Developer Tim Tepaki on the economy and politics
The Prime Minister’s announcement last Friday that new developers were to complete the Hotel project at Vaimaanga has brought developer Tim Tepaki out of a long, self imposed silence to speak to media.

This week the Times asked developer Tim Tepaki why he imposed a media blackout regarding his plans for Vaimaanga over the past year or so.
He said for no other reason than that the world was falling apart as global economies slide into recession and he, like every other developer was preoccupied managing his debt exposure. He said many of his developer mates in New Zealand hit the wall with millions wiped off their assets as the property market choked on the lack of money supply and slumped, adding that he did not escape the market collapse either, and only survived on prudent debt management. Tepaki said he and his financiers have been working on alternative funding options for Vaimaanga and other projects.
On the Vaimaanga Hotel project itself, Tepaki said in 2007 he and representatives from his equity financier, prime lender and operator met with the Prime Minister and Minister for Tourism and informed them that funding was available. In 2008 they were all staring down the barrel of a credit crunch that drove economies into recession, he said, and by 2009 his joint venture partner went into receivership and his financiers faced difficulties, forcing him to look at alternative funding. He said the change in the market was rapid and if he said something today it would be wrong tomorrow, so it was better to shut up and say nothing he said.
Tepaki told the Times he recalled stating in his speech at the wind up for sponsors at the Te Maeva Nui Celebration of 2008 that overrated western economies would fall and underrated eastern economies would rise and the Cook Islands would face adversity in the face of change, which words were chosen to encourage sponsors to continue sponsoring the celebration and the one thing Cook Islanders have that no adversity can take from them. However, even he could not imagine what was to come he said. Tepaki said he was reminded of his own words as he watched global economies slip into recession and the economy of the Peoples Republic of China defy the odds and expand, changing the dynamics of global economy for years to come.
Tepaki said we have much to learn from China’s success, not least its ability to survive because it has the assets (people) to work the economy and pay taxes, meaning we better arrest the current depopulation and repopulate if we aim to survive he said. And by that he meant repopulate with indigenous Cook Islanders and not just bring in more foreign workers, he said, as that will surely lead to future racial tension.
Tepaki said another lesson we should learn from China’s success is the ability of its domestic economy to sustain the nation, meaning we should move from the cash economy of Rarotonga that currently sustains the Cook Islands to a more productive economy that allows the outer islands to participate. He explained that it’s clear enough the Cook Islands economy is tourism led and driven by Rarotonga and to a lesser degree Aitutaki, with the other islands surviving on handouts from government and offshore relatives. It’s also clear enough, he said, that the tourism economies of Rarotonga and Aitutaki alone will not sustain the economy despite the current buoyancy of tourism. It is logical, he said, that tourism is developed on the other islands so they too can sustain themselves and contribute to the economy.
Asked how tourism, a high capital investment venture can be developed in the outer islands with the added problem of expensive airfares, Tepaki said if we can accept that tourists come to see us and our lifestyle and stop mimicking tourism elsewhere we can develop affordable tourism. He said we can develop fishing village style facilities similar to the “fale” concept in Samoa at less than NZ10,000 a unit and charge NZ$50 a night to make ten times the return on investment achieved by Rarotonga at a little more than 50% occupancy, which can be achieved by promoting a “guaranteed to catch a fish” facility he said. As for airfares, Tepaki said he expects Air Rarotonga makes its money on the Aitutaki tourism run and it follows that economy of scale for its operation will improve markedly as other islands come on line on tourism.
Asked what about concerns the Cook Islands currently owe NZ$15,000 per head of population and the highest for the South Pacific Island States, Tepaki said its plain enough to see that debt ratio will reduce if the Cook Islands repopulate and that will happen if the economies of the outer islands are stimulated to allow their people to return home and repopulate their island. He added that in any case he did not buy in to the methodology employed for calculating debt ratio, saying that foreign workers and tourists should be factored in the calculations for the Cook Islands, as after all they too contribute to tax take he said. It may be unusual in methodology but logical all the same he said.
As for funding, Tepaki suggests that donor countries will help if asked, as it is their aim to stimulate economies to achieve sustainability. And he is sure donor countries will recognize tourism is the key asset for the Cook Islands and developing that will yield far better return and stability to the economy than say a Sports Stadium.
Tepaki said that brings us to the third and most important lesson we can take from Chinas success, that the corporate and private sectors that drove western economies and we embrace so dearly have failed, forcing every other government on the planet to intervene in those sectors to save their economies, which he hoped the Cook Islands Government will also do, sooner rather than later to stabilize our sluggish economy before it slides into recession he said.
