During the time Fiji has been governed by the military, there has been much discussion about the impact of the political situation on economic performance. Satish Chand has argued that each coup Fiji has experienced has pushed the economy back three years, and that the aggregate erosion of the institutions of governance has retarded Fiji's ability to grow.
At last month's Fiji Economy Update 2014 in Suva, convened by the University of the South Pacific, the tone was cautious. There were numerous references to the need for 'stability' during and after the elections to ensure that the economic progress which has occurred can be sustained and developed.
There was also a sense that, while the regime has invested heavily in pro-growth big ticket items, particularly infrastructure, it is not yet clear exactly how these projects have been financed. There have been populist moves such as doing away with school fees and providing subsidised transport for schoolchildren. But you can't run an economy around photo opportunities, and there were numerous references at the conference to the likelihood of economic 'adjustments' once the new government is formed.
Certainly, if the new government includes the National Federation Party (NFP), we would expect Biman Prasad, as party leader and an eminent economist, to seek to redirect policy on a number of fronts. In the private sector, there is concern and even an expectation that 'adjustment' will mean an increase in taxes. [fold]
Throughout the forum there was the concern about the quality of spending. There were numerous indications that some allocations made by the regime were poor policy with populist appeal. For example, concerns were raised about the quality of education in Fiji, indicating that some would prefer to continue paying school fees for their children's education rather than receiving a sub-standard one at no cost. Concerns were also expressed about the focus on 'economic' infrastructure, such as roads and bridges, with inadequate attention to social infrastructure such as health.
Private sector representatives voiced two big concerns. First, despite the fact that Fiji has numerous tertiary institutions, there is a perception that graduates are not of an appropriate standard to participate fully in the workforce (this echoes concerns voiced at the PNG New Voices event held earlier this year in Port Moresby). Secondly, the president of the Chamber of Commerce referred to the lack of consultation between government and business, particularly in policy development. State-business relations are generally weak in Pacific island countries for numerous reasons, but it is likely that eight years of military rule-by-decree has exacerbated the situation in Fiji.
Meanwhile, as Fiji's 17 September elections draw nearer, party manifestos are now available (for the most part; at time of writing, manifestos were not available for One Fiji or independent Roshika Deo). So what do they tell us about proposed approaches to economic policy?
FijiFirst's manifesto, unsurprisingly, rests its economic policy on the interim government's track record. It highlights four consecutive years of GDP growth and a private sector investment rate of 15% in the current year. The manifesto stresses that job creation, particularly for young people, is a priority and sees maintaining the momentum of the Bainimarama Government as the means of achieving this. While there is reference to a 'comprehensive program' to be implemented after the election to complement existing policies (eg. tax-free zones, free education), there is no detail on what the 'key initiatives' are.
The Fiji Labour Party grounds its economic policy in the belief that 'given a stable democratic environment and honest and competent leadership with policies that ensure good governance and inspires investor confidence in Fiji's future, the economy will automatically pick up'. In terms of how the party proposes to grow the economy, the manifesto refers to reviving the agriculture sector and sustainable development of forestry and fisheries. It also identifies a number of ways in which the FLP intends to create a favourable industrial and business environment, including by bringing down the cost of doing business, setting up a 'Special Fund' to encourage self-employment, especially among professional graduates, and pursuing investment to boost employment opportunities and enhance incomes.
The Fiji United Freedom Party identifies 21 priorities in its manifesto, with the economy appearing as number 21. There are four action points: resolve disputes and write off Fiji Development Bank loans that are in 'deadlock' to make resources available for business development; promote micro and macro businesses focused on food processing; provide transport between rural farmers and wholesale centres; and provide a market for seasonal fruits and introduce food processing manufacturing projects.
The National Federation Party frames its policies around the perceived need to reposition the economy 'towards higher and sustained economic growth'. Generating employment is prioritised with reference to economic reform and macroeconomic management to increase productivity and create 'decent jobs'. The manifesto promises numerous reforms: of trade policy, labour market policies, national competition policies and tax, all with a view to creating drivers for growth in productivity. This manifesto also speaks to the importance of inclusive growth and sustainable development for Fiji, given that just over 30% of the population is classified as living in poverty (Fiji Bureau of Statistics figures).
The People's Democratic Party intends to focus on the 'increasing value of employment in high labour absorptive export and import replacement activities'. Employment generation is prioritised, through proposed reform of investment incentives and providing support to businesses (by way of tax concessions and other incentives) to employ more people and upskill existing staff. The PDP platform also includes a commitment to improving access to land for both commercial and household production and to improve access to finance for small and medium enterprises.
The Social Democratic Liberal Party manifesto also nominates employment and improvement of livelihood opportunities as a priority. It promises to revisit the issue of the minimum wage (currently FJ$2/hour) with a view to setting minimum wages for each sector based on the varying cost structures and profitability of different industries. The SODELPA manifesto differs from others in setting designated economic targets it intends to achieve if elected, including GDP growth of 5% pa, reducing the level of public debt to 45% of GDP, keeping inflation to less than 3% pa, achieving annual investment growth of 25% of GDP and ensuring that budget deficits do not exceed 3% of GDP.
Photo by Flickr user thaths.
