Islands Business - WE SAY: Tough task ahead for Cooks

‘The present government needs to do much more than throw tax incentives to attract its people back.
It needs to create income generating opportunities and look at perceived impediments in its schemes designed to attract foreign investment, especially in matters relating to landed property’

Clearly, one of the biggest problems the Cook Islands faces is a rapidly declining population that has now begun to have a multiple impact on its economy. Depopulation and the possible ways and means to reverse or even reduce it was topmost on the minds of Cook Islands’ leaders during New Zealand Prime Minister John Key’s visit last month.
But as things stand, there appears little that anybody can do about. More and more people are leaving the islands for greener pastures leaving the country of 11,000 residents increasingly reliant on tourism and a growing expatriate staff to run hotels and resorts. There are more expatriate workers employed in more line functions in the hospitality industry than at any time before. And these are not necessarily from the Pacific Islands region. It is not uncommon to find workers from as far away as Zimbabwe.
The Cook Islands, unlike other Pacific Islands (but like the tinier islands nations of Niue and Tokelau), is in a completely different situation when it comes to the ease of mobility for its people travelling to and settling down in Australia and New Zealand. Being in free association with New Zealand makes Cook Islanders New Zealand citizens and gives them the privilege of settling down and working in both New Zealand and Australia—something that is not available to other Pacific Islanders.
A combination of lack of opportunities to move up in life economically, low wages, high interest and mortgage rates and a relatively high cost of living and the ease with which they can resettle in New Zealand and Australia is what is driving Cook Islanders to leave their shores in hordes.
Despite the economic downturn that has caused a dip in tourist arrivals across the world, the Cook Islands is experiencing a boom of sorts with local resorts reporting occupancy rates upwards of 80 percent—something that would be the envy of more well-known tourist locations in other parts of the world. Yet, there are dozens of good resorts for sale and the reasons are not far to seek: depleting numbers of locals to keep up with the industry’s growing needs and the high cost of credit and operational expenses.

Not that the government isn’t trying. Over the years, several schemes to woo back Cook Islanders living in Australia and New Zealand to live and work back at home have been operating, but the uptake has been far less than encouraging. It is far too easy for disappointed people to take off to Australia and New Zealand where opportunities are far greater, the wages higher and the possibilities of advancing their careers and wealth infinitely greater than back in the Cook Islands compared with the emotional appeal of returning home.
Successive Cook Islands governments have fundamentally failed on three counts: they have neglected economic development especially in the outer islands by not only creating investment opportunities in the far flung northern group of the islands but have also let transportation between Rarotonga and the islands of Penrhyn, Pukapuka, Manihiki, Rakahanga and others become so infrequent, erratic and unreliable that it is more expensive to travel to and from these islands, a few flying hours away, than buying a round the world ticket.
Second, the country’s successive leadership has failed to provide better higher education facilities leaving little choice for their parents but to send their children to schools in New Zealand. Once qualified there, it is hard to find work back home—and even if they are successful in getting employed, it would be at half the wages they would get in New Zealand, with not much of a difference in the level of living expenses.
Third, though it has given tax incentives to bring back their savings for investment in the Cook Islands, the administration has made it unattractive for senior Cook Islanders to retire back home by neglecting to build comparable healthcare facilities—which would be the first requirement to attract seniors that have been accustomed to living in better managed healthcare environments.
The present government needs to do much more than throw tax incentives to attract its people back. It needs to create income generating opportunities and look at perceived impediments in its schemes designed to attract foreign investment, especially in matters relating to landed property.
It has plans to revitalise the offshore banking sector by putting necessary legislation and internationally required checks and measures in place. This could create possible opportunities in the near to medium term.
The government has a tough task ahead of itself but it must find the answers quickly—and it will have no choice but to think outside the box for medium and long-term solutions. The Cook Islands needs a sensible plan to woo back its own. And it needs it now.