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‘Government needs to act now’

Wednesday 27 October 2021 | Written by Supplied | Published in Opinion

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‘Government needs to act now’
The Rarotongan managing director Tata Crocombe. 20032050

As we head into Xmas and the New Year, thousands of Cook Islanders in the tourism industry will be looking forward with little confidence or hope that their lives will be better in 2022, writes Tata Crocombe.

With 98 per cent + vaccination of the adult population of the Cook Islands, the economic future and rights of the vast majority should not be compromised for the 100 or so unvaccinated adult Cook Islanders who have clearly made their own choices.

As Covid-19 is now a pandemic of the unvaccinated, and Covid-19 is a vaccine preventable disease, using international trends, if Covid-19 did appear in the Cook Islands, there is a risk that around five unvaccinated Cook Islanders will require hospitalisation and one unvaccinated Cook Islander will require ICU care. Our current hospital resources, backed up by those of NZ, are more than adequate to cope with such an outbreak.

Sadly, the Cook Islands is now divided into two communities. Those that get their income from the Government and have gone through the pandemic with increased incomes; politicians, officials, beneficiaries and a handful of favoured businesses. Those in the private sector, that pay the taxes that keep the country going, who have missed out on tens of millions of dollars in income and now find themselves struggling on $8hr an hour. To add insult to injury, the Government is now borrowing against the future earnings of the tourism industry to fund itself with the incredulous claim that they are doing this to save the private sector economy!

Balancing the risks of managing of an increasingly possible financial and economic catastrophe with a safe, phased border re-opening, the sensible way forward, given all our current circumstances, could be;

  • The Cook Islands remain committed to Zero Covid i.e. take every reasonable and sensible measure to;
    1. Keep Covid-19 out of the Cook Islands; and
    2. Through high levels of vaccination keep Cook Islanders as safe as possible from infection, hospitalisation and death; and
    3. Immediately stamp out any outbreaks as soon as they happen through;
      1. extensive contact tracing; and
      2. rapid testing; and  
      3. lockdowns on an island by island basis; and
      4. border closures.

A phased, safe re-opening of the borders, step by step, can be achieved while simultaneously rebuilding the economic foundations of the Cook Islands, without running the unnecessary risk of a possible economic collapse, which would be much worse than the 1996 economic collapse that resulted in many thousands of Cook Islanders being forced to flee their home land to South Auckland as economic refugees.

