A Bill to appropriate a sum of Eleven Million, Four Hundred and Ninety One Thousand, and Nine Hundred and Forty Three Dollars for the services of the Parliament for the year ending 31st December, 2007 (Bill No. 21 of 2006).

            A Bill to amend the Customs Tariff Act (Bill No. 22 of 2006).

            A Bill to amend the Excise Act (Bill No. 23 of 2006).

            A Bill to amend the Value Added Tax Decree (Bill No. 24 of 2006).

            A Bill to establish the Broadcast Licensing Authority for the purpose of regulating broadcasting and for related matters (Bill No. 10 of 2006).

            The Employment Relations Bill (Bill No. 8 of 2006).

TIME LIMIT ON DEBATE

            HON. LEADER OF THE HOUSE.- Mr. President, Sir, I beg to move:

                        That pursuant to Standing Order 56, a time limit be imposed on the debate on the 2007 Appropriation Bill 2006 (Bill No. 20 of 2006) and the 2007 Appropriation (Parliament Bill 2006 (Bill No. 21 of 2006) as cognate Bills on the following terms and conditions:-

            1.         Such debate shall commence on Monday, 4th December, 2006 and shall be completed before midnight on Tuesday, 5th December, 2006.

            2.         The House shall commence sitting at 10.00 a.m. on Monday, 4th December and at 9.30 a.m. on Tuesday, 5th December, 2006.  It shall rise at 1.00 p.m. and resume at 2.30 p.m. and rise at 4.30 p.m. or thereafter.  Mr. President shall, in his discretion, allocate time for tea breaks during the morning and afternoon sittings.

            3.        Honourable Senators shall be allowed 15 minutes each, excepting for the Mover of the Motion who shall be allowed 30 minutes to move the Motion and 15 minutes to reply to the Motion and; 30 minutes speaking time each for Leaders of each side of the House.

            4.        Honourable Senators, who do not fully utilise their allocated time, may transfer the unused balance to another honourable Senator speaking on the same day.  The speaking order shall be as agreed to by the Business Committee.

            5.         The questions on the second readings of the two Appropriation Bills (Nos. 20 and 21/2006) shall be put before midnight on Tuesday, 5th December, 2006.

            6.        Any infringement on the terms of this motion shall be deemed to constitute a breach of the Standing Orders of the House."

            HON. SENATOR RATU J.L.S. BOUWALU.- Mr. President, Sir, I beg to second the motion.

            Question put.

            Motion agreed to.

            MR. PRESIDENT.- Honourable Senators, I would like to remind the House that we would be dealing with Bills Nos. 20 and 21 of 2006 as cognate Bills, which means that the Bills will be discussed simultaneously, but will be voted on separately.  This is necessary as the Senate is required by Section 49(3)(b) of the Constitution to complete the passage of the two Appropriation Bills by the end of Tuesday, 5th December, 2006. 

            Also, honourable Senators, given the uncertainty caused by the current impasse between the Government and the Military, I have considered it prudent to ensure that this august House completes the passage of the two Appropriation Bills as soon as possible.  I shall therefore, would be calling on honourable Senators to co-operate if we should sit late in the evening. 

DEBATE ON THE 2007 APPROPRIATION BILL, 2006

            HON. SENATOR H.D. KHAN.- Mr. President, Sir, I beg to move that:

            (i)         A Bill to appropriate a sum of one billion, five hundred and seventeen million, seven hundred and nine thousand, four hundred and four dollars for the ordinary services of Government for the year ending 31st December, 2007 (Bill No. 20/2006).

            (ii)       A Bill to appropriate a sum of eleven million, four hundred and ninety one thousand, and nine hundred and forty three dollars for the services of the Parliament for the year ending 31st December, 2007 (Bill No. 21/2006).

            HON. SENATOR RATU J.L.S. BOUWALU.- Mr. President, Sir, I beg to second the motion.

            HON. SENATOR H.D. KHAN.- Mr. President, Sir, I thank you for this opportunity to present the Bills under consideration.  

            Mr. President, Sir, as I rise to elaborate on the Appropriation Bills, as presented by the honourable Minister for Finance to the Joint Sitting of 3rd November, this year, and subsequently passed by the House of Representatives, let me draw the attention of this august House to the concluding statements made by the honourable Minister for Finance in delivering his Address on 3rd November, 2006.  He said and I quote:

                        "Mr. Speaker, Sir, like any country, we face short term challenges.  The good thing is that we have identified these challenges and are beginning to address them.  There is national commitment to work hand in hand and resolve these challenges.  We should not dwell in the past.  It is time to look ahead."

            Mr. President, Sir, furthermore, the honourable Minister stated, and I quote:

                        "Sir, let us not be mistaken that the task ahead will be simple and easy.  It will need all our resolve and cooperation if we are to achieve our goal.  It is our collective goal.  We need the support of everyone.  Government cannot do it alone.  Together we are stronger.  Together we will overcome.  Together we will prevail."

            Mr. President, Sir, my rationale for drawing this august House's attention to the concluding remarks by the honourable Minister for Finance has a special relevance today.  Like any budgetary exercise, the process generally begins from a very early stage in the year.  Obviously, the momentum peaks up during the last few months, preceding the presentation of the Budget or Appropriation Bill. 

            Mr. President, Sir, many assumptions are made largely based on performances evidence from previous trends and a calculated assessment of what the future trends can be.  Needless to say, when this Budget was being prepared, all these ingredients were present.  It would be vicious and hypocritical of me to say with conviction at this point in time, Mr. President, Sir, that many of the assumptions will hold farce considering the rapidly changing economic landscape of Fiji in recent days.

            It would be foolhardy of me to expect the honourable Senators do not find that some of the forecasts and the platforms on which they are based not to have a hollow tone at this point in time.  Economic landscape is rapidly changing and it would be a prudent assumption that many of the deliverables mentioned by the honourable Minister for Finance may become suspect under the circumstances.  However, we are legally bound to turnaround the debate of these Bills within the specific time frame and within tight guidelines. 

            Sir, with the greatest of respect, it is not my intention to suggest that this august House does anything else, but deal with the Bills as presented.  However, it is my duty to draw the attention of the honourable Senators to the unique scenario facing us as we discuss these Appropriation Bills today, no doubt, everyone in the House is conscious of this factor.

            Mr. President, Sir, briefly I would like to draw the attention of the House to the economic performances and outlook, which were highlighted in the honourable Minister's address.

            Sir, the 2006 domestic economy has been forecasted to grow at 3.6 per cent compared to the 0.7 per cent in 2005.  Generally, the growth areas expected to be broad based led by the construction, tourism, finance and business services industries.  The outlook as presented for 2007 is forecasted to grow by two per cent.  Again, the sectors that are to be predominant as drivers of the growth include agriculture, forestry, fisheries, mining and quarrying, manufacturing, electricity, water, transport, communications, finance, insurance, real estate and business services.  Further than that, Sir, of 2008 and 2009, the economy is expected to experience moderate growth, and it is expected that it will grow at 2.2 per cent and 2.6 per cent respectively from 2008 to 2009.

            Sir, the GDP or growth figures for the last six years:

            2001 - two per cent;

            2003 - one per cent;

            2004 - 5.3 per cent;

            2005 - 0.7 per cent (albeit provision); and

            2006 - 3.6 per cent (forecasted. 

From next year (2007), it has been forecasted to two per cent and the year after, 2.2 per cent.

            Sir, the following are some of the key performing sectors that contribute to the economy.

            Sugar Industry: Regardless of all the trepidations and doom and gloom, there had been voice for years now that the sugar industry still remains a very important factor and plays an important role in the livelihoods of many thousands of people of this good nation of ours.  The changes required for the sugar sector results from global developments, largely from WTO-driven trade liberalisation, the erosion of quotas, preferential pricing and the consequential European Union (EU) reforms. 

            Of course, against this backdrop, Mr. President, Sir, reforms have been initiated to raise farm level and mill efficiency to steer the local industry to viability.  A growth of 6.2 per cent is forecasted for this year (2006), 1.3 per cent for 2007, 12 per cent for 2008 and 5.3 per cent for 2009.

            Sir, the EU had already announced its intention to progressively cut preferential prices offered to Fiji sugar, from five per cent in 2007 up to 36 per cent by 2009 and 2010.  The EU has confirmed, however, its support for the cost of this transition phase, and also through other trade arrangements such as the Economic Partnership Agreements (EPA), which are being negotiated.  The support provided by the EU through the National Sugar Adaption Strategy will play a pivotal role in addressing the production side of the industry through our re-planting programme, supporting research and drainage and irrigation activities. 

            Mr. President, Sir, with the Government support, the FSC has secured an $86 million loan from the Exim Bank of India, to upgrade the machinery and equipment in these mills.  The re-capitalisation programme should improve the milling efficiency of the FSC, reduce breakdowns and increase sucrose extraction rates.

            Complementing these institutional reforms in the industry are programmes such as the Alternative Livelihood Project (ALP).  It will focus on providing diversified opportunities on-farm and off-farm for those falling out of the industry, such as marginal sugarcane farmers, former sugarcane farmers, mill workers and rural communities in cane belt districts.  Despite the lower and expected commencement in 2006, implementation is expected to pick up in 2007.

            Non-Sugar Agro-based Industry: This sector is projected to grow to five per cent in 2006, 6.5 per cent in 2007 and eight per cent in 2008 and 2009.  This positive outlook is underpinned by the expected increase in range and production of crops to be the focus on moving towards import substitution in the short-term.  The support from ALP and EU supported Sugar Adaptation Strategy, are also expected to boost local production in cane belt areas.

            Importantly, Mr. President, Sir, the increase in the importation of agricultural produce, particularly by the tourism industry is largely due to the inability of domestic farmers to provide a consistent supply of quality products.  Of course, this adds to the pressure on Fiji's Balance of Payment, as we all know.  The opportunity to increase domestic supply of fresh fruits to the tourism industry is significant, but requires a major re-orientation of agricultural sector programmes.  Emphasis in the short-term will be placed on increasing this production.

            Tourism: Mr. President, Sir, this sector is the main driver of the economic growth and largest source of investment and foreign exchange earnings.  It is private sector-driven and globally competitive.  A positive outlook is projected over the next three years for the hotels and restaurant sub-sector, with growth at 2.9 per cent in 2007 and 2.8 per cent in 2008 and 2009. 

            Sir, the positive outlook is driven by increased room inventory, expanding eco-tourism and village-based activities, increased flights and the recent entry of new carriers.  Large scale developments with the likes of Sofitel Fiji Resort, Hilton Fiji Resort, the Naviti Resort in the Coral Coast, et cetera, would collectively add to 1,500 new rooms.  Construction work at the moment, is also in progress at the Marriot Fiji Resort and Spa in the Intercontinental Fiji Resort. This will provide a further growth impetus in the industry.

            Visitor arrivals in 2006, Sir, are projected at 576,000 and it is envisaged at this stage, to reach 709,000 by 2009.  The shift in the marketing strategy by the Fiji Visitors Bureau towards destination branding is geared at increasing Fiji's market share.

            Investment: Mr. President, Sir, although this sector has risen in the recent years, it remains below the average 20 per cent of GDP for developing countries, and below the SDP target of 25 per cent of GDP.  A particular concern has been the low rate of private sector investment.  This sector investment has doubled since the growth of 2006, but still remains at

seven per cent of GDP.  It is anticipated that the restructuring of the public sector will transfer assets and business opportunities to the private sector, and macro-economic management will establish an environment conducive to investment.  The re-orientation of public debt management to lower levels of borrowing will increase the availability of funds for private debt and equity finance of productive investments in Fiji.

            Balance of Payments: Mr. President, Sir, Fiji's overall balance of payments' position deteriorated to a deficit of $223 million in 2005, from a surplus of $102 million in 2004.  This was due to the higher deficit in the current capital and financial accounts. 

            For the current year, Sir, the current account deficit is expected to increase further to a 22.8 per cent of GDP.  For 2007, the current account deficit is expected at 19.5 per cent of GDP and the capital account deficit is forecasted at .3 per cent of GDP.

            The main medium-term macro-economic objectives of the Government, Sir, can be highlighted by the target of:

            (a)        economic growth, five per cent per year;

            (b)        poverty reduction, five per cent per year;

            (c)        inflation, less than three per cent over a five-year period;

            (d)        foreign exchange reserves, four to five months of input cover;

            (e)        Government deficit, two per cent of GDP or lower over the next five years;

            (f)         Government debt, reducing debt to a sustainable level of 45 per cent of GDP or below by 2011; and

            (g)        investment, about 25 per cent of GDP.

            On the indicative medium-term fiscal framework, Sir, the debt level at:

            2005 - $2.422 billion or 52.5 per cent of GDP;

            2006 - $2.579 billion or 52.8 per cent of GDP;

            2007 - $2.684 billion or 52.1 per cent of GDP;

            2008 - $2.766 billion or 50.8 per cent of GDP; and

            2009 - $2.824 billion or 49.1 per cent of GDP.

GDP growth for 2007 is forecasted at $5.153 billion and 2008, $5.445 billion.

            The overall focus of Government's fiscal policy, Mr. President, Sir, over the medium term will be focussed on pursuing progressive reductions in deficit levels to maintain sustainable debt levels.  These two have a very important correlation, whilst at the same time, maintaining support for investment and essential services. 

            Government's expansionary fiscal policy during 2001 to 2003 was associated with efforts to stimulate the much-needed economic recovery coming out of the events of 2000.  However, the financing of these deficits led to increasing debt levels, rising from 47.7 per cent in 2002 to around 52.5 per cent of GDP by the end of 2005. 

            The Government realises, Mr. President, Sir, that more effort is needed to accelerate the reduction in debt and in order to achieve this, it is committed to attaining the desired medium-term budget deficit targets stated in the 2007 Strategic Development Plan (SDP).  These deficit targets will be pursued through the following measures:

            (a)        Managing of growth and expenditures;

            (b)       maintaining a positive or increase Government savings by slowing the growth in operating expenditures;

            (c)       continuing efforts to strengthen tax compliance and increase efficiency of collection;

            (d)      ensuring that Government's net deficit borrowings are earmarked for productive investment expenditures; and

            (e)       ensuring that asset sale proceeds are reserved for debt repayments and growth, enhancing capital investments that are well justified, properly planned and implementable.

            Revenue Policy: Mr. President, Sir, Government's revenue and taxation policies are governed by the following conventional guidelines and principles:

            (a)        maintaining the integrity of the VAT system;

            (b)        minimising levels of distortion;

            (c)        tightening compliance in the tax system;

            (d)        improving collection of tax arrears; and

            (e)        promoting the user-pay principle.

            Expenditure Policy: Mr. President, Sir, the Government policy focuses on supporting the core priority sectors of health, education, poverty assistance and infrastructure.  More emphasis will be placed on investment and export-orientated initiatives, particularly in the resource and agro-based sectors.  This will ensure that economic benefits spread across rural and under-developed regions, and in the process, provide sustainable livelihoods for the disadvantaged.  The Government will manage the increases in operating expenditures within the growth in operating revenues.  The most effective way to achieve this is to manage the increases in wages and salaries, the main contributor to recent increases in operating expenditure.  In this regard, the Government has engaged donor technical assistance to review the manpower needs of the Government and provide a roadmap for Civil Service Reforms.

