HON. SENATOR E. RANACOU.- Mr. President, Sir, a supplementary question.  For the farmers who have been resettled in Navua and are close to tourism places.  In view of our inability to supply the tourism industry with local vegetables and shoots, and in view of the fact that many of these resettled farmers are experienced and motivated individuals, can the honourable Minister explain whether these people are being assisted to meet such food demands from the tourism industry?

            HON. SENATOR K. TAVOLA.- Mr. President, Sir, for the honourable Senators who referred to the resettled farmers in Navua, and again for the information of the House, there are three settlements in Navua - Batinikia in Busa, Raiwaqa I and Raiwaqa II.  There are 35 lots in Batinikia, Busa; 23 lots in Raiwaqa I, 16 lots in Raiwaqa II and all have been taken up.  So, there is obviously a lot of enthusiasm from farmers to come to this area (I suppose) because of the fertility of the area.  All of us who drive along the road can see the crops that are grown there.

            Mr. President, Sir, the possibility of supplying vegetables and root crops to various hotels, is a matter being taken up by the honourable Minister for Tourism.  He has, on a number of occasions, been publicly urging the hoteliers to have some arrangement with the farmers, so that they can supply the hotels, and there have been some arrangements already.  I know the Outrigger on the Lagoon have come to an arrangement with the farmers for some regular supply of vegetables and root crops to that hotel.  Also, a lot of the hoteliers are having some kind of arrangement with the farmers and we would encourage this because we have the land and we also have the demand.  I am sure that in due course, there will be a lot more supplied to the hotels, to provide for their requirements.

            MR. PRESIDENT.- Honourable Senators, I wish to acknowledge the presence in the public gallery of Form 4 students and teachers of the Assemblies of God High School.  On behalf of the honourable Senators, we extend to you a very warm welcome this morning.  We hope that you will learn something of value from your visit, and we all wish you well.

RESUMPTION OF DEBATE ON THE VALUE ADDED TAX DECREE

(DIPLOMATIC MISSIONS - AMENDMENT) BILL, 2006

            HON. SENATOR G. AHMED.- Mr. President, Sir, I rise to contribute to the Bill before the House, Bill No. 13 of 2006.

            Mr. President, Sir, first of all, let me show my concern about the assurance that all honourable Senators of this House will be facilitated with a copy of the Vienna Convention, which was not done.  This is for the information of the House because we were assured during our briefing that we will be facilitated with a copy.  However, fortunately, I came across a copy of this Convention, which was formulated and accepted in 1961.

            Mr. President, Sir, although the Bill came as a small thing, it became a big issue.  I do not wish to say whether I support the Bill or oppose it, but I have some observations to make.

            Mr. President, Sir, on the question of Vienna Convention, I will agree with the first point raised by the mover of the Bill, that there is a convention and there should be a waiver of certain dues and taxes.  However, in the first part of clause 2 of Article 23 of the Convention, it says and I quote:

                        "The sending State and the Head of the Mission shall be exempt from all national, regional or municipal dues and taxes in respect of the premises of the Mission, whether owned or leased other than such as represent payment for specific services rendered."

            Sir, clause 2 states, and I quote:

                        "The exemption from taxation referred to in this Article shall not apply to such dues and taxes payable under the law of the receiving State, by persons contracting with the sending State or Head of the Mission."

Here, the sending State is the United States Government, sending the United States Ambassador down here.

            Mr. President, Sir, going back to the statement made by the mover of the Bill, he said that the main contractors of this United States Embassy project will come from the United States.  Sir, I know that anyone, for that matter, who wants to build a building of $60 million will want to see that the architectural and design works, contractors and everything are their own. 

            However, Sir, the way I read and interpret clause 2 of Article 23 of the Vienna Convention is that, I do not think the people who will be contracted to do the work are entitled for tax exemption.  I stand to be corrected on that, Sir.  I am sure the honourable and learned Attorney-General will also contribute to the Bill, and I seek his assistance as our legal adviser, to let us know and give us a full interpretation of clause 2 of Article 23.  The way I read it, I am sure from my own judgment, that the contracting company is not entitled to tax exemption under the Vienna Convention, but I will leave that to the honourable and learned Attorney-General to clarify us on that for us.

