The National Federation Party submission made today as invited by the Parliamentary Standing Committee of Justice, Law and Human Rights on Recommendations on:
* 2014 General Elections – Final Report of the Multinational Observer Group
* The Fijian Electoral Commission – Annual Report 2014
* 2014 General Election – Joint Report by the Electoral Commission & the Supervisor of Elections
21 July 2016
The NFP President, Hon Roko Tupou Draunidalo has today called on the Minister for Elections to resign his Elections portfolio for questioning the independence and neutrality of the Electoral Commission.
This is through his utterances recently in a newspaper report (Fiji Sun, 16 July 2016) where he is purported to have said “he had left the Commission to be run independently, but had raised concerns with Mr Young on the perception that the chair had sought legal advice from an outside source at a fee of $25,000.”
“The Minister for Elections, Attorney General and General Secretary of the Fiji First Party, Mr Aiyaz Sayed Khaiyum made serious and what appears to be defamatory remarks against the Electoral Commission Chairperson”.
“The Minister was raising his concerns both as Minister for Elections, Attorney General and General Secretary of Fiji First, about Mr Young’s decision to outsource legal representation and he further stated in that article that with his other hat as Minister for Economy – his Ministry – will be investigating procedures of the Electoral Commission”, said the NFP President.
“The first issue is that the Minister for Elections and Attorney General is also the General Secretary of a Political Party, the Fiji
First Party, and appears to be trying to influence the Electoral Commission to suit his political agenda.
He should not be trying to do that and not be seen to be trying to interfere or attempt to interfere with the Constitutional independence of the Electoral Commission and as General Secretary of the Fiji First Party, he also has a myriad of other hats that he wears in which to wield his control”, added Draunidalo.
“Secondly, it appears that the Minister for Elections, Attorney General and General Secretary for the Fiji First Party is threatening and intimidating the Electoral Commission to seek legal advice that may come from his Office instead of an independent external source.
That the Electoral Commission should not be restricted to seeking legal advice from the Solicitor General who reports to the Attorney General, the Minister for Elections and the General Secretary for the Fiji First Party because in the case that the Electoral Commission brought against the Supervisor of Elections on 24 August 2014 (Civil Action No HBC 240 of 2014 – Electoral Commission v The Supervisor of Elections), the Solicitor General represented the defendant the Supervisor of Elections” highlighted Hon Roko Tupou Draunidalo.
“The third issue, is that this case of the Electoral Commission against the Supervisor of Elections is currently on appeal and as the chief legal advisor to Government, he should be the first to uphold these basic legal principles. The independent courts are above him as independent arbiters and he should respect that” adds the NFP President.
“Fourthly, the Minister for Elections, Attorney General and General Secretary of the Fiji First Party insinuates that there is some kind of perception that the Commission is not independent because of a commercial, arms length relationship that the Electoral Commissioner may have with independent, third party Counsel.
The Minister for Elections, Attorney General and General Secretary of the Fiji First Party should himself declare whether there is any difference in that situation to his relationship with Minter Ellison who he has been commissioned to do work in Fiji from as far back as 2008 until very recently with the Companies Act- and that Act has come back to Parliament for very many amendments after taxpayers money was used to pay for Minter Ellison.”
“Fifthly, the Minister for Elections, Attorney General and General Secretary of the Fiji First Party is undermining the role of the Constitutional Offices Commission who recommends appointments to the President for the Electoral Commission and Supervisor of Elections among others, but given that the Minister for Elections, Attorney General and General Secretary of the Fiji First Party is also a member of the Constitutional Offices Commission as Attorney General, any right thinking person can now predict what the end-game may be for Mr Young” said Hon Roko Tupou Draunidalo.
The NFP President said that too much power concentrated in any individual is always open to abuse, unethical and provides a platform for corruption, tyranny and incompetence. She called on the Prime Minister to remove this portfolio from the myriad of other spheres of control of the Minister for Elections, Attorney General, Minister for Economy and General Secretary of the Fiji First Party.
Hon Draunidalo also called on the Prime Minister to draw on the 2014 Annual Report of the Electoral Commission where it said on page 4 “that its work was affected by it not having the services of an independent legal advisor.”
July 18, 2016
The appointment of former ANZ Chief Executive Vishnu Mohan as the Chairman of Fiji Sugar Corporation as well as the appointment of Abdul Khan as the Chief Executive Officer of FSC is a case of nepotism and cronyism of the highest order.
There have been many allegations labelled against Mr Khan especially about his salary, perks and privileges. Appointments were not based on meritocracy.
Any shareholder in a company should be concerned, especially if it happens to be the Government, which is the largest shareholder and has pumped in millions of dollars of taxpayer funds in loans and guarantees into FSC.
However, the Fiji First Government has blatantly disregarded all ethics of transparency and god governance by announcing Mr Mohan as new Chairman. He has a conflict of interest because during his term in ANZ he a developed the export finance facility for FSC. FSC also has loans with ANZ guaranteed by Government.
Mr Mohan is also the Chairman of Public Service Commission. Therefore he is a political appointee of the Fiji First Government. He is qualified as a commercial banker but has no knowledge of the sugar industry.
Once again, this Government has demonstrated that the appointment is to try and save the technically insolvent at the expense of writing off its Government loans and subjugating cane growers through the Reform of the Sugar Cane Industry and Sugar Cane Growers Fund (Amendment) Bills, which have been totally rejected by growers.
Furthermore, this is seemingly part of FSC’s Strategic Plan that has never been revealed to the cane growers who are the largest stakeholders in the industry and genuinely fear reduction in their income with change in the formula determining sharing of proceeds from sale of sugar from the current 70/30 in favour of growers.
These appointments change nothing for growers and the industry as a whole. FSC will continue to be technically insolvent because already growers are demoralized and one must never forget that without cane growers’ increasing the crop production from the current low levels, there is no FSC.
In Mr Abdul Khan, FSC now has a CEO who as Executive Chairman did not hold the Corporation’s AGM for four years until May last year. He was a Board Member from October 2009 till December 31st 2010. From 1st January 2011, he was FSC’s Executive Chairman enjoying hefty salary, perks and privileges while FSC’s debt continued to rise astronomically.
The Fiji First Government has now rewarded him with the CEO’s position.
It is once again clear that this Government is clueless and not at all serious about reviving the industry that directly and indirectly supports the livelihood of some 200,000 people.
If Government is really concerned about the viability of FSC, it should authorise independent investigation into the management and operations of FSC to determine the truth.
Abdul Khan should immediately step aside and Vishnu Mohan should not take up his new appointment to ensure freedom and independence of the investigation process.
Hon Prof Biman Prasad
Opinion by Professor Biman Prasad , NFP Leader
The Fiji Times. Saturday, July 16, 2016
AT 12.45pm on Thursday, July 7, the FijiFirst Government effectively buried all hopes of rescuing the sugar industry from its death throes.
The Government used its majority in Parliament to defeat a motion during the debate on the 2016-2017 Budget.
The motion sought a package of $50 million per year for the next three years that would have resuscitated the industry and helped restore it to its glory days.
The NFP moved the motion because shock therapy is now needed for the sugar industry.
Funds for this specific purpose could have been diverted from the Fiji Roads Authority allocation of almost $528m. FRA has been allocated hundreds of millions of dollars in the past four national budgets. It will continue to receive the largest chunk of future The Government failed to answer questions on this issue raised by honourable Prem Singh last week.
Mr Singh wanted Government to inform Parliament how much of these hundreds of millions of dollar allocations have been used for actual construction — roads, bridges and jetties; and how much of it has been spent on management and technical expertise.
The NFP motion was, is and will be extremely relevant. During his budget reply on July 5, Mr Singh laid out the painful reality in Parliament: “The industry’s best hope of recovery 10 years ago, was derailed by the December 2006 coup. The military government sacrificed the injection of a $350 million grant to the industry by the European Union.
Had this materialised, Fiji from 2011 onwards would have been producing a minimum of 4,000,000 tonnes of cane and 400,000 tonnes of sugar, using more efficient methods than we are using now.
Sugar is a “lifeblood” industry. It is far too important for it to be allowed to die. But this Government, instead of providing any practical solutions, has been adopting a firefighting approach which, like most fires witnessed in the country in the past two years, have ended up destroying the properties meant to be protected.
Mr Singh pointed out that in 2006, when the industry structure was intact and we had input of politicians in the industry, there were 18,636 active growers who produced 3.226 million tonnes of cane.
The four mills produced a total of 310,140 tonnes of sugar at a TCTS of 10.4.
