Letters To The Editor

Economic reforms in Pacific Island nations

Dear Madam, Reported from the South Pacific Forum in the Cook Islands was the news that Australia and New Zealand were pressing for economic reforms in the Pacific nations. The plan calls for civil service cuts, privatisation of non profitable gov ernment businesses and services, adoption of new government accounting practices and greater public service efficiency.

This is set against a background of financial difficulties, in 11 of the 14 island nations, caused by their isolation, narrow

production bases, subsistence lifestyles,

small business communities and lack of natural resources. The proposed economic reforms are similar to those that New Zealand has undertaken.

It sold off assets such as Telecom and Railways, (both of which now make very large profits) and is proposing to dispose of reading and electricity generation.

There is increasing privatisation of both education and health, the civil service has been drastically reduced in size and many have had no pay increases for several years to name just a very few of the areas affect ed by the policy. There has been no tax reduction as a result of these policies and the number of people dependent on bene fits has risen.

The reforms have worked in some areas and for some people but it has left behind many economic and social problems. What will the proposed reforms mean to island nations? No doubt tourism will be seen as something of a saviour. The Theeexperience of Niue might show the opposite. The airport was upgraded and a 24 room resort built, all from aid funds which means that the proposals were sub ject to close scrutiny by the aid donors.

Except for official visitors both are unused.

The Cook Islands debt ridden hotel, (also built from aid funds) incomplete for six years is up for sale with the government company set up to build and run it, in receivership. As part of a financial restruc turing the Cook Islands dismissed 18,000 civil servants, two thirds of the public ser vants. What was the salary savings - $3OOO per person? What was the social cost to the country? What savings can other island nations make? What government business

es and services, profitable or not, can nations like Tuvalu, Kiribati, Nauru, Marshall Islands, Federated States of Micronesia sell to some overseas organisa tion? What resources do they have that can be turned into successful business ventures and should they sell their fishing rights?

What happened when the Solomon Islands sold logging rights? There was an outcry about cutting of the rain forests but no one offered an alternative to replacing the lost revenue. What benefits will the adoption of new government accounting practices have on the economy? The island nations would be better advised to place reforms on “hold” and press strongly for the aid agencies to fund a study that identifies indigenous sustainable development for each of the islands in each of the nations.

The answer for many islands will be “noth ing can be done in the foreseeable future”.

The other factor, and a most important one, that comes out of this push for eco nomic reform, is the continued insistence that these Pacific Island nations should strive for economic growth comparable to that of western nations - as if that is the only indicator of a healthy society.

Western nations are still grappling with the high economic and social costs of unemployment resulting from their reforms. Pacific Island nations have suc cessfully absorbed the economic and social implications of unemployment into their lifestyles for over 100 years. With a detailed study of all factors leading to a plan for indigenous sustainable develop ment, with a phasing of implementation that incorporates the social factors involved in the reforms, island nations could look forward with confidence to achieving some greater degree of econom ic self sufficiency.

Stuart Keene Levin

New Zealand