www.mccully.co.nz

21 September 2007 (#305)

A Weekly Report from the Keyboard of Murray McCully MP for East Coast Bays

Samoa

The dose of distilled wisdom from the worldwide headquarters of mccully.co this week is necessarily brief. The humble Member for East Coast Bays is on the road in Samoa – accompanying National Party Leader John Key on a two day visit. All part of a process of preparation to assume the responsibilities of office should the public so decide in 13 months time. Or less at the rate the wheels keep falling off the current administration.

New Zealand currently spends around $429 million in aid. Some will argue, on the basis of creative accounting, that half is spent in the Pacific. The real number is considerably less. But whatever the number, it is a fact that the results we are achieving will need to get substantially better. In a speech to the recent NZ/US Partnership Forum, John Key signaled a significant shift in priority towards the Pacific – a theme to be repeated in a formal National Party position paper to be released in the coming weeks.

Samoa is arguably the success story of the decolonised Pacific. The nation of 160 000 enjoys stable, democratically elected government, and reasonable economic growth. The forces of de-population that are winning the battle in some other small Pacific states are being held at bay. But it is when you briefly examine the two-way trade figures that it becomes evident just how far away we are from economic sustainability.

Pacific Trade

Two-way trade between Samoa and New Zealand totaled around $100 million for the 2006 calendar year. Not bad you might think. But the breakdown is hardly flattering: New Zealand exports to Samoa a touch under $97 million. Samoa exports to New Zealand around $2.7 million. And that, sadly, is the story of the Pacific.

Across the Pacific region, New Zealand enjoys a massive trade surplus. Exports to the Pacific are just over $1 billion while imports to New Zealand from the Pacific are just over $135 million. A regional trade imbalance like nowhere else, and hugely to our economic advantage. Except that it is occurring in the very same region that we say we are there to help.

Let’s look at a few other examples. Nearby Tonga has about $48 million in two-way trade. Again the breakdown is unflattering. About $44 million in exports from New Zealand, and only around $3 million of exports to New Zealand. The Cook Islands show a similar pattern: around $84.4 million in two-way trade with imports a little over $83.2 million and imports a mere $1.2 million. Yet, despite the issues around transport and biosecurity, these are nations with excellent climates, and good natural conditions for agriculture, horticulture and aquaculture.

There are real signs that the tourism sectors in these countries are headed for significant growth. Yet even here the net economic benefit is diluted by a need to import food and beverage supplies from New Zealand.

In each of these countries, New Zealand is spending around $10 million a year in aid. The question that now must be asked, on the strength of the huge trade imbalances, is whether we have been too focused upon hand-out as opposed to hand-up strategies. Because these trade numbers just cry out for improvement.

ENDS

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