            As I said earlier, Mr. President, Sir, the Government has set itself a target debt level of 45 per cent of GDP.  To effectively achieve this, the Government has committed itself to consistently reduce the net deficit as percentage of GDP over the medium to long term.  A sustainable reduction in the net deficit is largely achievable in the Government's operating savings increases over time thus reducing the need to borrow to finance the net deficit.  The overall budget forecast for 2007, Sir, shows the total operating receipts in direct taxes, fines, fees, et cetera, and other revenues at $1.448 billion and payments totalling $1.53 billion.  The net cash flow from operating activities at 194, thereafter the receipts from investing activities of 0.7 and payments of $300 million thereabouts, with the net cash flow deficit from investing activities of $299.95 million.  The net deficit forecast for next year (2007) is $105.3 billion or percentage of GDP, that is two per cent. 

            Mr. President, Sir, I will not elaborate any further in terms of the various measures that have been announced by the honourable Minister for Finance.  These have been made available and discussed over the last week by honourable Members, which are in various facets and forms already presented to us in the various handouts given to us.

            Sir, any economic platform is underpinned by the act to balance limited resources against unlimited and perhaps insatiable demands.  In developing countries like ourselves, we are constrained by natural limited resources, isolation by several thousand miles from the nearest market, small population base and huge reliance on goodwill of foreign economies.  The task of budget balancing exercise and meeting everyone's expectation is daunting, not everyone will find the overall measures proposed to meet with all their expectations.  The truth of the matter, Sir, there is only so much to go around.  Sacrifices have to be made and certain luxuries have to be foregone.  The honourable Minister for Finance and the SDL Government over the past six years have made valiant efforts to spread the benefits equitably to all needy sectors.  The 2007 Budget is in keeping with this momentum.  It needs the goodwill and cooperation out of all citizens to be able to make sincere contribution to a better future for our generations to come.

            Mr. President, Sir, I commend the Bill to the House.

            MR. PRESIDENT.- Honourable Senators, I intend to adjourn the House now for morning tea. 

            The House adjourned at 10.50 a.m.

            The House resumed at 11.25 a.m.

            HON. SENATOR RATU A. KATONIVERE.- Mr. President, Sir, I rise to contribute to the debate on the 2007 Appropriation Bill.  At the very outset, I wish to thank the Government and the honourable Minister for Finance and his staff for a very good and comprehensive Budget.  This Budget is part of the strategy of Government to move us forward.  Whilst nurturing this positive platform with the newly elected Multi-Party, Government has identified a number of challenges Fiji faces in trying to achieve economic stability and sustainability with the theme of "Partnership for Sustainable Growth".  However, it must be mentioned that for the Government to achieve the budgeted levels and containment of revenue, economic, social and political stability must prevail.  In spite of what the critics say, this is a visionary Budget, which I believe will benefit all sectors of our community.  The Government has placed emphasis  on reducing the dependence on imports, increasing the export base and focus on primary industries.  To me this means - let us go local, and I commend the responsible Ministers for their efforts because it will involve provinces in their economic strategies to roll out programmes that will enhance natural resource utilisation.

            The focus has justified the increase of allocation to the Fijian Affairs, a sum of $1 million in their structural adjustment that will realise reforms to upgrade the 14 provincial offices in Fiji to be productive through evolution from within.  This, Sir, augurs well with the dire wishes of the Bose Levu Vakaturaga and the formation of the Affirmative Action of the Government in trying to enhance Fijians' participation in business and the overall economy.

            The focus of alleviation of poverty is high in the Government's development agenda and is a key issue of national interest.  I commend the Government's commitment in creating more informal income generating opportunities through micro-enterprises and equipping the poor and disadvantaged with the skills to utilise such opportunities. 

            I wish to congratulate the honourable Minister for Women, Social Welfare and Housing and his staff for the walking out poverty programme.  So much has been made of the poverty of our people in terms of some income measures, yet we have land, forests and the coastal resources.  The walking out of poverty programme provides the correct impetus for our people to use their abundant personal and physical resources to improve their income levels and lift their standards of living.  Too often, criticisms have been levelled against the Fijian people for their failure to use their land and sea resources so they could reap the economic benefits.

            Mr. President, Sir, we know of the protective policy of the Colonial period.   While Fijian traditions and culture were protected, the rigors of the Girmit system taught the Indian cane farmers the skills and discipline of commercial farming.  The criticisms that Fijians are not properly using their resources are ill-conceived.  A Fijian lives a subsistence mode of living.  He uses his resources to feed off the land, and make just enough to meet his financial obligation.  If he is to be made to use his resources commercially, he has to be taught the skills and discipline of the true entrepreneur.  This is a very important point.

            Commercialism is a different ball game.  Figures indicate that in Australia and the USA, 50 per cent of new businesses do not make it past the first year, while only 10 per cent make it after the fourth year. 

            I, therefore, applaud the Government's decision to allocate about 19.5 per cent of the estimated expenditure for 2007 towards education and the development of Youth and Sports.  For measures to make the cost of education affordable, I am especially grateful for the allocation of $2.67 million for the Fijian Education Unit.  I am grateful to the Ministry of Education for having commenced enterprise education at primary school level in rural area, which encourages interface between school work and the survival skills out there in the community.

            Some of these projects include masi making, poultry farming, agriculture, art and craft, seaweed farming and so on.  I congratulate Government for the very comprehensive vocational training programmes in technical education that is now part of our school curriculum.

            Mr. President, Sir, I express my gratitude to Government and to the European Union, for the massive programme of infrastructure assistance to some of our schools.  I am aware that work has already started on six schools in Macuata.

            Mr. President, Sir, I am grateful that this Budget has finally made the provision of $1 million for the Prime Minister's residence.  As the elected leader of our nation, the honourable Prime Minister is entitled to an official residence that offers him and his family the privacy and material comforts to enable them to perform their important duties concerning the leadership of the land.  Moreover, official residence specifically built for our Prime Minister will add esteem and respect for the highest elected position of the land.

            The official residence of leaders of the world's leading democracies including the White House and Number 10 Downing Street, have become icons of the institutions of the State in America and the United Kingdom.  Likewise, the provision for the Prime Minister's residence in this Budget will strengthen our democratic institutions, as well as create a landmark of social and cultural significance.

            Mr. President, Sir, I am grateful for the provisions in this Budget for new Government initiatives to improve the lives of our people in rural and outlying islands.  This will greatly enhance the development and encourage economic activities in our maritime provinces.

            Mr. President, Sir, I thank Government for the provision of $1.3 million in this year's Budget to support the work of the Coconut Industry Development Agency (CIDA).  This has been revised to $1 million in the 2007 Budget.  I believe that work is on-going in support of coconut seedling nursery, plantation rehabilitation, research and piloting the processing of senile trees in value added products.

            Mr. President, Sir, processed timber is now very expensive.  For our people in outlying islands and in Vanua Levu, to build their homes, not only do they pay for such expensive timber, they have to pay the freight cost as well. The paradox is that traditionally, most houses in the outlying islands use coconut timber.  Senile coconut trees abound in rural areas in their thousands but the poor in our rural areas and the maritime provinces are made to pay for expensive processed timber because processing and marketing infrastructure for processed timber is well developed in our urban centres.  The continuation of the grant to CIDA for trials on value added processing of coconut timber is most welcome.

            I sincerely believe that if done properly and commercially, our rural dwellers can make viable use not only of coconuts and copra, but more importantly, of a coconut timber industry built on senile coconut palms.

            Mr. President, Sir, I thank Government for the $7.2 million in the Budget for rural and outer island developments.  This signifies Government's commitment to poverty alleviation, and to improve the income earning capacity and reduce economic disparities in rural and outer islands.  With further assistance from the Asian Development Bank, this project will involve both the Government and the private sector in developing the resources of the rural and outer islands to increase exports, and improve their standard of living.

            Mr. President, Sir, I support the call for marketing and transport infrastructure to increase the productive outputs of our people in Vanua Levu, and other maritime provinces.  One of the main pillars of this Budget is to increase exports, and improve the livelihood of the people.  The provision of $100,000 for agricultural extension work will be directed, partly, at improving the quality, consistency and reliability of the export of fruits and vegetables, mostly pawpaws, mangoes and pineapples.

            Mr. President, Sir, there is a big demand for these commodities in our hotels all over Fiji. The increase in duty of imported vegetables is a good and necessary measure.  I urge the honourable Minister for Agriculture to ensure the participation of landowners in the cultivation of fruits and crops to supply our hotel industry. 

            On the same token of concern to us in the North is the delay of the delivery of subsidised programmes with the Fiji Development Bank (FDB) to assist applicants who have gone through the rituals of qualifications with the assistance of the forestry and fisheries sector.  There is a large market in New Zealand and Australia for our dalo and other foodcrops.  The Government's outer island development programme can be very useful in providing the marketing and transportation infrastructure, to enable the people of the outer lying islands to effectively participate in commercial cropping ventures.

            Mr. President, Sir, we cannot continue with the viable commercial use of our natural resources without first safeguarding their proper use and management.  In such respect, I congratulate our honourable Prime Minister and the Government for the far-sightedness to social responsibility and protection of the environment.

            In the last six years, our Government has shown its commitment to the protection of our natural environment through the passage of the Environment Management Act in 2005 and other similar legislation.  These measures contribute towards the ideals of sustainable natural management, as well as to encouraging and assisting our communities throughout Fiji to conserve the integrity and diversity of nature.

            Mr. President, Sir, I support the Bill before the House.

            HON. SENATOR J. KOROI.- Mr. President, Sir, I wish to thank the honourable Minister for Finance and National Planning for tabling the first Multi-Party Government's Budget.

            Having said that, Sir, I must at the outset register my reservations on the 2007 Appropriation Bill, which has quite rightly been described as anti-poor, regressive and lacking the initiative to rejuvenate our economy.  The increase in direct taxation with 20 per cent increase in VAT is an anathema to the policies of the ruling party, which portrayed itself as a party that cared for the poor during the 2006 General Elections.  Added to this, the imposition of excise duty on imported basic food items becomes readily evident that this Budget will penalise the poor at the expense of the rich.

            Sir, the honourable Minister for Finance in his Budget Address consistently highlighted the Soqosoqo Duavata ni Lewenivanua's (SDL) stand on poverty alleviation and rural dwellers.

            In his 2002 Address, he stated that the Government would implement firm distributive measures that addressed the poor and the rural dwellers.  He pointed out that poverty remained the scourge of the developing world.  Now, we can argue endlessly about the exact statistics, but we would all agree that we need to eradicate poverty in Fiji. 

            In 2004, the honourable Minister for Finance said and I quote:

                        "Development has little meaning if the poor and the vulnerable are marginalised.  We must build prosperity together to ensure the Government provides for the needy and poor."

            Again, in 2005, he reiterated and I quote:

                        "Poverty alleviation is a priority of Government.  Government understands the difficulties that our rural communities face in their daily lives. We are committed to improve the livelihood of these communities."

            The Governor of the Reserve Bank in the Fiji Times on Saturday, 25th November, 2006 stated that VAT was put in place to help reduce debt and help fund the Government development plan and social obligations.

            Sir, there are many other ways available than to increase VAT on imported basic food items, which directly affect the poor and rural dwellers.

            Mr. President, Sir, the mismanagement of Government finances is a matter of grave concern for responsible citizens.  The Public Service Commission has failed to take decisive action nor has it held anyone accountable for the reports of corruption and the much-talked about scam in the Water Supply Department.  Instead there are token gestures of officers being singled out and either suspended, fired, transferred to other ministries or even promoted.

            Sir, why should Fiji's poor suffer two increases in VAT in the last three years to compensate for the incompetence of senior civil servants and their political masters?

            Mr. President, Sir, I hail from the farthest island in Lau and I know that you understand that by the time basic items such as kerosene reach Ono-i-Lau, the price they pay would have tripled or quadrupled from the prices paid in Suva.

            Mr. President, Sir, the honourable Prime Minister is the only Prime Minister who has his speeches printed in the three daily papers regularly not only in English, but sometimes in the vernacular as well.  In the briefing last week, we were told that this is funded by a Taiwanese grant.  Government should tell the nation how much the Prime Minister's speeches have cost since 2002.  Perhaps this money could have been better utilised in assisting at least one family living below the poverty line.

            The contentious Bills - the Promotion of Reconciliation, Tolerance and Unity Bill, Qoliqoli and the Land Claims Tribunal, Sir, will not be supported by the Fiji Labour Party.  The Government must tell the nation how much it has already spent on these contentious Bills.

            Sir, I must state my utmost disappointment at the unilateral imposition of the surcharge by the FEA Board.  The 30 per cent overcharge will bring greater hardship to the poor and will contribute to higher production cost with respect to the manufacturing sector cost, which will all be passed on and absorbed by the consumer.

            There was, of course, a far simpler and expedient alternative and that was to streamline the operations of the FEA, drastically cut the largesse and excesses of the FEA Board and to look at more practical ways of generating energy.  Our dependence on diesel, to power out electricity generators is outdated and rather lacking in innovation.  The development agenda and Government policies and programmes mentioned in the Budget to better distribute the benefits of economic growth to the poor are long term programmes.  What we need are more immediately effective initiatives.  We need more jobs, improved wages and better working conditions and we also need education assistance schemes, so that all children are privy to equitable opportunities in the education system.  We need all of these now!

            Sir, there is too much talk and little or no action taken by the Government and civil servants charged with the responsibility to serve civil society, not only the rich, but most particularly, the impoverished and disadvantaged.  With all of the finance and development works carried out by the Government to assist in eradicating poverty, the number of poor people continues to escalate at an alarming rate.  Results of a survey indicated that 34.4 per cent of the population lived below the basic needs poverty line, indicating a five per cent increase from the 1990 to 1991 household income expenditure survey.  What then of the honourable Minister for Finance's rhetorical speeches since 2002 in alleviating poverty?

            The Government urgently needs to rethink their policies and programmes for the alleviation of poverty.  They need to develop more immediately interactive and real measures to address directly the basic need of the poor, hence increasing VAT, is yet another example of insensitive and irresponsible governance.  It makes no sense at all to tax the people in order to help fund development and social obligations.

            Turaga na i Liuliu ni Bose, au gadreva me bau dua na noqu cau ena vosa vaka Viti, meu vakaraitaka kina e vica na ka bibi ka dodonu mera kila na noda na i Taukei.

            Taumada, au vagolea na veidokai kei na veivakalagilagi vua na Kalou bula ena nona veimaroroi.  Tabu saka ki na veitikotiko vakaturaga ena noda vanua, na veiyavu cecere ka ko ni biuta koto mai na nomuni vakanuinui ni na dau navuci yani ena vale ni Bose cecere oqo na veivakasama ena vakavurea na tiko vinaka kei na bula sautu.

