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Leading figures ::
Job Dudley Tausinga (president), Gordon Darcy Lillo, Toswel Kaua, Patrick Vahoe (Jnr), Matthew Fakaia (secretary), Loisa Fakaia (treasurer), Ashley Wickham (policy coordinator).
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Status ::
Founded in 2005, the party is contesting its second national general election. For the 2010 election, the party has set an ambitious target of 3 seats per province. A more realistic prospect would likely see SIPRA return in coalition with the main players in the previous CNURA government.The party has no specific regional strengths and in the past has picked up members from different parts of the country. In the last parliament, members were drawn from Western Province, Malaita and Isabel province.
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Links ::
SIPRA has indicated its intention to coalesce with the remaining parties of the previous Coalition for National Unity and Rural Advancement (CNURA) government led by Prime Minister Derek Sikua (Democratic Party, Nasnol Pati and the Association of Independent Members).
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Parliamentary seats ::
The party held 5 seats in the last parliament - Job Dudley Tausinga (MP for North New Georgia), Gordon Darcy Lillo, Toswel Kaua (MP for Baegu/Asifola), Patrick Vahoe (Jnr) (MP for Malaita Outer Islands) and Samuel Manetoali (MP for Gao/Bugotu) who has since left to establish the Rural Urban Party in the lead up to the 2010 elections.
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Policies and outlook ::
In addition to releasing its election prospectus, the party has produced a number of discussion papers covering policies across a range of issues (including: the national pension scheme, rural fuel price stabilization, RAMSI leadership and management, governance and traditional and community leadership). The guiding principles outlined in the SIPRA 2010 General Elections Prospectus include:
Specific policy commitments include:
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History ::
The Solomon Islands Party for Rural Advancement (SIPRA) was formed in 2005 to contest the 2006 general election. The party held five seats in the last parliament and was a member of the Coalition for National Unity and Rural Advancement (CNURA) government led by Prime Minister Derek Sikua. The party is led by Job Dudley Tausinga, who is the long serving member of parliament having been first elected to the North New Georgia constituency in 1984, and held the seat ever since. He served as Minister for Education and Human Resources Development and Minister for Forestry, Environment and Conservation under Prime Minister Derek Sikua. Previously he held the position of Deputy Prime Minister and Minister for Forestry, Environment and Conservation (April 2006 to 19 December 2006). He has also served as Minister for Foreign Affairs and Minister for Natural Resources. In addition, Mr Tausinga has a number of private business interests in shipping and logging. Three of the other five party members held cabinet positions in the last government: Gordon Darcy Lillo – Minister of Environment and Conservation, Samuel Manetoali – Minister of Police, National Security and Correctional Services and Toswel Kaua – Minister for Justice and Legal Affairs.
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Contact details ::
PO Box 161 Honiara, Solomon Islands
Tel: +677 7496856
lagunwe@hotmail.com
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Solomon Islands Party for Rural Advancement The Blueprint of Policy Statements and Directions 2006 – 2009
Solomon Islands Party for Rural Advancement Prospectus 2010 General Elections
SIPRA (2010) Discussion Papers
‘SIPRA to contest 31 seats’,Solomon Star
, 1 July, 2010
Solomon Islands National Parliament website – www.parliament.gov.sb
Solomon Islands became independent from Britain on 7 July 1978. The country is a constitutional monarchy with a Westminster-style parliamentary democracy system. There is a 50 member unicameral parliament elected by the people every four years, and is chaired by an independent Speaker. Parliamentary representation is based on single-member constituencies. Her Majesty Queen Elizabeth II (since 7 July 1978) is head of state and is represented by His Excellency Sir Frank Utu Ofagioro Kabui, Governor General (since 7 July 2009). The governor general is appointed by the monarch on the advice of parliament for up to five years (and is eligible for a second term). The prime minister is elected by a majority vote in the parliament. The outgoing prime minister, Dr Derek Sikua, has held office since 20 December 2007 (the last general election was held on 5 April 2006).
Solomon Islands politics has been characterised by weak political structures and highly unstable parliamentary coalitions. They are subject to frequent motions of no confidence and the make up of the cabinet changes frequently as a result. A further by-product of the history of instability is the staggering 24 government ministries in a parliament of just 50 seats. Despite the high number of no confidence motions, only one prime minister has lost office in a vote of no confidence in parliament – Manasseh Sogavare was toppled in December 2007 – although others have resigned instead of facing a vote. Former education minister, Derek Sikua was elected by the parliament to lead the government in December 2007 and has remained in office to the end of the term.
In an attempt to address the inherent instability in the political system, the Constitution (Political Parties Amendment) Bill 2009 was introduced by the outgoing government. The bill was subject to intense debate both in parliament and amongst the wider community. The vote, two days before the dissolution of parliament in April 2010, failed by two votes to reach the required two thirds majority for the bill to pass into law.
The country is also still in the process of rebuilding the systems and trust in government following the civil unrest between 1997-2003. While many challenges remain, the recently launched Truth and Reconciliation Commission is widely considered a valuable step in the national healing process.
An astonishing 509 candidates have registered to contest the 50 seats on offer in the 2010 elections, up from the 453 nominations for the 2006 polls. Only days out from the elections, most candidates have yet to declare their affiliation with a political party or grouping, and that is only likely to occur after the general election and in the lead up to the parliamentary vote to determine who will be the next prime minister. Given the geographic, ethnic and cultural diversity of Solomon Islands, an increasing emphasis on local, independent candidates could exacerbate the issues of having such a diverse parliament with few unifying ideologies. The challenge for political leaders and aspiring candidates will be to harness the diversity of public sentiment and building workable alliances.
