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2021 Appropriation Bill 2021 – Debate notes: Leader of the Opposition
Hon. Matthew C Wale
Isaiah 45:9 “Woe to him who strives with him who formed him, a pot among earthen pots! Does the clay say to him who forms it, ‘What are you making?’ or ‘Your work has no handles’?”
We know that our God creates out of nothingness. He commands and nothingness obeys it and becomes something. Out of nothing he makes the clay and out of clay he makes us – his pottery, his possession, destined for his glory, in total dependence on him.
Psalm 100:3 “Know that the Lord, he is God! It is he who made us. And we are his; we are his people, and the sheep of his pasture.”
We are sheep. God’s sheep. This should remind us to be humble before God and to respect one another.
Isaiah 33:21 “The Lord in majesty will be for us!”
The Almighty Creator is for us, and not against us.
Romans 8:31 “If God is for us, who can be against us?”
Covid-19 may claim our lives on earth, but God guarantees our eternal salvation.
Isaiah 64:4 “No eye has seen a God besides you, who acts for those who wait for him”
Can we think of anything that is more comforting and assuring and delighting than that the Lord in his majesty is for us?
In these uncertain and difficult times, I hope that we are encouraged by these readings, and fix our eyes upon Jesus Christ our Lord, the author and perfector of faith and wait for him.
I read recent reports of Christians in PNG who assert that they do not need to be vaccinated or take precautions against covid-19 because God will protect them. Unfortunately, this is a half truth. God does protect, but he also expects us to use the wisdom he has given us to exercise discipline and responsibility. This must be the clear message to our own people. God protects, and in the current circumstances his protection can be through social distancing, hand washing, cough hygiene, and vaccines. Our love for our neighbor compels us to do the things that are necessary to not put ourselves at risk. We all have a responsibility to each other – the wealthy and the poor, the educated and the uneducated, the old and the young.
Our trust in God, and our life in Christ, compels us to be responsible sensible citizens.
I note from Australian news that the Australian government is concerned about rare blood clots from AstraZeneca vaccines in young people, so they have decided that only those above 50 years old will receive that vaccine. The wisdom God has given us demands that responsible sensible government considers this development and ensure there is another WHO certified option for those under 50.
Let me turn briefly to the matter now before the House, the 2021 Appropriation Bill 2021.
We are truly in difficult and uncertain times. 2020 and 2021 will be remembered as representing some of the hardest social and economic challenges the world has faced in peace time. Solomon Islands has not been spared. The alarming spread of covid-19 throughout the world and the consequential shutting down of entire economies around the globe for periods at a time have had adverse effect on all countries, even on the few who are untouched by the virus itself.
Vaccinations represent hope in the current circumstances. However, it cannot work if only some of the world are vaccinated. This is a serious challenge as we witness vaccine nationalism dominate government policy responses worldwide. Developed countries have better access to the vaccines and some may even be hoarding them. Countries that depend on vaccine donations cannot have control over the timeliness of their vaccination campaigns. Vaccines and the roll out are critical economic policy issues, as well as being health issues. This is a serious policy consideration for Solomon Islands.
On the economy, Solomon Islands has experienced low GDP growth over several years. However, that growth has not been inclusive, in spite of the rhetoric. The economy went into recession in 2020 and is projected to come out of recession slowly in 2021. This has made the situation worse for many sectors of our economy and society. Over the past several years, the wealth created by economic growth in our economy has been concentrated in the hands of a few on the back of exploitative industry. The majority of our people have continued to live on the margins, barely surviving and just getting by. The current economic situation has simply made this much much worse for many of our people. Of course, subsistence economy provides a safety net, but this is increasingly not so for many people, especially in Honiara and other urban centers, at least 15% – 20% of our population. And for many of our people in the subsistence economy, they struggle when they interact with the cash economy in terms of school fees, transportation, health, clothing, permanent building, and other needs. It is no longer responsible for government to rely on the safety net of the subsistence economy to carry the burden during hard times. That it does is bonus, but the government must induce the economy to produce inclusive growth that benefits everyone. This is not rocket science, but it requires a clear vision, political will and commitment.
In the current economic model, it is fair to say that social and economic injustice will continue to be perpetrated as resources are exploited, the environment is degraded, taxes are evaded, transfer pricing endures, wealth inequality increases, income inequality becomes entrenched, the poor are unable to afford education for their children and get left out of opportunities to flourish, national infrastructure continues to deteriorate, the quality of health facilities and services continue to deteriorate, the cost of education continues rise, the people lose trust in government, and those disempowered and disenfranchised in society will resent the few that get more. These are all ingredients of social disharmony. And they are also links in the chain that strangles the economy. The economy we must build is one that values the input of all its people. Women in particular must be encouraged to be active participants. An economy with over 90% of its workforce employed in meaningful jobs earning a reasonable income will flourish, whether it be in the formal or informal economy. It would be true and meaningful redirection if the government takes the hard steps and decisions that will transition our economy to a truly inclusive one. It can be done.
