2001/2002 Budget Statement
Presented by Hon Misa Telefoni,Deputy PM and Minister of Finance
1. THE BUDGET SETTING
Mr Speaker, Honourable Members,
It is great honour for me to present this irst budget as Minister
of Finance. This is also the first budget for this new Parliamentary
term and therefore has special significance in setting the fiscal
framework for the implementation of the government's policy programme
for the next five years.
At the outset, I wouldlike to pay tribute to the Prime Minister,
Honourable Tuilaepa Sailele Malielegaoi, who has been Minister of
Finance for the past eighteen years, for his guidance, commitment and
dedication to prudent fiscal management, by putting in sustained
economic growth and development in the recent past.
I confirm that the government will continue to implement responsible
fiscal strategies based on transparent and accountable principles, that
will provide opportunities for everyone, and generate improved quality
of life, for all Samoan nationals.
There are of course, many new faces amongst honourable members here today
and it is therefore very important that everyone in this House understand
what hs been happening in the economy, and the government's ongoing reform
performance and the reform initiatives which have been undertaken by the
Government in the last five years.
I would nevertheless, recommend that all Members take the time to read
carefully the Economic Statement or the year 2000, which accompanies this
budget statement. This gives a very comprehensive review of the economy and
the outlook for the next year. It should be read together with the Statement
of Economic Strategy (SES) 2000 - 2001, which was tabled in this house at the
beginning of last year.
The economic and public sector reforms which have been implemented over the
last five years have already established a very sound base for our economy.
The key elements of the reform programme have been:
1. The liberalisation of the domestic financial sector from 1 January 1998.
This enabled the Central Bank to remove the previous direct controls on
monetary policy and to replace them with more flexible and market oriented
policy instruments.
Since its implementation, there has been noticeable improvement in the
performance of the financial sector, especially the commercial banks, including
a gradual decline in the lending base rates, which enhancing the range of
financial products available to the public. There has also been major investment
in modernising banking technology, with the establishment of Automatic Teller
Machines (ATM), and Electronic Fund Transfer at Point of Sale (EFTPOS)
facilities
for the convenience of consumers. The recent change of ownership of one local
bank
to a more internationally known bank, Westpac, will enhancce financial services
available.
Given the maturitty and healthy growth of the banking sector over the years, the
Government will soon be inviting expressions of interest for the establishment
of a
fourth commercial bank. The addition of a fourth bank will enhance the
competition
in the banking sector that will result in improved and cost efficient banking
service
to the community and continuing growth in the economy.
The market determination of interest rates, combined with other major reforms
and state
of the art developments have contributed to strengthening further the enabling
environment
government has continued to focus on, as part of its overall strategy for
strengthening of
the private sector, and raising the standards for doing business in Samoa.
2. Tax and tariff reforms which began in May 1998, which are still continuing.
This is leading
towards full compliance with the requirements of World Trade Organisation (WTO)
and Pacific
Region Free Trade Agreement (PARTA) membership in due course, and in support of
the moe to
free trade arrangements;
3. Corporation and privatisation of a number of government owned enterprises.
This is intended to
make State Owned Enterprises (SOEs) more commerciall managed and operated, in
order that
government's involvementin enterprise activities can be gradually reduced or
phased out altogether.
This is also consistent with the government's strategy to divest itself of
activities that can be
performed more efficiently and/or effectively be the private sector;
4. A public sector reform programme to institutionalise a more partnership
oriented and strategic
approach to planning abnd policy formulation; the introduction of an output and
peformance based
budget system and the preparation of corporate plans for all departments to
reflect clearly their
functions and harmonise these functions and roles in order to realise the
government's economic vision.
This programme is also focused on establishing Samoa as a leader in good
governance practises, so that
tax payers and the general public get value for money for the delivery of
services in a more efficient
and effective manner.
The broad thrust of these reforms will continue. Our economy must continue to
evolve to meet the opportunities
and challenges of the twenty-first century. Within our own region we have seen
much political and economic upheaval
in the last year. Internationally, oil prices have been very high impacting on
transport costs and the cost-of-living.
