From the House, by Pesi Fonua

Tonga Legislative Assembly, Minute No. 5, Wednesday June 8, 2005.

The Minister of Finance spoke of a $7.1 million salary rise for civil servants, and three new costly projects, the rebuilding of the Hu'atolitoli Prison, the building of a new Royal Chapel, and more money for the Tonga Defence Service to prepare them for Peace Keeping Duties.

Clive Edwards expressed his disappointment with the Budget because it focused on tax collection and offered nothing to curb the depressed state of the economy.

The Minister responded by saying that government would exempt growers from Consumption Tax and a National Economic Summit will be held in July to find a common ground for government and the Private Sector.

Fineasi Funake also expressed his doubt that the Ministry of Finance has the means to collect the Consumption Tax.

The Speaker opened the morning session by returning to the issue with Samiu Vaipulu calling for the Deputy Prime Minister to resign because of his alleged illegal handling of the National Trust Fund in 1994. He called on the Deputy PM to respond to the allegation.

The Hon. Cecil Cocker said that the call by Samiu Vaipulu on May 7 for him to resign was groundless, and that was no longer a trustee for the Trust Fund, for a number of years.

Budget

While the House was in Legislature, Sunia Fili informed government that the price for vanilla was very low in the world market, and that the vanilla growers of 'Eua were seeking government subsidies. He suggested for government to use $2 million that was allocated in last year's budget for Export Diversification Fund to subsidise the 'Eua vanilla growers.

The Speaker reminded the member that they were discussing this year and not last year's budget. He called on the Minister of Finance to continue with the presentation of his Budget Statement.

The Minister of Finance said that one of the pressing problems facing the country was the increasing number of skilled people and graduates who were leaving the country. He said that during the past five years 400 had resigned from the civil service. He said that to stop these people from leaving the country the Higher Salary Review Committee had recommended a salary rise for public servants to the tune of about $7.1 million. He said that this salary rise would be financed with $7 million from the termination of 300 to 400 existing vacant posts, and the balance would come from savings of the Ministry of Finance.

He said that the other three new projects which had been budgeted for this year were the building of new quarters for the prisoners at Hu'atolitoli, the building of a new Royal Chapel, and the upgrading of the Tonga Defence Services to be in line with UN standards for Peace Keeping Duties.

The Speaker dissolved Legislature into the Whole House Committee and the Chairman of the committee, Noble Tu'iha'angana, took his chair.

Clive Edwards, a Tongatapu People's Representative took the floor and reminded the House that the Prime Minister on numerous times last year had said that there were new economic recovery programmes to be implemented soon.

Tax collecting

Clive Edwards then changed into his attacking mode and tried to knock the budget down, as nothing but a tax-collecting mechanism, set up by government. He said he had read the Budget statement and the Budget but he could not find any economic recovery program that the Prime Minister was talking about. He pointed out that the six objectives that the minister outlined would not result in improving the economy, they were all tax-collecting measures. He said that if raising the value of the Tongan Pa'anga meant collecting more tax then it was scary. Clive expressed his disbelief that the Minister of Finance believed what he said in his Budget Statement to mean raising the standard of the economy when it really meant enforcing more tax burdens on the people.

With regards to government putting emphasis on Tertiary Education, he said there was nothing new in that area, and Lavulavu and others had been doing that. He said there was nothing new with the reconstruction of the hospital because the Minister of Health had been working on that during the past three years.

To deal with the increasing crime rate, Clive said that the reason why people committed crimes was simply because they were poor, and you had to raise the economy, not increase the tax burden.

He said that the objective to encourage the growth of the Private Sector was meaningless because there was nothing in the budget to encourage the Private Sector, it was all about tax collection.

Clive Edwards queried why the big increase in the vote of the Tonga Defence Services. Is that how you improve the economy by investing in the army? He also expressed his concerned over an increase in the vote of the Ministry for Foreign Affairs. He said that when the Crown Prince was Prince Regent and came up with the idea to establish an embassy in Beijing, Cabinet agreed because they were told that it would cost the governing nothing, but six months after it was approved, and when the Crown Prince was Prince Regent he proposed for an allocation of $2 million for the establishment of the Beijing embassy.

Growers' Petition

When the House resumed after lunch, the Speaker informed members of a Letter of Petition from the Growers, which had been distributed to all members. He asked the Minister of Finance to clarify a contradiction over the Consumption Tax. He said that there was an understanding that all agricultural products and services were zero rated and yet Clive Edwards said that importers were told by the Treasury that they would have to pay the 15% CT.

The Minister of Finance replied that there were three terms used, exempt, zero rate and exempt supply. He said that only growers for export were exempt but he was working toward exempting all growers.

There was a slow start after lunch because Clive Edwards was late, and the No.1 Tongatapu People's Representative, 'Akilisi Pohiva, said he would fill in until the 'Champion' arrived. 'Akilisi made a general comment that there would be no economic progress unless there were economic and political reforms. He said that a reform must be on two wheels in order for progress to move forward.

When 'Akilisi pressed the Minister of Finance to tell them any incentives that he was offering the Private Sector, Clive who was then back in the House told the member that government had given Shoreline Power a $7.2 million Industrial Development License incentive.

Tonga's domain name

On a different issue 'Akilisi queried the Minister of Finance, who was it that owned and operated the ".to" domain name, which is a property of the Tongan government. He said that the .to was worth $4 to $5 million annually.

The Minister said that the .to domain name was not in the estimates because it did not belong to the government, but he said he would find out.

The Governor of Vava'u knew better and offered an explanation. He said that according to the "Thick Book" - in the beginning there was nothing, and so was the ".to", there was nothing like that in Tonga but someone came up with the idea on how to make money and the .to came into being. He said that the same was with the Satellite slots (orbital slots), we were in absolute darkness about it until the princess with her business partners tried to make money out of it, then we went out saying that it belonged to the country.

Clive Edwards rebutted the biblical message of the governor, by saying that domain names were owned by individual countries as national assets. The question asked was, why did a foreigner own the .to domain name with a few friends, using the name Tonga while the government of Tonga got nothing out of it?

Fineasi Funaki returned the debate to the Consumption Tax and he expressed his doubt that the Ministry of Finance has the means to collect CT. He was sure that a lot of businesses would collect CT, but would not pay it to government.

When later Samiu Vaipulu pressed the Minister of Finance again about a program to encourage the Private Sector to develop, the Minister said that there would be a National Economic Summit in July, and following that government and the Private Sector should find a common ground where they could work together.