            Tabu saka talega vei kemuni na luveda, na makubui keimami o ni sa dui tiko ena  nomuni veivuvale ni sa sereki na vuli.  Me maroroi kemuni na Kalou ena Siga ni Sucu oqo me yacova ni laki tawase na yabaki.  Sa voleka ni cava na yabaki 2006.  Ni da rai lesu, au vakabauta ni ko ni na duavata kei au ni sa dua dina na ka na drakidrakita ni gaunisala eda muria mai. E dina ga ni da taleitaka ni a mai vakamuri na Yavu ni Vakavulewa ena vakaduri ni Bose Yaco Cokovata, ia na ka au sega ni taleitaka kau gadreva meu vakamatatataka vei ira na noda ena veikoro, koya na nona a sega ni liutaka vakatotolo na Matanitu na veivosakitaki ni Yavu ni Veiqaravi Raraba ni Bose Yaco Cokovata se na Multi-Party Cabinet Ground Rules.

            Na tikina oqo e yavalata yani nai Soqosoqo ni Tamata Cakacaka se Labour Party sa qai laki yadrava na Matanitu na nona i tavi ni dodonu me virikotori eso na yavu ni veiqaravi se na Ground Rules.

            Au vinakata talega meu vakaraitaka ena Vale ni Bose cecere oqo, ka vakatalega kina vei ira na noda era na saravi keda tiko ni sa vo tiko e vica na ka e dodonu me yadrava na Matanitu, oya:

            (a)      na lawa vakaturi ka me baleta na kena valuti na na vakayagataki i lavo vakailoa se na anti-corruption;

            (b)      na lawa vakaturi ka me vauca na nodra vaka vakarautaki ira ena i vakatagedegede e cake ko ira era vakaitutu lelevu se na code of conduct, ka dodonu me sa vakalawataki ni oti ga e lima na yabaki mai na gauna a vakadeitaki kina na Yavu ni Vakavulewa, me vaka e dusi vakamatata koto kina ka vaka na lawa vakaturi me baleta na galala ni vakau-i-tukutuku se Freedom of Information.

            Na vei lawa vakaturi kece oqori, kevaka ena sega ni navuca kina vakatotolo na Matanitu e dua na ka, e na dolava tiko ga na katuba ni kena vakayagataki tiko ga vakailoa na i lavo ni Matanitu, na nodra sega ni qaravi vakavinaka na lewenivanua mai vei ira na i vakalesilesi kei na kena vunitaki na i tukutuku ni vakasabusabutaki ni yau ni Matanitu ka dodonu me ra kila na lewe i Viti.

            Turaga na i Liuliu ni Bose, keitou dau dikeva vakabibi ka tutaka na lewe ni soqosoqo ni tamata cakacaka na FLP, na kena wasei vakavinaka kei na kena vakayagataki vakadodonu nai lavo ni Matanitu, ka vakabibi na kena vakagolei na i lavo me baleta na gagadre cava ga e tiko, ka me kakua vakadua ni vakayavutaki ena veivakaduidui vaka matatamata. 

            Turaga na i Liuliu ni Bose, sa leqa tu mada vakailavo na Matanitu, qai dau mai sivia yani na i wiliwili ni vakailesilesi era dau gole yani e na so na i lakolako ki vavalagi.

            Na vakaitamera ni wiliwili ni Bose Yaco kei ira na i Vukevuke ni Minisita e vakarisi kete na vakadomobula ni lavo e vakayagataki tiko me baleti ira.  Sa rauta me sega ni dau vakacavara na Matanitu na nona cakacaka ni veivakatorocaketaki, ka ni dau suka vakawasoma na i lavo ni veiqaravi raraba me qaravi kina na tubu ni sau ni tamata cakacaka.  Sa dusia tiko 'oya ni sa lala tiko na tobu ni lavo maroroi, me walia na leqa ni sau ni tamata cakacaka. 

            E basika tiko na leqa oqo ni vakatara tiko na Matanitu na vakayagataki i lavo vakalialia ena veika tawayaga me vaka na sivia ni wiliwili ni Lewe ni Bose Yaco.  Qai mai kena i lutua yani, Turaga na i Liuliu ni Bose, na nodra saumi tu ga na Mata i Palimedi, ko ira era a vakacalai vakalawa, bala e vale ni veivesu ni ra suka mai, era vakadaberi tale e na veta i cake ni veiqaravi era tu taumada kina.  Na i vakarau ni veivakaduiduitaki vakaoqo, Turaga na i Liuliu ni Bose, e sega ni yaco tale e na dua na Matanitu e vuravura.  E yaco walega ena noda vanua o Viti.

            Na yaloyalo ni bula cava eda via boroya me ra sarava na luveda kei ira na makubuda?  Au kurabui ka qoroqoro ni sa sega sara ga ni rawa ni da cakacaka vakadodonu.  Eda vakayacora tiko na vakaveitaliataki ni ka, ia ko ira na noda ena veikorokoro era sotava tiko na veileqa e tawa wiliki rawa.  Oqo, Turaga na i Liuliu ni Bose, na veivakalolomataki levu.  Kevaka eda kaya tiko ni da lotu, ia me da waraka tiko na kena i sau.  E na dui muri keda na noda i valavala.

            Eda nuitaka ni na cabe na matanisiga ni veiqaravi e na 2007, me na cadra vata mai kei na vuqa na i vakavuvuli vinaka eda sa vulica rawa ena veigauna sa sivi me rawa kina ni da tara cake e dua na dela ni gauna lagilagi vei ira na luveda me ra bula donuya.

            Esa noqu masu kei na noqu vakanuinui vinaka mo ni kalougata ka bula balavu tiko na, Turaga na i Liuliu ni Bose, kei kemuni taucoko na noqu i tokani ni Lewe ni Matabose cecere oqo, me da wasea vata na rarama kei na dina ni veisasaga yaga eso eda vakaitavi vata tiko kina ena yabaki oqo, 2006.

            Mr. President, thank you for listening to my deliberation on the first Multi-Party Government Budget Bill for 2007.  Sir, I regret that I cannot support the Bill before the House.

            HON. SENATOR DR. J.C. FATIAKI.- Mr. President, Sir, honourable Senators of this august House.  I rise this morning to make a brief contribution to the debate on the 2007 Appropriation Bill.  Let me say at the outset that I recognise the considerable work involved in the putting together a national Budget, and for that the honourable Minister for Finance and his team should be commended.  I have no doubt that many late hours were spent in collating information and compiling this most comprehensive document that we are deliberating on today, the Budget Estimates for 2007. 

            Having said that, and after having spent the better part of the last four weeks perusing these documents closely, and comparing the last three previous budgets, I cannot help but feel that this year's Budget lacks clarity, significant innovation, transparency and new direction.

            Much has been made of our country's key strengths by the honourable Minister in his Budget Address.  However, I think it would not be inappropriate to suggest that the picture is far from rosy and that the economy is indeed going through a difficult and critical period.  The future unfortunately, also looks grim and bleak, and I quote the words of a respected Economist and contributor to the Fiji Times in his critique of the 2007 Budget.  He said and I quote:

                        "This new budget provides for $1,554 million in total cash spending, to be financed from tax and non-tax revenues in the amount of $1,447 million, leaving an income gap, a deficit budget of $107 million.  The proposed amount of expenditure represents an 8.9 per cent increase from the expected spending this year, while projected revenue will be higher by a whooping 14 per cent.

                          Such perceived buoyancy of revenue collection and very generous spending allocations made to Government ministries, agencies and departments in a largely non-growing environment (real GDP growth estimated at 0.7 per cent this year, projected to be two per cent in 2007) can be termed as no less than a recipe for disaster, Government's eventual bankruptcy, sky-high interest rates, run-away inflation and nose-dive in the exchange value of the Fiji dollar."

Harsh words indeed and possibly overly pessimistic.

            However, I would have expected at the very least that the prudent thing to do would have been to incorporate into this year's Budget significant new initiatives and radical changes in thinking and policy direction.  Sadly, this has not happened and we are in for more of the same failed strategies and innovations previously applied unless, and I repeat unless we are willing to take the hard but necessary steps to walk the talk and translate rhetoric into reality.

            Let me elaborate on some of these measures that Government proposes to implement as part of its Policy Support Programme, namely Undertaking Key Reforms.  I will now touch on the Civil Service Reforms.

            Mr. President, Sir, for the past five years, I have read in all Budget speeches, the intention of Government to reform the Civil Service.  This time around, it aims to reduce the cost of the Civil Service from 14 per cent of GDP to seven per cent of GDP over the next five years, a most laudable initiative.  However, further perusal of the Budget reveals that the Government proposes to increase the number of Civil Service employees to an all time high of 31,043 in 2007, an increase of 5.5 per cent compared to 2006.  How on earth will we ever achieve our stated goal of reducing the cost of the Civil Service by 50 per cent in the next five years, if we continue to increase the size of the Civil Service year-in and year-out?  I stand completely confused.

            Public Enterprise Reforms is another area in the initiative.  We have heard much about the benefit of privatising public enterprises, making them more efficient, customer-driven and profitable.  If this were to occur, then the exercise would be indeed worthwhile and praiseworthy.  My concern, Sir, is that we must, in the process, ensure that we do not just shift wealth from Government coffers into the pockets of private investors and increase the costs of water, electricity telephone charges and other basic services.  Likewise, we must ensure that essential services that some of these entities provide are not compromised under the guise that they are unprofitable, such as the current state of affairs that exists with many rural and outer island airports, where the Airports Fiji Limited (AFL) is reluctant to maintain these unprofitable airports at the risk of reducing its profit figures for the year, as pointed out by their Chief Executive Officer (CEO) in the Fiji Times last week in responding to a query from a reporter.

            A third initiative suggested by Government in reform is the Public Financial Management Reform (FMR).  I must confess that some of the initiatives suggested by the honourable Minister for Finance in his Budget Address are very useful, and to be commended.  However, Sir, I would suggest that much, much more would be simply gained if Government were to seriously consider actioning all, and I repeat, all recommendations published in the Auditor-General's Report that was recently released. 

            The instances of financial mismanagement, corruption, abuse of Government funds and outright fraud are many and permeate all areas of Government operations.  Unless and until Government is willing to address these expeditiously and seriously, the problem, like a chronic sore, will continue to fester and all initiatives to reform public financial management will be doomed to failure.

            Sir, we have heard much in the recent past of the Multi-Party Cabinet concept that our Constitution imposed upon us after the last General Elections.  I recall the widespread optimism and the desire of all our people and our nation for this to succeed, and for us to move forward in unison.  Unfortunately, it has become evident that all is not well in this regard, and the divisions in Cabinet that manifested themselves during the Budget debate in the Lower House over the past three weeks, has been less than inspiring to, and most certainly far from unifying our people.  The fundamental question one is forced to ask is; why are we unable or unwilling to unite, despite all the rhetoric of multiculturalism, unity, partnership and Multi-Party Government?

            Sir, the answer and blame must surely lie with the powers that be, namely, the leadership of our country - those in Government and those who are not in Government.  I am reminded in this instance of the often quoted phrase; "To whom much is given, much is demanded", and wonder what it would take to have leaders who would rise above petty party politics, recognise humility as a strength and place their country truly above self and ego.

            Mr. President, Sir, I would suggest that our country demand true leadership that encompasses all communities in a genuine partnership and with a genuine commitment to working together for the betterment of the lives of all our people and our nation, and most importantly, in deeds and not just in words.

            How else can one explain the basis on which allocations for sports in the 2007 Budget gives rugby, $500,000; netball, $500,000; the Hobie Cat Championship (which is normally contested by 20 people), $200,000; bowling, $200,000 and yet, not a cent is given to soccer, despite their request for $400,000.  The sport is followed by a good 40 per cent of the people of this country, and this act is not only unfair and unethical, but I am ashamed to say unchristian and ungodly, and I beg the pardon and forgiveness of my Indian colleagues.

            At this juncture, Mr. President, Sir, I beg your indulgence as I use my home island of Rotuma, as a case in point in illustrating my concerns about how much of the rhetoric in the Budget Address, does not translate into reality on the ground.

            Sir, it was the honourable leader of the Fiji Labour Party, who spoke at great length about the poverty in the country, and the honourable Minister for Finance, who in his Budget Address, pegged the official figure at 34 per cent of the population living below the basic needs poverty line.  Let me re-emphasise that figure of 34 per cent, or 1:3 people being so poor, that they cannot even meet their basic needs.  This was followed immediately afterwards by observations that:

            (a)       more than half of Fiji's population continue to reside in the rural and outer islands; and

            (b)       that the survey into poverty (which came at these figures) also showed that the incidence of poverty is greatest in these areas (rural and outer islands).

            Mr. President, Sir, in the Rotuma Island context, if I were to apply the same criteria for determining poverty, then the figure of people on the island who live under the poverty line would be closer to 80 per cent.  Sadly, this figure could probably be applied to many Fijian villages and Indian settlements in the interior of Viti Levu and Vanua Levu, and the other outer islands.

            Sir, we are then reassured that rural and outer island developments to raise the livelihoods of these people is "a high Government priority", and that appropriate budgetary measures will be taken to address these.  Unfortunately, a closer scrutiny of the budgeted allocations and their relative amounts in terms of the overall budget, paints a vastly different picture and demonstrates exactly the opposite.

            Mr. President, Sir, I will now give some examples.

            The subvention allocation for the Council of Rotuma remains at $220,000, the same as it has been for 2005 and 2006, and is only adequate to pay for the wages and allowances of the Council staff and members, with no scope for any initiatives by the Council to do anything further by developing the island.

            The shipping franchise scheme which provides shipping services to the remote and "uneconomical island routes", and which serves as a lifeline for all outer island people, has had its budget reduced from $2 million in 2006 to $1.5 million in 2007.  Despite this subsidy, Rotuman islanders continued to be penalised with exorbitant fares of $220 to $280 return, for travel on ships that are barely seaworthy, unhygienic, unsafe and totally unsuitable to travel long distances to Rotuma.  Words cannot describe the nightmare, Sir, of travelling with 150 other people, jammed like sardines and sleeping on their feet for the two-day voyage to the island.

            The allocation for subsidy of domestic air services to all outer island routes (not just Rotuma) remains at a measly $370,000.  I say measly because Rotumans have to pay $740 for a return ticket to the island, and this needs to be seen in the context of the cost of a return ticket to Australia being only $500 at present.  Ironically, and despite these exorbitant fares, there is a waiting list of Rotumans who wish to travel to the island, but cannot do so because of the scarcity of flights.  The Air Fiji flights have averaged one flight per fortnight for the past three months, and yet, when I worked as the resident doctor on the island some 20 years ago in 1986, there were regular scheduled services of two flights each week.

            Sir, this problem with air services has been compounded by the deteriorating state of the present airstrip which, for safety reasons, has had to be closed on many occasions by CAAFI.  The sad irony of this, Sir, is that, when the airstrip was opened in 1981, it was able to accommodate a BAC1-11 jet with 110 passengers on board.  Due to neglect on the part of the AFL and the Ministry of Transport, at present, only a Banderante Aircraft carrying six to eight passengers is able to regularly make the trip to Rotuma. 

            Sir, you can, therefore, imagine my astonishment to hear that as part of Government's supposedly high priority towards infrastructural development in the outer islands, it has now reduced the allocation for maintenance of all rural airstrips (not only Rotuma) from the paltry sum of $900,000 in 2006, to $800,000 in 2007.  In a similar fashion, it has reduced the allocation for maintenance of all outer island jetties from $1.5 million in 2006, to $1 million in 2007.  Yet, it sees fit to allocate $5.5 million in 2006, and increased this to $9.5 million in 2007, to provide water infrastructure for a tourism development project in Natadola.  I am astonished and deeply saddened for the island people!

