is altered in undesirable ways, and to improve it in the interests of its various inhabitants. Money should be granted on the basis of this criterion to improve the quality of life in a wide range of circumstances: for example, to restore the ecological balance in areas in which mineral or timber resources have been exploited, or to improve living conditions for people on the fringes of new or expanding towns.

147. The Committee believes that there should be no decline in government services consequent upon the establishment of provincial governments. We therefore recommend that, if grants made to a provincial government according to the five preceding criteria do not yield enough revenue for services previously supplied by the national government to be maintained, then the provincial government should be given more money to meet the recurrent costs of such services. Money should be granted to provincial governments to ensure stability in the provision of government services following the introduction of the system of provincial government recommended in this Chapter.

148. The Committee believes that the national government should make unconditional grants of money to provincial governments according to the preceding criteria. But, the national government should also have the residual power to make both conditional and unconditional grants to provincial governments for any lawful purpose. The national government should be able to allocate money to further the interests of the country as a whole, and to assist in attaining its lawful objectives. We recommend that the Constitution should explicitly state that the national government has an unrestricted right to make additional grants to provincial governments, provided that it meets its lawful obligations and that the procedures recommended in Chapter 9, "Financial Control" are followed.

149. Money granted to provincial governments that has not been spent before the end of the financial year should remain under their control. It should not be held against grants made to them for the following financial year. We believe that it would be wrong to require provincial governments to return unspent grants to the national government. Such a requirement would probably encourage provincial governments to emulate the abandon with which government departments have tended to spend towards the close of the financial year, when they lose their unused allocations. We believe that provincial governments should be encouraged to economize. They should be allowed to keep control over any money left over at the end of each financial year.

Establishment of the National Fiscal Commission

150. It is inevitable that provincial governments will have to rely upon the national government for financial assistance. Unconditional grants for recurrent expenditures and minor capital projects will be the lifeblood of the system of provincial government recommended in this Chapter. We therefore recommend that the Constitution should set out the criteria according to which such grants should be made. We also recommend that the courts should have no jurisdiction over disputes concerning their application. They should be non-justiciable.

151. In Chapter 9, "Financial Control", we recommended that, except as otherwise provided in the Constitution, ultimate authority over both the raising and expenditure of all public monies should be vested in the National Parliament. We also recommend that the National Parliament should not be able to exercise this authority unless a measure has first been recommended by the National Executive Council. We do not believe that the allocation of grants to provincial governments should be exempted from either rule. We are, however, also of the opinion that the national government's control over the allocation of unconditional grants to provincial governments should be tempered. Provision should be made for views other than those of national politicians to be considered when proposed allocations are discussed by the National Executive Council and the National Parliament.

152. The Committee has looked carefully at the possibility that grants might be allocated by negotiation between the national government and provincial governments. We think that the views of provincial governments should be taken into account when proposed allocations are prepared for consideration by the National Parliament. But, experience in other countries leads us to believe that such a system would not be appropriate to Papua New Guinea, in that negotiations on such a vital issue as government finance tend to generate tensions, rivalries, and controversies between governments. Our recommendations are designed to facilitate co-operation between governments.

153. After careful consideration of the available options, the Committee has come to the conclusion that the Constitution should provide for the establishment of a body which should be known as the "National Fiscal Commission". The National Fiscal Commission should make recommendations every four years on the allocation of unconditional grants by the national government to provincial governments during the next four years. Its recommendations should be tabled in the National Parliament.

154. The National Fiscal Commission should comprise three members who should be appointed (or reappointed) for terms of four years by the National Executive Council following consultation with the Permanent Parliamentary Committee concerned with provincial government affairs. Two of the Commission's members should be persons with professional qualifications and experience in accountancy, economics, or law. A third member should be professionally qualified in one of the social sciences. These recommendations are designed to ensure that the members of the National Fiscal Commission are neither too strongly oriented towards the executive arm of the national government, nor antipathetic towards its objectives; and that they will take social as well as economic considerations into account in framing their recommendations. The National Fiscal Commission should be exempt from the provision in Chapter 14, "General", that the majority of the members of all collective bodies established in the Constitution should be citizens. The people chosen to become members of this Commission should be the best available from anywhere in the world. Other countries have found it useful to appoint neutral outsiders to similar bodies.

155. The Committee believes that the National Fiscal Commission's reports to the National Parliament are likely to play an important role in moderating inter-governmental conflicts over finance. They should provide a considered view of the demands made by individual provincial governments, and a counter to excessive centralism in the National Executive Council. They should enable the National Parliament to consider proposed allocations of unconditional grants to provincial governments on their merits. And, they will allow both the national government and provincial governments to plan ahead.

156. The National Fiscal Commission should be established as soon as possible, and in any case not later than the end of 1975.

Provincial Administration

157. Although this Chapter has so far been mainly concerned with the devolution of political authority to provincial governments, the Committee is aware that the effectiveness of these governments will depend to a substantial degree on their staffs. Their loyalty, competence and enthusiasm will play a large part in determining how the decisions and policies made by Provincial Assemblies, Provincial Councils and Premiers are given effect.

158. The system of district administration inherited from Australia was designed to rule rather than serve the people of Papua New Guinea. Administrative authority in all departments is far too centralized. Too little discretion is given to men and women in the field. Even quite trivial matters have to be referred 'up' to Konedobu for decision. Government officers outside headquarters receive no encouragement to exercise their initiative. They are unable to respond directly to local demand. Administrative activity is not properly co-ordinated in the districts. Each department tends to work on its own. We do not hold the present government of our country responsible for this situation. It has inherited a system that was devised for colonial rule. It is a system with a departmental structure more appropriate to the maintenance of law and order than to development.

159. The Committee believes that the establishment of the system of provincial government recommended in this Chapter will open up new opportunities for government officers. This system will provide a framework within which government activity in each province can be co-ordinated, and a fresh stimulus to development. Under our proposals, government officers will be answerable to the elected representatives of the people in the provinces where they serve. They will be able to work with and for them much more effectively than at present.

