What Government, Business and NGOs Can Do About Poverty

POVERTY IN FIJI

ISSUES WHICH NEED TO BE ADDRESSED

BY GOVERNMENT, THE PRIVATE SECTOR AND THE NGO COMMUNITY

(Suva, Holiday Inn,Holiday InnH October 2^nd 2012)

Kevin J. Barr

INTRODUCTION

I would like to begin with the observation of Mahbub ul Hag in 1998:

“We cannot leave intact the model of development that

produces persistent poverty and wistfully hope that we can take

care of poverty downstream through limited income transfers or

discrete poverty reduction programs. ... A few technocratic

programs downstream are not the real answer. The real answer

lies in changing the very model of development, from traditional

economic growth to human development, where human

capabilities are built up and human opportunities enlarged, where

people become the real agents and beneficiaries of economic

growth rather than remain an abstract residual of inhuman

development processes.”

Note that ul Hag stresses that a few poverty alleviation programs are not the answer. We must make a radical change in the economic system which is the root cause of the growing poverty and inequality in our world today. In other words poverty and inequality are on the increase in Fiji and in our world because of the unjust neo-liberal economic system underpinning globalisation which is being promoted by the International Financial Institutions. Because there is a growing consensus that neo-liberalism has brought great wealth for a few but great poverty for many and has increased levels of inequality, we need to wake up and see that we need a radical policy change.

Many of us would like Fiji to be in reality a people-centred society and be underpinned by an economic system which makes this possible – a system which would promote social justice and the common good. This would mean that we would recognizes that the resources of the earth are meant for all and, while it respects that everyone has the right to private property, it distributes its wealth in such a way that everyone can meet their basic needs and poverty and gross inequality are eliminated. Consequently we would promote an economy that works for the benefit of all - not just the few - and allows everyone to realize their full potential in society. Fiji would be motivated by more communitarian values of sharing, compassion and concern for all and be built on the appreciation that all its members are brothers and sisters in the one family and have equal dignity and rights.

The vision and values thus promoted would be more in line with our traditional Pacifican values and traditions. As well it would be in line with the values of the world’s great religious traditions.

Such an economy would have to move away from the extreme neo-liberal, free-market capitalism being promoted in our world today through the United States, the World Bank, the International Monetary Fund and the Asian Development Bank.

1. WHAT GOVERNMENT CAN DO

1. Government must realise that a few poverty alleviation programs (good as they may be) are not the answer and that we must address the root causes of poverty which lie in the economic system and policies we have been following under that direction of the WB, the IMF and the ADB.
2. Structure its National Budgets so that they are more centred on the needs of the people rather than on providing incentives in the form of huge tax cuts for businesses and investors. To this end the system of progressive taxation needs to be upheld so that the more wealth and income you have the more tax you are required to pay. Also regressive taxation in the form of VAT should be re-looked at and all VAT removed from all food – except luxury foods.
3. Government must also show appreciation for the workers of the country and address the issue of just wages and not bend to the demands of a lobby of greedy, selfish employers..
4. Because of the lack of sufficient affordable low cost housing, government needs not only to see to its provision but find ways of subsidising housing for those 50% of the population earning below $10,000 a year.
5. Accept that the current social welfare system covers only about 3%-4% of those living below the poverty line and that its allocations to these destitute people are totally inadequate.
6. Address the rising costs of such basic necessities as water and electricity brought about by corporatisation policies.

2. WHAT THE PRIVATE SECTOR CAN DO

(a) The private sector needs to recognise the levels of poverty and hardship faced by so many people in Fiji. Some need to realise that their selfish greed is unsustainable and contrary to social justice and learn to be satisfied with socially acceptable profits.

(b) Realise that while business may be the engine of economic growth it is their workers who keep the wheels of the engine turning and so must be respected, not exploited and be duely rewarded with just wages.

(c) Appreciate that “social responsibility” is not limited to the funding of sports competitions and clean-up campaigns but begins with the way they treat their workers and see that they receive justice and proper working conditions.

3. WHAT NGO COMMUNITY CAN DO

1. Empowering people – especially the poor – to move away from the “culture of silence” in which they live, expecting handouts etc. Then they can begin to take responsibility for their own development, This requires an attitudinal change not only in the poorer people of the nation but also of government and city councils because it demands consultation with the people and the people’s own active involvement in speaking up, being involved and providing their labour.

2. NGOs should also provide workshops in Economic Literacy which

Teach people to budget, to set priorities in their spending and learn to save for their future. The setting of priorities might also mean contributing less to the vanua and religious organisations and spending less on mobile phones. People should also be better informed about hire purchase and its negative consequences for their families.

3. NGOs can also be involved in housing projects and the promotions of small loans for business enterprises.

Conclusion

We need investors. Yes! But we need them to be responsible, pay just wages and not exploit their workers in the name of greater profits for themselves.

We need economic growth. Yes! But it must be properly redistributed so that all the people of the nation benefit and their quality of life is improved.

NOTES:

(a) Social Welfare

It is extremely important to note that the Family Assistance Scheme does not cover all those in poverty. Of the 35% of those said to be in poverty in Fiji the scheme covers only 3%-4% of the population. The other 31%-32% is not covered. Only some very serious cases who may be on the waiting list for FAS may benefit from the food stamp program.

