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2012-13
Budget Consultation
Government of the Cook Islands
Ministry of Finance and Economic Management
12 October 2011
To seek the input of Cook Islanders into the future of the Cook Islands
www.mfem.gov.ck
Cook Islands Government Budget Consultation 2012-13 2
Message from the Minister of Finance
Kia Orana,
Today, I would like to announce the commencement of the process for developing the
2012-13 Budget with the release of our first ever Budget Consultation Document.
It is the Government‟s desire to get more input into the budget process from across the
community. I and other members of the Government have been provided with many good
ideas across the country for our ongoing development. Responsible government
encourages community discourse allowing those across the community to get a good
understanding of different ideas and the choices faced by the Government.
It is in this sense of community consultation that I would like to take the opportunity to
invite individuals, the business community, the church, non-government organisations and
other representatives of civil society across the Cook Islands to present a submission to the
Government on the formulation of the 2012-13 Budget.
The Budget Consultation Document prepared by the Ministry of Finance & Economic
Management contains some base facts to inform people on how the nation is progressing.
This will normally be a succinct document, but for this year I have included two further
pieces of work to inform the community.
Firstly, the Government has provided a summary of the specific actions recommended by
the Economic Task Force and Economic Summit held in April 2011. These actions have been
recommended and initially costed by the Economic Task Force. The Government intends to
explore these options further, and will consider the short and medium term priorities
outlined by the Task Force in the development of the budget. The Government is grateful
for their efforts which have resulted in an impressive list of actions.
Secondly, we have included the guiding principles underlying the current Functional Review
of the Public Service. It is the intent of the Government to improve productivity and focus
the public service on its core business and to provide opportunities for new initiatives.
This Government will always be fiscally prudent. We have seen in the recent past how the
poor state of public finances can quickly get out of control and cripple a country; we are
seeing exactly this playing out in many parts of the world.
At this point in time of our national development the government is strongly advocating
wise investment in key infrastructure as it is the key to our continued national prosperity.
Cook Islands Government Budget Consultation 2012-13 3
Following the Budget consultation the Government will publish its master infrastructure list,
much of which is already identified in the Economic Task Force recommendations. This list
will outline the major works we would like to undertake, and and an approximate costing for
that infrastructure.
In a break from the past, the Government will release the Budget Policy Statement on 1
December along with an update on the Government‟s financial and economic projections.
This document will take into account feedback we received from the community in the
preceding weeks. We will also be asking our development partners to meet with us in late
January of 2012 to work through coordinating their investments for the continued
development of the Cook Islands. I would like to see both the Government and development
partners working cohesively to ensure that we get the best return from our investments.
I have recently announced the Government will assist Parliament in re-establishing the
Finance and Expenditure Committee. This will add an additional level of scrutiny of
Government and provide a more effective Parliamentary process for the review of the
Government‟s budget.
The Government is aiming to get the budget to Parliament in early June 2012, well in time
for the Committee, and Parliamentary debate. We are aiming to have the budget passed and
ready for implementation on 1 July 2012.
I encourage you all to contribute and participate in the development of the budget, it is in
this manner and spirit that our national will continue to develop and advance.
There is no set format to a submission, they can be brief or as long as the author desires.
These will be made public and posted on the Ministry of Finance and Economic Management
website: www.mfem.gov.ck.
Honourable Mark Brown
Minister for Finance and Economic Management
12 October 2011
Cook Islands Government Budget Consultation 2012-13 4
ABBREVIATIONS
ADB Asian Development Bank SOE State owned enterprise
BCI Bank of the Cook Islands SOI Statement of Intent
BSG Budget Support Group STE Small Tourism Economy
Capex Capital expenditure TA Technical Assistance
CE Crown Entity TAU Te Aponga Uira
CEO Chief Executive officer TechNZ NZ trade and enterprise
CIGPC Cook islands Government Property Corporation TOR Terms of Reference
CIIC Cook Islands Investment Corporation USP University of the South Pacific
CILMS Cook Islands Library and Museum Society VAT Value Added Tax
CISNOC Cook Islands Sports and National Olympic
Committee
Watsan project Water and Sanitation project
COC Chamber of Commerce
DFCI Development Finance Cook Islands
e-commerce electronic commerce
EDC Economic Development Corporation
EDS Economic Development Sector
EEZ Exclusive Economic Zone
e-government Electronic government
EIB European Investment Bank
E-knowledge electronic knowledge
ETF Economic Task Force
FAD Fish Aggregate Device
GDP Gross Domestic Product
GE Genetically Engineered
HOMs Heads of Ministries
ICT Information Communication Technology
KPI Key performance indicators
MEPS Minimum Energy Performance Standards
MFEM Ministry of Finance and Economic Management
MMP Mentor Matching Program
MMR Ministry of Marine Resources
MOCD Ministry of Cultural Development
MOIP Ministry of Infrastructure and Planning
MOU Memorandum of Understanding
NGO Non Government Organisation
NSDC National Sustainable Development Commission
NSDP National Sustainable Development Plan
NZ New Zealand
NZD New Zealand Dollar
PERCA Public Expenditure Review Committee Assessment
PPP Public Private Partnership
PS Public Service
PSC Office of the Public Service Commission
ROBOC Revenue collected on behalf of the Crown
All monetary references in this document are expressed as New Zealand Dollars.
The fiscal year of the Government begins on the 1st July and ends 30 June.
Cook Islands Government Budget Consultation 2012-13 5
1. Introduction
The purpose of this document is to engage the people of the Cook Islands in
developments managed by government realised through the government‟s annual
budget. Your input will be considered by relevant managers of the machinery of
government to inform future planning of service delivery to the people of the Cook
Islands.
The document provides a short overview of how the Government of the Cook
Islands sources funding and where it invests it in, what plans for developments are
being developed within Government that are intended to shape the future for Cook
Islanders.
If you would like to make a submission, please send these through to
[email protected] before the 31 October 2011 (noting that all submissions
will be made public via the MFEM website and will include authors unless requested
otherwise).
•Population
•Health and Education Page 5
•Economy
Cook Islands
Community Profile
•Where does our money come from
•Where does government spend its money Page 7
•Fiscal Setting
•Governments Fiscal Strategy
What makes up the
Annual Budget
•National Sustainable Development Plan Page 11
•Economic Summit Outcomes 2011 Page 14
•Functional Review of Government Page 47
Upcoming
Developments
•Submit your input before 28th October 2011
•[email protected] Page 55Having Your Input
Cook Islands Government Budget Consultation 2012-13 6
2. Cook Islands Community Profile
The Cook Islands has a relatively small economic base
due to its isolation from key global markets and limited
primary resources including land space. The economy
has evolved from one where growth was mainly driven
by public sector expenditure to one that is now largely
private sector driven. In 2010-11 it is estimated that
the Cook Islands economy has grew 3.4 per cent in nominal terms (2.9 per cent real
terms) over the preceding year despite the instability in the global markets in 2008-
09 which impacted on the global tourism market. The key industries underpinning
the economy are tourism, financial services, marine and agriculture.
The National Census will be conducted on 1 December
2011. The results will provide government with a revised
baseline for our population projections. MFEM estimate
the total population of the Cook Islands to be around
26,0001 in June 2011, consisting of residents and
temporary visitors (who stay more than 10 days). In the 2006 population census
the count of the resident population was approximately 15,000. It is difficult to
accurately estimate the current resident population due to the free movement
between New Zealand and Cook Islands which is difficult to monitor. Immigration
data suggests the resident population has declined by approximately 27 per cent,
suggesting the current estimated population of 26,000 is made up of approximately
40 per cent residents and 60 per cent visitors.
With the distribution of islands divided into the Northern and Southern regions,
covering a total land area of 240 km² and scattered across an Exclusive Economic
Zone (EEZ) of 2 million km² the population based on the 2006 census is vastly
urbanised. It is estimated that 72 per cent of the total
population resides on Rarotonga, it is expected that the
2011 census will unveil further urbanisation.
A management review of the Cook Islands Heath system in
2007 found the health status of the people of the Cook
Islands to be comparative to the health status of other
1 Source: Cook Islands Statistics Office, Table 1.1 Population Estimates & Vital Statistics, June 2011
Cook Islands Government Budget Consultation 2012-13 7
Pacific Islands populations in the region. Chronic diseases and associated risk
factors continue to be the most serious challenge to the health and well being of
people including obesity, diabetes, cardiovascular and respiratory diseases2.
The increasing rates of cancers and the ability to intervene early and provide
curative care represents a major challenge to the Cook Islands health system2.
Another issue is the continuing rise in motor vehicle related trauma will require a
cross sectoral community response and the social issues of alcohol and tobacco
continue to have an impact on the health system. The ability of the health sector to
respond to emerging new diseases, emergencies and natural disasters all provide a
significant challenge for a relatively small Pacific Island nation with limited health
resources2.
To date, the Ministry of Health confirm that the findings of the review in 2007
continue to be the same challenges faced by Cook Islanders in 2011.
The diagram below summarises the main characteristics of the Cook Islands, in
terms of its population, social and economic features.
2 Cook Islands Ministry of Health Management Review, 2007
Population
•As at June 2011
•Estimated total population
26,000
•Estimated resident population
10,900
• 5,559 male
•5,341 female
•As at December 2006 (Census)
•Median age 27.5 years
•Urban population 72%
Health & Education
•As at December 2006 (Census)
•Life Expectancy at birth
•male 69.5
•femaile 76.2
•Proportion of population aged
15+ is 69% having
•trade and business certificate
and professional certificate
18.4%
•Tertiary qualificatiion 28.6%
• Year end 2010
•65% passed national grade 4
English
•72% passed national grade 3
Numeracy
Economy
•2010-11 Nominal Gross Domestic
Product (GDP) NZD357million
•2010-11 GDP per capita
estimated to be $13,729
•2010-11 % change in Consumer
price index 0.5%
•2010-11 Visitor arrivals 106,000
•2010-11 Trade defcit estimated
to be $355.9million
•As at December 2006 (Census)
•Labour force participation rate
70.2 % (2006 Census)
•Unemployment rate 6.9% (2006
Census)
Cook Islands Government Budget Consultation 2012-13 8
The MFEM publishes Economic and Fiscal Updates three times a year, in December,
March and June with all budget publications. The next update will be provided in
the Half Year Economic and Fiscal Update to be published on 1st December 2011.
3. WHAT MAKES UP THE ANNUAL BUDGET
The annual budget (Appropriation) sets the upper limit of public expenditure from
July to June each fiscal year. In 2011-12 the upper limit of expenditure passed by
the Parliament of the Cook Islands is $172.1 million, which is funded through
various sources.
Where does the money come from?
Government finances public expenditure through various manners, these include
imposing taxes, receipt of assistance from donors, raising loans and other sources
of revenue such as user chargers. In 2011-12 the estimated revenue and funding
streams is $172.1million
Table 1 : Where our funding comes from ($ millions)
Funding Sources Estimate 2011-12
per cent of total budget
Taxation 90.0 52 per cent Official Development Assistance 44.0 26 per cent Loan Proceeds 14.3 8 per cent Interest and Dividends 5.5 3 per cent Other Crown Revenue 5.4 3 per cent Sale of Goods and Services 5.2 3 per cent Reserve Funds 1.6 1 per cent Other 6.0 4 per cent TOTAL 172.1 100 per cent
Where does Government spend its money?