To illustrate this point, a father of six recently came to me. His family lives in a leaf hut on the outskirts of Honiara where there is no running water, electricity or road access. They mostly eat from the garden they planted around their house on land that does not belong to them. His eldest three children are at high school, and the youngest three are still in primary. He is only able to afford to meet part of the school fees for primary school for the younger ones, and struggles to pay for uniforms. He is working hard to at least get his older kids into high school class, but the school insisted on payment of half the term’s school fees. The result is three young Solomon Islanders who are unable to attend classes. The anxious father asked me whose fault it is that his three kids can’t attend classes – is it his fault? He works two jobs but still does not earn enough to afford education for his kids; is it the kids’ fault for being born into the wrong family? I looked into the anxious father’s eyes and could see a man who has hopes for his children to have better lives than him. Without continuing their education, there will be opportunities that they will never be able to access. And the evidence is, children who drop out from schooling are likely to end up with similar situations with their own kids. So a cycle is created that may end up in poverty. This is not the kind of Solomon Islands we want to build. But it is perpetrated by the kind of economy we have. This must change, and we can change it. When the minister said that this is a budget for all the people of Solomon Islands, I immediately thought of this father and his family.
Young people complain of the lack of opportunities for them. Their youthful passion and energy can be put to productive use. But it needs an economy that appreciates and values inclusivity and rewards creativity. Young people coming out of the education system have no realistic hope of finding employment and meaningful opportunities. The government has the responsibility of giving hope to our young that they have a meaningful role and place in our economy and society. That their good creative ideas can lead to opportunities. We cannot use the covid-19 pandemic as an excuse for the lack of these opportunities for our young. Our economy before covid-19 did not offer much of such opportunities, and the way we are going, the economy post covid-19 will be much the same.
The Minister spoke of the need for strong ethical leadership, and how I wish this to be true in our governance. We desperately need it both at the political and administrative levels of government. However, there is a disconnect between the rhetoric and reality. Our people do not trust government because of poor decision making that is perceived, rightly or wrongly, as compromised because of personal vested interests. We do need strong ethical leadership that is not afraid to do the right thing, as was pointed out by the Minister. We need such ethical leadership so that there is meaningful reform of the forestry sector, the minerals sector, and so on. National interests in these sectors have been compromised by our own government for other interests. So I agree wholeheartedly with the Minister that we need ethical leadership. We need ethical leadership to ensure that the determined value for logs is equal to the international market price. We need ethical leadership to ensure the determined price for bauxite ore is equal to the international market price. We need ethical leadership to ensure the meager resources of the government are shared equitably, not on political affiliations and cold calculations. We need ethical leadership to not accept money from loggers and thereby be beholden to their whims and interests.
I was particularly encouraged by the Minister’s statement that the government does not blame anyone for the socio-economic problems the country has faced since independence. This is the first time I have heard this from the government. This is a sign of growing maturity. The Hansard is full of finger pointing and the blame game, as recent as last year. Blaming our founding fathers does nothing to address our problems and challenges. If they were here and allowed to compare their situation to ours and permitted to play the blame game – I wonder what our found fathers would say about what we have been able to do, or not do, or destroy during our time in leadership. But it is a sign of maturity to accept that we must make the best of the challenges and opportunities we face when we are in leadership. Blaming others does not fix anything, it only betrays immaturity. As leaders we must accept our responsibility to lead and build a Solomon Islands that we are proud to bequeath to future generations of Solomon Islanders.
The government has set the theme for this budget as “Towards a path to economic recovery: advancing growth and service delivery through better partnerships”
Hanging from this overall theme are five objectives of the government’s redirection policy aimed at protecting citizens and communities while making the economy more resilient and sustainable.
The five objectives are:
- Ensuring that the economic and social wellbeing of all Solomon Islanders are protected through improved service delivery and preventing the spread of covid-19;
- Redirecting resources to economic recovery;
- Prioritizing and targeting growth investments under productive and resource sectors;
- Improving the quality of expenditure and access to essential services; and
- Maintaining responsible and prudent macroeconomic and fiscal management.
The government believes the economy requires structural change in response to the effects of covid-19 to:
- Immediately address the health pandemic and protect the vulnerable;
- Dampen or mitigate the damage it has dealt to the economy; and
- Strengthen the future economy and bolster its resilience.
The government has directed that ministries plan and implement the 2021 budget focused on fundamental, productive, and resources sectors, additional to the social services. And to ensure that these redirection objectives are met, the government has adopted a top-down approach in directing what gets funded and given priority in those sectors.
Parliament is being asked to approve the 2021 budget as the primary tool of the government’s redirection policy. To do so, it is critical that parliament first understands what the redirection policy means, and to then see if the budget, both in general and in its detail matches the redirection policy, so that it is reasonably clear to see whether budget outcomes can be delivered. It is one thing for government to point to the budget outcomes it wants to see delivered, and as we know from our own frustrating experience, it is often quite another thing altogether what actually gets delivered, or in some cases, if anything gets delivered at all. Robust realistic planning and budgeting processes and discipline in budget execution are essential to delivering on government’s desired budget outcomes.
It is important then to start by asking how robust the planning and budgeting processes have been in ensuring that this budget is realistic, reasonable, has the priorities appropriate for this time, contains funding levels that will make a difference in achieving the outcomes (‘adequate for purpose’), and is deliverable based on adequate capacity in the machinery of government.
