The Budget statement and Budget have not been released to the press, so all the figures presented here are sourced from the minutes of the debate and cannot be verified. Likewise, the comparative year figures cannot be clarified or verified without sight of the Budget columns.)

Debate continued on Monday evening June 7

Trevor Guttenbeil - Called for the Minister of Finance to introduce the Tax Reform immediately and replace the Port and Service Tax, and Sales Tax with the 15% Consumption Tax. He thinks that such a move will bring down inflation and reduce the price of consumer goods. The policy to slow down imports does not work, imports reported an increase of 26%.

He also wanted to know what was the listed $4.7 million in Public Expenditure going to be spent on.

Minister of Finance: Said he would like to introduce the Tax Reform in the coming financial year, but unfortunately it was easier to terminate the existing Port and Service Tax, and the Sales Tax but it was hard to implement the new 15% Consumption Tax. He said that the introduction of the new consumption had been set for April 1.

Minister of Police: Praised the contribution by the PR for how government could improve its operation, unlike some of the critical but unenlightening comments that have been made by other PRs.

Feleti Sevele: Expressed his appreciation for the comment made by the Minister of Police. He pointed out that PRs had been telling the House since 1999, to eliminate the Port and Service Tax, and the Sales tax.

He pleaded for the Cabinet Ministers and the Members of Parliament to hold back from any salary rise, simply because of the depressed state of the economy and the fact that there was going to be a deficit of $10 million in the budget for the coming financial year.

He also raised the issues that government had not been receiving any dividends from its Public Enterprises. He said that millions that government used to get from Cable and Wireless was no more. After government spent millions to buy out Cable and Wireless the hope that TCC would produce dividends had failed.

He warned the House that if nothing constructive was done, then a year from now one pa'anga would be worth only 20 New Zealand cents.

He also pointed out that the use of double invoicing by the Informal Sector remained a disincentive for investors in businesses in Tonga.

With regards to the collapse of RTA he said that it was not because government did not give RTA the money it needed, but according to the report of the Royal Commission of Inquiry on RTA, it was because of the management, "the wrong people who implemented the wrong plan" and the conclusion of the report stated that "RTA tried to do the impossible."

'Etuate Lavulavu: He said that the total government debt was $189 million. He blamed the high debt on the failure of the National Reserve Bank to control Inflation and to maintain the Foreign Reserve in a high level.

'Uliti Uata: Called on the Minister of Finance to explain how a $5 million loan from the Asian Development Bank was spent.

Minister of Finance:– Said that the ADB loan was to finance the upgrading of the administration of tax collection and to enhance the business activities of government, including corporatisation and privatisation. In addition government also bought a new computer system for its Human Resource Management Information System. Also included was the training of public servants in preparation for redundancy.

Feleti Sevele: Going back to the RTA issue and a comment that was made by the Minister of Police that there was no feasibility study carried out because RTA went ahead and leased the 757 from Royal Brunei Airlines. He queried that if that was common knowledge to Cabinet Ministers why didn't they inform the Privy Council, instead of allowing them to proceed and quarantee the loan to RTA on November 26.

Minister of Police: said that RTA had already committed itself before the request to quarantee the loan was presented to Privy Council, the plane was about to arrive.

Feleti Sevele:– If that was the case, was it legal for RTA to sign the lease?

Minister of Police: Why didn't you do something about it then?

Feleti Sevele: Why didn't you stop it then, instead of allowing it to go forward, and now you are complaining and letting the people bear the consequences.

Chairman of the Whole House Committee - called on the two members to sit down, and cool off.

June 8.

Speaker: Firmly told the House that members who who did not attend the opening of parliament, would not be paid (about $300 each).

The House then proceeded to debate on the Budget Statement.

'Isileli Pulu: raised the fact that government loans should not be more than 45% of its GDP. He said that from his calculation the high government debt included a loan by the Tonga Electric Power Board of $14.4 million which had yet to be repaid.

'Akilisi Pohiva: said that when Shoreline Power took over from the TEPB the Minister of Police who was the Chairman of the board of directors of the TEPB said that the TEPB has been exempted from the repayment of the $14.4 million loan from ADB.

Minister of Police:corrected 'Akilisi that the loan has been settled by government, freeing the TEPB from the burden of loan repayment.

'Isileli Pulu: questioned the non-repayment of a $6.6 million loan from the Chinese government for the construction of the Ha'apai High School, he pointed out that since 1998 no repayment had ever been made.

Minister of Police: said that the PR did not understand loan repayment, particularly soft loans when only interest is paid in the first six years, before the repayment of capital begin.

With regards to a Vaiola Hospital Reconstruction Project of $41 million.

Minister of Health: told the House that the Japanese government had approved a grant of $20 million to finance a part of the project, which would reduce their proposed loan of $41 million from the World Bank.

Fineasi Funaki: expressed his concern that whenever the Crown Prince Tupouto'a became Prince Recent he made decisions that favoured his business interests and therefore he was supported by government but his companies did not provide a good service for the people.

