February 28, 2014

Prof Wadan Narsey - Election Issues Bulletin 2: Education

Professor Wadan Narsey (27 February 2014)

Education Issue 1: Free Pre-schools.
One of the Bainimarama Government’s good measures is that all students at primary and secondary school are able to a certain minimum funding from tax-payers.  However, the funding should begin from pre-school.

I have shown in these two articles here, that the major beneficiaries of pre-school education are the poorest students whose homes do not have a good learning environment. Moreover, the benefit that poor children receive at Pre-school or Early Childhood education, persist through later years of education.

Another gender benefit of ensuring free pre-school for poor and middle class children is that their mothers will be able to use the available time for income earning or professional development or much-earned leisure activities.

Voters should ask all political parties what their policies will be on

 All areas of  Fiji (rural and urban) where certain minimum numbers (to be decided by education stakeholders) of pre-school age children are located, should be funded to provide 

 (a) proper pre-school classrooms and teaching materials

 (b) pre-school teachers, preferably qualified, with unqualified teachers where absolutely necessary, with programs to ensure that they become qualified over time.

 (c) attendance should be totally free

Education Issue 2: Re-establish national examinations at schools at Year 8, Form 4, Form 6 and Form 7
The Bainimarama Government made a decision to phase out all national examinations.

I have previously explained the damaging consequences of this decision, here.

Voters should ask all political parties what their policies will be on

(a)  Restoring the national examinations at Year 8, Form 4, Form 6 and Form 8.

(b)  retaining and strengthening the scarce curriculum, examinations and assessment staff at the Min of Education.

(c) Insist that the results of the national examinations are not used to “push” students out of the education system but to guide them in their areas of weaknesses and strengths and guide them into labour-market oriented training that suits their skills.

Education Issue 3: Lift Retirement Age from 55 to 60
One of the negative policies implemented by the Bainimarama Government has been the compulsory enforcement of the retirement age at 55.

This policy has not been applied to Bainimarama himself or to some members of his family or key supporters.

This policy has meant disastrous effects in schools and in many other parts of the civil service.

In education, qualified and experienced persons in senior positions in the education system as Head Teachers and Assistant Head Teachers, Heads of Departments and education experts in the Head Office, have been forced to retire and replaced by inexperienced persons.

Some have been renewed for short periods, but at the discretion of the Minister or higher up, often depending on “who you know”.

To add insult to injury, some retirees have been offered to other Pacific countries to assist with their shortages, raising the question: why is Fiji offering their services which they do not want themselves?

Voters should ask all political parties what their policies will be on

(a) Lifting the retirement age for all civil servants to 60

(b) with annual renewals thereafter depending on satisfactory medical examinations.

Education Issue 4: Schools must be allowed to raise funds independently, in addition to receiving the grants they currently receive.
I have explained previously in a Letter to the Editor, the irrationality of the Ministry of Education policy decision that schools must not raise funds independently.

Voters should ask all political parties what their policies will be on allowing all schools to

(a) raise funds that the school management feel is necessary to achieve the standards that that they wish for, with the approval of the majority of the parents

(b) giving those parents who do not wish to take part in such fund-raising to go to other schools of their choice.

Education Issue 5: Education scholarships
While 600 scholarships are being offered to students completely on merit, indigenous Fijians, females and other minority groups  may not get a balanced proportion of these scholarships.

Voters must ask all political parties what their policy would be on

(a) Making available additional scholarships that ensures a reasonable degree of  ethnic and gender balance in the total scholarships made available, especially for the important fields in which Fiji will require expertise into the future.

(b) that there be  equity between those who receive scholarships and those who receive loans, with bonding requirements be the same for all categories of students assisted at tertiary level.

February 22, 2014

Prof Wadan Narsey: Election Issue for voters: Management of FNPF


The Fiji National Provident Fund (FNPF), is the largest financial institution in Fiji in terms of assets, bigger than the commercial banks combined, and the largest lender to the Fiji Government.

The members of the FNPF (current contributors and pensioners) number around two hundred thousands, or roughly 40% of all the voters for the coming elections in Fiji. They represent an extremely powerful “voting block”.

The Bainimarama Government recently defended their extra-legal policy changes at FNPF.