In 2015, after the military regime and FijiFirst Government have been in charge of the industry for nine years, the number of active growers had fallen to 12,872. They produced 1.84 million tonnes of cane. The four mills produced 221,934 tonnes of sugar at a TCTS ratio of 8.3.
So, Mr Singh pointed out, “it is clear where the fault lies. Not with the politicians, but squarely with this Government, which has politicised the industry like never before. People who cannot tell the root of a cane plant from its top are tasked with making decisions to the detriment of the growers and the industry as a whole.”
Against such a bleak backdrop, an allocation of $50m per year for the next three years remains the only hope for our canegrowers and the entire industry.
Because without canegrowers, there is no Fiji Sugar Corporation or the industry. This is a fundamental fact seemingly ignored by the FijiFirst Government.
We even outlined how the $50m could be used. With the cost of producing, harvesting and delivery of one tonne of cane averaging $45-$50 and with the price averaging $75 per tonne, some 9200 growers who produce less than the average 150 tonnes of cane earn a net income of $4500 in a season.
This income, in annual terms, is less than the (ridiculously low) $2.32 per hour minimum wage. That is why growers are in debt in perpetuity.
The forecast price this season is $65.69 per tonne of cane. Forecast price is discounted by 15 per cent —so the projected final price would be $75.
With the devastating effects of Severe TC Winston, growers in the affected areas of Viti Levu will receive depleted incomes because of crop damage.
It is therefore absolutely necessary to provide growers a minimum guaranteed price of around $90 per tonne to instil confidence in them to boost production. With the abolition of European Union sugar production quotas on September 30, 2017, our industry will be doomed unless cane production is significantly boosted.
Even if we were to produce 2,000,000 tonnes of cane for each of the next three years, $30 million will be needed each year to guarantee a price of $90 per tonne. The remainder of the $20 million can be used for cane planting programs and be provided as premiums to landowners to renew land leases of arable sugarcane land.
Government must realise its reforms are unworkable. Its plans and reforms for the industry have been an exercise in futility, driving growers out of cane farming and making the FSC technically insolvent because the four mills do not crush sufficient cane to remain profitable.
Instead of real and practical solutions, Government is now taking growers out of the frying pan and throwing them into the fire through the proposed Reform of the Sugarcane Industry and Sugar Cane Growers Fund (Amendment) Bills.
Growers have sent out a loud and clear message —enact these two Bills and Government will kill the sugar industry.
I believe growers refuse to be subjugated to FSC and Government any more. They want to control their own destiny by demanding the withdrawal of these two draconian Bills as well as the democratisation of the Sugar Cane Growers Council that will restore their rights and role as the largest and most important stakeholders in the industry.
It is still not too late for this Government to reconsider our proposal that was flatly rejected last week.
A kind and caring government, which FijiFirst professes to be, will gladly embrace any realistic and constructive solution proposed by anyone, even the Opposition, to fix problems that it has failed to resolve for 10 years.
It is simple — $50 million per year for the next three years will instil confidence in our growers, boost production, contribute towards our economic growth and boost the livelihood of some 200,000 people directly and indirectly dependent on the sugar industry.
There is no other alternative.
The National Federation Party submission made today as invited by the Parliamentary Standing Committee on Justice, Law and Human Rights on Recommendations on:
* 2014 General Elections – Final Report of the Multinational Observer Group
* The Fijian Electoral Commission – Annual Report 2014
* 2014 General Election – Joint Report by the Electoral Commission & the Supervisor of Elections
Fiji One News (Monday 11 July, 2016)
The National Federation Party says it would be fool hardy for Government to insist on taking the sugar industry bills to Parliament.
The Sugar Cane Industry Bill and the Sugarcane Growers Fund Amendment Bill, the Party says are being widely rejected by cane farmers.
After two consultations, farmers had asked for the Bills to be translated into i-taukei and Hindi.
“And they’re about Government’s plan to take control of the industry, including their own organisations like the Growers Council, Sugarcane Growers Fund and the rest of it, so what Government is trying to do through those two Bills will spell the death of the industry.”
Dr. Biman says farmers want control of the industry with a 38 member council to be reinstated.
“And its very important that they have an organisation where they are able to runt hat organisation, where they share the concerns, where they meet together, where they can share knowledge and experience and make presentations to Government and FSC on matters that affect them. Now the Sugar Cane Growers Council is controlled by Government, Government has taken the Sugar Cane Growers Fund so farmers have no control. It’s like we’ve gone back to the CSR days – where everything was controlled by CSR, farmers had no say.”
Fiji One News (Monday 11 July, 2016)
The National Federation Party has again highlighted a motion in tabled in Parliament last week proposing an increase of $50 Million for sugar cane development and farmers assistance programme.
The NFP is calling on Government to reconsider the proposal which it says could save the ailing industry, claiming that Government had for the last six to seven years done nothing to improve confidence in the sugar sector.
NFP Member of Parliament, Dr. Biman Prasad says the rejection of their proposal to increase funding to $50 Million a year over the next three years, could mean the death of the sugar industry.
“As you know the industry is on the verge of collapse. You have FSC (Fiji Sugar Corporation) which is basically insolvent. Government has continuously put in money into FSC over the last eight to nine years and nothing on the farms. And basically what we are saying is that if you want to rescue the sugar industry you got to get back to the farmers. The farmers over the last eight to nine years have had no support from Government,” Dr. Biman said.
NFP proposes that if the price per tonne of sugar is set at $15 per tonne that will guarantee a minimum price $85 to $90 a tonne for the next three years.
“If Government puts in $50M a year for the next three years and out of that $50M if the price per tonne of sugar is set at $15 per tonne that will guarantee a minimum price of $85 to $90 a tonne for the next three years.”
“Now that would cost Government $22-$23M a year. The rest of the $50M that we are proposing could go into premiums for landowners to renew leases, for cane access roads, for other developments, for replanting and so $50M a year is not a lot of money given the fact that Government has not put in anything basically anything onto the farms over the last eight to nine years.”
Dr. Biman said Government still has time to reconsider their proposal to rescue the industry.
“Its not too late for Government to reconsider its strength – allocate $50M a year for the next three years and I’ve said what are the components of that $50M – if you have a price subsidy of $15 per tonne, if you have a forecast price today of $70-$75 it will take the minimum guaranteed price for sugarcane to about $90-$95 that will inspire a lot of confidence in farmers because the cost of productions has been going up – we did not do any adjustment.”
Dr. Biman says the EU funds that was with-held in 2017 because of the 2006 coup was supposed to help farmers to cope with the rising cost of production.
“If you’re in Seaqaqa, the average cost per tonne is about $40-$45 and if the farmers have a forecast price of $70 what do they get at the end of the day? Peanuts. And so what we are saying is about $22M-$23M into price support. The rest of the $50M – which is $26M to be put into cane development, into landowners premium, getting the leases renewed, increasing acreage, that’s how you’re going to rescue the sugar industry.”
NFP had proposed reprioritising budgetary allocations from the FRA or the International Golf Tournament to help the industry survive.
Opposition Response to the 2016 Fiji National Budget
9.30AM – Parliament – Monday July 4, 2016
By Hon Professor Biman Prasad, Leader – National Federation Party & Shadow Minister for Finance, National Planning and Statistics
More Politics – Less Economics
Madam Speaker, it is my task today to respond to the Budget address of the Hon Minister for Finance – or the Minister of the Economy, or whatever he is calling himself right now. There is a good deal of politics in this Budget and I will certainly return to that. But in every Budget there is also a lot of detail and analysis which is the hard work of many public servants, and I thank them for that hard work.
A government gets one chance a year, Madam Speaker, to use a Budget statement to set out its vision for the country – for the coming year and the longer term. And this Budget has none. Unusually, the Budget does not even have a theme. The Government’s thought train seems to be like so many of those underused FSC locomotives in the cane belt – it has run out of track.
A few days ago, the Hon Minister attacked my party, the NFP and by extension the opposition, as having no vision for Fiji. This is one of those rare moments when he is actually required to listen to others, so let me set it out for him.
Our vision, Madam Speaker, is for Fiji to be an economically self-sustaining liberal democracy, made up of confident, self-reliant people who participate actively in their government. In our vision, those whose views are different from ours are respected and their ideas are taken into account.
In our vision, the benefits of economic growth are shared equitably and our people, particularly our young people, see opportunities and are free to act on them free of the dead hand of Government bureaucracy and control. In our vision, the government gives the people all the information, even when it is unfavourable, because we understand that this is the people’s right. In our vision, people are free to scrutinize and criticize their government and hold it to account when it fails them.
