By HENZY YAKHAM
TUESDAY, April 19 2021 marked the 47th anniversary of Papua New Guinea’s currency, the Kina and Toea.
On April 19, 1975, PNG’s founding Minister for Finance, Julius Chan (later knighted) launched the Kina and Toea in Port Moresby.
At the time of launching our currency, export earnings of then newly self-governing PNG were very low with a small budget and a handful of well-educated nationals to steering the former Australian territory into nationhood and beyond.
Today, PNG has so much wealth with big export revenue from extractive industries, agriculture, fisheries, logging and others.
This is coupled with many more well-educated nationals managing our affairs as well as occupying top managerial posts in regional and international institution.
On books, with abundant natural and human resources, PNG should be in a transformation period with citizens enjoying high quality health, education and other State services. Sadly, the truth is opposite and this is the million kina question every man, woman a child who calls this “land of milk and honey” home to ponder seriously in the 47th anniversary of our currency.
Rewinding back to April 1975, less than two years prior to the Kina Day, Sir Julius had announced that the then self-governing PNG administration had decided to introduce its own currency.
Many foreigners and indigenous people were sceptical and believed that as a newly self-governing PNG would not be able to make it.
By then PNG had only been self-governing for a short while since attaining self-government from it colonial ruler, Australia in December 1973. But, the occasion of Kina Day on April 19, 1975, Sir Julius proved many critics wrong of PNG having its own currency.
The Kina Day was the climax of an exercise that had involved a tremendous amount of work and planning.
In Sir Julius’ words, “it was an exercise which in terms of importance and efficiency, is the equal of anything that has ever been achieved in Papua New Guinea”.
What gave PNG’s first Minister for Finance of the soon-to-be newly independent PNG was the pleasure of issuing our Kina and Toea to the public.
Our currency was issued to the public on the third anniversary of the National Coalition Government of then Chief Minister, Michael Somare (knighted later) formed after the 1972 general election.
Looking back to the early struggling days in April 1972, it certainly was a remarkable amount of progress.
PNG had not yet quiet reached the point of full formal political independence. But the possession of Kina, together with the other measures the self-governing administration took to serve control of the economic life, gave people and leaders a very substantial measure of practical independence was the thing that really matter.
Credit to founding Governor of the Bank of PNG, Sir Henry ToRobert, who was the chairman of the currency working group, PNG’s first Secretary for Finance, Sir Mekere Morauta and all other public and private sector officials who worked tirelessly in their responsibilities of organising the currency change-over from the Australian current, dollars and cents to PNG’s very own kina and toea.
As well, credit to government information and liaison officers, banks, business community, the national radio, print media, police, elected and village leaders and above all our people for accepting the change.
Complementing many who participated in the currency change-over Sir Julius has often times spoken about “real control over our affairs”.
This control included initiating new opportunities to protect, improve and raise the welfare of our citizens and the responsibilities that come with the changes.
In PNG’s formative years, our founding leaders echoed the sentiments of indigenous citizens to rise and make their own choices about what they want and need most and what they can do without.
The messages of pre-self-rule and independence are still very relevant and ringing louder today in 2021.
In the first few years of the infant government of PNG our leaders were able to defer some hard decisions and choices.
This was because there was great scope for re-distribution of income and opportunities towards the people.
For example, increasing taxes, particularly on companies, the Bougainville re-negotiation, rapid localisation of positions in the public sector, financing increased wages and income, more services and rapid growth in the public service employment.
This was an objective of the then government policy and the leaders did a lot very quickly during the short transition period from colonial rule to self-government and eventual independence in September 1975.
The Government then was well into the time of some very difficult choices.
It meant higher income or more service to some people and less for others.
“We must now be very careful with our priorities,” Sir Julius sounded the warning then – and that is still very relevant today after 47 years.
The new currency was certainly no means to resolve the dilemma of limited resources and unlimited wants.
A newly self-governing PNG in April 1975 had fundamental choice of what strategies to adopt to protect the value of the kina – a “hard currency” or a “soft currency” strategy.
Under the alternative of “soft currency” policy, PNG would not be too worried if incomes were raised and spending programmes above the capacity of the economy to sustain when supported by realistic levels of foreign aid.
