Lowering of the credit rating-reading between the lines
The recent lowering of our sovereign long term credit rating by international credit rating company Standard & Poors, (S&P) was expected.
The report by S&P makes a reference to several factors including the country’s weak political culture and institutional settings and our country’s lack of timely and reliable data.
Of interest is what was not highlighted however, if you can read between the lines, you may notice an inkling of four issues which if left unattended, will continue to affect us and our credit rating like some silent disease.
1. Lack of independent assessment of government performance.
2. Lack of a proper House of Parliament.
3. Lack of new revenue streams.
4. Lack of foresight.
Most disconcerting is the lack of any credible, independent, assessment of government performance and independent analysis of government data and policy by in country assessors.
This issue has been raised by the Herald previously in relation to ADB’s country reports which are largely based on government’s data, policy and reports. Previous government half yearly economic reports revealed a pattern and practice of “cut and paste” which called into question the reliability of the data.
No local consultancies exist which have the expertise to provide independent assessments to international standard of government performance.
Why no such consultancies have been established, or encouraged is not known.
Local media has made some attempts to provide their own analysis but this has been difficult.
Should overseas donors, concerned about the proper and efficient use of funds, encourage or promote the establishment of independent agencies?
The Herald put that question to the ADB’s Regional Office about two years ago and had no response.
Why is an independent view important?
Since 1965 government’s performance has been reported on by government itself. Essentially, a culture of “self assessment” has been allowed to become established. Governments only like hearing good news about themselves so reports tend to warp toward “feel good” messages. Now that a sizeable portion of government’s annual budget is comprised of overseas aid, independent assessment of government performance is warranted.
The weak political culture referred to be S&P is more likely due to the lack of a proper House of Parliament. We are the only Pacific nation which has no proper House of Parliament. Members have no office at parliament and they only attend parliament house when parliament is in session. This results in a weakened institution where members lack unity, Members and Ministers are dispersed, and do not learn or practice how to work cohesively due to prolonged separation.
The failure to establish new, sustainable revenue streams is a concern. Tourism is experiencing moderate growth and agriculture, fishing and pearls are expected to struggle to generate modest additional revenue. New borrowings must be balanced against increased revenue from existing streams or by establishing new revenue streams.
Ideally it should be up to the private sector to establish new enterprises in sectors such as aviation, shipping and renewable energy, generating additional taxation revenue for government.
It is the additional revenue from these sectors which government can apply to improving infrastructure.
Lack of foresight can be overcome by following NZ’s lead back in the 1980s. Then, NZ had a “Commission for the Future.” The NSDP takes a 15-20 year view into the future but in today’s world of rapid technological change and people living longer, the need now is to look forward 50-100 years.
We should consider establishing a Commission for the Future given that in about 100 years from now, if climate change does not abate, the rise in sea level will wipe out most of the northern group with the southern group severely affected. - Charles Pitt

Herald Issue 554 09 March
- Norm exposes Trio of Doom
- Briefs from PM’s media conference Tuesday
- Tourism Industry ponders $5 million draft strategy
- Norman George resigns from Cook Islands Party
- Letter of Resignation from CIP
- Norman selfish says Prime Minister