In our vision, Madam Speaker, we understand that from time to time the government will change hands in elections, so we must see our political opponents as our partners, despite our differences. This means that we must discuss and agree with them on the broad future direction our country must take so that when governments change, social and economic growth continues. In our vision, we have first class health services and an education system that responds to the demands of the twenty-first century, and in our vision our poorest people have hope that their children’s lives will be better.
And what, Madam Speaker, is the vision of this government? It is of a stage-managed democracy. Under this government opposing views are treated with suspicion and paranoia and critics must be punished and suppressed. Under this government people look over their shoulders to see who is listening before they speak their minds. Under this government economic growth is created by frantically spending money and increasing debt. But the benefits of that growth go to the rich while the incomes of working people are stagnant. Under this government poor people are only seen when the government is giving them handouts and the Fiji Sun’s cameras are ready. Under this government, Madam Speaker, our education system is a bumbling bureaucracy and our health system is appalling. And this Government is afraid to listen to alternative ideas, because above all they fear losing power.
They will do anything to keep it for themselves, even if this means distorting democratic principles and undermining our institutions, such as an independent public service. This, Madam Speaker, is the reality of our so-called “true democracy”.
Unfortunately, the Fiji First Government seems to think that all that is involved in a vision is to spend taxpayers’ money and never mind the deficits and the debt. It seems to think that roads, bridges and schools are something new. It behaves as if there was no development in Fiji before Fiji First party arrived on the scene. They forget that Fiji was once a thriving democracy, not a manufactured one, when we robustly debated ideas and listened to and learned from the people’s criticism. And until the people regain the right to participate actively and vigorously in their government, we will not be a confident, prosperous and equal society.
Madam Speaker, this is a small-minded Budget. It is big on vote-catching spending promises. But it offers no vision on how to prepare our country for the many economic challenges before us. Let me give you just one example. After the worst natural disaster in its history, Cyclone Winston, we face, in 2017, a new economic disaster. There will be a crash in our economic returns for sugar. From about $192 million in sugar receipts that we received in 2015, we will probably receive no more than $135million in 2016. This will not just affect cane farmers. It will affect communities, towns, regions – and ultimately the whole country. The social and economic disruption will be severe. We have all known about this for years. And what is the Government’s plan? What is its strategy to prepare us for this? It is a subsidy on fertilizer. That’s it. The same tired strategy that we have had for more than 10 years. And the results of this have been uninspiring.
There is another initiative that apparently excites the government. . They have re-named ministry of Finance to Ministry of Economy. We hope the government will forgive us when we say we are underwhelmed. Changing the Ministerial letterhead is not vision; it is merely self-importance.
Madam Speaker, in November last year I called the Government’s last budget A deceptive budget of a confused government. It had no clear theme or direction. It was all over the place. VAT was reduced for the rich, but the poorest people will pay more VAT. The 2015 tax incentives for the tourism industry were taken away for 2016. In 2015 it had increased duties on luxury items – then in 2016 it reduced them. To put it simply, the 2016 Budget was consistently inconsistent.
The 2016/2017 Budget is no better. It may be good politics, but it is bad economics. It fails the test of fiscal responsibility. Fiji is running another huge deficit – 4.7% of GDP – using Tropical Cyclone Winston as an excuse. Of course we must pay for cyclone recovery. But we must do that by cutting back on spending, re-prioritising and raising tax in the right places. There have been no attempts to cut non-priority expenditure such as the Fiji Roads Authority allocation, subsidising golf tournaments, and covering Fiji Airways and FBC losses. Government debt will pass $5 billion in the next few months. We will be paying for Cyclone Winston for many years into the future. When economic growth begins to slow down, how will we pay for all of this?
Or is the Government simply thinking ‘we must get past the 2018 election, we will worry about that later?’ Which government will be left to clean up this mess?
Madam Speaker, Government’s decision to change the annual financial year to a July 31 year-end now is very convenient. It enables the government to bury their economic bad news for a little bit longer. The Hon Minister talked talked at length in his Budget speech about all the money he will spend. But he was strangely vague about how he will raise it. “We will improve tax compliance”, he said. He said nothing about asset sales. This is the sale of shares in Airports Fiji Limited and the Fiji Electricity Authority which he has promised for two years and which is supposed to raise $500 million. Of course it is not good economics to sell assets to pay for recurrent expenditure – but he has budgeted to receive this money, and it has not come in. This delay is costing taxpayers millions of dollars in interest payments each month.
Madam Speaker, there are a few aspects of the Budget that we support. This includes the fact that after almost 10 years in power, the Government seems to have discovered that disabled people exist and need support. The budgetary allocations towards their facilities are welcomed. The 300% tax incentive on their wages sounds impressive, but it is not particularly effective. It means that an employer who pays an employee $10,000 per year avoids paying $6,000 in taxes. There are many good employers in Fiji who already incorporate the employment of people with disabilities into their business culture. They too should be consulted on the most effective way to bring people with disabilities into the workforce. We need more imagination than an ineffective tax incentive.
We also welcome busfare concessions for people with disabilities – but we do not see incentives for other public service vehicles that take due care of the dignified transportation of those who are permanently wheelchair bound.
Furthermore Madam Speaker, we look to you to ensure that this House, the Peoples House, and its precincts lead the charge by ensuring disability access everywhere including rest-rooms and parking spaces.
We also welcome the increase in excise tax on sugar sweetened and carbonated drinks by 20 cents per litre, particularly in the fight against NCDs. This is not a big enough long-term deterrent. What we need to hear from Government now is what it plans to do with this tax after this year. Progressive increases in these taxes should be mapped out in consultation with the Health Ministry and the drinks manufacturers. This enables everyone to work together and the affected businesses to adapt their products and marketing campaigns without losing profitability. The most effective way to change the fizzy drinks culture is for the manufacturers to market healthier choices. They can do this if they understand that the Government will be consistent about increasing taxation on unhealthy products and the Health Ministry will give them support in promoting healthy ones.
For the benefit of the government, that is an example of how you show a little bit of vision. Madam Speaker, additionally, I am not sure if the decision to remove the requirement for special labeling for baby formula is the right thing to do. Addressing NCD issues starts very early and special labeling is important to ensure that mothers have the right baby formula to use. I hope it is not an attempt to help some manufacturers and importers in Fiji.
In addition Madam Speaker we need to urgently address the eyesore of plastic packaging that is choking our land and marine environment. We ask for appropriate tax measures with incentives for alternative and environmentally friendly packaging to be looked at soon. Our oceans need as much help as they can get and our tourism sector, I am sure, would only agree with us that it is good business to maintain a pristine environment.
Madam Speaker we remain disappointed that the 9% VAT on zero-rated goods remains in effect. Changing this would have been a win for the people. This is particularly true at a time when thousands must divert their already small incomes to cyclone recovery. The poorest people continue to be affected by a new regressive tax on their basic food items, for which they have not been compensated in any way, even by an increase in transfer payments through the Social Welfare system.
Madam Speaker, the government has repeatedly boasted about sustained economic growth over the last few years. However, in reality most wealth is being created by Government spending money that it does not have. Perhaps renaming Ministry of Finance to Ministry of Economy is the right thing!
Government is not just trying to manage it, it seems to be mainly responsible for creating it, even if this means piling up debt, which is close to $5 billion.
The Government seems to be proud of a long period of positive economic growth. But if you average it out over the last eight years, that is, between 2008-2015, the average growth rate has been just 2.8 %. Compare this to Mauritius and other similar and fast growing countries, countries the government wants to emulate, where sustained economic growth on average is much higher than the 2.8% average.
But Madam Speaker while our economy has grown modestly in the years since 2006, Government debt has increased by 40%. Government debt cannot increase faster than the size of the economy. That is the path to economic disaster.
Economic growth driven by government spending and consumption is obviously not sustainable. Growth in tourism is modest and now seriously impacted by excessive taxation. There is nothing significant to report about growth in other sectors of the economy. The Minister said nothing in his speech about growth in jobs, or growth in the real incomes of working people.
What is the vision to achieve this? Where is the plan? There is a tax-free region here and a tax incentive there – but nobody knows when the Government will change its mind, so investors – real investors, who will create jobs and growth and new industries – do not have confidence. And the business community is too afraid to speak up about what needs to be done, in case it is marked for punishment at a later time.
Madam Speaker in The Fiji Times of June 18 this year Mr Liam Hindle spoke out about the effect of taxation on his business. He has operated restaurants and nightclubs in Suva for 40 years. He described the current combination of VAT, Service Turnover Tax and the so-called Environment Levies as “the most serious challenge to our business in that time.” He has had to reduce operating hours and reduce staff. He made some reasonable suggestions about how to improve the fairness of the tax system to help his business and others in Suva.