Presently, there are concerns that the world economy, which has enjoyed and
unprecedented period of growth, may be
about to slow down. We must ensure therefore that our own economy is
sufficiently strong and diversified so that it
can withstand adverse shocks as wll as enable it to continue to grow in the face
of these real and potential problems.
We must also make sure that the benefits of our economic growth are enjoyed by
everyone throughout the country. As we
have continued to maintain, the conveniences every urban dweller in Apia enjoys,
must also be enjoyed by those in the
remote locations of Savai'i, Manono, Apolima and Upolu. This will be the main
theme for our national development
strategies in the coming years.
2. OFFSHORE FINANCIAL CENTRE
A key issue facing the financial sector is harmful taxes. The Organisation of
Developed Countries (OECD) has accused
Samoa's offshore finance centre amongst many worldwide, of conducting harmful
tax practices. The Government takes this
allegation seriously and will endeavour to make every effort possible to clear
Samoa off the black list.
Last year saw the continuation of the push by the OECD countries to blacklist
non-OECD countries, including Samoa, with
offshore finance centres. The Offshore Centre provides close to $4.0 million to
the budget annually. Additionally it
provides employment for our people as well as specialised business opportunities
for law and accounting firms. The OECD's
contention that our offshore centre is conducting harmful taxe practices is
without substance. And despite the numerous
efforts for empirical evidence to substantiate their claim, none has been
forthcoming from the OECD.
As stated in the recent press release, this is an example of the bigger and
richer countries dictating to the smaller and
poorer countries. It is encouraging to note, however, that the United States
does not support the OECD initiative. To that
effect, we have written to the US authorities, acknowledging with thanks, their
support of small developing countries on this
issue.
3. ECONOMIC PERFORMANCE IN 2000
Gross Domestic Product (GDP) gre strongly in the year 2000 rising by 7.3% over
1999. The growth was driven mainly by the
construction sector, commerce, transport and communication, finance and business
services.
On the external account, merchandise exports dropped by 17.6% compared to 1999.
This was a direct result of decline in the
export of fish due to lower export price, coprq, coconut oil and kava. On the
other hand, imports recorded the same level as
in 1999. The drop in export earnings was largely compensated by the strong
inflow of remittances which recorded $145 million
in 2000. Additionally, tourism earnings recorded $133.1 million, representing an
increase of 6% over 1999. This good
performance has continued into the early part of 2001 with tourism revenues in
the first quarter estimated to have grown by 32.1
to $33.4 million over the corresponding period of 2000.
During the year 2000, the balance of payments recorded an overall surplus of
$3.1 million compared to a surplus of $0.01 million
in 1999. The current account deficit narrowed to $43 million as a result of
improved tourism earnings and private remittances.
The external reserves position improved by 3% over 1999 to reach $212.7 million
and was sufficient to cover the equivalent of 5.7
months of imports.
The exchange rate was broadly stable in the year 2000.
Inflation in 2000 remained low at around 1%.
On the government budget, a current surplus of 3.5% was achieved during fiscal
year 1999/00 compared to a current surplus of 2.1% of
GDP budgeted for fiscal year 2000/01. The budget outturn for 1999/00 indicates
an overall deficit of 1% of GDP. For 2000/01, the
budgeted overall defici was 3.6% of GDP. In the first six months, of 2000/01,
fiscal performance appears on target with an overall
deficit of 0.5% of GDP achieved. However due to additional budgetary outlays to
meet the rising cost of overseas medial treatment,
national elections and recapitalisation of Polynesian Ltd, the budget is now
expected to increase beyond the target of 3.6% of GDP.
The fiscal expansion will be closely monitored to ensure that the Central Bank's
inflation target of 3% is maintained.
4. OUTLOOK FOR 2001/02
The macroeconomic policy framework for 2001/02 is aimed at achieving three
objectives: a sound and stable macroeconomic environment,
low inflation and a sustainable external position in the balance of payments.
These objectives are pre-conditions for generating
positive real growth in GDP, in order to create employment opportunities for the
growing number of young people entering tghe labour
force.