Planning, budget processes
At the outset, let me first congratulate government on this point. Given the uncertainty of the times and the urgency to outline an appropriate fiscal policy response, ministries received clear instructions as to what government’s priorities are for the 2021 budget. The PMO in particular has been providing the policy leadership we have not seen for many years. This is to be applauded. However, let me make just a few observations on this matter. First, it is obvious there is lack of depth in the dialogue between ministries and PMO & Finance. Some ministries described the process as a one-way dialogue, perhaps even a monologue. More value could have been achieved by harnessing line ministry experience in what is likely to work and what hasn’t. Ministries submitted to the top down approach taken, and excused the shallowness of the dialogue on that basis. There is a certain level of resignation to it. When we look at the budget details, it will become clear the implications of this problem.
Secondly, although funds are allocated under line ministry heads, some ministries fully expect that implementation decisions will be made by the PMO. This is problematic on a number of fronts. It is likely to cause unnecessary bottlenecks in both decision making and implementation, as ministries become indecisive and wait on direction from the PMO. Further, it is likely to disenfranchise the technical cadre in the relevant line ministries, which could adversely affect staff morale and result in absenteeism. It is also likely to lead to the politicization of budget execution. And it may undermine the coordination and monitoring role of PMO, as its staff become entangled in implementation. I would caution the PM to ensure that his office maintains some distance from line ministries in budget execution, but retain a clear focus on government’s overall redirection policy priorities. It is important the PMO’s focus remain clear and undiluted, and its energy to push line ministries through its coordination role remain undiminished or not dissipated.
A number of ministries when probed on the adequacy of funding stated that they fully expect additional resources in a supplementary budget later in the year. This is a perennial problem that has plagued our planning and budgeting processes for years. This practice betrays the fact that ministries do not think the funding they are allocated is adequate for the delivery of the desired outcomes. However, because this is a top-down budget, they are taking a wait and see sort of an approach. This risks partial implementation. And in a situation that requires a steady flow of cash through the economy, it risks mitigating any growth spurts in parts of the economy. It is important that government spends in the economy.
Is the budget realistic/reasonable?
This budget demonstrates that there is a growing awareness the government has been, over many years, trying to do too many things. The result has been scarce resources spread too thinly across too many priorities. This is a matter I have made a point of repeating to government in the hope that it would galvanize focus on a few deliverable priorities. It is better to do a few things and do them well, than to pretend to do too many things and not do any of them well. An inadvertent benefit from the covid-19 pandemic is that it has forced government to be focused in its response on a few priorities that are most necessary. The same approach should be taken in planning and budgeting to ensure that government focusses on the most strategic priorities and the funding allocations should reflect that focus. The criteria for what is strategic should be transparent to guide allocation decisions. Such criteria should be based on two principle considerations. Firstly, the core business of government ought to be adequately funded. Secondly, investments in the non-state sector and the economy must be guided by whether such investments will leverage other actors and resources to be harnessed to the desired policy outcomes. That government cannot fund everything is blatantly obvious. However, where there are clear market failures or high sovereign risks, the government has a role to play to mitigate such risks and or address the market failure until the private sector is comfortable about taking on the risks and sees the returns as rewarding.
As to whether this 2021 budget is realistic and reasonable, we will have to look at the number of priorities and the budget outcomes expected from each to determine these.
Are stated priorities appropriate?
The overall budget theme captures well the two most critical issues facing our country at this time. The challenge is to see whether the bi-focal theme runs through to the priorities set.
Further, priorities should reflect the overall redirection policy. Pardon my ignorance, but I have struggled to understand what is meant by redirection. The PS for Planning described it as a shift in focus, others have described it as a refocus, still others say it is a shift in emphasis and priorities. And I heard how the Minister described it in his speech. Perhaps it is all of the above. The word ‘direction’ is described in Merriam-Webster’s dictionary as ‘the line or course on which something is moving or is aimed to move or along which something is pointing or facing’. It can also mean ‘an explicit instruction’, or ‘a guiding, governing, or motivating purpose’. Redirection is described as ‘to change course or direction of’. Synonyms include deflect, divert, swing, turn, veer. The two letters ‘RE’ before the word ‘Direct’ must mean something in this overall policy.
Perhaps the minister, in his response, can clarify what is meant by redirection. Is it merely a shift in focus? Is it a reduction in priorities? Is it a re-emphasizing of priorities? And how are these priorities different from those of last year? This will enable the House to assess whether the priorities contained in this budget are indeed appropriate to the current circumstances and represent the best policy choices.
Are funding levels adequate for purpose?
Naturally, this is where we expect some debate. We all know government does not have access to unlimited amounts of cash, and therefore there is a limit to the size of allocations. This may come as a shock to Caucus, but there should be no debate on this point. However, the size of allocations quite often betray the real priorities. Our Lord said “Where your treasure is, there your heart will be also”. In other words, the larger allocations in this budget show where the government’s heart is – its priorities.
Two purposes have been identified by the government as the focus for the 2021 budget: keeping our population safe from covid-19, and economic recovery including delivery of social services. Therefore government’s priorities and programmes under its redirection policy should be funded at levels that are ‘adequate for purpose’. Let us briefly look at the allocations to key ministries to apply the ‘adequate for purpose’ test.