They claimed that previous governments had used the FNPF as their  “piggy bank” (Fiji Sun, 7 Feb. 2014).

This last statement is certainly correct, but that criticism can equally be leveled at the Bainimarama Government itself, with more serious criticisms, including their massive reduction of pension rates from 15% to 9%.

Further, despite being in control for seven years, this Bainimarama Government has done nothing to ensure that future governments will not be able to control and use the FNPF as their “piggy bank”.

Mismanagement of FNPF
This Bainimarama Government is an unelected government which seized power through a military coup in 2006.

Marginalizing both unions and employers who used to nominate their representatives to the FNPF Board, the Bainimarama Government appointed all the FNPF board members, some of whom have been non-citizens, and some who have Permanent Residency in other countries.

By military decree the Bainimarama Government and the FNPF Board, forced through a massive decrease in pension rates of all pensioners.

The FNPF propaganda has focused only on those who used to enjoy admittedly over-generous rates above 15% (to as much as 25%)- but even these were voluntarily offered by FNPF as legal contracts and accepted by those pensioners.

But the official propaganda ignores the more significant reduction of future pension rates from 15% to 9%, with grave public doubts about the fairness of the 9% rate.

Existing pensioners who chose not to accept the 9% pension rates were forced to withdraw their original sums, despite a clear legal contract being in place between them and FNPF.

These reductions were forced through, despite the fact that the pensioners’ had mounted legal challenge, which had been accepted for hearing by Fiji’s High Court.

The FNPF  management, against all rules of good corporate practice, have arrogantly assumed the right to state and justify major changes in FNPF policies, which should properly be the domain of a lawfully appointed Board.

Even private expatriate consultants from Australia and NZ, have justified the policy changes through the media, implicitly supporting the unlawful military decrees.

The FNPF Board has mismanaged a number of major investments, in particular those at Natadola, Momi and the GPH, resulting in the writing down of hundreds of millions of dollars in assets. Undesirable loans have also been made, such as to Fiji Sugar Corporation.

The FNPF Board and Management have refused to release any of the reports of inquiries into the mismanagement of the investments, making a mockery of the frequent claims of transparency and accountability made by the FNPF Board and the Bainimarama Government.

What voters should ask political parties:
Voters in the coming elections must make the governance of FNPF an important election issue.

Voters must ask all political parties, including any party that Commodore Bainimarama might set up, what their policies will be on a thorough reform of the management of FNPF, including the following:

(a) Two thirds of the Board of the FNPF (and the Chairman) must be elected for five year terms by the members of the FNPF.

(b) The legal case that pensioners had in the courts must be reactivated, with the judiciary requested to hand down a lawful solution to the case, which could include (c) below.

(c) The FNPF Board commission a thorough independent review that recommends a fair pension rate that is consistent with the long-term sustainability of FNPF.

(d) To strengthen accountability and transparency of the FNPF Board, all reports into the mismanagement of FNPF funds as well as the reports that have justified the recent changes in pensions, be made public.

Readers may wish to refer to some of my previous posts on FNPF and its activities in the Fiji economy here and in particular here or the full Report for the Burness/Shameem case.

February 17, 2014

Pacific Islands Forum Ministerial Contact Group Outcomes Statement

Saturday 15 February 2014

The Forum Ministerial Contact Group (MCG) concluded its two day visit to Fiji today, consistent with the mandate of Pacific Islands Forum Leaders to continue to dialogue and engage with Fiji. The MCG comprises Ministers from Australia, New Zealand, Papua New Guinea, Samoa, Tuvalu and Vanuatu.

The MCG thanked the Fiji Government for hosting the Group and the Pacific Islands Forum Secretariat for making the programme arrangements. The MCG appreciated the opportunity to meet with the Attorney General and Minister for Elections, Mr Aiyaz Sayed-Khaiyum; the Minister for Foreign Affairs Ratu Inoke Kubuabola accompanied by other Ministers; members of the Electoral Commission; and representatives of registered political parties, trade unions and civil society organisations.

