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February 12  1999 Issue 195

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Click on cartoon for the Independent's OPINION

...Urgent talks underway to extend contract

WIDESPREAD transfer pricing and species misdeclaration by log exporters could return if the log export monitoring contract is forced to be terminated at the end of next month, PNG Forest Authority (PNGFA) officials warned.

The officials said the recent lowering of the tax rates on log exports by the government gave the added incentive for malpractices seen in the forest industry in recent years to return.

PNGFA is in urgent discussions with Treasury for possible funding and extension of the contract for the remainder of the year. Several options are being discussed, including the imposition of a log export levy, which would raise the necessary funds to continue the contract. An additional K3 million is needed to see the year through.

Only K1 million has been designated for log export monitoring for 1999. According to the officials, this will last until the end of March, and if no further funding is forthcoming, the contract with the Swiss-based Surveillance Generate Systems (SGS), will be terminated.

SGS was contracted in late 1994 to provide inspection, testing and verification of log exports and species declaration following claims of massive under pricing and malpractices by logging operators. It started its monitoring operations in January 1995.

The monitoring activities of SGS made an immediate impact on the industry, and confirmed that malpractices in the export logging industry had been rampant. Over the years this has changed and the company now finds what it called "errors and omissions" by operators and not so much under pricing of logs or misdeclarations.

The contract has over the past four years cost K15 million, but K9 million of that came from the European Union.

Officially, the contract term expires at the end of March, but PNGFA wants the monitoring contract to be maintained for at least another year .

Figures supplied by SGS indicate that over the four years, the monitoring activities had resulted in K34 million foreign exchange earnings, which otherwise would have been foregone.

SGS general manager Bruce Telfer told The Independent  if no funding is forthcoming SGS would have to pack up and go. But he said the PNGFA would not have the capacity to take over the operations that SGS has set in place. Apart for extending monitoring and reporting equipment, SGS currently employs 80 staff, who the PNGFA would not be able to take back under its current constrained funding from the government.

He said PNGFA also wanted to ensure monitoring systems were in place, especially under the transitional period for tax rates on log exports.

Greenpeace had earlier sounded the alarm when it warned that all signs were that SGS would be forced to leave this year and may not offer their services.

"It looks like they (SGS) will have to leave the country and we expect to see illegal log exports, misdeclaration of volumes and species types and transfer pricing return to unsustainable levels," Greenpeace PNG spokesman Brian Brunton said.

The officials said the K17 million appropriated for PNGFA for 1999 will barely be sufficient to maintain monitoring of existing forestry operations, even with a 25 per cent  reduction in staff levels.

It would not be sufficient to fund any extension of the SGS contract above the K1 million earmarked for the first quarter, the sources said.
"Irrespective of which organisation undertakes the log export monitoring function, it is crucial that it be funded adequately and that the operation be conducted independently of public service restrictions," the officials said.

The officials said while they do not expect to see any major destruction of the country's forests as a result of the lowering of the tax rates, the concern arises because the lower tax rates will increase the rate of logging and log exports. This is where the log export monitoring becomes vital.

"We have checks and balances in our system through the Forestry Act and Regulations and the Logging Code of Practice that companies are required to follow. We have put all our field officers through necessary training to monitor logging operations and stringent control is applied. Companies which do not follow are immediately penalised. However, the lowered taxes will increase the rate of logging at a time when the returns to the nation are very low," the officials said.

DELAYS in payment of casual allowances totaling to almost K40 million for community health workers in the country has prompted the Community Health Workers Association to consider to take strike action.

Association executives said almost all provincial health divisions in the country have not been paying about 8,000 community health workers nationwide their casual allowances even though they are recognised health workers.

President James Amuna said provincial administrators and health authorities will be served with a circular dating back to 1998 from the department of personal management and the health department to pay all outstanding allowances for community health workers in their respective provinces. "The divisions of health throughout the provinces are denying to pay out community health workers pay-out.

"Some of the former retrenched nurse aids and orderlies did not get their entitlements," he said.

Mr Amuna said if provincial health divisions fail to allocate funds for casual payments for workers to be back-dated from when they commenced employment, the association will consider conducting a secret ballot for strike action.

"I am now advising all community health workers throughout the country, whether they are financial members or not to join this course of action taken by the association and walk off from their job on a rolling strike," he said.

General secretary Jack Suao said there were only two provinces who have paid their community health workers in which more than K9 million kina was paid out to more than 280 workers in the South highlands province and only six workers paid in the Central province.

"The first and the last payment was made to community health workers in the Southern highlands province." "More than 200 community health workers in the Central province are still waiting to be paid," he said.

Mr Suao said the association has also called on the health department to advise the provincial health divisions to allocate funds in their provincial budgets for this year to rectify this problem.