'Uliti Uata:supported the concern of the PR and pointed that when the Crown Prince was Prince Recent the current directors of the TEPB were appointed.

The Budget Statement was voted on and passed 19-4. Against were 'Akilisi Pohiva, 'Uliti Uata, 'Isileli Pulu and 'Etuate Lavulavu.

The House then proceed to debate on the Budget content. Vote No. 1 is for the Palace Office.Tuesday June 8.

'Isileli Pulu: moved that an amount of $45,000 for scholarship of the Royal Children, should be taken and given to an allocation in the Ministry of Education's vote for youth, sports and culture, leaving a token about of $1 in the Palace Office vote.

Minister of Land:– told the House of financial contribution from the Palace Office to the Ministry of Education for the development of education in Tonga.

He said that in 1995 there was a grant from the Palace Office to the Minister of Education of $247,401. In 1996 there was another grant of $229,040. In 1999 the grant was $254,427. He said that the grant in 1998 was about $205,000. In 2000 it was 194,570. In 2001 it was $332,047. In 2002 it was $303,588, and last year the grant from the Palace office toward education was $279,850. He said that these were the amounts of lease money that was owed to the Royal Family by educational institutions.

'Isilelei's motion was voted on and it was rejected 19-5. For it were 'Akilisi Pohiva, Feleti Sevele, 'Isileli Pulu, 'Uliti Uata and Peauafi Haukinima.

The Palace Office vote was passed with a vote of 20-0.

The House proceed to debate on Vote No. 2, of the House.

The Governor of Vava'u; move for the House to allow the Higher Salary Revision Committee to come in and set the salaries of members of parliament.

Speaker; Supported the motion.

The motion to allow the Higher Salary Revision Committee to come in and set the salaries of members of parliament was passed 18-3. Against were Noble Nuku, Peauafi Haukinima and 'Isileli Pulu.

The vote of the House was passed 22-0.

The House proceeded to Vote No. 3 the Prime Minister's Office.

It was passed 20-0.

Vote No. 4  Ministry of Foreign Affairs.

It was passed 21-0.

Vote No. 5 of the Governor of Ha'apai.

It was moved to be passed and it was passed 23-0.

Wednesday June 9

The House started on Vote No. 6 of the Governor of Vava'u.

'Etuate Lavulavu:– Moved for the vote of to be increased from $11,000 to $30,000.

The motion was passed by the House with a vote of 10-6. Against were 'Akilisi Pohiva, Sunia Fili, Peauafi Haukinima, Ministry of Justice, Minister of Education and Noble Tu'i'afitu.

The Vote of the Governor of Vava'u was voted on and passed 11-0.

The House proceeded to Vote no. 7, of the Ministry of Land.

It was passed with a vote of 20-0.

Thursday June 10

The House proceeded with an estimated budget for the government printing office.

Deputy Prime Minister ...– explained to the House that the vote that is requested was enough for only six s operation before the Printing House is Corporatized and then Privatized.

Dr Feleti Sevele ...– disagreed with the process of privatisation that was proposed by government, because the process had been proven not to be very successful. He also expressed his surprise that a committee which was made up of people from government and from the Private Sector had been formed to oversee the corporatising of the Printing House.

He suggested for government not to put any more money into the Printing House, but for government to call for tenders.

Vote No. 8 of the Printing House was passed with a vote of 18-0.

Vote No. 9 of the Public Relation Commission.

It was passed 17-0.

Monday June 14

Vote No. 10 of the Ministry of Justice.

Minister of Justice told the House that his vote had been reduced by $1.9 million to $2.02 million and the reason for the drop was that the plan for the construction of a new court house at Siaine had been postponed.

Noble Nuku asked the Minister why there were no Tongan Chief Justices and judges in the Supreme Court, and no Tongan judge in the Court of Appeal. He also queried the ineffective penalties for drug offences and sex crimes against women and under-age girls.

Minister of Justice He said that the reasoning is that in order to have a sense of justice in the country it was wise to continue to bring in foreign judges for the Supreme Court.

With regards to penalties passed by judges on drug related crimes he said that the decision was left entirely for judges but he said that a bill for heavier penalties on drug offences would be tabled into the House this year. (He did not say anything about sex crimes, rapes and incest).

'Isileli Pulu queried a big increase in meeting fees. During 2002-2003 it was $33,000, then last year it was $130, and it is the same again this year which averaged out at about $8000 a month.

Minister of Justice explained that the increase was to cover expenses of the Law Committees and of the Jury.

Finau Fili– commented on how the salary of the Chief Justice went up from $28,760 in 2002 to $280,529 in 2003. He said that under the constitution it was the responsibility of the House to decide the salary of the Chief Justice, but the salary of the new Chief Justice was not stated in the budget.

Minister of Finance said that the budget was drafted before the working contract of the new Chief Justice was confirmed.

