17 November 2015: NFP Whip’s response to the 2016 Budget, Hon Prem Singh

 

Please check against delivery.

 

hon prem singhMadam Speaker before I start my Budget response, I wish to raise two issues.

Firstly, as I was on my down to Parliament, I received calls from concerned parents of Year 6 students as well as management of schools who are still awaiting results of Intermediate Examinations released last Friday. One school management member told me that even in cases where results have been made available it is riddled with errors – A-grade English students have received zero marks in this subject. This needs urgent clarification by the Honourable Education Minister.

 

Secondly Madam Speaker, while raising a Point of Order during the reply to the Budget by the Honourable Shadow Minister for Finance, the Honourable Government Whip said “Name the lawyers and we will take them to task”. Since when Madam Speaker, has a Member of Parliament had so much power that he can ride roughshod over the procedures of Independent Legal Services Commission? Or is it that this is how the Commission has been interfered with?

 

Madam Speaker, this Budget has been thoroughly scrutinized by the Shadow Minister for Finance and the Opposition and no doubt will be subjected to severe scrutiny during the Committee stages.

 

Much was promised in the 2015 Budget – much is yet to be achieved or delivered. Similarly Madam Speaker, much has been promised in the 2016 Budget. Whether or not the projections and forecasts are fulfilled or objectives met will only be seen one year from now,

 

However Madam Speaker, scrutiny of a Budget which is the most important policy document handed down by a Government every year will be made much easier if Government through the Minister for Finance adheres to the requirements of the Financial Management Act and tables in Parliament reports on financial performance in accordance with the Financial Management Act. And not on Budget Day but strictly in accordance with the requirements as stated by the Shadow Finance Minister.

 

Madam Speaker, the reduction of Value Added Tax from 15% to 9% has been praised in this Parliament. Any reduction in taxes is naturally welcome. But let me put this reduction in context and its corresponding effects.
What about those below the tax threshold of $16,000, earning $2.32 an hour as minimum wage or living in poverty or abject poverty? What about those ineligible for the social pension scheme despite being in retirement?

 

Madam Speaker, those eligible for $50 food vouchers will get fewer items than previously because basic food items that were zero-rated now see increase in price because of imposition of 9% VAT.

 

And most seriously Madam Speaker, is imposition of VAT on basic food items turning promises into deeds or mis-deeds?

 

As revealed by Honourable Members of the Opposition, was this deed promised by Fiji First in its manifesto for the 2014 general elections? The Fiji First Manifesto is worth repeating and I quote:

 

“Fiji First will continue to control the price of basic food items such as rice, flour, potatoes, dhal, cooking oil, and pharmaceutical and medical products.

 

Fiji First will continue to place zero VAT on powdered milk, rice, edible oil, tin fish, flour, sharps and medicines”.

 

Therefore Madam Speaker, the imposition of VAT on basic food items that have been zero-rated for many years is a betrayal of the promise made to the people of Fiji by the Fiji First Government.

 

We are told that the imposition of VAT will be cushioned by the so-called free water and free medicine schemes. We are interested to know how many people or households are actually benefiting from these schemes. Government should provide these figures for the sake of transparency.

 

And Government so far Madam Speaker has not clarified what is the actual saving to a household or person accessing the free water subsidy. From our calculations it is $13.96 per year or $1.16 per month – or $3.49 a quarter or every three months.

 

This pales into insignificance with the increased cost of basic food items like rice, sharps, flour, oil and tinned fish and kerosene. These are bought every week in every household.

 

Madam Speaker, Government decided to significantly reduce duties on certain items. These items are not purchased weekly. What Government should have done was to reduce duties on food items like potatoes etc.

 

This reduction should also have happened in the case of meat like lamb and chicken, which have become a basic commodity. This would have been a reasonable measure to cushion the effects of imposition of VAT on basic food items.

 

Madam Speaker, the same analogy applies to milk. While milk, butter, cream and yoghurt have reduced VAT of 9%, it still attracts an import duty of 32%. However Fiji Dairy Limited enjoys 0% concession.

 

But for the last three years, production of fresh milk by Fiji Co-operative did not increase, as the amount paid to farmers is not enough to cover cost of production. This is despite what Government through the Permanent Secretary of Trade and Tourism said a few months ago.

 

Fiji does not manufacture milk powder, then why such high import duty of 32% was imposed? Inevitably, Madam Speaker, this duty is passed on to the consumers. Milk can be much cheaper if the duty is reduced. The concession provided to Fiji Dairy is not passed on to the consumers.