Providing accessible information to voters on political party platforms and policies is a crucial step in this process. Political parties need strategies for communicating with the public about their ideas and policies. Without them, parties and candidates can only rely on personality, family, kinship and money. If the political system is to foster an inclusive national debate on the pressing development issues, voters need to be able to evaluate the ideas and policies put forward by their politicians before every election.
As far as possible, the information contained in this publication is based on interviews with party leaders and officials and on official party documents where these exist or could be obtained. Any mistakes are entirely our own. The profiles focus on the present and the future, rather than the past. Where possible, however, historical background has been included. This is an essential part of any transparent curriculum vitae and is not intended in any way to compromise any party or individual politician.
We have tried to capture the major debates as stated by the political parties themselves. We have included entries for a number of new, start-up parties formed to contest the 2010 elections. Many of these parties may not have their candidates elected, but we have included them to capture the broad range of public policy issues being discussed presently in the country.
This publication is by no means the complete guide to political parties and groupings in the Solomon Islands. It is offered to people interested in Solomon Islands politics as a source of up to date information about the parties and groupings that shape the political landscape, how they have changed over time, the people behind them, and importantly the ideas and policies the leaders have for the future development of the Solomon Islands. As is the case in Solomon Islands, many of the parties/groupings will become redundant after the election and as the complex negotiations take place ahead of the parliamentary vote for the prime ministership. As a living document we will attempt to keep this resource as up to date as possible as new information comes to hand.
Every effort has been made to profile all parties contesting the 2010 election, however, some have not released any material in the public domain prior to our publication deadline. Further, the authors acknowledge the legitimacy of independent candidates, however were not able to profile them in this publication as there are simply too many.
We welcome any feedback or additions and wish all candidates the best of luck!
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Leading figures ::
Fred Fono (president), Seth Gukuna, Hence Vaekesa (secretary general), Sarah Dyer (treasurer)
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Status ::
A new party seeking to build on the reputation of its founder – and afford Fred Fono the opportunity to contest the parliamentary election for the position of prime minister.
Fred Fono has represented the Central Kwara’ae constituency since 1997.
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Links ::
The party’s founder, Fred Fono, served as Deputy Prime Minister in Derek Sikua’s Coalition for National Unity and Rural Advancement (CNURA) government from 2007-2010. The CNURA coalition also included the Democratic Party (Matthew Wale), Nasnol Pati (Francis Billy), Solomon Islands Party for Rural Advancement (Job Dudley Tausinga, Gordon Darcy Lilo) and the Association of Independent Members (Snyder Rini, Tommy Chan). The defeat of the Constitution (Political Parties Amendment) Bill in April 2010 split the coalition.
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Parliamentary seats ::
As a new party formed to contest the 2010 elections it held no seats in the last parliament, although the party founder,
Fred Fono has held his seat in the
Central Kwara’ae constituency since 1997.
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Policies and outlook ::
Despite repeated requests, the party has yet to provide a copy of its election manifesto for inclusion in this publication.
In media interviews shortly after launching the party, its founder Fred Fono, has promised sweeping changes to the way the Rural Constituency Fund (RCDF) is managed, stating “the focus of that party is to make reforms in the constituency development funding. The current system, one of the biggest weaknesses or the hurdles that we face is when these funds are paid through constituencies and members of parliament controls that, you tend to see a lot of people queuing at members of parliament residencies, offices, in order to give out free handout. That is the problem”.
The party will seek to introduce legislation that will require RCDF funds to be managed through local constituency congresses and not MPs.
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History ::
Founded in the lead up to the 2010 election by prominent Solomon Islands political figure
Fred Fono. As a long serving member of Parliament, Fono has represented the Central Kwara’ae Constituency since 1997 and has held a number of ministerial positions including Deputy Prime Minister and Minister for Rural Development and Indigenous Affairs in Derek Sikua’s Coalition for National Unity and Rural Advancement (CNURA) government. Prime Minister Sikua came to power after winning a motion of no confidence against former Prime Minister Manasseh Sogavare in December 2007. Mr Fono was a candidate to replace Snyder Rini as Prime Minister in 2006 but was narrowly defeated by Manasseh Sogavare. In opposition Mr Fono was highly critical of Sogavare, especially the relations between his government and Australia over the Julian Moti affair, and was instrumental in the eventual toppling of Sogavare as Prime Minister.
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Contact details ::
To be advised
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‘I will Contest for PM: Fono’,Solomon Times, 15 April 2010
‘Solomons Deputy PM to run for top job’,ABC Radio Australia, 15 April 2010
Solomon Islands National Parliament website -www.parliament.gov.sb
The annual report presents an overview of our many achievements over the past year.
Download the Annual Report here
It has been said in some quarters that we are now in the Pacific century, and recent global events have shown that this may well be the case. Geo-political interest in the Pacific is returning to levels not seen since the end of the Second World War. What was once a region struggling to be heard, is now one that is being courted.
The need for a truly independent Pacific voice has never been greater.
In this rapidly changing environment the norms of political and economic engagement are being re-written on an almost daily basis. This has enormous implications for everybody, ranging from the smallest Pacific island to our larger Antipodean neighbours. Nobody knows for certain how the emerging roles and influences from both the Asian subcontinent and also the Middle East will manifest in our region, but those of us who live here know that it is already happening and moving at a pace. The scramble for mineral and marine resources may further exacerbate this struggle.