            Mr. President, Sir, when one talks about exemption, I fully agree with the mover of the Bill, that we have to adhere to Conventions as Fiji is a signatory to it.  We must exercise due diligence and respect international conventions.  However, we also have to look at our economic development and means, whether we can sustain the exemption of these taxes.  For example, we are now giving the US Embassy a leeway and that is alright.  It is a $60 million project and they get an $8 million VAT exemption or more, but if there are five embassies that would want to erect buildings of their own of the same value - $60 million each, what are we talking about on VAT exemption?  We are talking about $40 million VAT exemption.  Is it not a huge amount of money that we are losing, Sir?

            Here, we are talking about the US Embassy being given a VAT refund of approximately $8 million, but on the other hand, we have hundreds of disadvantaged (poor) on the streets, who are knocking on the Social Welfare doors for assistance.  We cannot meet their demand and yet, we are here discussing VAT refund on their new complex.  Well, in agreement - yes, but there can be other approaches made to their Government with cordial dialogue to say; "Look, our economy is not that good."  We can tell the US Government that.

            Sir, the US Government is using billions of dollars for their security.  They have trillions of dollars in their foreign reserves, but if there is a proper approach made, I am sure they will agree on that point, despite the fact that the Convention is in place.  The US Government, as the mover of the Bill says, is a big brother and I accept that.  When a small brother talks to his big brother and kerekere, definitely the big brother will say; "Alright, thank you very much, I will forego this."  Therefore, if there is a proper approach made, I am sure the United States will do that.  Again, Sir, I stand to be corrected.

            Mr. President, Sir, some time back (I cannot recall the actual date), the US Government decided to wind up their Embassy in Suva, I cannot remember why, but there was a decision to wind up their Embassy in Fiji.  Today, we hear that the US Embassy wants to build their complex worth $60 million.  I feel a bit suspicious as to why there is a turnaround in their decision.  They once said: "No, I am sorry, very soon we will pack up and go".  Suddenly, a few years later, they change their minds; "Sorry, we will stay.  We will be constructing a building for this amount."  I am not against America, Sir.  I have visited America two or three times.  Members of my immediate and extended families and very good friends are in America, so I am not against them.   

            However, I see in the media and other papers everyday that many countries are against America.  Even the Americans in America are against America, there must be some reasons.  I am speaking on the Bill because here, it is specifically written about the US Embassy.  I am giving a true picture of the American Embassy and the US Government.  Now, a building of this worth, is a give and take.  I do not think we will be able to build a building worth $60 million in America. 

            Sir, the mover of the Bill said that in times of disasters, we always look forward for assistance from these big brother countries.  We, as a small nation in the Pacific, have also assisted America when the three natural disasters struck them.  It may be a small amount, but within our means.  One cannot say that we are completely dependent on America. 

            I would have loved to hear from the mover of the Bill as to the amount of assistance that America has given to Fiji, in terms of natural disasters after the aftermath of natural disasters.  What is the total amount that Americans have assisted us?  This kind of figure, Sir, would definitely satisfy my mind in saying; "yes, thank you".  Seeing this amount of money spent on disasters that have struck Fiji, in times of supporting this Bill, Sir, we would have no problems in saying; "okay, thank you very much, we will support the good cause taken by America". 

            Mr. President, Sir, there are a few questions that have not been answered, which I posed during the briefing.  The volume of work done, the answer that was given by the mover of the Bill, I am not satisfied.  He said that a major portion of the work will be done by the contractors from America and less will be done by our contractors here - landscaping, drainage, plumbing, et cetera.  However, the question relates to the areas of taxation of buying materials.  I can recall that there are in certain regulations that if a material is manufactured in this country and if similar materials are imported, then the duty will be high.  If the material, which is supposed to be used is not manufactured here, then the duty is low.  I want to know from the mover of the Bill or someone from the other side of the House, Sir, whether this particular duty exemption will also apply or be exempted?  These are some of the concerns that I would like to share, and at this point in time, Sir, I have not made up my mind whether to support the Bill or not.  However, it is really a concern, Sir. Let us see if the answers to the concerns and observations raised are fully given.  If I am satisfied, then definitely at the end of the day, I will make my decision. 

