From the House, an English translation summary from the Tongan vernacular, by Pesi Fonua.

Tonga Legislative Assembly, Minute No. 4, Thursday June 11, 2009.

Highlights:

- PR 'Etuate Lavulavu suggested that the Finance Committee draft an economic plan to revive the economy.
- PR Teisina Fuko called for commercial banks to give grace periods for borrowers who could not repay loans at this time financial hardship.
- PR 'Akilisi Pohiva proposed for government to direct investors where they should invest their money.
- Teisina accused 'Akilisi of introducing a dictatorship form of government.
- The Minister of Finance explained there is a $20 million surplus for the new budget.
- The Minister of Labour said that PR 'Isileli Pulu was telling tales when he said that Cabinet Ministers had a 160% salary rise.
- PR 'Isileli Pulu proposal for members of parliament to be awarded a 7% salary rise.
- PR 'Uliti Uata did not think it was an economically good idea to use Chinese loans to rebuild building that were gutted in the 16/11 riot.
- 'Akilisi said that the government guaranteed a $7 million Squash Loan that had not been repaid and he claimed it was the same as the Watergate Affair which led to the forced resignation of President Nixon.

Minute's silence

The morning prayer was led by the Governor of Ha'apai, Noble Malupo.

The clerk made the roll call. He said that the Prime Minister, Minister of Agriculture and Fisheries, and Noble Vaha'i were on leave of absence.

The Speaker called for members to stand in silence for a minute in respect of the passing away of Baron Vaea of Houma. He suggested for the House to go and have a prayer service with the family at Houma on Friday evening. He said he would organise something for them to take along, and it would come out of the vote of the House.

PR Teisina Fuko supported the idea and said that the approach should become a policy of the House.

The Speaker said he would look into it and they should talk about it a bit more.

PR 'Etuate Lavulavu followed a suggestion he made the day before for the Finance Committee to meet and draft a stimulus plan to revive the economy.

The Deputy Prime Minister and the Minster of Health briefed the House on the latest on Swine Flu. The flu has been found in 74 countries, and 27,000 people have been infected with 141 deaths.

The Budget

The Speaker dissolved the Legislature into the Whole House Committee and the Chairman took his chair.

The chairman reminded members that they were still with Paper 2 of the budget.

Noble Lasike, reminded the House that he asked for a license to export Sea Cucumber on Monday, and now it was Thursday, but there had been no response from the Minister of Fisheries.

The Deputy Prime Minister said that the minister had heard his plea, and he was sick.

'Etuate Lavulavu said that the budget was all about money for government ministries, and he suggested that fund from aid donors should be accessible for the private sector to borrow from. He said that the Finance Committee of the House should help the Minister of Finance solve the problems of people not being able to repay their loans.

Banks lending

Teisina Fuko suggested that under the current constraint situation banks should give borrowers a grace period.

The Minister of Finance said that members had been attacking the banks, but the banks had been trying to help. They had been trying to identify those that had no show of repaying their loans from those who could repay them. The banks had even offered that if the borrowers could repay half of their loans they would write off the rest.

He said that he was told by the Governor of the Reserve Bank that they had reduce the amount that the commercial banks have to deposit with the Reserve Bank to guarantee the repayment of deposits.

He said that the banks wanted to help but some of the depositors were not cooperating with the banks.

Government control suggested

'Akilisi Pohiva suggested that in order to stimulate economic growth government should control the kind of businesses that people should be involved in. He said that government should put a restriction in the number of second car dealers, because there were too many. He said the same thing with beach resorts, there were already enough, and investors should be discouraged. He also believed that were too many wholesalers.

The Minister of Works said that the line of thought that had been pushed in the House was for Free Enterprises. Whether a business would die or not was a matter for the investors to decide. He believed that the member was in a state of confusion, after calling for freedom now he wanted government to control.

'Akilisi said he understood freedom, but it was the responsibility of government to direct where people should invest their money so that they don't go broke.

Concern

Teisina Fuko expressed his concern that if government would try to dictate that, then we were heading for a dictatorial system of government. He said that 'Akilisi's line of thought was wrong, he was leading the country into dictatorship.

'Akilisi said that some banks knew that a borrowers could not repay loans yet they still lent them money.

The Chairman reminded the member that when loan interest was too high, people were screaming because they could not borrow. When the interest rate was lowered people were borrowing, but were not budgeting properly and they were just wasting money in bars.

Teisina Fuko wanted to know why, in the last financial year the Prime Minister's Office was supposed to collect a revenue of $6.4 million, but for the coming year they are to collect only $2 million. The same with the Finance and National Planning Department. During the current financial year they were expected to collect $67.1 million, in the coming year they were expected to collect only $26 million.

Funds for information ministry

The Minister of Finance said that in the coming year, some of the foreign aid money that used to come through the PM's Office would come through the Ministry of Information and Communication.

With regards to the drop in the collection of the Finance and the National Planning Department, the reason was that there was money there from the sales of Leiola Duty Free and the sales of government shares in Westpac Bank of Tonga.

Teisina Fuko queried the Minister of Finance on the fact that he said that there would be no tax increase and yet he was expecting government ministries to collect more than double of what they are collecting now. For example, the Ministry of Agriculture and Fisheries goes up from 2.4 million to nearly 8 million, Ministry of Works from 2 million to 8.9 million.

The Minister of Finance explained that the expected increase in revenue collection would comprise of revenues and foreign aid monies.

Teisina asked for more details. He could not identify the difference between the recurrent from the development budget.