  • The economic reality we face is;
    1. The Cook Islands economy has bled over half a billion dollars i.e. $500m+ in revenue through the border closures and the Government should have collected over $100m in taxes on that revenue instead of borrowing and begging for tens of millions of dollars to keep itself afloat.  While short border closures were necessary, there was no need to keep the borders closed when the lock down was lifted in New Zealand nor for the border to be closed right now; and
    2. Tourism makes up 85 per cent of GDP, so, in fact, basically funds the government.  Every teacher in Rakahanga, every nurse in Mangaia, every police officer in Aitutaki and every single politician is, in fact, paid for by taxes earned from tourism. The current Government borrowings are against the future earnings of the tourism industry so that the Government is now spending money that the Cook Islands tourism industry has not yet earned. Most of these borrowings the Government is spending on itself, other than a measly $8hr minimum wage for private sector workers; and
    3. The Government owes a quarter of a billion dollars i.e. $250m.  The Government cannot go on begging and borrowing forever or even, realistically, much longer. After the pandemic, just like before the pandemic, the Cook Islands will pay its bills through the tourism industry for the foreseeable future.
    4. The private sector owes a quarter of a billion dollars i.e. $250m. Until the borders reopen the private sector cannot pay the interest on this, yet alone start to pay these borrowings off.
    5. Between the public and private sectors, collectively the Cook Islands owes half a billion dollars $500m! With only about a thousand private sector tax payers earning more than $20hr, which is the minimum wage in New Zealand, this is around $500,000 national debt per private sector tax payer! This debt burden is, in my view, simply too much for a small, tourism dependent economy to sustain. Further, it is inter-generational theft i.e. this generation is stealing from the next generation and leaving the next generation to pay this generation’s bills. Rather than leaving the country in a better shape than we found it, this generation is currently on track to leave the country in a worse position than we found it.
    6. The interest bill on this half billion $500m is around $50m a year and principal roughly the same. So the Cook Islands has to find $100m a year just to service the existing national debt! Unbelievably, our Government wants to borrow more! This is roughly;
      • $100,000 per private sector tax payer per year. Very few Cook Islanders make this amount of money in a year.
      • Equivalent to a third of our total government expenditure and $100m is more than the country spends each year on key strategic national priorities such as;
        • Health
        • Education
        • Welfare Benefits
        • Infrastructure
        • Pa Enua development
      • Is around 20 per cent of GDP of $500m which, again, is just too heavy a long term burden on the country’s finances and economy.
    7. The Government does not have the financial resources to fund the private sector through further border closures but the private sector could fund the government with a safe border reopening.
    8. As the pandemic response pivots from primarily a public health issue, paid for by massive government borrowing against the tourism industry’s future earnings, to primarily an economic recovery response, a more effective public – private sector partnership needs to be forged. There is widespread frustration that a handful of politicians and officials think that they alone know best and deliberately exclude everyone else from making a useful contribution to a common strategy going forward like some sort of South Seas Kremlin fortress. In particular, tourism has been seen as the “last cab off the rank”, in spite of its pivotal role in the Cook Islands. The Border Easement Task Force (BET) is well past it’s use by date. The BET has unnecessarily cost this country hundreds of millions of dollars without improving the safety of the Cook Islands people from Covid one iota.
    9. As was the case in 1996, a collapse of the Government’s finances would affect every Cook Islander for many years and most likely result in a second mass exodus of Cook Islanders to New Zealand.
  • Government faces an immediate choice;
    1. Reopen the borders safely; or
    2. Put the Public Service and politicians, from Prime Minister down, on $8hr in order to reduce further borrowing during the continued border closure or run the increasingly high risk of a financial and economic collapse. The parallel universe of the Public Service and politicians on full pay and the tax paying private sector on $8hr is not only deeply unfair but it is unsustainable. Money needs to be saved for critical medicines not private jets for politician’s junkets. I have no doubt that all of this would be sorted out within a week if our politicians and officials were on $8hr like the private sector tax payers!
    3. To open safely immediately, as a first step;
