Signal of good times

good times

FIJI’S government has signalled its belief that good times are return ing by easing financial manage ment in a mini-budget delivered in early August. Wages will rise (although are still far short of what workers want) and tariffs have been changed to bring Fiji more in line with world prices.

Finance Minister Josevata Kamikamica is now predicting economic growth of between eight and nine per cent for the year, up from the 3.4 per cent estimated in the last budget in December. The minister said the outlook for 1989 had improved significantly, with the tax-free factories swelling employment figures and more tourists arriving then had been expected. Inflation was running at slightly lower levels than predicted.

Manufacturing employment was up 40 per cent this year.

Another factor was increases in sugar production with output expected to be 450,000 tonnes or more, compared with the 350,000 tonnes originally projected.

Kamikamica said the devaluation of the Fiji dollar in 1987 should have cushioned manufacturers against undue hardships, and gave local producers an

advantage over imported goods. He said

it was necessary to allow companies in Fiji to adjust to the world market gra dually, which had led to the government to developing a new tariff standard. Im port licensing has been removed from 34 items which are also made in Fiji, and

will be replaced by an import duty on many items of 57.5 per cent. “We realise that there are many producers who are competitive with lower levels of protec tion. The measures announced are the first move toward giving local manufac turers a level playing field through uni form levels of protection,” the minister said.

Tariff rates would be reduced over a five-year period to more appropriate levels, he said.

But the transport and hotel industries have been singled out for special help.

The government will provide about $F500,000 to pay for a three cents a litre subsidy on diesel fuel for bus operators, tariffs are down on bus tyres and tubes, while bus chassis and engines may be imported free of duty. Tariff concessions have also been made on some spare parts. The hotels will get an import duty break for furniture, fittings, tools and uniforms, while duty has also been lo wered on sports equipment and boats purchased by resorts.

Meanwhile, Fiji workers will get a six per cent wage hike backdated to July 1, although wages councils will be able to recommend higher increases to those earning less than the minimum wage.

This new wage guideline is expected to add $6.1 million to the government sal ary bill. Pensioners will also get the rise and consideration was being given to ad justing allowances to ex-servicemen.

Kamikamica said Fiji had to prepare for the day when it no longer received special treatment from overseas coun tries, such as concessions available through the Lome Convention or the

SPARTECA agreement. He said already some of the benefits were being wound down.

He said government policy was aimed

at restraining public spending, reform

ing the taxation system to minimise mar ket distortions and establishing a wage system based on international competi tiveness. Taxes would be reduced when possible, and the user-pay principle would be introduced more widely. Cor poratisation or privatisation would be ex plored in terms of government enter prises.

“Growth of revenues should come from growth of our economy, rather than increases in rates of taxation,” said the minister. “In particular, the rates of income tax on wage and salary earners must be brought down to levels which do not penalise effort or remove incentive.”

The mini-budget and its stated aims of anticipating the day when Fiji would lose special concessions such as SPARTECA coincided with growing debate in New Zealand over the free access granted there to Fiji garment manufacturers which, it is being claimed, is putting New Zealanders out of jobs. A government member of Parliament, Clive Mathewson (Dunedin West), says he will take the matter up with the New Zealand govern ment in Wellington. He said the com petition from Fiji, with its tax conces sions at low wage structures, as putting too much pressure on New Zealand manufacturers. Mathewson said he would ask Commerce Minister David

Butcher to apply a special safeguard

under the SPARTECA agreement

against Fiji garments. □