Government’s economic forecasts ‘unrealistic’

Monday June 10, 2019 Published in Letters to the Editor
Deputy PM Mark Brown Deputy PM Mark Brown

Dear Editor,

Reading CINews' Saturday issue and the Finance minister Mark Brown’s ‘Citizens’ Budget Guide’, I thought I'd add my two cents worth. Deputy prime minister Mark Brown’s self-congratulatory opinion of our country's economy, and without a doubt his unrealistic economic budget forecasts that, as far as he is concerned, were cleverly designed to give us the impression that our economy is going gangbusters. The reality of our true economic position is really so much more alarming and disturbing.

 

How mischievous and misleading, because while other "bona-fide and real developed countries" are preparing and mitigating for a long-term economic slowdown in their fully diversified economies (generating multi-revenue collections of mega-billions for their countries), our country relies heavily on our tourism industry as our major revenue earner — and as all economists would grasp, that positions our country's economy as "an at risk economy playing tiggy with bankruptcy!" A position no developing country would aspire to!

I mean, is there any prosperously developed country on the face of the planet, who has instituted and operates this dorky and insane economic model as we've done, by putting all our eggs in one basket?

By over-exaggerating and building up our own economy, which without a doubt would be the only (according to our FM) "rock star” economy on the planet with absolutely no diversification of revenue collection from our country's very own, and apparently very failed, primary industries of agriculture, fishing, and aquaculture (primarily that of Manihiki's production of the high-value black pearl). This will only see our hot-shot FM getting shot down by other real economists and FMs from other real developed countries, whose economies truly derive revenue from all their diversified industries within their own economic realm. But not ours, isn't that right, FM Brown? And yet you still want us to go the "developed nation status" route, with our one-legged stool economy of 100 per cent reliance on tourism, with no other discernible legs of revenue collection, pending a global financial collapse in 12-18 months?

And with our very own FM boasting to the world about our 9 per cent growth in our own economy being better than China's — coincidentally, a real example of a major developed nation with an economy based on multi-industry diversification of all that country's resources, generating mega-real billions of dollars for China and its people. Brown has positioned himself rather unflatteringly, to be held up to ridicule and derision by other world economists, with the consequence globally of our Cook Islands paradise being thought of as nothing but just another two-bit Banana Republic!

From your Citizens’ Budget Guide, "Increasing revenue without increasing the tax burden on society, through economic growth and by ensuring that tax legislation is enforced in an equitable manner." Economic gobbledegook put forth to mislead us by a bunch of tryhards who simply focus on and major in talking the talk, rather than walking the talk. Try honesty and explain to us why we have no diversification in revenue stream, e.g. the collapse of PM Puna's own home island of Manihiki's pearl industry and the irrational closure of its marketing arm, the under-appreciated Cook Islands Pearl Authority. If government’s prepared to spend some $60-90m on Te Manatua Cable, why didn't it commit similar monies to develop our own Cook Islands fishing fleet, and encourage and incentivise our very own fishermen to achieve their goal. As for our agriculture sector, government’s abject failure to reinvest in another of our major primary industries, is just tragic and is clearly an indictment on its lack of good governance and inability to convince the major global economic players, that it actually knows what it is doing.

I'm just gobsmacked as to why there aren't more Cookies out there who see the dangers we face economically for our Te Ipukarea paradise, and I ask "Why aren't they also using the media to express their dismay?!"

For example, government’s policy of raising the country's minimum wage rate will impact the private sector by some 5 per cent (minimum wage rate of $7.25 increased to $7.60), and the respective businesses' ultimate decision as to whether they will bear that 5 per cent increase, or if it may mean increasing the price of goods and services accordingly in order to cover that increase. Which may not only result in possible job layoffs, but could also likely trigger a vicious inflationary increase cycle if Team Brown aren't careful, and lack the know-how and economic nous for proper mitigation. This possible risk of a potentially vicious inflationary increase cycle, would become a huge economic burden on society.

And as for economic growth...where exactly would that growth come from, and in which primary industries would they now bother to support and invest in, having already failed these stakeholders over these past years, with many depopulating the Pa Enua and Raro for good, to NZ and Australia.

Analysing the Guide, further reinforces my view that the Budget is full of flowery and gung-ho positive sounding words, cleverly inserted as a distraction to make everything appear great.

And the only economic consideration that all of us need to grasp and understand is this:

There is no developed country in the world that has adopted finance minister Brown's Cook Islands economic model of near total reliance on one major industry as its number one revenue earner for the country, as a result of a failure to invest in, support and grow any and all other industry-diversification of their country's natural resources.

Unless of course, they're trying to convince its people there is a Hail Mary pass economic opportunity potential of say, selling the island of Suwarrow; or allowing a foreign investor a permit to farm black pearls; or allowing a foreign investor to begin mining our sea bed nodules. Rationally, none are ever likely to eventuate, fingers crossed! But hey, who knows? Time will tell, and yes that's why I say what an absolutely useless budget.

Papa William

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