      • Vaccinated visitors only, therefore no kids under 12 at this time. The fundamental mistake that Australia and New Zealand both made was to allow in untested and unvaccinated people. The Cook Islands can learn from these colossal mistakes. Indeed, the Cook Islands would not be in this perilous position were it not for these historically monumental mistakes by the Australian and New Zealand governments that has cost those countries tens of billions of dollars; and
      • Negative Covid test no more than 72 hours prior to departure; and
      • Christchurch Airport only to start with; and
      • Visitors from New Zealand Level 2 zones only; and
      • Mandatory participation in CookSafe and CookSafe+; and
      • Three separate Cook Islands bubbles managed with different risk mitigation strategies
        • Rarotonga
        • Aitutaki
        • Pa Enua
    4. Invest in additional health infrastructure to achieve twice i.e. 200 per cent of what is realistically likely may occur in an outbreak in Rarotonga and Aitutaki. Right now, we need to focus spending on “must do” upgrades to the staff and facilities in our hospitals rather than “nice to do” but politically popular bridges, harbours and roads.
      • Negative pressure beds
      • ICU
    5. In the meantime, the Cabinet to pre-approve, for immediate ordering, subject to NZ Government Medsafe approval;
      • Vaccines for 5-12-year olds; and
      • Vaccine booster shots for 16 + year olds
    6. If the community wants even more protection then the following could be implemented as well, all of which Fiji has adopted in some form or the other, as have many other countries around the world;
      • Visitors to be tested on arrival and remain in accommodation quarantine, whether resort or holiday home, for 2 days until a second negative test. 
      • Mandatory Covid insurance to cover any and all costs relating to a possible Covid infection thereby limiting the cost to the Cook Islands taxpayer.
      • Face masks in public places, particularly indoors and on public transport.
      • “No jab, no access to restaurants, cafes, night clubs, sports grounds, concerts, church etc.”
      • “No jab, no job” in both public and private sector.
      • “No jab, no welfare benefits”.
      • “No jab, no domestic air or sea travel”.
  • The private sector, particularly the tourism industry, is at breaking point, both financially and mentally. If there is not an immediate border re-opening, the private sector is going to require the full re-introduction of all aspects of the Economic Response Plan and then some until the borders can be reopened. Additional measures such as Business Growth Loans and $100 voucher for all Cook Islanders to take a Xmas staycation would assist, to a limited degree. However, realistically, the Government is not able to fund the private sector. Therefore, if the Government is unable or unwilling to reopen the borders, it needs to say that, so people in the private sector can close up their businesses in an orderly fashion and put in place migration plans to New Zealand in the New Year. Hundreds have already left and this exodus will become thousands in the New Year without any hope for a future in the Cook Islands.
  • The Cook Islands needs to introduce a two-year visa for long stay visitors that have the resources to fund themselves as well as priority skills that the Cook Islands needs such doctors, nurses, health technicians, maths and science teachers, accountants, engineers, builders, IT specialists etc.  5000 long stay visitors will generate a similar economic impact as 200,000 short term visitors as well as presenting a much lower health risk to the Cook Islands community as the global pandemic rumbles on. There has been much loose talk about economic diversification. This would be a realistic way to diversify the economy fundamentally and immediately without cost.
  • Economic diversification takes time and resources. Sustainable policies and a private-public sector investment plan needs to be developed over the next three months for immediate implementation in 2022. An Economic Development Commission needs to be immediately established to focus private and public sectors efforts for medium term diversification of the economy.
  • Without confidence in the economic future of the Cook Islands in the private sector, the New Year could bring a mass exodus of local and foreign workers, particularly skilled, technical workers as well as entrepreneurs and business owners making it difficult for the economy to operate at full potential. At some point, the Government will be left with a seriously depleted tax base to fund itself and will need to dramatically reduce the size of the Public Service, welfare benefits, public services such as health and education, infrastructure investments etc. The Cook Islands is already perilously close to that position right now. In 1996, thousands of Public Servants lost their jobs and left the country but in 2022 the fundamental difference will be that possibly thousands of skilled people who are also substantial tax payers could leave the Cook Islands in the New Year.