A recent World Bank study said that the FAS was well administered by the Social Welfare Department and successfully reached 70% of its target group. In other words 70% of those on FAS were truly destitute and met the strict criteria demanded by the scheme. Unfortunately this was interpreted by some senior government officials as meaning that the other 30% were not poor and should be excluded from assistance. But the Report did not say this. In fact they were poor but did not fit the strict criteria of the scheme. Previous reports had pointed out that the criteria applied were too narrow and needed to be enlarged to include other categories of people who were destitute.

Unfortunately when the National Budget and some other government Ministries talk about poverty alleviation and the poor they think mainly about those covered by Social Welfare (the 3%-4%) and not the whole 35% of those in the country who are living in absolute poverty and cannot meet their basic needs. Many of them are in full-time employment but are earning wages well below the poverty line. They are often referred to as the “working poor”.

(b) Recent Additional Hardships for the Poor

Moreover everyone seems to have forgotten that we are living in the aftermath of two recent disasters for the poorer section of our nation. The first - the 20% devaluation of the Fiji dollar in 2009 - meant that the purchasing power of existing low wages decreased while food increased by 36% and building costs by 29%. The second was the increase in VAT from 12.5% to 15% in 2010. Being a regressive tax it had serious effects on poor and low income families. Everyone seems to gloss over these disasters as though it is all “water under the bridge” and no harm done. But a lot of harm has been done to the quality of life of poorer people in the nation and nothing in the recent budget really addresses the effects of these disasters.

The vast majority of those who are poor hardly feature in the Budget even though they are a huge percentage of our population. They need better incomes, reasonable food prices and better, more affordable housing. VAT needs to be removed from all food (except luxury foods and food bought in restaurants). Housing needs to be subsidised in varying degrees for those earning below the tax threshold.

(c) Misconception about Economic Growth

The recent Budget set in place policies such as huge corporate and personal tax reductions to attract investors and encourage the business sector in order to increase economic growth BUT how does this economic growth benefit the workers and the people of the nation unless regulations are set in place to make sure that workers receive just wages and all the people benefit from the economic growth? The old theory of “trickle down” has been proved to be a myth. It rarely happens. For thirty years or more we have been hearing about attracting investors and increasing economic growth but it never seems to happen.

Again economic growth depends not just on investor capital but on a well trained, satisfied and enthusiastic workforce. But how can workers be expected to work productively and enthusiastically when their wages are kept low and their Unions are emasculated and their Union leaders vilified.

We may need many more private sector investors BUT workers and their Unions are as important to economic growth as any investor and this has not been captured in the Budget. Instead, what we are seeing is worker’s rights being ignored and their unions effectively destroyed while every advantage is being offered to investors and the business sector. In such conditions do you think workers want to be productive and cooperative?

Of course we all want to see greater economic growth but economic growth depends on more that attracting more private sector investment. That is only part of the solution. Authentic economic growth depends on the workers and the resources of the nation and cannot be achieved at the detriment of our own people. Also we need to spell out clearly how any economic growth – big or small – will really benefit the ordinary people of Fiji and not just investors. The economy is meant to benefit all the people of the whole nation.

(d) The Cost of Poverty

As often happens in modern economic planning, poverty is seen as marginal to mainstream economic planning. This is because economic policies are often underpinned by the view that money spent on poverty alleviation is unproductive and that government shold target its resources to areas that are productive in terms of economic growth – areas such as agriculture, fisheries, business development. But this is a very limited perspective, even in economic terms for, as we shall see below, investment in poverty alleviation ultimately benefits society in terms of a healthy and educated population and in terms of spending on security.

Poverty usually brings social disharmony and higher crime rates. Obviously this is not to say that all poor people are criminals but that poverty is certainly a breeding ground for crime – especially petty crime. Glaring levels in inequality give rise to a “them and us” sense of frustration especially when poor families cannot meet their basic needs.

(e) Social Justice

A people-centred society is built on Social Justice. Social justice reflects the ways in which human rights are manifested in the everyday lives of people at every level of society in terms of access to wealth, power and opportunities. It protects human rights but goes beyond any individualistic approach to human rights to take into account the good of all. Social Justice challenges us with the demand that we provide all people with equitable opportunities and rights in a real and substantive way. This means that all people have the right to participate fully in society. Social justice requires us to protect the most vulnerable people in society and endeavour to eradicate the cases of poverty and disadvantage which prevent many people from enjoying life and realizing their full human potential. Social justice demands that the needs of the poor take priority over the wants of the rich, that the freedom of the weak takes priority over the liberty of the powerful, that the rights of workers take priority over the desire of employers to make excessive profits, and that the access of marginalized groups in society take priority over the maintenance of an order which excludes them.

Social justice demands that we challenge and change the structural injustices which disadvantage and marginalize so many of our brothers and sisters. Social justice calls upon us to stand up for those whose basic rights are ignored and who live in desperate poverty and de-humanising conditions. Social justice demands that those who have more than they need should share with those who lack the basic necessities for living a decent life. Social justice challenges us to work for the good of all – the common good – and not allow a few to exploit others and monopolise the wealth and resources of the earth which were made for all. Social justice seeks a more equitable distribution of wealth, power and opportunities and urges us to fight against exploitation and oppressive relationships. Thus social justice promotes distributive justice where people get a more equitable distribution of the benefits of development, and economic wealth does not just accumulate only in the hands of a few.