This article caught my eye because it was one of the few times when a business person has had the courage to publicly criticize the government. His courage was important. This is not because it made the Government look bad, but because it offered the chance for people like me to understand his business better and to contribute to the debate on how we could help in the creation of jobs and wealth.
But I have no doubt, Madam Speaker, that when the Minister in his Budget speech attacked business people for blaming the tax system for their problems, he may have been taking aim at Mr Hindle. After all, Mr Hindle had the courage and honesty to suggest that all was not perfect in the country. The government meanwhile, had the temerity to suggest that people like Mr Hindle, a man with 40 years’ experience of business, did not understand finance.
In the last Budget speech the Minister lectured businesses about lowering their prices and selling more products to be successful. Madam Speaker, the Honourable Minister and I have at least one thing in common. Neither of us has ever owned or run a business. I am trying now Madam Speaker! The difference between the Minister and me, however, is that I am certainly not going to lecture business people on how they should run their businesses when I do not know what I am talking about.
Some Common and General Features in this and the last few budgets of the Fiji First Government
Madam Speaker, this budget has features in common with the last few budgets of the Fiji First Government.
1. First of all, the capital expenditure programme is high. The government is very proud of the fact that its capital expenditure is more than 30% of his Budget and past budgets. Maybe, Madam Speaker, it is the government which does not understand finance, or perhaps basic mathematics. If you borrow and spend large sums of money for capital expenditure, of course the proportion of capital spending in your budget will increase. Nothing could be more obvious. The real question is how we are spending this money and how we are going to repay the debt we have created.
The Fiji Roads Authority (FRA) has had huge budgetary allocation. There have been no proper audits, no efficiency assessment and no assessment of value for money. Madam Speaker, it is not unusual for dictatorial governments around the world, who are hell bent on remaining in power, to show this kind of extravagance on infrastructure programme. In fact, Madam Speaker, this one of the many reasons why I have described this Government’s budgets as more about politics than economics.
This government forgets that many of projects were delayed because of the coup in 2006. As a result, infrastructure has cost the people of Fiji much more money. For example, the Dreketi-Nabouwalu road, a very good project, was due to have started in 2007. It was budgeted to cost only $72m. It has ended up costing us about $220m, more than three times the budgeted cost. I also notice, Madam Speaker, that many sections of the road are already being worked on again. Are we getting value for money? Have we had an audit or an evaluation of how this money was spent? The allocation for Water Authority of Fiji is also large. The same questions need to asked. What lessons have we learned from the past?
2. Next we see increases in social welfare such as free tuition, free text books, free milk and free medicine scheme and water and electricity. As well as being good ways to catch votes with taxpayers’ money, some of these could be good initiatives if they were well thought out and managed. However, the question is: How effective are they? If you read the Fiji Sun, of course, they are perfect and everything is fantastic. In reality, free textbooks have been a two-year fiasco and free medicine has proven elusive. If the Government was truly concerned about how well these initiatives were working it would call for an objective evaluation of these schemes so that they were better targeted and implemented. In reality, Madam Speaker, the Government does not really care about how well these programmes are implemented as long as they can keep telling everybody that they are there.
3. The third feature is the continuing increased allocation to the military. For example, $78 million for peace keeping. What are we gaining from this expenditure? Fiji in our view is losing out on peacekeeping. We are not getting value for money- we should review this part of the RFMF expenditure allocation and redirect to some other priority areas.
4. The fourth feature of recent budgets is that there is a massive allocation to Head 50. Head 50 is for so-called “miscellaneous expenditure”. How can there be an allocation of just under $400 million – this is more than 10 % of the total Budget! – to “miscellaneous expenditure”? This allocation reflects poor planning and allocation and the lack of trust in other ministries and ministers to oversee execution of the expenditures. It also allows the politicization of expenditure by the Government. Madam Speaker if you add this amount in Head 50 to all the amounts on requisition, the Minister of Finance (Economy) alone will effectively have a control of the about 50% of the total expenditure of $3.6 billion in this budget amounting to about $1.8 billion. This raises several questions. Will the Ministry have the capacity to centrally deal with this volume of expenditure and requisition?
Will it lead to better efficiency in expenditure management? Will the staff in the Ministry of Economy have the capacity and the time to respond and facilitate all requisitions? It is more likely that this zeal for control will stifle timely and appropriate expenditure by different ministries.
GDP Growth forecasts
The growth rate of 2.4% projected for 2016/17 is merely a reflection of the reconstruction work, cash distributions from the FNPF and “Help for Home” initiative and other post-cyclone related expenditure, much of it funded from increased foreign aid. The 3.7% and 3.2% rates for 2017 and 2018 respectively are optimistic. The cyclone has destroyed productive assets as well as people’s homes and, when cyclone rehabilitation spending goes down, there will be little to replace it. Madam Speaker as I said before what we talking about here are very ordinary performance by this government as far as economic growth is concerned.
I raised the question in the last budget response about growth and that is: Where did it come from? Let me remind the House of what I said. And in doing that, I will comment on what the Government has done – or is not doing – to address those issues:
– First, we had elections and a return to democracy – at least, some kind of democracy – which boosted economic confidence and released some pent-up demand for investment. The real question is not “how well are we doing now”? The real question is how much better we would be doing now if there had been no military coups and eight years of military government.
– Second, we have been borrowing and spending to keep up economic growth. And we all know that this is not sustainable.
– Third, we have remittances, which at F$430 million in 2015 is our second largest source of foreign exchange income, ahead of sugar and behind only tourism. The Minister for the Economy never talks about the contribution of remittances to the economy, because they are testament to the failure of this Government to give opportunities to our people, forcing them to go elsewhere in the world.
We receive remittances because of the economic growth of other countries. We receive these remittances because our people can find better jobs overseas than they can find at home. This is a real credit to our people and their marketability. Even when I often lament how much Fiji loses out on in terms of brain drain, I understand their choice. Our people work overseas because they cannot find opportunities to put their skills, experience and productivity to good use in their own country. Fundamentally Madam Speaker, we need to understand that remittances fund only consumption expenditure. Remittances do not multiply growth and jobs in the way proper investment does. They do not create productive capacity in Fiji. They do not create skills and training opportunities in Fiji. They do not create a base from which we can create economic growth. In fact, they retard long-term economic growth because they deny the Fiji economy some of our most productive people. This is one of the stark realities of our economy.
If the Government had a vision, it would be thinking of how those skills could be applied in Fiji. Take our caregivers, most of whom look after elderly people in the United States. For example, have we ever looked at how we could generate rest homes for the growing number of elderly people in Australia and New Zealand, many of whom remain relatively fit and mobile? Perhaps until our health facilities improve this would be an impossible dream. But perhaps if the Government saw an economic return, it would be prepared to invest in those facilities.
– Production in the real goods sectors, such as gold, fish, and garments actually fell in 2014. Agricultural production as a whole fell by about 2.4 per cent in 2014. So there is no economic miracle. Pent-up demand, Government spending and the sacrifice of Fiji citizens offshore are why our economic growth figures remain buoyant.
What about the future? Even after all the borrowing and spending, is the Government’s growth sustainable? Apparently not. 2014 growth was 5.3%. In 2015, it is projected to be 4.3%. It falls further to 2.4% in 2016 due to the impact of Cyclone Winston and 3.6% in 2017 and 3.2% in 2018. Growth forecasts for 2017 and 2018 are overly optimistic and are expected to be lower as the re-construction work slows down.
The Government ought to know that you cannot keep borrowing and spending your way to economic growth. Like every household, you can borrow to have a party, and everyone feels good for a while. But pretty soon the party ends and then it is time to pay the bills. We cannot have a Government spending party on roads and airports every year. Yes, infrastructure is critical but not at the expense of three square meals a day of the taxpayers. The very same taxpayers who pay the bills for the party and for whom much is demanded in every budget session.
I said in my last address that, the government is running out of tax tricks to keep spending consumer high. For 2014, income tax was reduced. This pleased many people – particularly the richest people, whose tax bills went down. But it also put money in consumers’ pockets to spend. So increased consumer spending boosted the growth figures. But the government cannot cut income taxes again. That was a one-time trick.
In the government 2016 budget had cut VAT and import duties on luxury items. This is the real reason why they had reduced VAT so that people supposedly have more money to spend. Their spending will, again, boost the growth figures. But they cannot cut VAT again. This too was a one-time trick. And there are no more one-time tax tricks left.
Perhaps I am wrong. Perhaps changing the fiscal year is the last one-time trick.
After all, it means that the Government can, in those last few critical months before the 2018 election, avoid revealing to the people the true results of its economic performance.