Agriculture – consistent with the two purposes set for this budget, we expect that food security contributes to the first purpose and commercial production contributes to the second. Both of these require support services in research, extension, biosecurity and so on. Overall an average of 1% of total SIG expenditure from 2016 to 2020 was given to Agriculture. In 2021 Recurrent 32m (2019- 32.6m; 2020-52.8m); Budget support 7.3m; Dev 25m (2018-11.9m; 2019-12.2m; 2020-23.4m). Total of 64.3m in 2021. Still hovering around the 1%. So we can say in terms of the overall allocation to agriculture, there is no change. It is not possible to see any redirection from the overall size of the allocation.
Let’s look at the detail to see if redirection is clearer to determine.
The ministry itself admitted to the PAC the inadequacy of the allocations to meet their ministry budget outcomes. The ministry received funding in the development budget for four programmes: Food security & Livestock industry – 6m; Commercial agriculture development – 8m; Export crop – 7m; and National Biosecurity strengthening – 4m.
Food security & livestock industry programme includes construction of pig breeding facility, construction of poultry slaughter facility, support to poultry farmers association, & support to honey-bee industry. Is 6m adequate for purpose for these activities? Further, is 6m adequate if we are looking for serious growth in livestock? Obviously not. Looking at this nothing immediately hits you that there is indeed redirection.
Commercial agriculture development includes incentives and project funding support to 3 commercial farms, a garage and staff house at Tenaru Field Experimentation Station, farmer support services unit to be set up in MAL, 2 pack houses guarantee scheme, MAL on farm and field research, support to provincial commercial farms in carrot, taro, kava, coffee, & oil palm out-growers. Is 8m adequate for all these? Obviously not. Again here nothing immediately hits you that there is redirection.
Export crop includes funding for kava production increase of 20%, increased production of coconut by-products by 15%, increased noni production, increased cocoa production & bi-products, lentil, vanilla, ginger, copra and cocoa freight subsidies. Is 7m adequate for purpose for all these? Obviously not. 7m is not even adequate if it all only went to one crop. Again, there is nothing that jumps at you to indicate there is redirection.
National Biosecurity strengthening includes (4m) eradication and prevention of entry of IAS into the country, export facilities that include biosecurity holding facility, cold storage facility, fruit & vegetable treatment facility for export, capacity building with business & community, training, & border biosecurity infrastructure. Is 4m adequate for purpose for these? Obviously not.
Agriculture processing is key to lifting our economy, and so let’s turn to the Ministry of Commerce to see adequacy of funding to enable serious game changer processing initiatives.
On the face of it, the allocations that might impact agriculture processing and exports are increased funding levels compared to 2020. However, the devil is in the detail. There is 7m for trade and export programme for agriculture products, which includes kava exporters program, exporters support program, Lata export facility program, CEMA noni buying centers, copra & cocoa freight subsidies. Is the funding level adequate for purpose?
There is another 7m for value adding & downstream processing programme. This includes value added & downstream processing business, kava downstream processing program, noni juice bottling, coconut value adding, cocoa value adding, & youth innovation program.
That is a combined 14m for agriculture processing, trade and exports. On the face of it, these are good directions. However, it is clear the funding levels fall short of the ‘adequate for purpose’ test. This is disappointing.
I would suggest that the government review this immediately with urgency in a holistic manner. Funding for agriculture production should be increased for targeted crops/livestock to around 100m. Funding for agriculture processing increased to 120m. New funding allocated to export marketing of around 80m. And all this ought to be further incentivized with fiscal carrots (to use a crop). For a total investment of 300m (coupled with fiscal incentives) the government could give this sector an injection of steroids that is very likely to boost GDP meaningfully and sustainably in the short to medium term. This would show government is serious. Japan has shown a willingness to lend to our government at 0.01%. I would venture to suggest that the government approach Japan for an interest-free loan of 300m for this targeted agriculture investment. Such a loan can be repaid in a few years, as GDP is likely to be impacted positively from such an investment in the mid-term.
Relative to allocations and choices in previous years, I can glimpse the increased focus on this sector, but it is not strong enough to make the growth jump that is possible in this sector.
And as I am familiar with the noni crop, let me use it, again, as an example of the challenges posed by inefficient decision making. The sole processor of noni value-added products has spent millions in marketing. Although more work needs to be done, his efforts are beginning to bear fruit. However, fiscal incentives that would enable scaling up of processing capacity have taken three years for government to decide. This is a serious and frustrating drag on investment in this country. Businesses in pioneer industries expect to make losses for a few years but accept this risk as part of developing an industry that will be rewarding in the future. Fiscal incentives mitigate this risk and reduce it to an acceptable level. Government’s attitude towards these types of businesses need to change to a positively embracing facilitating one. There should be transparent objective criteria that guide decision making on support to such businesses. It should not be for businesses to have to forcefully try to persuade politicians of the merits of their business on a case by case basis.
So, is the redirection policy going to provide the game-changing boost in the agriculture sector? The policy disposition is good, but it has not been matched by resources. Business as usual, unfortunately!
Let’s have a similar look at Forestry. 2016-2020: Received an average of 1% of government expenditure over the 5 year period. Consistently contributed roughly 40% of government revenues and 70% of foreign earnings. However, government policy for this industry has been mindless and negligent at best, and at worst complicit in the irresponsible destructive exploitative practices that have caused so much division in communities and damage to our environment. It has been obvious for the last 20 years that the future of this sector is in processing and value adding, and it is fair to say that government response has been irresponsible neglect. It is the government’s responsibility to make reforms a win-win for all stakeholders in this industry. No one should feel threatened by reforms that will assure long term sustainability in this sector, unless they are so greedy and seek only the quick profit from round logging and have no interest in being part of creating the long term opportunities for Solomon Islanders. Logging has ever only been a get-rich-quick industry in our country. Is this something we should blame our founding fathers for? They would point the finger straight back.