All of this befalling a region that is still finding its own identity. At every level there are serious challenges. Is the Pacific a single region, or three distinct regions that need to face these challenges separately? How do the Melanesian states combine the need to meet the challenges of the 21st century internationally, whilst dealing with domestic issues and challenges that have their roots deep in their past? How will the recent increased geo- political interest affect the relationship between the Micronesian countries and the United States? Can small Polynesian microstates possibly be expected to operate effectively in such a complex political environment?
The challenges and opportunities for the Pacific are indeed great. In order to meet these challenges, and hopefully make the best of the renewed interest in our region, it is important that our people, leaders and decision makers have access to as much information as possible. This information needs to be provided in a meaningful way that is readily understood and able to help them in their deliberations.
It is therefore a great honour for those of us on the Board of PiPP to see how this young organisation has grown quickly to fill this need. We all understand the very great responsibility that lie on its young shoulders, and congratulate the executive and staff for their incredible achievements in such a short time frame. I hope for the sake of all of us who live in Pacific that we shall continue to see PiPP grow from strength to strength.
Nikunj Soni
Board Chair
Download the Annual Report here
The events of the last year highlighted the vulnerabilities and resilience of Pacific island states. The ripple effect of the global financial crisis reaffirmed the need for sustainable, broad based economic growth, and ongoing investment in social and physical infrastructure. The devastating flooding in Fiji and the earthquake-triggered tsunami that hit American Samoa, Samoa and Tonga were painful reminders of the force of nature, and the threat posed by climate change. The increasingly polarised debates on trade accentuated the difficulties of small island countries competing on an ever-shifting world stage.
These events further demonstrated the need for Pacific policy responses to be informed by relevant, independent evidence and analysis. Over the first two years of operation, PiPP has positioned itself as the Pacific’s leading independent think tank. From the outset, innovative communications activities have been central to our model of engagement. Based on a detailed understanding of the issues, and the political context in which they will be considered, what we do is immerse the literature and participants in the live policy debate. In addition, research activities build on the knowledge base through original investigation and a considered synthesis of the work of others. Information is presented in accessible language and formats. By tapping into existing networks, we avoid duplication and broaden exposure.
The role of information interlocutor is often invisible, but its value can be gauged through the tremendous support for PiPP across the region and internationally.
We occasionally get asked if we have a particular agenda to advance. We don’t. PiPP is proudly independent and non-partisan, and we do not seek to advocate particular policy positions. We exist simply to stimulate and support policy debate on the issues shaping the next phase of nation building across the Pacific. Our impartiality allows us to build trust, understanding and consensus for action. It also allows us to tackle sensitive issues and challenge the status quo when required.
The results speak for themselves, and this annual report presents an overview of our many achievements over the past year. It also showcases the striking imagery of Pacific-based, international photojournalist (and PiPP Advisory Council member) Ben Bohane. Like Ben’s photographs, our early efforts have concentrated on Melanesia. A focus dictated as much by resource constraints, as an awareness of the incredible diversity of the countries in which we operate. Underestimating the nuances of each island state remains all too common in regional and international discourses on the Pacific. Yes, there is much to be gained from pooling resources and sharing learning, but there is no easy ‘one size fits all’ approach to development in the Pacific islands.
For the year ahead we will continue to develop our programme focus on trade, civic engagement and climate change. Topical issues being explored through these programmes include: education, gender equity, infrastructure, migration, renewable energy, urbanisation and youth citizenship. We will also endeavour to strengthen our partnerships with policy stakeholders and research institutions, especially in Micronesia and Polynesia.
As incoming executive director, it is an honour to be tasked with the leadership of such a dynamic organisation, and a privilege to work alongside a dedicated and capable team of colleagues and associates. We are indebted to the people and organisations that continue to support us, and welcome new partners to promote informed policy debate on the issues that matter.
Derek Brien
Executive Director
Download the Annual Report here.
Copies of the full version of the audited financial statements are available on request.
It has been said in some quarters that we are now in the Pacific century, and recent global events have shown that this may well be the case. Geo-political interest in the Pacific is returning to levels not seen since the end of the Second World War. What was once a region struggling to be heard, is now one that is being courted.
The need for a truly independent Pacific voice has never been greater.
In this rapidly changing environment the norms of political and economic engagement are being re-written on an almost daily basis. This has enormous implications for everybody, ranging from the smallest Pacific island to our larger Antipodean neighbours. Nobody knows for certain how the emerging roles and influences from both the Asian subcontinent and also the Middle East will manifest in our region, but those of us who live here know that it is already happening and moving at a pace. The scramble for mineral and marine resources may further exacerbate this struggle.
All of this befalling a region that is still finding its own identity. At every level there are serious challenges. Is the Pacific a single region, or three distinct regions that need to face these challenges separately? How do the Melanesian states combine the need to meet the challenges of the 21st century internationally, whilst dealing with domestic issues and challenges that have their roots deep in their past? How will the recent increased geo- political interest affect the relationship between the Micronesian countries and the United States? Can small Polynesian microstates possibly be expected to operate effectively in such a complex political environment?
The challenges and opportunities for the Pacific are indeed great. In order to meet these challenges, and hopefully make the best of the renewed interest in our region, it is important that our people, leaders and decision makers have access to as much information as possible. This information needs to be provided in a meaningful way that is readily understood and able to help them in their deliberations.
It is therefore a great honour for those of us on the Board of PiPP to see how this young organisation has grown quickly to fill this need. We all understand the very great responsibility that lie on its young shoulders, and congratulate the executive and staff for their incredible achievements in such a short time frame. I hope for the sake of all of us who live in Pacific that we shall continue to see PiPP grow from strength to strength.