160. The Committee recognizes that the implementation of its recommendations will involve fundamental changes in the organization of the public services at all levels, and a reorientation of their officers. We believe that these changes are necessary in the interests of development and responsive government. They should be welcomed because of the likelihood that they will bring about more rational use of the skilled manpower in public employment, and thereby lead to a rise in morale. We believe that the courses which are presently taught in public service training institutions should be revised as soon as possible to take account of our recommendations. Immediate steps should be taken to prepare present public servants for their new roles by disbanding the regional headquarters of national government departments, posting more government officers to rural areas, and devolving increased administrative authority upon them.

161. The Committee is only too well aware of the kinds of criticism that are likely to be levelled at our proposals, particularly by adherents of the status quo. But, we believe that it would be better to make major changes now than to postpone them even for a few years. A complete reorganization now would enable the public services to take on a 'new look', and create the climate for an improvement in their relations with the public and politicians. Certain changes are almost inescapable: present administrative arrangements are simply unsuitable for a system of provincial government. We believe that the total disruption to government is likely to be greater if only piecemeal changes are to be made with the introduction of provincial governments, and major changes are left till later. A complete re-organization now would make it possible for Papua New Guineans in government employment to be introduced to the recommended system as they take up their duties. It would avoid the need to retrain them following localization.

162. We have already said that provincial governments will have to have loyal and competent staffs if decisions made by their political leaders are to have effect. The Committee has examined a wide variety of possible arrangements under which such staffs might be employed and has come to the conclusion that they should comprise both public officers (as defined in Chapter 12, "The Public Services") as well as people directly employed by provincial governments themselves.

163. The Committee has given careful consideration to the possibility that individual provincial governments might have their own public services. Such an arrangement would probably prove to be very expensive. It would also limit the job mobility and promotion prospects of provincial government employees. The additional loyalty such employees would be likely to feel towards the provincial governments for which they work might well be offset by a corresponding lack of commitment to Papua New Guinea as a whole. We therefore recommend against the establishment of separate provincial public services. But, we do recommend that provincial governments should be able to supplement staff made available to them from among members of the national public services by hiring personnel of their own. Provincial governments should have the power to recruit their own experts; to employ people who might not be willing to join the national public services lest they be posted to other parts of the country; and to appoint their own people to offices for which they feel that total loyalty to the provincial government is absolutely essential.

164. The Committee believes that provincial governments should be represented on any board or committee of the Public Services Commission which deliberates on the appointment, promotion, transfer, discipline or dismissal of public officers in their employ. We recommend that the transfer of government officers between provinces should be kept to a minimum. These recommendations are made in the hope that they will provide encouragement for all government employees to work loyally in furthering the interests of the provinces in which they are employed, and to pursue their careers in the service of provincial governments.

Co-ordination : agency functions and the Provincial Secretary

165. The most important administrative changes which should accompany the establishment of provincial governments flow from the Committee's proposal that provincial governments should become focal points for the co-ordination of all government activity in the provinces. We recommend that provincial governments should act as agents of the national government in relation to matters over which they do not have final control. Unless the national government provides otherwise, all of the public officers in each province should work for the provincial government. The provincial government should be responsible for ensuring that the lawfully made policies of the national government are carried out.

166. The Committee believes that provincial governments should be able to play a major role in co-ordinating government activity in their areas without having control over all of the policies they administer. The national government should be prepared to forego detailed control over the administration of its policies. Provincial governments should be required by the Constitution to see that lawful directives made by the national government are obeyed. They should be responsible for the day-to-day administration of the provinces. Such an arrangement would obviously require a high degree of co-operation between governments if it is to function at all satisfactorily.

167. The Committee believes that, as a general rule, all government activity in each of the provinces should be placed under the administrative control of the provincial government, and that all public officers should be required to work for it. We recognize that such an arrangement may not be practicable in the case of certain relatively self-contained institutions of national importance, and we recommend that provision be made for bodies such as units of the Defence Force, universities, teachers' colleges and specified international aerodromes to be made exempt from the rule. The national government should deal directly with exempt bodies. It should also have the power to make exceptions in respect of public officers performing specified functions over which the national government has final power. Provision should be made for agencies to be withdrawn from provincial governments.

168. The Committee believes that almost every aspect of domestic government activity can be brought under the administrative control of provincial governments as we have recommended. Once an agency has been delegated to a provincial government, the national government should act directly only in circumstances of extreme urgency, or after it has failed to resolve a dispute with a provincial government which has obstructed the execution of its lawful directives.

169. Although they may have to rely upon provincial governments for ancillary services such as accommodation and transport, constitutional office-holders (who are specified in Chapter 14, "General") should be as independent of direction and control by provincial governments as they are in respect of the national government.

170. The Committee envisages that the linchpin of its proposals concerning the co-ordination of government activity in each province will be the holder of the office of Provincial Secretary. The Provincial Secretary should be directly answerable to the Provincial Council for the activities of all public servants in each province. He should supervise the implementation of the lawful decisions of the Provincial Assembly, the Provincial Council and the Premier. He should be responsible for the administration of public funds in the province according to law. Provision should be made for the appointment of suitably qualified staff, including a Planning Officer, a Financial Officer, a Personnel Officer and such other assistants as may be appropriate, to assist him in performing his duties.

171. All public officers and all members of the provincial government's staff should be made responsible to the Provincial Secretary for the efficient performance of their lawful duties. He should be the supreme disciplinary authority in the province in respect of public service matters. He should have at least the same power over members of the provincial government's staff as a Departmental Head has in relation to officers of a national government department. The Provincial Secretary should have the power to summon the heads of all governments departments in the province - even those who may not come under the administrative control of the provincial government - to meetings at which common problems and programmes might be discussed.

172. Provincial Secretaries will play an important part in determining how the system of provincial government recommended in this Chapter actually operates. That is why we have recommended that they be given such wide-ranging powers. And why we also recommend that they should receive the same remuneration as the heads of major government departments.