            With those few observations, Sir, thank you very much for giving me time to speak on the Bill.

            HON. SENATOR RATU S. BUASERAU.- Mr. President, Sir, I rise to contribute to the debate on the Bill before the House. 

            Mr. President, Sir, my contribution is intended to critically look at the procedures and process of what I perceive as the rationale behind the introduction of the Bill, and at the same time offer options that could benefit Fiji. 

            Sir, the wisdom of introducing the Bill at such time when the nation is facing a 30 per cent fuel surcharge, rising interest rates and poverty, high debt and economic woes, really amazes me as a Member of the Senate.  This borders on abuse, lack of good governance, insensitive to living beyond our means, neglecting the needs of our people and poor stewardship.  I would be failing in my calling and duty if I do not speak out for the poor and the rural communities of this country, whom I represent. 

            Sir, at the outset, I wish to question the honourable Minister and the honourable Minister for Foreign Affairs, whether there was an official request by the United States Government in seeking such a concession.  I hope the letter did not just originate from the US Embassy here in Suva.  It is important to verify this; if it is coming from the USA, then Fiji can use this precedent for its future negotiations.

            Mr. President, Sir, on the matter of legislation amendment, I would like to question the honourable and learned Attorney-General and Minister for Justice, the honourable Minister for Foreign Affairs and External Trade and the honourable Minister for Finance and National Planning on the following:

            (a)       The amendment is proposed on the VAT Decree that is under the control of the honourable Minister for Finance.  My understanding is that, a Decree is an instrument of law passed in the absence of a Parliament.  Why do we still have Decrees when, for six years, we have had a Parliament formed under the relevant provisions of Fiji's 1997 Constitution?

            (b)       Section 70 of the VAT Decree only makes reference to a new dwelling house.  A dwelling house is defined as a building constructed solely as a residence for exclusive occupation, as a principal place of abode of that eligible person's household.  Adding the proposed amendment to this section, is, I believe, irrelevant and introduces a completely foreign concept to this section of the VAT Decree. 

            (c)       I believe that the relevant Acts under which the proposed amendment should be considered are contained in the Diplomatic Privileges and Immunities Act (Cap. 8 Ed. 1978) and the Consular Privileges and Immunities Act (Cap. 9 Ed. 1978).

            (d)      Thus the amendment should legally and correctly be introduced by the honourable Minister for Foreign Affairs and External Trade, with the concurrence of the honourable Minister for Finance and National Planning.             

            The introduction of this Bill points to an action by a Government Minister that borders on abuse of power and is illegal under the provisions of our existing laws.  It also reflects the lax attitude of Government and the honourable Minister for Finance and his officials, for not correctly informing this House. 

            Mr. President, Sir, to support the position I have alluded to previously, I wish to elaborate on the relevant provision of our existing law, to place things in perspective for the benefit of this august House. 

            Firstly, section 11 of the Diplomatic Privileges and Immunities Act (Cap. 8) of 1978, deals with Reciprocal Treatment.  It states, and I quote:

                        "Nothing in this Act shall be construed as precluding the Minister from declining to accord privileges and immunities to or from withdrawing, modifying or restricting privileges or immunities in relation to, nationals, and representatives of any State or the Government thereof, on the ground that the State, or the Government thereof is failing to accord corresponding privileges and immunities to Fiji."

            Secondly, section 12 of the Diplomatic Privileges and Immunities Act (Cap. 8) of 1978, deals with the Exemption from Taxation.  It states, and I quote:

                "(1) Notwithstanding anything to the contrary in any Act, the Minister with the concurrence of the Minister responsible for Finance may from time to time wholly or partly exempt from any public or local tax, duty, rate, levy or fee any of the following Governments or persons:-

                  (a) The Government of any state or the Government of any

                        territory whose international relations the Government

                        of any such State is responsible or any office or

                        organisation forming part of a sponsored by any such

                        government;

                   (b) A representative or officer of the Government of

                         any country other than Fiji or of any provisional

                         Government, national committee, international

                         organisation or other authority recognised by Her

                         Majesty in right of Fiji, if he is temporarily resident

                         in Fiji in accordance with any arrangements made

                         with the Government of Fiji;

                   (c) A member of the official or domestic staff or a spouse

                        or dependent child, or any person to whom

                        paragraph (b) applies.