Nikunj Soni
Board Chair
An overly ambitious two weeks in Copenhagen?
PiPP executive director Derek Brien was in Copenhagen for the United Nations Climate Change Conference (COP15). Here he describes a chaotic two weeks that resulted in a less than ambitious ‘non-deal’. After a heated final session, exhausted delegates passed a motion to ‘take note’ of the US-brokered Copenhagen Accord without formally adopting it. The pact did not have unanimous support, and the conference ended much as it had begun – with an enormous divide between the big and small economy countries. COP15 did succeed in highlighting the new face of climate change geopolitics. For the Pacific, it will be important to build on the momentum from the Copenhagen negotiations and keep the dialogue alive
- by Derek Brien
Everyone was calling for an ambitious deal in Copenhagen. Perhaps we overlooked just how ambitious it was going to be getting any sort of consensus agreement at what was probably the largest gathering of world leaders we have ever seen. Especially for such a divisive and complex issue as climate change. Hardly surprising really that what we got was a much diluted political statement, and not a legally binding treaty.
The 15th Conference of the Parties commenced amidst a climate of much anticipation. The Danish capital was optimistically rebadged Hopenhagen. Tens of thousands of delegates and observers from 191 countries descended on the Bella Centre, which was abuzz with a somewhat festive air of activity. It quickly became clear, however, that this was not going to be like any other conference. Despite two years of preparations, there was little common ground between the main parties, and the division between the big and small economy (and emitter) countries was glaring. Not only in terms of negotiating position, but also physical location within the conference centre. The small delegations of the Pacific huddled around computer terminals shared with media and civil society representatives, while other delegates adjourned to the luxury of country delegation offices. The EU and US had delegation ‘centres’ complete with cafes, offices and media briefing rooms. Within the US centre there were separate offices for the White House, the House of Representatives and the Senate, highlighting the role of domestic politics in these international talks.
Perhaps surprisingly, the Pacific led the charge, with Tuvalu in particular, mounting a strong case to limit temperature rise to no more than 1.5 degrees Celsius. They were not alone with over 100 ‘least developed’ countries across Africa, Central America, Asia, the Caribbean, the Indian Ocean and the Pacific determined to hold the Alliance of Small Island States (AOSIS) line on 1.5 to stay alive. According to some scientists, anything above a 1.5 degree increase would put some countries (including Kiribati, Tuvalu and Marshall Islands) under water.
The big economy countries were pushing the G20′s ‘more deliverable’ limit of 2 degrees, with UK climate secretary Ed Miliband suggesting the AOSIS position was simply not achievable, neither politically nor technically. Many rumours abounded that some big names were backing away from the 1.5 line – it seems this was more wishful thinking by those in the 2 degree camp. PNG did break ranks with the rest of the Pacific to support the position of those advocating 2 degrees. But by and large the rest of the 1.5 coalition held firm – so much so that some African and Pacific leaders were declaring publicly that to agree to anything else would be tantamount to a suicide pact.
Given the final accord was essentially drafted by the large emitters (including the United States, China, India and Brazil) it is hardly surprising that it sets a maximum of two degrees Celsius average global temperature rise, but it does state that a review by 2015 should consider limiting warming to 1.5 degrees Celsius (included in the last line). Further, the language in the text implies that 2 degrees is not a formal target (for there are no ‘targets’ in this ‘non-treaty’) but just that the Conference of the Parties ‘recognises the scientific view that’ the temperature increase should be held below this figure.
The lack of transparency of proceedings was another major concern voiced by the ‘developing country’ bloc throughout the two weeks. Many were angered by the propensity for ‘huddle groups’ to take control of key elements of discussions. This anger boiled over into the last marathon session when the hastily drafted accord was presented to the plenary (i.e. the 180 odd countries that were not included in its preparation – for a highly entertaining account of ‘how the deal was made’ have a look at this piece by the AFP’s Stephen Collinson – remember decisions under the rules of the climate conference generally require consensus from all participating countries). There was significant opposition from a number of African, Latin American and small island nations who were cut out of the accord’s drafting.
So other than a rather tepid commitment to keep global temperatures below 2 degrees, what does the Copenhagen Accord actually say?
First and foremost, it is a political agreement so there are no legal obligations on any of the signing parties. There is also no mention of ever translating the accord’s framework into a legally binding treaty (at one stage in Hopenhagen talk was that a weak deal would be firmed up into legal text by the next COP meeting in Mexico).
The draft document asks all countries to submit their own national emissions targets by 31 January 2010 to be included in the accord. Significantly, developing countries’ mitigation targets ‘will be subject to their domestic measurement, reporting, and verification’ procedures. The US had argued strenuously that all countries, and China and India especially, should be subject to international monitoring of emissions targets.
The accord also recognise the ‘crucial role’ of forests and supports the ‘immediate establishment of a mechanism’ (including REDD-Plus) to provide incentives (money) to reduce deforestation and forest degradation.
Financial support for mitigation and adaption measures was another key area that was not fully resolved over the two weeks in Copenhagen. The ‘collective commitment’ (i.e. break down of contributions was not decided) by developed countries is around USD$30 billion for the period 2010 to 2012 rising to $100 billion by 2020. Allocation of the these funds will be split between mitigation and adaptation with priority given to the ‘most vulnerable’ developing countries including small island developing states. A new Copenhagen Green Climate Fund is to be established as operating entity of the UNFCC and accountable to the Conference of the Parties. The big economies had lobbied hard for any climate funds to be dispersed through established mechanisms (i.e. the World Bank).