            Telecommunication services on the island were prohibitively expensive with calls to Fiji being charged at $1 per minute.  This only came down recently with the Commerce Commission's determination on charges.  Poor reception is the norm for most landlines, and as recently as two month's ago, the telephone lines were out of order for a period of five weeks, awaiting the arrival of a technician from Suva (who incidentally took exactly five minutes to fix the problem).  Despite this, TFL continues to post huge profits and significant dividends are paid back to Government, and yet I see no allocation towards improving the service in 2007. 

            Other Government services are plagued with regular shortages of fuel.  School buses stopped two weeks ago because of no fuel, equipment, medical supplies and water cuts.  We complain about water cuts in Suva, you are lucky if you get six hours a day of water in Rotuma.  Roads resemble a lunar landscape and make Suva's potholes appear downright attractive.  The LTA has not visited the island in over one and half years and yet continues to levy licence, wheel tax and other fees.

            The economy on the island is virtually non-existent.  Other than a handful of Government and council employees, the islanders can only fall back on copra, fishing and subsistence agriculture.  The copra industry, which was once a vibrant and growing industry in the 1950s and 1970s when the Morris Hedstrom and Burns Philps were there, but due to lack of regular shipping and poor prices for copra, has become almost obsolete.  I look forward to Government for assistance in reviving this vital industry.  I thank honourable Senator Ratu Katonivere for his comments in respect of the CEDAW Board, as a means of improving the economic livelihood of the Rotumans on the island and all the people of the maritime provinces.

            In a similar vein, the island is blessed with waters teeming with fish and marine resources and yet the local people are unable to access this resource, due to lack of equipment, expertise and infrastructure necessary to develop this further.  The irony of the situation, Sir, is that we commonly see foreign vessels licensed in Fiji, such as the MV Solander that unfortunately sunk last week, travelling from Suva, 400 miles to fish within three miles of our coast.  We look to Government and the Ministry of Fisheries to assist our development with our requests for gazetted archipelagic waters for Rotuma, the issuance of Tuna Offshore Longline licences that we have applied for, and the development of the infrastructure necessary to sustain an island based fishing industry. 

            Mr. President, Sir, I thank you most sincerely for your patience and tolerance in permitting me to use my island of Rotuma as an illustration of some of the shortcomings of this Budget in addressing the issues of poverty and the lack of development of the rural and outer islands.  It is my hope and fervent prayer that Government will see fit to make the necessary changes to translate their rhetoric into reality. 

            With these few comments and in recognition that Government cannot operate without money, I commend this Bill to the House and support it.  May I extend, on behalf of the Rotumans our warmest wishes and the peace of God upon you for Christmas and New Year.  Vinaka vakalevu, Dhanya vaad, Shea shea ni and fai'askea.

            HON. SENATOR K. TAVOLA.- Mr. President, Sir, I rise to support the Bill before the House.  I am certainly very grateful to my colleague the honourable Minister for Finance and National Planning for presenting the Budget for 2007 to the Lower House.  The theme of the Budget is very apt and relevant considering the situation for next year, as far as the budget is concerned - Partnership for Sustained Growth.  Sir, partnership is critical if we are to go forward as a country and as Government, and this (I suggest) applies across the board to everyone in the country.  We need partnership.  It also applies to the Government and the private sector for partnership to grow.  The Government and the trade unions, this theme would also be relevant.  And, of course, the partnership would also apply to Fiji as a country with all its developmental partners abroad. 

            Mr. President, I would like to very briefly (I know the time is short), speak on the various portfolios I am responsible for - Commerce and Industry, Agriculture, Sugar and of course, Foreign Affairs and External Trade.

            As far as Commerce and Industry is concerned, Sir, the Budget hopes to create the environment which is conducive for the operation of the industry.  It will address the establishment or creation of the legal and regulatory framework that is conducive, not only for the Ministry, but also for the private sector of this country. 

            We have heard in the media and also in the Budget presentation the National Export Strategy which has been launched and very relevant in the context of the economy as we are at the moment.  As we look at our trade statistics, we are concerned, of course, with the decline in total export paid and this new strategy (National Export Strategy) is hoping to arrest that decline, and also to diversify our export base so that we can increase our export proceeds, and have the reserves that will be needed to buy all the imports that we need for our developmental purposes.

            The Budget also addresses the various specific assistance to targeted sectors within the economy, and one of the targeted sectors that is being promoted is the ICT or Information Technology or Information Technology Enabled Services, and we hope to see with the implementation of the Budget for 2007, establishment for more call centres, more back offices for business process outsourcing and also to go upstream, to the extent of developing software development.  This is an industry which has a lot of prospects for the country, it is one of those modern industries, it is clean and is part of the services industry which we need to promote.

            I have just returned from a Trade and Investment Mission in India.  There was a lot of interest in ICT and Information Technology Enabled Services.  As we know, India is a leader in this industry and we hope that we can benefit from what is happening in the South continent.

            For the information of the House, Sir, the Indian Government has agreed in principle to the establishment of an IT Centre of Excellence in Fiji and we look forward to the realisation of that very important project.

            As for small and medium enterprises, again for the information of the House, the Indian Government has also agreed in principle for the creation or establishment of a Centre for Entrepreneurship which can address the needs of the small and medium enterprises.  We are very grateful to the Indian market for its generosity in trying to target some of the institutions that would help our national development here.

            As far as Commerce and Industry is concerned, Sir, the environment that is going to be created, hopefully will be conducive for an increased inflow of foreign direct investment into Fiji. As you know, way back in 2000, the FTI, as a percentage of GDP was hovering about 9.9 to 10 per cent, but over the years, this percentage has grown - right now it is hovering about 17 to 18 per cent, our target, of course, to get up to the 20 to 25 per cent mark of GDP because we believe that that level FTI inflow into the country will sustain the 5 per cent economic growth that we are projecting for our economy.

            Mr. President, Sir, in terms of Agriculture, we believe that agriculture still holds the greater potential for the development of the country.  There is unexplored potential in this sector, and we hope to realise and to develop the potential in the agricultural sector through the sugar adaptation project because that project will have three parts; it will address the reform with the sugar industry itself; it will also address the reform of those who want to exit the industry and to participate in other related industries, for instance, agriculture and which will also address the various institutions related to the operation of the sugar industry.  We also hope that through the implementation of the Alternative Livelihood Project, funded by the Asian Development Bank that the unexplored potential of this very important sector (agriculture) will also be realised.  In the Budget, of course for 2007, there are proposals for some protective tariffs for agriculture to induce farmers and local producers to increase their agricultural production.

            In terms of market access, we are very pleased with the arrangement that is currently being put in place between some farmers and some organisations in the farming sector with the various hotels.  That is a good sign because we still import a lot of our agricultural produce, when we can produce them quite effectively and perhaps cost effectively as well.  So we want to encourage the kind of arrangements that are being put in place.

            As far as market access, of course, agriculture has great potential with the application of the SPARTECA, for instance, the Preferential Arrangement between the Pacific Island countries and Australia and New Zealand.  We are hoping to review the Rules of Origin that will obviously help in the increase of trade to those two countries.  As far as agriculture is concerned, and as far as other resource-based products are concerned, we do not need to really amend the Rules of Origin because under the Rules of Origin, they become automatically originating products, so they can benefit from the concessions that are available under SPARTECA.  So we want to encourage production because the market access is there, the framework under SPARTECA is also there. 

            As you know, Mr. President, Sir, we are currently negotiating an Economic Partnership Agreement with the European Union (EU).  Again, agriculture is going to be featuring very prominently in that trade arrangement, so that we can direct some of our resources into agriculture, to take full advantage of the potential that that sector can offer.  We will, obviously be very alert to the use of various measures as a trade barrier, as far as agricultural trade is concerned.  There is the tendency to use the SPS as a trade barrier when it ought to be really facilitating trade, so we will have to be alert to that possibility.

            As far as sugar is concerned, Sir, I have referred to the adaptation projects (three parts) and as far as the funding is concerned, I wish to inform the House that the preparation of the Report which will release the funds from the European Union is fairly well advanced, and I understand that the money will be available by the end of the year so that adaptation projects can start.  We are also grateful to the European Union, of course, for the funds that are coming through to help us with the adaptation project, which is aimed at reforming the sugar industry.  We are also very grateful for the soft loan that is coming from the Exim Bank in India and the new dimensions, directions, that are going to emerge from the reform of the industry, particularly, the cogeneration increased production of electricity, which can then be sold off to the national grid to FEA.  We are also very hopeful that a new dimension will be created from the reform of the sugar industry, in the form of ethanol, which will create another dimension to the sugar industry.

            Mr. President, Sir, as far as my Ministry is concerned, the Foreign Affairs and External Trade, the funding that is available for next year's Budget will obviously help us in the various negotiations in which we are participating.  I refer to the economic partnership agreements, the negotiations for which are currently underway.  The negotiations will be stepped up this year and hopefully at the end of 2007, we will conclude the negotiations.  As far as SPATECA is concerned, even though I refer to the Rules of Origin (ROO) as not really required to induce more increase in trade as far as agriculture is concerned, we will still need to look at the Rules or Origin as far as trade in manufactures are concerned.  At the moment, the Rules of Origin provide an obstacle to trade and we want to address that, so that it facilitates trade as it ought to.

            Under the WTO of course, the negotiations on the DOHA development agenda is suspended and hopefully very soon, it will come back on track and we will continue to negotiate under the DOHA, so that we can establish a multilateral trading arrangement, which would be conducive for trade as far as small island developing states are concerned. Our hope for global trade rests with a multilateral arrangement rather than regional trade agreements.  We have started to implement the PICTA (Pacific Island Countries Trade Agreement) where only three countries out of 14 are implementing this trade agreement.  We want all the other countries in the Pacific to start implementing, so that we can benefit from this agreement and increase our trade within the Pacific.  Under other Pacific Areas Closer Economic Relations Agreement with which Australia and New Zealand are a party, we will, in due course, be negotiating a free trade agreement with them and that again will offer some possibilities and opportunities as well. We have just concluded discussions at the regional level, for possible negotiations of a free trade agreement with China and Japan and again, this will offer opportunities as far as market access is concerned.

            Mr. President, Sir, my Ministry is really a window to the rest of the world, but having said that, with the internet that is currently available now, the rest of the world is very well informed of what is happening here in Fiji.  What is currently happening now is obviously creating a lot of concern.  The threat by the Military to take over a democratically elected Government is creating a lot of concern and various countries have submitted various declarations to denounce what can happen in Fiji.  We ought to take heed of all the statements that are coming through from our friends from abroad because if there is a forceful takeover of a democratically elected Government, we will undo all the good things that we have been putting in place over the years.

            Finally, Mr. President, to conclude, I would like to go back to the theme I started with "Partnership for Sustained Growth".  Here, we have in Fiji under the Constitution, a partnership through the Multi-Party Government and this is one we ought to really nurture and sustain.  My plea to our fellow colleagues across the room is that we concretise this partnership and vote in favour of the Budget.

            Mr. President, Sir, I support the Bill before the House.

            HON. SENATOR ADI S.T. CAKOBAU.- Mr. President, Sir, I rise to lend my support to the 2007 Appropriation Bill presented by the Minister for Finance and National Planning with the theme "Partnership for Sustained Growth".

            I thank the Minister and his Ministry for the 2007 Budget Estimates and the Cabinet Sub-Committee on the Budget for their deliberations and input. 

            Mr. President, Sir, I sincerely believe that this Budget provides an opportunity for strengthening and harnessing the historical partnership we had embarked on in the form of the Multi- Party Cabinet.  Like any partnership where there are common grounds to be strengthened, there are differences that can be resolved through dialogue and goodwill.  So, it is with this Budget in spite of our divergent opinions on it, it is still our collective responsibility to ensure that there is sustained growth in our economy for the benefit of all our people.

            Mr. President, Sir, the strategic development plan is the roadmap that guides Government and its decision making for the next five years. The 2007 Budget is the first in its five-year term.  It is the product of wide and extensive consultation, between our civil society, the private sector and the Government and is guided by the principles of good governance, respect for law and order, culture and traditions of all our communities and the maintenance of standard of conduct in Public Service.  This plan defines the common thread for the Government strategic direction towards the vision of a peaceful and prosperous Fiji.  The basic tenet of which is to obtain decent living standards and a better quality of life for all of us.

            I would like at this juncture, Mr. President, Sir, to take this opportunity to express my own observations on the 2007 Budget.  First and foremost, the Budget is the life-blood of the Government's operations and activities in 2007.  It is a Budget for the people of Fiji.  It must be appreciated, Sir, that we only have a small national cake to share.  The Ministry of Finance has divided this cake, though not equally, to bring into the fold all the key factors of the economy.  In doing so, the Budget places great emphasis and importance on poverty alleviation, social welfare, small and micro enterprise development, rural and outer island development, information communication and audio visual industries, resource based sectors including agriculture, fisheries and forestry, environment, disaster management and affirmative action.  Additional to this, the Budget continues to place high regard and provide sufficient resources for law and order, women and development and employment opportunities and productivity.    

            Sir, it is encouraging to note that the Budget also provides for specific measures towards raising the country's economic potential.  Such measures include the policy support programme covering the three-pronged public sector reform and the export-oriented trade policy.  These reforms will open doorways to increased productivity, productive investments, increased income and therefore higher economic growth in the years ahead.  As a consumption tax, VAT provide the consumer the choice of planting and consuming more home grown food instead of depending entirely on store goods.

            Above all, VAT should not be considered in isolation because it comes in a policy package, which also includes some counter weighing measures to moderate any adverse effect on the poor and disadvantaged.  In this regard, Government among other things continues to maintain zero rating on essential food items such as powdered milk, tea, flour, sharp, tinned fish and kerosene. The move to raise the income tax threshold from $8,840 to $10,000 from would allow an additional 10,000 income earners not to pay tax.

            Mr. President, Sir, whichever way we choose to look at the Budget, in a piecemeal or in its totality or in a broad view or focus on specifics, we will agree that the Budget includes the poor and looks after the welfare of all people, especially those most needing assistance in this country.

            As the Minister in the Prime Minister's Office, I am indeed pleased that a significant proportion of the 2007 Budget will benefit the disadvantaged and those needing Government intervention to make a decent living.  I am pleased because the co-ordination of some of the special assistance programmes comes under the direct responsibility of the Prime Minister's Office.

            Sir, as you are well aware, the role of the Prime Minister's Office is to provide advice and support to the honourable Prime Minister and his Cabinet.

            Mr. President, Sir, also in this Office, we co-ordinate the Affirmative Action Programme of Government.  This programme is implemented in its different forms across the Government Ministries and agencies.  Its goal is to ensure that disadvantaged groups of people have equal access in the areas of education, training, land and housing, and participation in commerce and in State services. 

            This programme is designed to help these groups attain equal access to opportunities and bring them on par with those already advantaged in these areas.  Government recognises that equality of opportunity and avoidance of extreme deprivation in outcomes is the key to long-term prosperity and development.

            The budgetary allocation for Affirmative Action continues to increase since the Programme's inception in 2002.  The increased allocation to $72 million in 2007 is commendable and justified. Sir, the 2002 and 2003 household and income expenditure survey reveals that 34 per cent of our population live below the poverty line.  Government through the Budget has provided and continues to provide opportunities to alleviate poverty through business opportunities and support, education and training, housing and other related programmes. This is in keeping with its social and economic policy commitment to meet the needs of these groups. 