Government uses its funds to provide various public goods and services, invests in
assets and services debt. The Governments priority areas are guided by focus
areas identified in the annual Budget Policy Statement. Table 2 reflects the
expenditure commitments in the 2011-12 Budget Estimates:
Cook Islands Government Budget Consultation 2012-13 9
Table 2 : How funds are allocated by sector
Sector 2011-12 ($ million)
per cent of total budget
Social 44.0 26 per cent
Education 13.4 8 per cent
Health 13.4 8 per cent
Other 17.2 10 per cent
Economic 20.5 12 per cent
Tourism 14.3 8 per cent
Other 6.2 4 per cent
Infrastructure 32.3 19 per cent
Infrastructure 30.4 18 per cent
Environment 1.9 1 per cent
Law and Order 6.6 4 per cent
Policing 4.1 2 per cent
Justice 2.2 1 per cent
Other 0.3 0 per cent
Outer Islands 11.2 7 per cent
Governance 19.3 11 per cent
Other 38.2 22 per cent
Debt servicing 3.8 2 per cent
Contingency 0.2 0 per cent
Emergency Response 0.2 0 per cent
Other3 34.0 20 per cent
Grand Total $ 172.1 100 per cent
Source: Budget Estimates 2011-12, Appropriations and Commentary, Government of the Cook Islands, July 2011
The 2012-13 Budget Policy Statement is intended to be published on 1 December
2011 to provide updated policy and economic parameters for the allocation of
resources in the development of the 2012-13 national Budget. The 2012-13
Budget Estimates document detailing where the Government has committed its
available resources will be tabled in Parliament on the 1 June 2012 and publicly
released at the same time.
Fiscal Setting
Table 3 demonstrates current resourcing available for new expenditures from
2012-13. It does not include any savings which may arise from Government
decisions.
3 Includes contingency funding, unclassified donor funds, and debt servicing.
Cook Islands Government Budget Consultation 2012-13 10
Table 3: Budget Balance Forecasts ($ million)
2011-12 to 2013-14
2011-12 2012-13 2013-14
Budget Forecast Forecast
$m $m $m
Operating balance 0.0 0.6 2.6
Overall budget balance 0.4 0.1 0.0
Source : Budget Estimates 2011-12, Appropriations and Commentary, Government of the Cook Islands, July 2011
Current revenue streams are likely to be insufficient to cover improved services
going forward without structured reforms to the public service and the overall
modality for funding the delivery of public services.
What is government‟s fiscal strategy?
As stated in its Budget Policy Statement 2011-12 and reflected in the Fiscal
Responsibility Ratios, the Government of the Cook Islands fiscal strategy is
Size of governments pocket
Maintaining taxation to GDP ratio of 25 per cent to control the size of
governments operating expenditures and limiting the withdrawal of resources
away from the private sector
Expenditure control
Continuing to maintain recurrent expenditures within operating revenues to
keep within affordability
Keeping cost of the public service within 40 per cent of total revenue to ensure
that significant sums are flexible for development programs
Prudence
Undertake new borrowings within the country‟s debt carrying capacity, within
35 per cent of nominal gross domestic product
Debt servicing costs for new and existing debt levels are kept within 5 per cent
of total revenue noting that the value of debt servicing is expected to increase
over the medium term.
the rate of debt accumulation will be balanced across the country‟s debt carrying
capacity and the cost of debt servicing
Cook Islands Government Budget Consultation 2012-13 11
2012-2013
Budget Policy
Statement
To be released
1 December 2011
2012-2013
Budget
To be released
1 June 2011
The 2011-12 Budget documents can be downloaded off the MFEM website:
http://www.mfem.gov.ck
Cook Islands Government Budget Consultation 2012-13 12
4. WHAT DEVELOPMENTS WILL SHAPE THE FUTURE
The Government is working on various policy documents that are intended to guide
and shape the future for Cook Islanders.
The Government intends to specify development outcomes for Cook Islanders
through the National Sustainable Development Plan 2011-2015 that will also take
into account the outcomes of the Economic Summit 2011.
The Government intends to align the machinery of government to deliver on these
outcomes through the Functional Review currently being undertaken by the Office
of the Public Service Commission.
The Government is also considerate of its ability to effectively position limited
resources towards the highest most effective and efficient programs.
Improvements to the Government of the Cook Islands funding systems are intended
to come through a road map for better Public Sector Financial Management, and the
release of the Cook Islands Official Development Assistance Policy governing the
receipt and use of donor funding.
Cook Islands Government Budget Consultation 2012-13 13
I. NATIONAL SUSTAINABLE DEVELOPMENT PLAN
2011-2015
Cook Islands Government Budget Consultation 2012-13 14
2011-2015
NSDP
To be released
1 December 2011
i. NATIONAL SUSTAINABLE DEVELOPMENT PLAN 2011-2015
In 2007 the Cook Islands launched its 2020 visionary framework - Te Kaveinga Nui,
articulating the development outcomes desired by the Cook Islands which would be
realised through a three phase medium term planning approach.
The Te Kaveinga Nui was accompanied by the first National Sustainable
Development Plan 2007-2010, a strategy on how to progress towards the 2020
outcomes during the first phase. This will be followed by NSDP 2011-2015 and
finally 2015-2020.
The purpose of a National Sustainable Development Plan is to set national goals, the
expected results and effective strategies to guide policy decisions over the medium
term that aim to deliver on Te Kaveinga Nui.
The National Sustainable Development Plan 2007-10 can be downloaded off the
Office of the Prime Minister‟s website: www.pmoffice.gov.ck.
Drawing to the end of the first phase of the planning period, the Government has
reviewed the performance of the NSDP 2007-10, and drawing on this review intends
to release the second phase of the planning period, NSDP 2011-2015, on 1
December 2011.
This second phase of planning is expected to draw on the key strategies from the
Economic Summit outcomes held in April 2011 and on other extensive community
consultations undertaken by the Office of the Prime Minister over the past year.
The NSDP 2011-15 will set the priority areas for this planning period aligned to the
Te Kaveinga Nui outcomes.
Te Kaveinga Nui
Vision 2020
NSDP
2007-2010
NSDP
2011-2015
NSDP
2016-2020
Outcomes
2020
Cook Islands Government Budget Consultation 2012-13 15
Through the consultations undertaken by the Office of the Prime Minister, the
recommended goals for 2011-15 are as follows:
The working draft of the National Sustainable Development Plan 2011-15 can be
downloaded off the Office of the Prime Minister‟s website : www.pmoffice.gov.ck
Strategic
Goal 1
•„A COOK ISLANDS WHERE ALL OUR PEOPLE CAN BUILD BUSINESS AND ENTERPRISE TO CONTRIBUTE TO NATIONAL
ECONOMIC GROWTH WHILE RESPECTING OUR ENVIRONMENT AND CULTURE‟
Strategic
Goal 2
•„A COOK ISLANDS WHERE ALL PEOPLE CAN ENJOY OPPORTUNITIES TO FULFIL THEIR POTENTIAL, PROSPER AND
PARTICIPATE IN THE SOCIAL, ECONOMIC, POLITICAL AND CULTURAL LIFE OF OUR COMMUNITIES AND NATION‟
Strategic
Goal 3
•„A COOK ISLANDS WHERE WE SUSTAIN OUR ECOSYSTEMS AND USE OUR NATURAL RESOURCES EFFICIENTLY‟
Strategic
Goal 4
•„OUR INVESTMENT IN INFRASTRUCTURE WILL MAXIMISE ECONOMIC RETURN, IMPROVE LIVELIHOODS AND BUILD
RESILIENCE‟
Strategic
Goal 5
•„A COOK ISLANDS WHERE THE PRINCIPLES OF GOVERNANCE ARE PRACTICED TO ENSURE SUSTAINABLE DEVELOPMENT‟
Strategic
Goal 6
•A COOK ISLANDS WHERE THE RULE OF LAW ENSURES JUST, SAFE, SECURE, STABLE AND SUSTAINABLE COMMUNITIES
Strategic
Goal 7
•A COOK ISLANDS WHERE OUR PEOPLE ARE RESILIENT TO DISASTERS AND CLIMATE CHANGE TO ACHIEVE SUSTAINABLE
LIVELIHOODS
Cook Islands Government Budget Consultation 2012-13 17
ii. ECONOMIC SUMMIT OUTCOMES 2011 – A SUMMARY OF THE ECONOMIC TASKFORCE
OUTCOMES
The Cook Islands is referred to as a Small Tourism Economy (STE). Since the
investment in the Rarotonga International Airport in the 1970‟s, tourism has
become the core driver of our Nation‟s transition from subsistence to a sustainable
economy. This transition remains in progress today and our economy must achieve
significant growth to reach the parameters of a sustainable economy delivering the
outcomes and expectations of our people. By international standards today we fail
to achieve the status of economic independence. Solid economic foundations have
enabled our economy to grow but we must now focus on investing in our
infrastructure and driving key industries that will guarantee economic returns in the
short, medium and long term.
The Economic Task Force identified the following key industries to grow and
transform the economy:
Tourism
Financial Services
Agriculture and Horticulture
Marine Resources and Fisheries
Cultural, Creative and Tertiary Education Industries
Trade and Enterprise
There are some fundamental strategic directions that must be followed if we are to
achieve growth and transformation of the economy from an STE to a sustainable
economy. The following pages reflect the specific actions which the Economic Task
Force identified as being the priority for the short, medium and long term.
Cook Islands Government Budget Consultation 2012-13 18
Table 4: Economic Taskforce Specific Actions and Programming
Sector NZD
Agriculture 5,600,000
Short/Medium Term Initiatives 300,000
Medium/Long Term Initiatives 5,300,000
Trade and Enterprise 20,840,000
Short/Medium Term Initiatives 19,580,000
Medium/Long Term Initiatives 1,260,000
Culture and Creative Industries 4,090,000
Short/Medium Term Initiatives 140,000
Medium/Long Term Initiatives 3,950,000
Financial Services 4,010,000
Short/Medium Term Initiatives 2,210,000
Medium/Long Term Initiatives 1,800,000
Infrastructure 546,565,000
Short/Medium Term Initiatives 85,750,000
Medium/Long Term Initiatives 460,815,000
Marine Resources 6,890,000
Short/Medium Term Initiatives 3,620,000
Medium/Long Term Initiatives 3,270,000
Public Sector 7,255,000
Short/Medium Term Initiatives 5,400,000
Medium/Long Term Initiatives 1,855,000
Tourism 22,800,000
Short/Medium Term Initiatives 21,400,000
Medium/Long Term Initiatives 1,400,000
Grand Total 618,050,000
*Source: Taskforce Spreadsheet – 2011 Second Edition 5th October 11## Version 2.xls
Agriculture and Horticulture
The Task Force believes the agriculture sector has the capacity to develop as
Tourism and financial services have done with the arrival of modern, innovative,
researched and technically engineered farm units valuing our resources, our
landowners, our agricultural expertise combining technology and new labour. Made
in the Cook Islands will drive up Gross Domestic Product (GDP) as we become a
contributor to overall global food production. The Task Force recommends the
following specific actions.
Cook Islands Government Budget Consultation 2012-13 19
Short/Medium Term Initiatives
1. Introduce Government policy in support of the EDS. National, Island, Vaka, Village based
Cooperatives and Farm Public Private Partnerships (PPP) will be supported enabling
larger scale national Cooperatives/PPP's and smaller village scoped Cooperatives/PPP's.
The Commercial Farm Cooperatives and PPP‟s are the core private sector investment
vehicles.
This may come at no cost, or may still require further costing
2. Provide national policy support for biological and organic production
This may come at no cost, or may still require further costing
3. Regulate the introduction and use of GE seeds and products
This may come at no cost, or may still require further costing
4. The Economic Development Corporation (EDC) will establish Agriculture, Creative and
Marine sector mentoring programs. In partnership with the NZ Government and its
Forward Aid program to introduce into the Aid program schemes that provide
mentoring, technical support and knowledge and capacity building. These are new
initiatives that directly support the new Economic Development Strategy (EDS), Growers
Associations, Farm Cooperatives and PPP's,. Facilitate the delivery of appropriate
programs in primary and fishing production, stock and crop management, marketing
including freight-to-market solutions.