                 (2) Subject to the provisions of any international correction, treaty or arrangement to which Fiji is a party, where a person who is a member of the official or the domestic staff of a person to whom paragraph (b) of subsection (1) applies to a Fiji citizen and not a citizen of the country concerned or is not a resident in Fiji solely for the purpose of performing his duties as such a member of his family be entitled to any exemption granted under subsection (1)."

            Mr. President, Sir, subsequent pieces of legislation further supports the stated provisions.

            Article 23 of The First Schedule of the Vienna Convention (Cap. 8) of 1978 states, and I quote:

                "(1) The sending state and the head of mission shall be exempt from all national, regional or municipal dues and taxes in respect of the premises of the mission, whether owned or leased other than such as represent payment for specific services rendered.

                 (2) The exemption from taxation referred to this Article shall not apply to such dues and taxes payable under the law of the receiving state by persons contracting with the sending state or the Head of the Mission."

            Article 34 of The First Schedule of the Vienna Convention (Cap. 98) of 1978 states, and I quote:

            "A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except:

                             (a) Indirect taxes of a kind which are normally incorporated in the price of goods and services;

                             (b) Dues and taxes on immovable property situated in the territory of the receiving state, unless he holds it on behalf of the sending state for the purposes of the mission;

                              (c) Estate, succession or inheritance duties levied by the receiving state subject to the provisions of paragraph 4 of Article 39;

                             (d) Dues and taxes on private income having its source in the receiving state and capital taxes on investments made in commercial undertakings in the receiving state;

                             (e) Charges levied for specific services rendered; and

                              (f) Registration, court or record fees, mortgages dues and stamp duty, with respect to immovable property, subject to the provisions of Article 23."

            Mr. President, Sir, based on the provisions of the existing laws I have cited, I believe it is illegal, unethical and incorrect for the honourable Minister for Finance to introduce Bill No. 13 of 2006, to amend the VAT Decree, as the proposed amendment is not relevant to section 70.  This proposed amendment, if accepted, will introduce a completely new concept to this section of the Decree, which creates a precedent and violates procedures provided by law. 

            Although one can argue that this Bill is a money Bill, it therefore, should be appropriately introduced by the honourable Minister for Finance.  However, I am not convinced with this argument, as the cited provisions of our existing laws are very clear and direct on the procedures. 

            The honourable Minister for Finance and Government in my mind has, therefore, erred in law and we, as lawmakers, cannot afford to compromise our position in upholding the laws of Fiji.  Therefore, I strongly believe that the proposed amendment is only relevant to be considered under the Diplomatic Privileges and Immunities Act (Cap. 8) of 1978 and be introduced by the honourable Minister for Foreign Affairs with the concurrence of the honourable Minister for Finance, as provided under section 12 of the Diplomatic Privileges and Immunities Act (Cap. 8) of 1978.

            The other issue is, why introduce the amendment now, when this can be worked into the budget for 2007 and 2008?  It seems that this is a case where the left hand does not know what the right hand is doing. 

            Mr. President, Sir, on the diplomatic front, section 11 of the Diplomatic Privileges and Immunities (Cap. 8) of 1978 is clear that Diplomacy is reciprocity.  In the private sector, it is "I scratch your back and you scratch mine".  Operating on this principle, I need to know whether there has been some trade off made.  If so, can the honourable Minister for Finance outline these to us, so that we can appreciate better why Cabinet and Government had decided to introduce such a costly Bill?  I believe Fiji cannot be merely responding to the past goodwill of the US Government, as perceived from some of the arguments and utterances made in the Lower House.  Is the consideration to increase tax exemption from the new US Embassy in anyway implying some potential gains to our economy in the future?  If so, we have the right to know the details to help in our decision-making. 

