In his submission to the Constitution Commission, Professor Wadan Narsey zeroes in on how coups have been a 'lose lose game' for both Indo Fijians and Itaukei.
|Poverty in Fiji under the Bainimarama regime has worsened. pic Fiji Times|
Employment, incomes and poverty
1. The two most important indicators of well-being are employment and income figures. The latest figures may be obtained from the Fiji Bureau of Statistics whose 2010-11 Employment and Unemployment Survey data are still being finalised, although preliminary estimates may be requested by the Commission from the FBS.
2. The available data on employment indicates that while the total number of economically active persons has increased between 2006 and 2011 by around 20%, the number of wage earners has changed little or may have even declined. This is to be expected given that there has been very little economic growth between the two years. Salary earners may have increased slightly in the public sector, because of increased spending by government and statutory organisations.
3. The data on incomes would suggest that real incomes of the unorganized sector may have decreased by up to 30% given that there has been virtually no increase in nominal wages while inflation as measured by the CPI has been around 36%. Given that food prices have risen in the same period by 48% and the poor generally spend more of their income on food, their cost of living between December 2006 and July 2012 has risen by probably above 40%. It is therefore a conservative estimate to suggest that the most vulnerable workers in Fiji (who are usually covered by Wages Councils) have seen a reduction in their real incomes by more than 30%.
4. It is pretty axiomatic that rates of poverty have increased since 2008-09 when the last HIES was conducted. The aggregate incidence of poverty in 2008-09 was 31% (18% in urban areas and 43% in rural areas). In both areas, the incidence of poverty is likely to have increased significantly, because of economic stagnation in urban areas and continuing economic decline in rural areas.
5. The military coups of 2006 and 2009 may be held partly responsible for the overall decline. The decline in rural sugar areas is largely due to the continued decline in the sugar industry, with a major cause being the withholding of $300 millions of EU aid originally allocated for industry reform, because of the Regime's refusal to hold elections in 2009, but also the reduction in canefarmer margins because of reducing EU prices, and rising costs of cultivation, pesticides, fertilizers, harvesting and transport. Many of the cane farmers also have reduced their commitment to cane farming because of greater financial security through grown-up children.
6. Other areas of rural decline, may be attributed to the inability of successive governments (not just the Bainimarama Regime) to establish appropriate marketing mechanisms for rural crops, with the result that farmers have been demoralised by a cycle of gluts and depressed prices and have reduced production of a large array of crops. Other factors have been lack of agricultural extension support and widespread theft of crops.
7. In urban areas, poverty has increased because the Regime has for five years been giving in to powerful employer lobby groups, who have managed to get postponements of Wages Councils Orders, with not a single employer showing accounts to either the former Wages Council Chairman (Father Kevin Barr) or the Labour Minister. Father Barr has since resigned.
8. Another aspect where the Regime's policy has directly had a detrimental impact is income distribution. In difficult times, while one might expect a government to ensure that the better off take a relatively higher share of the burden of generating revenues for government, the Bainimarama Regime has done the opposite. In the 2012 Budget, the Regime reduce corporate tax AND taxes at the higher levels, from around 30% to around 20%, immediately handing over some $30 millions extra to each group.
9. Simultaneously for the same year, the employers' associations were fighting tooth and nail to deny Father Barr's Wages Council increases, which might have cost them around five to ten millions.
10. There is little doubt that income distribution has worsened significantly under the Regime's stewardship, in large measure due to their own policy measures.
11. It is no surprise that the corporate sector in Fiji has been delighted with the Bainimarama Regime as there has been no government since independence, which has served the employers and corporate sector so well in taxation laws.
12. It is no surprise that the corporate sector have made no public calls on the Bainimarama Regime to be accountable to the public with the Auditor General's Reports, or to remove all media censorship and the draconian labour laws.
13. While existing investors have been well-served by the Regime, overall however, the increase in poverty must be attributed to the failure of the economy to grow, which is ultimately due to the lack of new private sector investment. Total investment as a proportion of GDP has needed to be around 25%; in reality it has hovered between 12% and 18%, and the latter high figure is due entirely to increasing public sector investment.
14. In large measure the failure of investment may be attributed entirely to the lack of investor confidence in political stability, caused by the military coups of 2006 and 2009, and associated decrees which have broken the sanctity of contracts. These have not only hurt groups such as pensioners (whose pensions were reduced fro 15% to 9%, but whose case alreadu before the courts, was thrown out by decree. There have also been cases, such as at the Nadi Airport, where existing leases of tenants have been arbitrarily cancelled, while property of tourism investors at Momi and Natadola have been appropriated by the Regime, with a banning of any recourse to courts. Such actions seriously undermine investor confidence.
15. It should be pointed out that one cause of political instability has been the tendency of race-based political parties, when in power, to focus primarily on their own ethnic group as in need of "affirmative action". The two major parties have been reluctant to accept the objective assessment of poverty in Fiji which clearly shows that the two major ethnic groups are equally poor and assisting the poor on the basic of need alone, would distribute poverty alleviation resources roughly in proportion to their population numbers. Numerous of my publications have attempted to show that, the latest being my poverty report based on the 2008-09 HIES.
16. It also has been a futile exercise pointing out to many political leaders that if the economy grows well because of political stability, then the cake available to government expands enough to satisfy everyone's affirmative action policies, even if ethnically based. If however, the cake does not grow, or shrink as has often been the case, then no one's affirmative action policy can be funded from tax payers' funds.
17. The submission recommends that the Commission emphasize in their report the terribly damaging impact that military coups have had on Fiji's incomes, standards of living, and poverty, and that far from being a "zero sum game", coups have been "lose-lose games for both the major ethnic groups.
18. Currently, it may be noted that there is a slight upward trend in buildings approvals, with the very real prospect of normalcy returning with elections in 2014. Investment is picking up slowly, but full recovery is largely predicated on elections being held and a government, accountable to parliament, being put in place.
19. One area rarely discussed publicly is that there has been a significant real decline in property prices between 2006 and 2011, while the pre-2006 coup trend was a very strong positive one. One major impact of this is the reduction of foreign capital inflows into the country.
20. The submission recommends the Commission obtain the views of real estate agents on the impact of the 2006 and 2009 coups on property prices and inflows of foreign capital.
21. It may be pointed out that there has also been an extremely large increase in public debt, with debt repayments rising to record percentages of total government revenue This public debt will have to be paid by the future generations. It is unfortunate, however, that part of the problem of lack of accountability of this Regime is a total refusal to report to the public on the amount of foreign loans that have been incurred by this Regime on tax-payers' behalf, the interest costs, and the repayment terms.
22. This submission recommends that the Commission obtain from Planning Office the statistics on the last ten years' of debt repayments (capital and interest) in absolute amounts and in relation to government revenue, and in relation to GDP, project also five years into the future.