Estimated Cost $300,000
Medium/Long Term Initiatives
1. Adopt an EDS "Farm Model" Policy: Either PPP's or Cooperatives combining stakeholders
(farming/primary producers community and business sector) intending to jointly
develop, innovative, research and technically engineer "model farms" that value our
resources, (people, land, traditions and agricultural expertise) create modern business
enterprise. Consider 200 per cent deduction of the direct costs and labour costs; 5year
grant term; status approved by EDC; Applies to existing and new companies engaged in
the Pa Enua; incentives recognise risks and extra costs of doing business in the Pa Enua;
Incentive is to develop new products, in consultation with Growers Associations,
acknowledges farm development and marketing costs to reach Rarotonga, Papeete,
Auckland, Sydney, Los Angeles.
Estimated Cost $ 3,000,000
2. EDC: Through these PPP's will manage promotion/marketing, Crop pricing, subsidies
and grants to farmers that guarantees minimum prices at the farm gate to farmers at the
time of planting the crop. A scheme is already approved that incorporates crop planning,
pre production targeting, production costs, sales contracts and freight contracts.
Estimated Cost $300,000
3. EDC: Adopt policy for the better utilisation of our natural resources - Land use,
cooperatives, land bank, land corporation
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 20
4. EDC: Negotiate and complete PPP's or Memorandum of Understanding (MOU) with Private
sector and Growers Associations, Farmers Cooperatives for resources and support from
the Government, these agreements will also include production, (including bio-energy
fuels), supply quantities, prices and delivery.
Estimated Cost $500,000
5. EDC: Provide grants towards the transition costs (moving a business unit into the Pa
Enua) to establishing Pa Enua production units
Estimated Cost $ 500,000
6. Establish Green Energy crossover applications in EDS - Agriculture etc
Estimated Cost Estimated Cost $200,000
7. Grow Bio fuels – select suitable island location, plan cost and establish technical
specification. Government fund these costs in the Budget Appropriation
Estimated Cost $300,000
8. Legislation. Government will review existing and consider new legislation to support the
EDS and Agriculture policy. Food, Fair Trade, Import Levies, Price Control, VAT, Taxation
etc will be reviewed to simplify and create appropriate investment environment for EDS
products "Made in the Cook Islands" to expand. Consider direct incentives via grants
and exemption, and the removal of taxes and Import levies.
Estimated Cost $100,000
9. The EDC will facilitate grants and support to farmers to develop farms and products in
the Pa Enua. Estimated Cost $200,000
10. The EDC will provide EDS support during transition and crucial business building phase
by a system of freight subsidies to Rarotonga/Auckland/Sydney for exports to these
destinations
Estimated Cost $200,000
Trade and Enterprise
The Task Force believes there are a number of opportunities to improve the
capacity and management of the trade and enterprise sector. These include
cooperatives and public/private partnerships in all economic development sectors,
land use and land banking, telecommunications, transport, residential and
commercial property portfolio. The Task Force recommends the following specific
actions.
These major sectors require the basic underpinning of improved infrastructure.
Cook Islands Government Budget Consultation 2012-13 21
Short/Medium Term Initiatives
1. As the Holding Company Cook Islands Investment Corporation (CIIC) will hold all
public investments in State Owned Enterprises (SOE), Crown entities and
Agencies and will be responsible for their management. The holding company
(CIIC) will establish an Statement of Intent (SOI) with the Cabinet and the
Chamber Of Commerce (COC) that establishes the Government's National
Economic and Commercial policies for the SOE's, Crown Entities and Agencies.
This may come at no cost, or may still require further costing
2. CIIC Develop a National Telecommunications Policy with a particular focus on
high quality, low cost broadband internet access available nationally, specifically
addressing:
This may come at no cost, or may still require further costing
3. CIIC is the holding company for Government's trading entities and assets and its
functions and board of directors composition will be restructured to reflect its
commercial significance in the National Economy. SOE's, like the private sector
are commercial businesses producing revenues from the sale of products and
services and they are a significant key to our wealth, economic growth and GDP.
Public sector business enterprise policy will be aligned with Government and
Private Sector through CIIC by the appointment of a board of 7 people, 3
Ministers of the Crown appointed by Cabinet and 3 Directors from the Private
Sector appointed by the Chamber of Commerce, plus a chairman appointed
jointly by Cabinet and the Chamber of Commerce.
This may come at no cost, or may still require further costing
4. CIIC manage SOE financial and economic policy, pricing, profitability, capex,
return on investment and dividends given the monopoly position
This may come at no cost, or may still require further costing
5. Commercially innovate tertiary education, research and scientific development
supporting job creation, higher educational skills and broader qualifications,
population growth and rising incomes.
This may come at no cost, or may still require further costing
6. Employment Policy: employee benefits, minimum wage, maternity leave etc,
these principles to be incorporated into legislation whilst leaving the employees
and the private sector to implement these policy of rewarding experience,
qualifications, training and acceptance of responsibility. Employees In the Public
Service, contracts must be robust; specify obligation to adopt new policies;
acceptance of responsibility for outputs; collective responsibility for sustainable
practices, environmental preservation, renewable energy; Economic
Development policies; minimum training and CE obligations; all as conditions of
continuing employment.
Estimated Cost $100,000
Cook Islands Government Budget Consultation 2012-13 22
7. Encourage the University of the South Pacific (USP), Tertiary sector and the
Ministry of Education‟s Schools System to develop training programs for EDS's
This may come at no cost, or may still require further costing
8. Establishing these policies at CIIC will require structural and operational review
to streamline and centralise Governments Investments in SOE's and companies
and to reposition all management operations within the SOE's Entities and
Agencies. A peer review advisory services have been offered as part of the
review. Implementing new policy will include the appointment of Boards of
Directors and CEO's to each entity, SOI's and a 10 year business plan that
integrates to the NSDP.
This may come at no cost, or may still require further costing
9. Explore options to provide cheaper, quality telecommunications, broadband and
technologies including fibre to homes and businesses in Rarotonga and the
whole of the Cook Islands
This may come at no cost, or may still require further costing
10. Explore Telecom broadband service improvements that will reduce latency and
cache local internet network and deliver free wifi and charge only for
international traffic used
This may come at no cost, or may still require further costing
11. Form new business PPP for Disaster reconstruction projects and many other
projects restricted by capacity
This may come at no cost, or may still require further costing
12. Implement policy that places Telecom within CIIC new management structure
(refer elsewhere in this document) enables and clearly defines
Telecommunications sector future plans and defines role of Telecom CI as level
1 provider of international connectivity, the backbone infrastructure for service
delivery and applications and enables wholesale and retail applications (level 2
and 3) to be contested/delivered by private enterprise
This may come at no cost, or may still require further costing
13. Initiatives that innovate private sector growth in Tourism, Financial Services and
the new Economic Development Sectors.
This may come at no cost, or may still require further costing
14. Introduce a new Information and employment website - a portal to be funded by
Government and operated jointly by Ministries and the Chamber of Commerce
on behalf of all employees in the Cook Islands whereby entrepreneurs and
employers advertise new business ventures, capital funding opportunities, job
vacancies, management positions, training options and incentives, new projects
listings, Business Plans, Business Plan updates, share trading, RFI‟s, RFP‟s,
tenders, discussion documents, information memorandums, MOU‟s PPP‟s
contract negotiations, and executed contracts.
Estimated Cost $100,000
Cook Islands Government Budget Consultation 2012-13 23
15. Introduce Competency based - Training to be practice-oriented, including
attachments to companies and work on real projects to reinforce learning.
This may come at no cost, or may still require further costing
16. Investigate Governments investment in upgrading the communications
infrastructure while service providers lease access for usage
This may come at no cost, or may still require further costing
17. Investigate Lower telecommunications costs by de-regulating the
telecommunications market as soon as possible
This may come at no cost, or may still require further costing
18. Investigate selling Telecom share holding – government to move to being the
regulator only in a competitive market
This may come at no cost, or may still require further costing
19. Investigate Telecom Cook Islands to be separated from the Government
regulatory function
This may come at no cost, or may still require further costing
20. Justice Ministry research and innovation of Births, Deaths and Marriages
database developing online web based technology enabling revenue service to
all Cook Islanders
Estimated Cost $20,000
21. Justice Ministry upgrade of services. On line Land registry, Justice land transfer
system merged with MOIP survey classification system. Unify and upgrade.
Tenders to private sector for integrated web based technology
Estimated Cost $100,000
22. Knowledge Solutions for Ministries, HOMs, Crown Agencies and Private Sector,
a Mentor Matching Program (MMP): Mentors located in NZ who will be matched
to a counterpart partner in the Cook Islands to provide an E- knowledge
solution; MOU between NZ and CI Government about providing access to both
Public and Private Sector to enable exchange and sharing of knowledge, an
additional on line source of skill and capacity; assist technical capacity building,
continuing education, project management, ICT Website managing and
bringing these resources into CI online net.
This may come at no cost, or may still require further costing
23. Manage monopolies by the introduction and enforcement of relevant Commerce
Act and other legislation. Empower a suitable body to investigate matters and
enforce legislation, dealing with anti-competitive practices etc.
Estimated Cost $20,000
24. Ministries and Crown Agencies annual business plans be audited for compliance
with policy, legislation obligations, and refocused to include Economic
Development Sector growth functions and only those "should do" functions
whilst ensuring that all business plans strategic policy is contained in the NSDP.
Plans must support economic development. Estimated Cost $100,000
Cook Islands Government Budget Consultation 2012-13 24
25. Ministry or Agriculture form new farm business PPP's for Ministry activities better
placed in business. Agriculture nurseries, seeds, fertilizer and other farm inputs,
supplies, crops, and production
This may come at no cost, or may still require further costing
26. Negotiate with aid donors an arrangement, to contribute to a development fund
(the grow fund concept) that negotiates grant funding from organisations like
ADB and EIB. Fund managed by Bank who will add their management margins,
and manage a Development Finance Fund of low cost finance for development
Estimated Cost $5,000,000
27. On-going review of TCI's monopoly position, and introduction of competition if
and when appropriate
This may come at no cost, or may still require further costing
28. Opportunities to allow a wholesale/retail relationship between TCI/local
businesses at profitable rates for all parties, and for resellers to have a clear run
at the market
This may come at no cost, or may still require further costing
29. Positive policy to ensure Government creates capacity, adds value, gain
expertise through cooperation and collaboration. Always adopt and use PPP's
and tendering processes to seek information, collaboration, innovation,
research, capacity partnerships and performance of any given Government
Ministry output.
Estimated Cost $100,000
30. Principles that will stimulate a renewed understanding and economic growth.
One Country and One Economy. Taking time right now to learn about our
economy. Understand the urgency around the need for change. Be open minded
to new attitudes and innovative ideas. Collaborate with people and organisations
in new sectors of our society. Seek business and community solutions. Involve a
wider circle of associates and partners in economic discussions, decisions and
policy formulation. The economy is starved of employees. There are so many
opportunities that no one needs fear change or the future. No one needs to fear
loss of a job, but we all may have to change our job or the way we do that job.
This may come at no cost, or may still require further costing
31. Promote and form business PPP‟s with the private sector for drivers licenses
This may come at no cost, or may still require further costing
32. Provide Policy to direct that existing China Grant fund for Equipment and
Technology assistance is applied by EDC to the EDS's eg Agricultural -
Equipment and Farm Coop systems, Creative, Marine Resources. Tertiary
Education, Trade and Enterprise, Renewable energy etc.
