Budget 2019

Fiji Budget 2019: A Budget That Is Securing Our Nation A Sustainable Future

This is Part 1 of the 2019/2020 National Budget address made by the Attorney-General and Minister for Economy, Aiyaz Sayed-Khaiyum on Friday, June 7, 2019 in Parliament.
10 Jun 2019 12:22
Fiji Budget 2019: A Budget That Is Securing Our Nation A Sustainable Future
Fijian Prime Minister Voreqe Bainimarama and Attorney-General and Minister for Economy Aiyaz-Sayed Khaiyum after the Budget announcement on Friday June 07, 2019. Photo: Ronald Kumar

Honourable Speaker, Honourable Prime Minister, Honourable Leader of the Opposition, it is my privilege to present to Parliament and to all Fijians, across our country and overseas, the National Budget for the 2019-2020 fiscal year.

Whether you’re watching live on television, listening on radio or streaming on Facebook, the Parliament Live website or the Walesi application, I’d like to thank you for being with us this evening. Given the incredible progress we’ve made in expanding Walesi’s coverage this year, wed like to especially acknowledge those tuning in from community halls in Lakeba, Moala and Kadavu, as well as from deep rural pockets in Viti Levu, all of whom have received Walesi coverage for the first time: Welcome to this National Budget Announcement.

Now, I know we traditionally say budget “announcement”, but as more Fijians are not only watching, but participating in this event, it’s really grown to become a national dialogue among our citizens. And for all those who are following along and commenting on social media, please use our hashtag “Fiji Budget” to share in this nationwide conversation.

I want to thank all of those who took part in the first-ever online national budget consultations we held on Facebook earlier in the year. The over 50,000 engagements on Facebook, which included thousands of comments, questions and suggestions from secondary and tertiary students, as well as the general public –– have made the 2019-2020 National Budget the most participatory budget to-date, with a record volume of perspectives, ideas and experiences brought to the forefront of our consultations.

And I was particularly happy to see that entire classrooms gathered around the computer screen, using these digital consultations as an exercise to learn more about how our budget works and hear directly from their government. An engaged, well-informed young population is the greatest assurance we can possibly have that the progress we make today will be protected through the decades to come. And the contributions we received from young Fijians across the country made clear that Fiji’s future is in very good hands.

Mr Speaker sir, tonight, we further the realisation of a vision of empowerment, people-first policy-making and innovative problem-solving. A vision that prioritises the prosperity of our people today and protects the wellbeing of generations to come.  A vision set out by our Honourable Prime Minister and set in motion by the responsible and practical management of our economy.

Tonight, that vision enters its second evolution, led by a future-facing budget that builds on the unprecedented achievement of the Fijian economy and looks ahead with confident expectations and ambitious aspirations. It is a budget that paves the way towards even greater triumph, for our economy, for our businesses, and for our people –– and ensures resilient progress in a changing climate and a changing global market.

It is a budget that secures our nation a sustainable future, with every dollar of new expenditure dedicated to support one of five fundamental pillars of modernity:

  1. First: Strengthening law and order;
  2. Second: Protecting our natural environment;
  3. Third: Empowering young Fijians;
  4. Fourth: Spurring technology and innovation; and
  5. And lastly: Building certainty in an uncertain world.

 

THE BAINIMARAMA BOOM

Standing before this august Parliament one year ago, we proudly celebrated the ninth straight year of growth for the Fijian economy –– the single longest stretch in our history. Today –– one year on –– we are proud to announce that the FijiFirst government is adding to that record-breaking streak of economic expansion. We expect GDP to grow to $12.7 billion this year, making for ten straight years of growth for our economy.

When we went to the Fijian people in 2014 and 2018 ahead of our National Elections, we promised that we were the only government equipped to consistently grow the economy to improve the lives of all Fijians. Just as promised, we’ve delivered a decade of progress, a decade of development, and a decade of prosperity for all of our people. We’ve done more than set a new record; we’ve set a new bar of expectation for what our nation can achieve. For all the young people watching this evening, that’s a bar we expect all of you to one day surpass.

Before this government, the Fijian economy had some good years, some okay years, and some bad years –– quite a few bad years, actually. Through decisive political leadership and responsible financial management, we ended that era of instability, we shut the door on economic inconsistency and put ourselves –– the Fijian people –– in command of our own destinies. Under our Honourable Prime Minister, our economy has been stable, our growth has been steady, and our future has been secure for ten straight years. This age of historic economic achievement –– this unbroken decade –– has been rightly dubbed the Bainimarama Boom for our economy. Not a bump, not a bubble –– an economic boom that has carried our economy through ten years of expansion, and that will go down in history as the decade we solidified Fiji’s economic future.

Since 2009, the Bainimarama Boom has more than doubled the size of our economy. A boom in employment has put 100,000 more Fijians in jobs. 100,000 more women and men who can go to work, earn a pay check and provide for their families –– driving national unemployment to a 20-year low of 4.5 per cent. And booming private sector investment has built new homes, hotels, offices, residential buildings and shopping centres, while historic public spending has built a national network of high quality infrastructure and reliable essential services.