The outlook for 2002 remains good. the strong GDP growth of the lst two years is
expected to continue in 2001 and 2002, albeit at a
somewhat slower pace. The construction sector is expected to perform strongly as
implementation of new public sector investment projects
progress. Construction in the private sector is expected to be buoyant. The
fishing industry is expected to grow following a period of
consolidation in 2000.
In agriculture, the production of taro has begun to show signs of significant
recovery as a direct result of the research work carried out
by the Agriculture Department leading to the identification of 21 disease
resistant varieties. These new varieties hae been distributed
widely for the benefit of farmers. This could lead to a much needed boost to
growth in the agriculture sector after its recent years of
poor performance.
Tourism is expected to be slow in light of the difficulty facing the travel
industry worldwide. Imports are expected to continue to grow in
line with the general pace of economic activity. However, with continuing growth
in exports and remittances, the current account balance
should remain manageable.
Manufacturing is expected to improve as the garment factory continues to grow.
The establishment of the dessicated coconut factory in
addition to the resumption of coconut oil mill operation will provide added
impetus to growth in the manufacturing.
In summary, the economy is expected to grow by about 4 - 5% in both 2001 and
2002. Inflation is projected to increase to around 2% as
increasing oil prices continue to impact on domestic costs.
The above scenario remains vulnerable to external shocks as the global economy
continues to slow down. The continuing rise in world oil prices
continues to slow down. The continuing rise in world oil prices presents another
dimension of risk.
At the domestic front, recent economic expansion has been largely on account of
expansionary fiscal policy and an accommodative monetary policy
stance. As a result, growth in both credit and money has been rising. Whilst
this has not resulted in inflationary pressures, there has been
a noticeable rise in imports which together with abundant liquidity in the
economy, poses a threat to economic stability.
The key challenge for maintaing macroeconomic stability involves a combination
of measures aimed at economic development and growth with effevtive
macroeconomic stabilisation policies. This will require an integrated approach,
focusing at the same time on a forceful continuation of structural
reforms, corrective fiscal policies aimed at controlling ther deficit, and the
willingness to tighten monetary policy if signs of inflation or
balance of payments pressures emerge. Such a combined strategy will also be
critical for reducing the vulnerability of the economy to external
shocks.
This scenario forms the basis on which the 2001/02 budget is formulated.
5. BUDGET STRATEGY
The 2001/02 budget strategy will aim at maintaing a surplu between current
revenue and expenditure. This means that current expenditure must be
contained relative to revenue and that increased expenditure must only be
accommodated to finance development oriented projects. With the
implementation of major public sector investment projects, there is expected to
be an overall deficit within the budget period.
The target ceiling for the overall budget balance will be a deficit of no more
than 3% of GDP in government finance statistics (GFS) format. This is
considered to be tghe maximum defici the economy can sustain to ensure that
macroeconomic stability is not compromised. It is not expected therefore
that there will be any significant increase in the real growth of current
expenditures during the fiscal year 2001/02.
6. BUDGET MEASURES
Mr Speaker, Honourable Members
I will not speak on the details of the budget but I would like to summarise the
maibn aggregates of the 2001/02 budget.
REVENUES $316,814,220
Ordinary revenues 242,380,177
External grants 72,934,043
Stabex 1,500,000
EXPENDITURES $355,874,902
Statutory 32,023,171
Current 223,809,730
Development 100,042,001
OVERALL BUDGET DEFICIT ($39,060,682)
Financed by:
Soft Term Loans 25,607,958
Financial Sector
Program Loan 10,000,000
Domestic Financing 4,000,000
CASH SURPLUS AFTER BORROWING $547,276
========
6.1 FINANCING
The 2001/02 budget is projected to achieve an overall deficit of $39.0 million
which is being financed from soft
term loans of $35.6 million, and domestic financing of $4.0 million. When
expressed in government finance
statistics, the overall deficit is equivalent to 2.9% of GDP. This is consistent
with the target set out in the
2000/01 Statement of Economic Strategy. The deficit is considered sustainable
given that a large part of expenditure
is to finance investment projects, details of which are provided below.