Ministers welcomed significant progress made by Fiji since the Group last visited in April 2013, including important and significant efforts to prepare for elections by 30 September 2014. These include the approval on 6 September 2013 by the President of Fiji of the Constitution of the Republic of Fiji; the registration of four political parties and the enrolment of more than 540,000 voters including enfranchising Fijians living overseas; the appointment of an independent Electoral Commission and the commencement of a dialogue between the Commission and political actors; the bolstering of the Elections Office, with support from technical advisers from Australia, the European Union, New Zealand and Papua New Guinea and the public release of the National Register of Voters.

Ministers looked forward to the early appointment of the Supervisor of Elections and the early release of the Elections Decree and legal framework for elections. Ministers were pleased to hear the assurances from the Attorney General that these steps were imminent.

Ministers noted the logistical challenges still facing the Fiji Elections Office and the importance of ensuring widespread access to voter education.

Recalling the expectations of the people of Fiji and the international community for free and fair elections, Ministers reiterated the need for political parties’ full engagement in the electoral process, including the ability to meet freely and campaign openly. In this respect, while welcoming the significant improvement that has taken place since their last visit, Ministers emphasised the importance of ongoing improvements to media freedom, freedom of speech, association and assembly.

Ministers emphasised that it would be in Fiji’s interest that the election be judged on its openness and fairness according to accepted international standards. Ministers encouraged Fiji to welcome full international observation of the election to leave no doubt as to its legitimacy. They also emphasised the critical importance of access for international media.
Ministers reaffirmed the clear commitment of all Forum members to encourage and support Fiji’s early return to parliamentary democracy, and reiterated members’ offers to assist electoral preparations as well as to provide immediate assistance to the Electoral Commission, if so requested.

Welcoming the progress Fiji has made towards elections and a return to parliamentary democracy, and recognising the importance of greater regional trade and economic integration, Ministers agreed to recommend to Forum Leaders that Fiji be invited to participate in PACER Plus negotiations and Forum Trade Ministers’ Meetings at ministerial level.

Ministers discussed with the Forum Secretary General steps for welcoming Fiji’s full participation in the Forum following Fiji’s September election, in accordance with the spirit and intent of the Biketawa Declaration.

The MCG is chaired by the Hon. Murray McCully, Minister of Foreign Affairs of New Zealand, and include: Hon. Julie Bishop, Minister for Foreign Affairs of Australia; Hon. Rimbink Pato, Minister of Foreign Affairs and Immigration of Papua New Guinea; Hon. Tuisugaletaua Ali’imalemanu Sofara Aveau, Minister of Communication and Information Technology of Samoa; Hon. Taukelina Finikaso, Minister of Foreign Affairs, Trade, Tourism, Environment and Labour of Tuvalu; and Hon. Nipake Edward Natapei, Deputy Prime Minister and Minister of Foreign Affairs and External Trade of Vanuatu.


The Australian: Bainimarama gamble may be winning hand


JULIE Bishop doesn’t lack nerve. She called in the Chinese ambassador when Beijing sought to extend its claims over disputed areas of neighbouring seas, through which most Australian trade travels.
She stood her ground in the recent difficulties with Indonesia. And now she has flown to Fiji to repair the most awkward relationship Australia has suffered in the whole Asia-Pacific region for more than seven years.
This is not mission impossible, but it is not without profound risks.
As Ms Bishop well knows from her official briefings and from her conversations with other regional politicians still bruised from the encounters, Commodore Frank Bainimarama is an unpredictable and prickly figure to deal with.
Her meeting could have gone badly, leaving Australia in a worse position diplomatically.
Mr Bainimarama might have called it off at the last moment, equally embarrassingly.
But sufficient groundwork went in to the encounter - through patient efforts by long-suffering officials, and through Ms Bishop’s own meetings with Fiji’s Foreign Minister Inoke Kubuobola - to give it a strong chance. It went ahead, the atmospherics were excellent, and so the new-deal relationship is already up and running.
Much can still go wrong though.
Mr Bainimarama might not go ahead with his planned resignation from the military at the end of the month.
The new political party whose details he will announce on March 1 may fail so patently to gather support that he might call off the election, leaving everyone in the lurch and much egg on Canberra’s and especially Ms Bishop’s face. Human rights violations may recur. But fortune sometimes favours the brave, and in the context of Fiji today, the odds appear to be leaning towards the election going ahead, with the country returning towards a more recognisable rule of law.
One of the factors driving Ms Bishop’s dramatic move to repair the relationship is Fiji’s centrality to the whole Pacific islands region - not just geographic, but in economic, transport and cultural terms. Australia’s effective detachment from Fiji has thus in some ways locked it out of the Pacific heartland - although other island nations that have remained stoutly democratic naturally look to Canberra to continue to provide leadership over democratic values, as the largest such nation in the region.