The Minister of Finance pointed out that was no longer any separation of recurrent from development, there was only one figure.

Salary rise proposal

Teisina Fuko expressed his concern that the total allocation for the three main ministries, which he considered to be the main engine to drive the economy, - the Ministry of Agriculture and Fisheries, Ministry of Labour Commerce and Industries and the Ministry of Tourism - amounted to only 7% of the total budget.

The Minister of Finance pointed out that a big allocation does not guarantee a big return. He said that these ministries were the most efficiently managed ministries. He said that some ministries may have bigger allocations but at the end they could not spend all their allocation.

'Isileli Pulu wanted to know if the $10 million grant from ADB would be used to finance the proposed civil servants' salary rise. He reminded the House that the Privy Council has approved a 160% salary rise for Cabinet Ministers.

The Minister of Labour, Commerce and Industries, wanted to know what salary rise the member was talking about, because there had been no change in the amount he was earning.

'Isileli Pulu said he did not mean that they had been paid, he meant that it had been approved and there was a possibility that it could be back dated to 2005.

Teisina Fuko reminded the member that any salary rise would have to come through the House.

The Minister of Tourism reminded the member of the salary scale that was recommended by a salary consultant Salway, for the salary for the House and Cabinet Ministers. He said that PRs disagreed, they thought it was too small, then they moved to increase theirs. The Cabinet stayed with Salway's recommendation. As for the 160% salary rise that the member was talking about, he was making up a story.

The Deputy PM asked the Chairman to control the debate so that they stayed with the budget.

Funeral expenses

After lunch the Speaker called for votes that they would give the family of Baron Vaea $3000 when they called in to say a prayer and to say farewell the following day.

It was carried, all agreed.

$77.5m Salary rise in budget

The Minister of Finance said that he had discussed with 'Isileli Pulu three times his concern about salaries, but unfortunately he still could not understand. The 10% salary rise for civil servants and 7% for all heads of departments amounted to 77.4 million, and it was in the budget.

With regards to the salary rise for Cabinet Ministers that was passed by the Privy Council last September it was in preparation for when all Cabinet Ministers would be elected and not appointed. He said that Ministers' salaries at present consisted of three components, their salaries for being Cabinet Ministers, their salaries as members of parliament, and their allowances from the House.

Teisina Fuko asked 'Isileli to stop raising the 160% salary rise because it is obvious it is not true, because it had to be approved by the House.

'Isileli Pulu then moved that everyone including civil servants and members of the House should all have a 10% salary rise.

Teivina said that members of parliament should be excluded from the proposed 10% salary rise.

'Uliti Uata expressed his concern over the increasing amount that government borrows, and more worrying also was what the loans money is used for. He did not think it was a good idea to borrow from China to build; the most important thing was for a source of capital for the people to make a living.

The Minister of Tourism wondered if the member could tell him who would borrow from the Chinese money for the reconstruction of their buildings that were gutted by fire. He said that there would not have been any need for loans if Nuku'alofa was not set on fire.

'Uliti said that the Minister missed his point. He said that an example of his point was that government should lift the restriction on the issuing of sea cucumber export licenses, and that the loan money should be spent on to bring in more money.

Surplus

PR Clive Edwards queried how the Minister of Finance claimed that there was surplus in his budget when there were more expenditures than earnings.

The Minister of Finance explained that a surplus of about $20 million was achieved when the surplus and foreign aid were added together.

'Akilisi Pohiva argued that there should not be a thing called surplus in the budget, because some of the services offered by government were very poor, and also it was a known fact that there is an efficiency in the collection of Consumption Tax.

The Minister of Finance reminded the member that the amount of money spend on its services is dictated by law passed by the House, so having surplus does not mean that one should be able to spend than it is stated in the law. Secondly, as he had explained, the surplus plus foreign aid presented the surplus figure that they were looking at.

Squash Council loan

On a different issue 'Akilisi reminded the House of a $7 million loan from the Tonga Development Bank by 15 members of the Squash Council. The loan was guaranteed by government, but it had not been repaid. He said that out of the 15 company members, only five were still in existence.

The Minister of Finance believed that government guaranteed the loan in good faith that it would rescue the squash industry.

The Chairman reminded the House that the Minister of Agriculture and Fisheries had suggested for the squash loan to be written off.

Teisina Fuko thought it was unusual that one of the first things that the Minister of Fisheries did after he was appointed a minister was to move for the squash loan to be written off. (The Minister's company was one of the 15 signatures to the squash loan).

'Akilisi claimed that the Watergate case of the former American President Nixon was the same as the squash loan, which in the end meant that Nixon was forced out of office and sent home. He queried how could it be possible for a loan of 15 companies that was guaranteed by the government?

'Isileli Pulu said that the term of the squash loan ended in 2011, and the interest alone to date was nine million.

'Uliti Uata said that he was getting very angry after listening to the squash loan. He thought that government and the House should do something about the squash loan.

The Chairman said that they should move on to Paper No. 3.

Ha'apai

Teisina Fuko raised the issue about the causeway between Lifuka and Foa in Ha'apai. He said that the Causeway was getting more delapidated by the day.

The Minister of Finance said that $5 million had been earmarked for the rebuilding of the causeway. It is funded by Germany and the delay was because Germany needed a work plan from the Tongan government.

Teisina Fuko expressed more concern about development projects in the Ha'apai group, including sea level rising, and expensive electricity from diesel generators in three islands.

The House was closed until 9.30 am Monday morning.