How? By playing our cards in a savvy manner. By keeping a close eye on market developments, business cycles, and geopolitical machinations. By making tough decisions at the right times, forging new strategic partnerships, seizing opportunities while they were hot, and pulling back when things slowed down. That record has inspired confidence in our nation’s progress –– confidence among our people, confidence among our development partners and confidence among business owners; from CEOs heading investment firms to vendors operating roadside stalls. We’ve harnessed that collective confidence and used it to build an economy that works for all of our people, at

all levels of our society.

Mr Speaker, our commitment to inclusive progress has made Fiji one of five countries in the Asia-Pacific region –– a region that’s home to more than 60 per cent of the world’s population –– where income inequality is actually decreasing. In a global economy where¬ –– far too often –– only the rich are getting richer, Fijian society is actually becoming more equal. The Bainimarama Boom was a boom for ordinary men and women, not only the wealthy and the privileged; it has uplifted dalo farmers as well as doctors, taxi drivers as well as teachers; cashiers as well as company owners.

But our surging economy has done more than put money in our people’s pockets – far more. It has funded an unprecedented wave of development across the country. It has dug boreholes in rural villages, giving more of our people access to clean drinking water. It has built health centres that have provided life-saving treatments to our people in times of emergencies. It has paid the school fees of tens of thousands of Fijian children. And it has built faith among our people – and among the world – that Fiji is headed in the right direction. That faith takes many forms. It is the faith held by a Fijian factory worker that her daughter could one day lead the same company she works for today. It is the faith held by investors that Fiji is where their investment will see the biggest returns and that the Fijian people are capable of building their businesses. And it is the faith held by every Fijian that they stand on firmly upon an unshakable foundation of political, civil and socio-economic rights. All those individuals share a collective faith in our nation’s potential; faith that Fiji is a nation on the rise; faith that our country’s best days are yet to be had.

 

FIJI’S FINANCIAL DISCIPLINE

Mr Speaker, when it comes to national budgets, we sustain that faith in our future by making prudent and disciplined financial decisions. That means achieving balance. Balancing expenditures against revenues, balancing investments against returns, balancing private sector funding against public sector spending, and balancing short-term needs against long-term aspirations. By managing those balances responsibly, we build confidence in the future, as that allows a government to adapt to unexpected circumstances. And as a nation with strong relationships with development partners, along with extreme climate vulnerabilities, that is all the more critical for Fiji.

Mr Speaker, for decades, Fiji’s adherence to a long-term economic balance was side-lined by short-sighted economic management. As a result, back in 2006, this government inherited debt worth 53% of the then GDP. Now, with debt levels that high, you’d expect that those governments would have something to show for it. You would expect that debt to be accompanied by some serious investments in roads, bridges, jetties and ports and airports, education and other strategic investments. Mr Speaker, these are the sorts of expenditures that fuel a nation’s long-term productivity and GDP growth. But past governments weren’t making the required levels of investments. They built up that debt and then simply took that money and blew it on short-term expenditures. They were borrowing money simply to cover their operating costs, to pay their own employees. Anyone who has run a business can tell you –– that’s called “being in the red”. And it’s a sure sign you’re headed for financial catastrophe.

Mr Speaker, I saw a headline yesterday that I really couldn’t believe. It read, “Fiji Opposition Warns of Economic Collapse” with a photo of Honourable Sitiveni Rabuka. I thought for a minute that I was reading a newspaper from 1996. But no. It was story, run yesterday, with Honourable Rabuka claiming that our nation – today – somehow faces an economic crisis. Mr Speaker, you’d think Honourable Rabuka would know a thing or two about what a real economic crisis looks like – considering he led our nation straight into one when he crashed the National Bank of Fiji as Prime Minister. That reckless sabotage of the Fijian economy cost our people – in today’s terms – 500 million dollars. 500 million dollars, Mr Speaker, thrown down the drain, never to be seen again.

In his supposed “warning” Honourable Rabuka went on to claim that government expenditure should be 20% of GDP and revenue should be 15% of GDP. During his entire term as Prime Minister, his government came nowhere near to achieving those figures – with expenditures hitting highs of over 30% and average revenues of 25.6% of GDP. But his hypocrisy didn’t end there. He then implied that the government should run a deficit of 5% in this budget. Five per cent, Hon Speaker. He’s made a call for greater levels of debt for Fiji, while warning of the dangers of expansionary spending, all in the same breath.

Hon Speaker Honourable Rabuka clearly hasn’t taken any lessons from his own disastrous economic blunders that began the vicious cycle of Fiji’s inter-generational debt. Debt that was subsequently mismanaged and worsened by the governments that followed. Until, Mr Speaker, this government finally said: enough was enough. Until this government finally brought fiscal discipline and prudent management to our economy.