Forestry downstream processing programme is allocated 5.2m and includes expansion of the Henderson timber yard, consultant audit, plan for Noro timber yard, 2020 outstanding payments for DSP, & freight.
The question to ask is ‘Do these represent the downstream processing that would boost GDP substantially?’. The answer is no. The downstream processing that would significantly contribute to sustainable harvesting, and increased foreign earnings has to go beyond merely cutting timber for exports. We should be creative in looking for opportunities to turn our wood into all kinds of processed products needed in overseas markets. It is important that government attract the right investments with appropriate fiscal incentives that will create economies of scale in forestry processing. This would be an important part of reducing the unsustainable harvest of forest resources and not losing the foreign earnings from this sector. How long must we wait? Should we blame our founding fathers for this long neglect?
I am at a loss to see where the redirection is in this sector. Can you?
Fisheries – 2016-2020: Average 1% of total SIG expenditure. Development budget 2019 – 3.7m; 2020 – 10.3m; 2021 – 15m. A slight increase. Of the 15m, allocated to community fisheries livelihood programme is 7m, fish export infrastructure & fisheries centers programme 4m, & Bina 4m. Clearly government is not planning to spur any serious growth in this sector in the 2021 budget. It is important that the work on Bina continue. The other allocations are merely holding the fort. It seems the government is content to wait and collect revenues from offshore fisheries. Not many of the fisheries centers that were built during the last House are still functioning. Government should understand why that is and take steps to remedy this. Fishing must be tied to markets for it to be sustainable, and value adding requires processing. The constituency fisheries centers cannot be sustainable if they’re only supplying their local markets. There is a disconnect in this policy. We must invest in linking local fishing to processing to international markets.
It is difficult to see where the redirection is in this sector, given these priorities and allocations.
Mines & Energy – 2016-2020: average 0.1% of total SIG expenditure. This sector contains some low hanging fruit, given the current economic situation and the need for government to make revenue gains.
The geoscience lab (Geochem. & petrological lab) ought to be fully funded. It is key to the government assessing the true quantity and value of ore shipped overseas. It is also critical to determining the right international market price applicable to the grade of ore. Different grades attract different prices. As it is, government is wholly dependent on the company to self-report. This is a most terrible situation that has been deliberately allowed to carry on for far too long – 7 years. Minerals are non-renewable, therefore government must get the highest fair revenue from it and put such revenue to sustainable use to benefit future generations. It took 6 years of bauxite mining before export prices were determined. The government has no way of knowing the true grade of ore shipped. I am not sure if the export duty on the ore is now in the schedule. In this matter there has been long term consistent belligerent negligence, may be worse. Should we blame our founding fathers for this?
In-country mineral processing is included in the government’s redirection policy. However, there is no programme or funding to advance this policy. The manner in which tenements have been allocated betray three things: firstly, there are former loggers who have migrated to mining and are holding licenses. We can take from this that the practice of merely extracting resources and shipping them overseas will continue. Just as in logging, it will be difficult to see processing with such operators. Further, the corruption with transfer pricing will continue as with logging. This represents bad choices. Secondly, processing requires economies of scale to be viable. By allocating small tenements to many small companies, the government has shot itself in the foot and precluded the possibility of processing in-country. This questions the government’s sincerity in its redirection policy statement. Thirdly, the quality of the investors holding tenements leaves much to be desired. All these factors combine to betray that fact that the mining industry will become like the logging industry – a get-rich-quick industry for foreigners. This industry will perpetuate the exploitative economy that impoverishes the large majority of Solomon Islanders who are increasingly marginalized. There are just too many poor choices being made in this. Should we blame our founding fathers for this?
Where is the redirection in this sector that is likely to have positive sustainable long term benefit? It is hard to see.
The Solomon Islands Democratic Party has a policy I would like to propose it to the government. That an SOE be established by legislation to invest in mines. Such an SOE could hold shares in other mining companies and may itself form wholly owned mining companies. It would ensure that ethical behavior and practices are followed by companies and transfer pricing is eliminated. The SOE would also be a platform for share interests for landowners of locations where various operations occur. Such an SOE would be linked to a Sovereign Wealth Fund or Future Fund, into which all mineral revenue should go to be invested for the benefit of future generations of Solomon Islanders. The SOE can acquire the technical capacity and funding it needs. If all that is involved in mining is digging up soil and shipping it out, surely the government would want all the proceeds from that to remain and benefit the government and people of Solomon Islands, rather than enrich a few foreigners.
Infrastructure – 2016 -2020: MID received an average of 6% of government expenditure over the 5 year period. Development budget 2019 – 107m; 2020 – 81.9m; 2021 – 100m. It is heartening to see the government maintain the level of funding for infrastructure. This is a sector that can create many jobs for our people during these difficult times. However, we are perpetually condemned to repairing existing roads and never able to build any substantial new roads. The government must devise a strategy to build long-life roads. In the long term it might work out to be more efficient. This is a sector that we should not be constrained from borrowing to invest in – but only to build quality infrastructure. I would encourage the government to draw up infrastructure proposals to be submitted for funding under the Australian government’s AUD2 Bn regional infrastructure fund.