Finally, the accord requires an assessment of its implementation to be completed by 2015, including the aforementioned consideration of limiting temperature rise to 1.5 degrees. But if it is too late to achieve this target now (as Mr Miliband has suggested) surely there will be no hope in six years time, especially as we have no binding targets for reducing emissions or other mitigation strategies. In fact, nothing in the accord really spells out just how the parties will keep the planet from warming another 2 degrees. Nor does it signify any resolution of the differences between the parties.
The Copenhagen meetings did provide a fascinating overview of the shifting sands of climate change geopolitics. The high profile role assumed by AOSIS (including the Pacific delegations) and the strength of the alliance in the face of tense negotiating demands from traditional development partners (some still interpret this as bullying) was impressive. The stronger alliances (which are becoming more coherent and their interests clearer) and the depth of division between the various interest groups such as AOSIS, the African group of countries, the BASIC block (Brazil, South Africa, India and China), and the G8 plus Australia and New Zealand, appears to make it more difficult for existing and emerging powers to secure the powers of veto of smaller countries.
All in all it was an unforgettable two weeks. Clearly trying to break the gridlock in the climate change debate was an overly ambitious target, especially within the UN framework of consensus decision making. I am sure the Danish hosts and UNFCC organisers regret the hype that resulted in an extraordinary turn out of world leaders, media and civil society representatives. This turn out served to highlight the ambiguous Copenhagen Accord (noted but not agreed to) as a face saving non-deal. It was supposed to be a planet saving deal.
The Pacific Institute of Public Policy invites responses (click here) to this opinion piece
Opinion pieces are published in order to stimulate thought and discussion on important policy issues in the Pacific. Views expressed are those of the author(s) and may not reflect opinion of the institute.
Putting development first-byWesley Morgan, Communications Officerat the Pacific Network on Globalisation (PANG).
World Bank Senior Economist for the Pacific, Dr Manjula Luthria, argues that PACER Plus could lower the economic distance between countries in the regionif concerns regarding agricultural exports, labour mobility, and tariff revenue losses are adequately discussed. Here, Wesley Morgan responds, arguing that a free trade deal offers more dangers than gains for the Islands.
The push for a Pacific free trade agreement, to be called PACER-Plus, clearly originates from policy makers in Australia and New Zealand (and from supporters at multilateral institutions such as the World Bank and the Asian Development Bank). Both Australia and New Zealand have considerable experience negotiating free trade agreements, and stand to gain commercially from PACER-Plus. The majority of any increase in trade brought about by PACER-Plus will come in the form of an increase in their exports to the Pacific (adding further to considerable trade imbalances faced by many Pacific countries).
That Australia and New Zealand are keen to pursue a free trade agreement (FTA) means that Pacific countries are being asked to consider what they might ask for ‘in return for’ trade liberalisation. In her opinion piece (October 21, 2009), World Bank economist Dr Manjula Luthria offers a number of suggestions for what Pacific might ask for under PACER-Plus.
Clearly, this is putting the cart before the horse. Trade arrangements between the Pacific and Australia and New Zealand can, and should, be dramatically improved. But there is no need to negotiate a dangerous FTA to do so. The key question should be: ‘how can trade assist with improving development outcomes in the Pacific?,’ not ‘how can we make a FTA more palatable?’
Undermining government revenue in the Pacific
Dr Luthria quite rightly points out that PACER-Plus will leave a “significant hole” in the budgets of Pacific island countries. A report commissioned by the Pacific Islands Forum Secretariat, and completed by Washington-based consultants Nathan Associates, has found that under PACER-Plus, Pacific countries stand to lose tens of millions of dollars each year. That report found Vanuatu stands to lose around 17% of its annual government revenue, as does Tonga, while Samoa and Kiribati stand to lose around 14% of their revenue. Even bigger countries like Fiji and PNG stand to lose more than $10 million each year[1].
Dr Luthria, also quite rightly, points to a lack of solutions for this revenue loss, indicating that moving to a VAT would be difficult for many countries – especially those with large informal sectors. Dr Luthria says money delivered straight from Australian and New Zealand governments to make up the shortfall (‘time bound structural adjustment support’) is justified. Failing that, Pacific countries will simply have to ‘grin and bear it’ – at least in the short term, until the ‘benefits’ of a FTA are realised.
However, it is not at all clear that Pacific countries stand to gain much from a FTA with Australia and New Zealand – even in the longer term. Pacific countries already have duty free and quota free access to Australian and New Zealand markets for their exports, and other non tariff barriers to trade (affecting potential exports of agricultural goods for example) aren’t necessarily solved by a traditional FTA.
As for regaining lost government revenue; studies by the International Monetary Fund have found that over the past 25 years, low income countries have completely failed to recover government revenue lost from the reduction of import taxes (and that introducing VAT has little impact on meeting the shortfall)[2]. T
here are recent examples of this in our region – when the Asian Development Bank forced Vanuatu to lower tariffs and introduce a VAT as part of conditions for a new loan in the late 1990s for example, the country suffered massive revenue losses that it took many years to recover from.
Consumer gains from PACER-Plus?
Dr Luthria argues that reducing tariffs on imports can “significantly increase the welfare of Pacific denizens”. However, it is not clear that Pacific consumers will gain meaningful price reductions through PACER-Plus.
Experience suggests that even if tariffs are lowered, in many cases exporters and distributers (middle men) tend to increase their prices almost back to the same level after tariffs are removed, and fail to pass on the benefits to consumers.