173. The Provincial Secretary will play a pivotal role in co-ordination activities for which the provincial government is responsible with those over which the national government retains control. He should therefore be acceptable to both governments. We recommend that the Provincial Secretary be chosen by agreement between the National Executive Council and the Provincial Council. He should also be transferred by agreement between them. But, to ensure that the Provincial Secretary remains loyal to the body to which he is directly responsible, provision should be made for the Provincial Council to remove him from office.

174. It is important that the Provincial Secretary be the best person available for the job. Vacancies in the office of Provincial Secretary should be publicly advertised. Both public officers as well as other persons should be eligible to be chosen.

175. A person chosen for the position of Provincial Secretary should, if he is not one already, become a public officer upon taking up his appointment. This is necessary so that he can be given the public service powers listed above.

Implications of administrative re-organisation for national government departments

176. The administrative re-organisation which should accompany the establishment of the system of provincial government recommended in this Chapter ought not to be confined to the provinces. It has important implications for the entire machinery of government in Papua New Guinea.

177. Under the arrangement proposed in this Chapter, national government departments will cease to be directly responsible for the execution of a wide range of national government policies. Unless otherwise provided, their personnel will work for provincial governments. They will be responsible to the Provincial Secretary in relation to all but technical and professional matters, and through him to the Provincial Council and the Provincial Assembly in each province. The national government should work through provincial governments. Provincial governments should act as agents of the national government in relation to matters over which it has final control. They should be responsible for seeing that the national government's policies are put into effect.

178. The Committee believes that responsibility for overseeing the implementation of the proposals contained in this Chapter as well as the continuing conduct of the national government's relations with provincial governments should be assigned to a senior minister. The minister responsible for provincial government affairs should assume a central role in co-ordinating the national government's approach towards provincial governments. He should become a focal point for communications between governments. The relevant minister should be a person who is formally committed to the principles upon which the recommendations made in this Chapter are based, and with sufficient status to ensure that these principles are adhered to in practice by other ministers.

179. The implementation of the Committee's recommendations will have a far reaching effect upon national government departments. The functions they have hitherto performed should be changed in fundamental ways. Under the proposed system, they will tend to be limited to providing guidance to provincial governments on technical and professional matters; to training personnel; to planning and implementing national programmes and projects; and to advising both the national government and provincial governments on overall national strategy and policy in relation to their areas of responsibility. They will generally not be directly responsible for carrying out government policies in the field.

180. So many of the present responsibilities of national government departments will be delegated to, or devolved upon, provincial governments under the proposed system, that the size of most departmental headquarters can, and should be reduced. Consideration should therefore be given to the re-allocation of responsibilities among departments, and a reduction in their number and size. Staff should be released from national and regional headquarters of government departments to take up the enhanced responsibilities that will be placed upon heads of departments at provincial level. Careful thought should be given to the proposal that responsibility for all rural development activities might be given to a single department.

181. The Committee believes that its proposals are likely to produce a dramatic increase in the economy, efficiency, and enthusiasm with which our country is administered. They will provide new challenges and opportunities for Papua New Guineans in public employment, particularly those in the provinces. But, important though we believe our recommendations concerning the need for administrative re-organisation to be, we think it appropriate to repeat the warning of Professors Tordoff and Watts that -

"only firm political direction can enable the public servant to break his inherited bureaucratic strangle-hold and become development-orientated".

Consultation between governments

182. Throughout this Chapter, the Committee has placed considerable stress upon the need for the national government and provincial governments to consult and co-operate with one another. We have sought, in our recommendations to provide a framework for governmental inter-dependence; one which secures the autonomy of provincial governments without undermining the unity of our nation. The same themes and objectives have guided our attempts to devise means through which the policies of the national government and provincial governments can be co-ordinated by their political leaders.

183. We have already suggested that one of the main tasks of each Provincial Premier should be to represent the government of his province in its dealings with the national government and other provincial governments. We intend that he should do so in more than a formal sense. We recommend that each Provincial Premier should have the right to attend meetings of the National Executive Council at which important matters directly affecting his province are discussed. The minister responsible for provincial government affairs - who should be generally responsible for facilitating communications between governments - should advise a premier in advance when such matters are to be discussed by the National Executive Council.

184. The Committee believes that thee is a need for a forum in which the Prime Minister and the Provincial Premiers (or their respective representatives) can meet periodically to discuss matters of common concern. We recommend that the Constitution should make explicit provision for such a body and that it should meet at least once a year. We recommend that it be called the "Premiers' Council".

185. The Committee envisages that discussions in the Premiers' Council will be both wide ranging and informal. We anticipate that the Council will develop into a major forum for review by the leaders of the participating governments of the entire system of provincial government recommended in this Chapter. It will provide opportunities for the exchange of ideas between governments, and in particular for bringing the needs, hopes and grievances of provincial governments to the attention of national politicians. We recommend that the Premiers' Council should have the power to make direct reports (including recommendations for alteration of the provincial government system) to the National Executive Council and the National Parliament. It should also play a role in the resolution of inter-governmental disputes.

186. The Prime Minister should have the power to call meetings of the Premiers' Council, provided that at least three weeks notice (or such other notice as may be required by law) is given. He should be required to do so within a month of receiving a written request for a meeting bearing the signatures of at least three provincial premiers.

Constitution of provinces

187. The Committee has explained in considerable detail - in both our First and Second Interim Reports and earlier in this Chapter - why provincial governments should be established on a district basis. We have also said that the constitutional framework for provincial governments should be flexible: that it should provide for change and variation in the circumstances and desires of the people of the various provinces. We therefore recommend that the Constitution should provide for the creation of new provinces, the amalgamation of existing provinces, and the alteration of provincial boundaries.

188. Existing district boundaries were drawn so as to meet the administrative requirements of a highly centralized colonial government. They acquired political significance later. This does not mean that we should ignore them, as some of our critics have implied. The existing districts are of manifest importance to our people, as submissions made to the Committee have shown. We believe hat district boundaries should be left intact when provincial governments are established, and that future changes to them should not be arbitrarily imposed. Provincial boundaries should henceforth be changed through a process in which elected leaders at both the provincial and national level of government have a say.