Further, there are logging roads that are left to deteriorate after logging operations cease in various locations around the country. There should be a database held at MID of logging roads built and which of those should come under the ministry for upkeep.
Given the nature of infrastructure work, 100m isn’t a redirection to more or better infrastructure, but a mere holding of the fort. I urge the government to be proactive in its engagement with the Australian government in its SI Infrastructure Fund of AUD250m over the next 10 years. It is important that projects identified for this funding are the result of robust consultations between the two governments and must reflect our government’s priorities.
Is there adequate capacity to implement?
All ministries are confident of their capacity to implement their budgets. However, it is important to note the historic low execution rates recorded by some ministries and see if this is due to capacity constraints and whether any such constraints have been addressed.
Agriculture – 2016 to 2020: average execution rate for recurrent expenditure is 65%, and Development budget is 35%. And in 2019 and 2020, Ministry of Agriculture recorded the highest number of virements (totaling 3.6m in 2019 & 4.4m in 2020). A look at the virements is a reflection of the robustness of the budgeting process and budget execution capacity.
Forestry – 2016-2020: average execution rate: Recurrent 68%; Dev:32%; Virements are also an issue.
Fisheries – 2016-2020: Budget execution rates, Recurrent 67%, Dev 33%; Virements are heading in the wrong direction.
Mines & Energy – 2016-2020: Budget execution rates, Recurrent 52%, Dev 48%; Virements improved substantially. But very low execution.
Culture & Tourism – 2016-2020: Average 1% of total SIG expenditure; Budget execution rate average; Recurrent 69%; Dev 31%. Virements are an issue. Very low execution.
Communication & Aviation – 2016-2020: Average 2% of total SIG expenditure; Average execution rates: Recurrent 72%, Dev 28%. Virements continue to be an issue. Very low execution.
Ministry of Infrastructure – 2016-2020: average execution rate: recurrent 31%, Development: 69%. MID received an average of 6% of government expenditure over the 5 year period. This ministry seems to have brought virements under control. Execution needs to improve significantly.
Commerce & Industry – 2016-2020: ave 1% of total SIG expenditure; ave execution rate: Recurrent 85%, Dev 15%. Virements are a real issue here for planning & budgeting. Low execution.
Lands & Housing – 2016-2020: average 1% of total SIG expenditure; Average budget execution rate: Recurrent 69%; Dev 31%. Ministry is improving in its planning/budgeting and virements are under control.
Rural Development – 2016-2020: Average 9% of total SIG expenditure; Average budget execution rates, Recurrent 91%, Dev 9% (excluding constituencies I assume); Virements are an issue.
Ministry of Education – 2016 to 2020: Average 31% of SIG expenditure; average execution rate is 88% for recurrent, and 12% for Development budget. Virements is also an issue for MEHRD. Low execution.
Ministry of Health – 2016-2020: average execution rate is: Recurrent 97%, and Development 3%. During the same 5 year period the ministry received on average 11% of total government expenditure. Virements are a real issue for this ministry. Low execution.
Police National Security & Correctional Services – 2016-2020: received average of 8% of total government expenditures; Average execution rate: Recurrent 96%; Dev 4%. Although virements decreasing, the value is high at 18m in 2020. Low execution.
Ministry of Finance – 2016 to 2020: average execution rate is recurrent 72%, and Development 28%. It is the worst culprit when it comes to virements. Low execution.
PMO – 2016-2020 average budget execution rate: Recurrent 79%; Dev: 21%. PMO received 5% average of total government expenditures over the 5 year period. It is also the worst performing when it comes to virements. Low execution.
Provincial government – 2016-2020: average 4% of total government expenditure. Average budget execution rate; Recurrent 73%; Dev 27%. Virements continue to be an issue. Low execution.
Justice – 2016-2020: Average budget execution rates, Recurrent 92%, Dev 8%. Virements are an issue. This appears a neglected sector overall. Low execution.
National Judiciary – 2016-2020: Average 0.8% of total SIG expenditure; Average budget execution, Recurrent 98%, Dev 2% (no dev budget for 2020). Virements are a concern. Low execution.
Women, Youth, Children – 2016-2020: Average 0.3% of total SIG expenditure; Average budget execution rates, Recurrent 91%, Dev 9%; Virements seem under control. Low execution.
Environment – 2016-2020: Average 1% of total SIG expenditure; Average budget execution rates, Recurrent 83%, Dev 17%. Virements are a real problem. Low execution.
The historical evidence is clear that government’s budget implementation is a very real challenge. Of course, there are any number of issues that may contribute to this problem. Government’s announced reduction of the size of the public service must take this serious matter into consideration, to ensure an already weak budget execution capacity is not further eroded.
Have the constraints to budget execution been addressed? This is not clear from the budget documents themselves. However, the ministries, by and large, have confirmed there has been no real change to their capacities to implement the budget. In light of this, therefore, it is not unreasonable to conclude that we are to expect similar budget execution rates in 2021 or perhaps even worse, and given only another eight months remaining for this budget, we are to expect that some budget outcomes may not be delivered as stated. The freeze in recruitment and further reduction in the public service are further challenges to budget execution. For the 2021 fiscal year, the risk of partial or incomplete projects is higher than usual.
