The Kingdom of Tonga is a constitutional monarchy, which is unique in the Pacific. Under arrangements in place until November 2010, the governing structure comprises the King in Privy Council, the cabinet, the legislative assembly and the judiciary. The King is head of state and the Prime Minister is head of government. The King presides over the Privy Council, which comprises cabinet members (ministers, including the prime minister plus the governors of Ha’apai and Vava’u). The Privy Council is the highest executive authority in the kingdom. The King appoints the ministers and governors; in effect, this means appointment for life or until they receive his permission to retire or are asked to resign. The Constitution provides for a legislative assembly comprising the 16 cabinet members, nine elected representatives of the nobles (there are 33 noble titles in Tonga) and nine elected representatives of the people. Elections for the legislative assembly have been held every three years, with nobles’ and peoples’ representatives being elected on different days. Elections were last held in April 2008. The November 2010 elections will be held under new arrangements following a process of political reform, which has dominated politics in Tonga in recent years. On 22 July 2008, legislation was passed for the establishment of a Constitutional and Electoral Commission tasked to examine almost all aspects of political reform, including alternate electoral arrangements. Elections expected in November 2010 will see an increase in the number of parliamentarians directly elected by the Tongan people (people’s representatives). A new formula was agreed by the legislative assembly in December 2009 and legislation passed in April 2010. The proposed model considerably reduces the powers of the monarch, which will devolve to the cabinet and the cabinet will be answerable to the legislative assembly. Under the new arrangements, the legislative assembly will comprise 17 people’s representatives, nine noble representatives elected by Tonga’s nobles and up to four other members appointed by the king on the advice of the prime minister of the day. Members of the elected legislative assembly will elect a prime minister, who will then be formally appointed by the king. For the first time the elected prime minister will have a constitutional mandate to govern.

Tonga’s National Strategic Planning Framework (NSPF) sets the overarching development framework for the country. The NSPF sets out four key enabling themes: ␣␣ Continue progress to smaller and more efficient government to transfer resources to improved services and maintenance of resources. ␣␣ Ensure State Owned Enterprises are accountable to government and provide dividends in proportion to capital invested. ␣␣ Improve the effectiveness of revenue collection to ensure a level playing field and that services to the people can be appropriately funded. ␣␣ Ensure a more coordinated whole of government approach to donor funding. Tonga is embarking on an ambitious program of political, economic and public sector reform. Since taking the decision to join the World Trade Organisation (WTO) the government has started many reforms especially on the revenue side of the budget. On the expenditure side the major challenge remains the high public sector wage bill and how to reduce the number of civil servants in the absence of a vibrant private sector. The November 2010 elections are expected to return a more representative, democratic parliament. The 2010 Public Expenditure and Financial Accountability (PEFA) Public Financial Management Performance Report found Tonga’s public financial management (PFM) system to be based on a solid legal and regulatory framework to oversee the government’s budgeting, spending and accountability structures. These include measures to ensure responsibility and accountability for public funds and procedures covering expenditure control and procurement. The overall impression of the PEFA assessment team was that there are clear rules and procedures in place and these tend to be followed, and that the PFM system is mostly operating at average or above average levels when compared to international best practice. Significant improvements in recent years have included attempts to shift towards multi-year budgeting, and revenue collection and enforcement, which has resulted in the level of tax arrears being identified and actively pursued using a risk management approach. There remains room for further improvements, notably in relation to improving budget credibility at the ministry/departmental/agency level by strengthening the linkages between the National Strategic Planning Framework and individual corporate plans, and less reliance on the Contingency Fund to adjust agency budgets during the course of the year. There is also scope to strengthen the transparency around financial operations of public enterprises, procurement contracts entered into by the state, and audits performed by the Audit Office. Procurement is managed by Treasury Instructions and the procedures generally ensure open competition for tendering above what are deemed to be sensible thresholds. However, the policy is not yet firmly established in regulations or legislation and procurement decisions are not publicly available.

Vision ^[5]

“To create a society in which all Tongans enjoy higher living standards and a better quality of life through good governance, equitable and environmentally sustainable private sector-led economic growth, improved education and health standards, and cultural development”.

Labour market‚ Formal sector (2003)

Tonga has a small economy that is heavily reliant on remittances from Tongans living and working overseas and foreign aid to fund a large current account deficit. Over recent years, Tonga has averaged approximately 200 million pa’anga (TOP) per year in remittances (A$133 million) although these have fallen by approximately 20 per cent over the last 18 months. This is likely due to the impact of the global financial crisis, which together with the civil unrest in Nuku’alofa in 2006 and administration weakness have contributed to the relatively poor performance of the economy in recent years. Revenue across all sectors declined in recent years – especially 2008-2009 – when earnings from tourism dropped by 6%, despite a 4% increase in visitor arrivals. Declines in electricity consumption, new car registrations, and imports (which fell by 10% in the first half of 2009) indicated an overall weakness in the economy. Nonperforming loans led to a deterioration of the banking and lending environment in 2008 with credit restrictions reducing business activities. Agriculture is the leading productive sector while the manufacturing sector is very small with limited export production in recent years. Tourism is modest but with potential for expansion. Tonga’s main trading partners are New Zealand, Australia, Fiji, the United States and Japan. Most Tongan exports are agricultural produce while imports cover the full range of consumer and industrial goods. In 2009, Tonga’s GDP was US$259 million and the economy was estimated to have contracted by 0.4 per, owing primarily to a slump in tourism activity and falling remittances. The International Monetary Fund have forecast public infrastructure spending will provide a temporary boost to economic activity in 2010/11, but caution that once those projects wind down it will be challenging to achieve growth in the 1 to 2 percent range.

The media in Tonga has limited independence.

Tonga has a national police service and a military service – the Tonga Defense Service (TDS), which includes a coastal naval unit and rural development service amongst others. The TDS functions and duties are specified in the Tonga Defense Service Act 1992, Privy Council Decision and Defence Board Decision. In Section 5, Part II of the Act the following functions and duties are specified: ‘The defence of the Kingdom; the aid of civil authorities in maintenance of order in the Kingdom; the support of civil authorities; and other functions and duties that His Majesty may from time to time determine’. The TDS receives support from the government’s of Australia, China, France, India, New Zealand and the United States of America. The United States military provides training to the TDS and conducts humanitarian civic action projects in Tonga. Since 2002, TDS personnel have been deployed as part of the RAMSI regional peacekeeping force in the Solomon Islands and between 2004-2008 to Iraq. In 2010 Tonga agreed to send troops to Afghanistan and the first deployment are expected to commence training in the UK in October 2010.