189. In Chapter 6, "The Legislature", the Committee made provision for the making of minor changes to provincial boundaries to bring national and provincial electoral boundaries into line. We are concerned here with the creation, amalgamation and other alterations, of provincial boundaries.

190. The Committee believes that the National Parliament should have the power to create, amalgamate, and otherwise alter the boundaries of, provinces. The Constitution should ensure that local hopes, needs and affiliation should be taken into account. It should require that a bill to alter provincial boundaries be circulated to the provincial governments directly affected by it at least three months before it is presented in the National Parliament. In the case of a bill moved by a minister, the views of affected governments should be sought and incorporated in a submission to the National Executive Council before the bill is presented to parliament. The support of an absolute majority of the members of the National Parliament should be required for a bill to alter provincial boundaries to become law.

191. The Committee believes that it would be unwise for the National Parliament to agree to a bill to divide or amalgamate provinces or otherwise alter provincial boundaries without the agreement of the provincial assemblies of the provinces affected but, we recognize that it may not be possible to secure their agreement. We recommend that a bill to create a new province to amalgamate existing provinces, or otherwise alter provincial boundaries, should not become law unless it receives the support of a majority of the members of the Provincial Assemblies in all affected provinces. In the case of a bill which affects more than one province and does not receive the support of all of the Provincial Assemblies concerned, the bill should be treated as the subject of a dispute between governments. If the dispute cannot be resolved through the procedures provided for the resolution of inter-governmental disputes, then the National Parliament should have the power to legislate on its own, provided that the bill is supported by an absolute majority of members.

192. The Committee believes that the procedures we have specified above provide vital safeguards for provincial governments, without preventing change. The many hundreds of submissions we have received indicate that our people want provincial governments to be set up on a district basis. Our proposals leave open the possibility that individual provinces might be divided into smaller units, each with its own provincial government, or combined to form larger units. The only ways in which we have qualified either possibility is by insisting that all of the governments directly affected by boundary changes - the National Government as well as provincial governments - should be consulted before such changes can be made, and, if the change affects a single province, the provincial assembly of that province must support the change by a resolution passed by a simple majority.

193. The Committee recommends that the same general principles should be followed in respect of the naming and re-naming of the provinces, and legislation that provides for the making and alteration of the documents which establish provincial government. In both cases, the proposed measures should be circulated to the provincial assemblies affected at least three months before presentation in the National Parliament and the support of an absolute majority of the members of parliament should be required for such bill to become law. However, the National Parliament should not exercise its power to give a name to a province unless the provincial assembly of the province concerned has first passed a motion proposing a name. Legislation that provides for the making and alteration of the documents that establish provincial governments (which documents should specify, for example, the procedures for election and removal of each Provincial Council and Premier) make provision for both the National Government and provincial governments to take the initiative in proposing alterations to such documents.

Resolution of inter-governmental disputes

194. Despite the emphasis that we have placed upon the need for co-operation and consultation between governments, and the ways in which we have sought to facilitate joint policy making and action, the Committee recognizes that inter-governmental disputes will almost inevitably arise. Provincial governments may disagree or decline to co-operate with one another, or with the national government.

195. If a matter over which two or more governments differ cannot be resolved by negotiation, then it should be referred for mediation by an independent body comprising one or more persons who are acceptable to the parties of the dispute. If the disputants cannot agree upon the composition of such a body, or if the mediating body fails to find a solution, then they should be free to refer the dispute to the Premiers' Council. The Premiers' Council should determine whether to try to resolve the dispute itself, or to appoint a body to mediate on its behalf. We have already recommended that the Prime Minister should have the power to call meetings of the Premiers' Council. We have also proposed that he be required to do so upon receipt of a written request signed by at least three provincial premiers. We believe that these recommendations should ensure that the Premiers' Council will meet within a reasonable time to discuss serious disputes. In the case of a dispute which involves only two provinces, the Prime Minister or another premier would have to be convinced that the dispute was important enough to warrant a special meeting of the Premiers' Council. Provincial governments should be encouraged to resolve their own differences.

196. The Committee believes that disputes between governments can best be resolved by political means. We believe that court action tends to produce unnecessarily rigid and legalistic solution to what are often essentially political disputes. Unlike the parties to inter-governmental disputes, the courts are not directly answerable to the people. It is for these reasons that we have recommended that some of the most important constitutional provisions concerning the operation of the provincial government system should not be justiciable. It is also why we believe that the national government and provincial governments should have recourse to the courts only after the procedures outlined above have been employed and only if the dispute concerns a matter of law. The Supreme Court should hear inter-governmental disputes that concern matters of law.

197. The foregoing recommendations should not apply in respect of disputes other than inter-governmental disputes. Individuals or groups who seek to take action or to protect themselves against the National Government or a provincial government should take direct action through the courts, the Ombudsman Commission, their elected representatives, or such other means as are provided, as may be appropriate in each case. The courts should guard against governments that might seek to circumvent the recommended procedures for resolving inter-governmental disputes by acting through individual persons or groups.

Suspension of Provincial government

198. Throughout our deliberations on "central - regional - local - government relations", the Committee has sought to secure the autonomy of provincial government without undermining the role of the national government as guardian of the overall national interest. This objective has not been easy to obtain and we are aware that situations might arise in which it may become impossible. We believe that the Constitution should make specific provision for such situations. It should define when and how provincial governments might be suspended by the national government.

199. The Committee believes that provincial governments should be suspended only in the most serious of circumstances, and even then as a last resort. The suspension of a provincial government would represent at least a temporary breakdown in the system of government recommended in this Chapter. Care should be taken to see that it also provides an opportunity for a fresh start to be made in any province in which the provincial government has been suspended.

200. The Committee recommends that the National Executive Council should have the power to suspend a provincial government when -

§ there is widespread corruption among elected officials or government employees;

§ there has been deliberate and prolonged frustration of lawfully made national government directives;

§ a State of Emergency has been declared in accordance with the Constitution; or

§ a majority of the members of a Provincial Assembly voted that the government which they control should be suspended.

