“I rise in response to some seriously misleading allegations in the public media about the level and state of government debt, statements made by the leader of the Democratic Party,” Brown began.
“I would like to give you some further information on our current debt levels in response to the leader of the Democratic Party’s totally false statements.”
Brown went on to describe how the net debt stands at around $130 million, or 29.1 per cent of GDP, which is within the debt restriction of GDP (which stands at 35 per cent), and that it will no doubt continue to improve as old debts drop off the books. Furthermore, under the international definition of debt, the Cook Islands are far below those of surrounding nations such as Tuvalu, Samoa, Fiji, Tonga and even Australia.
Brown then turned the spotlight back on the Opposition, believing that they were unable to successfully manage debt when they were in power.
“The amount of debt agreement that this government has taken on since 2010 … the economic recovery support, borrowings from the Asian Development Bank, were a Democratic debt instrument.
“They borrowed this money, and then stuck it in the bank, because they didn’t know what they were going to spend it on, for three years. The government (CIP) used this money to initiate and complete Project City.”
Brown also let the ministers know that the most recent borrowing, through the Asian Development Bank, is for the Cook Islands share of the Southern Renewable Energy programme.
“So to say that this government has been borrowing this money in an out of control fashion is totally false,” Brown said.
He finished the session by providing an analogy to the “scared Democrats”, hoping to allay their fears of the big numbers.
“If we compared the Cook Islands to a household, (it would be) a household that would be earning $45,000 a year. The Cook Islands GDP is $450 million a year, but we’re using $45,000 so there’s no need to be frightened,” Brown teased.
“The Cook Islands would then have a borrowing rate of $15,000; the household would have debt repayments on that loan of around $1000 a year and we would have $2400 in the bank, cash reserves, as well as $2000 put away for debt repayments.
“And we would own our own house.”
“I don’t expect members of the Opposition to understand this analogy; it is for the benefit of our people, who have a far greater understanding.”