By the time the Bainimarama government took up the reigns of our economy, we weren’t only faced with a mess of government finances. Due to a historic lack of strategic investment, our nation also suffered from massive gaps in productive capacity. We had to play serious catch-up to keep pace with a rapidly modernising economy, or else our people were going to be left behind. We didn’t shy away from confronting those weakness. We tackled them, head on. We made smart investments, and today, what were once our most serious shortcomings rank among our greatest strengths.

We transformed technology from an afterthought into a driving force behind delivering faster and better government services. We made education free and created affordable pathways to higher education, fuelling the engine of Fijian ingenuity. We invested in our people –– our greatest resource –– by caring for those who are vulnerable, building resilience to worsening climate impacts, empowering the disadvantaged to lift themselves from the grips of poverty, enabling those with big and bold ideas to chase their ambitions, and giving all of our people a fair shot at success in our economy; creating a new age of Fijian meritocracy – one in which success is not about who you know and where you may come from, your ethnicity, your religion or what province you belong to, but about what you know and the value you can create for your country

Delivering those achievements has required significant investments, and we took on manageable levels of debt. But, the thing about smart investments is that they pay back returns in the form of a more productive economy. Prior to 2016, despite an ambitious investment agenda, we made clear commitments and progress towards reducing our debt levels, achieving steady reductions in our debt to GDP ratio, from that high of 53% in 2006 down to 43.9% in the 2016-17 Financial Year.

Then came 2016, and with it, the massive devastation of Tropical Cyclone Winston. As reports of the damages poured in from around the country, we knew moments after Winston left Fijian waters that the rebuild would take us years. When the assessments completed, it was revealed that Winston wiped out one-third of the value of our GDP. And over the years, the price tag of this storm has proven immense, with a total cost to our economy of an astonishing $500 million. Those costs were compounded by the devastation of cyclones Josie, Keni and Gita in the years that followed.

Mr Speaker, we could have easily rushed the rebuild. It would have been cheaper and far more politically expedient had we built back to the same haphazard standard that existed before Winston.

We can vividly remember some of the propositions outlining half-measures and quick-fixes to fix our schools, homes and other infrastructure. But this government didn’t go for any of those Band-Aid solutions. We chose to put in the time, the money and the effort to build back better, to a stronger standard; building schools with resilient building plans, providing high-quality materials for homes that were built to code and re-deploying infrastructure in a climate-conscious manner.

As we conclude that historic rebuilding effort, we can now say –– without a shadow of doubt –– that the Fijian economy is the most climate-resilient it has ever been. Every new school building we’ve reconstructed is built to withstand category 4 cyclone winds. And we’ve already completed 55 evacuation centres across the country, many of which are equipped with generators and water tanks. When future storms bear down on our country –– and they most certainly will –– not only will those investments in resilience save us a great deal of costs in rehabilitation, more importantly, they’ll save lives.

Mr Speaker, the scale of our rebuilding effort was only possible because of the strength of our economic position prior to Winston. And –– even in the midst of that massive funding effort –– our debt levels remained sustainable. That is the clear consensus among banks and multilateral institutions. And, let’s be clear, those are organisations with entire teams dedicated to assessing the health of the Fijian economy. They don’t play political favourites and they don’t supply political opinions –– only fact-based analysis. The point being, that when the commercial banks, multilateral financial institutions, and the Reserve Bank of Fiji all agree on the health and sustainability of our economy, they are being objective. They are looking at actual facts and making a considered assessment.

Meanwhile, the Leader of the Opposition occupies his time with desperate doomsday predictions on the eve of the budget announcement. Hon Speaker, let’s take a moment to pause at the utter absurdity of this –– under the flash of the cameras, Honourable Rabuka essentially issued a budget response before this budget was even announced, rambling on an about economic collapse to anyone who would listen. We all know that he loves the limelight, but couldn’t he have waited a day to learn what was actually in this budget first?

While this pre-emptive attack on a yet-to-be-announced budget was unprecedented, there was a far greater offense to his actions than a break from tradition or even a gross breach of decorum. His baseless assertions are economic sabotage of the highest order. He needs to realise that his words have consequences, and very false accusations can result in very real damage to our economy, which is underpinned by investor confidence. In his time as Prime Minister, Hon Rabuka has already upended our economy once –– but I suppose that because of our young population, more than half of Fijians weren’t even alive when he first drove us into the ground, so perhaps he wanted to refresh our memory. But this Government, Mr Speaker, will not let Fiji suffer from a bad case of déjà vu at the hands of the Leader of the Opposition. Our young people, in particular, don’t have time for this; as they look to the future, they want to be inspired, not intimidated with fear-mongering. Our youth have more opportunities at their feet than at any point in our history, and their vitality is what will drive us into the future. Through this unbridled optimism in what’s ahead, we will continue to move our economy forward, not back.

So, Mr Speaker, let’s take a good look at the facts and let’s speak in economic realities. In the next financial year, we’re looking at revenues of around $3.491 billion, with tax revenue passing the three-billion-dollar threshold for the first time. And we’ll be collecting that historic figure in tax revenue without raising VAT, without increasing corporate taxes and without increasing personal income tax. You heard that right, in a growing Fijian economy, with growing incomes, we’re not raising VAT, we’re not raising income tax and we’re not raising corporate taxes.