Estimated Cost $14,000,000
Cook Islands Government Budget Consultation 2012-13 25
33. Provision of very high speed / low cost LOCAL internet for e-commerce, e-
government, security systems, video streaming at local rather than international
traffic rates
This may come at no cost, or may still require further costing
34. Quarantine, heat treatment facility to be offered for tender as a PPP by EDC
This may come at no cost, or may still require further costing
35. Recognition of the essential nature of effective telecommunications to the
Financial Services Sector.
This may come at no cost, or may still require further costing
36. Removal of Public Sector overlaps by effective cooperation and collaboration
between Public and Private sector intending to achieve a $5m reduction in
operating costs and a $5m growth in revenue.
This may come at no cost, or may still require further costing
37. Run a Public health campaign to achieve 51 per cent of the population to achieve
a healthy weight according to the Body Mass Index (BMI).
This may come at no cost, or may still require further costing
38. Student Visa category created for study in the Cook Islands.
This may come at no cost, or may still require further costing
39. The Economic Task Force be empowered to monitor and conduct a mid term
2011-2012 evaluation and performance assessment during the last quarter
2011 with the view to providing Government with an early assessment in 2012
of the Economy's performance towards economic development and Private
sector led growth. This report to be timed to coordinate with the annual Budget
Policy Statement and the 2012-2013 Appropriation Bill.
Estimated Cost $40,000
Medium/Long Term Initiatives
1. Align proposed new USP Schools to our EDS and with Ministries and Agencies
new capacity and resources. Research efforts to maximise our business and
trades academic, vocational training and economic opportunities. Private sector
growth requires innovation and diversification in education curriculum and
tertiary programs that support economic development sectors engineering,
technical and scientific practical studies and research.
Estimated Cost $100,000
2. As part of Tourism route underwrite negotiations Government through EDC, will
Introduce policy of support to primary producers in Government underwrite
negotiations with airlines/shipping companies for concessional freight rates for
exports.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 26
3. Centralise via a modern designed Data Computer Centre providing accounting
and data services; consider establishing a PPP. Estimated Cost $200,000
4. EDC will develop Mini Grants and Micro Finance schemes to the economic
development sector for new initiatives - Agriculture, Culture, Marine.
Estimated Cost $200,000
5. EDC will work with Airlines to grow export freight to Rarotonga, Auckland, Los
Angeles and Sydney markets.
This may come at no cost, or may still require further costing
6. Establish as a subsidiary of CIIC the Economic Development Corporation, (EDC)
governed by a board of Directors representing all stakeholders. Encompass the
new economic development sectors, ie Agriculture, Culture, Creative Industries
and Tertiary Education and Marine Resources.
Estimated Cost $60,000
7. Extension and diversification of Scholarship contracts and contractual terms to
be aligned to include educational sectors suited to both the Private and Public
Sectors and to provide best solutions for student's post qualification
professional practical experience and best practice educational training.
Estimated Cost $100,000
8. Form new business PPP for Agriculture research and development.
This may come at no cost, or may still require further costing
9. Form new business PPP for Procurement and contract management.
This may come at no cost, or may still require further costing
10. Form new business PPP for project management, design, engineering and
consultancy services.
This may come at no cost, or may still require further costing
11. Form new business PPP for the permitting, inspection, and registration of
building, wiring, plumbing, and drain laying.
This may come at no cost, or may still require further costing
12. Form new business PPP for Training programmes, TVET and other tertiary
services.
This may come at no cost, or may still require further costing
13. Government will include in the Banking sector review the value of a Development
Finance entity (DFCI) managed by BCI that will offer finance to the EDS. PPP's
and cooperatives generally, with lending based upon supply contracts with
Private sector purchasers, secured by production/outputs. These loans will be
low interest, unsecured; development loans limited to direct production costs.
Estimated Cost $500,000
14. Health Medial insurance and Medivac Scheme. Establish Trust or PPP with
Government and Private sector, integrate with insurance review.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 27
15. Improving Import substitution. A strategy to avoid leakage and maximise growth
in the domestic economy from tourism, export of financial services, agriculture,
fishing, marine resources and cultural and creative industries. Increase local
production and reduce trade barriers.
This may come at no cost, or may still require further costing
16. Research and Scientific Development. Government to formulate a RandD policy
and enshrine this policy as a CIIC responsibility delivering expertise to the
Private Sector and deploy PPP's as effective delivery mechanisms. In establishing
RandD policies align and request NZ Government to extend its NZ Trade and
Enterprise (TechNZ) support schemes to the Cook Islands: The Cook Islands
Government to also appropriate budget to manage the scheme .
Estimated Cost $100,000
17. The EDC will coordinate all Pa Enua Economic Development Plans, Government
capex investment programs in each Economic Development Sector,
Cooperatives/PPP's business plans and support these initial, first step, business
models transitions and strategies on an Island by Island basis. The EDC will
ensure the EDS have representation at NSDP and CIIC.
This may come at no cost, or may still require further costing
Culture, Creative and Tertiary Industries
The Task Force believes that this is an exciting and innovative new economic
development sector, and that there are great openings for the expansion of creative
industries and the preservation of our cultural heritage to work side by side.
Cultural creative and tertiary education industries provide exciting opportunities for
major innovation of our core culture through education to enterprise. Our People,
our heritage, our future, our priority, our actions to sustain; Value our Creative
Nation, our Art, our Artists, their Intellectual Properties; Traditions, Values, essence
of our independence; Polynesians, voyagers, vibrant, academic, entrepreneurial,
sporting nation. In five years creative industries will have contributed significantly
to our Made in the Cook Islands brand and in 10 years this sector‟s contribution will
continue to grow. The Task Force recommends the following specific actions.
Short/Medium Term Initiatives
1. EDC to establish Policy and Legislation for Intellectual Property Rights,
Traditional Knowledge Rights, Copyright.
Estimated Cost $50,000
Cook Islands Government Budget Consultation 2012-13 28
2. Establish a Cultural and Creative Industries Council and establish a strategic
a direction for Creative Cook Islands.
Estimated Cost $40,000
3. Establish the status of the gifted land to USP for the Pacific Studies Campus
at Tuikatoti, Titikaveka and research feasibility of establishment of new USP
Campus. A condition of the gift is to establish Traditional Knowledge as the
centre of the Campus.
This may come at no cost, or may still require further costing
4. Introduce Copyright legislation and enforcement.
Estimated Cost $50,000
5. Provide support for artists and the arts, both direct and indirect, through
encouragement of private sector partnerships. eg incorporation of artworks
into public buildings as in the new airport; the improvement and
enhancement of public spaces through government commissioning of public
art.
This may come at no cost, or may still require further costing
6. Redesignate the Ministry of Cultural Development as the Ministry of Culture
and Creative Development to emphasize the dynamic nature and economic
significance of cultural and creative industries.
This may come at no cost, or may still require further costing
Medium/Long Term Initiatives
1. Align College curriculum and USP subjects to provide pathways that develop
cultural and creative expression.
This may come at no cost, or may still require further costing
2. Designate and develop the precinct comprising The National Museum and
Library, MOCD, USP, CILMS and Galleries, as a national creative hub.
This may come at no cost, or may still require further costing
3. Develop a Creative Industries Workforce Skills Qualification - Identify the key
competencies needed for different occupations and for career advancement
in the creative industries.
This may come at no cost, or may still require further costing
4. Develop Standards and training programmes introduced to enable workers to
acquire industry recognized competencies.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 29
5. For the Cook Islands to prosper as a creative private sector led economy,
requires specific actions: Introduce a programme for the retention and return
of the creative class – artists and knowledge workers; establish policies to
promote and prefer Cook Islands Made products; start up fund offering
grants and tax incentives for people taking up business ventures based
solely on the creation, production and promotion of cultural products; run a
program of competitive skills development and business development grants
or commissions, allocated annually; support creative and cultural hubs in
the Pa Enua with promotional and marketing centres in Rarotonga; place new
emphasis on creativity, art and design in the school curriculum and in
teacher training; Introduce opportunities for students to develop and
showcase cultural knowledge and creativity in the production of viable
market products through a National Secondary School Culture and Creativity
Competition; develop a Culture and Enterprise course („Art‟s Business‟) for
school leavers incorporating a period of internship in local creative industries
as a means of creating innovation enterprises, employment and economic
growth; promote the creation of the Creative Cook Islands brand.
This may come at no cost, or may still require further costing
6. Government to support Creative industries and their contribution to the
sustainable cultural development of cultural assets, from minority languages
to artworks, artefacts and heritage sites. Creative industries are also
environmentally friendly as the primary input is a service (non-finite
creativity) not a finite natural resource.
Estimated Cost $100,000
7. Government to support in policy and PPP's a promising documentary industry
exists in the Cook Islands and provides an important vehicle for cultural
preservation and creativity, with the capacity for onselling to both Cook
Islands Television and Pacific Television to the Tourism sector marketing, UN
agencies with social messages to be delivered.
Estimated Cost $100,000
8. Government to support in policy and PPP's Fashion labels, independent
record labels, visual and performing arts etc can become the foundation of
the Cook Islands Creative industry growth and investment;
Estimated Cost $100,000
9. Government to support in policy and PPP's the Cook Islands, in particular, the
Pa Enua (outer islands) to become a destination for art, culture and
educational tourism.
Estimated Cost $100,000
Cook Islands Government Budget Consultation 2012-13 30
10. Government to support in policy and PPP's the development of art and craft
provides an opportunity to effectively integrate the Pa Enua into the national
and international economy and sustain their current populations.
Estimated Cost $100,000
11. Government to support in policy and PPP's the Direct marketing to the Cook
Islands population overseas for the sale of music, books, documentaries, art
works, language resources, online podcasts, and on-island cultural,
educational and creative tourism.
Estimated Cost $100,000
12. Increase focus on developing museums and cultural centres on a business
model including incorporating museum shops, cafes, organized tours.
This may come at no cost, or may still require further costing
13. Infuse Design Thinking in the Schools and Workforce - Design thinking is
essential to developing a creative and innovative workforce, and improving
business and work processes, customer-centric services and new products.
This may come at no cost, or may still require further costing
14. Research and Formalise Preservation and Promotion of cultural heritage and
history – marae, vaka ocean voyaging, performing arts, music in conjunction
with the proposed Cultural, Creative and Tertiary Education Industries
Council
Estimated Cost $150,000
15. Set aside affordable spaces/hubs in Rarotonga and Pa Enua, to encourage
enterprises and designers to collaborate and work towards cutting-edge
design-driven innovation. These Hubs to be supported with prototyping
facilities, incubator programmes and showcase events organized to
encourage cross-pollination of ideas and the creation of innovative products
and services.
This may come at no cost, or may still require further costing
16. Set up Campus's in conjunction with USP including: Agriculture School,
English Language, Marine science, Polynesian Navigation, Traditional
knowledge, Chinese Studies, Sports Science and Management, Creative and
Performing Arts.
Estimated Cost $1,500,000
17. Support appropriate institutional and regulatory frameworks to establish a
“creative nexus” that attracts investors, technology, and businesses.
This may come at no cost, or may still require further costing
18. Support Creative Industry Scholarships for advanced learning
This may come at no cost, or may still require further costing
19. Support spaces, places and conditions for networking for the development of
the creative industries.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 31
20. Support the Creative sector in developing the following industry sectors,
publishing industries (book publishing houses, newspaper publishers,
publishers of CD records and music); film industries (film, TV, video
production, distribution, cinemas); broadcasting industries (radio/television);
music, visual and performing arts (independent artists, private theatres,
nightclubs, theatrical agencies, technical stage enterprises); journalists /
news agencies; museum shops, arts exhibitions (commercial museum
activities and arts; exhibitions; retail trade of cultural goods (music stores,
book stores, galleries, art trade); architectural offices (interior, garden,
landscaping, design, building and civil engineering architects); Design
industries (industrial, product, fashion, textile and similar design);
advertising (advertising agencies etc.,); Manufacture of software/games
(development of software, games including consultancy, excluding hardware
and data processing services)
Estimated Cost $1,500,000
21. Through EDC Introduce mini grants and micro financing of small and
medium-sized creative businesses
Estimated Cost $200,000
Financial Services
Financial services have expanded over 30 years and matured into a core economic
sector. It retains significant knowledge and expertise, human resources, and is a
professionally driven industry operating to international standards.