Another way to look at this issue is that it is likely that the number of priorities are still beyond the capacity of the machinery of government to deliver.
Public service recruitment freeze is mindless policy. If the government is serious about efficient and effective government then the restructure and resizing must start at the political level in the consolidation of ministries. The size of cabinet is simply too large for a country such as ours. The number of ministries are way too many. There are a number of ministries that are so small in terms of their prescribed responsibilities that it is logical to ask why they are even ministries. The number of ministries is not determined by the need for effective efficient government, rather by political expediency. A consolidation of ministries would not only make decision making more efficient but will also result in savings from the amalgamation of corporate/finance/HR functions. And this can be done without a freeze that penalizes the clear ongoing need for technical people to be recruited, who are critical to budget execution.
Another issue identified by almost all ministries as a serious impediment to efficient budget execution is the red tape in the procurement process. It is very important when dealing with public funds and resources that there is transparency around procurement decision making to ensure value for money and minimize corrupt practice. However, the procurement process must not become the goal of government policy and expenditure. The procurement processes simply take too long, and in the short 8 months of 2021, this is a serious challenge to budget implementation. The procurement process must not hijack efficient effective budget implementation, rather it should support it. There is a clear need to streamline current procurement processes, without eroding public trust in government procurements.
Women, youth and children safety funding – the government clearly does not take seriously the scourge of domestic and gender-based violence in our society, beyond the rhetoric. If it did, the size of allocations would show it. We are not unlike any other country in the world in this matter unfortunately. Gender based violence has increased sharply in recent times, at least by 15 percent where records are kept, and we don’t even have a proper recording system for this problem. The need for refuge or safe houses in each province is both urgent and desperate. Government cannot continue its current business as usual attitude to this problem in our midst. It must collaborate with the churches and NGOs and invest in a rollout of safehouses across the nation, whilst simultaneously adopting a proactive preventative approach. Given the urgency and desperation of this situation, it is important that government consider renting properties for safe houses, as it plans for long term solutions. There is nothing in this budget to address this cancer. Is it because this problem predominantly affects women, young girls and children? In difficult uncertain times, we must unite to fight together, the Minister reminded us. Such unity is empty if we continue to turn a blind eye to the weak, the marginalized, the suffering, the abused, the violated in our midst. I am very ashamed of this blatant, and it seems deliberate, neglect. We continue on with our insulated lives oblivious to the suffering of our women folk. This is not the Solomon Islands society we want to see or build. Government must show more empathy and compassion. Health safety and social safety are connected to national security – surely there is somewhere in these cold-blooded calculations that we can find to fit in funding for our vulnerable and abused women, girls and children. I am making a direct appeal to the PM to intervene personally in this matter and find serious funding to adequately respond to this great need.
The local shipping industry is being killed by predatory practices by foreign logging companies. I recently received a copy of a letter by the Solomon Islands Maritime Transportation Association addressed to the Minister for Infrastructure complaining of predatory practices by logging companies who have entered into commercial shipping. It is not clear if they have FIB approval to enter into this industry. These predatory practices are meant to kill off our local ship owners and operators, and when that happens we will expect shipping rates to increase. The result will likely be no locals in the shipping industry in the mid to long term. This would be a terrible situation indeed. There should be protection for Solomon Islanders in the shipping industry. I urge the government to look into this matter and take serious steps to protect the interests of Solomon Islanders in this industry.
Climate Fund – The response to covid-19 has demonstrated government is able to galvanize attention and focus resources to tackle an issue effectively. A similar commitment needs to be made to tackling the consequences of sea level rise on vulnerable communities. It is now not good enough to wait until disaster strikes before responding to alleviate the plight of our people. I urge the government to seriously consider the establishment of a Climate Fund, which should be responsible for the funding of all matters that are climate related including mitigation, adaptation, relocation, disaster resilience, response, rehabilitation, etc. Recent photos of Kwai & Ngongosila show what was also experienced in Lilisiana, Walande & Fanalei, and many other vulnerable communities around our country. Government cannot justify its postponement of meaningful action on this existential matter.
Indigenous business – I am encouraged by the noises I hear of intentions to protect indigenous rights. However, it is the right of indigenous Solomon Islanders to participate meaningfully in business that must be protected and advanced by their own government. This is a matter I have repeated on many occasions throughout the many years I’ve been in this House. Indigenous Solomon Islanders must not be forced into becoming spectators in business by an exploitative economic model and system. This is a serious threat to social harmony and national security. I am yet to see concrete actions taken on this important matter. Government policy to address this issue must not be premised on giving only bred crumbs to indigenous Solomon Islanders.
MEHRD – the PAC was informed that literacy and numeracy levels in our school system have improved and is relatively high compared to other countries in the region. I found that hard to believe, but hope that it is true. Illiteracy and innumeracy should never exist in our education system, and we must make it our aim to eradicate them. That students can get to junior high school and still struggle to read and comprehend is totally inexcusable. SICCI has complained about university graduates that are unable to write a coherent basic report. And we see this in the high levels of government as well. We only need to read the Budget Paper Volume 1 to see evidence of this problem. If the literacy and numeracy rates have improved, let’s keep working hard at eliminating the problem from within our education system. I note there is little funding for it in the budget, and perhaps it is again picked up under donor funding.
