Tipped over the cliff of viability

Paradise is being lost very quickly because of the cost of doing business

In a country with a declining population and all our eggs in one basket (tourism) unless government can reduce the costs of doing business then according to one local businessman, by 2012 we could all be broke.
Businesses, he says, will be tipped over the cliff of viability and paradise will be lost very quickly.
The Economic Development Task Force has called for reforms and these are sensible reforms.
Most sensible, is the call to reduce the cost of energy which is the greatest cost facing any business. If government can give the proposed energy reforms high priority, it will go a long way to easing the financial pressure on all businesses.
Other obstacles exist and a local businessman has listed these below. Government must also pay attention to these. They are;
(1) the high cost of finance. Interest rates are prohibitive.
(2) The high cost of transportation. No competitive shipping.
(3) The high cost of taxation.
(4) The high cost of telecommunications.
(5) The high cost of purchasing product.
(6) Limited human resources. Labour must be imported at high cost.
(7) No control on monopolies. Current laws are ineffective.
(8) Weak Justice system. Enforcement and compliance ineffective.
(9) Reliance on one industry-tourism. Ours is one of the least diversified economies.
According to the local businessman it’s a wonder any business manages to survive in the Cook Islands. Economies of scale mean a declining population facing rising costs because government insists its business units, e.g. Telecom, Te Aponga Uira, return a dividend of at least 5 per cent to government.
Government must also reform or re-engineer cost structures within government. For instance there has been a big rise in personnel and administration costs to the detriment of operational functions. When there’s less money for operations, households must foot the bill for breakdowns in services. For instance, pay to have fresh water trucked in because the water pipes don’t work. Pot holes and bad roads increase the costs of vehicle maintenance and repair.
Lowering the cost of energy however remains the highest priority. When this cost increases, so do all other costs.

Herald Issue 463 10 June
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