 

Madam Speaker Government projects to rake in $ 127.5 million from Service Turnover Tax. The 10% STT means for example if I eat in a restaurant and the food bill comes to $10, $2 goes to Government. This is apart from 9% VAT and duties on food items.

 

The same applies to Hotels where tourists pay the STT. But are the workers of our hotels, resorts and restaurants sharing a piece of this revenue cake? While Government forecasts revenue of more than $127 million from STT, the salaries of workers remain stagnant. Madam Speaker, we have established that there is no uniformity in salaries and wages of our hotel and resort workers.

For Fiji’s largest revenue earner, generating over $800 million last year (although 60% of the tourist dollar or 56% depending whether one believes the Reserve Bank of Fiji Governor and Deputy Governor respectively) goes outside Fiji, our workers in the tourism industry deserve much more.

 

For example Madam Speaker, one resort pays only $2.89 an hour for receptionists. Another resort is paying $4.65. The lowest wage rate in the tourism industry is $2.50 an hour while the highest is $6 an hour. These are disparities that must be corrected. Affordability by hotel and resort owners is not an issue because some prominent resorts are paying lower wages than smaller ones.

 

Madam Speaker, still on tourism, the plight of curio vendors, especially at the Suva Handicraft market is not being addressed. Government is promoting “Buy Fijian Made” but tourists who arrive at Queens Wharf onboard cruise ships are whisked away on tours or to prominent duty free outlets while the curio vendors are left to feed on crumbs.

 

This is totally unfair and unreasonable Madam Speaker. Every business must have equal opportunity, whether small, medium or large entity. And curio vendors sell locally made and crafted handicraft – not items imported from Asian countries.

 

Furthermore Madam Speaker, one cannot recognise the Handicraft centre, unless he or she is well versed with the city of Suva. The entire building has Digicel signage and colours. How will tourists know that quality ad exclusive handicraft is available for sale?

 

Madam Speaker, each stall owner pays a total of $2,511.60 in stall fees per stall per annum at a rate of $8.05 cents for a 6-day week. The Centre has 71 stalls and it should be generating $178,323.60 in annual revenue for SCC.
SCC should give Digicel naming rights – not complete signage that completely overbears a semblance of the existence of a handicraft centre. This should be similar to the naming rights of our sporting facilities that still retain their identity – for example like ANZ Stadium or Vodafone Arena or the Dome

 

The curio vendors certainly deserve better treatment from both SCC and Government and we urge the Honourable Ministers of Local Government and Tourism respectively to address this issue with urgency.

 

Madam Speaker, we see Government is providing incentives like tax holidays and duty free imports of equipment for the establishment of state of the art hospitals and diagnostic laboratories. Public/private partnership is a good thing – we vigorously promoted this during the last elections.

 

But this has to become a reality. The last such proposal of the establishment of an hospital by the Apollo Group 8 years ago has not seen the light of the day despite the offer of similar incentives.

 

However Madam Speaker, in the absence of state of the art hospitals, it is utterly disappointing to note that tertiary health care – which is advanced surgical procedures like heart surgeries has been halted.

 

The Ministry of Health must confirm whether bureaucracy and legal wrangling by the Ministry and the Solicitor-General’s Office has halted heart surgeries.

 

We know Madam Speaker that when this issue was raised by the Honourable Leader of the NFP a month ago, the Honourable Minister for Health vigorously denied this. But he did say that the agreement with Sahyadri Hospitals was invalidated on 6th August. But the Honourable Minister also said that nobody was denied his or her fundamental right to treatment. But the fact is that only patients who received treatment, and too overseas, were patients who had medical insurance.

 

This is reportedly because of alleged non-compliance and delays on the interpretation of a memorandum of agreement between the Ministry of Health and Sahyadri (Fiji), which is believed to be a subsidiary of Sahyadri Group India, whose surgeons were providing specialist treatment to Fiji patients.

 

We believe the Agreement between Sahyadri (Fiji) and the Health Ministry was valid for 5 years. Under the agreement surgeons and specialists from Sahyadri (India) commenced advanced cardiac, orthopaedic and neuro surgeries at the CWM and Lautoka Hospitals from 2013.

 

The question that arises is this: If there were flaws in the agreement between the Health Ministry, Sahyadri (Fiji) or even Sahyadri (India), why wasn’t this detected before it was signed by the parties?

