Correcting a $6 million error in a supplementary national budget going through its second reading in Parliament is a gaffe many a finance minister would rather not deal with.
For now, it forms the least of worries for Deputy Prime Minister Sir Terepai Maoate.
He found space in his September supplementary budget speech to voice concern over the impact of monopolies in the retail sector following the collapse of a major company PDL Ltd, owned by Cook Islanders Brett Porter and John Wichman, and its subsequent takeover by Trevor Clarke and his CITC interests.
The takeover, which came after PDL ploughed into insolvency leaving creditors scrambling for some NZ$3 million in invoices, saves almost 120 Cook Islanders and their families from an uncertain Christmas.
For CITC as another leading retailer in a small islands trading environment, the move was less about opportunity and more about the necessity of ensuring economic health.
And while the Prime Minister Jim Marurai says he is listening and keeping an eye on the private sector, it could be what’s under his very nose that is adding to the problem: too much money on public salaries and not enough on services and infrastructure to bring in the tax revenues needed to keep cash in circulation.
Is life getting so hard that the Cooks is seeing shades of Transition II? The T-word from the 90s is once more being heard in much the same tones and from much the same people who raised the alarm back in the 90s.
Development economist and Cook Islands News columnist Vaine Wichman notes in a September post that the situation needs Cook Islanders to stand up and meet the challenges head on—as they did in the mid-90s when the crunch hit.
The transition period of 96-98 is most remembered because it performed the seemingly impossible task of slicing a workforce of more than 3000, into half. An incentive was three months full pay for those who volunteered their redundancy. Many took up that option and emigrated, thanks to the safety valve provided by the New Zealand citizenship of Cook Islanders, to New Zealand and Australia. For others, small businesses incentives were unveiled and a private sector keen to respond to the challenging times also absorbed large numbers of former public servants.
Options for putting more cash back into Cook Islands pockets form part of a special task put to his top officials by the Finance Minister—they include activating COLA, or adjustment aimed at keeping earnings linked to the cost of living calculated from the Consumer Price Index. Then there is the likelihood of increasing the minimum wage, or lowering taxes.
But those expecting to hear more on another option—that of a government committed to living within in its means—were disappointed.
That may have been because Public Service Commission Minister Tangata Vavia had already admitted as much on the bloated public service of the mid 90s to a Cooks-hosted regional summit of public service bosses two weeks earlier.
And what was glossed over in his opening remarks, development consultant Teresa Manarangi-Trott, a member of the Forum PIPSO board and herself a former Cook Islands Chamber of Commerce President, was left to detail.
Her response to the question of whether government had learnt its lessons from the public sector collapse and ‘transition’ period from the mid 90’s was a firm ‘No”.
An ADB Economic and Social Report in 2006 confirms the fears: from 3200 employees prior to 1996 representing approximately 60% of the paid workforce, to 1500 by early 1997 and 1320 by mid-1999. Then a rise to 1520 by mid-2002 and by mid-2006 1900 public servants were employed, with signs that this number is increasing.
The jump in personnel costs squeezes on available funding for purchases of goods and services, sharing the common Pacific trend of workers being paid to turn up for work, but not having the budget to do the work they are paid to do!
Catch-22: That catch-22 isn’t the only result of a chunky payroll—money for essential infrastructure projects such as water, road repairs and sewerage becomes the domain of donor and development funding or bank loans. Other core governance factors which provide the base for economic growth—education and health—are compromised as well, says Trott.
Lessons from the last decade show that legislated reform, while good at keeping a nation on track in its reporting, can still be tampered with in some areas, and isn’t enough to keep leaders from subbing in their political mates in lieu of those topping a list put through a contestable selection process run by PSC.
Despite meaty changes and a growth in information disclosure from the Cook Islands Ministry of Finance and Economic Management (MFEM) Act, Public Expenditure Review Committee and Audit (PERCA) Act, Public Service Act and a Cook Islands Investment Corporation (CIIC) Act, all tabled and passed in 96/98, successive coalition governments have all sidestepped and manipulated their way to the current déjà-vu moment: another public service payroll beyond the means and tax revenues from a fragile private sector.
Ironically, while it was the introduction of the tough reforms that ultimately cost former Prime Minister Sir Geoffrey Henry his popularity at the polls, those changes also created the conditions of robust economic growth which helped successive governments fund—and then expand—the old payroll.
Another twist to the political nature returning to top posts is post-transition amendment to the PSC Act which basically moves all power of termination back into the hands of the ministers of cabinet, leaving the Public Service commissioner in a confusing role when it comes to firing HOMs (heads of ministries) who aren’t performing.
Prime Minister Marurai says he will be guided by a just-completed review of the Public Service Commission likely to include greater emphasis on performance-based measures, which speaks directly to improving the levels of accountability in the management of budgeted operations.
The review has a strong focus on the relations between PSC and the departments, and the perceived gaps and breakdowns in progressing with sector-wide changes to improve efficiency.
For his own part the Prime Minister fully supports the fundamental principle of a private sector-led economy with strong encouragement for fairness in trading, competitiveness, and equal opportunity for local investment.
He wants to see a streamlining of public sector responsibilities to improve effectiveness and efficiency in the delivery of services, especially in focusing on core activities which don’t duplicate the work of the business sector.
But Marurai’s biggest challenge may well be ensuring his own senior lieutenants toe the line. In that regard, he will be sharing the nightmare of denial which dogged transition leader Sir Geoffrey Henry’s attempts to spread the burden and responsibility of ringing up the changes. The lack of ownership by his fellow politicians saw deep fissures in the leadership of the day; which also put his own party leadership under attack.
And while his humble demeanor and softly, softly style has earned him both credibility and criticism from his people, he is still relatively untarnished by the political tar-brush which voters have seen other leaders dabble with.
He does risk that brush swiping back at his pro-reform views though, especially if he swivels his attention to an item lower down the priority list: political reform.
If he does do that and risk incurring the wrath of his cabinet subordinates who are running the political show, recommendations in the so-called ‘Purple Book’ may yet see the light of day, despite being commissioned some 15 years ago.