In February 2016 we were hit by the worst cyclone ever to reach Fiji’s shores. This has created a real human tragedy and those of us on this side of the House have been shocked and saddened at the devastation caused by Cyclone Winston. We were also saddened that the Government did not take this opportunity to work co-operatively with us. The Opposition extended their hand of support to the Government. We even contributed, directly from our own salaries, towards the Prime Minister’s own disaster fund. But our offer of help was rebuffed. Even at the time of a national crisis, the Government wanted to use cyclone rehabilitation as a political opportunity.
For Government, cyclone rehabilitation and relief has again added to the Government’s ability to increase short-term consumer spending. The FNPF withdrawals Madam Speaker which I first suggested amongst others to deal with the aftermath of the destruction including the call for housing grants that will boost demand in 2016. Some of this may continue in 2017. The Government took on board some of the Opposition’s ideas Madam Speaker but they would not credit the Opposition with those ideas. There is a saying Madam Speaker, which is as follows: ‘There is no limit to what a man or woman can do if they do not mind who takes the credit’. So Government can take credit for these short-term grants but the Opposition is happy that people have benefited from both FNPF withdrawals and housing grants. Having said that, there were clearly significant levels of abuse of these grants. It does not seem clear to us why people in Suva were handed grants so easily when clearly there was less damage and destruction in the Suva area. There needs to be some learning from this experience.
If people are silly enough to destroy their own pension plans by taking funds from their accounts, we will need some better way to manage these schemes.
Grants for reconstruction of homes destroyed by Cyclone Winston is a good initiative. The Help for Homes initiative by Government lacks of imagination. The Government had the time to think and plan on how these rehabilitation funds could be spent. In the end, however, it opted for just grants.
Madam Speaker, climate change is here to stay. We would be blind if we did not believe that there are many more destructive cyclones in Fiji’s future. So can it be a good use of public money simply to give people money for building materials to repair homes which may be destroyed again in the next cyclone? Why is there no scheme by which Government, perhaps with the help of skilled non-government bodies here and overseas, could not work to build more permanent homes for the people most exposed to cyclones?
We understand, Madam Speaker, that there is not enough money to build everyone a cyclone-proof home. But if we could apply limited funds to at least building cyclone-proof central cores for people’s homes, this would ensure that they were kept safe from destructive winds and had basic shelter afterwards, even if the rest of their home was destroyed. Over time, people could be encouraged to extend the construction of their homes to cyclone-resistant standards as their incomes allowed.
This is another example of how the Government’s main concern is to push money into the hands of the people without any thought for the long term. Thousands of people remain homeless now. And after the next cyclone, this will be repeated, with more loss of life. And we will have to borrow and spend more money, because we have not planned ahead. The lack of thinking now, the lack of vision and the lack of any genuine interest in long term solutions is deeply frustrating for those of us who care about the long-term future of this country, not just the next election.
Third, disaster is looming for our sugar industry. In 2017, prices for our sugar will fall to less than half of what we are earning now. We all know this. We have known this for many years. And in 2017, the collapse in the cane belt economy will begin.
The incomes of farmers, cane cutters, rural shopkeepers and their families will be slashed. There are no tax tricks to turn this around. And Government has no plans ready for this. The closure of Rakiraki mill will ruin the economy of Rakiraki and Tavua. Once again, Government has not dealt with this issue. Government has no plan. It has certainly not consulted those communities about how it can help them plan for their long-term futures.
Madam Speaker, the Government is hoping that its spending and tax tricks will create a growth cycle that will encourage private sector investment. This is a gamble. If it fails, Fiji will be deeper in debt with bigger bills to pay.
Private sector investment will not follow unless our politics is stable, our economic fundamentals are right and our economic policies are consistent.
Revenue Measures, Debt and Borrowing in 2016/17 Budget
The key revenue measures in the 2016/17 budget are a continuation of the strange and contradictory smorgasbord that we saw in 2016 budget. If we analyse the 2016/17 revenue collections we see an increase in overall revenue. Direct taxes collections show an increase of about 12% from 2015/16 to the 2016/17 financial year. This is a huge increase. We cannot see how this will be realised. Collections of indirect taxes (VAT) show an increase of about 9%. You would recall Madam Speaker that in the 2016 budget while government reduced the VAT from 15 to 9%, it also imposed a VAT of 9% on basic food items. This was, as we said then and continue to say now, a wrong move. It broke the promise of the Fiji First Party in its 2014 election manifesto. Other increases in indirect taxes such as customs duties, STT, water resources tax, airport departure taxes, stamp duties, levies, fees, fines and other charges and penalties are all going to add additional burdens on our people.
Despite all these increases in revenue measures including those which are promised from asset sales, we will continue to see the people of Fiji being burdened with more debt and eventually the people now and in future will have to bear the burden.
Let me Madam Speaker now turn to our debt levels and borrowing. Between 2006 and 2014 government debt rose by $1.136 billion — nearly 40 per cent. This has now been increased further.
Total debt does not include government guarantees for statutory bodies and government companies. These are contingent liabilities. They are not budgeted and accounted for. If any of these guarantees were called on, government debt would again go up. These liabilities were $2.4 billion in June 2014 — that is, another 30 per cent of GDP. In 2015 it went to 30.7%. These contingent liabilities are real exposures. If we add this to our debt to GDP ratio of 50.4% we would end up with a total exposure of about 81% of GDP.
Over spending and debt levels have put the government in a tight fiscal space. In 2015, Government restructured the payoff methods for a US$250 million debt of which US$200 million remains. In 2014 and 2015, most of the planned asset sales that were factored into revenue projections remain unsold. Half way into 2016, there is still no news. Thus it is not surprising that the government is ready to draw down a US$50 million borrowing facility that was approved in 2014.
In the 2016/2017 budget the government will have to borrow $620.6 million. Of this, $329.1 million will be from overseas loans and $291.5 million from domestic loans. The total debt projected as of July 2017 will be close to $5 billion. Madam Speaker this means that as of July 2017, every citizen of this country, children, men and women will be burdened with a debt level of about $6000 each.
One worrying feature of the debt trajectory of Fiji is an increasing trend towards more overseas borrowing. External debt is projected to be about $1.6 billion dollars amounting to about 16% of GDP and 32% of Fiji’s total debt. The total debt to GDP ratio is about 50.4%. This is about 10% higher than it should be in a well-ordered economy. In many countries it is of course worse than this. But we should not be measuring our economic performance against those countries. Total debt increased from $ 4.2 billion in 2015 to an estimated $4.5 billion in July 2016 and then to $4.9 billion in July 2017. This means that every year we could be paying more than 30% our total revenue for debt repayments. For every three dollars we raise in revenue, we pay one dollar to our creditors in interest and debt repayments. That is money that is denied to the people for health, education and other services. So when we borrow money, we must know that we are borrowing for good purpose and not just to pay for another of the government slogans and publicity and campaign stunts.
When are we going to pay back this debt? And when are we going to stop the spending party?
High external debt is also a worry as it has implications for foreign exchange. Our export base is weak and the projection for total exports for 2016 shows a decline over 2015. The prospects for increasing our major commodity exports remain weak and unlikely to increase in the future give the declining prospects for sugar.
Timber exports remain weak and here I want to pose this question to the government. What happened to the so called Mahogany exports? I don’t see any discussion on it at all? What happened to the plans for mahogany guitar exports that was launched by the Prime Minister in April 2012?
Employment, wages/salaries, poverty/social welfare
Madam Speaker just before the Budget announcement the Minister of Finance went on yet another so-called consultation tour, closely followed, of course, by the Fiji Sun. This time, apparently, he was talking to school students. He told us in his Budget address that these young people would soon be going into the universities and the workforce. But he forgot to say that many of them will remain at home, desperately searching for any kind of job, just like the university graduates who have now left university. Some may be able to find low-paying jobs that do not enable them to develop the skills they have acquired. And they may consider themselves the lucky ones.
Employment remains a major issue for our people. Youth unemployment in particular has been on the rise and government has not been able to address this issue. Growth must lead to productive, inclusive and well paid employment. Many people are asking the important question that if growth is taking place in an unprecedented manner as claim by government then where are the jobs? The reality is that very few jobs are being created in an economy driven by consumption led expenditure.
The so-called employment creation reform by the government is merely about the services of the National Employment Centre. It is an important institution that does help young people find some avenues to search for jobs but Madam Speaker if there are very few jobs available then even the NEC cannot help the people. Yes, we can send some of them to New Zealand and Australia under seasonal worker scheme and government’s effort to facilitate that is commendable but it does not solve the underlying problem of unemployment, low wages and salaries for those who manage to find employment.