Mr Speaker, it took over 35 years for tax revenues to reach one billion dollars, and it took another ten years after that to reach two billion dollars. But it took this government only five years to go from two billion to the three billion in tax revenue collection, all while steadily decreasing the tax burdens faced by ordinary people. VAT is down from 15% to 9%. Families who make under $30,000 a year have been freed from paying income tax entirely. Small businesses have been exempted from paying ECAL. Instead we’ve made some simple and savvy changes to improve tax compliance and close loopholes that once allowed countless millions to pour out of the country. Now, instead of that money leaking out of Fiji, it’s helping fund a nationwide network of social safety, educate our children and drive forward an agenda of empowerment through the life-changing new developments that are the hallmarks of this government.

Mr Speaker, now that the vast majority of cyclone rehabilitation has ended, we can sustainably shift our economy back onto the path of fiscal consolidation –– a commitment first announced by this government back in 2017.  Projected expenditure for the year is down to $3.84 billion –– reflecting a lowered deficit of 2.7% of GDP, down from 4.4% in 2017-2018 and 3.4% in 2018-2019. With a GDP of $12.7 billion and a debt at $5.98 billion, our debt to GDP ratio is projected at 47.1% of GDP – meaning our debt to GDP ratio is six percentage points lower than 2006.

As of this month, our foreign reserve levels are around $1.92 billion, equal to 4.2 months of coverage for retained imports of goods and non-factor services. Current inflation stands at 2.1%. You don’t need an economics degree to recognise that progress for what it is. Even someone with a pedestrian knowledge of finance and economics will tell you – or rather, have to admit – that is indisputably responsible financial management.

 

GLOBAL ECONOMIC OUTLOOK

Mr Speaker, there’s a reason why we’re building up our fiscal buffers to give ourselves greater financial leeway. The world’s leading financial institutions, economists, and NGOs are warning that economies around the globe are facing down a period of great uncertainty.  But one trend is clear: global growth is softening. Just this week, in its June Report titled, “Heightened Tensions, Subdued Investment”, The World Bank attributes a dampening in global growth prospects to a further escalation of trade disputes between the world’s largest economies, renewed financial turmoil in emerging and developing economies, and more abrupt deceleration of economic growth among major economies. Mr Speaker, it’s not hard to see how they arrived at that conclusion.

A single tweet from the President of the United States threatening war with Iran can send shock waves through the international oil market. A test missile fired by North Korea can send ripples through the Nikkei index. Every time the United Kingdom holds a new Brexit vote, traders around the world await the outcome with bated breath. And the ongoing international trade war ignited by the Trump administration is being fought on many fronts, from China to the EU to Mexico, with a new tariff making headlines with head-spinning regularity.

The International Monetary Fund forecast for global growth in 2019 stands at 3.3 per cent, down from 3.7 per cent last year. But that slowdown won’t impact all nations equally. Some economies are proving more resilient. The growth of emerging economies, such as India, Vietnam, and China, are all projected to steadily chug ahead.

The drop in global growth is mostly due to slowing growth among developed economies, whose growth is decreasing from 2.2 per cent in 2018 to 1.8 per cent this year. That includes all of Fiji’s major trading partners, the United States, the Eurozone, Japan, Australia and New Zealand whose growth is forecast to be lower than earlier projected. For example, Australia’s growth is projected to slow from 2.8% in 2018 to 2.1% this year.

Meanwhile, growth in emerging economies will see a much more modest drop of a mere 0.1 per cent.  And currently, economists are cautiously optimistic that the growth of world economy will recover by 2020. And those projections come despite a continuing drop in growth among the developed economies. Stronger growth among emerging economies of 4.8 per cent in 2020 is projected to single-handedly lift the global growth rate back up to an average of 3.6 per cent. Given these projections, we’re positioning the Fijian economy to do more than add to our record-breaking stretch of economic success, we’re looking to out-perform the growth of our more developed trading partners. If our past performance is any indication, this government is more than capable of doing exactly that.

Mr Speaker, it was this government that brought the Fijian economy booming back to life out of the global financial crisis of 2008. In the midst of that economic chaos, we kept our cool and did what needed to be done. We enacted anticipatory measures. We showed we knew how to tighten our belts, foresee new opportunities and distinguish ourselves in competitive markets. When growth was slowing in our neighbouring economies, we showed we could re-vamp our tourism industry to continue attracting historic numbers of visitor arrivals. When global investment stagnated, we showed we knew how to rally businesses, build confidence and drive local capital investment. When global output lowered, we showed we knew how to increase productivity – in the public and private sector – make pricing adjustments and continue to fund long-term development aspirations. We’ve shown we knew how to build a modern economy, even in the face of adversity, through our brand of positive, creative and collaborative leadership.

So, while we must remain cognisant of current global realities, we should take comfort that this government has proved its merit in maintaining positive economic momentum. Despite the whims of larger economies, despite the shifting winds of global markets, this government has charted ten years of sustainable, resilient and responsible economic growth.