MLE – the report on the trial of Multi-Lingual Education across a few of our schools is very clear that this is the best way not only to eliminate illiteracy and innumeracy, but also to raise Children’s overall learning and creativity. The evidence is very clear that MLE needs to be mainstreamed into our primary school system. I urge the government to take this up with enthusiasm and plan for a roll out of MLE throughout the country over the next ten to twenty years. It is a complex matter that involves language mapping, planning for teacher training, resources, and monitoring and evaluation of progress. The roll out must not be rushed, but the planning for it needs to start.
Likewise, STEM now needs to be mainstreamed and rolled out throughout the education system and be adequately funded. STEM holds the key to the potential future society and economy that we must build. Again, this is a matter I have been repeating for many years, and I am glad the ministry is beginning to recognize its importance and are taking small steps towards it. But it requires a deliberate plan on how to roll it out and the financing of it. STEM needs to be introduced early in the pre-primary phase and run right through to SINU and skills training. It will be the defining character of our education system and its product, if planned and implemented properly.
Skills training – the bulk of the need in our economy is for trade skills, yet the bulk of the funding for tertiary education is in the academic stream. This is a mismatch that must be seriously addressed. Again, this is a matter I have been repeating in this House for many years. I can see that steps are being taken to address this issue, but such steps fall short of substantively dealing with it and the challenges that are the consequences of this situation.
The state of education infrastructure throughout our education system is a serious constraint and bottleneck in the development of education, the quality of learning and teaching. Admittedly, it is not an easy challenge to address, but we must find ways to address it. It is important that the government set some minimum standards for schools infrastructure and facilities.
Education is key to the future society and economy. Of all the things that government must do, education must rank as first. The great need for education infrastructure, the expansion of quality skills training, the roll out of MLE, and the mainstreaming of STEM throughout our education system require significantly more funding than the budget can afford. And the results of such significant investments are generational. But these would be among the best investments any government can make, and leave the best legacy for future generations of Solomon Islanders. I therefore urge the government to be bold and ambitious in planning for them, and to seek a substantial loan to finance these. It would be money well spent.
SINU – the governance and leadership problems at SINU are inexcusable. That these have been allowed to drag out for so long is even worse. These point to the need to amend the SINU Act to ensure these kinds of problems never happen again. The government’s decision making in these problems have been convoluted and perplexing. This is not the way to support, develop and run a university. Further, SINU has expressed its need of reliable fast internet access that is not being provided by current operators. The government needs to step in to ensure SINU has fast, reliable and cheap internet access. This is essential to a university. If the licensing authority needs to be directed by law, then bring legislation to the House to make this happen with some urgency. Government must demonstrate it is proactive in standing behind SINU to support its growth.
Health – the state of the NRH is desperate on a number of fronts. The infrastructure is dilapidated making for a very challenging workplace. The corporate governance is chained to public service processes and procedures that are inefficient, unresponsive and are probably not appropriate for a peak hospital dealing with people’s health, life and death. Its clinical governance is in a perilous state, long neglected. This situation is totally unacceptable and has become untenable. NRH needs a total transformation, and this need is both desperate and urgent, not for the pacific games, but for our people and the health professionals that work at the NRH. Our people deserve better. It is blatantly obvious that the NRH needs an independent board to manage it at an arm’s length from the ministry. Its budget must still be fully funded by government but an independent Board should have responsibility for its own planning, development, governance, staffing, and performance.
Hospital equipment budget needs to be adequately funded. NRH must now have equipment for dialysis treatment. 20% of deaths at the NRH are due to kidney failure. This is a significant percentage, and government must take action. It is good policy to tax plastics, sugar and soft drinks. I suggest that government add salt to that list. I urge the government to ringfence the revenue collected from these taxes, and from alcohol and tobacco for health expenditure directed at the NCD crisis, and the need for appropriate equipment at our hospitals, especially the NRH. Ringfencing this revenue to health would also enable funding and the long delayed roll out of the role-delineation policy to commence.
Let me conclude.
The top down approach taken in the formulation of this budget is in itself not inherently wrong. Given the urgency of the current pandemic situation and its consequential fallout on the economy, it may be justifiable. However, efficient and effective budget execution will depend on good planning and flexibility in procurements. A top down approach may allocate resources that risk not being ‘adequate for purpose’, and thus jeopardize implementation and outcomes. That is the risk facing this 2021 budget.
This 2021 budget has 8 months to run, and red tape bureaucracy may take up significant time, risking rushed spending at the end of the year to merely expend funding without delivering on the budget outcomes.
2020 was a very tough year for the majority of Solomon Islanders economically. 2021 will be the same.
If the redirection policy is taken to mean giving greater clarity and the narrowing of focus, a reduction to fewer strategic growth-catalytic priorities, and the allocation of ‘adequate for purpose’ funding levels – then it is fair to say the government is on to a good thing. It is for members to determine if government’s redirection policy has these qualities.
Does this budget contain investments that are both strategic and adequately funded? This is a question for members to reflect on.
My own assessment of this budget is that it is not ambitious enough in the most strategic parts. That is disappointing.
However, it represents a dawning realization that fewer priorities may result in better delivery of development and social services. This is positive, and deserves the support of the House, and it has mine.