There are recent examples of this from within our region. For example, when the Asian Development Bank forced Vanuatu to lower tariffs as part of conditions for a new loan in the late 1990s, benefits were not passed on to consumers. A report commissioned by the United Nations Development Programme on Leveraging Trade for Human Development in Vanuatu found that one of the ‘benefits of trade liberalisation – a fall in retail prices of consumer items – is not evident in Vanuatu’[3].
Any fall in the price of consumer goods as a result of a reduction in tariffs is likely to be at least partially offset by increases in consumption taxes (introduced to meet serious government revenue shortfalls).
Indeed, governments that already have these taxes have steadily raised them in recent times. Samoa for example introduced a Value Added Goods and Services Tax when it unilaterally reduced tariffs in the late 1990s. Originally levied at 10%, the VAGST has since been raised to 15%, and is likely to be raised further under PACER-Plus. Tonga, which introduced a Consumption Tax in 2005 to offset losses incurred by joining the WTO, gathered 20% less revenue than it expected to in 2008/09 and is also likely to raise its Consumption Tax again in the near future.
A further key point to remember is that Pacific countries can currently lower tariffs unilaterally at any time they like, if such a move is deemed to be of benefit to local consumers. This would avoid the dangerous, and irreversible, conditions of a FTA with Australia and New Zealand.
Finally, lowering tariffs needs to be considered against maintaining local livelihoods and jobs. If Pacific countries allow cheaper imports (often made by large corporations who enjoy bigger economies-of-scale) to flood the market, local businesses will close down as the private sector turns to imported goods. Cheaper imports may even undermine local agriculture and reduce the income of village farmers selling their produce at the local market.
Agriculture and labour – the Pacific’s ‘comparative advantage’?
Dr Luthria argues that the Pacific would do well to focus on areas that it has a ‘comparative advantage’ – namely agriculture and labour – but fails to indicate why a FTA is necessary to increase export potential in these areas.
Taking first agriculture; it is true that Pacific agricultural exports are much under-developed, especially given the prevalence of productive agricultural systems in the Pacific – for subsistence and cash-income – and climate advantages (for tropical fruits and root-crops for example).
A new regional trade agreement could open new ‘export pathways’ for agricultural exports by providing resources and expertise to meet Australian and New Zealand quarantine standards, and prioritising the assessment of Pacific produce by Australian and New Zealand quarantine agencies (at the moment, Australia is especially slow at assessing the entry of new products). As Dr Luthria points out, a hefty emphasis on ‘aid for trade’ would be required, as would a focus on improving key trading infrastructure (such as rural roads, ports, pre-shipment quarantine facilities etc.).
However, a free trade agreement with the Pacific’s biggest trading partners would remove key policy options for growing Pacific agriculture (including seasonal tariff protections, and occasional subsidies when prices for island commodities – like copra – fall through the floor), and is likely to promote a greater reliance on food imports and increased competition for local producers from foods produced in Australia and New Zealand. Over time, this will undermine the income and livelihoods of village farmers selling their produce in local markets.
Dr Luthria argues that “the other main exportable item from the Pacific is semi-skilled and unskilled labour”. However, it is not explained why PACER-Plus is necessary to improve opportunities for the export of Pacific labour.
Both Australia and New Zealand currently maintain a temporary labour mobility scheme that allows small numbers of Pacific islanders to fill labour shortages in their horticulture industries. However, demand for unskilled labour fluctuates overtime in both countries, and a binding commitment to a quota of Pacific island workers as part of PACER-Plus is unlikely. The recent downturn in the global economy and increasing unemployment in Australia and New Zealand means that labour mobility of the type sought by the Pacific countries is increasingly unlikely to be included under a new deal.
Other FTAs negotiated by Australia and New Zealand do not offer hopeful precedents for the Pacific, as negotiations have focused on market access for executives, professionals and skilled self-employed contractors who service transnational corporations and meet skills shortages. As a recent study commissioned by the Pacific Islands Forum Secretariat points out that; “[Pacific] priorities include the free movement of skilled and unskilled labour, however we believe it is unlikely that PACER-Plus negotiations will encompass free movement of unskilled labour.”[4]
If Pacific countries choose to negotiate a FTA including trade in services, in the hope of gaining labour mobility commitments, they may simply end up with what they already have. That is, they may gain a temporary labour mobility scheme designed to meet labour shortages in Australia and New Zealand (that can be suspended when unemployment rises in those countries) through onerous conditions on any Mode 4 concessions, or a side letter that deals with labour mobility. In return, the Pacific may have to liberalise a range of service markets and surrender sovereignty over key areas of national economic policy-making.
The World Bank is right to point to regional labour mobility, and improvements in agricultural exports, as key priorities for the Pacific – but clearly a free trade agreement is not the appropriate vehicle to pursue these interests.
Wesley Morgan is Communications Officer at the Pacific Network on Globalisation (PANG).
[1] Nathan Associates. 2007. Pacific Regional Trade and Economic Cooperation – Joint Baseline and Gap Analysis. Pacific Islands Forum Secretariat, November 2007.
[2] International Monetary Fund, 2005. Tax revenue and (or?) trade liberalisation. (prepared by Thomas Baunsgaard and Michael Keen). June 2005.
[3] Wagle, S. 2007. Leveraging Trade for Human Development in Vanuatu – Summary of Issues. Asia-Pacific Trade and Investment Initiative UNDP Regional Centre in Colombo.
