Teachers petition wins $300,000 approval [1]
Wednesday, October 20, 2004 - 19:30. Updated on Thursday, May 8, 2014 - 13:49.
From the House Minute No. 60, Wednesday 13 October 2004
- Parliament responded to a petition from the Teachers' Training College, and ordered Government to pay $300,000 to the Ministry of Education. The Minister was to disperse the money according to a plan he presented to the House in August.
- The Interim Minister of Education was the sole opposition to the House's decision.
Speaker ... called on the clerk to read a letter from the Select Committee of the House, their decision on a petition from the Teachers' Training College.
Clerk - the letter stated that after further investigation and studying of documents relating to the petition the committee decided ...
1. For government to pay $300,000 that Parliament agreed to when it passed the Budget Act No. ½003 and the Budget for 2003/2004.
2. For the Interim Minister of Education to distribute the fund according to a plan he presented to the House on 17 August 2004.
The letter was signed by the Chairman of the Committee, Hon. Fielakepa.
Speaker - called for votes. It was carried 12-1. Against was the Interim Minister of Education.
The speaker dissolved the House and the Chairman of the Whole House Committee, Prince Tu'ipelehake took his Chair.
Chairman - called for debate to continue with the Financial Institution Bill.
Dr Feleti Sevele - asked the Minister of Finance for clarification on the eligibility of former staff of a defunct bank to work in banking in Tonga.
Minister of Finance - said that there was a provision for the Reserve Bank to assess the character and the working experience of people who are working in a bank.
Dr Feleti Sevele - under clause 28, he queried the fact that a bank may lend no more than 25% of its Capital. He thought that 25% was too restrictive, and it should be allowed for the Reserve Bank to decide, depending on the nature of the loan.
Minister of Finance - said that the 25% was in accordance with International Convention, but he asked for time, allowing him to modify the Clause.
Dr Feleti Sevele - queried why under Clause 29 that loans that were guaranteed by government could be more than the 25% limit for private loans. He said that there was a possibility for government to deplete the reserves of the bank, making it very difficult for the private sector to raise loans from the bank.
Minister of Finance - reminded the member that it had been passed by the House for loans to be guaranteed by government to be only 5% of the annual budget which at the moment only $5 million.
He said that most of Clause 29 dealt with borrowing between commercial banks if they ran out of cash during a business day.
Trevor Guttenbeil - expressed his concern over the authority that was given to the Reserve Bank to penalise banks for wrong doing. His concern was that the Reserve Bank could also punish the directors and the shareholders in the Bank.
Minister of Finance - said that it was needed for the Reserve Bank to have such an authority to make sure that neither the Bank nor the Directors and the Shareholders took their chances to play around with the deposits of the people.
After Lunch the Minister of Finance wanted to distribute an amendment he made to Clause 20 as it was requested by Dr Feleti Sevele.
He said that he had also looked at the concern by the member about the 25% of Capital limit of money to be lent by a bank. He said that they were looking at issue and were studying the definition of Capital.
'Akilisi Pohiva - wondered if it was appropriate for the Reserve Bank to advise banks on how to run their business and to set their salary rate. He said that that should be the responsibility of the bank and not of the Reserve Bank.
Minister of Finance - said that Clause 37 could be applied only in a situation when the bank was in trouble.
'Akilisi Pohiva - wanted to know the Reserve Bank would only intervene if the Bank went bankrupt.
Minister of Finance - said that the intention was for the Reserve Bank to intervene before the bank went bankrupt in order to safeguard the deposits of the public.
'Akilisi Pohiva - thought that it should be the responsibility of the public to ascertain the credibility of a bank before they deposited their money with the Bank. He said that the Reserve Bank would interfere with the competition because the banks which were doing fine would hope for the one that is getting into trouble to fold up.
Minister of Finance - said that in New Zealand, all commercial banks publish quarterly reports, detailing their financial position, so the Reserve Bank of New Zealand let the public decide for themselves where they should deposit their money. He said that if Tongan banks were to publish quarterly reports, most of the people would not understand the report. To pursue the idea of safeguarding the deposits of the people he believed that his approach was better for Tonga.
'Akilisi - disagreed, he said that Tonga was only a small place and if the financial reports of banks were efficiently distributed people would soon know which bank was the safest and the best. The Reserve Bank could also help with the diseminating of relevant information.
Minister of Finance - said that the New Zealand approach was still not suitable for Tonga. He said there were about 80,000 depositors in Tonga and a majority of those accounts held less than $100 in their accounts, and he said that these people should be protected.
Dr Feleti Sevele - expressed his concern over how a controller in the Bank was immune from prosecution. Under Clause 48 this person if he was found to have done something wrong he was simply being fired from his job, and nothing else would happen to him.
Minister of Finance - said that the Reserve Bank appoint a Controller to work in the bank, if the bank was in trouble. If the Reserve Bank was not happy with the work of this person they would dismiss him, and if the depositors were not happy with him they could complain to the Reserve Bank. He also pointed out that a controller is not just one person but an Accounting Firm like Price Water House or KPMG.
Dr Feleti Sevele - said that he accepted all the reasonings of the Minister but he just could not see the logic of why he was free from prosecution.
Minister of Finance - said that the indemnity for the Controller, was because his task was to rescue the deposits of people and that during such a time the wrong doers could use the law against the controller and try and sue him and that was why it was necessary for him to be protected.
Dr Feleti Sevele - moved for the Minister to have another look at his concern but for the proceeding to continue on to Clause 49.
It was accepted.