The national minimum wage rate of $2.32 Madam Speaker has become a joke around grog bowls. What we need Madam Speaker is a just and living wage for our people. Employers were quick to embrace the $2.32 minimum wage and continue to laud government policies and some continue to obsequiously support government policies which they know are detrimental in the long-term. This culture of sycophancy and servility that has beset this country has killed debate and honest discussion of government policies. Employers have to understand that ultimately only a just and living wages for our workers will increase productivity and create real demand, which will be in the interest of everyone.
I acknowledge the Minister of Finance’s assurance that this ridiculous wage rate will be revisited. I intend to hold him to that promise.
Civil service Reforms, wages and salaries
Madam Speaker, I said a lot about civil service reforms in my address last year and not much has changed since then. The promised reforms are still under consideration. However, no plans have been presented to Parliament for us to understand what is the nature of the reform. As usual, the talk is well ahead of the delivery.
Madam Speaker, an independent, efficient and effective civil service is necessary for any government and country. Madam Speaker, this is the first government which has turned the civil service into a nightmare. Civil servants are under siege.
Indecision, inefficiency and a culture of fear and intimidation have become the order of the day. Some ministers and senior officials in some ministries are on a rampage under the protection of the Constitution, which allows the Minister to have the final say on any appointment. In some ministries, nepotism, promotions based on whom you know, disregard for established MQRs and other criteria have thoroughly demoralized the civil service.
Madam Speaker, let me implore on the government to relook at the Ministry of Public Service. Madam Speaker, we recommend that government appoint an independent body within the Ministry of Public Service which could operate like the Public Service Commission and have an oversight of all public service appointments, promotions etc. to keep it independent.
Otherwise Madam Speaker, we will have what we have now – a thoroughly politicized, demoralized civil service. Already Madam Speaker, the switch to contracts in the civil service has created chaos, instability, insecurity of employment and arbitrary decisions by Ministers. I know staff in government had their contracts lapsed for as long as a month before new contracts are issued and in between they have lost out on pay. This Madam Speaker is unacceptable. We need to go back to tenured appointments in the civil service. Recruitments should be based on strict merit based criteria so that we attract the best minds and keep them in the civil service. The current practice will drive many young and bright people away from civil service jobs.
The government’s commitment to raise doctors’ salaries is commendable and it something that was long overdue. Madam speaker, civil servants including teachers, nurses and police officers have not had decent pay rises over the last 9 years. Madam Speaker, teachers are the worst affected. By our calculations they deserve a pay rise of about 20%. What they had in the last 9 years was a restoration of 5% pay cut in 2007 and a small rise later. If we add carefully the rising cost of living, teachers, nurses and police officers all deserve about 20% pay rise.
Poverty and Social welfare
Madam Speaker, government in the last 9 years has not been able to address the issue of poverty. I don’t believe the figures on poverty that government took so long to arrive at. We believe that the poverty rate remains around 32 percent and estimates suggest that another 35% are just above the poverty line. This means Madam Speaker that about two thirds of our households are barely making ends meet. Government claims that its social welfare programmes are cushioning the effect of low wages and those unemployed. For some that may be true but for a large majority despite that help, the life is a struggle.
The minister, in his budget address talked about ‘a journey that all of us will make together with no Fijian left behind”. Madam speaker, that is a very noble statement which we would all support if we could see it being implemented.
However, Madam Speaker much of the other measures for enhancing social welfare are band-aids. They are not going to cure the long and sustainable diseases of poverty and destitution. In fact we should separate support for destitution and support for those in poverty. Some of the policies for addressing destitution are good and we support those. But those in poverty will need government policies that reduce the burden of high cost of living, address the problem of low wages and unemployment.
Madam Speaker, an estimated 72% of the population earn below the income tax threshold and therefore the majority of them would be hit by the imposition of 9% VAT on basic food items.
It is simple. If you are going to hit the poorest people in this way, it is the obligation of any responsible Government to cushion the blow. But Social Welfare payments are not increasing. And what will happen to those people who do not receive any Social Welfare payments, pensioners and those on fixed incomes?
Madam Speaker, we are talking about the 60,000 households that are on or below the poverty line.
The Government should remove 9 % VAT on basic food items to address the high cost of living and to help low income earners and the poor. In fact at should add another four items as basic food items.
Health Service Delivery
Madam Speaker, if you randomly ask 10 people today about the delivery of health services in Fiji, 8 out of 10 will tell you how pathetic the services have become.
You go around the country and you will see the dirt, lack of cleanness, lack of proper equipment, lack of medicine, lack of emergency services, long waits etc.
Madam Speaker, children, men and women are dying because of lack of care and facilities in our health centres and hospitals. I have had first-hand experience Madam Speaker in witnessing the deterioration of health services and facilities, whether it is in major hospitals, health centres or nursing stations the situation is the same. Recently Madam Speaker I was in Vanua Levu and took a sick lady to the health centre.
Madam Speaker, you will be appalled to see the pictures I have of the health centre. The waiting shed blown away during the cyclone is still not repaired five months after the cyclone. There is a qualified doctor there with but even his little office where he examines patient is a little cramped cubicle and it does not look like a Doctor’s room. Obviously, the Doctor, nurses, staff are demoralized and helpless in not being able to get themselves heard. I am sure there are similar stories elsewhere.
The health budget for 2016/17 has markedly been reduced to 2.6% of GDP. This will put us at just over half of the World Health Organisation recommended ratio of 5% of GDP. Instead of increasing our health budget we are regressing. Fiji remains the country with the lowest health budget in the Pacific as a proportion of GDP. I sympathise with the Minister of Health Madam Speaker. He is not being given the tools to meet essential needs. What could be more essential than health?
Why can’t some of that Head 50 fund of $373 million be given to his Ministry instead?
Much of the health programme seems to be for political consumption.
Implementation and effectiveness leaves much to be desired. The free medicine scheme with an allocation of $10m remains disjointed and ineffective since 2015. Under Amendments to the Pharmacist Decree 2015, retail, private pharmacists are forced to be part of the scheme under threat of fines. Yet 18 months after its announcement no one has access to the wonderful list of items said to have expanded to 140 odd items? There is no logistical support, no IT centralization and backup, no storage space and no human resources provided for the efficient and effective delivery of free medicine for those eligible. Medication and consumables are also not provided and some have expired without use.
Only an estimated 20,000 people registered for the scheme in the last two years.
They are frustrated by the apathy of staff and health management. It is a program which looks good on paper only. The implementation of the scheme needs a review and a total overhaul. Of course the Minister of Finance (Economy) will never agree to this. He cannot afford for his Government to look bad in the short term, even if the review would give people long-term benefits.
Not withstanding, we strongly recommend a re-evaluation of the medical positions structure with sub-specialty trained specialists and a general increase in manpower as expatriate engagement is a short term measure.
In the meantime I want to ask the following 12 questions and the Minister for Health in his response may wish to answer these.
1. Why is government not filling the Specialist Gaps in the system? We are told there has not been a single recruitment in the last two and a half years to bring in expatriate doctors to fill needs in Ear, Nose, Throat, Skin, Radiology, Psychiatry and Pathology specialists as we don’t many local with specialist status in those areas.
2. Why is there so much delay in right sizing of the Medical Establishment? It seems we are working on an old establishment structure which is not coping with new specialty and new specialists returning without positions to keep them engaged locally in the public sector?
3. When will the Minister review the Fiji Pharmaceutical and Biomedical services which needs a major overall? Why was a recent $US5 million tender allocated to an unknown local chemical importer for High Technology Biomedical Equipment when the most economic practice of going to the manufacturers was identified to provide, warranty, post warranty service contracts with Government budget allocations of $1 million? The selected company has no background in biomedical procurement, warranty and post warranty service. When parts need replacement then the expertise to repair, replace and provide on time replacement will be nonexistent. Even by a flight of imagination then the costs charged by the middle men will be much higher than that of the manufacturer! We revert to old habits when corrupt dealers became sole suppliers and milked the Fijian tax payer with poor quality equipment and technology.
4. Why has Ministry of Health MRI machine been down for over 6 months? And why is General Laboratory equipment not operational most times and patients sent to private centers who use the same technology and equipment?
5. Why are we reverting to buying old style medicine when new items come of the patency period with marked reductions in cost/ per item?
6. Why are we short of life saving medication in Emergency departments for over 6 months: Clot dissolving medication is out of stock and young men in their thirties are dropping dead because someone has not placed the order in a timely manner or the system delays urgent procurement!
This is a daily event in our Emergency Departments and a source of great frustration for our clinical teams. Worse off we do not have basic penicillin and its derivatives in hospitals!