[4] pp. viii Nathans Associates. 2007. Pacific Regional Trade and Economic Cooperation – Joint Baseline and Gap Analysis. Pacific Islands Forum Secretariat, November 2007.
The following is the opinion piece originally posted by Dr Manjula Luthria, of the World Bank.
PiPP welcomes further comment on this topic in the spirit of promoting policy debate.The Pacific Institute of Public Policy invites opinion pieces for publication in order to stimulate thought and discussion on important policy issues in the Pacific.Views expressed are those of the authors and may not reflect opinion of PiPP.
PACER plus has the potential for lowering the economic distance between countries in the region. But only if concerns regarding agricultural exports, labour mobility, and tariff revenue losses are adequately discussed.
Along with the much larger economies of the world, the small islands of the Pacific are trying hard to cope with the effects of the global economic downturn this year. With this bleak backdrop, it is almost understandable when the idea of greater openness and trade integration through the PACER Plus Agreement does not translate into a picture of economic security in their minds. However, the reality is that even greater trade integration could translate into concrete economic benefits for them. Tariff reductions on imports from Australia and New Zealand (ANZ) – who are the main suppliers of imports into the Pacific – can significantly increase the welfare of Pacific denizens. This is primarily because it is already very expensive to get goods to the Pacific doorstep due to their small size and extreme remoteness. Adding on tariffs which result in increasing the final price of goods to Pacific consumers is akin to the islanders being shot in the foot twice, once by geographical distance and a second time through protectionist policies.
At the same time it is hard to deny that the Pacific’s hesitation to negotiate the PACER Plus agreement has some just cause. After all, tariff revenues comprise upwards of 10% of all government revenue in most islands, and their reduction will leave behind a significant hole in their budgets. There are no easy remedies for filling this revenue gap – for example, oft-heard advice to fill that hole through prudent financial management will appear pedantic. Similarly, suggestions for moving to a VAT system of tax collection are also infeasible in the presence of large informal sectors. The other commonly given advice in such situations is that this pain of adjustment is temporary and, hence either a ‘grin and bear’ approach is recommended or a call for support for temporary, time-bound structural adjustment support is justified.
This is where the stark reality of many small states facing preference erosion will need to be faced in bilateral, regional, and ultimately multilateral trade liberalization fora. For many small states this pain is permanent, because they simply do not have the size and location advantages to operationalize their comparative advantage. Recent emphasis on economic geography has also shown that efforts to push economic activity out from hubs to the periphery either through conventional policy prescriptions or through aid to build state capacity are fraught with failure. Instead, small states would do better by attempting to become economic extensions of their nearest large market. This is best achieved by reducing any economic ‘frictions’ that create economic barriers between the islands (the periphery) and the nearest hubs – be they barriers of language, transport costs, costs of telephony, or trade tariffs.
Reducing these frictions all around will also require that goods or services in which the Pacific has comparative advantage be allowed to reach neighbouring developed markets without being met with high tariff or non-tariff barriers. And there are two such items the Pacific has the potential to offer: agriculture and labour. In exporting agricultural goods the Pacific islands will face technical barriers to trade (e.g. SPS conditions) which they are almost certainly not going to be able to meet. Consequently, a hefty emphasis on trade-for-aid to build the Pacific’s capabilities to meet those stringent requirements will be needed. The attractiveness of this approach is that the abundant fertile and under-utilized land assets in the Pacific will receive a financial boost and thus set in motion the virtuous forces needed to create commercial land-leasing arrangements which are compatible with customary land ownership but currently scarce in the Pacific. Once that happens, large masses of Pacific populations that are ensconced in the informal sector may find sustainable ways to access a cash economy in which they aspire to partake. And faced with the prospect of greater openness in agricultural trade in the region, the pacific could also review some of its own tariff peaks in agriculture which are not conducive to attracting investment or to the adoption of new technical know-how in the agricultural sector.
The other main exportable item from the Pacific is semi-skilled and unskilled labour. A restriction on the movements of Pacific people constitutes a non-tariff barrier on their chief export and prevents their comparative advantage from being operationalized. This despite the fact that nearby hubs are labour starved already and likely to become even more so as their populations age and the need for labour-intensive services increases. Greater regional labour mobility for all skill types offers a chance to bring prosperity, as well as social stability and security, to the entire region.
So the Pacific might need to start thinking seriously about putting an end to shooting itself in the foot by maintaining high tariffs on imports, and ANZ might need to deliberate on a combination of aid-for-trade focus to facilitate agricultural exports out of the Pacific, significantly lowering barriers on labour mobility, and ultimately buffering any remaining revenue losses due to foregone tariff revenues. Without these ingredients the Pacific might find itself either quietly marginalized by globalization or loudly trampled upon by it. With these ingredients however, it can potentially insert itself into the globalization process as a full participant of its fruits.
Dr. Manjula Luthria, The World Bank
Senior Economist for the Pacific Region
The Pacific Institute of Public Policy invites opinion pieces for publication in order to stimulate thought and discussion on important policy issues in the Pacific.Views expressed are those of the author and may not reflect opinion of PiPP.
DISCUSSION PAPER #12: World leaders left Copenhagen with a ‘non-deal’. The development challenges remain the same.
The sirens have sounded on climate change. Pacific islands are on the frontline and some are facing an existential threat to their very existence. The world was watching to see what would happen at the Copenhagen summit. Few were optimistic about the outcome. The Pacific Institute of Public Policy (PiPP) released a briefing paper in the lead up to the COP15 conference that canvases the most important aspects of the debate in a Pacific context: the human impact of climate change and how adaptation measures should be about meeting development challenges.
