The Vaka is ready but is everyone aboard?

In formulating economic reforms following the National Economic Summit, government must remember it has a Social Contract

The two day National Economic Summit ended on Thursday with some people calling it a “talkfest.”
Wilkie Rasmussen labeled it a waste of time.
Some attendees told the Times, they were of the view a major omission appeared to be the lack of a holistic outcome.
There were many suggestions and recommendations put up for making economic progress but no explanation of how these will benefit society as a whole.
Sector recommendations were not quantified commented one woman. Already there is a noticeable gap between economic policy development and social policy development.
How well will society benefit from economic reforms if at the point we start from we do not know what state our society is in? For example, what is the current level of unemployment? What is the purchasing power of incomes in households? What level of hardship are families facing? Put bluntly, we have no indicators of the current wellbeing of society.
How then can we measure social progress in the face of economic reforms?
What is needed is a regular survey of households so the impact of economic reforms can be measured. The five yearly Census figures are out of date.
We must be careful not to become caught up in the euphoria and hype generated by the Summit. It’s time to get back to reality and decide what economic reforms will best benefit the majority of society. Not benefit the top 10 per cent but everyone.
The danger with economic reforms is that they tend to benefit those who are already well off.
In sifting through and prioritizing the recommendations, a bench mark to guide the Task Force decisions should be to consider what portion of the community will benefit. Unless it exceeds say 75%, the recommendation should not be adopted.
Care should be taken to ensure no sector of society “falls through the cracks.”
That danger already exists in the Justice sector. While the Justice system generates revenue through fees and fines, the funding of legal aid is insufficient and the cost to hire a lawyer is beyond the capability of young people.
In Court on Thursday morning, a young man appeared on a charge of assault. He had no legal representation. The JP asked him if he was aware of the nature of the charge against him. He said he did. The JP then asked him how he pleaded. He replied, ”Guilty.” Then the JP asked him if he had a lawyer. He said no. The JP asked him if he would like a lawyer. There was no response then Wilkie Rasmussen rose to offer his services. The guilty plea was then vacated by the JP.
No young person should come before the Court without legal representation. Young persons should know their legal entitlements.
How will the economic reforms address the issue of youth offending, given it reflects badly on the tourism industry?
One comment emerging from the Summit was that the economy was stagnating. However, this is contrary to the rather rosey report from MFEM in the Budget Policy Statement (BPS) issued in March. The BPS reads like a “feel good” report but it seems out of step with reality and what is actually going on especially at the grassroots level of society. If the economy is fine and poised to bounce back, why is petty crime rising? Is petty crime due to social pressures? Future BPS’s need to be more honest and tell it like it really is.
According to one speaker at the Summit, some 28 per cent of our society is hovering at the poverty line. That is not reflected in the BPS.
There is anecdotal evidence that near 120 properties may soon advance to mortgagee status.
A local woman reported she knew of 70 local people who left the country in March.
Where was the impact on migration in Summit proposals?
The boost in visitor numbers will mean a boost in imports unless local growers can increase production and lessen the estimated leakage of 58 cents in every dollar earned .
In the BPS the assumptions made that underpin the economic impacts of the Tourism Growth Strategy is that each additional tourist will:
• Stay an average of 10 days1
• Spend approximately NZD223 per day2
• Such expenditures have a multiplier effect of 1.82
• Every NZD1 in general consumption generates $0.42 in GDP3
• Every NZD1 in GDP generates on average $0.25 in taxation
(These assumptions haven been reviewed by the Ministry of Finance & Economic Management
with technical assistance from the Asian Development Bank).
However, where was the cost benefit exercise to show the actual level of visitor spending required to mitigate the loss of funds to imports, infrastructure development and additional support services?
The increase in visitor numbers to the current level of around 104,000 had done little to mitigate the economic realities facing outer islanders in the north who face costs 30 per cent higher than in Rarotonga because of high freight costs. While government is only too happy to subsidize a NZ government owned airline to the tune of several millions of dollars a year, it is unable to provide a lesser subsidy to local transport operators. A subsidy which would bring down freight costs and living costs and help to prevent further migration and act as an incentive to establish business activities.
So far government has had smooth sailing but the “honeymoon” is over and it’s time to get serious and subject the economic reform proposals to close scrutiny.
Unlike other Pacific nations, Cook Islanders can seek better opportunities in New Zealand and Australia. However, those who lack the resources to leave may in time come to harbour deep resentment towards authority.
We are reminded by the riots in Honiara, Tonga and even Tunisia what can follow when deep resentment comes to the surface regardless of how well the economy may be doing. The deep seated resentment in Honiara and Tonga was towards the growth of foreign run businesses. Tunisia was probably the best well off nation in Africa with a high GDP. The Cook Islands has a high GDP per head of population. How much higher does the price of bread have to go before a Cook Islander protests in the streets? In other countries the price we pay for a loaf of bread would cause riots.
Government must not forget nor take too lightly the fact it has a “Social Contract” to ensure the wellbeing of society, to ensure the vulnerable are protected and to ensure as far as possible a more equitable distribution of wealth.
Papa Albert’s vision of inclusiveness can be taken to mean, when the Vaka is ready to sail, everyone must be aboard.

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