6.2 REVENUE ISSUES
Total ordinary revenue for 2001/02 is estimated to be around $242.4 million
representing an increase of 3.3% over
2000/01. As a proportion of GDP, total budgeted revenue and grants for 2001/02
accounts for 34.2% of GDP relative to
35.2% in 2000/01.
Revenue will continue to depend predominantly on tax reeipts. Despite the
moderate level of revenue budgeted for 2001/02,
the Government is not in favour of any proposed revenue increase through
increased taxes of any sort. The Government however,
may consider broadenibng the tax base as part of further refinements of the tax
and tariff structure during the course of the
fiscal year.
6.3 EXPENDITURE PRIORITIES
The proposed total expenditure amounts of $335,874,902 representing an increase
of 3.2% over the 2000/01 financial year. The
increase in expenditure reflects government's commitment to the development of
the key priority sectors identified in the
Statement of Economic Strategy and the implementation of its investment program
announced in the HRPP "Anavatau" Manifesto.
In implementing the program promised in the Anavatau, it is important to note
that implementation will occur over the next five
years. It is also important to note that the program outlined in the Anavatau is
broadly consistent with the key priority areas
stated in the Statement of Economic Strategy.
Mr Speaker, Honourable Members,
I will now outline the policy commitments to be financed in 2001/02 in direct
response to the undertakings announced in the Avatau.
Overall, a total of over $95.0 million tala is provided to meet the policty
commitments.
6.3.1 Health
The Anavatau recognises that good healthand sound education are the key pillars
for improved quality of life and sustained
economic growth. Therefore investment in health and education is a key priority
development in the Anavatau. Improved access
to good health service and facilities as well as a sound eduction system, is a
practical vehicle for redistributing the benefits
of policy initiatives and reform to everyone. In support of that objective, the
budget for the Health Department has been
been increased to $29.05 million tala. Within the budget, a provision of $2.0
million has been allocated to meet the cost of
medical treatment overseas of those medical cases that cannot be treated
locally, in addition to the assitance proivided under
the NZODA of $728,000 tala. With assistance from the world Bank and AusAID,
funding of $3.9 million is being earmarked for the
improvement of health facilities as well as improving the policy framework and
institutional process by which health services are
being provided so that all Samoans can have access to an improved and efficient
health service. A total of $500,000 is provided
for as government contribution to this project.
The most recent acquisition of a mobile clinic under the New Zealand Government
assitance to provide on-site diagnosis and treatment
of rheumatic fever and other diseases affecting especially young children and
the elderly, is a valuable asset to support the
department's health outreach program around the country.
6.3.2 Education
In support of education development, the budget for this vital sector has beebn
increased by about $4.0 million, to a total of $41.7
million compared to the 2000/01 fiscal year. Within that total, $3.0 million is
earmarked for grants to non government schools,
representing an increase of $1.0 million tala over the 2000/01 allocation.
Support for village school stationery has been increased
to $850,000 tala with $150,000 tala allocated to assist with repayments of
village schools loans. $2.3 million is budgeted to support
the government scholarship scheme in addition to $8.4 million provided by the
Governments of New Zealand and Australia.
Additionally the Asian Development Bank and AusAID are providing funding of
$24.0 million tala over five years, of which $4.0 million
is allocated for 2001/02, to support the refurbishment of selected school
facilities earmarked in the department's strategy for
rationalising resources to build up access and equity for all Samoans to a high
standard of education as well as strengtheningthe
mangement capacity of the Education Department. A total of over $1.5 million is
being earmarked as government contribution to this
project.
Further support to education will be provided through grants to institutions
such as National University of Samoa and Samoa Polytechnic
with a combined total of over $7.0 million tala during 2001/02.
6.3.3 Agriculture
The government recognises the severe situation faced by tghe coconut industry
due to the extremely low price level for coconut products
worldwide. To assist farmers, in line with the principles of the Anavatau, the
Government has decided to set aside a total of $1.5 million
tala from Stabex funds to stabilise the local price of copra. Whilst this
initiative may be considered sub-optimal in terms of efficiency,
the government considers that the adverse impact on the community of this
prolonged stte will exacerbate the current situation facing our
coconut based products and is therefore prepared to provide temporary assistance
to mitigate the hardship faced by the copra producers to
date. A Taskforce has been set up to look at how the scheme might be operated to
ensure that the farmers receive the full benefit of this
initiative.