201. The national government should take over all of the responsibilities of a suspended provincial government with the aim of restoring it as soon as possible. The Minister responsible for provincial government affairs should make a full report to the National Parliament at its next meeting n the circumstances which prompted the suspension of a provincial government. Fresh elections should be called within six months of the suspension of a provincial government, and should be held within the following three months.

202. The National Parliament should have the power to extend the period for which a provincial government is suspended by six months at a time, provided that an absolute majority of members support a motion to that effect. If the period of suspension is extended, the Minister responsible for provincial government affairs should make a full report to each successive meeting of the National Parliament on the state of affairs in the province until such time as he is able to report that the provincial government concerned has been re-established.

203. The Committee believes that provincial governments should be suspended in only the most serious of circumstances. But, the national government should exercise its power before the orderly development and constitutional government of the country as a whole are imperilled.

204. The national government should do all that it can to prevent circumstances requiring the suspension of a government from arising. Every effort should be made to restore a province in which the government has been suspended to normal as soon as possible.

Establishment of Provincial governments

205. The Committee has emphasised repeatedly that we believe that provincial governments should be set up throughout Papua New Guinea without undue delay. The government should make legal provision for provincial governments to be established in a manner consistent with our recommendations even before the Constitution comes into force.

206. The system of provincial government recommended in this Chapter is designed to meet the needs of our people. It would be quite inconsistent with this design for provincial governments to be imposed upon them. Provincial governments should be established and developed through specified stages as their representatives at district or provincial level may determine.

207. We repeat that the provision of a phased approach should not be used as a pretext for delaying implementation of the final form of provincial government that we have recommended above. Area Authorities should not be regarded as satisfactory alternatives to provincial governments. Our people do not regard them in this way. Stage One and Stage Two are not long term alternatives to Stage Three provincial governments. And, to emphasise this point, we recommend that all references to Area Authorities, Stage One and Stage Two provincial governments should be removed from the law as soon as Stage Three provincial governments have been established in all parts of our country. We believe that Papua New Guinea should have a fully decentralised system of unitary government. There should be no turning back from our goal.

208. We have already recommended that provincial governments should be set up and developed as the representative of the people in the provinces may decide. They should build on from the present system of government at district level. We recommend that Area Authorities should have the power to decide when provincial government should be established in their districts, and what stage of government it should be. The Provincial Assemblies in provinces with Stage One or Stage Two provincial governments should have the power to initiate and advance to Stage Two or Three. In all of these cases, the support of an absolute majority of the members of the Area Authority or Provincial Assembly should be required before a motion to advance is given legal effect.

209. A request made by an Area Authority or a Provincial Assembly for establishment or development of a provincial government should be forwarded to the Minister responsible for Provincial Government affairs, who should inform the National Executive Council of its contents. A request should be put into effect as soon as possible. The Minister responsible for Provincial Government affairs should make a report to the National Parliament on the implementation of requests to establish or re-establish provincial governments. He should continue to report to each successive meeting of the National Parliament on progress made in implementing every such request he receives. The Minister should provide detailed information of any cause of delay. Districts without Area Authorities should move directly to the establishment of Stage Two provincial governments. The Committee's sole purpose in providing for the establishment of Stage One governments has been to facilitate the transition from the Area Authority system to the system of provincial government recommended earlier in this Chapter. There is no point in establishing Stage One provincial governments in districts without Area Authorities: they would only have to be reorganized later. It would be better to begin with a system that is organized in a manner consistent with the final objective.

210. The Committee has already recommended that the Constitution should vest responsibility for government at the local level in provincial governments. But, the rights and powers of existing local government bodies should receive some protection. We recommend that the Constitution should provide that local government bodies should retain control over those powers and functions which they had actually exercised power at the establishment of provincial government. They should also be allowed to continue to draw revenue from those sources from which they had actually derived it, except that the national government should cease to make direct grants of money to local government bodies. The national government should make grants to provincial governments in accordance with our recommendations. Provincial governments should provide such financial assistance that may be appropriate to local government bodies.

211. The Committee is very conscious of the wide gap that has hitherto existed between the powers and functions vested in law in local government councils, and those that they were actually able to exercise. That is why we have recommended that local government bodies should retain control over only those powers and functions which really were theirs. All other powers and functions of government at the local level should be placed under the control of provincial governments.

212. The Committee believes that provision should be made for local government bodies to transfer their powers, functions and sources of revenue to provincial governments by negotiation. Provincial governments should have the power to take over any or all of the powers and functions of local government bodies on their own authority, provided that two-thirds of the members of the Provincial Assembly in the province concerned agree to a motion to that effect. A three-quarters majority should be required for a Provincial Assembly to abolish a pre-existing local government body.

213. The preceding recommendations are designed to smooth the introduction of a new tier of representative government between the national government and local government bodies. They are intended to provide protection for existing local government bodies, and to facilitate their integration into the provincial government system. We believe that the national government has certain obligations towards existing local government bodies. We have tried to ensure that they will be met. But, in principle, we believe that local government should be organized to meet local needs. That is why we recommend that responsibility for government at the local level should henceforth be vested in provincial governments.

214. Provincial government should provide for the establishment, re-establishment and organization of local government in their areas. They should determine the powers, functions, staff and financial resources that should be placed under the control of local government bodies.

215. The Committee believes that local government has a most important role to play in the overall government and development of our country. Provincial governments should be encouraged to respect and decentralise power upon local government bodies. We recommend that control over local government should itself be decentralized. That is why our Report does not deal in detail with the organization, powers and conduct of government at the local level.

Interim Provincial Government

216. The Committee's recommendation that provision be made for provincial governments to be established in stages should not be taken to mean that we believe that each province should have to begin with a Stage One government and pass through Stage Two to Stage Three. We think it likely that a number of Area Authorities will opt immediately for Stage Two provincial governments, and we recommend that those provinces without Area Authorities should move immediately to Stage Two. Our recommendations leave open the possibility that some provinces might move directly from Stage One to Stage Three. We believe that provincial government should be established and ..... representatives of the people at provincial level decide is appropriate.