7. Why has the NCD allocation been reduced to $600,000 when $1.2 million was allocated in 2013-14, when you are constantly heard telling the public that NCDs are Fiji’s biggest public health threat? Why has the additional and alternative revenue generated by Tobacco taxation been taken away from Health allocation? If 80% of our deaths are NCD related, the Government allocation does not indicate any resolve to address the crisis.
8. Why is the Emergency Department at Lautoka Hospital making slow progress but the additional Operation theaters have been quietly shelved? Are the lives of Westerns not ready for better, regular surgical services?
9. Nadi Sub divisional Hospital has not been coping well and we have had many problems including cases of negligence and death. A large growth area with Tourism sector development needs urgent decentralization of health services from the Nadi hospital.
10. What is the status of Votualevu and Korovuto Health Facilities? Was Keyasi Sub division hospital upgrade a priority when the population base is small, scattered and the current Health center has developments with an inpatient facility? Was this simply political maneuvering at great expense to tax payers? Makoi Birthing Center has been in the incubator for rather long! We have heard of its completion date from 2013! Can we be realistic! Naulu Health Facility: We note a budget allocation in 2014 yet nothing substantial have taken shape apart from ground work? Nausori Hospital: A large segment of the population covering Nasinu,
the three provinces of Rewa, Tailevu and Naitasiri needs urgent attention, improved services and quality inpatient services. This Hospital development has dropped off the radar after three years on the planning phase! An overcrowded, fragmented facility next to a burial ground, old market place in the town center. What is the problem? Who is responsible for this hold up?
11. CWM Hospital Maternity Unit Development had an allocation of $2.9 million for ground works for the last several years. What is the occupancy rate? Do we have enough midwife’s? Why have we not been able to address the public’s complaints of medical negligence.
12. Why is there no mention of the Radio-oncology Unit Development in this budget, when we have committed to the International/ UN/ WHO Forums that the service will be open by 2020?
Madam Speaker, it seems there are many arteries blocked in the health Ministry. I am not sure if a process of stenting would do the trick or we need surgery to fix the deteriorating health services and facilities. Many people who die Madam Speaker would not probably die if we step up our facilities and service delivery. We call on the on the government to immediately appoint an expert independent inquiry into the health services and recommendations from the inquiry could be implemented urgently to address the worsening health situation in the country.
Education Service Delivery
The allocation for the Ministry of Education has been increased to provide for the reconstruction of many of the schools that have been damaged and we do hope that it is managed efficiency and effectively so that we can get the children out of the tents and temporary shelters to more permanent classroom and facilities.
Let me Madam Speaker repeat what I said in the last budget response with respect to quality of education.
– the Education Minister made some shocking admissions about the quality of our education system. At least he had the courage to say that all was not perfect. In particular he identified deplorable pass rates among our secondary school students – 15% passing maths and 20% in the sciences.
Madam Speaker, education should not be a political football. Education is a long-term issue which needs to be addressed over a long term, without regard to election years. This is an example of the need for bi-partisan co-operation, so that even if there is a future change of government, our education policy stays on course.
Again Madam Speaker, let me ask the government to consider our suggestion to appoint an Education Commission. The last one was in 2000. It has been 16 years now and many changes have occurred over that period. It would be a good thing for the future of education to have an independent group of experts to review the policies over the last 16 years and assess whether we are making progress towards quality education.
Madam Speaker, the twin objective of export promotion and food security for the agriculture sector is an important one. However, we have to understand that agriculture sector is increasingly coming under stress because of shortage of labour. Mechanization even on small scale is the way to go. It therefore disappointing that budgetary allocation of just $1million has been provided to support farm mechanization.
One of the other key obstacle to efficiency and productivity in the agriculture sector, especially in the non-sugar crop sector is the lack of research and extension support. Again it is disappointing to note that a total of less than $1 million is provided to research for the crop sector under $1 million for livestock research.
Madam Speaker, non-sugar crop sector and livestock has a significant potential for growth. Unfortunately, government allocation does not reflect its often stated goal to boost the agricultural sector.
Madam Speaker, for more than 100 years the sugar industry has been the backbone of our economy. This stopped after the turn of the century when tourism and later Fiji Water overtook sugar as the largest foreign exchange earner.
For more than 100 years, including the indenture period, the sugar industry has weathered many storms and defined the national landscape. It has survived cyclones, floods, droughts, two World Wars, industrial and political strikes, and political upheavals.
But finally, an industry which has directly or indirectly supported a quarter of Fiji’s population across races, throughout history is now bleeding to death, Madam Speaker. Industry stakeholders have run out of answers on how to revive it.
The industry’s best hope of recovery 10 years ago was derailed by the December 2006 coup. The military government deliberately sacrificed the injection of a $350 million grant to the industry by the European Union. Had this materialized, Madam Speaker, Fiji from 2011 onwards would have been producing a minimum of 4 million tonnes of cane and 400,000 tonnes of sugar, using more efficient methods than we are using now.
Madam Speaker, sugar is a “lifeblood” industry. It is far too important for it to be allowed to die. But this government, both as a military regime and now as the Fiji First administration, instead of providing both theoretical and practical solutions, it has been adopting a fire-fighting approach, which in reality just like most fires witnessed in the country in the last two years, has destroyed the properties it was supposed to protect.
Now the Fiji First Government has gone a step further – and that is to enslave our cane growers through Bills Number 19 and 20; reform of the Sugar Cane Industry and Sugar Cane Growers Fund (Amendment) Bills). Government and the Fiji Sugar Corporation, whose Executive Chairman is paid an exorbitant salary; intend to take control of the sugar industry including the livelihood of cane growers. This is worse than the days of the Colonial Sugar Refining Company and its subsidiary South Pacific Sugar Mills.
Madam Speaker, Government says the sugar budget has increased by almost $5.7 million. We believe the increase is fictional. The Budget documents show a sum of $11 million allocated towards sugarcane development and farming assistance and $9.7 million as subsidy to South Pacific Fertilizers Ltd.
Now is this really a subsidy? Or is it a loan to be recovered from the shareholders of SPF which is mainly the Sugar Cane Growers Fund? This was certainly the case in the last two Budget announcements. And is this a direct subsidy to SPF? Or is to be administered by the FSC, whose Executive Chairman is also SPF Chairman – even though SPF is a company owned 100% by cane growers through the Growers Fund and the Sugar Cane Growers Council?
And how is the amount of $11 million for sugarcane development and farmers assistance programme to be used? Government has not provided any comparative figures of how cane replanting programme funds of $5 million annually were used and what percentage of growers benefited from this funding because the size of the sugarcane crop has not increased.
Madam Speaker, the Budget also lists over $31.5 million as Aid-in- kind for social mitigation scheme, supposedly from the European Union.
Last year an amount of 33.7 million dollars was similarly listed as aid. But what is this money? The Minister failed to clarify our queries as to what this aid-in- kind was going to be used for last year. We believe it did not see the light of the day.
Now this year we have the Budget documents stating a sum of over 31 million dollars. Again Madam Speaker, who is going to benefit from this aid? Is it the growers, the FSC or no one because there is no explanation about these funds.
Madam Speaker, the budgetary provisions on sugar also reflect on the possible enactment of the Reform of the Sugarcane Industry and SCGF Amendment Bills.
On 29 th May this year the Honourable Prime Minister and Minister for Sugar through FSC’s Executive Chairman delivered his statement to the ISO Council in Turkey where he described those criticising the Reform Bills as a “conga line of politicians and naysayers” who were politically motivated.
Madam Speaker, nothing can be further from the truth. In 2006 when the industry structure was intact and we had input of politicians in the industry, there were 18,636 active growers who produced 3.226 million tonnes of cane. The four mills produced a total of 310, 140 tonnes of sugar at a TCTS of 10.4.
In 2015, after the military regime and Fiji First Government have been in charge of the industry for 9 years, the number of active growers had fallen to 12,872. They produced 1.84 million tonnes of cane. The four mills produced 221,934 tonnes of sugar at a TCTS ratio of 8.3.
The only improvement in the last nine years has been the TCTS – tonnes of cane required to make one tonne of sugar. And this has come at the expense of an extensive mill upgrade programme, first resourced through an Exim Bank of India loan negotiated in late 2005 by the deposed government but which was drawn down by the military regime after 2007.
So it is clear where the fault lies Madam Speaker. Not with the politicians, but squarely with this Government, which has politicised the industry like never before. People who cannot tell the root of a cane plant from its top are tasked with making decisions to the detriment of the growers and the industry as a whole.