February 03, 2014

PM to Rabuka: Get facts right

February 2, 2014 | Filed under: Fiji News | Posted by: newsroom
- Claims on education policy and debt management refuted
- Questions on management of public funds by Rabuka Govt

Prime Minister Commodore Voreqe Bainimarama yesterday rubbished claims made by the former Prime Minister and Social Democratic Liberal Party (SOLDELPA) leadership candidate Sitiveni Rabuka. These were in regard to education policies and debt management..

The Prime Minister detailed how the Government is managing debt and how Fiji is doing much better than a range of similar size economies.

He also pointed out debts included those accumulated from borrowing by previous governments such as the SVT government Mr Rabuka had led.

Mr Rabuka had said that while he was happy with the developments taking place across the country he was concerned “about how we are going to pay for it.” He called it the “debt burden.”

In reply, Commodore Bainimarama said that whilst his Government had borrowed to finance capital for infrastructure development, they have also reduced the income and corporate tax rates.

He said the reduction in taxes increases the disposable income of workers and supports investment plans of private businesses.

Commodore Bainimarama said the borrowing was supported by the IMF Article IV Mission assessment of Fiji.

“Therefore, one can deduce from Mr Rabuka’s statement that he will either reduce borrowing, thus affecting development of much needed infrastructure in Fiji that will support the private sector, small and medium enterprises and improve standards of living, or he will raise taxes again to finance development thus increasing the financial burdens of workers who currently enjoy more take home pay as a result of the current Government’s tax adjustments.

“The positive spinoffs from the tax rate reductions has been witnessed in the economy through higher sales by businesses and investment levels, and evidenced in the high revenue collection by the Fiji Revenue and Customs Authority (FRCA), a level that has never been achieved before.”

He said to reach the record level of revenue collection as such, $1.86 billion in 2013 despite the tax cuts, was commendable.

“In fact it has been hovering around $1.7b for the last three months.”

Free Education
Mr Rabuka had also stated that the free education implemented by the Bainimarama Government was a hand-out.

The Prime Minister responded: “With regards to free education as a hand-out Rabuka obviously does not understand the big picture.

“Education is the greatest investment a nation can make in its future.

“My Government wants an educated society; it brings social and economic development.

“Free education provides a level playing fi eld for everyone, in particular the poor and the disadvantaged.

“By giving free education and scholarships, students and families from these disadvantaged groups can now say we have a chance in life.

“So if that’s a handout then it’s certainly a beneficial one.”

Below is the full response regarding Mr Rabuka’s comments on debt:

Debt Position
This is the Fijian Government’s response to Mr Rabuka’s comments in the Fiji Sun (30/1) regarding Government Debt.

As the former Prime Minister may be aware, Government’s debt position reflects not only the existing Government undertakings but comprises of borrowings undertaken by the previous government over the years. To only state that future debt burden is a result of the loans borrowed by current Bainimarama Government is completely erred, considering that the portfolios of existing stock were taken in the last 15 to 20 years.

These debts were accumulated from previous governments including the SVT government led by Mr Rabuka.  Though loans acquired over the years has grown marginally, the Bainimarama Government has maintained its credibility by ensuring that the loans are serviced as per the loan repayment schedules.

The recent improvement in the Fiji Government rating by S&P is a testament to this.

When this government came in 2007, Fiji’s Debt to GDP ratio was around 52 per cent compared with 49 per cent as at December 2013. For the period 2002 to 2006, the borrowings undertaken previously were as follows:

Majority of borrowings above were for loans with term of 15 years.

The Qarase led government’s borrowing recorded the highest with $891 million in 2006, of which US$150 million relates to the 1st global bond issuance.

In 2007 when the current government came into power, we reduced the total outstanding debt from $2.86 billion to $2.73 billion, as Government introduced stringent expenditure measures.

From 2007 todate, we have maintained tight fiscal policy which resulted in the reduction of Debt to GDP ratio to 49 percent in 2013.