            Mr. President, Sir, on the project proper, has the US Federal Government submitted estimated costing based on drawings and Bill of Quantities, or is it rather a crude estimate of its intention at this point?  I believe the people of this country need to be accurately informed of this matter, as it involves giving away a large amount of potential revenue.

            Mr. President, Sir, a key question is; what does Fiji get economically in return now or in the future, based on the current policy of the USA Government of reducing development aid and assistance to Fiji and the Pacific? 

            On trade, Fiji has lost its quota on garment to the US and I wonder why the Government failed to use the opportunity to put the issue on the table as a negotiating chip in return for the concession requested.  I understand that engineers, architects, machines and materials would be imported from the USA.  This easily means that under the present tax regulations in the USA, Fiji will not get any tax under this concession, but the US Government will still collect income tax and other company tax from the US company, people and equipment engaged as the operation will be just treated by the US Government as an extension of their USA operation.  Therefore, what we get in return will be merely cost of labour, accommodation, food and beverages and travel costs.  Allowing this concession is really denying the people of Fiji the foreign money to finance the much needed infrastructure development around the country that will facilitate the free flow of goods and services.

            Mr. President, Sir, the wisdom of Government and the honourable Minister for Finance in introducing this Bill without clearly outlining what we get in return, really baffles me.  There seems to be a lack of foresight in their consideration.  Not too long ago, Government was advocating its position to negotiate seasonal work with its trading partners, starting with New Zealand and Australia.  It is truly a blessing that the current state of our economy and the declining exports remittances have been buoyant in neutralising the impact of increasing imports.  I, therefore, wonder why did the Government ignore to submit this or negotiate a tax relief agreement with the US Government to benefit our people working there or will work there in future.

            Mr. President, Sir, I share the sentiments of those who have contributed to the debate in both the Houses, and I respect the effort made in requesting the concession of $8 million.

            Sir, I swore under oath to serve in the best interest of my country and its people.  As a nominee of the Great Council of Chiefs to this august House, our people rely on our leadership and look upon us as their pillars of strength and hope to advocate and uphold their best interests at all times.

            Sir, 58 per cent of our population live in the rural areas of Fiji and they cry out for development to satisfy their basic needs.  Yet, they have been denied this, due to lack of financial resources.  The current state of our economy of high debt level, increasing poverty and crimes, rising unemployment, widening trade deficit and dwindling reserves are causes for alarm.  Staring at us in the face are the rising interest rates, 30 per cent fuel charges, servicing the bonds that Fiji has issued to raise funds internationally, with possible increase in inflation and the likely chance of devaluation, plus whatever unknown risks that are yet to come our way. 

            Taking all these into account, Sir, it is only prudent and good stewardship that we reduce our costs, force ourselves to live within our means and capture every opportunity of maximising revenue earnings.  Therefore, giving away potential revenue of $8 million in concession, in addition to lost income through concessionary imports of personnel, equipment and materials are considered as irresponsible and cannot be taken lightly and allowed to proceed unchecked. 

            Mr. President, Sir, I find that the argument used by the Minister for Finance in introducing the Bill is not convincing and unjustifiable.  Sir, a bird in hand is not worth two in the bush.  We have potential revenue that we are trying to give away here.  It is ironical that a third world country like Fiji, with its economic woes, is trying to donate funds into the coffers of an economic power and a key member of the G7. 

            Sir, we have fought wars side by side with our allies, with our countrymen dying in battleground of foreign lands, upholding world peace.  We have also supported the policies of our allies in fighting terror and we, as a country, have spent millions to provide a safety net for them and they see us as their backyard.  I see the US as a super and economic power, and I respect them, yet I have great difficulty appreciating the justification of this Bill. 

            Sir, I stand to be corrected, if there are additional information and strong arguments to support the Bill that have not been furnished yet. 

            Mr. President, Sir, in serving the best interests of our people and country, and in light of the unconvincing arguments used by Government in introducing Bill No. 13 of 2006, and the error in the procedure, which is a breach and violation of existing laws, I recommend that it be withdrawn from Parliament and reconsidered by Cabinet and Government, before it is reintroduced to both Houses with a more convincing argument.