The development of the agriculture sector will also be supported through the
provision of $1.0 million tala towrds village competitions and
rural access roads. Under the work program of the Ministry of Agriculture in
2001/02 totalling over $11.0 million tala, support for further
research into improved varieties of taro will continue. an allocation of $50,000
tala has been provided to meet the cost of providing more
fishing aggregate devices (FADs) to promote fisheries development.
With assitance provided under the European Union (EU), a total of $779,000 has
been allocated to meet the cost of a heat treatment plant.
This facility will enable the quarantine of agricultural fruits so that we can
penetrate the fruit market in New Zealand and Australia. The
Government will be consulting widely with stakeholders on the operation and
management of the facility, so tha the facility is operated and
managed optimally.
6.3.4 Infrastructure
The government will continue to invest in providing the necessary infrastructure
to support economic and social activities during 2001/02 as
announced in the Anavatau.
(i) Roads and bridges
Counterpart cost of $3.2 million has been provided for the construction of roads
and bridges under the Infrastructure Asset Management
Project (IAMP) with loan disbursements provided by the World Bank totalling
$11.2 million tala. Under this project the bridges at Lelata
and Tuaefu will be completed as well as the Saleia and Falevao bridges which are
to be constructed in 2001/02. Rountine maintenance of
roads around the country will also continue to support transportation of
agricultural produce and travel for the public.
Other works to be completed in 2001/02 include the following:
- Completion of the Safotu and Ologogo roads;
- Completion of the Sopoaga road;
- Completion of the road between Falelatai and Lefaga;
- Rehabilitation of Fogapoa & Iva roads;
- Commence work on Papa Sataua road; and
- Continue work on the Patamea road.
(ii) Port Development & Sea Wall
The development of the Apia port will commence in March 2002 with a total cost
of $66.5 million tala to be provided under Japanese grant
assitance.
Additionally a total of $1.51 million tala has been earmarked for the
maintenance of seawalls in Savaii and Upolu as well as financing of
capital works on seawalls in Upolu.
(iii) Water supply
The Rural Water Supply Project, estimated to cost around $54.0 million tala
under the European Union grant assitance is aimed at improving
access to good quality water for the village communities. Under this project,
water treatment plants and reservoir will be constructed at
Fuluasou. Piped water supply for the districts of Faleata (Ululoloa) to the
district of Samatau and Falelatai in Upolu as well as from the
district of Vailoa, Palauli to Puapua in Faasaleleaga will be upgraded. Inb
light of the importance of clean water to healthy life, the
Government calls on the districts and villages concerned, to support these
developments so that clean water can be provided to every home.
A total of $2.0 million tala is provided as counterpart cost for this project.
Additionally a provision of $4.1 million tala has been
identified to support the Samoa Water Authority's work programme during 2001/02.
(iv) Rural Electrification
Under the Government's rural electrification program, much of the country has
been practically covered with very few locations remaining,
especially in newly established residential subdivisions that are being
developed. this program will continue to ensure electricity is
accessed wherever necessary. A provision of $1.5 million tala has been
incorporated in the budget to support this program.
6.3.5 Telecommunications
The Government, through the Samoa Communications Ltd, will continue to invest in
improved telecommunications infrastructure. A fibre optic network
in urban Apia will provide modern telephone and data servicesm, and the internet
international gateway will be enhanced and shared more equitably.
Improved telecommunciation with American Samoa has paved the way for the two
countries to develop opportunities for information sharing in support
of distant education and tele-medicine.
6.3.6 Tourism Development
Tourism development is identified as a prioity area in the 2000/01 Statement of
Economic Strtegy in view of its potential capacity to generte
foreign exchange earnings. Consistent with that priority, the government will
formulate strategies on how Samoa could be aggresively marketed
overseas as an investment opportunity. This will involve a review measures on
how the hotel industry might be assisted. Additionally, provisions
for the operation of the Samoa Visitor Bureau has been increased to $2.7 million
in 2001/02.