217. The Committee recommends that a Stage One provincial government should be known as an "Interim Provincial Government" and its controlling body as an "Interim Provincial Assembly", to emphasise the purely transitional nature of Stage One arrangements. As in the case of Stage Three provincial governments, the Committee has sought to frame its recommendations to take account of change in, and variation between, the circumstances of individual provinces. The procedures through which provincial governments are established should, we believe, be guaranteed in the circumstances. But, the precise arrangements for Stage One and Stage Two provincial governments should remain flexible: they should be provided for by ordinary legislation.

218. We repeat that our sole purpose in providing for the establishment of Stage One provincial governments is to facilitate a smooth transition from the Area Authority system to the provincial government system recommended in this Chapter. We recommend that the members of each Interim Provincial Assembly should be chosen by bodies exercising governmental functions at the local level, in the same way as members of Area Authorities are presently chosen. Provision should also be made for the co-option of all of the members of the National Parliament from the province. Co-opted members should not have the right to vote in the Assembly.

219. The proposed composition of Interim Provincial Assemblies does not conform to that which we have recommended for Stage Two and Stage Three Provincial Assemblies, but it does provide continuity from the Area Authority system. In order to prevent those indirectly elected bodies from becoming entrenched, we recommend that Interim Provincial Assemblies should be directly elected at the next provincial elections after they are established (that is, three months after the next general election for the National Parliament). And, in order to provide some encouragement for them to move to direct elections as soon as possible, we recommend that certain powers and functions should not be transferred to provincial governments until after they have passed from Stage One to Stage Two or Stage Three.

220. The head of the Interim Provincial Government is to be known as the "Chairman" to distinguish him from the head of a Stage Two or Stage Three Provincial government. For so long as the members of the Interim Provincial Assembly are not directly elected by the people, the Chairman would have to be chosen by the members of the Assembly from among their own number. But, the members of a directly elected Interim Provincial Assembly would determine for themselves how their Chairman should be chosen and removed from office, and their decision should be incorporated in the document that establishes each provincial government.

221. The executive body of a Stage One provincial government should be known as the "Interim Provincial Council". The recommendations we have made in respect of provincial councils would also apply to Interim Provincial Councils.

222. The Committee recommends that Interim Provincial Governments should be responsible for the government of their provinces at the local level, and for those powers and functions which appear in the "C" list of the schedule appended to this Report. They should have the power to make laws and to determine policies within their areas of responsibility, but they would not be empowered to negotiate for the transfer of authority over those powers and functions in the "B" list of the schedule. The Committee believes that the leaders of Interim Provincial Governments will almost certain wish to assume responsibility for powers and functions on the "B" list on behalf of their people. We hope that this desire will act as an inducement to move to Stage Two.

223. Interim Provincial Governments would have the power to undertake projects that cost no more than $50,000 each, and they should receive grants from the government for that purpose. They should have their own budgets, and be responsible for as much of their own accounting and recurrent expenditure as practicable. And, they would negotiate with the national government for the transfer of control over those revenue-raising powers which we have recommended should be vested in Stage Three provincial governments by the Constitution. The policy to issue, and levy fees for, mobile trading licences, liquor licences, motor vehicle and drivers' licences and registration, and entertainment licences would be transferred to Interim Provincial Governments at the request of their assemblies.

224. Both Stage One and Stage Two provincial governments should be treated as self-accounting departments of the national government until the system whereby direct grants of money may be made to them by the national government on the advice of the National Fiscal Commission can be brought into effect. The Committee appreciates that the necessary financial arrangements for this to happen may take some time to ....., we hold very strongly that the National Fiscal Commission should be established as soon as possible and certainly not later than the end of 1975.

225. Members of Interim Provincial Assemblies (including the Chairman and the members of each Interim Council) are unlikely to have to work more than part-time at their official duties. They should receive only sitting allowances for time spent in performing these duties. These allowances should be determined by the Parliamentary Salaries Tribunal provided for in Chapter 6, "The Legislature".

226. Each Interim Provincial Assembly should have its own Executive Officer who would be appointed in the same manner as we have provided in respect of the office of Provincial Secretary. A person who has been recruited from outside public employment should become a public officer upon taking up an appointment as Executive Officer. Executive Officers would be removed from office or transferred between provinces in the same manner as we have recommended in the case of Provincial Secretaries.

227. The Committee believes that there will be a need for a public officer in each province to be designated as the Senior public officer for that province. He should be called the "Provincial Commissioner". The Provincial Commissioner should be a member of a separate department of the national government which should be under the control of a Senior Minister.

228. The Provincial Commissioner should be responsible for co-ordinating the administration of the province. He should have the power to call meetings of the heads of all government departments and he should chair them. He should have the same disciplinary powers over all public officers in the province as a Departmental Head has over officers of a national government department, except in relation to technical and professional matters.

229. The Committee anticipates that the political leaders of Interim Provincial Governments may encounter some difficulties in ensuring that the provincial administration co-ordinates its programmes with theirs. This is especially likely to be the case early in the life of these governments. We therefore recommend that the Provincial Commissioner should participate (without a vote) in meetings of the Interim Provincial Assembly, as the Assembly may determine. There should also be a Provincial Development Committee comprising the Interim Provincial Council and the Heads of such Departments in the provinces as the Interim Provincial Council may determine. The Provincial Development Committee should be responsible for preparing plans for the development or improvement of the province. It should be chaired by the Provincial Commissioner until such time as the Chairman of the Interim Provincial Government wishes to assume the duties of Chairman of the Provincial Development Committee too.

230. Interim Provincial Governments should not be entitled to a direct say in the appointment, promotion, transfer, discipline or dismissal of public officers in their respective provinces. But, the national government would be unwise to go against any strongly held views they might have on such matters.

231. The Committee recommends that its proposals concerning the Provincial Assemblies, Provincial Councils, and Premiers of Stage Three Provincial Governments should apply at Stage Two. Stage Two Provincial Governments should have all of the powers and functions of Interim Provincial Governments. They should negotiate with the national government for the transfer of responsibility over powers and functions that appear in the "B" list of the Second Schedule to this Report.