The Task Force believes that international financial services have enormous capacity
to immediately expand and contribute significantly to economic growth. A targeted
investment in legislation and marketing will deliver these benefits to the economy.
Investment in Finance Sector is simple to monitor, faster to convert to a Return on
Investment, and has little to no impact upon the environment. The Task Force
recommends has outlined the following investments. The Task Force recommends
the following specific actions.
Cook Islands Government Budget Consultation 2012-13 32
Short/Medium Term Initiatives
1. Achieving improved governance, fiscal control and Standard and Poors
rating. PERCA reporting to Parliament and Select Committee processes re-
established
This may come at no cost, or may still require further costing
2. All Ministries and Agencies will support and contribute to the Public sector
achievement of MFEM economic benchmarks for the Crown. Eg MFEM
Personnel benchmark is 40 per cent of revenue and actual 2010--2011 is
43 per cent (proj). PSC targets should be set at "benchmark less 5 per cent"
creating headroom to the benchmark. Therefore personnel target for 2011-
2012 equates to a 38 per cent of revenue and a saving to Government of
approx $2m.
This may come at no cost, or may still require further costing
3. Amend Foreign Investor Policy: Foreign capital must enter and remain in
Cook Islands with preference to equity investments. Foreign investor to
contribute to business knowledge. Agree to mentoring obligations and
voluntary contribution of specific expertise to our nation building economic
strategies
This may come at no cost, or may still require further costing
4. Captive Insurance as a means of extending risk management strategies and
lowering (and capping) the cost of Government Insurances
This may come at no cost, or may still require further costing
5. Conduct a special review into banking with the purpose of achieving a broad
range of lending options for the market in a competitive environment.
Estimated Cost $20,000
6. Create a Foreign Investment Policy that prioritises capital inflows, makes the
Cook Islands an attractive place in which to invest and enables partnerships
with Cook Islanders to also invest in their country.
Estimated Cost $20,000
7. Encourage a savings-based economy and capital inflows by making interest
tax-free for non-residents in the domestic economy.
This may come at no cost, or may still require further costing
8. Establish a National Reserve Fund for disaster management, climate change
adaptation and National Sustainable goals under the auspices of legislated
charter and independent trustees
Estimated Cost $1,000,000
Cook Islands Government Budget Consultation 2012-13 33
9. Establish a Review (Taskforce) to evaluate various models to meet the long
term social welfare needs of the Cook Islands peoples while creating a large
pool of savings to underpin economic growth: Incorporating
superannuation, Accident Compensation, Health Insurance, Life Insurance,
Asset insurance, Education, Health services and Housing.
This may come at no cost, or may still require further costing
10. Establish an Insurance Review to examine appropriate level of Public and
Private Sector insurance particularly in regard to natural disasters, major
risks, limiting Government expenditure. TOR to include options to lower
Insurance cost in the Cook Islands, Joint Venture insurance company to
insure both Public and Private sector assets, eg 51 per cent IC Government,
25 per cent CI Public and 24 per cent International Insurance Company.
This may come at no cost, or may still require further costing
11. Establish Monetary policy regarding Cook Island savings and deposits;
incentives to encourage savings; tax free deposits for Cook Islanders
investing at home; economic development fund tailored as an option for
development partners; disaster relief trust fund; environment protection
trust fund; education trust fund; supporting policy of CI Government
appropriation to specific Funds in plan to effect appropriate advertising and
marketing of these funds for development objectives amongst foreign
investors and tourists;
This may come at no cost, or may still require further costing
12. Experienced advisor engaged by Government to work with Development
Partners and international agencies to achieve an appropriately risk adjusted
interest rate structure for capital development finance
This may come at no cost, or may still require further costing
13. Explore a joint venture for BCI with an overseas bank or sell it: 51 per cent CI
Government, 25 per cent CI Public, and 24 per cent Intl Bank
Estimated Cost $20,000
14. Foreign capital enter the Cook Islands with preference as equity
This may come at no cost, or may still require further costing
15. Increase Finance Sector marketing efforts internationally to raise the profile
of the jurisdiction and diversify our client base.
Estimated Cost $200,000
16. Investigate benefits of bringing Superannuation funds back into the country
This may come at no cost, or may still require further costing
17. Investigate Development Partners lending to the private sector via BCI
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 34
18. Mentoring program with appropriate NZ Government Financial institutions
and consider amongst others: capital raising, enabling public deposit funds,
encouraging and expanding savings and domestic deposits, Cook Islanders
come home fund, land deposits fund
This may come at no cost, or may still require further costing
19. MFEM Accounting and Reporting responsibilities, decentralised or centralised
accounting, reporting, financial control. Review the Public Sector Financial
Reporting Consultants TA report. Estimated Cost $100,000
20. Policy for BCI to be the CI Government Bank of First Choice
This may come at no cost, or may still require further costing
21. Public Sector and Public Service internal economic review in 2011-2012. A
time for Research and Innovation within the Public Service. Research topics
(a) review KPI's and Ministry Objective, (b) challenge principles behind all
2011-2012 budget appropriation, existing functions, process and methods
(c) innovate new solutions and technologies, (d) simplify outcomes and
reduce cost, (e) engage with Private sector to seek solutions and alternatives
This may come at no cost, or may still require further costing
22. Reintroduce 100 per cent depreciation to stimulate capital investment and
construction
This may come at no cost, or may still require further costing
23. Reviewing the Charter of BCI, technology systems, banking products and
services to fit the future economic needs of the economy and contribute to
the greater expansion of our economy
This may come at no cost, or may still require further costing
24. Single Depository into BCI of all Government Treasury functions (including
ministries, SOE‟s and Crown agencies), funds.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 35
25. Ten ways to approach operational expenditure decisions, budget cuts and
taking on new policy or new functions. (1) Identify, understand and review
the way you discharge Regulatory obligations. (2) Identify and adopt
applicable Government policy. (3) Analyse and prioritise the "must do"
functions. (4) Review all major budget cost items, challenge processes,
systems, established methods, apply rigor, innovation and new technology
solutions to this analysis. (5) Seek to simplify operations and administration,
reduce the number of divisions, committees and reporting agencies. (6)
Consider mergers, closures, privatisation, contracting out as solutions,
achieve expenditure savings and reduce staff numbers. (7) Take all options
into a wider group discussion and involve other Ministries, private sector and
civil society in these new ideas. (8) Stop doing functions if the objective or
benefit is not certain or clear to you. (9) Seek to secure a revenue stream for
any or all functions. (10) Convert tasks into business units, cooperatives and
Public Private Partnerships (PPP's) removing all operating costs from the
budget, placing the function into the private sector and creating an ongoing
shared revenue cashflow for Government from the partnership.
This may come at no cost, or may still require further costing
26. The Audit of the Government Crown accounts is near approaching 4 years in
arrears and an unacceptable example of fiscal non-compliance and PSC
appalling standards of performance with severe consequences upon the
Economy. The MFEM Act specifies reporting standards and Government must
introduce new accounting and audit standards to apply from the
commencement of the 2011-2012. The Audit Office and MFEM will
immediately tender all CIIC Holding and subsidiary company Audit and
Accounting services to the Private sector ensuring that standards are raised
and obligations are fundamental to the existence of these institutions.
Estimated Cost $200,000
27. The fall in our Standard and Poors rating has direct implication on the cost of
finance, a key economic component restricting business growth. The Crown
Audited Financial Statements for the year ended 30 June 2012 will be signed
off and tabled at Parliament by 30 November 2012. Therefore Audit for year
ended 30th June 2009 and year ended June 2010 will be contracted to the
private sector. Tenders will require completion of the June 2009 and 2010
audit by 31st December 2011 to enable the audit for the 2011-12 year to
complete unimpeded. Tender document will be released to the private sector
by 31st July 2011.
Estimated Cost $400,000
Cook Islands Government Budget Consultation 2012-13 36
28. The recent MFEM Act Economic Policy statement releases require significant
changes in the way we administer Government and how we do business. To
achieve these all our impact upon the economic must change. The Economy
has been forecast to achieve growth. Revenue from taxation is forecast to
rise by $8.4m a10 per cent rise in total taxation. However cost of
Government is forecast to take up 90 per cent of those gains. These revenue
targets are fundamental to how we do business in the future. They require a
commitment from every sector especially the Public sector to support and
guarantee this growth. The Cost of Government (operational expenditure)
can only be justified expenditure if that investment contributes to economic
growth. In 2011-2012 Budget Expenditure that does not achieve these
targets should not be incurred enabling saving. A target of $19m savings to
the Public Account should be the 2011-2012 target.
This may come at no cost, or may still require further costing
29. Undertake a review of the regulatory framework in the banking sector with a
view to a) understanding the factors that influence interest rate setting, and
b) managing the negative impacts of high interest rates.
This may come at no cost, or may still require further costing
30. Undertake immediate review in 2011-2012 of BCI and Banking sector,
engaging services of Sam Knowles (ex Kiwi Bank CEO).
Estimated Cost $100,000
31. Update existing Finance Sector legislation and create new legislation to allow
for new products and services that generate revenue for the trust companies
and fee income to Government.
Estimated Cost $150,000
Medium/Long Term Initiatives
1. A Strategic Review of Superannuation - Compulsory participation and level of
employer contribution: Allow Cook Islanders to choose to go into the Cook
Islands National Superannuation scheme or any Australian or NZ Government
approved scheme: Portability with NZ: Lower the fund administration costs
through a PPP: Allow the Cook Islands scheme to be invested within the Cook
Islands through ANZ or Westpac (which are currently guaranteed by the
Australian Government - ie lower risk than current investments):
Superannuation Funds would only be available for lending on residential
mortgages within the Cook Island; Arrange reciprocal portability of
superannuation with New Zealand.
This may come at no cost, or may still require further costing
2. EDC: Provide a fund for no- or low- interest loans for business in the
Economic Development Sectors (Agric, Creative, Marine) for machinery and
development projects.
Estimated Cost $500,000
Cook Islands Government Budget Consultation 2012-13 37
3. Encourage new entrants to the Finance Sector both in primary and ancillary
roles.
This may come at no cost, or may still require further costing
4. Enter into trade agreements with regional and global partners to stimulate
exports, particularly from the Pa Enua.
This may come at no cost, or may still require further costing
5. Establish and Fund an Economic Development Fund with our Development
partners to support and stimulate transition grants to new and existing
businesses with feasible plans and strong people behind them establishing in
the EDS's.
Estimated Cost $1,000,000
6. Provide tax incentives to encourage a dramatic increase in local savings.
Estimated Cost $200,000
7. Reduce the cost of regulating the International Finance sector; There are 3
SOE‟s / Government Agencies regulating this Finance Sector and their
responsibilities overlap and could be delivered cost effectively with a
rationalisation of these entities into one Regulatory Authority, retaining the 3
regulatory disciplines in separate divisions.
Estimated Cost $100,000
8. We have no alternative other than to prioritise planned investment in our
economy and change institutional view of our economic performance.
