Transcript
VIJAY NAIDU: There's a number of very good things but it is a deficit budget and there is some worry around that. In terms of changing the nature or structure of our society, it helps but really we need more than what has come out of the budget.
SALLY ROUND: First of all the economic situation as outlined by the Economy Minister Aiyaz Sayed-Khaiyum. It seems healthy. High foreign exchange reserves, a good growth forecast. Is that how you read it?
VN: Well you know the growth forecast for this year and performance has not been too bad. It's around 3.8 percent, but as we look ahead it's not that positive. So there are issues around the sustainability of economic growth over time and our ability to meet our debt payments.
SR: We'll get onto the debt shortly, but first of all some of those goodies, I guess you could call them, in the budget - a 14 to 15 percent wage increase for government workers, increase in benefits for the poor and elderly, a raise in the income tax threshold, a crackdown on business over pricing ... is this enough to address major concerns about poverty and the cost of living?
VN: I think one can say that to some extent they do address elements of poverty but it's not sufficient to resolve the issues around poverty. The tax threshold increase to ($FJ)30,000 is very positive because about 80 percent of our people actually earn below 30,000 and of course a good proportion of people are actually in poverty or close to poverty. This would help together with those increases in the poverty benefit fund and the social pension fund. However the minimum wage has only been increased by 36 cents. It's now FJ$2.68 an hour so that doesn't substantially alter at all the wage structure that is to be found for the most vulnerable in our society and a majority of the people who are poor in Fiji are those who work actually, but who work on very low pay.
SR: The health allocation has increased substantially, 350 doctors, 42 million for drugs and equipment. I think the overall budget an increase of nearly a third. This is in response to many health concerns over the last year, would that be right?
VN: Yes and you see some tall claims being made and it'll be interesting to see how these things play out because we have problems around dialysis machines, we have problems about the supply of drugs and medication and we have problems relating to health service workers, you know both doctors and nurses as well as support staff. In this sense this initiative seeks to address a number of gaps in our health sector.
SR: The sugar industry - there have been fertiliser subsidies announced and other initiatives. Is this enough to boost the industry?
VN: Well, again I think one has to accept that these are positive initiatives towards trying to help resolve the situation regarding the industry and the farmers but it won't actually solve the problems. I think the major problem for the farmers is not only the core structure of inputs and the cost of producing sugar cane, but it also has to do with what income they earn. The loss of preferential access to the European Union market has meant that over time the sugar price has come down and so the big gripe of the farmers has to do with the loss of higher returns on sugar cane production but also they complain about the inputs, so that included the price hikes relating to fertilisers as well as the cost of hiring cane cutters to harvest the cane and the transportation costs for the trucks that took the cane to the sugar mills. If you look at what the Minister for the Economy has said there are elements in this budget that addresses these various cost dimensions but he has said nothing about how the income of the farmers might be addressed.
SR: Can Fiji afford this budget? What about the government debt?
VN: Well, that's a question that many people who are more reflective about the budget will sort of contemplate over. You see we already have a $5 billion debt and this deficit budget adds to that debt and if you look at our exports and our revenue, foreign exchange earning activities, basically agricultural commodities, fisheries and the tourism sector, and in all these sectors there's a likelhood of price fluctuations. A major revenue source for Fiji of course has been remittances. Again you know much of what we get depends on the circumstances where our short term and long term migrants are and, again, in terms of the sustainability question, there's a whole lot unpredictables ahead. I think especially tourism is dependent on political stability in the country and of course in our experience that can never be guaranteed.
