21 Jul 2020

Business over people: Govt accused of leaving Fijians 'high and dry'

2:22 pm on 21 July 2020

Fiji's opposition parties and a teachers' union have condemned the government's 'big and bold' $US1.7 billion National Budget for the 2020-2021 financial year.

Last Friday, Minister for the Economy Aiyaz Saiyed-Khaiyum announced a $US930 million stimulus package to fund the country's recovery from the impact of the Covid-19 pandemic.

Attorney-General, Aiyaz Saiyed Khaiyum

Minister, Aiyaz Saiyed-Khaiyum Photo: Fiji Govt

But the opposition said the government had failed to address the biggest crisis in the country - unemployment.

The National Federation Party said there was hardly anything in terms of direct support to those unemployed or on reduced hours.

NFP leader Biman Prasad said all people hear about was the accessibility of the pension fund (Fiji National Provident Fund).

Mr Prasad said people had the choice to use up their funds for "current consumption" or save them for their retirement or pension.

But he said those with very low balances had no choice but to withdraw their funds to survive.

"Unlike in other countries where governments had some real physical space in the economy, they're able to help the people directly," he said.

"In Fiji, the government did not leave any physical space due to the poor economic management they've practised over the years, which was borrowing and spending recklessly.

"Now we're in the middle of a global pandemic and we've borrowed or we are going to borrow $2 billion in the next financial year to keep the government running."

The deputy leader of the opposition in Fiji and NFP president Biman Prasad.

The deputy leader of the opposition in Fiji and NFP president Biman Prasad. Photo: RNZ Pacific/ Koroi Hawkins

Economic management

Mr Prasad said over the last several years, the government has put all its "emphasis and eggs in one basket", tourism, and neglected some sectors of the economy like sugar, dairy, agriculture, fisheries and social welfare.

Mr Prasad said while funding for welfare had been increased by about $US6.5m, it was not enough.

"We need to also focus on health, education and social welfare, and ensure that the most vulnerable - those who have lost their jobs, incomes and those struggling to make ends meet - are supported in a much more concerted and direct manner.

"Unfortunately, that's not happening in this Budget."

Mr Prasad said the focus had not been on resetting the economy, instead "here's a poorly crafted Budget by a reckless and immoral government.

"If some of the things announced were done two or three years back, we would've seen some very positive impact," he said.

"But this government mismanaged all these economic policies over the last four or five years and we were already in a big hole and now we're hit by Covid-19 and the government doesn't seem to know which way to go."

Mr Prasad said the revenue projection of $US740 million was optimistic given the tax changes. But he questioned how government would meet its debt-servicing for the financial year, which was almost $US500m.

'Wrong strategy'

The Unity Party agreed with Mr Prasad and said this "big and bold" Budget was the "wrong strategy" for the economy.

Savenaca Narube (R)

Savenaca Narube (right) with party members Photo: Facebook / Unity Fiji

Unity leader Savenaca Narube said while there was demand on expenditure, he can't see the "logic" in reducing taxes on luxury goods, vehicles and alcohol.

Mr Narube said now the government's borrowing much more - than it could have been - to subsidise these taxes.

The former treasurer said the quality of that borrowing would be "low" and so will its impact on growth.

He said the tax cuts were aimed at businesses like supermarkets, car dealers and hire-purchase companies.

Mr Narube said whether these businesses pass on those savings from taxes to the customers was "anyone's guess".

He said if the government wanted to raise demand on these goods, this could only be done if people had jobs and incomes to do that.

"If the government wanted to reduce the cost of living, it could have focussed on essential food imports. And this lower costs of imports can be easily wiped out by the depreciation of the Fiji dollar."

The government allocated $US9.2m for unemployment relief but Mr Narube said the pension fund assistance was "inadequate".

He said Fiji would suffer in the future for such a strategy and would be left with a "big debt outstanding with very little flow-on impact on the economy".

"The Budget is set on the wrong either thinking of what the economy is," he said.

"Perhaps it's set in the strength of those who lobbied hard at government. But it definitely doesn't set the foundation that will give us growth."

Relief for families

Mr Prasad said the government doesn't have the resources to provide relief to those affected in a sustained manner.

But he said if the government was "smart" or "clever" enough, it would've made deeper cuts to the military, police and other government operational expenditure.

"Some of those resources could've gone to helping those vulnerable, families and the unemployed because spending on them - in terms of the demand on goods on services - would also help bump up the demand in the economy."

Mr Narube said the Budget doesn't address the cost of living which was the key concern for Fijians.

He said instead, it's focussed heavily on businesses, on the rich and have left the poor "high and dry".

"People have been forced to deplete their retirement pension funds. And what about those who are not members of the Fiji National Provident Fund? What happens to them and their families? Who will help them?

"Look at the cane farmers - 22,000 of them - the government has reduced their payments - that's a huge population.

"They've also reduced allocation to the manufacturing sector, cut salary increases to teachers and suspended the parent assistance payments."

Vatuvonu College on Buca Bay in Vanua Levu, Fiji, will close on Thursday and reopen next month as a private school.

The Teachers Union is disappointed in a lack of recruitment in the Budget Photo: Supplied

The Fiji Teachers Union said it's also disappointed the recruitment of new teachers was not announced in the Budget.

Union general secretary Agni Deo Singh said there was no solution by the government to address teacher shortage.

He said there was a "dire" need for counsellors which wasn't addressed.

"Teachers have not received a decent salary increase promised to them under the reforms for the last three years," Mr Singh said.

Meanwhile, the Social Democratic Liberal Party described the Budget as a tough one.

In a statement, SODELPA leader Sitiveni Rabuka said he would like to see what impact it would make on the people.

While the Budget was tough, there were some incentives people could make use of, accept and move forward, Mr Rabuka said.

The Budget debate will get underway in Parliament next week.

Fiji's SODELPA leader, Sitiveni Rabuka.

Fiji's SODELPA leader, Sitiveni Rabuka. Photo: RNZ / Koroi Hawkins