OPINION: The economic impact of Covid-19 on Cook Islands

Tuesday 14 September 2021 | Written by Te Tuhi Kelly | Published in Editorials, Opinion

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OPINION: The economic impact of Covid-19 on Cook Islands
Construction workers from Landholdings Ltd demolishing part of the Vaka Shed to make way for the upcoming construction work on Empire Bridge. AL WILLIAMS/21082507

For yonks we have gone around in circles talking about diversifying our economy, lessening our reliance on tourism receipts, investing in agricultural enterprises, foreign investment and guess what, the clamour for change has fallen on deaf ears, writes Te Tuhi Kelly, Leader of the Progressive Party of the Cook Islands.

I have been thinking about the economic impact of Covid-19 on the Cook Islands and whilst there has been some statistics regarding commodity prices recovering in the first quarter of 2021 and continuing on throughout the year according to the World Bank, this is heavily contingent on progress in containing the Covid-19 pandemic.

“Energy prices are expected to average more than one-third higher this year than in 2020, with oil averaging $56 a barrel. Metal prices are expected to climb 30 per cent; and agricultural prices are forecast to rise almost 14 per cent,” says the World Bank.

The forecast goes on to say that all commodity prices are now above pre-pandemic levels. Therefore, emerging evidence is confirming that food insecurity is increasing and a number of countries are facing growing levels of food insecurity and this will continue through 2021 and 2022. Globally food commodity markets are well supplied, however Covid-19 has impacted local labour and food markets around the world, with the disruption to supply chains, reduced incomes and intensifying food and nutrition security that were in evidence before the pandemic.

What that suggests is that the Cook Islands may well be faced with rising commodity prices through 2021 and for the foreseeable future. In other words, the cost to the consumer will be higher, because these have to be passed on, as someone has to pay. From this we are able to make some inferences as to what this means for us as a small island nation, tucked away in the Pacific Ocean. Separated by thousands of kilometres (kms) from mainland countries and dozens of kms from each island that makes up the Cook Islands. Throw into the mix the transport and freight costs of getting supplies, services, goods and people to these remote islands firstly from mainland countries and then ex-Raro and you can see the dilemma we are facing.

We will be on a hiding to nothing because everything that we currently enjoy will increase in price, it’s a no brainer. We currently pay competitive prices for some of our goods as compared to say NZ, but that honeymoon will soon be a thing of the past if prices rise prohibitively.

The Government and people will be faced with a situation beyond their control as regards to supply, it has always been this way and it will always be that way. We do not have control over these price rises. What we do have is control over whether we buy or not, secondly whether in fact we need to buy and thirdly where we can source at affordable prices. We as a nation will also be faced with a situation where people will leave for greener pastures and it may end up in a flood to NZ or Australia. This is the bleak future we face if we don’t get a handle on our economic sustainability and do something about prices, do something about supply sources, do something about keeping people here.

It is not a time for the Government to batten down the hatches and hide under a rock till things get back onto an even keel. Money begets money, frugality creates austerity and public unrest and people need to have confidence in the decision-making process. For yonks we have gone around in circles talking about diversifying our economy, lessening our reliance on tourism receipts, investing in agricultural enterprises, foreign investment and guess what, the clamour for change has fallen on deaf ears. Because tourism was the cash cow and all else was put into the too hard basket. Covid-19 has put paid to that.

Tens of millions of dollars of food is imported by the local supermarket into the country and this has accelerated to place us in a complete reliance on this. BTIB and its food import substitution is a farce, because nothing is, has or will be coming out of that Agency without proper leadership and the will to innovate, initiate and succeed. When the price crisis hits and it will, the Government needs to spend on innovation and initiate a whole of people approach to lifting us out of penury.

The Pa Enua has had millions of tax dollars spent on seemingly political favours, look at Manihiki and Atiu for starters, this has to stop. Did they need upgraded and sealed roads and airport, what happened to local innovation and those millions could and should have been spent on a coral or rock crusher to allow the locals to maintain their sealed roads and provide work and the money going into the community. It’s not as though they are travelling at 100km an hour, is it? Those millions could have been spent on turning the Pa Enua into a food bowl and thus negating to some extent the reliance on the supermarket imports. The money could have been used to subsidise freight costs of food grown locally and sent to Rarotonga. Instead, the money appeared to be used for election campaigns.

We need to be subsidising education for our top scholars in fields such as researchers, medicine, dentistry, engineering, IT, management, law, business, investment and bonding them. Our technical people need an apprenticeship scheme to turn out IT Techs, mechanics, plumbers, electricians, catering, entertainment, tourism, web development, and agricultural workers.

If we don’t innovate, we stagnate, if we stagnate, we die as a nation of paupers, constantly begging for the financial crumbs off the global economic table.