External assessments and comparisons of our economy against international
standards result in the damaging SandP view that states we are threatening
our fiscal stability through (1) weakening institutional settings, (2) erosion of
quality and unacceptable performance levels of key Public Service
appointments, (3) declining population, (4) weakening political culture, (5)
narrow tourism based economy, (6) deepening debt burden and an inability
to appreciate the urgency over the last 10 years of investment into economic
infrastructure. Our institutional framework will determine our economic
future and the cost of doing business for every Cook Islander in the Country.
Our economic policies must therefore be so aligned as is the National
Sustainable Development Plan and a reformed National Sustainable
Development Commission. These are the point of commencement of our
economic recovery.
This may come at no cost, or may still require further costing
Infrastructure
The Task Force believes the infrastructure investments of the country must be
scoped to existing industry and new economic development sector needs. These
investments will need to be prioritised, costed and funded in consultation with our
Development Partners. Infrastructure investments should also be tendered and built
to acceptable international standards with benefits of private sector participation,
Cook Islands Government Budget Consultation 2012-13 38
and business growth within the economy. Infrastructure investments are overdue;
planning for them must be implemented and completed as a priority in 2011-2012
with the physical investment completed within ten years. The Task Force
recommends the following specific actions.
Short/Medium Term Initiatives
1. Address the building code to raise minimum building standards to align with
NZ and Australia building standards. With adverse impacts and devastation
from cyclones and natural disasters the economy must invest wisely and
build better, achieving sound solutions that deliver long term sustainable
building practices.
This may come at no cost, or may still require further costing
2. Adopt policy avoiding support for experimental, trial, or pilot renewable
schemes, and implement only proven technology forming part of the overall
100 per cent renewable energy policy.
This may come at no cost, or may still require further costing
3. Adopt policy ensuring maximum opportunity for suitable qualified local
contractors to implement renewable energy projects.
This may come at no cost, or may still require further costing
4. Adopt policy to pursue lower energy cost through implementation of
renewable green energy, by using solar, wind and hydro technology.
This may come at no cost, or may still require further costing
5. Cook Islands Investment Corporation (CIIC) restructure to include activation
of Cook Islands Government Property Corporation (CIGPC) as the Corporation
with board and responsibilities for property investment and management.
Includes policy of non-competing with the private sector Landowners and
developers, thus policy for divestment to landowners. This may come at no
cost, or may still require further costing
6. CIIC: Will own/manage Watsan Infrastructure assets; consider subsidiary
Water Corpn under CIIC; Consider all options is determining Watsan Project
delivery include Build, Operate and Transfer basis.
Estimated Cost $40,000,000
7. Continue the rollout of Mini grids in all the Pa Enua – north.
Estimated Cost $6,000,000
8. Develop Donor partner 10 year budget estimates of blended grants and low
cost development partner loans to support a nationally scoped, designed,
costed, fiscally prudent infrastructure capital works plan (achieved in 2011-
0212) that incorporates agreed priority capex works for water, waste,
sanitation, renewables and transport.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 39
9. Develop the alternative reef access in Arorangi to open up opportunities to
grow our cruise business, marketing on a more reliable basis. Enable fishing
and water based activities are less weather dependent.
Estimated Cost $1,700,000
10. Emergency Management and Disaster recovery projects.
Estimated Cost $30,000,000
11. Endorse a net metering policy throughout the Cook Islands to allow private
sector grid connection for small scale energy „storage‟.
This may come at no cost, or may still require further costing
12. Endorse the Te Aponga 100 per cent renewable energy policy, with Te
Aponga as the lead implementing agency.
This may come at no cost, or may still require further costing
13. Establish a private sector tax rebate for renewable energy managed by RMD,
funded by donor funds.
Estimated Cost $2,000,000
14. Fast track renewable energy engineering and feasibility for the Pa Enua
Tonga.
Estimated Cost $6,000,000
15. Form new business PPP's for Road and Water works.
This may come at no cost, or may still require further costing
16. Introduce policy that ensures that government purchases of energy
consuming equipment is compatible with utilization of renewable energy and
is energy efficient. Prefer electric equipment over fossil-fuel fired equipment
to allow transition to renewable energy.
This may come at no cost, or may still require further costing
17. Ministries and MOIP to amend their business plans to cease undertaking
services deliverable by the private sector, and restrict their functions to
regulatory, planning and supervisory.
This may come at no cost, or may still require further costing
18. Undertake a study to assess the feasibility of upgrading the airport at
Aitutaki to full international status.
Estimated Cost $50,000
Cook Islands Government Budget Consultation 2012-13 40
Medium/Long Term Initiatives
1. A National Transportation Policy with public/private participation. Core
principles include that infrastructure capital plan is implemented,
Assumptions include - tourism numbers rise to 150,000, 100 new rooms in
Aitutaki and Pa Enua, - airports upgrade in Atiu, Manihiki, Aitutaki, Mangaia,
Penrhyn and Pukapuka. - roads in Rarotonga and Aitutaki, - economic
development sectors supported, considerable private sector investment
required.
Estimated Cost $50,000,000
2. Adopt an energy-efficiency standard similar to the NZ/Australian ‟Minimum
Energy Performance Standard‟ (MEPS) to govern the importation of appliances
and equipment.
Estimated Cost $50,000
3. Aitutaki Port and CBD
Estimated Cost $15,400,000
4. Atiu Airport upgrade, seal strip to Aitutaki standard. Atiu becomes a hub for
Mitiaro and Mauke, with services operating ex Atiu.
Estimated Cost $4,000,000
5. Harbour Developments - Mauke, Mitiaro, Penrhyn, Avitu, Avarua, Pukapuka,
Rakahanga, Estimated Cost $54,000,000
6. Implement renewable energy projects - Aitu Estimated Cost
$3,525,000
7. Implement renewable energy projects - Aitutaki Estimated Cost
$8,000,000
8. Implement renewable energy projects - Mangnia Estimated Cost
$3,455,000
9. Implement renewable energy projects - Manihiki Estimated Cost
$2,500,000
10. Implement renewable energy projects - Mauke Estimated Cost $4,000,000
11. Implement renewable energy projects - Mitiaro Estimated Cost $1,500,000
12. Implement renewable energy projects - Nassau Estimated Cost
$350,000
13. Implement renewable energy projects - Palmerston Estimated Cost
$350,000
14. Implement renewable energy projects - Penrhyn Estimated Cost
$2,500,000
15. Implement renewable energy projects - Pukapuka Estimated Cost
$2,400,000
16. Implement renewable energy projects - Rakahanga Estimated Cost
$1,100,000
17. Implement renewable energy projects - Rarotonga Estimated Cost
$200,500,000
Cook Islands Government Budget Consultation 2012-13 41
18. Implement renewable energy projects - Suwarrow Estimated Cost
$35,000
19. Investigate small scale hydro on Rarotonga for primary generation and
energy storage and integration of renewable energy to the grid
Estimated Cost $150,000
20. Mangaia Airport Upgrade, Relocate and seal new airport
Estimated Cost $4,000,000
21. Manihiki, Airport Upgrade and seal new airport. Incorporate Airport
Management within CIIC/Airport Authority
Estimated Cost $6,000,000
22. Penrhyn, Airport Upgrade and seal new airport. Incorporate Airport
Management within CIIC/Airport Authority
Estimated Cost $6,000,000
23. Pukapuka, Airport Upgrade and seal new airport. Incorporate Airport
Management within CIIC/Airport Authority
Estimated Cost $6,000,000
24. Review existing proposals for purpose designed built Ship for the Pa Enua.
Complete feasibility for operating service.
Estimated Cost $20,000,000
25. Upgrading roading for Rarotonga
Estimated Cost $60,000,000
26. Roads on Rarotonga, plan to complete following Watsan, TAU, Telecom ring
main investments
Estimated Cost $5,000,000
Marine Resources and Fisheries
These resources are our lagoons, oceans and potentially our seabed. The Task
Force believes that these are all significant underutilised assets that are available to
contribute to growing and sustaining our economy. The Task Force believes it is
imperative that a well researched and managed marine sector flows through to the
economy by way of collaborative partnerships and Cooperatives. The Task Force
recommends the following specific actions.
Short/Medium Term Initiatives
1. EDC: Expansion of FAD placement and maintenance program, activate by private
sector contracts
Estimated Cost $100,000
2. EDC: Research Pearl management programs identified and initiated, with focus
on: increased productivity, pearl quality, improved husbandry practices
Estimated Cost $1,500,000
Cook Islands Government Budget Consultation 2012-13 42
3. EDC: Support Marketing efforts for stimulus and rejuvenation of the pearl
industry.
Estimated Cost $1,500,000
4. EDC: Undertake a review of Licensing system to maximise the economic benefits
from licenses to reflect the real value of Cook Islands Fisheries to the Cook
Islands economy
This may come at no cost, or may still require further costing
5. EDC: Undertake research program to assess effectiveness of management plans
– including water quality, disease, and stock status
Estimated Cost $20,000
6. Introduce the concept of Economic Development Sector (EDS). Agriculture,
Marine Resources, Culture and Creative Industries Tertiary Education and
Commercial and Residential Property will be a approved Economic Development
Sectors. These sectors will be managed by the EDC. During a reasonably long
development period, say 5 years all revenue from these EDS in the Pa Enua will
be VAT exempt and labour engaged in the sectors in the Pa Enua will be tax
free. The MFEM will cost these exemptions and confirm to Government that they
are sustainable exemptions that do not reduce or deplete the tax revenue
estimates. In partnership with Government our development partners will be
encouraged to provide support during the development period.
Estimated Cost $500,000
7. MMR: Complete the exploration, boundary delineation and sovereign
negotiations to secure the nations EEZ and Cook Islands seabed .
This may come at no cost, or may still require further costing
Medium/Long Term Initiatives
1. A focus of the EDC to Improve EDS income generating opportunities for the
private sector particularly in the Pa Enua, increase technical and scientific
assistance and support new industry establishment.
Estimated Cost $200,000
2. EDC and MMR - Marine conservation, biodiversity and eco-tourism: Support the
protection and conservation of our natural marine biodiversity, it‟s affiliated
customary practices and knowledge and potential commercialisation such as
marine eco-tourism.
This may come at no cost, or may still require further costing
3. EDC and MMR support: Plan a strategy for exploration of other mineral or
petroleum resources.
This may come at no cost, or may still require further costing
4. EDC: Develop the strategy to advance Cook Islands business interests, expand
economic development and fulfil its international and regional obligations in
regard to offshore fisheries Estimated Cost $50,000
Cook Islands Government Budget Consultation 2012-13 43
5. EDC: With support from Marine resources Offshore industry development plan
prepared and implemented in PPP's with fishing industry, licence holders and
stakeholders: infrastructure, USP Marine School, markets, products, capacity
building in private sector.
Estimated Cost $50,000
6. EDC: Build stakeholder capacity to develop, operate successful business in this
sector; integrated with development and implementation of appropriate fisheries
management plans.
This may come at no cost, or may still require further costing
7. EDC: Commercialise potential business opportunities using Cooperatives and
PPPs active in marine eco-tourism, pharmaceutical and traditional medicine
research.
Estimated Cost $100,000
8. EDC: Develop and expand production base for profitable farming including
extending to other islands.
Estimated Cost $1,000,000
9. EDC: Develop Cooperatives/PPP's for sustainable fishing and conservation
practices resulting in long term food security and traditional subsistence
practices.
Estimated Cost $200,000
10. EDC: Functions to include Research programs to: identify and develop new
management and market opportunities, establish production/farming and
increase profitability, sustain and add value to the resource, Secure funding for
innovation and research.
Estimated Cost $100,000
11. EDC: Manage with MMR non-living marine resources (nodules). Policy support of
the wise research program into our non-living marine resources in cooperation
with private sector and recognised international corporations for our long term
sustainable development.
