Lack of Govt. spending comes with heavy cost

By The Editorial Board 31 January 2021, 12:00AM

The effects of the global coronavirus pandemic on our economy can be seen everywhere. 

But on the front page of the Weekend Observer, we were able to quantify for the first time how many Samoan workers have been affected by the economy's downturn. ("Job losses top 4,500: report reveals".)

Revelations that some 4,600 Samoans lost their job last year were shocking but not surprising.

The evidence of economic decline is apparent all around us, from a recent increase in petty crime to the rising visibility of street vendors to the shuttering of tourism properties such as the Sinalei Reef Resort.

Samoa's economic freefall even set records with its 16.3 per cent contraction in last year's September quarter - the sharpest quarterly ever recorded since quarterly figures started being kept in the late '90s. 

But up until now, these abstract figures have not been translated into the economic depression's effect on Samoan families with mouths to feed. 

The best estimates available have been forecasts from Government agencies such as the Samoa Tourism Authority (S.T.A.) which estimated some 1500 people in the hospitality sector had been laid off. 

But we now know the reality is much starker than that.

The new figures, sourced from an analysis by the research arm of the A.N.Z. bank show that close to one-in-five Samoans lost their jobs last year, or just over 18 per cent or some 4,600 people. 

The figures, of course, are not official. (Attempts to seek comment on their validity from the Government Press Secretariat on Friday were not successful.)

A.N.Z.’s analysis was based on surveys of Samoan private-sector employers. 

But the bank has recently been one of the most authoritative sources of information about Samoa's economy. After the closure of the national border in March last year it predicted with remarkable accuracy that unemployment in Samoa would peak at 19 per cent. 

But there is a reason that the bank did not rely upon official Government statistics for its analysis. 

The Government, which has this very data to hand, has not disclosed the full extent of the damage caused by the economic crash as the bank has. 

It is hard to escape the conclusion that their reason for not doing so is a fear that the numbers will not cast the Government in a positive light.

The Government does release regular economic updates.

But separating data between fiscal and calendar years, or spreading it out across quarterly reports allow for plenty of diversionary tactics to spare the Government from dispensing a single hard truth to the public, as Friday's report did. 

A Samoa Bureau of Statistics report last year that admitted to “unprecedented” job losses across the nation but only noted a 3 per cent decline in employment across the country.

The bureau’s report for the September quarter suggested employment had fallen by a far more modest 0.3 per cent. 

The Government is yet to release its analysis of the final quarter of last year’s economic data, one which is likely to have brought about some of the heaviest job losses. 

But there nonetheless appears to be a significant disjuncture between the bank’s analysis and that released by the Government.

We must question why the Government has not been forthcoming about the extent of the damage our current economic crisis has had on the workforce. 

After all, these job losses are not by themselves a poor reflection on the Government. The entire Pacific region, while largely insulated from COVID-19’s health impacts, has been hit hard by its economic effects.

In fact, our job losses, according to the bank, are proportionally lesser than those in Vanuatu, Tonga and the Cook Islands.

It would be unfair to criticise the Government for unemployment driven, as it has been, by forces outside its control.

But we do believe the extent of job losses in Samoa shows the Government’s policy response to our fast-contracting economy has been hugely inadequate. 

The A.N.Z.’s Country Manager, Bernie Poort, in November, issued a call for the Government to do more for the private sector by injecting money into the economy. 

“Nothing seems to be forthcoming,” he told the Samoa Observer at the time. 

“Looking around other Pacific Islands, like Australia and New Zealand their Governments are spending large amounts of money to keep people employed and their economies moving forward, in Samoa we just haven’t seen that.”

Independent data backs up Mr. Poort's analysis.

An August report from the Australian National University described as a “tragedy” the fact that other Pacific nations were not following Tonga’s lead by trying to fight off a recession by increasing its Government spending by 15 per cent. 

By comparison, Samoa’s Government is actually decreasing the amount of money it is putting into the economy by 8 per cent, the analysis showed. 

This compares to Fiji, which is keeping Government spending stable, and the region's big economies, Australia and New Zealand, which have increased their spending by 30 and 20 per cent respectively. 

Why the Government appears to have chosen to take the exact opposite response to severe economic downturn from the world's other countries is beyond our comprehension. 

The Government has recently boasted of making significant inroads into paying down the national debt but keeping businesses afloat during this time of economic trial should be the greater policy priority. 

The last we heard from the Government on economic assistance for business was a second phase stimulus package released last May, with an $80 million relief package. The problem with that announcement was that it was inflated by poor substitutes for cash injections, such as business discounts on electricity or rent or small one-off payments to consumers.

The Ministry of Finance Chief Executive Officer, Leasiosiofa'asisina Oscar Malielegaoi, has suggested a third phase of relief measures could be forthcoming in May or as part of the mid-year national budget.

In our view that is far too long for a Government not to have taken serious steps to combat a recession; stimulus measures are always most effective when deployed sizeably and as early as possible. 

Friday’s report showed that this inaction is having a very real impact on not only the thousands of Samoans who have lost their jobs but also the thousands more who rely upon their salaries. 

Instead of allocating money to projects such as renting a new Samoa Airways jet, the Government must urgently review its budget priorities to place the people of Samoa first. 

By The Editorial Board 31 January 2021, 12:00AM
Samoa Observer

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