            Mr. President, Sir, with due respect to the Government of the day and the US Government, I will be failing in my duty to the people of Fiji, and our beloved nation, if I support the Bill before the House in its current form. 

            With those words, Mr. President, I have reservations in supporting the Bill before the House.

            HON. SENATOR COL. M. SARASAU.- Mr. President, Sir, I rise to make my contribution to the debate on the Bill before the House.

            Without specifics, Sir, I have a number of observations to make.  The first question that I wish to raise is; why should the United States, a super power and one of the richest countries in the world be concerned with the claim of a mere $FJ8 million (an equivalent of $US5 million), when it has trillions or even zillion of dollars for its annual budget? 

            Sir, I am sure the US knows fully well the state of Fiji's economy, and the level of poverty in this country.  It seems so unreal and unfair.  The Australian Government built its complex at Nauluvatu, but it did not claim for VAT.

            Also, the way the Bill is brought to this august House is brought without much detailed information.  I have a number of areas that I think the Bill should have come with more detailed information, and the questions are: 

            (a)       How much would be paid to the US contractors, and how much do we expect to be paid to our Fijian contractors on the project? 

            (b)       On the number of paid workers; are both the US nationals and Fijians expected on the site at the peak of the Project?

            (c)       What are Fiji's interests in the global village, particularly with the US, that should warrant our support for the Bill?

            (d)       Is there a reciprocal undertaking that Fiji wants to pursue or negotiate whatever in the immediate future? 

            Sir, those are the four questions that I ask and perhaps, it should come with more details to help us understand Government's position in this undertaking.

            Sir, I feel that these are the issues that Government should provide for us to help us understand the bigger picture, and hence our endorsement.  However, Sir, having said that, historically, the United States is both a big brother to Fiji since World War II, and also the policeman on his beat in the global village.  Fiji is part of that global village.  The US has had a hand in the development of our nation. We do not have to look far to see those developments. 

            Sir, $8 million is nothing, and it is a one-time commitment, compared to the remittances that are coming from the Fiji citizens, who have been employed in the United States over the years.  I am sure, Sir, from the US, Fiji is receiving over $FJ100 million annually.  However, Sir, we could use this as a tool to negotiate residency for our nationals, who are residing illegally in the US.  If we do this, Sir, we can expect the remittances to double. 

            Finally, Sir, here we are only dealing with the $8 million.  What we should be concerned about is the $130 million unpaid VAT yet to be received.  Government should be pursuing that vigorously.

            With those words, Sir, I am inclined to support the Bill before the House.

            HON. SENATOR RATU J. YAVALANAVANUA.- Mr. President, Sir, I wish to make a short contribution to the Bill before the House.

            The objective of this Bill is straightforward and quite clear.  This amendment will enable diplomatic missions to claim refund on the construction of their office complex here in Fiji.  I believe that the VAT legislation does not define embassies or high commissions, as being a wages person for VAT purposes. 

            Mr. President, Sir, it is a vote of confidence on Fiji that some diplomatic missions have gone from renting, to actually building their office complex.  This will involve a considerable investment in our economy.  We have been informed that the construction of the office complex for the United States Embassy, which is estimated to cost around $60 million, apart from creating direct employment, the flow-on effect on the economy will be considerable.  Although the main contractor for the construction of the US Embassy complex will be America, a lot of our local firms will benefit through sub-contract services. 

            Mr. President, Sir, under the Vienna Convention on diplomatic relations under the Diplomatic Immunity, all embassies and high commissions are given immunity from paying taxes.  The Vienna Convention on diplomatic relations was adopted on 14th April, 1961 by the United Nations Conference on Diplomatic Intercourse and Immunities.  The Convention came into force on 24th April, 1964 and Fiji is a signatory to that.  It is for such a spirit that the amendment to the VAT legislation is being sought. 

            Sir, I can only agree that in accordance with the obligations, we should extend this diplomatic privilege to all embassies and high commissions.

            With those few words, Sir, I support the motion before the House. 

            HON. SENATOR E. RANACOU.- Mr. President, Sir, I rise to contribute to the debate on the Bill before the House.