232. The Provincial Secretaries of Stage Two Provincial Governments should be appointed in the same manner and on the same conditions, as we have provided for the Provincial Secretaries of Stage Three Provincial Governments, except that their salaries and conditions of service should be equivalent to those enjoyed by Level One officers in the present public service.

233. Stage Two Provincial Governments should be represented on boards or committees of the Public Services Commission which deliberate on the appointment, promotion, transfer, discipline or dismissal of senior public officers in their provinces. They should have the right to reject the proposed appointment, promotion, or transfer to their provinces of all other public officers.

234. The Committee anticipates that the transition from the status of Stage Two Provincial Government to Stage Three may take the form of a graduation rather than a single step, especially for those Stage Two Provincial Governments in provinces with a single structure. But, a move from Stage Two to Stage Three will be nonetheless important, for it will not be until Stage Three that provincial governments will have final control over all of the revenue raising powers listed above, or that they will be fully responsible for the administration of their respective provinces.

235. The Committee recommends that the Provincial Assembly on each Stage Two Provincial Government should determine whether the administration of the province is to be organized into a single or dual structure. The first alternative bears a closer resemblance to the system we recommend for Stage Three. A single administrative structure would provide better training for Stage Three. It is also less likely to lead to conflict between senior officers of the national and provincial governments in the province.

236. Under the single structure management, the Provincial Secretary would be a head of the provincial government's staff as well as the senior representative of the national government in the province. He would be responsible for executing the lawful decisions of the Provincial Assembly. He would control and co-ordinate government activity in the province. The Provincial Secretary should have the power to call meetings of the heads of all government departments in the province, and he should chair these meetings. He should have the same disciplinary powers over all public officers and provincial government staff as a Departmental Head has over officers of the National Government Department. He should also exercise certain delegated powers over junior pubic officers on behalf of the Public Services Commission.

237. Under this arrangement, the Provincial Secretary would be the focal point for the co-ordination of all government activity in the province. Public officers would tend to be answerable to their departmental headquarters for only technical and professional matters. The Provincial Secretary should be kept fully informed of all communications between the headquarters (including regional headquarters) of National Government Departments and their officers in the province. But, by Stage Two, the Provincial Premier should certainly be Chairman of the Provincial Development Committee we recommended should be set up at Stage One.

238. The Committee believes that it would be advantageous if a single administrative structure were developed in all provinces as soon as possible. But, we leave it to individual Provincial Assemblies of Stage Two provincial Governments to decide for themselves whether a single or dual administrative structure should be established in their provinces.

239. Under a dual structure, the Provincial Secretary (who should be appointed in the same way and on the same conditions as recommended by us) would be the senior member of a small provincial government staff. There would also be a public officer who would be designated as the senior national government agent in the province. He would control and co-ordinate the activities of National Government Departments.

240. The senior national government agent should have the same powers over all public officers working for National Government Departments in the province as a Departmental head has over officers of a National Government Department. He should also have the power to call meetings of the heads of all National Government Departments in the province, and should act as their chairman.

241. The activities for which the national and provincial governments are respectively responsible should be co-ordinated through a Provincial Management Committee, comprising the Provincial Council, the senior national government agent in the province, and such heads of departments as the Premier may determine. The Premier of the province should be the Chairman of the Committee.

242. A dual structure at Stage Two would make it less likely that divided loyalties would develop among officers who might otherwise be answerable to both the national and provincial governments for the performance of their duties. But, a dual structure would place a premium upon co-operation between the Provincial Secretary and the senior national government agent. It would require firm leadership from the Premier to ensure that such co-operation is forthcoming. A dual structure might involve some otherwise unnecessary duplication of expenditure - on personnel and equipment. It would bear some resemblance to the present dual structure of administration in the district - with the Area Authority (and its staff) on the one hand and the bulk of the public service on the other.

Review of provincial government provisions

243. The Committee has consulted a number of experts, from Papua New Guinea and overseas as to how the principles underlying our recommendations can best be put into practice. We believe that the system of provincial government recommended in this Chapter can be effectively implemented. We expect it to work well, not least because of the widespread support it enjoys among our people. But, it is obviously impossible to provide for all contingencies before any part of the recommended system has been brought into effect. Practical experience with the system is likely to reveal both problems and possibilities that we cannot see now. We recommend that the Constitution should provide for the system's actual operations to be reviewed - after it has had time to be properly "run in" but before its apparent shortcomings have either undermined the support that the system enjoys, or become too deeply entrenched. This review should be conducted three years after the Constitution comes into force.

244. The Committee recommends that the proposed review of the provincial government system should be carried out by a body appointed by the Premiers' Council. This should ensure that it is not unsympathetic to the problems and aspirations of any of the governments involved.

245. The terms of reference of the review body should be drawn up so as to allow, and encourage, a thorough examination of all aspects of the provincial government system. We recommend that the review body should pay particular attention to the distribution of powers and functions between the national government and provincial governments, the financial resources available to provincial governments, and sources of conflict between governments.

246. The review body should embody its recommendations in a report to the Premiers' Council, and this report should be tabled in the National Parliament. The Committee believes that it should be up to the National Parliament to determine whether, and if so which, major changes requiring legislation or alteration of the Constitution should be made to the system.

Follow-up to Constitutional Planning Committee

247. On a number of points in this Chapter, the Committee has drawn attention to matters on which further detailed work still needs to be done in order to ensure that our recommendations are implemented as we intend. We have made specific reference to this need in relation to the form in which the proposed distribution of powers and functions between the national government and provincial governments should be provided for in the Constitution, and the criteria on the basis of which the national government should grant money to equalise development between provinces.

248. The Committee has devoted a great deal of time and careful attention to consideration of the submissions received on, and the issues raised by "Central-Regional-Local Government Relations and District Administration". The recommendations contained in this Chapter involve the creation of an entirely new tier of representative government in our country. Inevitably, given our other commitments, we have had to concentrate on matters of principle. We have had to leave certain aspects of the implementation of our recommendations until later.

249. Experience has shown us that even matters of detail and so-called technical questions should not be left to "the experts" to deal with on their own. The Committee has a strong mandate from the people for the recommendations we have made. We should not allow them to be undermined in the fine print, so to speak, or when they are put into practice.

