Island Aid: The Other Side

Of The Coin

Australia and New Zealand look at the Islands these days with far more generous eyes than they did a few years ago. By the decade’s end, all the island territories are expected to be independent— free to choose their own friends. Which is one reason why aid to the Islands is increasing. But the ideal is to help the Islands to develop their own economies. PIM looks at this aid from more than one angle.

The New Zealand Govern ment recently hosted a semi nar in Auckland on the Pacific Islands Industrial Develop ment Scheme (commonly referred to as the PHD Scheme). Invited to the semi nar were government and business representatives from Fiji, Tonga, Western Samoa, Niue and the Cook Islands, as well as a fairly wide cross-sec tion of NZ manufacturers.

The PHD Scheme was set up, on a bilateral basis, to en courage NZ firms to set up in dustries in the Pacific Islands on a joint basis. The major ob jective is to improve the Is land economies by diversify ing and increasing their pro duction and employment op portunities.

Incentives are available from both the NZ and Island Governments for those who want to take advantage of the scheme. Unfortunately, the one crucial incentive of easy access to an assured market is far from being guaranteed.

The Island local markets are small, and thus ventures that may be set up under the scheme must look to overseas outlets as well. NZ’s advice in this respect is to look for markets other than NZ’s. The NZ market is rather limited.

In addition, unless the Manufacturers’ Association and the Federation of Labour are agreeable, there is no way in the world in which the NZ Government could throw open the local market to manufactured commodities from the Pacific Islands which are also produced in NZ. The NZ Minister of Trade and In

dustry, Mr Adams-Schneider,

m opening the seminar, ad mitted this much though, in

qualification, he implied that

this was not a protectionist stance on the part of his Government.

Well said, Mr Minister!

Wuh such logical reasoning, it is no wonder that the Japanese cannot see anything wrong with their keeping a tight con

trol on the amount of NZ farm products being imported so as to protect the interests of their own farmers. And no wonder either that the scheme has wit nessed only one venture estab lished under its auspices since it was introduced about a year ago. Even then the venture, established in Western Samoa, encountered extreme difficul ties in trying to export its products to NZ because of opposition from vested in terests, and only some delicate behind-the-scenes manouevres by the NZ Government averted disaster.

There is no denying that the scheme holds great potential for the Pacific Islands. But unless the question of market

accessibility is clearly thought

out, discussed and resolved realistically, this great poten tial will not be realised.

The trade deficit between NZ and each of its Southwest Pacific Island neighbours has been and is overwhelmingly in NZ’s favour. And while the deficits are increasing, formal representations from the Is lands have not produced much joy. To be fair, some concessions have been granted, but these have been insufficient to materially nar row the widening trade deficit gaps and to reconcile NZ’s at titudes to imports from her poor Pacific neighbours and her tough stand on the need for Japan and other developed countries to buy more from NZ.

The NZ Government spon sored a Fiji trade mission to NZ in 1976 in an effort, so it was officially publicised, to bridge the trade deficit gap and to give greater credibility to NZ’s declared aim of as sisting her Pacific neighbours as much as possible. NZ has oyer the past few years directed its overseas aid more and more to the Pacific Is lands. During the visit NZ im porters gave the mission or ders for Fiji-produced goods to the value of about

$5OO 000. Unfortunately for Fiji, owing to NZ’s protec tionist import policies, only about 10% of the total orders were finally exported from Fiji.

Looking at the prospects for agricultural exports from the Islands to NZ, one finds tre mendous potential. NZ’s con sumption of fresh tomatoes, for example, during its winter season is of the order of $l5 to $2O million. It is no secret that all this can be supplied, and at much cheaper costs by the Cook Islands and Tonga, if only they are given the chance. As a matter of fact either one of these two island groups could do it.

But what these two coun tries, and Fiji and Western Samoa, are permitted to ex port to the NZ market is to the order of less than $5OO 000, and informed sources both in the Islands and NZ have ad mitted that they could not en visage any significant conces sion by NZ in this respect. The NZ glasshouse tomato growers are too influential a group to be ignored by the government. The fact that ex pensive imported fuel, among other things, really push up the costs of producing hothouse tomatoes, and hence the price to consumers, is only a secondary consideration.

The NZ market for cap sicums, cabbages, lettuces, beans, etc, during her off season also presents very real development potential for the Islands. But, like tomatoes, the extent to which this poten tial can be realised depends very much on the goodwill of the NZ farmers rather than on comparative economic advan tage or other considerations.

The amount of mandarines and grapefruit being imported from the Cook Islands has dwindled over the past few years in line with the amount being produced by NZ farmers.

Competition from the more ad vantageous and more wealthy Kiwi farmers has brought with

it a rather gloomy future for an industry that once promised so much development for the poverty-stricken Cook Islands.

In this day and age of trade rather-than-aid, a philosophy to which NZ also subscribes, such a situation is difficult to comprehend on realistic and honest grounds. NZ’s aid to the Pacific is underlined to an important degree by the need to boost the productive sec tors vis-a-vis the non-pro ductive sectors; and the really firoductive sectors in these Is and economies are undoub tedly the agricultural sectors.

In this connection, access to markets is crucial. It will pro vide the catalyst required by these economies, leading in the long run to a lessening of the aid burden on the NZ tax payers and a lessening of the reeling of dependence of Islanders in having to accept “handouts”.

Is it not a fact that the ulti mate objective of aid to the developing countries is to help them to become more, if

not fully, independent econ

omically? Is this not the path which NZ wishes to see the Cook Islands eventually follow? Or, is this not the way to view the issue? Perhaps the philosophy of aid is not to be understood in simple logic nor to be viewed through the eyes of a simple and poor man. Is it not the result of frustration with the Western world’s philosophy of aid that has caused some Pacific na tions to seek communist friends? Between them NZ and Australia do have the means and resources to sig

nificantly improve the stan

dards of living of the Pacific Islanders without adversely affecting those of their own citizens. What is required is a more genuine and honest con cern for the welfare of the Islanders by a greater propor tion of both the NZ and the Australian public.