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Parliament approves budget increase, leaders clash over economic outlook

Friday 1 March 2024 | Written by Losirene Lacanivalu | Published in National, Parliament

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Parliament approves budget increase, leaders clash over economic outlook
Prime Minister and Minister for Finance Mark Brown in Parliament on February 29, 2024. LOSIRENE LACANIVALU/24022982

The Appropriation Amendment Bill 2024 (Supplementary Budget), seeking a top-up of $16.5 million to the 2023/24 budget, was passed in Parliament yesterday.

Leader of the Opposition Tina Browne, who is also a member of the Public Accounts Committee that reviewed the Bill last week before its second reading this week, said the Bill complied with the Constitution.

However, Browne raised concerns about the assumptions used by the Ministry of Finance and Economic Management (MFEM) in their presentation. MFEM based their estimates on four assumptions, including an optimistic tourism recovery, she said.

“My thinking in respect of that is given the global economic uncertainty, and the potential unforeseen events that could impact airline capacity … I wonder whether these assumptions and forecasts are robust enough to support the estimates.”

Browne also expressed concern about the assumption of no further significant debts and stable interest rates.

However, she welcomed the acknowledgement of ongoing inflation, particularly its impact on vulnerable individuals.

She also emphasised the need to diversify the government’s revenue strategy, citing the heavy reliance on income tax, VAT, and other levies.

Prime Minister Mark Brown, also the Minister for Finance, addressed Browne’s concerns.

He assured her that the economic team’s assumptions were “robust and strong”.

“In terms of the optimist of our tourism industry looking forward, this is not just due to looking at tea leaves, tea cups and then looking at the star, this is a solid optimistic prediction on the forward bookings that our industry has been able to demonstrate to us,” Brown said. “I can say the forward bookings are looking very optimistic.”

He said in terms of interest on debts, there is no expectation for more debt to be drawn down, and interest rates from the national debt taken from the Asian Development Bank and other multinational institutions are fixed rates up to 20 years.

Brown advised the Leader of the Opposition to obtain a better economist to provide her with advice because the suggestion to wipe out VAT would be a disaster for the country.

He said any economist would say that VAT or GST consumption tax is the fairest and easiest to administer.