            In addition, Affirmative Action has borne positive results and achievements that are encouraging.  In the area of education and training, Sir, scholarships and loans were made available to tertiary level students attending the University of the South Pacific (USP), Fiji Institute of Technology (FIT) and Fiji School of medicine (FSM).  This included the Multi-Ethnic Affairs Scholarship, Fiji Affairs Board Scholarship and the Student Loans available through PSC.  The provision of text books for disadvantaged primary and secondary schools, the upgrading and maintenance of boarding facilities, staff quarters and facilities in rural schools, also continue to have a positive impact on the quality of education for the beneficiaries.

            Sir, funding continues to be directed towards vocational training of serving prisoners both men and women, and training of youths in rural areas.  This training equips the beneficiaries with skills necessary to enter the workforce.  Special education has now 17 centres where students with disabilities are trained.  Training programmes are also offered at cultural centres to promote and protect cultural heritage and cultural cohesion.

            Mr. President, Sir, in the area of land and housing, achievements are noted in the following areas.

            Cane farmers who are assisted with lease renewals produce over 2.5 million tonnes of cane last year.  Other forms of assistance include resettlement and provision of residential leases for squatter resettlement.  Sir, 200 families have been assisted at the Waila Sub-division and Field 40 in Lautoka, while an additional 200 families will settle in sub-divisions in Ba, Badrau and Sasawira.  Family assistance schemes administered by the Ministry of Women and Social Welfare in the form of cash supplement has assisted 22,534 persons.  Recipients under this scheme include chronically ill-persons, single parents, elderly persons, persons with permanent disability and dependants of serving prisoners.

            The poverty alleviation project administered by the Department of Social Welfare helps homeless persons and provides fund for income generating projects and relief assistance to families who are victims of fire.  The self-help housing assistance ensures that all rural dwellers have access to proper housing and since its inception in 2002, close to 800 people have been assisted in the construction of decent dwelling houses.

            Significant changes have also been recorded in the area of commerce and industry. The Small Equity Business Scheme made loans available to Fijians and other communities.  The most common types of businesses funded were wholesale retail, restaurants and motor vehicle trading.  Small Micro-Enterprise Development recorded a total value of savings for last year, amounting to $1.54 million.  This is an increase from the previous year and is an indication that people are using the scheme to save their money.  This is further supported by the fact that there are 5,442 new savers who are joining the scheme for the first time.

            Sir, Fijians and Rotumans have continued to be assisted in the award of contracts, permits and licences, but this programme has recorded low participation due to certain challenges throughout the tender and award process.  Government continues to rent office space from Fijian and Rotuman landlords catering for 57 per cent of Government's total rental need.

            For last year, 36 eco-tourism projects creating nearly 4,000 direct and indirect employment opportunities were approved by Government.  Although Affirmative Action has had its achievements, it has not come without its challenges.  To address this, the Social Justice Act and the Affirmative Action Programme will be subjected to a review next year.  The review is to gauge the real achievements of the programme and to recommend necessary changes to the current programme to better achieve equality for disadvantaged groups and to ensure that no group is excluded.  The review will also ensure that the Affirmative Action Programmes comply with the requirement of the Constitution and Human Rights Law.

            Mr. President, Sir, on Fijian Affairs, it is my fervent prayer and hope that the institution of the Fijian Administration will remain intact and paramount in dealing with customary rights and indigenous issues in this country.  I am pleased to note that the restructure of the Fijian Administration is a priority for the Fijian Affairs in the coming year.  The restructure will enable an institutional strengthening of Fijian Administration and improve capacity building of both the Fijian Affairs Board and our provincial councils.

            At this juncture, Sir, I would like to congratulate the honourable Minister for Fijian Affairs and his officials for the remarkable arrangements made during the hosting of the Melanesian Arts Festival in October.  By the same breath, Sir, I wish to caution that as a nation, we need to be committed to conserving and promoting our traditional culture, heritage and language.  We must also learn to share the written unique culture of the other races living in Fiji and exercise tolerance and patience towards one another. 

            Mr. President, Sir, the land issue remains a fundamental concern for the Government.  Significant progress has been taking place in the return of Schedules A and B land.  Four per cent of all land in Fiji are State lands.  The land policy is to ensure the optimum use of all State lands, to benefit the State and the nation.  The development of State land for residential and industrial purposes continue to be the focus of the department.  Government also leases land for public purposes such as schools, health centres, water catchments and other areas. 

            The demarcation of NLC boundaries in Namosi is a five-year project that commenced in 2004 and will continue in 2007, with the assistance of the Native Land and Fisheries Commission.  Sir, the Native Land Trust Board plays a critical role in the resolution of land issues under ALTA.  It is encouraging to note that NLTB has reviewed its position and has put forward options that will bring about change and positive outcomes to the long standing land issue.  It is also my prayer that good sense will prevail and an amicable solution is reached through dialogue and consensus. 

            On provincial development, Sir, the increase in the budgetary provision  by 40 per cent from last year is commendable.  Rural and ALTA development is a priority concern for Government, because it is the rural sector in Fiji that offers the greatest potential for private sector investment and expansion. 

            We also recognise the vast disparity that exist and the need to bridge the gap, by raising the living standards of the rural dwellers to be on par with urban residence, particularly through access to basic amenities like clean and safe water supply, electricity, proper health and sanitation, telecommunication and roads.  This year's allocation allows Government to do this and to spot programmes that aim to improving the lives of rural dwellers. 

            Government is also assisting in skill development in the forestry through training centres in Colo-i-Suva, Lololo and Nasinu.  These centres also offer specialists training for logging operators, wood processing and woodscraftsmen.

            A chipmill in Vanua Levu is to be operational early next year and this will help boost the economy in the Northern Division, in line with Government's Look North Policy.  Government is also assisting the forestry industry by providing business financed through the Affirmative Action Programme.

            In the fisheries sector, the maximisation of economic returns for our communities through sustainable development and management of our marine resources is of utmost strategic importance.  The support and assistance directed towards the fisheries sector will help raise its contribution to GDP from its current two per cent to over three per cent in the future.  Despite the constraints and challenges, Sir, Government continues to forge ahead in its effort to provide equal access to opportunities for all our citizens, in order to have meaningful and dignified lives. 

            Mr. President, Sir, this Budget needs our collective commitment and support to realise its goals and I once again state my support for the 2007 Appropriation Bill before the House.

            In conclusion, may I wish you, Mr. President, Sir, and all honourable Senators a very Merry Christmas and a Happy New Year.  May the peace that passeth all understanding pervade our lives in 2007.

            May God bless us all and may God richly bless our nation, Fiji, its Government and its people.  Mr. President, Sir, I thank you.

            HON. SENATOR RATU K. VAKAWALETABUA.- Mr. President, Sir, I rise to give my contribution to the Budget, presented by the honourable Minister for Finance and National Planning at the Joint Sitting of Parliament on Friday, 3rd November, 2006.

            Firstly, Sir, allow me to express my sincere gratitude and appreciation to the honourable Minister, for a well compiled and a well presented Budget, which promises growth in our economy.  I must also congratulate the honourable Minister of State for National Planning, for his contribution to this massive task. 

            I also acknowledge the CEO and his staff, for the hardwork that was sacrificed in the preparation of the Budget, given the ongoing debate for distribution of funds and the prevailing constraints of the scarcity of resources faced by our Government.

            Mr. President, Sir, the 2007 Budget is a positive one.  Positive in a way that it promises growth for our economy and future prosperity for Fiji.  The theme "Partnership for Sustained Growth" speaks volume in itself.

            In my understanding, Sir, the 2007 Budget needs the support and co-operation from all of us, despite our differences.  This Budget will only realise its full potential, if we put our hands together to make it work. 

            I understand, Mr. President, Sir, that the 2007 Budget has also come under fire from factions of our economy on certain issues that will be forever debated in this august House.

            I believe, we must understand that Fiji is such a small nation.  We are faced with scarcity of resources and we rely on our big brothers from overseas for monetary assistance.

            With little that we have, we should be wary of the fact that we have to sacrifice something to have other things which is simple economics.  Therefore, understanding and co-operation is highly needed.  Our nation has gone through a lot since independence.

            We have had three coups in less than two decades.  Despite that, we are able to bounce back to where we are today.  Visitors returned to our shores and together, we made their stay a memorable one.

            We may toil the land and sacrifice for our livelihood, but we still smile at the end of the day.  We may differ in ideology and beliefs, but one way or the other, we manage to live in harmony, despite our differences.

            Furthermore, Mr. President, Sir, early this year, a first ever for Fiji, our nation made history forming a Multi-Party Cabinet.  Our leaders joining ranks to charter a new direction for Fiji.  The points I have raised above, Mr. President, Sir, is a testimony that we all can work together.

            The same can be applied to the 2007 annual Budget.  As I have already mentioned above, this Budget promises to generate economic growth and future prosperity, and to realise that, support is needed from everyone.

            Mr. President, Sir, the annual Budget for 2007 has outlined benefits for major areas such as health, family assistance, education and public utilities, to name a few.  The increase in expenditure in these areas will be a relief for the under-privileged, who in the past had faced a lot of difficulties.

            Firstly, the increase in expenditure for education and Multi-Ethnic Affairs Scholarships, will lighten the burden faced by many parents in sending their children to school. 

            The increase in expenditure for family welfare grant will also make life easier for most families that needed them.  I urge the authority concerned to make a thorough research, to make sure that assistance goes to the people, that rightfully deserves them.

            Mr. President, Sir, I have seen and witnessed the problems faced, due to the limited resources we have in our health services.  I hope the increase in the expenditure for our health budget will ease the difficulties faced by the health authorities in the services they provide, particularly in the rural areas.

            I would also like to commend that again, there is an increase in the expenditure for public utilities.  This is an area that draws a lot of interest for myself.  I believe that in the past, during my speeches in this august House, I had highlighted the road problems we face in the Northern Division.  Those of us that have travelled the main road from Nabouwalu to Labasa would agree with me on this. 

            In addition to that is the poor road condition that we have in my province.  One will have to travel those roads to witness the problems the people of Bua are facing, especially the farmers.  As a result, it directly affects our potential to generate maximum result of our farming yields.  Our students face difficulties travelling to schools, and during unfavourable weather conditions, they sacrifice by staying home when bus services cease their services. 

            Mr. President, Sir, I believe that other provinces have enjoyed good quality roads for a while now.  It is only fair that we are also acknowledged in the North, of our need for good roads.  Therefore, Sir, I hope that the increase in expenditure directed to roads for 2007, will in part reach the very people that desire it most.

            Mr. President, I would also like to express the disappointment of the people of my province for the cancellation of the purchase of the boat that was earmarked for Bua.  The boat was to have assisted development in the province.  May it be sabotage or conspiracy, we the people of Bua have vowed that what had transpired will not deter us from giving what is best for our province, for the sake of our people, especially our children.

            Lastly, Mr. President, I would like to give my view on the situation that is currently faced by our nation.  The impasse by the Government and the Military is already affecting our economy.  Fear and instability have again slowly crept in upon our nation.  Fiji cannot afford another fall.  We are all well versed with the consequences of political turmoils as we had experienced in the past and another of that kind will only deteriorate our economy further.

            I urge the two leaders to come to a solution, to the current situation in order to save our country.  The rule of law must be upheld. 

            Mr. President, Sir, before I take my seat, I would like to thank you for allowing me the time to give my contribution in this august House.  Sir, I support the 2007 Budget.

            HON. SENATOR RATU S. BUASERAU.- Mr. President, Sir, I rise to contribute very briefly on the Budget allocation for 2007 by the honourable Minister for Finance and National Planning. 

            Sir, Fiji should take advantage of opportunities in penetrating niche markets that gives the greatest competitive advantage.  There are two critical issues that I would like to raise here, particularly the loss of Government access to the United States and the loss of preferential access of sugar to the European Union market through bilateral arrangement needs to be addressed urgently, as about a quarter of our population depend on these two industries for their livelihood. 

            We have a small vulnerable narrow-base economy with a small domestic market, so we need to make necessary adjustments to be able to survive in a competitive global market. 

            Fiji needs to attract more meaningful and worthwhile investments that would contribute positively towards income generation and this creates employment for the unemployed and school leavers. 

            Sir, I must congratulate the Ministry of Commerce and the Fiji Exporters Club for taking the initiative in launching the rapid export growth strategy aimed at enhancing exports, by getting exporters to work together under one banner.  This would provide a vision for members of the private sector and the investors when they make decisions to invest here.  This export promotion is necessary for Fiji's economy as a country striving to achieve consistent growth of five per cent for the next five years.

            Sir, we must have this growth if we are to improve the quality of education, medical services, infrastructure to help sustain this growth, alleviate poverty and generally, improve the standard of living. 

            Sir, I will now touch on the rule of law.  Law and order is essential for social stability sustainable development and economic growth. 

            I commend the Police Department for effectively dealing with criminal and civil cases in the past.  However, I must emphasise the point that, we as Parliamentarians and law makers must draft out some stiff legislations to act as deterrent for hard-line criminals in committing serious crimes such as robbery with violence, rape and unlawful use of motor vehicles. 

            Sir, for far too often we hear in the news and read in our local newspapers about families being bashed and robbed in their homes and one should just imagine if the same thing was done to your own family, only then will they realise the drastic effect it has created in our society.

            Sir, we know for a fact that the Police Commissioner had asked for more budget allocation for his Department to be able to tackle all these problems.  However, I think that the present budget allocation and the number of the Police Force is adequate to carry out the task.  It is only the penalty that needs to be addressed such as the introduction of corporal punishment in prison that will act as a deterrent to these hard-line criminals from committing these crimes in future.  

            Value Added Tax (VAT): Mr. President, Sir, the proposed increase in VAT from 12.5 per cent to 15 per cent is an unfair burden on the poor or the most vulnerable in our society.  In 2004, 34.5 per cent of Fiji's population lived below the poverty line.  In 2006, that number increased even higher.

            Sir, when you increase VAT, you definitely lower the quality of life, increase the cost of living, poverty and crime rate, as well as raise instability in the life of our communities.  Some people agree with the concept that VAT treats everyone equally, but not everyone is equal.  The VAT demands the same from the poor and the rich, so how can you call that a fair taxation?

            Sir, we know that other countries have VAT but they have social safety nets, such as welfare systems and minimum wage legislation to protect the poor and the unfortunates.  In Fiji, the VAT is an unfair burden on the poor and an unimaginative way for the Government to generate revenue.  Fair enough, Government has to get its revenue from somewhere, but there are other alternatives such as Capital Gains Tax, that taxes those who make the most money.  Think of the astronomical profits some are getting from rents, property and land speculation.

            Mr. President, Sir, the other alternative is the reduction in the number of Ministers of State and their secretaries, and a slight reduction in civil servants with the introduction of the Performance Management System (PMS) to make them more effective. 