Consistent with the thrust towards the development of tourism, the Government
will continue to support the national airline so that the required
infrastructure demanded by the tourist industry is available at all times.
6.3.6 Tourism Development
Tourism development is identified as a prioity area in the 2000/01 Statement of
Economic Strtegy in view of its potential capacity to generte
foreign exchange earnings. Consistent with that priority, the government will
formulate strategies on how Samoa could be aggresively marketed
overseas as an investment opportunity. This will involve a review measures on
how the hotel industry might be assisted. Additionally, provisions
for the operation of the Samoa Visitor Bureau has been increased to $2.7 million
in 2001/02.
Consistent with the thrust towards the development of tourism, the Government
will continue to support the national airline so that the required
infrastructure demanded by the tourist industry is available at all times.
6.3.7 Polynesian Airlines
Since 1994, after more than six years of continuous profitability, the airline
has suffered operating losses for the year to date. These losses
are attributable to several factors:
(a) a sharp reduction in traffic on the airline's principal routes and a general
softening of markets mainly due to economic downturns
in Australia, New Zealand, the USA;
(b) increases in capacity on Polynesian's routes by its principal competitor,
Air New Zealand;
(c) a 53.4% escalation in the price of fuel this year compared with last year;
(d) an appreciation of the US dollar against the Tala, in which the airline's
costs are mostly denominated;
(e) additional marketing and other operational epenses incurred in opening new
routes like Honolulu, that are expected to produce new
revenue for the airline, as well as new foreign exchange earnings for the
country.
These losses have led government to reconsider its continuing involvement in
such a high capital high risk enterprise, given the continuing exposure
of the government to the vagaries of the aviation industry. In this regard, the
government is looking to privatisation as an alternative option.
A task force has been approved accordingly to consider this option. However,
sucha a decision necessitates strengthening the balance sheet of
Polynesian Ltd, and especially now given the downturn in the industry, and the
uncertainty as to when the industry will recover.
This has been achieved with the re-capitalisation of Polynesian Ltd from an
advance of $5.0 million which is being provided for under the Second
Supplementary Estimates 2000/01, and $15.0 million from 2001/02 budget. The
total provisionof $20.0 million includes proision for old debts. This
infusion of funds reflects the priority accorded by government to strengthen
further the tourism industry. The Government is encouraged by the
support given by the Chamber of Commerce and the tourism industry to the
national airline.
6.3.8 Small Business Development
Under the Asian Development Bank a loan of US $3.5 million has been approved for
the developmebnt and promotion of small businesses around the country
with a particular emphasis in the rural areas. This loan will be used to finance
the following components:
(a) a small loan guarantee scheme which is currently being administered by the
Samoa Business Enterprise Center (SBEC);
(b) a pilot project or micro-credit financing under the Development Bank;
(c) procurement of training services from a Small Business Development Trust
Fund to assist those small and medium-sized enterprises
established and/or developed under the above components of the loan;
(d) a fourth component will involve the establishment o a venture capital fund,
which will be assisted by the ADB, the World Bank through
the International Finance Corporation (IFC) and other potential investors.
This assitance will support the government's strategy for th further
strengthening of the private sector.
6.3.9 Sports Development
The Anavatau also recognises that sports can provide a grand opportunity for
employment as demonstrated by the access of talented Samoan sportsmen and
women to lucrative contracts to play internally. In that light, sports
development will be promoted om 2001/02 with a total of over $1.0 million tala
allocated to the construction of sport fields, contribution to national and
international sports events, provision of sports equipment and promotion of
Samoa Games.
Recently, the government allocated $269,460 to the Samoa Sports Federation, and
will continue to allocate proceeds from the Sportslotto to the
development of sports nationwide, including individual sports.