These fiscal policy measures has enable the current government to withstand the financial crisis in 2008 and the debt crisis that affected the Euro zone and other developed countries of the world.

Tabulated below is the debt position of the current government
It should also be noted that between 2001 to 2006, Public Debt increased from $1.68 billion in 2001 to $2.86 billion in 2006.

This accounts to an average net debt financing of $197.2 million on an annualized basis.

On the same note, Public Debt stands at $3.81 billion as at 31st December, 2013 which equates to an average net borrowing of $154.1 million over the last eight years (2007 to 2013).

This not only reflects prudent borrowing but targeted borrowing specifically confined towards capital projects.

Comparison with Similar Size Economies
Fiji has maintained prudent public financial management ever since the Bainimarama Government came into power. The table below reflects Fiji’s debt level when compared to other economies of similar size.

Objective of borrowing
Unlike the previous governments where borrowings were mostly to meet operational expenditure, the Bainimarama government has mandated that all borrowing are for capital and infrastructure projects.  As part of this exercise, the government changed its bond title from Fiji Development loans to Fiji Infrastructure Bonds.  This is noted in the improvement in infrastructure and public utilities in Fiji today.

Developments in Capital Market
Not only have there been improvements in the debt position, the current Government has introduced more initiatives to develop the primary and secondary market.

This includes more tax benefits for those willing to list their companies with SPSE, a new Viti Bond to target retail investors and reducing short term debt level.  The easing of monetary policy together with a more accommodative fiscal program brought about more demand for government securities. Furthermore, interest rates fell significantly and government was able to borrow at low rates.  The US$150 million first raised by the Qarase government in 2006 was successfully settled by this government in 2011.

Part of the success was the opening of Sinking Fund account abroad where surplus funds could be deposited to assist in future repayments of our debt.

With the new loan of US$250 million contracted in 2011 (through Global Bonds), the current Government already has US$140 million in the sinking fund account, in readiness for the full settlement of loan in 2016. Improvement in capital and infrastructure around Fiji is moving at a much faster pace. To name a few, the Nabouwalu/Dreketi Roads, Moto Roads, Raiwai Low Cost Housing are some of the projects that this government is pursuing to improve livelihoods of the people of this country.

The improvement in rural roads has other benefits like establishment of business, hotels, eco-tourism and more developments in the rural area. Developments have created market access for people in the rural areas, something that they have been deprived of, in the past. 

This is in contrast to loans contracted by the previous governments, where bulk is diverted for operational expenses, and majority of the capital projects not realizing their full potential. 

Had the Rabuka Government ensured soundness in the management of public funds, this government wouldn’t be carrying out all this initiatives.

Refinancing of Expensive Loans
Other initiatives undertaken by the current Government, includes the prepayments of expensive loans.  This is done, in conjunction with Government’s intention to continue to reduce the Debt to GDP ratio in the medium term to 45 per cent, and below 40 per cent in the longer term.

Increased Indian investment anticipated

February 1, 2014 | Filed under: Business | Posted by: newsroom
Double Taxation Avoidance Agreement signed in New Delhi

The Attorney-General and Minister for Industry and Trade, Aiyaz Sayed-Khaiyum (right) with the Indian Minister for Finance, Palaniappan Chidambaram, during the signing of the Double Taxation Avoidance Agreement in New Delhi, India.A significant increase in the amount of investment from India is anticipated in the country.
This follows the signing of the Double Taxation Avoidance Agreement (DTAA) between the Fijian and Indian Government on Thursday in India.

The agreement was signed on behalf of Fiji by the Attorney-General and Minister for Industry and Trade, Aiyaz Sayed-Khaiyum.

Speaking from New Delhi, India, Mr Sayed-Khaiyum explained the agreement would prevent Indian investors from being taxed in India on business profits earned in Fiji.

He said this would make it much more appealing for them to invest in the country, growing the economy and creating jobs for ordinary Fijians.

Mr Sayed-Khaiyum said the same would be true for Fijian investors in India.

Indian Finance Minister Palaniappan Chidambaram signed the agreement on behalf of India.

Potential of the agreement
Mr Sayed-Khaiyum said this agreement had the potential to seriously boost the Fijian economy.

