Tongan budget prompts calls to rein in spending

Transcript

The new Tongan budget has faced criticism for relying too heavily on foreign aid, with 59 percent of the record budget provided by donors.

The Finance Minister, 'Aisake Eke, handed down the budget last week, and industry leaders are hoping to sit down with him this week to hear more.

The budget is a 35 percent increase from last year's record, at just under $260 million US dollars, and the private sector says there must be more consultation and transparent application of the rules.

Alex Perrottet reports:

The government has been praised for reaching out to community groups in the wake of Cyclone Ian, but there are concerns the reliance on foreign aid needs to be scaled back. A People's Representative for Tongatapu, Dr Sitiveni Halapua, says he is concerned about repayments, such as the $63 million US dollar loan from China to rebuild Nuku'alofa following the 2006 riots. China has extended the repayment date for the principal amount another ten years, but Dr Halapua says the country's current debt level, which is 46 percent of GDP, is too high.

SITIVENI HALAPUA: I think we have to reduce that level below 40, even if it's 30 percent that's in my view, more optimal and more sustainable. And that would give us more room to develop the economy.

But the CEO of the Ministry of Finance, Tetafu Moeaki, has played down the concerns, saying the International Monetary Fund's assessment has been kinder in 2013, raising Tonga's rating to moderate, from "high risk of external debt distress" in 2012.

TETAFU MOEAKI: Prior to being rated moderate risk since July 2013, it would have been a serious concern but after the improved ranking by the bank and the IMF of Tonga as now a moderate risk, we have considered other factors where it's a level more manageable.

Mr Moeaki says the budget is also investing in people. He says over a million US dollars will be allocated to training, which will then provide local jobs, as well as opportunities overseas such as the New Zealand recognised seasonal employer scheme.

TETAFU MOEAKI: Some technical skills in construction, in plumbing, in tourism, agriculture, and also in electrical appliances but it's basically to expand the skill base of the country.

The budget is also allocating major spending to several government departments, with Justice, the Auditor General, and Public Relations winning out. A huge 325 percent increase for public relations will include the setting up of the office of the ombudsman. Mr Moeaki says a 32 percent increase for justice will alleviate the long queues at the courts and a 75 percent increase for the auditor general will help fight corruption. But the President of the Chamber of Commerce,  Aloma Johansson, says she is worried that these amounts will mostly be spent on staff, which is not necessarily converted into results.

ALOMA JOHANSSON: Fiftly-three percent of operating expenditures are staffing costs. Whilst there is a commitment of that level to staffing costs, what it implies is that we then have less available finance to actually perform the functions and the services that the government is meant to do.

Aloma Johansson says the government needs to dialogue closely with industry representatives to ensure the new budget is applied fairly to all. She says there must be a transparent application of rules on tender processes and licencing.

ALOMA JOHANSSON: Rules need to apply to everybody. And that has to do with issuing certain licences to certain individuals and organisations that perhaps maybe shouldn't have received it. This is a concern, a direct concern, that has come out from these two industries, economic sectors, the manufacturing and the agriculture.

Ms Johansson says the Tongan government has never been better in its attitude towards industry, but improvement is needed.