In the context of Government's ongoing public sector reform program, including
institutional reform, the government will be considering appropriate
policy measures and institutional arrangements to ensure transparency and
accountability in the application of public funds by sporting bodies. As well,
government will be looking at various approaches to strengthen sports
development including sports administration so that there is balance in the use
of
resources, but more specifically on systematic approaches to harnessing early
and developing properly sporting talent in a nurturing environment.
6.3.10 Salaries and Wages
In consideration of the budget deficit of $39.0 million tala, Government has
selectively approved for inclusion in the budget, a review of professional
occupational structures involving scientific and technical skills in the fields
of engineering, agricultural science and computer science. This review
follows the reviews carried out previously of the occupational structures for
nurses, doctors and teachers.
A provision of $267,000 has been incorporated to meet the cost of this review. A
sum of $350,000 has also been included to meet the shortfall in financing
of the review carried out for teachers the previous years.
After taking into consideration the additional cost of these reviews, and the
obligations on government for counterpart staffing requirements on a number of
major development projects that have commenced. Government has decided to freeze
all increments for the year 2001/02. This decision was taken after due
consideration had been made of the 5% general wage increase awarded in January
2001.
6.3.11 Other Developments
Other major commitments include:
* the increased allocation for the Senior Citizens Pension scheme with a total
of $10.0 million for 2001/02;
* $400,00 has been allocated to the Housin Corporation;
* $50,000 for the review of the electrol act;
* $200,000 for Police promotions;
* $300,000 for the law reform commission
* $474,000 for the population census in addition to $752,000 provided by the
Government of Australia; and
* $1.0 million to complete the government owned petroleum storage facilities at
Sogi, Faleolo, Asau and the Matautu wharf.
7. LEGISLATION TO SUPPORT REFORMS OF THE FINANCIAL SYSTEM
The impact of the wider public sector reform program as well as changes to the
financial system over the years have demanded a comprehensive review of the
current legislation
to ensure sound management of public finance. Additonally, the government's
commitment to the principles of transparency, accountability and good governance
ought to be
further strengthened in an enabling legislation. As such, the prsent Public
Monies Act was extensiely reviwed to give strength to the government's new role
of fiscal
responsibility and economic management. The two new bills to be tabled during
the current sitting to support these developments are:
7.1 Public Finance Management Bill
This bill is designed to update the existing public finance laws of the country
consistent with Samoa's present and future requirements, while at the same time
introducing financial managment provisions reflecting modern trends and
international best practice.
The current ACt principally responsible for the operation and regulation of
public finance in Samoa is the Public Moneys Act 1964. This Act is largely
outdated and
does not reflect the Government's public finance management policy initiatives
or current practices. The review of the Act and consequential preparation of
this bill
is the first significant review the Public Moneys Act has received since its
enactment.
This bill provides the legal basis on which the principles of transparency and
accountability are enforced in the way the country's finances are managed and
accounted for.
7.2 Public Enterprise (Performance and Accountability) Bill 2001 - PEPA
The bill will provide a strengthened legislative framework to ensure that all
state owned enterprises reach the same high standards in profitability,
efficiency, being a
good employer and have regard to the interests of the community. In addition to
their obligations as public bodies under the Public Finance Management Bill,
SOEs will
have clear commercial accountabilities and reporting, to enable Government to
monitor their performance.
7.3 Companies Bill 2001
This is the first of a series oif major bills to reform company law in Samoa.
this bill is designed to replace the Companies Act 1955 (NZ). Its intention is
to ensure
the commercial sector is adequately supported as well as protected, and to
further enhance the environment for foreign investment.
The rest of the company law reform program is being prepared for consideration
by Cabinet later in the year.
8. PUBLIC SERVICE REFORM
Since the implementation of reforms to the public service in 1998, a number of
milestones have been achieved. These include completion of all corporate plans
for departments;
a first and second review of those plans that had started earlier in the
process; the commencement of annual plans; and the trialling of direct
recruitment by a number of
departments following the constitutional amendment last year to allow this key
function of the Commission to devolve to departments. Deparments are now working
on developing
service charters with their respective stakeholders. These charters will be
important in developing key performance indicators by which both the service and
the public can
monitor both the efficient delivery of services as well as the quality of
services to ensure that there are acceptable standard being observed.