“This would be by way of encouraging a stronger flow of investment, technology and services between Fiji and India, one of the world’s largest and fastest growing economies and the second most populated country in the world,” he said.

Mr Sayed-Khaiyum said with this agreement in force, the generous investment incentives offered by the Bainimarama Government would be much more attractive to Indian investors.

This, he said, would ultimately lead to more jobs for ordinary Fijians.

“With the signing DTAA, now, Indian investors have clear and transparent rules regarding taxes, bringing about surety and certainty,” the Minister said.

Prevention of tax evasion
Mr Sayed-Khaiyum believes this agreement would also help prevent tax evasion and false investor declarations.

“The agreement signed with India is fair, balanced and progressive, unlike agreements we have with some of the other countries,” he said.

“The Indians have been most accommodating. The DTAA spares Fijian students that are studying in India from paying taxes, if they choose to work whilst studying.

“Under the DTAA, the Indian Revenue and Tax Authority will assist FRCA to recover any taxes owed to Fiji, by individuals or companies residing in India.”

The delegation
The delegation to India is made up of:
- Permanent Secretary for Industry and Trade – Shaheen ali
- Fiji Revenue and Customs Authority chief executive – Jitoko Tikolevu
- Fijian High Commissioner to India – Yogesh Karan
- Investment Fiji chair – Truman Bradley
- Deputy Secretary for Industry and Trade – Maciu Lumelume

Bainimarama Officiates the 2014 Chinese New Year Celebrations

Raiwai PRB flats nearly complete

17:07 Yesterday (02 February 2014)
Report by: Elenoa Turagaiviu

Work on the Raiwai Public Rental flats is nearly complete, a year after a stop work notice was issued to the contractor.

China Railway First Group resumed work in October, after Prime Minister Voreqe Bainimarama intervened and settled a dispute over the cost of the project.

The houses were supposed to be ready by the end of 2012.

The Permanent Secretary for the Prime Minister’s Office Pio Tikoduadua says they want to the project to be completed as soon as possible.

After almost a year of work, it surfaced that the total cost of the project is twice the initial amount.

The Prime Minister intervened, and China threw a lifeline.

Tikoduadua says the nine point three million dollar grant from the Chinese government came at the right time.

When completed, the flats – intended for low to middle income earners – is expected to house two hundred and eight tenants. It should be open by August.

A number of land subdivisions done illegally

Publish date/time: 03/02/2014 [07:08]

The Ministry of Lands and Mineral Resources has confirmed that a number of land subdivisions have been done illegally.

Permanent Secretary, Tevita Boseiwaqa said these subdivisions were done without following proper procedures and without the consent from the Director Lands and Director Town and Country planning.

He said they are now dealing with these cases.

He added that they want to regularize these subdivisions to allow the tenants to get their leases. 

Story by: Dhanjay Deo

FRCA aims to collect over $2 billion in revenue this year

Publish date/time: 01/02/2014 [13:14]

The Fiji Revenue and Customs Authority is aiming to collect $2.039 billion in revenue this year.

Permanent Secretary for Finance Filimoni Waqabaca said last year FRCA collected a record $1.86 billion in revenue.

Waqabaca added this year may be challenging but this can be achieved.

Waqabaca was the Chief Guest at the International Customs Day Celebration in Suva yesterday.

Story by: Akuila Cama

2013 growth forecast could be achieved: RBF

13:08 Today (03 February 2014)

There are indications the 3.6 percent growth forecast for last year will be achieved says the Reserve Bank of Fiji.

Governor Barry Whiteside says domestically, economic activity was positive last year as key sectors in Fiji showed encouraging outturns.

Whiteside says there were upbeat performances in consumption and investment activity as well.

He says domestic demand continues to be optimistic supported by a number of factors including improved labour market conditions, the expansionary 2014 Budget, record low commercial bank lending rates and a favourable general business environment.

Whiteside says there is also indication that the pace of investment activity strengthened in 2013 and will remain above 25 percent of GDP this year.

With the dual mandate of the Central Bank in check, Whiteside remarked that the Government’s expansionary fiscal policy earmarked for this year will stimulate growth even further going forward.

Hence he says the economy is expected to surpass the 3.0 percent pre-budget forecast.