And, Mr Speaker, I should add; we’ve made that progress despite continuing partisan efforts to crush our progress under the weight of lies and pessimism. We’ve cut through those fronts of fear-mongering and fogs of falsehoods, and carried our economy to record-breaking success, because this government has inspired belief in Fiji’s true potential. And when we look to the future of our economy, we must continue do so through lens of truth and objectivity. We must maintain a dispassionate assessment of what the coming years will bring. We can’t hold our economy hostage to politically fuelled rumours and unfounded speculation. We can’t waste time hanging on the words of people with zero economic credibility. No politician’s 15 minutes of fame should be allowed to come at the expense of the health of our economy. A strong economy underpins our people’s prosperity. A strong economy helps keeps the lights on, keeps the tap flowing and sustains our people’s livelihoods. And when we speak about the economy, we need to adhere to a level of intellectual rigour. There’s no room for shallow social media speculation, we need hard facts, we need objective analysis. And – when debates arise – we need well-thought out proposals brought to the table. At the very least, as members of the Opposition, you owe the Fijian people with a responsible and considered alternative way of doing things. Our people deserve that much, at least, because when we talk about the economy, it is their wellbeing that is the subject of discussion.

 

Fiji’s Economic Outlook

Mr Speaker, building a strong economy defined by sustainable growth only occurs with adherence to the right policies and the right fundamentals. We proved that to be true with our successful economic record in the wake of the global financial crisis. And now, we’re harnessing this new global downturn in our favour by becoming a more productive society, preparing and adapting the Fijian economy for new and better opportunities. As part of that transition, we will be progressively undertaking a comprehensive package of structural fiscal management reforms that stretches across every sector of our economy, with an eye to sustaining our wide-reaching economic prosperity:

 We’re reviewing the Foreign Direct Investment Act to encourage greater foreign investment;

 We’re reforming our State-Owned Enterprises and Public Enterprises to make them more customer-oriented, profitable and efficient;

 Just last week, we announced a reform of our secured transaction framework and the launch of the personal property securities registry, which makes it easier for our people to use their assets as collateral to secure loans. Basically, access to finance has gotten easier, allowing our people and our businesses to make investments at lower costs and with greater efficiency. Since its launch at the end of May, over 7,000 loan entries have already been loaded on to the on-line Registry.

 We’re also conducting a review of the Financial Management Act 2004 – the FMA – to make some key changes that meet the high expectations of transparency and accountability in a modern economy. Every year, before the budget announcement, government must table a broad fiscal framework that sets the stage for budgetary preparations, thereby building accountability and adherence to fiscal projections. The government of the day will also be required to provide a pre-election economic and fiscal update on the state of the economy, which will compare information from the mid-year annual report against the fiscal strategy. That update must be made publicly available at least 20 days before polling day. We’re enhancing the accountability of internal audit functions within government through the establishment of an internal audit committee to oversee audits and – where necessary – Permanent Secretaries have been empowered to initiate prosecution to combat abuse of taxpayer funds. Lastly, we’re climate-sensitising the FMA to engrain a deeper focus on building resilience. Catering to investments that climate-proof the economy and support inter-generational equity.

 We’ll be mandating that all political parties contesting the election cost their budgets in relation to manifestos, to grant full transparency to the Fijian people in assessing the viability of political promises.

 We’re also giving new levels of certainty to our partners in the private sector through a range of new initiatives that incentivise investment and spur greater development. The specifics of which we’ll be covering later in the evening.

Mr Speaker, our multilateral partners have offered their full support towards – what they agree – is a critically important, and impactful, programme of reform. The Asian Development Bank and the World Bank are stepping in to assist by re-financing our loan obligations with policy-based loan support that is contingent on the progress of our reforms. The Fijian Government intends to use this funding support to redeem the US 200-million-dollar global bond due in October 2020. We’ll be accessing the loan in two tranches, and based on our progress so far, the first tranche has already been made available, which we’ll access this financial year and keep in an offshore account until the global bond is due next year. By accessing these funds now, we ensure we’re on track to access the full extent of this policy-based support well in-advance of the October 2020 deadline. There will a temporary increase in our headline debt this financial year, but that will go down the moment we redeem the global bond in the 2020-2021 financial year.

It’s abundantly clear: The world sees our financial reforms as credible and our current leadership as responsible, and we’re getting a more favourable loan that comes at a lower cost as a direct result. This isn’t actually adding to our debt portfolio; our strong economic position has simply allowed us to broker a sweeter deal. A deal that costs us less in interest, protects us against unexpected shocks and smooths our debt repayment profile.

Mr Speaker, ironically enough, this debt we’re re-financing was actually rolled over from the Qarase Government. Let that go to show how severe the consequences of irresponsible management can be. So, with this move –– and by deploying what we call a bullet repayment –– we’ll finally put a stop to that vicious cycle of debt that was initiated and exacerbated by past economic mismanagement in this country. And let me commit now, that this government will never repeat such mistakes. Every dollar we spend, will be to build up our country, not drive it into financial chaos. And we will never take on inter-generational debt in exchange for nothing.