 

Why did it take two years for the Health Ministry to seek legal opinion on the agreement?

 

We also believe as part of the reversals being put in place by the health ministry, the grant of $F10,000 has been reduced to $5,000 for these cases since 2015. This makes it even more difficult for patients to be prepared for open-heart surgery. No clear answers are forthcoming from the health personnel apart from the “No money” cry since July 2015. Why Madam Speaker?

 

These are critical issues that need to be addressed. And we certainly look forward to the Honourable Health Minister informing this House why the grant has been reduced.

 

Madam Speaker if similar obstacles are faced with any new tertiary health care provider who wishes to operate in Fiji and enjoy the tax holiday and duty concessions provided under this Budget, then our patients are doomed.

 

Madam Speaker, despite what we were told by Government through the Honourable Minister for Health, a patient awaiting heart surgery died. We were told that the Agreement with Sahyadri was terminated on 6th August. But on 12th August a patient travelled from Rakiraki for his scheduled surgery to be performed by Sahyadri surgeons.

 

He was never informed prior to his trip to CWM Hospital that the operation had been postponed or in this case cancelled until his arrival at the Hospital. Madam Speaker, the patient returned home and died 5 days later on 17th August. If this isn’t bureaucracy then what it is? Who is responsible for this negligence?

 

Section 38 (1) of the 2013 Constitution (Right to health) states, “The State must take reasonable measures within its available resources to achieve the progressive realization of the right of every person to health and to the conditions and facilities necessary to good health care services…” 38(3) states “…if the State claims that it does not have the resources to implement the right, it is the responsibility of the State to show that resources are not available”.

 

Madam Speaker, we see from the Budget that there is no contingency plan to combat the debilitating effects of the drought, particularly in the Western and Northern Divisions.

 

In some areas tanks have been placed and residents are required to travel to these locations to fetch their emergency supply. These tanks quickly run out of water. This is a departure from the past practice of trucks carrying water carts to homes in settlements. In many cases tanks serve a population residing with a 5-kilometre radius. It is extremely difficult for residents to travel this distance and fetch water.

 

Further Madam Speaker, only a comprehensive survey will determine the kind and amount of assistance and crop rehabilitation packages needed for the recovery of these industries or sectors.

 

Government must immediately move in this direction, apart from supplying and improving the distribution of emergency water supplies.

 

Madam Speaker, I also totally agree with the Honourable Leader of NFP about the plight of cane growers and the industry. I will not repeat them.

But Madam Speaker, the fact that cane growers are treated like sacrificial lambs or beasts of burden is best seen from the events of the past few weeks, culminating into the mediocre allocation of only $5 million for cane planting programme.

 

For the 2014 season, the actual cane payment growers received was $72.59 per tonne. This is almost $16 per tonne less than the $88.49 paid out in 2013.

 

The 2014 payment was boosted to $81 with a top-up of $8 per tonne of the 4th payment and 41 cents to the final payment, which was growers’ share of proceeds from the liquidation of Fiji Sugar Marketing in 2009.

 

Madam Speaker, growers received the lowest final payment of a meagre 30 cents per tonne a fortnight ago (topped up to 71 cents by 41 cents as growers proceeds from FSM liquidation). This is the lowest in history – in fact two lowest final cane payments of 37 cents and 30 cents happened under the military turned Fiji First Government in 2010 and 2015 respectively.

 

The Special Payment of $2.80 per tonne paid on the eve of Diwali is also advance – that is growers’ own money. It is part of proceeds for the 2015 crop and is likely to be deducted from the 3rd and 4th payments in March and May respectively next year. This is the truth.

 

The average cost of production, harvesting and delivery of cane is $45. Seventy percent of our growers produce an average of 150 tonnes of cane. This is around 9,000 growers.

 

Madam Speaker, the total earnings for 9000 average growers for the entire season excluding the harvesting, delivery and production costs is a meagre $5,400 paid over 16 months.

 

This is $10,600 below the tax threshold of $16,000. Growers are therefore in abject poverty ever since cane production declined by 50% from pre-coup levels in 2006 to between 1.6 million and 1.8 million tonnes.

 

When you have people in charge of the industry who cannot differentiate the root of a cane stalk from its top then God help cane growers.

 

This is the sad and unmistakable reality, Madam Speaker.

 

Thank you Madam Speaker.