In his ISO speech as well as the budget, a sugar action plan was mentioned. So was existence of the FSC Strategic Plan. Nobody except the PM and FSC have any knowledge of these plans. We want to know – are these plans based on the regressive Bills 19 and 20 that enslave growers in the hope that it will rescue the technically insolvent FSC?
Until we have a strategy for mechanization, for improving farm productivity and providing technical and administrative support for farmers, this situation will not change. But this is too serious a problem to ignore. I have previously asked the Government to set up a task force involving all political parties in Parliament to work on this problem. So far I have been ignored. But if Government does not have the solution, why will it not accept our help?
Madam Speaker, the Government seems to think that it can solve the problems of the sugar industry by itself. It cannot. It has no plan. It must work with the stakeholders to find a way. It may already be too late to save the industry from disaster.
Once again I say – Work together with us Prime Minister. blaming politicians will not help our industry. It is bipartisanship.
Tourism, STT and the environment levy
Madam Speaker I talked about the increase in STT and the so-called environmental levy last year and indicated that these tax increases will make Fiji a costly destination for tourists.
Last year I pointed out that, contrary to what the government thinks, our tourism industry has a long way to go before it is considered mature. Our tourism numbers have risen in the last five years by an unimpressive 2% a year compared to smaller and more isolated island countries like Mauritius, and even the Maldives. These countries maintain consistent, long term incentives for their tourism investors.
They do not chop and change the regulatory environment every year. The Government seems deaf to even the smallest requests of tourism operators. For example, here is a simple one.
Most tourism operators depend heavily on the business of tourism wholesalers, whose agreements with those operators run from April to March each year. When the Government increases taxes to take effect from 1 January, this disrupts the wholesaler agreements and it is usually the resorts that are forced to absorb the increase until 1 April. Fortunately there are no increases in tourism taxes in this Budget. But in future years, if there are tax changes taking effect from 1 August, the effect of these may have to be borne by tourism operators for a longer time. It would be a simple matter to ensure that the timing of tax changes for the tourism industry were consistent with the financial years of their most important customers.
In reality, the almost unanimous view of the industry is that the tax burden they carry is now too great and is harming the long-term future of the industry. I referred earlier to Mr Hindle’s comments. These views are shared privately by most tourism operators. They will just not express those views in public because they are afraid of the Government. What a way to run our largest industry!
As I said previously, Madam Speaker, tourism is one of the few industries where Fiji has a comparative advantage. Research has shown that habit persistence is a predictor of demand and visitors are willing to visit again because of experiences during the previous visit. The challenge for the tourism industry in Fiji would be to convert this desire into more visits. This means ensuring Fiji’s tourism products and services remain globally competitive through continued investment in enhancing quality of experience and improved infrastructure and keep the prices competitive.
There is nothing in the budget to encourage diversification of tourism products. I know the motion by Hon Gavoka for supporting the setting up of retirement homes, medical tourism was defeated by the government side. That was good motion. The support for it would have at least demonstrated our resolve to diversify the tourism product market in Fiji.
Allocating more budget for promotion and marketing to enhance Fiji’s image will not be enough. In order to improve the effectiveness of the tourism industry, we need policies and incentives to encourage diversification of tourism offerings, address seasonality issues and manage tourism growth strategically.
Madam Speaker, all the hype about a new financial year and a new budget will remain an exercise in futility. This budget is simply a continuation and cover up for the confused and deceptive 2016 budget. The government was being vilified by almost all the sections of the population. In the 2016 budget government had put out a confusing set of policies, more burden on the poor by the imposition of 9% VAT, more taxes, fees and fines for businesses.
The budget touted as a budget to respond to the reconstruction efforts after cyclone Winston remains one of re-allocation but nothing innovative to prioritise expenditure and live with its means. Instead, it has continued with expenditure which is not a priority- large allocation to FRA, 9 million to golf, 18 million to Fiji Airways and others. What we have ended up with now is more debt projected to be about $5 billion dollars which will be paid both by current and future generation.
Madam Speaker, a Peoples Budget from our side would see this happening:
– Removal of 9% VAT on zero-rated food items
– Removal of Environment levy and Service Turnover Tax
– Increase of $20M to Head 5 with a focus on ensuring that climate change relocations comply with free, prior and fully informed consent backed up by robust protection measures for traditional knowledge and genetic resources on the current yavu and iqoliqoli of those seeking to relocate.
– Reduction of $5M from Head 10, Fijian Elections Office
– Reduction of $35M from Head 17- Ministry of Civil Service
– Increase of $50M to Head 18- Ministry of Rural Development and National Disaster Management
– Increase of 10M to Head 21
– Increase of 10M to Head 22- Health Ministry where $5M is prioritised towards an aggressive NCD campaign.
– Increase of $20M to Head 35 (Sugar Industry support and development
– Increase of 10M to Head 26 with special focus of research and development on technologies for entrepreneurial ventures with incentivised start-up capital under PPP in the area of disaster resilient infrastructure, renewable energy technologies
– Reduction of $300M from Head 43- Fiji Roads Authority.
This is what we are asking the Government to do:
1. First, improve its own economic management and reporting. If the Budget it to be a meaningful exercise, and not mere rhetoric political stunts, we must have facts and figures – as the law requires them to be delivered to us. In fact this budget presentation is even less transparent then the last one.
2. Second, to develop a vision for economic management. We do not mean the tired old slogans about democracy and transparency and accountability. We mean a clear vision which the Government is prepared to commit to implement consistently. Government should become fully transparent on its spending and economic policies. The Budget should not be a surprise. It should be an opportunity for Parliament to critically review Government policy.
3. If the Government will not remove the VAT exemption on basic food items, kerosene and prescription drugs, we need to ensure ensure that the poorest 60,000 households in Fiji receive compensating cash benefits. Otherwise, they will be condemned to even greater poverty. Or better still remove the 9% VAT on basic food items.
4. Terminate the services of Qorvis Communications immediately and save a few million dollars and save the country from false propaganda even if it means that the government will not look so good and may have to write their own speeches.
5. Decide upon a strategy to save the sugar industry. We in the Opposition are ready to help. Once that strategy is developed, we will need to act urgently to implement it. We call upon the Government to abort the sugar cane industry bills and create a joint parliamentary committee to deal with the problems of the industry.
6. Review the budget for the Fiji Roads Authority and audit the work done for the last five years to see where we are going and what should be our priorities.
Madam Speaker, I will finish on this note. This is what I said last time and let me repeat: In a parliamentary system, the side which is not the government is known as “the loyal opposition.” We are loyal to Fiji and want the best for it. That is why we choose to sit here, despite the daily mockery that this Government makes of our democracy, to make good on our promises to represent our voters. We may differ with the government of the day and how to achieve those results. But it is airing those differences and sharing ideas that yield the best decisions. If the Government is firm in its belief of its standing, they have no reason to fear such a process.
Dissent, after all, is the highest form of patriotism. Parliament Madam, Speaker is not a Church, Temple of Mosque, it is a temple of democracy, it is a place where we can have a robust, sometime, heated and passionate debate and yet we can all go and have tea after that and have a good yarn. Suspension of members of parliament for debate and comments in the house is a sure way to kill debate and discussion in this house.
The government has difficulty with the idea of consultation. This idea of know it all Madam Speaker is unhelpful. No one person or group has a monopoly over ideas. Madam Speaker, it may enlighten the Fiji First government to learn that even I, as an economics expert, never stop learning and from even the most unconventional means… speaking to people, the “ordinary people” on the streets, in the teitei, in the markets, the buses, the rice and sugarcane fields. As confronting as this may seem to be this government they are well advised to spend less time lecturing people and more time listening. Madam Speaker they don not have all the answers. Indeed, as this Budget shows, they seems to have very few.
The economy may have surged for a while through borrowing and remittances. But we all know that this is not enough. We will need to re-look at our strategy and approach. We need political reform to restore trust and faith in our people and the international community. Without this we will be continuing to muddle through on the economy.
Madam Speaker, the Fiji First government should move away from its petulant politics where it wants to win every argument and decide every point. They managed to replace me as Chairman of the Public Accounts Committee. I don’t know what they were afraid of. Suspension of members of parliament from the opposition side using their majority is not going to inspire confidence in Fiji. If it wants to establish genuine democracy, inclusive economic growth and improve the livelihoods of families, we need to change course. We can help. We will not always agree, but if the Government is honest about its weaknesses, we can help.
Let us as lawmakers leave a future that our children will be proud. We need to strengthen our intangible assets, our laws on property rights, efficient law and justice systems, skills, knowledge and trust, transparency, accountability and freedom.
Trust is very important, be it in economics, in politics, in anything. We need to build trust in our system of governance, in our parliamentary process and in our delivery of information.
Thank you and god bless Fiji.