Tepaki admitted that he is an ardent supporter of free enterprise, the game being dog eat dog and all strive to be top dog and the gap between those who have and those who don’t have widen, but not in the Cook Islands he said, at least not for him, as he still shares the Christian spirit and family values that Cook Islanders continue to embrace. He said he will always remember going with village elders to the village pa on the reef and fish all day and coming home to share the catch with all households in the village, which spirit may have depleted on the private enterprise island of Rarotonga but still alive and well in the outer islands he said.
Tepaki told the Times that central to China’s success is its ability to regulate its economy and more specifically, its ability to regulate credit, pointing out that it was a credit squeeze that triggered the current global recession and brought about the demise of western economies, angering the likes of President Obama who openly call Wall Street bankers “fat cats”, not nice but understandable all the same said Tepaki.
He said we seem to pride ourselves in having a deregulated finance sector when in truth, the foreign banks operating in the Cook Islands are regulated by their home base and they in turn are regulated by the fat cats of Wall Street. And for some reason, the powers that be seem to rate the Cook Islands as having a “country risk” factor of some 4%, meaning we are required to pay 4% more interest on borrowings, resulting in unsustainable loans and causing our people to lose their home and land when they can’t service debt. He said he never could understand why it is that the Cook Islands is rated for country risk when it employs New Zealand’s currency and there is no currency risk, adding that it is a recipe for preventing investment in the Cook Islanders and impediment to economic growth. He said deregulation is a myth and we are regulated like it or not, and the sooner government moves to regulate the better.
Tepaki noted with interest that the Economic Development Task Force recommended that government borrow soft funding from China and give it to the banks to provide affordable funding. He said he disagreed with the notion that funds are to be disbursed by banks, as that assigns the right to disburse from the government as borrower and guarantor and guardian of the people to the banks and private enterprise, and likely to widen the gap between those who have and those who don’t he said.
Tepaki suggested that the Task Force might recommend that government borrow soft funding and buy out the banks toxic debts instead, to save the banks and save the home and land of Cook Islanders, just as the US Government did for its banks and people he said. Tepaki said it is tragic that Cook Islanders are packing up and leaving for distant shores with their heads hanging in shame and never to return because they lost their job their home, their land and their dignity. He said every Cook Islander that can be stopped from leaving is an investment, as Cook Islanders are being replaced by foreign workers as they leave and a recipe for the demise of Cook Islanders he said.
Asked how politicians could be trusted to fairly distribute funds in light of the Toagate revelations, Tepaki said its time we learned to trust our own representatives. He said he has friends in all political parties and he knows they have the heart for the people and they chose to serve the people. He said he never could understand why they go into politics when they have to attend every wedding, funeral and whatever else is going on in their electorate and give their envelope of money or lose votes, and by years end they are broke with those in business facing lost business opportunities. Tepaki said he does not buy in to the thinking that politicians are well to do and if anything, they are the underpaid public servants he said.
On Toagate, Tepaki said putting the arguments of what may or may not have happened aside, his take is that government was right to buy the Toa fuel farm and should buy the Triad fuel farm as well, which he understands government was also aiming to do but was prevented from accessing the Triad fuel farm for valuation purpose. He said all that happened, it would seem, is that two different consultants gave conflicting advice to Cabinet and caused a split in Cabinet that ended up in court, giving the public reason to beat up on government and all politicians, distracting them from their elected task of governing the country. He said it is tragic that foreign consultants are hired to inform government and when all is done and dusted, the buck stops with our politicians and they end up in court while consultants pocket their fees and laugh all the way to the bank.
Tepaki agreed that government could have explained themselves better and had they done that the people would have seen the bigger picture; that government had to take over fuel supply as only government can join the cartel of neighboring island governments and bulk buy cheap fuel, not private enterprise. Government can also spread the cost of fuel and subsidize as necessary to sustain the economy whereas private enterprise will only operate cost plus and result in expensive fuel he said. Tepaki said the outcome of all this distraction is a disabled government with the people continuing to pay high cost for fuel and soaring airfares and freight costs that may yet shut down the outer islands if not remedied in time, and not a good outcome for the Cook Islands he said.
Tepaki told the Times that publishing pseudonym letters that beat up on politicians, which anywhere else in the world will have lawyers lining up to litigate, is destroying the credibility of government and the Cook Islands. Tepaki said Cook Islanders by nature do not write to the media and when they do they will put their name to it, so ordinary Cook Islanders, the silent majority as he calls them, see pseudonym writers as foreigners meddling in their affairs. He also said Cook Islanders do not like seeing one of their own being assassinated in the media, which he knows first hand as local people brought him food and offered moral support when he was attacked by the media a year or so ago. He warned that a backlash is emerging at the back of the current spate of attacks on politicians or more to the point, Cook Islanders. He suggested media editors might be more responsible in what they publish.