Future outlook good but control government spending
The long term economic outlook for the country is potentially very good provided government can get public service spending under control and support (not necessarily underwrite) private sector initiatives in sectors other than tourism.
Getting the public service under control is not an easy task for any government as it means reform.
Reform of the public service along sector based lines should hardly come as a surprise to Heads of Ministries (HOMs).
Several years ago following a special review of the Ministry of Works by the Audit Office, the review report recommended the formation of MOIP and also made reference to organizing the public service along sector based lines.
This concept was put to the public again in the Cook Islands Party election manifesto.
Prior to the last election the then Democratic Party government initiated a review of the public service functions.
With the election of the Cook Islands Party government, it comes as no surprise then that the recent review report on the public service mirrors this concept.
It is a logical and sensible development for a small country whose public service has grown without any basic framework to guide it in terms of purpose, numbers and structure.
In 1996 the size of the public service was reduced from 3,000 staff to 1,500. The resultant impact was that up to 5,000 people then left for overseas.
Currently, the public service stands at about 1,900-an increase of 400.
As previously mentioned by this writer, reform does not necessarily mean redundancies. It should be about making what we have more efficient and deliver better value for the taxpayer’s dollar.
In a restructured public service there will always be some who will not be sufficiently qualified for the new jobs on offer. It becomes a matter of finding a place for those staff.
In the public service, redundancy is always the last option. It is better to keep people in work even if it may not be the type the job they really want.
The concern for the taxpayer is that government cannot keep growing. Taxes are what pays public service wages and if there is no significant growth in the private sector, more and more of the operations budget will have to be put to wages reducing the amount available for projects and maintaining essential services.
The long term outlook for the country is good if potential revenues from fishing, agriculture and sea bed minerals come to fruition.
Tourism has the potential to generate more revenues if access to the outer islands can be assured by way of a mass transport system. At present over 100,000 visitors come to Rarotonga but have no means of getting to the outer islands (other than Aitutaki) without straining their budget. -Charles Pitt

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