This may come at no cost, or may still require further costing
12. EDC: Merge Pearl Authority functions into EDC. Rejuvenate Pearl Industry
through a growers cooperative and improved productivity and environmental
management.
Estimated Cost $50,000
13. EDC: Record and protect the traditional knowledge and cultures of marine
resources.
This may come at no cost, or may still require further costing
14. EDC: representing the committed stakeholders (e.g. industry, Researchers,
Island Councils, Cooperatives etc) work to integrate and implement development
plans.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 44
15. EDC: Support Pearl farmers management decisions using improved knowledge
and information, to improve profitability.
This may come at no cost, or may still require further costing
16. EDC: With MMR advisory support analysis and priorities for investment in the
development of new and existing aquaculture and commercial inshore fisheries
opportunities.
Estimated Cost $200,000
17. EDC: With Marine Resources - Inshore Fisheries and Aquaculture Development:
Develop Fishing Cooperatives Improving income generating opportunities and
scale of operations for the private sector particularly in the Northern Group,
through increased provision of technical and scientific assistance, direction of
machinery/Equipment Grants and utilisation and operation of Penrhyn research
station.
Estimated Cost $200,000
18. EDC: With Marine Resources acting in Offshore Fisheries Development: Expand
private sector income earning opportunities from sustainably managed offshore
fisheries through capacity building, and infrastructure and market development,
quota's, distribution and processing, associated businesses being supported by
Offshore Fishing Development.
This may come at no cost, or may still require further costing
19. EDC: With Marine Resources will promote and partner small scale fisheries and
aquaculture Cooperatives/PPP's; utilise where possible, knowledge of our license
holders to exchange knowledge gain experience and develop domestic fishing
using the international capacities and expertise of our partnering license
holders.
This may come at no cost, or may still require further costing
20. EDC: With Marine Resources will promote Marine eco-tourism links in Pa Enua
using PPP's and Cooperatives.
This may come at no cost, or may still require further costing
21. EDC: With support from Marine Resources will develop, expand and diversify
offshore fishing via designated and exploratory licences. The license enables
the fishing industry in the Cook Islands and new conditions of these licenses will
include guarantees to support, priorities and contribute to economic growth of
the Cook Islands business sector. Licenses shall be an avenue for growth of our
fishing industry, enabling fishing cooperatives and PPP's and overlaps into other
marine products and other businesses in the EDS of the Cook Islands.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 45
22. Incorporate surveillance and monitoring systems within our CI industry
expansion plans to meet identified compliance and research needs, effective
management of offshore fisheries, and regional / international obligations,
consider privatisation and enabling private sector participation in these
functions.
This may come at no cost, or may still require further costing
23. MMR: Ensure monitoring and compliance of lagoon and management plan and
farmer code of conduct particularly on Manihiki.
This may come at no cost, or may still require further costing
24. MMR: Invest in Certification and sanitary systems to improve quality and market
access to international markets e.g. EU, USA and Japan.
Estimated Cost $20,000
25. MMR: Research development plans for species and opportunities identified as
having the most potential (chosen from tuna, deep sea fish, trochus, giant
clams, live rock, seaweed, prawns, milkfish, aquarium, parrot fish, snapper,
etc.), and support EDC to develop Cooperatives and PPP's with business.
Estimated Cost $200,000
26. MMR: Support the USP Maritime School, website and communications strategy
and Improve Marine industry analysis and policy advice to Government.
Estimated Cost $500,000
27. The EDC to facilitate research and development functions to Improve the quality
of Marine product through better farm husbandry systems, based on enhanced
techniques, capability building, resulting in increased production.
Estimated Cost $200,000
28. The EDC to expand income earning opportunities from sustainably managed
offshore fisheries, through Cooperatives, PPP's capacity building, infrastructure
and market development, fisheries management plans and innovative strategies,
research and monitoring.
Estimated Cost $200,000
29. With EDC support, access International Agencies and Institutional technical
advise for the establishment of a seabed nodule mining industry around
appropriate International environmental preservation standards.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 46
Public Sector
Short/Medium Term Initiatives
1. An anticipated outcome of the new Economic Development policies will be the
resetting of priorities. Recognising these priorities will identify the clashes
between available time and capacity and budget capacity/appropriation and
finance. The recalculation of priorities towards those supporting private sector
growth and the economy will determine the ranking of these options and the
alternatives requiring further consideration and revised decisions.
This may come at no cost, or may still require further costing
2. Communication strategy to engage the nation with information about the new
economic development policy. Coverage specifically to all sectors from Public to
Pa Enua, Civil Society and communities in our economy. Strategy will inform the
country of economy's needs, the innovations and new policies and strategies
essential for the achievement of change
Estimated Cost $100,000
3. In adopting new Economic policy for the development of private sector led
economic growth, ministries will recognise that achieving these policy outcomes
requires not only adjustment to their business plans but also a refocus Ministry
resources towards domestic investment (expenditure) ie outcomes directed
specifically to growing the economy.
This may come at no cost, or may still require further costing
4. International representation and strategies to establish new international
relationships be deferred infavour of National objectives to balance the budget.
This may come at no cost, or may still require further costing
5. Ministries and Agencies will cooperate with Private Sector to align economic
strategy, development plans, business opportunities, partnerships, effective
collaboration, and "how to" solutions and capacity building,
Estimated Cost $100,000
Cook Islands Government Budget Consultation 2012-13 47
6. Planning in the Economy. Economy growth requires a strategic coordination of
all sectors in the economy. The process of planned economic development
involves participation of all sectors of society in determining the best options for
the Nation. Whilst planning is a continuous process, to be effective it must drive
actions and outcomes otherwise it is sterile and meaningless. In the same way
the outcomes of a plan to action must be assessed, evaluated and be influential
in the physical performance and advancement of Government actions and well
as controlling the ongoing corrective cycle of strategic planning. The process is
dynamic, interactive, integrated, innovative and vigorous, demands action and
performance of all Ministries and Crown Agencies. Therefore the 5 year National
Sustainable Development Plan will be incorporated in every Ministry and Crown
Agency Business Plan who will each be tasked to achieve these outcomes. The
NSDC will be restructured to include representation of all sectors in the
economy, civil Society, the Private and Public sector; once the 5 year plan is
established it will be ongoing, critiqued, evaluated, adjusted and added to
annually, providing the strategic direction for sustainable social and economic
development. The National Sustainable Development Commission will receive
bi-annual reports from OPM supported by PSC and CIIC detailed reports
assessing their ministries and corporations performance in delivering the
business plan. The NSDC will maintain a website and provide an independent
updated report quarterly to the Public upon the progress to implement the
National Plan.
Estimated Cost $100,000
7. Population 10 year statistics . Change is an economic necessity. Population
Residents in 2001 - 18,027, PS employees 1,708, workforce then 9.5 per cent of
Population. Residents in 2011 - 10,800, PS employees 1,736, workforce now
16 per cent of Pop. 1,736 employees to administer 10,800 people is not
efficiency or economically justifiable.
Estimated Cost $100,000
Cook Islands Government Budget Consultation 2012-13 48
8. The effective delivery by the Public Service Commission (PSC) of its functions
impact directly upon the efficiency of the economy. The PSC has a key role to
ensure regulatory responsibility is a core Ministry outcome. Ministry business
plans must be aligned to their regulatory requirements. PSC systems must
ensure compliance and timely performance are key deliverables. Business plans
must also align to Government policy. They must reflect what functions each
Ministry should administer. Therefore staff performance and continuing
employment should be subject to these requirements. Budgets must align only
to these outputs. The efficiency of the PSC and the public sector is best
expressed in the performance outputs of Ministries, employee work habits, team
spirit, respect for work standards. When comparing these to the size of the
workforce and labour cost to the economy the key performance indicators are
not good and could be significantly more effectively implemented. Better use of
procedures manuals, staff education and training programs to raise performance
level and accountability could quite likely reduce staff numbers.
This may come at no cost, or may still require further costing
9. The PSC current reform should coordinate its policy implementation with
Economic Task Force recommendations in establishing the functions to be
undertaken by each reporting agency, including functions and outcomes that
support economic development policy, modernise and centralise functions,
update employee contracts terms and conditions of employment, strict
performance evaluation, every employee to undertake training and continuing
education requirements, provision of service manuals and customer service
levels of standard.
This may come at no cost, or may still require further costing
10. This Communications strategy will include employing a Press Secretary solely
responsible for managing the communication strategy, the website, an economic
development newsletters, specific training programs to be effective immediately
and coordinating the planned focus during 2011-2012 Budget year.
This may come at no cost, or may still require further costing
11. To achieve rising incomes and economic performance invest in education. The
Ministry of Education will review their budget strategy and capacity to meet the
market and employ appropriately qualified teaching staff. This outcome is
fundamental to raising the academic teaching standards. Transition costs to be
met by Development Partners.
Estimated Cost $5,000,000
12. Up skill and focus resources of ICT Department to manage communications
strategy for Economic Development policies and strategies, coordinate with ETF
and CIIC.
This may come at no cost, or may still require further costing
Cook Islands Government Budget Consultation 2012-13 49
Medium/Long Term Initiatives
1. Develop a 10 year national sports and events development plan and assist with
its implementation with a view towards specific performance goals in; Cook
Islands Games, Pacific Games, Commonwealth Games, Olympic Games, World
rankings in prioritised team sports and individual sports.
Estimated Cost $350,000
2. Establish a Sports Institute and Integrate with CISNOC, Institute of Sports
Excellence, USP School of Sports Science, SENZ, Sports and Event Tourism,
National Federations and their International federations.
Estimated Cost $1,500,000
3. Implement the National Sports Policy and Sports Act; a framework for the
development of Sport.
Estimated Cost $5,000
Tourism
Whilst the tourism sector has matured over its 30 year life and appears well
established, and even mature in some aspects, it has not generally been able to
produce the returns essential for reinvestment of its aging plant and wealth
creation. The Task Force believes the sector holds significant potential for growth
and innovation and is the key to the comprehensive expansion of our national
economy. The Task Force recommends the following specific actions.
Short/Medium Term Initiatives
1. Construct Walk ways and cycle ways around Rarotonga, Aitutaki and all Southern
Group by linking in with the NZ Cycle Way promote eco-tourism, and co-
branding in international markets with Tourism NZ.
Estimated Cost $450,000
2. Continue aviation underwrites through government subsidy of the Los Angeles
and Sydney routes.
Estimated Cost $12,000,000
3. Coordinate Internet Marketing for the Cook Islands and include in all marketing
plans.
This may come at no cost, or may still require further costing
4. Develop a Cook Islands biological and organic foods brand for tourism, export
and local consumption.
Estimated Cost $100,000
5. Develop a Tourism Master Plan 2011-2021.
Estimated Cost $100,000
6. Enforce Lagoon Management Plans for Rarotonga and Aitutaki.
Estimated Cost $250,000
Cook Islands Government Budget Consultation 2012-13 50
7. Implement Strategy to establish Bird Sanctuaries appropriately located
throughout the country.
Estimated Cost $100,000
8. Improve destination sales and marketing including restructured head office and
overseas offices.
Estimated Cost $2,000,000
9. Institute policy that supports the establishment of a retirement home industry
preferably in the Pa Enua.
This may come at no cost, or may still require further costing
10. Integrated Tourism strategy; Ensure Lagoon Management Plans and Raui
supported by Legislation on Rarotonga and Aitutaki.
Estimated Cost $50,000
11. Link environmental preservation and branding into the overall destination
development strategy and brand image.
This may come at no cost, or may still require further costing
12. Measuring Economic impact of tourism.
Estimated Cost $100,000
13. Revitalise Tourism and Cook Islands brand.
This may come at no cost, or may still require further costing
14. Tourism education programme; specialist hospitality training and education.
Estimated Cost $250,000
15. Tourism infrastructure development for Aitutaki, Aitu, Mangia, Mauke, Mitiaro,
Northern Group.