            Sir, we have been informed that the Value Added Tax Decree (Diplomatic Missions - Amendment) Bill, 2006, is to authorise the Government to accede to the United States of America's request for a refund of $6 million worth of VAT surcharge on the construction of its Embassy. 

            Mr. President, Sir, I note with some concern the lack of information, in support of this Bill, as have been clearly explained by former speakers.  Most of the arguments put forward to justify this Bill, during both the briefing given to honourable Members of the Senate and during the tabling in the Senate, Sir, could be considered as assumptions on what benefits may accrue to Fiji.  We have not been informed, if any agreement has been concluded on benefits to Fiji, if we accede to the United States of America's request, for its VAT refund.

            In considering the merits and demerits of this Bill, Sir, in terms of possible benefits or otherwise to Fiji, and in view of the comparative economic sizes, strengths, sustainability, global influences and challenges of these two Samson and Goliath economies, I am torn between two stand points.  On one hand, my heart tells me to support this Bill, while on the other hand, my mind tells me that the Bill is loaded and shrouded with ill-answered questions, doubts and a great deal of assumptions, on possible or hope for economic, social, political benefits which have accrued to us historically and continuing or even increasing in the future. 

            Mr. President, Sir, my heart tells me to support the United States of America, through my support of this Bill, in view of our common historical ties, shared values and assistance, the US has kindly offered to Fiji over the past years.  We share with the people of the United States of America a common colonial history under Great Britain, which gave us the basis of our similar Aglo-phone heritage and values to our two countries to shoulder in times of international conflicts, to preserve our freedom and ways of life as occurred during World War II, Sir, especially against our common enemy over the Pacific region. 

            We fought against communism global expansion, which took our men to the Malaysian peninsular during the 1950s and this has continued in recent times, in theaters of conflict over the Middle East, Eastern Europe and the African continent. 

            Mr. President, Sir, the United States of America has assisted Fiji in many spheres of human, natural resources and technical developments, through the Peace Corps, scholarship grants and in many other areas.  I, and many of our nationals, have been grateful recipients of US scholarships to study in the United States' universities.

            My village hosted a contingent of Hawaii-based US Army Engineer Corps during the 1980s, who donated and installed a mini-hydro electricity generator and wired power to each household.

            Mr. President, Sir, the United States has been our friend and allies in peace and war in the past and I am sure, it will continue to be so in the foreseeable future.  Thousands of our people have settled in the United States and are sending back to Fiji remittances of great economic benefit to our country, far in excess of $6 million refund that we are talking about. 

            However, Sir, given all the benefits that accrued to Fiji from our ties, which I have alluded to and many more that are not mentioned, I strongly believe that in return, the United States has also benefited from its close association with Fiji. Benefits to the United States would be economic, cultural, social, military and political. 

            Mr. President, Sir, although Fiji is small in size and influence at global level, our deep rooted friendship and common shared values and outlook, couple with Fiji's regional strategic physical and geo-political position status, I strongly believe that the US's reciprocally benefited in what is considerable race from its association with Fiji.

            Mr. President, Sir, our participation in theatres of conflicts in the Middle East, East Europe and Africa have been in support of political, military, economic, strategic and security policies determined largely in Washington and other capitals of the western powers.  Our support of their decision and success of our participation, have enhanced interest of those countries in policy areas mentioned above. 

            Our association, assistance and support for the United States and for other countries, therefore, may be regarded as far in excess of our geographical or economic size, emphasising that the benefits from our association are not direct only towards Fiji, but have been mutually beneficial. 

            Sir, the Bill before the House is also intended to attract other countries and established embassies in Fiji, with a view of enhancing benefits to Fiji.  I wish to repeat that those countries intending to establish their presence in Fiji do not do so with reasons far greater than VAT, although the latter may assist. 

            Mr. President, Sir, I repeat, my heart tells me to support this Bill for reasons outlined above, however, my mind tells me that I have reservations towards this Bill.  I do not understand why this most powerful, global and economic juggernaut wants a small economic fry like Fiji to refund its VAT, which is an important economic umbilical cord to this country's comparatively fragile economy.    

