An evil budget laced with deceit

If this were a normal budget presented by an elected Government and an elected Minister of Finance, one would look for the good things in it.

The rhetoric is good, and indeed there are a few good initiatives.

One would also discuss a number of irresponsible stupidities in this budget: the increase of tariffs reversing the hard-won progress in reducing protectionism; the inefficient doubling of the allocation to the Fiji Visitors Bureau; or the granting of tax incentives only to the rich (those investing more than $2 millions) and not to the thousands of small and poor potential entrepreneurs who should be helped.

But this is not a normal budget. This is a budget forced on the people of Fiji by a military government that deposed an elected government by using guns.

This is the question the public need to ask: what significant changes has this military government brought in that would not have been brought in by a normal responsible government, elected by tax-payers themselves?

In particular, do tax-payers agree with the illegal over-expenditure by the military in 2007, amounting to a massive $50 million more than was approved by the 2006 elected parliament?

Do taxpayers agree with the massive 39 per cent increase in salaries (amounting to $23 million per year) that the military government gave the Fiji Military Forces staffing establishment that will now continue into the long-term future?

So what is evil?

Health experts know that when you do not spend $50 million extra on medicines, doctors, nurses, life saving operations, you lose x number of lives.

It is evil therefore that $50 million which could have gone to health, education, and poverty alleviation, was given to the military, by Commodore Bainimarama, who did the coup, appointed himself Prime Minister, appointed himself “Minister of Finance” and gives tax-payers’ money to buy the support of his soldiers for the coup. It is evil that our hard-working and valuable nurses, who were forced to go on strike for a pitiful increase in salaries, were beaten down by this interim government and its lackeys.

It is evil when our health centres last year ran out of medicines, because the then Interim Minister of Finance had to cover the over-expenditure by the military: while $15 million had been approved for medicines, only $10 million was allowed to be spent in 2007 (read the fine print in the 2009 Estimates).

It is evil when the Ministry of Education is told they cannot have $3 million for scholarships for the poor; or that the squatters are told there is no money for housing.

While this military government, without the permission of tax-payers, spent an extra $50 millions in 2007.

Where is the deceit?

For two years in a row now, government expenditure summary statistics have been presented without including the VAT on most items, while previous years have included VAT.

Commentators are making the mistake of comparing VAT-inclusive figures in previous years (2006 and 2007) with 2008 and 2009 estimates where the VAT has been differently estimated. This illusion permeates the whole of the 2009 budget, much of which is now presented without the application of VAT. The real increases in many areas, including total government expenditure, is far more than it appears.

There is another “deceit” that the public needs to look out for. The 2009 Budget is all about “Estimates” – what is supposed to be spent in the future in 2009, and “Revised Estimates for 2008”.

But for the Fiji Military Forces, the Estimates for 2009 or the Revised Estimates for 2008, cannot be relied upon.

That is obvious from last year’s budget by Mr Chaudhry that gave the 2007 Revised Expenditure for the military as $72 million. The Actual Expenditure, published in this year’s budget, was $118 million, an over-expenditure of $47 million.

Did Mr Chaudhry know of this over-expenditure by the military which is why he was slashing expenditure elsewhere, including that for medicines?

No one should believe any number presented by this military government as Estimates, or Revised Estimates for the FMF for 2008 or 2009.

Almost certainly the 2008 Actual Expenditure by the military will be the same, if not more than that in 2007 – not what is stated in this year’s Estimates.

Why is the military not allowing the Government Auditor to audit its accounts?

Why is the public not being given the audit accounts for 2006 and 2007?

The Long-term Evil

The evil that this military government has done for 2006, 2007 and 2008 will not stop this year.

Over the next 20 years, the 39 per cent unauthorised increase in military salaries, which will be virtually impossible to reverse, will cost the tax-payers an additional $460 million. That is in addition to the normal $1,260 millions that will be spent on their normal salaries as approved by the 2006 Parliament.

All money that will not be spent on education (teachers), health (nurses) or poverty alleviation, for the poorest of all races in Fiji. That is the evil legacy that Bainimarama’s military government will be leaving the people of Fiji, and future elected governments (if we ever get one).

An irresponsible government

An elected government may bind the hands of future governments in terms of revenues foregone through tax incentives, if the elected parliament approves the long term taxation benefits.

But this unelected military government has no legal or moral authority to tie the hands of future elected governments, by declaring 17-year tax holidays for some well-off enterprises.

This unelected military government has no authority to reduce corporate tax.

The people of Fiji must realise that the effect of all these tax holidays is that the future burden of raising revenue for government, will fall on indirect taxation including the VAT, whose burden falls most heavily on the poorest in the country.

Of course, the business community, large investors, the senior accounting firms, will be rubbing their hands with glee, since none of this future taxation burdens will fall on them, while they will be enjoying the delights.

Of course, the tourism industry will be very happy with the drastic doubling of their FVB allocation, from $12 million to $24 million, even if the increase is stupid as it cannot be efficiently implemented.

Did the Ministry of Finance look at the sad previous experience when Jim Ah Koy doubled the FVB allocation without any proportionate increase in tourism arrivals (my 2004 report must be gathering dust on the shelves of the Ministry of Tourism).

This country has rarely if ever seen any moral response from the business community to any budget which has damaging impacts on the society at large. That is to be expected. They are here to make money, not to look after the poor.

But is that not what this Interim Government claims to do?

And our moral community?

What is not understandable is the complete silence from Fiji’s “moral community”.

Only three years ago, a whole heap of clerics would have been shouting from the roof-tops challenging a government which takes away food and medicines from the poor and gives it to the powerful armed men in uniforms. Today, CCF (Akuila Yabaki, Jone Dakuvula and others) and the Fiji Labour Party, are all silent about the huge military over-expenditure. Other clerics, such as Father Kevin Barr, Archbishop Mataca and Father David Arms recite the mantras of honesty, transparency and accountability, while actively supporting the NCBBF and the Charter processes, which are all that now remain to justify the 2006 military coup and the huge military over-expenditure.

The Commodore’s 2009 Budget address, helped along by John Samy, talked of being pro-poor, and fostering economic growth, two favourite themes of the ADB, from which John Samy and Francis Narayan recently retired.

There has not been a word from them about the military’s illegal over-expenditure of $50 millions in 2007.

The cherubic Interim Attorney General, now also an economic expert, solemnly justified on television the massive salary increases to the military establishment as “necessary adjustments long over-due”.

While academic Dr Rohit Kishore, newly appointed by the Military Government to the board of directors of Home Finance Corporation took a whole page of a newspaper to explain “how the budget must drive the planning process”. What drivel Yes indeed, let us all plan for military over-expenditure for the foreseeable future!

If the 2009 Budget was “Pro-Poor and for Economic Growth”, and if our religious do-gooders and overseas experts are to be believed, Fiji’s poor must be all in the military.

Because that is the only place where there has been significant growth in allocation of taxpayers’ funds since 2006. And you can be sure that is one place where there will be no budget cuts.

Our security guards will continue to rob the tax-payers’ bank. And our Auditor General will keep sending his Audit Reports to the bank robbers.

Dr. W. Narsey, Fiji Sun 26Nov08