Estimated Cost $6,000,000
Medium/Long Term Initiatives
1. Develop a distinctive Cook Islands cuisine based on fresh, local, organic foods
and the best of international food trends.
Estimated Cost $300,000
2. Ensure Raui to be supported by legislation on Rarotonga and Aitutaki.
Estimated Cost $250,000
3. Establish Events Tourism drawing upon our Cultural and Creative Industries, our
expanded, refocused private sector developments in Agriculture, Fishing,
Natural Resources, Sport and Trade and Enterprise.
Estimated Cost $350,000
4. Management plan for reserves parks, flora and forna.
Estimated Cost $250,000
5. Redevelop Punanga Nui to a six day, all weather, day and evening market
including; specific markets for fashion, arts and craft, pearls; food court;
farmers market; produce auction house.
Estimated Cost $250,000
Cook Islands Government Budget Consultation 2012-13 52
Why the Government is undertaking a Functional Review
The Government has indicated from the outset that it is committed to reviewing the
machinery of government- particularly reviewing the public service and crown
agencies toward better defining what it „should‟ and „should‟ not do, and what is
best left to the private sector. The overall outcome of the review is to improve the
performance of government and to enable government to focus on what it must and
should do- and do it more effectively and efficiently.
This means that improved performance toward defined outcomes „drives‟ the skill
requirement of the public service. The number and type of staff required is
determined by the outputs set by government.
Improving the performance of the public service by re-defining its role and scope
and the manner by which it conducts its business requires a robust methodology. It
requires a set of „ Guiding Principles‟ directed toward achieving a public sector that
undertakes an agreed set of functions and with staff who understand and are
committed to outputs and quality performance.
With this in mind, the Government commenced in March 2011, a Functional Review
of the public service with the assistance of the Asian Development Bank. The
Functional Review is being undertaken in two phases:
Phase 1 – Assessing the current Public Service functions:
what government must do (as defined in the Constitution, Legislation and
binding bilateral and international Treaties;
Assessing what government should do (as required in key strategic
statements such as the National Strategic Development Plan, and as
suggested by reviews such as that conducted by the Economic Task Force);
Using decision trees and other tools to determine what is not the core
business of government and should be: left to the private sector; contracted
out or simply, stopped.
Phase 2 – Detailed design for implementation of the changes to the scope and
functions of government and implementation, to achieve a function based
performance- centered public service with staff that have the right skills for the job
and are committed to outputs and long term outcomes.
Cook Islands Government Budget Consultation 2012-13 53
What the Functional Review Will Cover
Traditionally government is comprised of three distinct branches, the Judiciary, the
Legislature and the Executive. The Executive consists of the Public Sector which is
made up of the Public Service, Crown Agencies and State Owned Enterprises. The
functional review focuses on the Public Service and to a lesser degree on Crown
Agencies. It does not include State Owned Enterprises.
The Functional Review Team has established a set of guiding principles which will
underlie both their approach to the tasks, and their recommendations. The
principles can also be used in the future, after the recommendations of the review
are implemented, to determine the validity of proposed new functions or to
continue the process of reviewing existing functions to ensure government
continues to focus on what it defines as its core business.
Clarifying the Scope and Depth of Government
The scope of government relates to the overall functions of government. That is:
the range of functions that government undertakes. For example the government
performs functions in the health, education, justice, finance, economic,
infrastructure, environment, transport and policing sectors.
The depth of government relates to the functions that are performed within
individual organisations in government, for instance in education you may have
functions relating to the provision of pre, primary, secondary, vocational and
tertiary education.
Defining the current scope of government
Defining the role and scope of government requires addressing the three critical
questions:
What must government do?
What government „should‟ do?
What should government not do?
The answers provide a baseline of functions, clarifying what government is doing
currently, and outlines criteria on what it should and should not be undertaken.
Guiding principles 1 to 4 are the basic framework for determining the functions
that government must undertake; should undertake and should not undertake.
Cook Islands Government Budget Consultation 2012-13 54
Relocating a function will require identifying which organisation- within or outside
government- would be best placed to undertake that function (e.g. contract it out;
a public private partnership arrangement; or privatisation).
Ceasing a function will then leave it for the market or civil society to determine
whether it needs to be undertaken, or it can become an individual responsibility.
The Functional Review Team have identified from the Constitution, and relevant
legal documents, all the functions that are contained in these documents and are in
the process of classifying them according to the Guiding Principles below.
Guiding Principles 1 – 4 for Determining the Scope of Government
Guiding Principle
1 –
What government
must do
The core role for government is in performing legal and
regulatory functions for the „peace, order and good
government of the Cook Islands‟ as defined in:
the constitution of the Cook Islands;
government legislation; and
regional and international treaties
Guiding Principle
2 and 3 –
What should
government do
Government „should‟ perform or facilitate the provision of
services required for planned development, whether
economic, social or environmental. This should link to the
National Strategic Development Plan (NSDP) and other major
bodies of work including the output of the Economic Task
Force (ETF), Budget Support Group (BSG) and commitments
made by Government during the election.
In some cases government will perform these functions itself,
in others it may facilitate the services but not perform them
(e.g. establishing a Hospitality Training school, which is of a
broad economic value); or regulate the function but not
deliver it (e.g. private health or education facilities).
Government should, in the interests of human rights and
equality of access to services, finance social obligations which
enable equitable or essential delivery of services which are not
undertaken by the private sector or NGOs.
Social obligations are the provision of finance or services by
government, where the potential revenue is outstripped by
cost of service provision.
In these instances government‟s obligation is to take up
unprofitable services that other sectors will not undertake, or
will only undertake if financed by government. These are
Cook Islands Government Budget Consultation 2012-13 55
generally undertaken for social or law and order reasons (such
as unprofitable street lighting; inter-island shipping services;
and telecommunications to the Outer Islands) and are in
deemed in the public interest.
Guiding Principle
4 -
What should
Government not
do
Government should not compete with the private sector or
undertake functions that can be done by a functioning
market, to service standards determined by government.
This addresses the requirement for best practice government
and can be summarised as:
reducing the service delivery role;
strengthening the regulatory role to improve service
delivery;
eliminating duplication both within government and
between government and the private and NGO sectors;
consolidating services; especially of common functions and
outsource where effective and commercially viable ;
strengthening partnerships; and
encouraging innovation.
Defining the Depth of Government and Grouping Functions into Sectors
The Functional Review Team are utilising a commonly used framework4 for
grouping government functions.
The scope of government will be primarily grouped into policy, regulatory,
coordination, service delivery and support functions. Under each grouping will be
the grouping of functions this will assist in eliminating duplication and improving
efficiencies.
Group 1 - Policy functions: such as strategic planning, legal drafting, development
of performance contracts, minimum standards, norms, policy analysis and
evaluation, forecasting. These functions tend to be regarded as „inherently
governmental‟ requiring specialist skills, and are usually provided by core ministries
within central government.
Group 2 - Regulatory functions: such as licensing, certification, market sector
regulation, permissions, accreditation, inspection, compliance and financial audit.
These functions are also often regarded as „inherently governmental‟ and provided
by statutory commissions and other arms length bodies within central government.
It is widely maintained that regulatory functions should be separated from those
4 Methodology for Functional Review DAI 2006, Bannock 1999
Cook Islands Government Budget Consultation 2012-13 56
policy functions that determine the regulations, and service delivery functions that
provide services to customers.
Group 3 - Co-ordination, supervision and performance monitoring functions: such
as coordination relationships between different bodies, monitoring the performance
of subsidiary bodies, facilitating and enabling subsidiary bodies to reach their
performance targets. These functions also tend to be regarded as „inherently
governmental‟ and undertaken by core ministries.
Group 4 - Service delivery functions: such as the provision of products or services
to internal (other public bodies) or external (farmers, foresters, fishermen)
customers. Service delivery is often provided outside of central government
through contracting arrangements or by sub-national government. When
undertaken by central government this is normally performed by supervised bodies
or executing agencies.
Group 5 - Support functions: such as financial management, human resources
management, information systems, infrastructure, staff training, efficiency review
and management audit; and secretarial services. These are increasingly contracted
out except when regarded as inherently governmental for security or other reasons.
Guiding Principles 5, 6 and 7 are aimed at consolidating linkages between and
within the above groups, and improving efficiencies of delivery of the function.
Guiding Principles 5 – 7 for Determining Functions of Government
Guiding Principle
5 –
Ensure Functions
are Vertically
Aligned
Ensure identified functions (what the Ministry does to achieve
its sector goals) are clearly linked to the sector goals.
In a whole of government review of the sector goals, the
scope of government must be identified first (Guiding
Principles 1-3) The functions - how it is done can then be
allocated to the appropriate sector and clearly aligned to the
scope and sectors of government.
Guiding Principle
6 –
What should
government do
Ensure Sector Ministry reviews focus on identification of:
Core functions, linked to an agreed scope
Non-core functions that must 'stay' since they are:
essential; or
cannot be better placed anywhere else.
In some cases a function may be core to government but
located in an inappropriate sector (non-core to the sector).
Cook Islands Government Budget Consultation 2012-13 57
In other cases a non- core function may have to stay,
because it is essential and there is no better option for its
location
Guiding Principle
7 -
Identifying Non
Essential functions
Assessment of non-core functions which are „non-essential‟
and could be placed somewhere else to determine whether
to:
do nothing; but „ring-fenced‟ for further action;
integrate and consolidate within another internal function;
split the function to retain the core component;
transfer out;
contract out;
privatise; or
cease.
How the Functional Review Team will Move Forward
Using the above guiding principles the Functional Review Team will undertake a
process to identify what should be done by government.
1 If a function is identified as something government „must‟ or „should do it can
be confirmed as such through a simple analysis.
2 If a function is confirmed as valid, then a recommendation will be made as to
whether that function is best done within government or could be undertaken by
the private sector or NGO‟s
3 If a function is determined as best undertaken within government a decision
must be made as to whether it is a „unique‟ stand-alone function or whether it
can be merged with other common functions to improve technical breadth and
depth of the combined functional group and improve efficiency of delivery.
What the Functional Review Team will do
There are essentially six steps to be undertaken by the Functional Review Team in
making a recommendation to Government, they are:
Confirming functional requirements emerging from the Constitution; legislation
and treaties.
Confirming sectors using legal, constitutional and strategic planning
requirements (NSDP).
Comparing legal and constitutional requirements with business plan functions;
identifying gaps and overlaps and core/ non-core functions.
Grouping core functions under sectors and develop exit strategies for non-core
functions.
Cook Islands Government Budget Consultation 2012-13 58
Functional Review
Final Report on
Structures to Cabinet
16th November 2011
Preparing high level function-based organisation structures for each sector.
Developing options for sector management.
Cook Islands Government Budget Consultation 2012-13 59
Budget Consultation
Submissions due
31 October 2011
5. PROVIDING YOUR FEEDBACK
The Government of the Cook Islands welcomes your documented feedback on how
it can improve its delivery of results to Cook Islanders in the most efficient way,
submitted via
Email to : [email protected]
subject heading: Budget Consultation Document 2012-13
OR
Post to : Budget Consultation Document 2012-13
Ministry of Finance and Economic Management
PO Box 120
Avarua, Rarotonga
All submissions should be received by 31 October 2011 and will be considered by
relevant departments as an input into the planning process for the 2012-13
Budget.
All submissions and their authors will be uploaded and made publicly available on
the MFEM website www.mfem.gov.ck unless otherwise requested.
For further information please email [email protected] or call our Budget
and Economic Policy Division on +682 29511.