Vote of the Ministry of Justice was passed 19-0.

The House proceed to Vote No. 11 of the Ministry of Police.

Minister of Police told the House that they requested $5,330,316 from government, but they were given only $4,248,958.

'Etuate Lavulavu– proposed for the vote of the Ministry of Police to be increased by $200,000, in order to equip the force to combat crimes.

Tuesday June 15

The House voted on the motion to increase the budget of the Ministry of Police by $200,000 was passed 19-0.

'Uliti Uata moved for $1 million to be taken from the vote of the Tonga Defence Services of around $4 million and give it to the police. He said that the 50 soldiers who had left for Iraq, would be paid and looked after by the Americans, so a million could be taken off the vote of the TDS.

Chairman said that the Americans pay only for their arms, transport and their living in Iraq, but Tonga pays the salaries.

The vote of the Ministry of Police was passed 20-0.

Vote No. 13 of the Ministry of Health.

Minister of Health– told the house that his total vote for the coming financial year was $13.3 million, $1.3 million more than the current financial year.

'Etuate Lavulavu– moved for government to pay $50 for all new born babies to help the parents during the first month of their lives. He also moved for all the tramps to be paid $40 a month.

Both of these motions were defeated.

The vote of the Ministry of Health was passed 21-0.

Vote No. 12, Crown Law.

'Akilisi– wanted to know the details of a liability of $500,000.

Minister of Justice said that an amount of money is set aside every year to meet Government Liabilities, and that this year is the same as last year $500,000.

'Akilisi said that he thinks that the $500,000 government liability fund this year is to pay for Civil Case of the Taimi 'o Tonga against Government. He queried who advised government wrongly, leaving the public to pay for other people's mistakes.

Wednesday, June 16

'Isileli Pulu told the House that a New Zealand lawyer David Jones was paid $NZD99,808 for his service last year, and only a part of this amount had been paid, the rest will be paid in the coming financial year.

'Akilisi wanted the Minister of Justice to say yes or no if the claim by the Taimi 'o Tonga ($300,000) would come out of this $500,000 allocation.

The Minister refused to answer.

Chairman eventually told the Minister to sit down because what he was talking about had no connection with the Estimated Budget.

Minister of Finance confirmed to the House that in the current financial year 2003-2004 $459,720 has been paid out from the $500,000 allocation for that year. Government has to pay fines in nine cases. The allocation for government Liability in the coming financial year is again $500,000 and there is already a $300,000 claim against government.

Dr Feleti Sevele wanted to confirm if the total amount that has been paid out to the Taimi 'o Tonga lawyer last year was more than $100,000. He also wanted to know who claim $300,000 from government.

Minister of Police told the member to be patient, after the case is heard government will release the information.

'Uliti Uata pointed out that last year and so far this year government has paid out $1 million in fine.

Minister of Justice told the house that the $459,000 that had been paid in the current financial year was for claims only, lawyers' fees had not been added to that figure. He said that the total claim from government during 2003-2004 was over $400,000, but for the coming financial year the total claim from government is $600,000 and if you add on to that lawyer fees the figure will be very high.

The Vote of the Crown Law was passed 17-4. Against were 'Akilisi Pohiva, Feleti Sevele, 'Isileli Pulu and 'Uliti Uata.

The House move on to Vote No. 13 ...– The Tonga Defence Services.

'Uliti Uata queried an allocation that was $240,610 in the current budget but in the coming budget it has gone up to $400,000. Why?

The Minister of Defence said that the allocation was for spending on equipment for soldiers who had just left for Iraq and for those who were in the Solomons.

'Isileli Pulu that noticeably on this Vote is an increase in salaries and travel allowances. He wanted to know who paid for the salaries and for the life insurance of the Tongan soldiers who are going to Iraq, was it Tonga or America?

Chairman told the member that a Bill had been tabled to the House relating to the Insurance Policy of the soldiers for Iraq.

The Minister of Defence explained that the salary remained the same but the travel allowance went up, depending on the places that the soldiers were going to.

He said that Tonga pays the basic salaries of the soldiers and their allowances and America was responsible for the transport, accommodation, food, return them home and the transportation out of Iraq of a badly wounded or a dead soldier back to Tonga will be looked after by the USA.

'Akilisi wanted to know if there was an understanding between the soldiers for Iraq and government in the event if someone died.

Chairman said that according to the Bill that has been tabled by government the amount of $20,000 will be paid out if a soldier dies.

Minister of Defence pointed out that the allocation for insurance on the Vote was for the insuring of weapons, he called on the Minister of Land to explain the situation since he was member of the TDS negotiation team.

Minister of Land said that any decision that will be made will be tabled into the House.

'Akilisi said that it appeared that there was some uncertainties on what will happen if a soldier dies in Iraq. The soldiers were not told what their families, wives and children will get if he dies in Iraq.

Thursday June 17

Vote No. 13 of the Tonga Defence Services was passed 18-0.