Papua New Guinea first decentralized to nineteen provincial governments in the late 1970s (see chapter 12). Following independence, the government introduced the Organic Law on Provincial Government to decentralize the management and administration of government services, including health. The two main components of health services — rural health and hospitals — which enjoyed a centralized vertical but integrated planning and management approach were now to be under separate authorities. Rural health services became decentralized while hospital services were only delegated to the provinces for planning, management and administration (Thomason, Newbrander and Kolehmainen-Aitken 1991).
For the health system, this presented some significant issues. Appointment of provincial health officers became politicized, mobility of the health workforce declined, and the national Department of Health found it impossible to maintain standards and ensure health policy implementation in the hospitals, which were delegated functions, or in rural health, which was transferred. Functional roles and responsibilities for the two components were poorly defined, leading to much confusion for both national and provincial governments, and consequent uncertainty at both national and provincial government levels. This uncertainty led to poor resource allocation, lack of coordination, and inefficient management of the health services, and thus the deterioration in quantity, quality and coverage of basic health services provided from rural health facilities and hospitals. Gains made under the centralized health system prior to independence were not sustained.
Despite these and a number of other problems which followed the initial decentralization, there was a further decentralization in 1995 through the enactment of the Organic Law on Provincial Governments and Local Level Governments (OLPGLLG), which further decentralized to around three hundred local-level governments.
The present OLPGLLG was adopted with the aim of improving government service delivery, especially health services, to the majority rural population. Where the previous legislation had failed, this new law ambitiously attempted to improvise and enhance the government’s ability in service provision by empowering and decentralizing further into the districts the rural health services component. The practical effect of the new OLPGLLG has been to give provincial governments and local-level governments significantly greater discretionary control over spending at the sub-national level, without effective checks and balances to ensure national policies are being implemented.
National public servants in each of the provinces report to a provincial administrator, who is the head of the provincial administration. Each district (corresponding to the area of an open electorate) is under the administration of a district administrator. District health staff report to the district administrator who has limited knowledge of health programs and of what it takes to make the health system perform properly. The hospital CEOs, senior clinical staff and provincial health advisers who have the knowledge and experience to run the health system cannot discipline staff in rural areas, nor direct them or financial and other material resources to where they are needed.
Effective implementation of health policy requires the ability to ensure that resources are directed to the key policy priorities. Under the organic law the sources available for health funding include the national budget (including the District Development Program — see chapter 12) and provincial and local-level government budgets (mostly funded from grants under the OLPGLLG but including some internal revenue). There is no provision at the national level for reviewing the overall sectoral allocation, nor sectoral allocations among provinces or districts within provinces (although the OLPGLLG does provide for joint planning and budgetary priority committees at provincial and district levels). It is currently impossible to even review provincial budget allocations for health, let alone centrally direct or influence them.
There are two key issues in the funding arrangements, which lead to what is essentially an untenable situation. Funding for provincial governments is no longer calculated on the basis of functions they perform, instead the grants are calculated primarily on the basis of population and geography. The funding may not be adequate to carry out all the necessary functions. Grants paid to provincial governments are essentially unconditional, so while the national government can set national policy, it cannot make provincial governments outlay money to implement it.
A further and presumably unintentional anomaly has been the establishment of public hospitals under a separate piece of legislation, the Public Hospitals Act. Following the passage of the Public Hospitals Act, hospitals have operated as quasi-statutory authorities, responsible to an independent board of management, and through it to the national minister for Health. They are funded from the national budget. This administrative and financial separation of hospitals from rural health services has caused problems in ensuring that hospitals deliver their support services to the rural healthcare system. The lines of direction and control are uncoordinated. Since hospitals are independent of provincial governments, the provincial governments must negotiate the basis on which the services of the two different systems are provided.