Mr Derek Brien, Deputy Executive Director of PiPP, says “in a changing climate, the development challenges remain the same. Adaptation needs to consider more than just climate-proofing infrastructure. Climate change adaptation is about development: water supply, sanitation, agricultural productivity, food security, urbanisation, economic development, health care and education”.
The latter especially may not seem obvious climate related issues, but without healthy and well educated populations, the Pacific will not have the capacity to deal with development pressures that are made all the more urgent in the face of shifting weather patterns, coastal erosion and more frequent and extreme storm events.
Even in the most vulnerable, low lying atoll states, the focus of climate change is on tackling existing and future development challenges. Kiribati (population 100,000), Marshall Islands (60,000) and Tuvalu (population 10,000) face the prospect of becoming uninhabitable over the next fifty years. Compounding the problem of rising seas and retreating land is rapid population growth, placing increasing pressures on already limited physical and social infrastructure. South Tarawa, the main atoll of Kiribati already suffers severe overcrowding with over 40,000 people crammed into less than 16 square kilometres of land. That is a higher population density than Sydney, Australia’s largest city.
Relocation is not a simple solution. The evacuation of 3,000 people from the Carteret islands, a group of five atolls in Papua New Guinea that have progressively become uninhabitable due to salt-water inundation, has been fraught with problems. Not the least of which is how to move entire communities so they can be self-sufficient and live harmoniously with the traditional land owners.
President Anote Tong of Kiribati goes to Copenhagen with an emotional message – in fifty years his country may be all but submerged. He knows his people have to move, and has a preference for a gradual outflow rather than the wholesale relocation of the population.
“Climate change adaption also needs to facilitate choice migration”, says Derek Brien, “and that will require a shift in prevailing attitudes to the subject, as well as ensuring current and future generations of Pacific islanders have access to international standards of education to compete on the global stage”.
History has demonstrated the traditional resilience and mobility of island communities. People have moved when various pressures afflicted them, from tribal war, to fresh water scarcity to the lure of Christian missions and urban life. Climate change presents just the latest challenge for islanders to make the best of a bad situation and adapt – as they always have.
This time, however, the challenge is global and there remains a need for a sustained and co-operative effort by the world’s leaders to tackle it. Copenhagen was supposed to deliver a binding post-2012 agreement. It didn’t. For the Pacific Island states, it is important to keep the discussion alive. The count down has well and truly started and for some island states there may be little time left. Climate change threatens the region in a way that may warrant declaring a state of emergency.
A copy of the briefing paper published before the COP15 conference is available here.
THE NEED FOR INCLUSIVE DIALOGUE
The Pacific Institute of Public Policy has released its latest briefing paper to stimulate thought on how to develop an informed and inclusive series of national dialogues to bring about wider participation in PACER Plus discussions.
PACER Plus has proven to be a particularly divisive topic in the region, mirroring the global debate for and against free trade agreements. Pacific Islands Forum ministers and officials meet this week in Brisbane to map out a framework to move negotiations forward.
Despite an exhaustive (and perhaps exhausting) tour of the Pacific this year by Australian and New Zealand ministers and officials – a tour that sought to assure governments and the public that PACER Plus would be development focused and more than just a trade agreement – there remains an overwhelming public perception that PACER Plus is not in the best interest of the islands. Pacific leaders have also sought to quell fears that they have been ‘ambushed’ and assert PACER Plus is not being ‘forced’ upon them.
So why, after clocking up so many air miles and so much media space, are civil society groups and the wider population still not convinced?
Mr Derek Brien, Deputy Executive Director of PiPP, says “if we are to get a true picture of the potential impact of PACER Plus – both positive and negative – then we need to open up the discussion beyond the narrow confines of existing trade relationships. It is, after all, a Pacific Agreement on Closer Economic Relations”.
The briefing paper suggest that as a starting point, the Australia New Zealand Closer Economic Relations agreement presents a more relevant model than traditional trade agreements.
“A Closer Economic Agreement in the Pacific needs to consider a whole range of issues, such as improving living conditions, consumer protection, business development, social inclusion, infrastructure, the environment and migration. Pacific leaders have demonstrated a long-standing commitment to regional integration, and PACER Plus presents an opportunity to build on the deep social, cultural and commercial linkages between the Pacific islands, Australia and New Zealand,” says Mr Brien. “But we wont get there unless we change the language of the debate. Just releasing an avalanche of technical studies is not enough. Framing the discussion in trade jargon excludes most people, and prevents a more thorough appraisal of the options for mutually beneficial integration.”
There is no one-size-fits all framework to guide national consultations as each country has specific national interests as well as political, social and economic context. Defining a consultation framework will require the involvement of key stakeholders from across government, business, industry bodies and civil society.
The Pacific island governments have called for space to undertake national consultations. This space should be allowed within the negotiation time line, bearing in mind that a well managed national dialogue will both inform and be informed by ongoing research. It is not about slowing the process; it is about achieving better outcomes.
A copy of the briefing paper is available here.
This week on Pacific Politics: PiPPtalks - MSG Secretariat Director General Peter Forau discusses the organisation's identity and purpose; Dan McGarry looks at the West Papuan independence movement's long road to freedom; a photo essay on the MSG's Eminent Persons Group and much more....
PiPP is pleased to present its latest tool in understanding the state of mobile phone and internet use in Vanuatu. This infographic encapsulates the key findings from our 2011 study of social and economic effects of telecoms in Vanuatu. Please contact us for a printed copy or click here for the downloadable graphic.