            We know that the Government wants to generate $60 million through VAT increase.  A 10 per cent decrease in salaries paid to the Government would produce more than enough, so if the Government wishes to ensure a successful budget that is responsible to all the people of Fiji, it should implement the following three strategies:

            (a)        Delay in introducing any increase to provide time for the Government to consider alternative strategies for revenue generation that do not place the burden on the poor;

            (b)        amend the Budget to freeze the VAT at 12.5 per cent; and

            (c)        increase the number of items on the exempted list to include, for example; tinned meat, soap, margarine, basic medicine, educational supplies like uniforms and textbooks, so as to lighten the financial burden on the poor.

            Agriculture, Forestry and Fisheries:  Mr. President, Sir, Government should allocate a bit more fund in this sector, as this will create more employment opportunities for the school leavers and the unemployed.  There is a drastic need for the farmers to be technically and financially assisted, to enable them to increase their milk and meat production.  We know for a fact that 90 per cent of the bulk of milk needed for local consumption are imported, as well as beef.  I would urge the Government for its concerted effort in helping the farmers, so that we can boost our livestock production and reduce the imports which, unfortunately, seem to increase each year.

            Mr. President, Sir, we are all aware that agriculture plays an important role in the economic development of our nation.  The agricultural sector contributes 15 per cent to GDP and is also a major source of employment, economic activity, food security and also, foreign exchange earnings for the Government.

            Mr. President, Sir, on that note, I support the Bill before the House.

            MR. PRESIDENT.- Honourable Senators, we will now adjourn for lunch.

            The House is adjourned.

            The House adjourned at 1.13 p.m.

            The House resumed at 2.40 p.m.

            HON. SENATOR E.L. MALANI.- Mr. President, Sir, I rise to contribute to the debate on Bills No. 20 and 21 of 2006, knowing fully well that the debate in this House will not make any difference to the outcome, as this is a money Bill which the Lower House had already approved.  However, I am still going to make my comments and suggestions, which at best, advocating the interests of our people.

            The theme for the 2007 Budget is "Partnership for a Sustained Growth" appears to signal the importance of the Multi-Party Cabinet to sustaining economic growth.  Partnership for me implies a relationship of mutual trust and understanding, mutual respect and reciprocity, an enabling environment that all players will operate at a level playing field. 

            Mr. President, Sir, in the immediate future, we need to urgently implement development programmes that will curtail our consumption and raise revenue to fuel our economic growth. 

            Mr. President, Sir, before I turn to the Budget proper, I wish to delve on the financial performance of Government in the past six years, including the 2007 Forecast.  Statistics and information alluded to in this presentation is a result of a review of 2001 to 2007 Budget Estimates and the Auditor-General's Reports for the 2001 to 2005 period.

            Sir, the figures reflected in the Annual Budget Estimates from 2001 to 2005 are actuals, while 2006 and 2007 figures would be based on forecast.  I believe this is crucial to set the stage for debating the Appropriation Bill, 2007.

            Sir, the reports compiled by the Office of the Auditor-General during the period 2001 to 2005 have become rhetoric, with lack of action on the part of Government, the Public Service Commission and the Ministry of Finance in dealing with the reported anomalies.  The lack of action to-date has now been perceived as condoning the rot that were highlighted over the period, and the Civil Service in turn, has more or less accepted this as a norm within the Service.  Citing of the basic lack of reconciliation in accounts, incorrect and pending corrections of notice trust accounts, records not matching bank balances, uncollected advances, overpayment of salaries, lack of surcharges for accidents and breaches and violations of stores and financial regulations, let alone liabilities related to neglect, overspending of resources and leave and the list goes on.

            It is clear that no attempt to address these anomalies have been made since incidences had been reported way back in 2002 and are still carried forward in the 2004 Audit Reports.  The Auditor-General's Reports even highlighted the heavy reliance of accounting officers in a central ledger system kept within and maintained by the Ministry of Finance.  Even the accuracy of this centralised system is of concern. 

            Our average annual real GDP growth based on the Reserve Bank of Fiji's data as reported in the Auditor-General's Annual Report of 2004, for the period 2001 to 2005 is 2.4 per cent, which is about 1.4 per cent below the world's annual average growth for the same period under review.  This indicated that economic growth due to productivity in Fiji was well below the world average.  It is difficult to see us catching up when we have to import technology, our economic reform has been procrastinated and social cost has been soaring.  Government had been making commitments to reduce debt but had not been able to. 

            Looking at our debt level in relation to real GDP, one could easily work out that our real debt level sits at 86 per cent, which is much worse than 53 per cent widely referenced statistic based on nominal GDP.  The concern with using nominal GDP is that value changes from time to time depending on price changes and market forces and is not an accurate measure of the actual productivity in a country.  Hence, the country is sitting on a time bomb with obvious signs of an acute ailing economy noticeable in high unemployment, increasing poverty, escalating crimes, congested prisons, high incidence of street begging, increasing squatter settlements, inadequate supply of utility services and poor infrastructure.  

            Mr. President, the overview for 2006 Economic Performance appears to be optimistic and need an immediate review, if the 2007 forecast is to be substantive due to the following reasons:

            (a)        The 2006 fourth quarter result is expected to be the lowest in 2006 due to the prolonged and unresolved impasse between the Military and Government, which will affect growth forecast in tourism, finance, wholesale and retail and the business services industries.

            (b)      Growth anticipated in the forestry sector had been dampened by the unresolved land issue at Sote, putting production to a halt and causing short supply to the export markets to be short; and

            (c)        Electricity growth will not be felt until 2008 and 2009 as initial production will mostly be offsetting units generated using fossil fuel.

            Sir, these factors will surely affect the outlook for 2007 and seriously so, if there is no quick fix and positive resolution to the current impasse.  Growth expected in the agricultural sector is expected to be slow, in view of the extended growth cycles of the related commodities.  Growth expected in the sugar industry will be dampened by the reduction in EU sugar prices and the low production caused by the uncertainty in lease renewals and the non-production from vacated farms. The reality of achieving a positive outcome through the Sugar Adaptation Strategy Alternative Livelihood Programme and the remote and outer island assistance directly depend on Government having the political will and the financial discipline to ensure undisturbed implementation of the programmes.

            Sir, the 2007 Budget gave established and unestablished staff, numbers under each Head of the Budget.  The Public Service will have a total workforce of approximately 3,1000, with about 5,000 established and 6,000 unestablished, costing the country approximately $643 million.  Sir, in six years, the Service has increased its workforce by 2,600, with a further increase in 2007, taking the total increase up to 3,900 in seven years.  This has been happening at a time that reform was committed and zero growth was mandated.  The increase has cost the taxpayers of this country an additional $175 million in seven years.  To make matters worse, Budget allocations under some Head with "R" standing for Requisition indicated would account for projects.

            These projects are meant to operate within a year only and there are project officers manning the project paid out of these funds and not taken as personnel cost under SEGs 1 and 2.  In some cases, the allocation is barely enough to meet the annual wage of the project officer, leaving no funds for the project proper.  Most of the officers have been engaged continuously for over five years without any confirmation of appointment.  Moreover, there are staff employed in acting positions for years and in some cases indefinitely.  Those that control the system, then use the loophole to elevate junior officers to act on higher posts, providing an opening for nepotism and favouritism to creep through promotion and recruitment.

            The service referred to these as "held against" in a "person to post or P2P" exercise.  What I am saying is the Commission, Government, and those in control either are not aware, or are in the know that these things happen.  Cleaning up therefore, will come at a major cost to those who will become innocent victims and the taxpayers of the country and indeed, will make an industrial stir amongst the union representatives.  In terms of distribution of manpower by sectors, there are 33 per cent in General Administration, 48 per cent in Social Services, 8 per cent in Economic Services and 11 per cent in Infrastructure.  In cost, 32 per cent is in General Administration, 40 per cent in Social Services, 10 per cent in Economic Services and 18 per cent in Infrastructure Services.

            In the past six years, Government has tabled six Budgets with varying themes.  In these entire Budgets, one will see that Government has set itself targets and repetitively Public Service Reform amongst other reforms has always been one of these targets.  Some seven years later, we are still seeing a large Civil Service that is oversized, and costs at least 70 per cent of the total budget for each of the ministries, as we had heard from the various ministries' presentation last year.  However, from the PSC officials briefing that we had last week, we heard that there were no resources provided for the Civil Service Reform.  The Civil Service Reform, must start immediately with the following proviso:

            (a)        Reskill and upskill workers who potentially will become victims of reforms in their organisation to be able to fill gaps in other organisations within the Service and outside, to participate in the existing labour mobility schemes and the proposed schemes of New Zealand.  We know that Samoa has already taken advantage of this opportunity and they have already started discussions with New Zealand.

            (b)        Reduce the retiring age and introduce an affirmative SME scheme where the retirees can invest part of their pensions in operating small businesses.

            (c)       To retain the skills and expertise. These retirees can still be available as advisers and consultants when required by Government.

            (d)       Invest in a National Services scheme for young school leavers between the age of 18 and 22 years to inculcate discipline and a sense of community service as well as livelihood survival skills, before they pursue further studies to develop their skills and competencies for their career in life.

            (e)       Formalise bilaterally labour mobility arrangements in the areas of sports, teaching, nursing doctors, health care providers, peacekeepers, blue collar jobs, farming and preparing locals in established institutions to be certified and internationally recognised.

            (f)        Negotiate with China for the recruitment of Fiji Teachers that can tutor English in preparation for the Olympics with a possibility of extension after the event.

            (g)       Promote Fiji as a retirement home destination around the world that will benefit our people through the coming in of better, modern and quality healthcare services.

            Sir, raising Government revenue has been a challenge against rising cost of operating the Public Service.  The three key sources of Government revenue are direct taxes through PAYE, company taxes, et cetera, indirect taxes through VAT, duty and hotel turnover tax and fees and charges.  Revenue contribution by each source is 32 per cent from indirect taxes, 63 per cent VAT and 5 per cent fees and charges.  There are other sources, which are rather small and unreliable, including the 2007 Budget revenue from direct taxes had increased by $200 million, indirect taxes by $500 million and fees and charges by $12 million over a period of seven years.  Of these increases, approximately $98 million in direct taxes, $151 million in indirect taxes and $4 million in fees and charges are increases attributed to the 2007 Budget alone.

            Of the $953 million approximate forecast as revenue from the indirect tax in 2007, approximately $602 million is from VAT, $334 million is from excise duty and $17 million is from hotel turnover tax.  For the period 2001 to 2007 inclusive, VAT revenue has increased by $350 million, duty has increased by $131 million and turnover tax has earned $25 million since its introduction in 2006.  The increase in VAT revenue had been largely due to the raising of VAT from 2.5 per cent to 15 per cent for 2007 with increased consumption.  Increase in revenue earned from excise has been more structured growing at an average rate of $20 million a year in seven years.  VAT revenue forecast increased by $121 million over 2006.

            Sir, the Auditor-General's Annual Report, 2004 indicated that an annual average in arrears collection in the past 10 years is 12 per cent.  I wonder whether this has been allowed in the revenue forecast set in the Budget for 2007.  Also, the current impasse if unresolved soon will affect revenue forecasts on direct and indirect taxes.  Dampening consumption based on the Government taxation measures is envisaged to directly affect its revenue earnings for 2007, hence, the deficit is expected to increase as a result.

            Sir, we heard from various ministries last week, shortfalls on staff, vehicles, capital grants to name a few and there was some reference to meeting that shortfall from the infamous Head 50, with a total budget of $118 million which sounds like a slush fund for the Ministry of Finance.

            Mr. President, Sir, last week during our briefing, I had frequently requested the Ministry of Finance to provide us with an explanation on Head 50 - Miscellaneous Services (the name itself gives a bad picture).  I wonder why Head 50, SEG 1 should have over $60 million when costs for established staff is fixed and, therefore, could be given directly to ministries.

            During the informal briefing, there were also revelations that some ministries do not have enough vehicles to conduct their duties and, yet there is $1 million under Head 50 - New and Replacement Vehicles.  There are two Government Departments in Rakiraki that do not have vehicles - Social Welfare and Fisheries and Forests.  How are they supposed to carry out their work?  The $10.5 million for travelling expenses for Ministers under Head 50, is really a crime.  I believe that half of the trips for honourable Ministers are paid for by the various organisations that request their attendance.

            The Ministry of Youth does not have any resources to implement their 20/20 Strategic Plan and the subsequent plans cascading from this plan.  So much for the rhetoric that "youths are the future of the nation".  A highly publicised National Export Strategy has only $50,000 to implement their plans and given the competing priorities in the other ministries that are supposed to be implementing agencies.  There is no guarantee that they will do away with their own programmes because their performances will be assessed based on their KPIs (Key Performers Indicators).  (Yes, I can hear the silent responses, take it from the infamous Head 50").

            Whilst I welcome the $1 million for the Women's Plan of Action, I request that a transparent approval process is adopted and resources are given to those that need it most.

            We heard from the CEO for the Ministry of Public Enterprises, that there has to be political will to reform the existing public enterprises and after 10 years, there is only one success story.  We could save resources by downgrading this Ministry to a division within the Ministry of Finance and move the CEO to other ministries, where his skills and knowledge can be better utilised.  The Yaqara and the Viti Corporation, since it is a leasing arrangement, can be transferred back to Agriculture, so that they can benefit from the technical expertise from the private companies leasing the two entities.

            With regard to the VAT increase, I am deeply disappointed and some suggestions made earlier, will enable us to reduce and stop any more increases on VAT.  The $8 million VAT waived for the construction of the United States of America (USA) building, could have been put to better use towards the National Export Strategy and Youth Programmes, and of course, the vehicles for Government services in the rural areas.  However, I suppose Head 50 will suffice.

            Mr. President, Sir, my saying "aye" or "nay" to this Appropriation Bill, does not really matter.  I am abstaining from voting on Bill No. 20, as an act of protest for the nil allocation for Youth Development Programmes and for the exorbitant amount provided for under Head 50 - Miscellaneous of $118 million.  However, I will support Bill No. 21 of 2006.

            Sir, since this may be our final sitting, I wish you all a blessed Christmas and we will continue to place Fiji's destiny in God's hand.

            HON. SENATOR G. AHMED.- Mr. President, Sir, I rise to contribute to the 2007 Appropriation Bill.  While doing so, let me first of all, thank you and your office for organising a week's briefing for all honourable Members of this House.  The briefings were very informative and many of us learnt a lot in regards to individual departments and ministries.

            My areas of focus this afternoon, will be in the Ministry of Home Affairs and Judiciary, and I wish to speak on the budget allocation of the Fiji Police Force, though, I can see an increase of $9 million in the Police budget and I thank the Government for that.  However, I still say that more needs to be given to the Police Force, in view of the duties they are performing.  Sometimes, they encounter unforeseen operations whereby money is spent and the Police Commissioner does not have a Contingency Fund.  I had been asking for this when I was a Member of the Lower House that the Commissioner of Police should have a Contingency Fund; a fund that can be kept and used in times of emergency or need by the Commissioner of Police.  At the moment, it is very critical because funds for 2006 have already been exhausted. 

            The safety and security of the citizens of this country is a concern.  Citizens' security and safety is left entirely on the Police Force.  The Force's main objective is to maintain law and order and enhance the life and protection of the people. 

