Khaiyum’s Band-Aid Budget

  • 29th June 2018
  • 2018
  • // Display comment count + link

Economy Minister Khaiyum’s  Budget fails to address the
crucial issues affecting a majority of our people who have to
struggle each day to provide for their families.

One must question why an important event like the presentation of the national Budget is timed to take place on the eve of a public holiday. It was originally scheduled to be presented a week earlier on 22nd June but was, without explanation, delayed by a week to coincide with the National Wellness and Sports Day holiday.                                                                                                                      

The budget address was not on the Ministry’s or government website the next morning, nor were the details of revenue and expenditure in the Budget Estimates available for public scrutiny. Indeed, there was no mention of the Budget in the Ministry’s website.

The curious timing of the Budget presentation, coupled with the subsequent scarcity of information on it, makes one wonder whether the whole event was planned to minimise reactions to the Budget which at best can only be described as hollow and irrelevant to the expectations and aspirations of our people.

Real Issues

Economy Minister Khaiyum’s  Budget fails to address the crucial issues affecting a majority of our people who have to struggle each day to provide for their families.

Recent surveys by the media identified the following as matters of utmost concern to the people:

  • high cost of living
  • low wages
  • high unemployment
  • rising poverty levels
  • lack of affordable housing and
  • a rapidly declining agricultural sector

Yet the Budget does little or nothing to address these critical social issues facing the nation. The 9% VAT imposed by the FF government in 2016 on basic food itmes stays despite urgent pleas for its removal to reduce food prices.

Instead, we see the Minister quite readily half  import duty on second hand vehicles (less than 2 years)  from 32% to 15%. What is the justification for this massive reduction?

These sort of anomalies make a mockery of Mr Sayed-Khaiyum’s oft-stated remarks in his Budget address that the budget emphasises the well-being of families in Fiji and was a true family budget.

The Budget identifies no worthwhile measures to tackle the high unemployment rate  among our youth which stands at 25%, if not more. It is silent on measures to reduce poverty through the determination of a fair national minimum wage rate.

Housing

Concessions under the housing sector show that the 2018/19 Budget is high on rhetoric and fancy packaging which may sound promising on paper but really boils down to nothing under  closer scrutiny.

The  first home buyers scheme is nothing new. It has been there for at least the past five years and is simply being dished out again with a few cosmetic changes.

The point is that the scheme has not worked. Reason being that those targeted under it, do not have the initial resources required to access the benefits offered under it. Economy Minister did not tell the nation how many families have benefited from the scheme so far because that would have revealed its failure.

 TELS and Toppers

Labour believes the whole scheme is misconceived. The Budget has allocated $206m for it, allowing 25,000 students to access it. But this will merely aggravate the issue of student debts. The accelerated repayment incentive offered will  benefit the government, by encouraging early repayment of loans. Early repayment will only be possible if graduates are able to find jobs on finishing tertiary education. We see nothing in the Budget towards employment creation.

Expanding the Toppers scheme to allow full scholarships to 970 students  – is again of little real benefit. As it is the bar has been set so high that not all the previous 600 scholarships were taken up. It may be useful to revise the qualifying criteria to make it reasonable.

Labour also believes that 20 overseas scholarships for specialised training is not enough. More students should be sent overseas for special studies to build local capacity and reduce our reliance on expatriates.

A better approach would be to reduce the cost of tertiary education by substantially increasing funding to the universities and negotiating an equivalent reduction in fees.

Additionally, a fee subsidy scheme to assist students would be more caring than to add to their hardship through loans.

NPTC Levy

Restructuring the NPTC levy to pay for private medical services and workers compensation is wrong. The levy was never intended for this purpose. It was meant to build capacity through the training of employees and has to be used for this.

Civil Service Medical Insurance

We support this but feel it should be extended to all citizens.  The scheme is being funded by the taxpayer. It is therefore highly discriminatory to confine it to the  civil service.

Labour believes this is a vote buying gesture to placate and win back civil servants after the gross assault on their rights with the unilateral imposition of the short term employment contracts. Now government is trying to offer a carrot and we hope civil servants will not be fooled by this conciliatory gesture.

A scheme that is funded by the State should apply across the board. There should be a National Health Insurance scheme covering all citizens.

Scrapping duty on imported fruits  

This is just a 5% reduction and will not make much of an impact on the shelf price of these overseas fruits and vegetables. However, we question the wisdom behind this. Except perhaps for apples – just how many ordinary families can afford to buy exotic imported fruits like apricots, strawberries and the like?

It would have made more sense to introduce incentive packages to encourage greater production of local fruits and vegetables. It would also lead to greater self-sufficiency in food.

If duty reduction was to be effected, we believe it should gone towards reduction in duty of breakfast cereals, milk and other dairy products which are too expensive for low income families.

Duty reduction on used cars

Again we question the wisdom of this. It would have been far more beneficial to the 60% of our workers who are receiving below poverty line wages, if the Economy Minister had removed the 9% VAT on basic food items he imposed in January 2016.

Sugar

The $85 a tonne guaranteed cane payment through the establishment of a price stabilisation fund to be set up jointly by government and FSC, will not make much difference to alleviating the hardship of the cane farmer. He has been demanding  $100 a tonne guaranteed cane price to offset rising costs of production, harvesting and transportation.

Plastic Bag Levy

The levy has been bumped up 100%. This seems unfair considering that it was imposed just last year. Why not simply ban the use of plastic bags outright and require paper bags to be used thus creating a cleaner environment.