Budget 2016/17: Business as usual

  • 24th June 2016
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Budget 2016/17 fails to provide answers to the major
socio-economic problems facing the nation.

“Under Finance Minister Khaiyum’s stewardship the Budget process is reduced to being a mere exercise in financial allocation. All he does is increase funding for some ministries and decrease it for others, without any seeming logic or explanation,” says Labour Party Leader Mahendra Chaudhry.

While roadworks receive an enormous $527m, the budget for Agriculture and rural development, the main areas devastated by Cyclone Winston and needing extensive rehabilitation, goes down by 6%.

Health is another sector needing urgent funding yet the Health budget is reduced by 13%. Khaiyum’s own ministerial portfolios – Justice, Finance, Communications, Public Enterprise and the Civil Service – get a whopping 44% increase in the Budget. Where is the justification for this?

The Minister has failed to live up to his oft-repeated promise to reduce the operating expenditure of the civil service. The cost of the public service has in fact gone up. It has risen from $1.5b in 2014/2015 to $1.7b in 15/16 and is now estimated at $1.9b for 2016/2017.

Salaries and wages have gone up steadily from $806m in 14/15 to $856m in 15/16 and is put at $903m for 2016/17. Where is the reduction? He says the Budget deficit has come down. In fact, the deficit for 2016/2017 is $621m which is extremely high at 4.7% of the GDP.

The large deficit is an indication that the FF government is living off borrowed money thus aggravating the ballooning national debt burden.

Even with the $527m allocation for roads and bridges, the Budget address made no mention of giving any priority to rebuilding the Stinson Parade and Vatuwaqa bridges, the partical closure of which is causing immense traffic congestion in the capital city. Indeed, Suva’s traffic situation is becoming chaotic yet there is no mention of any strategies to deal with the situation.

The Minister said next to nothing on the need to boost our exports which have remained depressed for several years now. The budget for Agriculture, Forestry and Fisheries have all been reduced.

Likewise, there is no clear strategy on how the sugar industry which has declined 50% over the past 8 years, and has been dealt a severe blow by Cyclone Winston, will be revived. An $11m allocation has been made but no details are given on how this will be utilised.

A glaring omission is the absence of a statement on the future of the Penang Mill. The livelihood of some 2000 cane farmers and the economy of the entire district is at stake because of uncertainties that surround the future of the mill. There have been conflicting statements from the FSC on its future plans for the mill. Cane growers need a categorical statement from government on this issue.

The RFMF remains a major burden on tax payers. Expenditure on the army keeps going up from $90m in 2014/15 to $100m for 2015/16 and is projected at $96m for 2016/17. In fact, if the funds expended on Peacekeeping duties are taken into account, total outlay on the Army comes to about $180m annually – this is extremely high for a small nation like Fiji which has other pressing priorities.

The minister has failed to provide any specific measures to reduce the youth unemployment rate which is currently estimated to be around 18-20%.

All in all this Budget is business as usual.