What we need right now is confidence and hope that there is a realistic, viable plan for the future.

Why is the Government spending time and resources on a 100-year plan when what is actually needed right now is a clear plan for the next 100 days!

Each day that the borders stay closed, the greater the exodus will be, the more demoralised the critical tourism industry will be, the deeper the long term, structural economic scarring will be, the closer to collapse the Government’s finances and the Cook Islands economy will be. This is all so unnecessary and avoidable.

While Fiji is rapidly selling out with its firm border reopening of 1 December, bookings for the Cook Islands are at an all-time low. Most of these resorts, holiday homes, restaurants, cafes and tours are owned by Cook Islanders.

This strategy would get the country safely reopening from a health and economic point of view and can be implemented immediately. The country needs a clear plan well before Xmas 2021 that can be clearly communicated to staff, suppliers, travel agents and guests.

Let’s set our own “Freedom Day” of Monday 15 November! It is time for a circuit breaker to bring in hope that we have turned the corner and can look forward positively to 2022.

The Government needs to act now before it is too late.

Tata Crocombe is the owner of The Rarotongan Beach Resort & Lagoonarium, Sanctuary Rarotonga – on the beach and Aitutaki Lagoon Private Island Resort. He graduated with a BA from the University of the South Pacific and MBA from the Harvard Business School and was formerly Chairman of the Cook Islands Tourism Corporation and Bank of the Cook Islands. He is a co-author of “Upgrading New Zealand’s Competitive Advantage” Oxford University Press and has been a consultant to the Asian Development Bank, Bank of Scotland, New Zealand Trade Development Board, Tasmanian Department of Economic Development, Skellerup Industries and many other public and private sector organisations.

Comments

STEVE SEIPOLT on 28/10/2021

Simple solution is open the gates let people in why not anyone's money is good money but control how when why they enter fully vaxxed and negative test results to and from. Get a plan in place and open - simple. I heard NZ will open travel bubbles with Samoa, Vanuatu, and Tonga by Christmas pending the new system. The Cook's should already be open now. Why not introduce a quarantine system where short term guests (i.e. visitors restricted access until day 3 negative test) return something simple takes so long to figure out. Mr Tata is a man of business he deserves to be told and helped to re-open i'm happy to bet anyone NZ wont open before Feb or March next year.

Greg Hansen on 27/10/2021

I along with many other prospective tourists reading this are gobsmacked by your article Mr Crocombe. Your over inflated sense of entitlement in regard to what you think you and your country are owed by the NZ government and people in regard to tourism is outrageous to say the least. Let me remind you that 98% of your population would not be vaccinated at all if it were not for the kindness of the NZ government and taxpayers providing the vaccine free of charge to your country at substantial cost to NZ. Also the millions in aid given freely to help the Cook Islands continue to stay safe while many many New Zealanders suffer through cold winters living in their cars because they cant afford a home or to feed their poor children, and they say charity starts at home! It is not fair that you seem to blame New Zealand and Australia for the state that the Cook Islands now finds itself in because your government has failed to put money into your health system to enable Rarotonga to cope with the likes of covid or that you have put all of your eggs in the tourism basket. How can any of that be our countries fault? It's not like we haven't given the Cooks many millions of dollars over the years to help towards this and I'm sure Australia has done so to. It is nothing short of insulting that you would seek to blame our countries for the situation you now find yourselves in and if you think that the average NZ tourist who is already looking at paying double the airfare to fly to the Cook Islands that they were pre Covid is going to want to pay another $240-280 per person to run around the countryside getting a pre departure covid test done 72 hours before travel when a great deal of us are travelling from areas that haven't seen covid for over 19 months, you are sorely mistaken. We will just choose to spend our tourist dollars elsewhere I'm afraid. We are fully vaccinated just like most of you and coming from a Covid free area, that should be enough!

Sally Wyatt on 27/10/2021

A great opinion piece Tata. It sometimes appears to be too easy for decision-makers to forget the economic impacts of border closures. You are right, the worst impact on the economy will be associated with population decline. That is the biggest threat facing the Cook Islands now.

Teremoana Turua on 27/10/2021

Totally agree with you Tata, 100%. Unfortunately, the Cook Islands has a bunch of inexperienced and immature politicians who, I doubt, will listen to any of your suggestions or recommendations. I heard on the "Coconut Wireless", "we have that in NZ too" without the coconut trees, that MP 's attend church services regurlary, pray like mad, I presume, to the "Lord Almighty" to forgive whatever and hopefully attract more voters for the next election. You might ask, "how is this going to solve the current economic situation". Spiritual intervention, maybe!!!! I know, you need that intervention like yesterday. What now? Well, elections are just around the corner and there are so many of you in Rarotonga and the rest of the Cooks who are capable of carefully guiding the Cook Islands towards a fruitful and economically sustainable future. Put your hands up and lets get the Cooks out of this mess that is going to drastically impact the future of our tamariki. As a nz tax payer I am seriously concerned about the inequality of the distribution of our hard earned funds (NZ Financial Aid) to all Cook Islanders. There's a song that goes "God is watching is us from a distance". We are watching and listening to your cries Tata. Kia Orana e Kia Manuia T A A Turua Matakite