Mr Speaker, responsible management of our economy is always important, but more so now than ever, given the threat we face from climate change. Fiji has led a concerted global campaign to make international climate finance accessible not on the basis of the size of a nation’s economy, but on the basis of vulnerability to climate impacts. The World Bank has answered that call to action, by declaring Fiji eligible to receive international development assistance in recognition of our extreme vulnerability to climate change. Essentially, this means Fiji can now access over $55 million dollars annually, at zero interest rate, with an extended repayment term of 40 years.  Mr Speaker, that’s over 55 million dollars a year in development funding on the best terms a nation could ask for, and we expect the Asian Development Bank to soon follow suit in offering similar terms – in recognition of the extreme climate threat faced by the Fijian people.

Mr Speaker, when cyclones do descend upon Fiji and lay waste to cities, town and communities, we can’t afford to watch critical development finance be stalled by bureaucratic inefficiencies. We need funding that can be quickly deployed to rebuild damaged infrastructure and get our economy back on its feet. We’ve nearing an agreement with the Japanese International Cooperation Agency to provide a trigger-based “Stand-by Loan for Recovery and Rehabilitation” to fund immediate disaster relief efforts in the aftermath of a severe weather event. Under the terms of this agreement, the moment the government declares a state of emergency, rapidly deployable funding, of up to US 50 million dollars, will be made available at an extremely concessional rate of 0.01% interest with a 40-year tenor, and a ten-year grace period.

Mr Speaker, at a time when the world faces softening expectations, our fiscal discipline is impressing the world’s foremost leaders in finance, sparking new confidence in Fiji among multilateral organisations and our partners in development. That confidence is building tangible buffers that are literally shielding our people from threats to our progress. Through responsible fiscal management, even in an era of global uncertainty, Fijians can be certain that we are ensuring our economy is resilient –– in the best possible position to withstand any headwinds on the horizon – whether from climate impacts or market downturns – and come out of those storms stronger than ever.

Mr Speaker, our operating expenditure on the year stands at $2.534 billion, with capital expenditure at $1.252 billion. The growth of those figures is lower than the periods of expansionary spending following Cyclone Winston for the reasons we’ve stated. But our agendas to improve our people’s health, build a knowledge-based society, develop new networks of infrastructure, access the digital age, care for those who are vulnerable and modernise our nation will all push forward with the same relentless ambition we’ve driven from day one. Growth in expenditures is down, but so are leakages and waste. We’re offering new incentives that trust businesses and taxpayers to spend their own money, by incentivising them to make strategic investments.  And in this period of fiscal consolidation, government’s focus will be streamlined to the key pillars that support our people’s welfare, by doing more with less.

Starting with health, we have made an allocation of approximately 53.4 million dollars for the commencement of the Lautoka and Ba PPP Project which will transform the quality of medical services in Fiji, including a wide range of tertiary medical care. These medical services will provide opportunities in aged care and retirement villages and we have also introduced a very attractive tax incentive for retirement villages and aged care facilities. Together with this, FNU will also be introducing courses in the aged care industry to provide qualifications to our people who are naturally skilled in aged care. This will position Fiji to develop other areas like retirement villages, aged care facilities and host many large events that we could not capitalise on in the past.

And a capital infusion will continue in the form of new and extensively-upgraded hospitals, subdivisional hospitals, and health centres all throughout Fiji. An allocation of $12.7 million is dedicated to the Ministry of Health’s major infrastructure projects in this budget, including an ongoing major extension of CWM’s Maternity Unit, the construction of a new subdivisional hospital in Navosa, and preliminary works for the Labasa Hospital, Lodoni Health Centre, and subdivisional hospitals in Nausori, Korovou, and Valelevu.

Concurrently, the Ministry plans to invest another $3.2 million on refurbishing a number of additional health facilities around the country, including refurbishing the emergency departments at CWM and the Nausori Health Centre, the upgrade and extension of Rotuma Hospital, in addition to the specialised Tamavua Twomey Hospital and subdivisional hospitals in Vunisea, Savusavu, Nabouwalu.

 

STRENGTHENING LAW AND ORDER

Mr Speaker, this budget recognises that the dollars and cents of our nation’s economic output can’t possibly capture all aspects of our people’s wellbeing. More important than any financial assessment is how secure Fijians feel in their homes and when they go about their business. Every Fijian deserves to hold absolute confidence that they are safe, their families are safe, and –– if they ever do face a threat –– the Fiji Police Force is committed and capable of translating their concerns into prioritised actions.

This budget sets out a series of critical measures that ensure our police officers are properly trained and equipped to deliver a world-class duty of care to Fijians in our cities, towns, and the most rural and maritime communities across the country. We’re continuing with our five-year restructure of the Fiji Police Force, regularising another 995 special constables to give them proper training, equipment and, of course, compensation for the critically important service they provide the Fijian people.  Upgrading works on new police stations in Lautoka, Nadi, Nakasi and Nawala will also continue into the next financial year.