            Mr. President, Sir, it is sad to note that $750,000 was taken away from the 2006 Police budget to meet the payment of the Cost of Living Adjustment (COLA).  Sir, taking away this large amount has directly affected the operations of the Police Force because money taken is either from the Officers' Subsistence or Travelling Allowances.  At the moment, the police officers are detained for extra hours of duty to continue their operations.  In case of leads, police officers are duty bound to continue those leads of information.  In this case, Sir, one works extra hours and is entitled for meal allowance and other subsistence allowances claim.  Also, because of the transfer of this budget allocation, police officers have lost interest in their work, knowing that there is no money for extra effort put in their work.  This is really a sad occasion because police officers are losing interest due to no allowance and the poor people will be the likely victims.

            Recently, I am told that circulars were sent to all police stations informing officers to minimise travelling out of stations because of the cut on their budget.  They have been told that there is a limited amount of allowances (subsistence and travelling), with the Police Headquarters.  Sir, year in and year out, the Fiji Police Force runs out of their normal budget.  This time, there is chaos in their last quarterly budget because there is hardly any money left apart from their normal salary.

            Mr. President, Sir, the Police are also concerned about the lenient sentence imposed by our courts.  For example, a notorious criminal who was arrested for escaping from prison was sentenced for only six months' imprisonment, which was concurrent to his eight years serving sentence.  This prisoner will only serve the initial eight years, and that is after remission.  The six months' sentence for escaping from prison is really a joke.  The sentence is not a deterrent either to the said prisoner or to others.  What is the use of arresting and taking him to court?  I am told, Sir, that at this point in time, there are about four prisoners at large.  Recently, there were about 18 who escaped from prison. 

            Secondly, a person who was convicted of receiving stolen property in Lautoka was given a suspended sentence.  What a joke?  Some time ago, receiving stolen property was a serious case as observed by the courts in the country.  The Police and the courts took this as a matter of concern because it is very difficult to trace, catch and convict receivers because of its sensitivity and the surrounding evidence.   I ask the court to re-look and re-visit this area of sentencing, because it should be a realistic and deterrent factor.

            Mr. President, Sir, the recent spate of house invasions, with victims assaulted or killed is a matter of concern for everyone.  The Police Force needs money to buy more combat vehicles and resources to counter these criminals.  How can they do this with a limited budget?  The Police Commissioner is doing his best, seeking more funds to buy these resources, and I urge this Government that this is a priority for our citizens' safety and they must act accordingly.

            Many police stations around the country also have old fleets or outdated vehicles.  The Nasinu and Valelevu police station are an example, having very limited transports, covering a very densely populated area.

            On top of that, Sir, fuel ration also applies to all police transport.  A maximum of 20 litres of fuel is supplied, per vehicle, per shift.  If one fleet consumes 20 litres fuel, that transport is grounded.  How can one get serviced in case of emergency?  Five vehicles at Valelevu and Nasinu police stations are in the garage after having accidents.  Sir, another concern is inexperienced police drivers.

            Mr. President, Sir, the Police Support Officers (PSOs) are now on a cut-off hours of work.  Before, a PSO would be working 104 hours per week, but now they are only working 84 hours per week.  Many PSOs are drivers, and if one exhausts his or her normal 84 hours, he would be asked to rest, leaving no drivers to attend to emergencies.

            Mr. President, Sir, police officers in remote and maritime stations are supposed to attend Tikina and Provincial Council meetings, but this is often hindered because these officers cannot claim their meals and subsistence allowances.  Sir, one cannot blame the Police Commissioner because he has to survive on the budget that he is given.

            Mr. President, Sir, on the 2007 Budget, I do not have the figure that was requested by the Police, however, I am happy that they have an increased allocation of $9 million.  

            Mr. President, Sir, the rise in fuel prices and the demand for police services is a genuine call to Government, given the realistic budget provisions for the Police Force.

            Another area of grave concern, Sir, is the crime committed in our places of worships.  Nearly every week, one would read in the daily newspapers or see on television a Mandir or Bhawaant being damaged or burnt.  This is an outrageous act of hooligans.  Our societies have condemned this act of sacrilege and I request the Government to plan something to combat this.

            Mr. President, Sir, let me now dwell on the Immigration Department's budget.  First of all, Sir, on the issuance of passports, though there is an increase of $250,000 for passports, one has to look at the time consumed in obtaining passports from this Office.  Before, it used to take seven days for someone to obtain a passport from the Immigration Office, but recently, it has taken six weeks.  A time even came, Sir, when the Immigration officials said that there were no passport books left so people had to wait.  For such reasons, many people would not be able to travel abroad on time, an example, are few players from the Ba Soccer Team who could not travel abroad on time due to unavailability of passports.

            Whilst on Immigration, Sir, we are giving first-class services to people arriving in this country; we give them their visas through our gates.  However, when we want to visit countries like Australia, New Zealand, America and Canada, we have to go through a lot of hassles and in some instances, one has to wait for months in order to obtain a visa.  When applying for a New Zealand visa, one has to wait for three or four months in order to obtain a simple visitor's visa.  It takes them three to four months to process and approve applications, and now what has happened, because of the present impasse, they have closed their office in Suva. 

            Sir, I am also told that 350 teachers who are on school holidays could not obtain visas because of the closure of the office and delay in processing.  This has been a matter of grave concern.

            Another country is Australia.  Now, there are people over the ages of 60 to 80 years, who have to go through a lot of hassles by going to doctors for x-rays, medical reports, et cetera, and on top of that, they have to pay higher amounts of fees.  Sir, when we can give them visas easily on our gates, why are they putting us through so much hassle?  I am asking my good friend, the honourable Minister for Home Affairs if there can be some type of dialogue with these high commissions.  There are genuine people who want to visit abroad.  However, I know for a fact that there are some who would want to beat the system.  They get visas for Australia and New Zealand, go there and overstay, get married or do something like that.  There may be some, but there are many genuine applications that they need to consider, to process papers for visas in a speedy way instead of taking up a lot of time processing.  

            Sir, I also request the Passport Officers to speed up the process, because this is the place where the Government is making money.  Individually, one pays $72, and for the Department to receive more revenue for the Government, the Department must have enough passports.  I am sure the passports coming in for $250,000 from the UK is somewhere around 80,000 passports.  I do not have these statistics (how many passports are issued every year), but, Sir, I think we should have enough stock because these are not given for free, passports are sold to our people.  The more we sell, the more the Government will get in terms of revenue.

            Mr. President, Sir, lastly, let me dwell on the Judiciary.  This morning, while going through the daily newspapers, Sir, I came across an article in regards to the Judiciary, especially the judges.  At the moment, we have some good judges and magistrates on the bench.  However, a time will come where, if we do not put our acts and policies together, I am sure we will not have those competent type of people sitting on the bench. 

            Now, one factor told by the legal birds in the paper today is that, because of the working conditions and the salaries that the judges are receiving today (which is far below what the people are getting in other countries like Australia, New Zealand and in other developed countries), we would not get such competent people in future.  There are a lot of reputable lawyers in our country who have a lot of years of experience.  A lot of solicitors and barristers in the private firms want to come in as magistrates and judges, but then again, when they look at the pay and working conditions, they say it would be better to be in the private practice than be judges and magistrates. 

            Mr. President, Sir, I believe there is some time left for me and I request that time left be given to the honourable Senator Prasad.  With that, Sir, and the type of Budget given, I will reserve my decision when the voting time comes.

            HON. SENATOR RATU J. YAVALANAVANUA.- Mr. President, Sir,  I rise to contribute to the debate on the Bill before the House.  I state from the very outset, my very strong support for this Bill.

            Mr. President, Sir, allow me to express my gratitude to Government, and the honourable Minister for Finance and National Planning, for a very well prepared and comprehensive Budget.

            I am sure that the strategies as set out in this Budget, will go a long way to lifting our standard of living, and to helping the poor live satisfactory lives.  The theme for this Budget is appropriately called "Partnership for Sustained Growth". This is our first Multi-Party Budget.

            In a Multi-Party Government system, one important consideration is that, a Multi-Party Cabinet consists of members of different parties who have their own different policies, yet reach collective decisions after negotiations, discussions and compromise.

            This Budget is the result of deliberations of our Multi-Party Cabinet.  Under the principles of collective responsibility, honourable Senators of this august House who are nominees of political parties represented in this Multi-Party arrangement should support the Budget. 

            Mr. President, Sir, it is common knowledge that cracks have begun to appear in our Multi-Party arrangement.  There have been some talks of one of the Multi-Party partners pulling out.  It is over six months now of the Multi-Party Government coming into being, but there are still no ground rules.

            Mr. President, Sir, we have a heavy responsibility in this august House.  As more matured respected members of our community, we can be a vital force in uniting our communities and our nation.  We can rally our nation together in showing that while we may differ on some issues the interest of the nation is above those of our political affiliations.

            Mr. President, Sir, the whole nation is watching us.  Let us exercise our careful discretion and collective wisdom, and show the nation of our commitment to the Multi-Party Government principles.

            Mr. President, Sir, rural urban migration in the last 10 years has increased significantly.  About half of our population now lives in urban areas, and of this, about 15 per cent are estimated to be squatters. 

            Mr. President, Sir, the increased number of people in urban areas puts pressure on public utilities.  Our health services and education have been particularly burdened with huge demands.  Schools in our urban areas are overcrowded. 

            I am therefore, grateful that this Government recognises the very important role of education in our national development.  The largest share of the Government Budget for 2006 is for the Ministry of Education.  I specially welcome the absorption of grant-in-aid teachers to the civil service.  This will mean that committee schools which previously have to pay 20 per cent of the salaries of these grant-in-aid teachers now do not pay for them.  For committee schools in both our urban and rural areas, this is a very effective measure of Government assistance. 

             I thank Government for the provision in this Budget of tuition fee assistance.  I note that in this year's Budget, a provision of $15.8 million is provided for tuition fee assistance for class one to Form seven.  I also thank Government for the provision in this Budget of a building grant allocation of $1.2 million.  This grant has assisted a lot of our schools, especially among the poor of our communities in rural areas. 

            I am also grateful for Government's assistance specifically for the improvement of Fijian education.  I thank the Government for the provision of $2.67 million in this Budget to the Fijian Education Special Projects Unit.  This will be used in much needed projects such as centres for excellence, the purchase of textbooks, improvements in boarding facilities and in community awareness programmes. 

            Mr. President, Sir, a lot has been said about our Government being anti-poor.  Most critics base this on the increase in VAT to 15 per cent.  I have just spoken of the many measures in education where Government is contributing directly to alleviating the burden of the poor.

            In 2001, the family assistance budget was only $8 million, because of this Government's concern for the poor, this allocation has been progressively increased to that in the 2007 Budget, the family assistance allocation is $18 million. 

            I thank Government that the provision in this Budget for Housing Assistance Relief Trust (HART) has been doubled to $2 million.  HART houses some of our poorest citizens.  The provision for the Rural Housing Assistance Scheme has gone up in this Budget to $1.6 million, an increase of 33 per cent.

            Mr. President, Sir, I can go on about the numerous measures in this Budget to benefit the poor. 

            With respect to agriculture, the sector has grown by six per cent in 2005, and is expected to grow by 6.5 per cent in 2006.  It is interesting that the largest growth is expected from rootcrops, fresh fruits, vegetables, yaqona and ginger.  Our dalo, tavioka, uvi and uto are much in demand overseas.  These crops fetch a better price than sugar, and our people already have the skills for these crops.  All they lack is the infrastructure, especially storage and transport.  Considering the assistance that goes into our sugar industry, and the fact that this sector can add considerably to our foreign exchange, I urge Government to put more resources in assisting our farmers grow root crops, fruits and vegetables for exports, as well as import-substitution.

            I note that with respect to the alternative livelihood project, a sum of $350 million is coming on stream and apart from sugar, at least some part of this funding should be used for crop development for export to fulfil the high demand for our root crops.

            Mr. President, Sir, water problems in some of our cities and towns, reflect the huge demand for improved infrastructure posed by our increased urban population.  I am sincerely grateful that Government has increased the allocation for the Ministry of Public Utilities by $48 million.  Part of this will go towards infrastructure development.

            I thank the honourable Minister for Public Utilities for assuring the nation that with his Ministry's increased allocation, we can all look forward to improved infrastructure services from next year.  Together with on-going works, this will go a long way in resolving problems with some of our urban infrastructure.  So I express my gratitude to our Government.  Where past Governments have failed to initiate solutions to deteriorating infrastructure services, this Government has done much to resolve these problems in the last five years.  The total allocation for the development of urban and regional water supplies in this Budget is $50 million.

            This is proof of Government's commitment to upgrade and improve water supply services in accordance with master plans in Suva/Nausori, Navua/Deuba, Sigatoka, Nadi/Lautoka, Ba, Tavua, Vatukoula, Rakiraki, Korovou, Levuka, Labasa and Savusavu.  These measures should assist greatly in improving water supply services in our urban centres.  I express my thanks to Government for the continuing allocation of funds for rural development. 

            Mr. President, Sir, those who criticise the Government for being anti-poor, do not appreciate the considerable assistance that our Government gives to rural communities, and it has been confirmed that majority of the 34 per cent of our people that are poor, live in rural areas.

            With respect to Rural Housing, the figures given by the Department of Regional Development confirm that in the four years from 2002, a total of $5.5 million was spent assisting 1,050 families in the building of their homes in rural areas.

            I am grateful that in this Budget, a further sum of $2.5 million is being provided to assist a further 350 families.  There are provisions for provincial development projects, rural roads, self-help schemes and community capacity building. 

            Mr. President, Sir, in respect to health, I applaud the allocation of the sum of $155 million in our health budget for 2007.  It is very pleasing that a provision of $3 million is allocated for the completion of the new wing at the Labasa Hospital. 

            In addition to other measures in this Budget, it shows that this Government cares very much for the people of the Northern Division.  A sum of $1 million is for building the new Ba Hospital.  This is a good start and it augurs well for the people of Ba and Tavua. 

            I thank Government for the provision of $500,000 in this Budget for HIV/AIDS prevention.  I urge that more seminars should be held at village and community levels, to warn our people against this disease.  We are a very small population and if left uncontrolled, diseases such as HIV/AIDS can decimate us very seriously. 

            Mr. President, Sir, again, I thank the honourable Minister for Finance for a very good Budget and I support the Bill before the House.

            HON. SENATOR T. RICKETTS.- Mr. President, Sir, I rise to contribute to the debate on the national Budget. 

            There have been many adjectives used to describe the Budget, but my description of it is simply, that it is unjust.  Let me tell you why. 

            VAT: Mr. President, Sir, as you all know, VAT has been increased by 2.5 per cent.  In doing my research, I found some useful information in the response by the Ecumenical Centre for Research, Education and Advocacy (ECREA) to the Budget.  ECREA is an organisation, which has for years conducted research into the problem of poverty in Fiji.  Sir, as an organisation, it is strongly opposed to VAT.

            The Government says that VAT is a fair tax, but ECREA says that this is a myth being propagated by business people who have influenced and convinced the Government.  In fact, VAT is universally recognised by economists as being a regressive tax.  This means that it affects everyone, irrespective of their inability to pay. 

            Income tax, company tax and capital gains tax are much fairer methods of taxation, because they tax people according to their ability to pay.  Being a regressive tax, VAT has harmful effects on the poor and low-income earners, especially in a nation like Fiji, which does not have a comprehensive social welfare system nor a national minimum wage.  Moreover, Fiji currently has 35 per cent of its population living below the poverty line and 12 per cent living in squatter settlements.