Under that policy, the then government would run budget deficits.
Government would borrow Kina from the Bank of PNG, but as the Government and people spend this money, the Bank of PNG would run out of its reserves of foreign currency.
It would have led PNG to being bankrupt thereby reducing the value of the Kina in terms of foreign money.
This would have force the prices of goods and services to increase.
The logic of “soft currency” approach would have led to more Government spending and higher wages, supported by more borrowing from the Central Bank.
But, with no reserves of foreign currency, the value of the Kina would fall again and that would have been a disastrous cycle.
At the end of it, there would not have any more real goods or services as a result of the extra spending, but the Government would have ruined the new currency and shattered people’s confidence.
A “hard currency” strategy meant taking deliberate action to ensure that the external value of the Kina did not weaken.
This required two things, the accumulation and maintenance of adequate international reserves to assure the credibility of such a policy and appropriate internal policies of economic independence.
On the reserves, the self-governing administration discussed with Australian Government over a fair and appropriate level for PNG’s initial reserves once PNG left the joint currency system.
Sir Julius’ team was confident Australia would agree in wanting a strong Kina and that Australia was well aware of PNG’s need for adequate reserves to make it strong.
With adequate reserves, the flexibility permitted by having own currency was very important to allow PNG to even out its good and bad years, by running surpluses in good years and modest deficits in poor years.
This was not to allow the Government to embark on spending programmes greater than the country could earn, afford and sustain.
This means not spending what the country did not have and living beyond our means – something very different today.
If the administration chose that road, PNG would have headed for the swamps of soft currency with disastrous results.
The “hard currency” strategy meant facing up to the difficult choices before, rather than after PNG got itself into big trouble.
Under this policy, more wages and salaries meant less ambitious Government programmes, more Government expenditure on one activity means less in others.
In the short term, this meant less in the way of incomes and services.
In the long term, it meant the generation within PNG of more wealth to pay for goods and services as well as revenue from development and export of natural resources to provide means to greater national self-reliance and wealth.
Sir Julius’ central message in April 1975 was of PNG being a potentially rich country and if the nation was careful and sensible, the hard choices were not quite as hard as they were in many other countries.
“Our village land and water provide many things we need and with skill and effort can provide them in steady increasing amounts.
“Our emery and mineral resources can with good management and the assistance of outside capital and personnel, lead to great increases in our national wealth.
“The hard currency policy requires that we spend these increases when we earn them, so that they are real increases.
“If we try to spend our wealth before it has been created, it will destroy our new currency and our people will be confused and disturbed by high inflation,” Sir Julius stressed 47 years ago.
Since the launching of the PNG’s own currency the people were still using the Australian dollars and cents for eight months until the dual currency period ended on December 31 1975.
The essence and relevance of the message central to the new currency back in April 19 1975 is very much still relevant today after 47 years.
Creating wealth for PNG and its equitable distribution to all our citizens is a mammoth task, but it is for the good and wellbeing of the majority.
This is a direct challenge to all current lawmakers (MPs), who have volunteered to be people’s servants to take heed of the message from one few remaining pioneer PNG leaders.
Most of what our seniors and elders said in the early stages of PNG’s nationhood are still very relevant.
Today, PNG is handling greater wealth than 47 years ago, but much of this wealth is melting away in the process of delivery system and not trickling down to village level.
Didn’t PNG reach the pass-over year in September 2015? What has happened to our beloved Kina and Toea?
Why is there scarce of our currency?
The Kina has sunk to rock bottom low and it can die if nothing is done to save it.
Papua New Guineans will be voting for their representatives to the National Parliament in the coming months.
The voters must use the power of their secret ballot voting to dump non-performing MPs and those who have been implicated of both perceived and actual corrupt conducts.
The executive government and its law enforcement agencies have failed in many instances to successfully prosecute corrupt public officials including lawmakers.
This is an opportune time for electors to use their voting powers and remove corrupt and self-serving politicians.
Papua New Guinea is blessed with abundant natural resources and is envied by many worldwide.
We must elect good leaders in this year’s general election who will invest the nation wealth for and good and benefit of majority citizens and not for themselves and their cronies.