The nature and tactics of criminal operations are evolving, leading to a rise in criminality, particularly in the trade of hard and synthetic drugs. Our Fiji Police Force needs to evolve in response. If Fiji is increasingly seen as a transit point for drug traffickers, that can carry serious spill-over effects of violence. That’s not a future we’re prepared to accept. We’re sending a clear message to hard and synthetic drug traffickers: doing business in Fijian waters won’t get you to lucrative drug markets in Sydney or Auckland, it will get you bunk space in a Fijian prison cell.

We’ve allocated $800,000 to fund a stronger effort to combat drug trafficking, with dedicated staff tasked with finding and rooting out networks of hard and synthetic drug dealers and suppliers.

Allocating $720,000 towards the purchase of four new intercept boats for the police to strengthen law enforcement’s presence on the seas. The Fiji Navy will also be providing the Police with additional personnel and vessels to assist with maritime surveillance, with a $1.1 million allocation set aside to fund personnel costs aboard two new vessels, the RFNS Volasiga and the RFNS Savenaca. And we’re grateful to the Australian and Korean governments for donating these vessels to our fleet.

And, Mr Speaker, in our Fiji Corrections Service, we’ve allocated $4.0 million for capital expenditures to undertake major infrastructure works to improve the security, and the quality of life, in our prisons. That’s just for our national security, because creating humane environments within prison walls is actually proven to reduce rates of recidivism. When you give people respect, they’re more likely to act in a respectful manner themselves, and that’s a key tenant of the highly successful Yellow Ribbon project we’ve already undertaken.

 

PROTECTING OUR NATURAL

ENVIRONMENT

Mr Speaker, we generally regard development as a positive, and for good reason. Development brings essential services to our people that can not only change, but save lives. Development opens communities to new opportunities and new dreams of what they can become. Development creates higher-paying and fulfilling careers for our people; quite literally feeding Fijian families. But there is a flipside to that coin. As development – if left unchecked – holds the potential to irreparably destroy our natural environment.

On the world stage, Fiji has emerged as a respected champion for environmental protection, pushing forward the campaigns for climate action and oceans preservation. And at home, we need to live out the same expectations we’re demanding from the rest of the world. As Fiji enters the second phase of our economic evolution, we must remain adherent to our zero-tolerance policy for any development that comes at an overall cost to our natural environment. A position made crystal clear by our Honourable Prime Minister, who has pledged new environmental laws to permanently ban developers from working in Fiji if they disregard our environmental laws and protections.

Mr Speaker, we plan to introduce those laws at the next available opportunity, but we know that strong laws alone won’t cut it. We need a whole-of-society approach, one that is guided by government actions and commitment, but that inspires ordinary people to take ownership over the protection of our natural environment.

As previously announced, we’re on track to ban single-use plastics by 1 January 2020 – that is in seven months’ time. These bags –– which have a thickness of less than 50 microns –– are the thin bags we’re grown used to shopping with at the supermarkets. But their use in Fiji is literally choking the life out of our environment, particularly our marine life. In the next financial year, we will also be increasing the duty on plastic bags with a thickness of more than 50 microns.

As an alternative, we’ve been steadily promoting the usage of locally-produced, reusable plastic bags. To spur that emerging industry, the duty on materials used to manufacture non-woven bags will be dropped to zero. And to protect our budding local reusable bag manufacturers, fiscal duty will be raised to 32 per cent on imported reusable non-woven bags.

We want to see alternatives to plastic in every supermarket, in every restaurant, and in every market stall, everywhere. So, we’re also placing zero duty on all non-plastic food packaging, straws, containers and cutlery.

Reducing Fiji’s reliance on plastic is a movement that cannot be restricted to government actions alone, it must become a nationwide, Fijian effort. To incentivise action at the grassroots level, we’ve partnering all PET bottle packagers to launch a nationwide plastic bottle deposit scheme, whereby Fijians who deposit plastic bottles will be compensated. Over the next few months, we’ll be introducing laws to this effect that will contain the exact policy details – with plans to have this programme up and running early next year.

Mr Speaker, the most responsible way to deal with plastics is to never use them in the first place. Even products branded as “biodegrade plastics” can take up to 300 years to actually decompose. But the next best thing we can do is ensure that plastic waste is properly recycled. Fiji doesn’t have a recycling plant at the moment – and the associated carbon emissions of shipping our plastic overseas will do far more harm than good. We need a local, Fijian waste management industry. That is why we’ll be establishing a tax-free zone in Naboro for waste management businesses. Companies operating in the zone will be granted income tax exemption for capital investments of under one million dollars, two million dollars and more than two million dollars for periods of 5 years, 7 years and 13 years, respectively. And we’re granting an import duty exemption on raw materials, plant machinery and other equipment needed to run a recycling and waste management business. Land will also be made available at a concessional rate. The Naboro Landfill, as well, will be entering phase two of construction, funded to the tune of $5 million.

