In this important paper, Fr Kevin Barr (photo, left) of ECREA, the Ecumenical Reseach, Education and Advocacy NGO, says he knows Government is genuinely concerned about the poor and intent on putting measures in place to greatly reduce poverty, but he is not convinced the 2010 Budget is a pro-poor budget.
I am surprised the paper was not published by the mainstream Fiji media and wonder whether this was due to censorship. If so, the censors should think again. This is precisely the sort of helpful commentary Government should welcome.
An ambitious ten point economic plan announced in the 2010 Budget included the statement: “Poverty to be reduced from current levels to less than 5 %”. This certainly is ambitious.
A number of times throughout the Budget we were told that there would be “targeted assistance to the poor”. But it is not always explained how this will be done.
We are told that:
- Those already on the FAS will receive an extra $30 in food stamps;
- The free bus fare scheme for school children will be continued subject to a means test;
- Housing assistance worth $10m will be available for first home owners in the form of a $10,000 deposit on a home.
1. $9m extra was provided to poverty alleviation for $30 extra a month for those on Family Assistance and for more staff to administer the poverty alleviation unit and collect more reliable data. Questions were raised about the misdirection of funds by the Social Welfare Department in the past and the lack of reliable data as though this was the reason for the growth of poverty in the country. As the Fiji Sun reported: “Government has tried its best to reach out to the poor ... However they remain poor because something is amiss. It has now been established that the funds allocated for them have not resulted in actually getting them out of the poverty cycle.”
I have been involved in three reviews of the FAS. It is totally inadequate, its criteria sometimes too narrow. There are not enough staff (which will thankfully now be remedied) and there are not enough vehicles for staff to monitor those on the scheme. Except in some cases it is not possible to get such categories of people out of poverty – only to help them live with a bit more dignity.
Those on Family Assistance (about 27,000 people) are only the tip of the iceberg of poverty. We know that currently there are at least 40% of our population living below the poverty line and probably about another 25% living close to the poverty line. Moreover 60% of those in full time employment are earning wages below the poverty line. So it is not just a matter of a “few people out there” who are poor and whose data need to be checked to verify that they are poor. In addressing poverty, government may well start with those on FAS but they represent only the tip of the iceberg of poverty in the country. In fact those on FAS represent only 7.9% of all those in poverty (and 3.16% of the total population).
Every government for years has been talking about getting more reliable data. By all means get more data but we already have enough data to tell us that we have a huge problem of poverty in Fiji and we are not sufficiently addressing it.
2. We are told that in removing price controls Government “will provide targeted assistance to the poor”. But there is no detail given. The removal of price controls was described as archaic, anti-business and opposed to a liberalised economy where market forces should be free to operate. Of course this move was wholeheartedly welcomed by the business sector. However there are a number of countries which still have price controls in place and they are of particular importance for a country like ours which has such a high percentage of its people in poverty. There need to be controls set on the market.
One wonders how we can be so quick to talk about a liberalised economy and the effectiveness of market forces when we have only recently faced an economic collapse beginning in the US (the great liberalised economy). Big question marks have been raised about the validity of the theory and policies surrounding “market forces”. Alan Greenspan, the great economic guru of the US, admitted that for years he held that “markets work best, so let them” and that he had argued against any government intervention. On 23 October 2008 before the US Government Oversight and Reform Committee he had to admit publicly that he had been wrong and that there was a “flaw” in his ideology of market forces. He confessed that his faith in deregulation was shaken and stated that he was in a “state of shocked disbelief”. He accepted also that “the market” doesn’t have a soul. It doesn’t respond to the need for compassion, mercy, forgiveness, tolerance, generosity and social justice – the core values which give meaning to life. The “market” sees only the need for continual increased profits. In fact the recent economic meltdown showed clearly that the market-based ideology of global capitalism had been fatally flawed.
3. The Housing Assistance grant of $10,000 is good but does not really provide assistance to the truly needy – the low income earners. As the Attorney-General mentioned at the Holiday Inn Forum, it will assist middle income earners only and not low income earners.
Currently in Fiji 50% of workers earn below $10,000 and 71% earn below $15,000. Consequently housing is not affordable for so many people in Fiji today and that is one of the reasons why we have so many squatter settlements and informal settlements.
The $10,000 grant to assist someone get a 20% deposit on a $100,000 home sounds good but it could also be considered a bait to get a person thrown to the sharks. The banks and housing institutions will then provide loans and they charge such high interest on housing loans. If a person can come up with the other $10,000 they still have to pay off their loan for many, many years ahead. How many have had to default on repayment of loans and be forced deeper into poverty?
A straight out grant of $10,000 to new home buyers to purchase a lot or to put a house on an existing lot would have been a better move. Also removing duty on housing materials for housing projects for low-income earners would have been more acceptable.
The negotiation of a loan from China for the housing projects is also welcome but it remains to be seen if the housing built is affordable for the majority of poor people.
4. Other policies in the Budget will hopefully have positive repercussions on the poor:
- The Land Reform Policy;
- More doctors, nurses and available medicines;
- Improvement of Infrastructure – roads, seaports and jetties;
- The decision to improve the agricultural sector.
It was heartening to know that the reduction of basic food items to 0% is to be maintained but, of course, we now have the negative impact of the 20% devaluation on the cost of these basic food items which is not good news. One wonders if the Governor of the Reserve Bank in his enthusiasm to prop up foreign reserves thought through the serious implications of the 20% devaluation on the lives of the ordinary people and the poor. This has not been rectified in the 2010 Budget.
It remains to be seen how the corporatisation of Water will affect people in Fiji – especially the poorer section of the community. The news from other countries such as Ghana and parts of South America are not at all encouraging.
5. I know that this government is sincerely interested in helping its poor and disadvantaged people but I wonder if the economists who advise government really know how to implement pro-poor, pro-people policies. This budget is very much in favour of the business sector. That is important because business is the engine for economic growth but the business community makes up only about 5 - 7% of Fiji’s population. Of course there should be flow-on effects if businesses are successful but that does not necessarily follow. We have had extremely low wages for over 60% of our working population for over 30 years and there are other areas where our workers are still being exploited.
Most of our economists in government positions of importance seem to have been trained in the traditions of the World Bank and the Asian development Bank which have been advising us for years according to the theories of extreme liberal capitalism. Recently Dr Wasim Zaman, a senior director at UNFPA, stated at USP that the economic policies we have been following have delivered economic growth but with inequality, injustice and poverty for so many.
I also think that the statement of the Meltzer Commission of the US Congress in 2000 is very relevant when we talk about poverty alleviation and the international Financial Institutions because they reached the shattering conclusion about the effectiveness of the policies of these IFIs:
“Neither the World Bank nor the regional banks are pursuing the set of activities
that could best help the world move toward a world without poverty or even the
lesser, but more achievable goal of raising living standards and the quality of life,
particularly for the people in the poorest nations in the world.”
6. The title of the Budget was “Strengthening the foundations for Economic Growth and Prosperity”. It would have been comforting if “for ALL” had been added in the title. (I hope I heard the Prime Minister actually add that phrase in his reading of the Budget.) Without that added phrase, the Budget could portray the sense that prosperity was directed only to a certain sector of society. We need to stress that the economy must benefit all the people of Fiji – not just a few. We do not live in an economy but in a society and society is made up of people – all sorts of people - rich and poor.
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