            Sir, increasing VAT in such a situation is, in my view, an absolutely unjust and as some have said, immoral.  The Government has said that VAT is increasingly being used as a source of income worldwide, maybe, but those countries which do this usually have a comprehensive system of social welfare and a properly established minimum wage.  Also, they do not have 35 per cent of their population living below the poverty line.

            Moreover, how many developing countries have a 15 per cent VAT?  Not even developed countries like Australia and New Zealand have such a high rate of VAT.  Sir, we acknowledge that Government has to find the revenue from somewhere.  If not from VAT, then where should we get it from? 

            I think one of the ways that Government could improve its finances would be to prevent the huge amount of money currently being wasted through scams, corruptions and sheer mismanagement.  As you all know, scams have cost the country millions over the years.  Every year, the Auditor-General highlights the deficiencies in the various ministries.  These deficiencies are discussed at length by the Public Accounts Committee and then Parliament, but then it appears that no action is being taken. 

            Sir, the following year, the same thing happens again.  Surely, it is time Government take responsibility and enforce accountability, to ensure that items highlighted by the Auditor-General are satisfactorily attended to and not repeated.

            Sir, in going through the Budget, I also noticed an item under the Ministry of Fisheries and Forests of $4.5 million for the payment of compensation for the failed Lami Jetty.  What went wrong here?  Who is accountable and has anyone been taken to task for this failure?

            Sir, there is the ongoing problem of the mahogany industry.  Remember in 1999, this was going to be a multi-million dollar industry, but today, the company is struggling with the Fiji Development Bank (FDB) repossessing their vehicles and Government having to bail them out.  Again, where did we go wrong and have we learnt from our mistakes?

             Sir, then there is the cost of the Civil Service and the excessive Cabinet that we have.  There is too much talk over recent years about right-sizing the Civil Service, but although this has been mentioned in various plans or budgets, at the end of the day, not much action has been taken.  Our Cabinet is far too big and the size is ridiculous for a small place like Fiji and on top of this, we have State Ministers.  Do we really need them and what do they do?

            Sir, in our local newspapers recently, there was an article headlined "Poor Handling Cost us a Billion", in which Dr. Paresh Narayan, an Economist from Griffith University replied to an Australian Treasury Department report on Fiji.  He said and I quote:

                        "Poor governance has cost the economy close to a billion dollars.  Fiji's economic performance had been poor as its growth rate over the last decade had been around two per cent.  The country had not been able to achieve the target growth rate of five per cent.  The other macro economic indicators such as declining foreign reserves, ballooning debt, escalating trade deficits, rising interest rates and rising inflation all pointed to unstable macro economic conditions."

            Mr. Narayan added that poor governance could be addressed through State reforms and getting rid of people who are the source of it.  Good economic management can overcome this problem.  The failure to address it will, in his opinion, propel the chances of Fiji becoming a failed State reminiscent of many African countries. 

            Sir, this is a good summary of our position today and it is a big challenge to us all, especially the Government of the day.  The signs are there and we must take heed now.  We ignore them at our peril.  Our children and grandchildren will carry the burden if we do not.

            Environment: Mr. President, Sir, the budget for the Ministry of Environment shows $60,000 for Awareness and Education.  I think the time for awareness and education has passed, as we all know, people continue to litter despite all the advertisements and awareness campaigns that have been held. 

            How often do we hear of groups of volunteers cleaning up the foreshore at Suva Point, Nasese and other parts of Fiji?  Whenever this happens, two days later, these places are again covered with litter.  Likewise, a visit to the Suva Market or the Post Fiji Stadium after a big event on Saturday evening, will indicate that our people do not care and just throw their rubbish on the ground. 

            Sir, instead of wasting any further money on awareness, we should direct it towards the enforcement of the litter laws.  This tough policy has been successful in Singapore and I see no reason why it should not be just as effective in this country.  I know it will initially hurt some people but hopefully, the message will soon get through, resulting in a better environment for all of us and certainly, it will be less costly in the long run.

            This amount of $60,000 may be insufficient to cover the cost of enforcement.  If there is no other way of finding additional funds in the meantime, then I suggest that an increase be sought in the next budget.

             Corporatisation: Mr. President, Sir, the Ministry of Public Enterprises and Public Sector Reform have the Department of Water and Sewerage earmarked for corporatisation.  One of the reasons, Sir, for this undertaking is that, it will improve efficiency.  Although there is plenty of water in Fiji, distribution of it is a big problem and not a day goes by without complaints from many areas throughout the country.

            Sir, the suggestion that corporatisation will fix this, is unrealistic.  All that this will be doing is shifting the problem away from Government.  This will certainly result in an enormous increase in the wage bill and other costs, which the poor consumers will have to pick up.

            Sir, I understand that in time, Government may consider a joint venture with commercial companies.  I hope they do not do this, as I believe the State should control water supply.  However, if they do, I hope the Government seriously considers all implications and hold wide discussions and consultations with the people.  As you can see, Sir, in this Budget, the Government has shifted the burden on to the poor through the increase in VAT.  As I mentioned before, this is unjust.  The Government's first duty should be to look after the poor. 

            Sir, let me conclude by quoting some words from Nelson Mandela.  He said and I quote:

                        "Millions of people are trapped in the prison of poverty.  It is time to set them free.  Poverty is not inevitable, it is man-made and can be eradicated by the action of human beings.  Overcoming poverty is not a gesture of charity, it is a matter of justice.  It is the protection of a fundamental human right - the right to dignity and a decent life.

            Mr. President, Sir, thank you for allowing me this opportunity of expressing my thoughts on the Budget.

            MR. PRESIDENT.- Honourable Members, we will now adjourn for afternoon tea.

            The House adjourned at 3.38 p.m.

            The House resumed at 4.45 p.m.

            HON. SENATOR Q.B. BALE.- Mr. President, Sir, I seek your leave to move a motion under Standing Order (56).

            (Leave granted)

            Mr. President, Sir, I wish to invoke Standing Order 56, particularly paragraph (3), and I beg to move that the question be now put on this motion.  I will elaborate, once you allow me to do so, Mr. President, Sir.

            HON. SENATOR RATU K.R. VAKAWALETABUA.- Mr. President, Sir, I beg to second the motion.

            HON. SENATOR Q.B. BALE.- Mr. President, Sir, I now wish to elaborate the reasons why the motion has been moved at this point in time.  Let me, first of all, refer to the Standing Order that I have invoked.

            Mr. President, Sir, Standing Order 56 deals with the limitation of debate.  In paragraph (3) of that Standing Order, it is provided, and I quote:

                        "During the course of any debate, any Senator may move "That a question be now put"."

That means, the question that was placed before us, to give rise to the debate on the second reading of the Bill before the House and in this case, the two Bills that were read cognately, introduced cognately and are being debated cognately.

            Sir, paragraph (4) of that Standing Order provides, and I quote:

                        "A question "That the question be now put", may be made without notice..."

That is why I sought leave, Sir, because I did not give notice, except immediately prior to our resumption of this debate.

            Paragraph (4) went on to say, and I quote:

                        "... and, subject to paragraph (6) and to its being seconded (it has been seconded), the question on it is proposed without amendment or debate."

            Sir, paragraph (6) says, and I quote:

                        "The President may refuse to propose "That the question be now put", if the President considers such proposal to be an abuse of these Standing Orders or an infringement of the rights of a minority."

            Sir, that is why I sought your leave, so that I could elaborate on the reasons why we are moving this motion at this point in time.  Mr. President, Sir, we acknowledge from the Government side the very special procedure that we have been provided in relation to introducing, as well as debating and passing Appropriation Bills.

            The Bills before us are Appropriation Bills, and we are required to pass them within 48 hours from the time the Bills are introduced.  They were introduced this morning and we have until tomorrow to pass it.  The batting order that have been agreed to by the Business Committee, after discussions with representatives of all groups in the House was accepted and would take us right to the end of tomorrow.  More importantly, Sir, these are Bills, (the second of their type and the only other occasion would be the debate on His Excellency's Address) when all honourable Members of both Houses, particularly this House, are expected and entitled to make their contributions to the Bill during the debate, and may I confirm immediately that this side of the House, or at least the Government side acknowledges and accepts that procedure.

            Sir, why then do we have to move this motion?  We accept and we all know that there are quite a lot of honourable Senators, who are keen to make their contributions before we wind up the total debate tomorrow, and have yet to speak.  So, this motion will then automatically mean that they will not be in a position to make their contributions in relation to this debate.

            Sir, the other issue that I wish to stress is that, out of all the Bills that we go through on any given Parliamentary year, these are the Bills that need to be passed before the end of the year, because the moneys that are appropriated through these Bills, both for Parliament and Government services generally, are required to be available from 1st January.  The meeting that we are going through now for both Houses (we have completed the House of Representatives and we are now on this House) is the last meeting of the second House that can consider these Bills and pass them.  These Bills have been passed in the Lower House and it is now left for the Parliamentary procedural process to be completed.  The balance of the procedures left (one is the passage by this august House, the other is the submission of the passed Bills to His Excellency the President for assent), once they are done are then published and become law.  We can then use the money appropriated under these two Bills for Government services, and for Parliamentary purposes next year.

            Sir, needless to say, the Government side would have loved to hear all contributions now before we pass these Bills.  Events, however, (and I think many of us have kept ourselves informed as much as we can us through the use of vodaphones, et cetera) have become aware of the development going outside this august House, in relation to the continuing impasse between the Government and the Military, or at least that is the way it has been described by many people.

            Sir, as a result of that, events have taken place outside this House that has created an atmosphere of uncertainty that also can cover the passage of this Bill.  We can, of course, take the risk and say: "Well, we come back tomorrow because nothing will happen".  The fear, or concern about that is; "What if something happens"?  Then, we would not have passed the Bills and that would create a very difficult constitutional and legal situation, administrative as well as financial, for the whole of Government and Parliament next year. 

            Sir, because of the uncertainties and the risks involved, this side of the House has discussed this, I have taken the opportunity to discuss the situation with your good self in the absence of the leader of the Great Council of Chiefs' nominees, the Leader of the House and also the honourable leader of the Fiji Labour Party in this House, and I know that the honourable Senator did not agree with me.  However, the Government side, with all due respect to all honourable Senators, is not prepared to take the risk to go on until tomorrow, despite the uncertainties that might come, and that is why I am pleading to all honourable Senators to forgive us for having to do this at this time.  It is not something that we want to do, or forced to do, and I believe good sense to go the way that we have proposed.

            The question then is; what happens to those honourable Senators who have not given their contributions to the debate on these Bills because many of the others have?  We acknowledge that that creates an unfair situation, but after discussing the matter and pleading with you that we have consequential Bills that are yet to come.  If we should avoid all these uncertainties and go on, then we will move on to consequential Bills that need to be passed, consequential on the initiatives that are announced in the Budget like the VAT Bill, et cetera.

            Sir, I had pleaded with you that when the time comes for the consequential Bills, the Government side would be very happy and would not object (and we believe that no one should object to that), especially those who have not made their contributions on these Bills to be given the liberty to stray as much as possible, to meander out of the specific focus of these consequential Bills, in order to give them the opportunity to make their contributions on whatever they might have missed out, as a result of the motion that is now being put at this time.

            Sir, these are the circumstances - sad, unfortunate, and from our side regrettable, but we consider that this is a motion that we are forced to move at this time, and we hope that honourable Senators would accept the wisdom in our having to do this for the many reasons that I have explained.

            Sir, thank you kindly for giving me the opportunity to elaborate on this motion.    

            HON. SENATOR J. KOROI.- Mr. President, Sir, may I say something, please?

            HON. SENATOR Q.B. BALE.- Mr. President, Sir, I thought I had taken the liberty to read the Standing Order that I had sought leave to invoke (for which I was given leave), because it is very clear that the question on it is proposed without amendment or debate.  If the honourable Senator is proposing to make a contribution, that would amount to a debate, that at least is not allowed under our Standing Orders. 

            HON. SENATOR J. KOROI.- It is because we were not told beforehand.  Could we ask for an adjournment so that I could speak with the honourable Senators on my side of the House?  Give us 10 minutes, please Sir.  I request that we adjourn for 10 minutes and then we come back again and decide.

            HON. SENATOR Q.B. BALE.- Mr. President, Sir, we have explained in as much detail and I would have thought that that was clear enough.  However, we have no strong opposition, Sir, to their proposal, so long as we come to a reasonable, wise and sound decision on this as of today, because as I say again, the developments taking place outside may go totally beyond our control, and we may not be in a position to complete this Bill - that will be sad.

            MR. PRESIDENT.- Honourable Senators, we will now adjourn for 10 minutes.

            The House adjourned at 5.03 p.m.

            The House resumed at 5.10 p.m.

            HON. SENATOR H.D. KHAN.- Mr. President, Sir, we have heard the honourable Senators this morning from the Government side, GCC nominees and also the Fiji Labour Party nominees.  Obviously, there has been a diverge opinion as to what the Appropriation Bill means to our fellow Senators.  Largely, Sir, I am pleased to note and report (as we have all noted), that most of the honourable Senators are happy and pleased with the effort being made by Government to put into effect the financial plan for next year, which under the circumstances is the best possible alternative available.  Obviously, there have been critics and there will be critics all the time, Sir, in terms of whatever is proposed, as far as money Bills are concerned. 

            I have taken note of some of the comments made by honourable Senators who have decided to make comments as regards to some of the issues.  As alluded to by the honourable and learned Attorney-General, when the opportunity arises again on the other consequential Bills, hopefully we will get the opportunity to listen to the remaining honourable Senators, and at that point in time, I will be happy to cover some of the issues that have not been covered today.  Suffice to say, Sir, at this point in time, in respect of the issues currently at hand and the urgency of this, I commend this Bill to the House.

            Bill No. 20:

            Question put.

            Motion agreed to. 

            Bill read a second time. 

            In Committee:

            Clauses 1, 2, 3, Schedule and title and enacting clause agreed to. 

            The House resumed:

            HON. SENATOR J. KOROI.- Mr. President, Sir, may I request your leave to say something.  Sir, I wish to bring to your notice, with all my fellow colleagues here this evening that we are very disappointed in what has happened now.  We came and waited for so long, we could have been told about it so that we could at least sit and talk about it, and then come in and give our decision in this august House.  However, we were taken by surprise. 

            The Bill at the moment is prematurely being approved because only 12 honourable Senators have spoken and we still have the whole day tomorrow to debate on these Bills.  We are not aware of what is going on outside, it is all very well for the honourable and learned Attorney-General to come in and say that we are aware of it, we are not.  We have not been given any progressive report of what is happening, and the least that he could have done was to inform the House, so that the President could inform us of what has been going on.  We are very

disappointed.  I am personally very disappointed about this, because all throughout this year, we have been working together as a team and towards the end, we are divided like this.  I am very disappointed and we strongly object to what has happened, and I just want to let you know, Sir, plus all my fellow colleagues in here how disappointed we are about what has happened this evening.           

            The House resumed:

            Bill reported without amendments, read a third time and passed Act No. of 2006)

            Bill No. 21:      

            Question put.

            Motion agreed to.

            Bill read a second time.