            In terms of the United States economy, the $6 million refund it is seeking from Fiji is a drop in the ocean.  As the United States personally requested similar concessions from bigger and stronger economies like Australia, New Zealand, Britain, France and  Germany to name a few, to Fiji the $6 million is significant and substantial, given our precarious balance of trade position, foreign reserve balance and economic vulnerability.  This year, we have to postpone many needed capital projects, maintenance works on infrastructure and expansionary development projects, due to lack of funds.  The above issues and their consequences were discussed at the recent National Economic Summit Conference. 

            Mr. President, Sir, waiver of that surcharge for the United States will undoubtedly, trigger questions in the minds of our vulnerable poor, who comprise about 40 per cent of our population and living below the poverty level, and who are also struggling daily to pay for costs of basic food items carrying VAT surcharges.

            Mr. President, Sir, school committees, especially rural schools, pay VAT to build school buildings and run the school encumbered with that surcharges.

            Mr. President, Sir, the struggling members of our community may justifiably ask why rich United States of America and other countries are being exempted from paying tax and not them.  A reasonable question to ask Government would be, if other alternative options for assisting foreign embassies established in Fiji are being explored, what actual reciprocal benefits will Fiji get, if any have been offered?

            Sir, given the two stand points I have attempted to explore above, in support of and against the Bill before this august House, on balance, I am inclined to support this Bill.

            Sir, I therefore, support the Bill before the House.

            HON. SENATOR ADI L.B. VUIYASAWA.- Mr. President, Sir, I rise today to contribute to the debate and to join my fellow colleagues in voicing my support, for the adoption of the Bill currently under our consideration - a Bill for an Act to amend the Value Added Tax Decree and is sighted here as the Value Added Tax Decree (Diplomatic Missions - Amendment) Bill, 2006.

            The effect of the initiative reflected in the suggested amendment in this Bill is that, permission will now be granted to foreign missions having diplomatic relations and physical presence in Fiji, to claim deductions for cost of construction of new premises to be used for their professional diplomatic purposes.

            Sir, this is indeed a welcome initiative and ought to receive the full commendation of this august body.  When our bilateral partners decide to build permanent premises, embassies or high commissions for themselves in this country, it means that they have a relevant and long term interest in remaining here.  It is an indirect way, from my reading at least, of their telling us that they are committed to seeing our relations last and prosper.

            Sir, Fiji has benefited tremendously from the continued cordial relations it has always enjoyed, with its bilateral and multilateral partners.  If one equates the benefits we have gained over the years from establishing and maintaining diplomatic relations with other sovereign nations, we will all agree that the benefits certainly outweigh the money being requested here. 

            With the escalation of terrorist-related activities around the world, more and more of our bilateral partners are feeling the need for accommodating themselves in secure and well protected premises.

Realistically, Fiji may not be in a position to provide and maintain a level of security they would otherwise require, or meet their level or preference.  Building their own properties provides them this avenue, and we ought to support this endeavour.

            Sir, while on this issue, I seize this opportunity to call and support extensions of ties to other sovereign nations, that have indicated to us their willingness to establish diplomatic relations.  A number of countries have requested to establish diplomatic relations with Fiji at ambassadorial level, specifically in a multi-lateral setting under the United Nations.  Fiji will only stand to benefit positively, from expanding its circle of friends around the world, and I would commend such a move.

            Mr. President, Sir, in conclusion, I wish to say that I was encouraged by the commitment and declaration made by the honourable Minister of Finance, in relation to the construction of the premises of the embassy of the United States in Tamavua, and the need and grievances of the landowners should also be addressed fully.  In our pursuits to accommodate others, we must not forget or overlook the needs of our own.

            I commend the passage of this Bill, Sir.

            MR. PRESIDENT.- Honourable Senators, I intend to adjourn the House, but before that, may I remind you of our informal meeting in the Big Committee Room before the briefing of Bill No. 19 of 2006 after morning tea. 

            Honourable Senators, I will now adjourn the House to 9.30 a.m. on Thursday, 5th October, 2006.

            The House adjourned at 11.00 a.m.