One of the most important aspects of this reform process is a functional review
of all departments. This exercise will allow government to assess the
effectiveness of departal
services, given the the multiplicity of roles and functions over time which have
not been fully assessed against existing institutional roles and legislative
functions. The
changes over time as well to a number of institutional arrangements by policy
need to be fully incorporated in this exercise, to ensure that the cost of
services will be
economical as possible, while also ensuring an acceptable standard of
performance is expected and delivered to the public.
With the implementation of output/performance bnased budgeting, the reform of
the public service is a necessary complement to this major outcomes government
is working to achieve.
The Treasury and the Public Service Commission will be consulting extensively
with government departments on this framework.
9. SUPLEMENTARY ESTIMATES
The government is also tabling in this session of Parliament the Supplementary
Estimates to clear unauthorised expenditures approved during the 2000/01
financial year, in addition
to seeking approval for additional unforseen expenditures. The parameters of the
second supplementary are as follows:
Revenues $300,694,861
Ordinary Receipts 235,603,471
External Grants 65,091,390
Expenditures $349,234,204
Statutory 29,745,129
Current 225,504,272
Development 93,984,803
Overall Budget Deficit ($48,539,343)
Financed by:
Soft Term Loans 28,893,413
Domestic Financing 19,820,000
Cash Surplus after Borrowing $174,070
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10. CONCLUSION
Mr Speaker, Honorable members
The Government has implemented its reform programme for over seven years now
primarily to develop
Samoan as an efficient economy, operating for the benefit of its people. These
policy reforms
and associated changes were indeed difficult to introduce and implement. However
every Samoan
should be proud to realise that the Samoan economy has continued to make marked
progress. This
clearly demonstrate that our strategies and reform programme are working.
Macroeconomic
stability has been achieved in the recent past while at the same time our
children continue to
have access to improved health and adequate education facilities. The supporting
infrastructure
is in place. Water, electricity and roads, and telecommunications facilities
continue to improve.
With sustained growth, the Government will be in a better position to
redistribute the efficiency
gains generated as a result of the reforms for the benefit of everyone. As
honourable members
will note from the work programme for 2001/02 presented above, this budget
presents a deliberate
attempt on the part of the Government to ensure that the benefits of economic
growth is enjoyed
by everyone.
The Government will be commencing next month consultations with all stakeholders
in the preparation
of the next Statement of Economic Strategy. The new SES document will
incorporate the priorities
of the government and will emphasise the government's commitment to ensure that
the benefits of the
reform programme are shared by everyone in the country. We believe that Samoa
should become a land
of opportunity in which everyone will be able to realise their talents and their
aspirations.
I have emphasised earlier that we need to continue to refine our economy for us
to take advantage of
the benefits offered by the process of globalisation, mindful of our paramount
obligation to keep our
national identity and culture intact. In that context, I must emphasise that we
cannot be complacent
otherwise we will be left behind.
Our economy must continue to achieve positive real ceonomic growth which is a
pre-condition for
development. Without economic growth, the government will struggle to provide
adequate health service
and facilities, appropriate education service and facilities, clean water
supply, supporting
infrastructure and all other ingredients necessary for an improved quality of
life.
Indeed the welfare of the people is at the heart of your government's policies
and strategies. The
government will continue to monitor carefully the impact of all its policies and
strategies to ensure
that the weaker sections of our community are not overlooked nor disadvantaged.
This underscores the
need for closed cooepration between the whole community and the government in
order that the stratgies
and programmes to be funded in 2001/02 can be achieved for the benefit of every
Samoan citizen.
At this point I would like on behalf of the Government to acknowledge with great
gratitude the
continuous support our development partners have provided to the development of
our country.
Finally, I would like to take this opportunity to express the Government's
appreciation to the whole
country for the support o all of its initiatives and strategies. There remains a
lot to be done
still. working in partnership with all stakeholders, we can be confident that we
can continue to
build a solid economy for the benefit every Samoan citizen.
Mr Speaker,
I recommend the budget to the House.
May God Bless Samoa and Her People.
Soifua.