250. The Committee believes that we owe it to our people to ensure that our recommendations are carried out as they and we intend. Strong and committed leadership, with access to objective expert advise will be needed if entrenched interests both in politics and public employment, are to be overcome. We cannot afford to underestimate the difficulties likely to be encountered in decentralizing authority from the presently powerful to the institutions provided for under the system we have proposed.

251. For these reasons, we recommend that the House of Assembly should appoint a committee of six or eight members to assist in the implementation of the recommendations made in this Chapter. Half of the members of this committee should be former members of the Constitutional Planning Committee - to provide continuity with our work. The committee as a whole should be broadly representative of political opinion in the House and committed to our objectives.

252. The committee to follow up the work of the Constitutional Planning Committee should be assisted by qualified advisers and other staff. In particular, we recommend that the consultants who advised us on the financial aspects of provincial government and the resolution of disputes should be asked to assist the follow-up committee.

253. The Committee has drawn up proposed terms of reference for its successor. The follow-up committee should be charged with responsibility for overseeing the implementation of the proposals contained in this Chapter, and with making recommendations consistent with ours in relation to the following matters:

§ the form in which the Constitution should provide for the distribution of powers and functions between the national government and provincial governments;

§ the criteria to be used in the allocation of grants to equalize development among the provinces;

§ the implementation of our recommendations concerning inter-governmental disputes;

§ the organization of National Government Departments, and in particular the need for a single National Department responsible for rural development, once provincial governments have been established;

§ such other matters as the Committee determines and that are related to the effective implementation of our recommendations.

254. We are especially conscious of the need for the Second Schedule to this Report to be simplified, qualified, and presented in more general form, so that it gives full and accurate expression to our objectives. We believe that provision should be made for this schedule to be altered following receipt of the follow-up committee's recommendations in the same way as the Constitution may be altered. The support of an absolute majority (instead of the special majorities we have required for substantive alterations to the "A" and "C" list) of the members of the National Parliament should suffice for the schedule to be altered following receipt of these recommendations provided that any such proposed alterations do not diminish the powers and functions of provincial government in any way.

255. The Committee envisages that so much of the follow-up committee's work as has not been completed by the time that the Constitution comes into force will be taken over by the First Parliamentary Committee. We have recommended in Chapter 6, "The Legislature", that the First Parliamentary Committee should be responsible for constitutional matters.

Conclusion

256. The Committee believes that the recommendations contained in this Chapter provide for the establishment of a flexible, participatory and fully decentralized system of government within a unitary state, in accordance with the views expressed in an overwhelming majority of the submissions we have received. We urge that our proposals concerning the manner in which our substantive recommendations are to be given effect should be read with care.

257. We embarked on our consideration of "Central-Regional-Local Government Relations and District Administration" with no preconceptions. We did not even begin our deliberations with the words actually used in our terms of reference lest they should pre-empt our options. Instead, we asked ourselves probing and difficult questions, concerning the most suitable distribution of power in our country. Our early conclusion that government at district level is becoming increasingly important to our people has been amply confirmed by events. The many hundreds of written submissions we have received, bearing the names of some thousands of people, and the views that were put to us at public meetings in all parts of the country, have expressed overwhelming support for the establishment of representative bodies with the power to govern at the district level.

258. Power should be returned to our people from the centralized colonial bureaucracy by which it was taken. It should be exercised through their representatives at all levels of government.

259. Many of the recommendations contained in this Chapter are novel. Their impetus springs strongly from the needs and hopes of our people. They have accepted the possibility of devising a truly "home-grown" Constitution with gusto. But they have also expressed the desire that the new system of provincial government should build on from their past.

260. The Committee has devoted most of its deliberations on "Central-Regional-Local Government Relations" to provincial government. This has not been because we regard national government, or local government in particular, as unimportant, but because we have sought to link them together in building our nation.

261. The Committee believes that the recommendations contained in this Chapter embody the will of our people - their desire for political self-expression, as well as their need to be reassured by the provision of certain constitutional safeguards. We believe that the system of provincial government we have proposed opens up new opportunities for our people. Under this system, they should be able to contribute to, and benefit from, the development of our country more than ever before. Above all, they will be able - through their representatives - to control it.

262. Throughout deliberations on the subject-matter of this Chapter, the Committee has sought to ensure flexibility in the arrangements devised. But, not at the expense of guarantees sought by our people. We have proposed that many of our recommendations should not be embodied in the Constitution but in ordinary laws, regulations, and Standing Orders. We have sought to minimise the role of the courts: by recommending that certain of the most important statements of principle in the Constitution should be non-justiciable; and by qualifying the role of the courts in relation to inter-governmental disputes. We have recommended that the Constitution itself should provide for a review to be made of the actual operation of the entire provincial government system. And, we have been deliberately silent on a number of points - for example, the organization of government at the local level - not out of ignorance or indifference, but because we believe that certain matters should be left open for decision by other bodies at other times. Certain statements of principle and minimal guarantees to provincial governments have been recommended for inclusion in the Constitution.

263. We do not believe that our recommendations are unnecessarily detailed or rigid, as some of our critics have claimed. We have had to provide for the establishment of a whole new tier of representative government in accordance with our people's demands. We find it ironic that so many of those who accuse us of these shortcomings are themselves so reluctant to change.

264. The Committee believes that the implementation of the recommendations made in this Chapter will render the government of Papua New Guinea more efficient and effective and, above all, more responsive to our people. We look forward, with enthusiasm, mingled with some apprehension, to the day when our proposals are brought into effect. We note that our recommendations have an overwhelming mandate. But, we are also well aware of the existence of interests entrenched in he bureaucracy and national politics, which may seek to resist any diminution in their authority. Strong and committed national leadership will be required for our recommendations to bring about a real change in the status quo. Without such leadership, the Committee fears that the yearning and discontent referred to in the opening sentence of this Chapter will continue to grow. But with it, nation-building will become a reality.

PNG Constitutional Planning Committee Report 1974