Mr Speaker, plastic isn’t the only scourge of our natural environment. Styrofoam containers – also composed of fossil fuels – are just as bad, taking up to one thousand years to decompose. Long after a meal is finished, even long after the person who used that container is dead and gone, that Styrofoam will still be there, until it finally breaks down into harmful particles that pollute the environment and hurt our plant and animal life.  Tonight, we’re announcing a complete phase-out of Styrofoam containers by 1 Jan 2021, and we’ll be carrying out a nationwide consultation and awareness campaign to give ample notice to restaurants, coffee shops, grocery stores and convenience stores to prepare for that transition.

Many businesses in Fiji –– in fact, entire industries –– depend on the health and sustainability of our natural world, and it’s incumbent on businesses to play their part in preserving our natural environment. We’ll be incentivising businesses and organisations to “adopt” stretches of highway. Basically, if an organisation commits to covering the costs of maintaining the cleanliness of a stretch of road –– in line with FRA standards –– they’ll be given recognition in the form of signage along the roadside. It’s a system you’ll see on highways across the United States, Canada, Australia, and other major economies where consumers are already rewarding businesses who are making a contribution to cleaning up the roads.

Mr Speaker, we introduced the Environment and Climate Change Adaptation Levy – ECAL – in 2017. Since that time, ECAL has emerged as one of the effective financial tools at our disposal in building a better, cleaner and more sustainable nation. ECAL has funded schools that have sheltered our young people during severe weather events; solar panelling that is increasing our share of renewable power; new technologies that are giving advance warning of incoming storms; tangible assistance for Fijians affected by climate impacts; farms that produce more climate-resilient crops; and a range of other climate and environmental protection initiatives across the country. Since its introduction ECAL has collected over a quarter billion in revenue, with $120 million collected so far in this financial year alone.

Mr Speaker, that work must continue. We’ll be applying ECAL to a few new items that are proven to worsen pollution through high usage of electricity and the emittance of chlorofluorocarbons, including vehicles, smartphones, microwaves, washing machines, televisions, and other commercial appliances or “white goods”.

Mr Speaker, the present climate crisis poses an unprecedented threat to our people, our progress and our natural world. At current rates of global warming, we’re already seeing horrific levels of environmental degradation, particularly in our oceans and reefs. In response, Fiji has remained on the frontlines of the global campaign for climate action and environmental protection. From Suva, to New York, to Nairobi, our Honourable Prime Minister has been sounding the alarm and demanding greater action from the world –– and I’d like to extend my personal gratitude to him for sacrificing so much of his time away from the comforts of home and family in pursuit of carwrying Fiji’s urgent message to the world.

Mr Speaker, Fiji’s global engagement on these campaigns has not only advanced the cause of vulnerable nations the world over, it’s pushed global financial players, business leaders and development organisations to re-think how they can best support building climate resilience. Fiji’s perspective has highlighted new opportunities to think innovatively in the climate financing space to develop new financial products that attract development finance. The Green bond we launched back in 2017 was one such example that is already funding critical adaptation efforts across our economy. But climate impacts are wide-ranging, and we need a diverse array of financial tools to respond effectively.

And today, on the eve of World Oceans Day, there’s no better time to announce that in the next financial year, Fiji will be seeing blue. We plan to expand beyond our shoreline, replicating immense environmental progress we’ve made into our oceans and reefs and reefs, which are particularly at-risk to the impacts of climate change. We will be pursuing a number of Oceans and Blue Economy Initiatives that transform Fijian waters – known as our Exclusive Economic Zone – into a responsible Marine Managed Area. We’re recovering our oceans and protecting our marine resources from lasting, generational devastation, by making Fiji’s oceans free from nuclear testing, deep sea mining, overfishing, plastic pollution and industrial discharge. We will also be pursuing the issuance of a Blue Bond to fund these critical efforts to preserve our oceans and build a Blue-Fiji. In early discussions, we’ve already sparked strong initial interest in the bond among our development partners, and we’ll have more details to announce on this initiative in the months to come. Mr Speaker, sir, we are also keen to pursue better prices for the blue bonds and the already issued green bonds. We are currently in talks with our development partners about this.

This focus on cultivating a sustainable Blue Economy will take close coordination effort across Government, businesses, our development partners, and society –– particularly, to benefit those many Fijians who have long-relied on our oceans for their livelihoods. Some of the most tangible change will come at the community level, as the Ministry of Fisheries works to accelerate new, sustainable industries in our seaside communities, subsidising the cost of projects like fish hatcheries, shrimp and prawn farming, and seaweed farms, which will prove to be both beneficial for the health of our oceans, and in creating lucrative new career paths for entrepreneurial Fijians. And those of all ages and walks of life can personally participate in our efforts to build a Blue Economy with small steps at the grassroots level; simply by planting mangroves or cleaning up rubbish from our beaches, we can work to instil a culture of proactive oceanic stewardship that sets an example the rest of the world can follow.

TO BE CONTINUED

Source: Ministry of Economy

 

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