In this article, Co-operative Business NZ CEO Craig Presland challenges the anti-Pacific rhetoric of media commentator Heather Du Plessis-Allan, sets the record straight on the Pacific’s importance to New Zealand and explains how the co-operative business model can aid the sustainable development of the region.
It was a surprise to read Heather Du Plessis-Allan’s ill-considered comments earlier this week that the Pacific region may “not matter” along with her reference to “leeching”. While New Zealand does indeed allocate millions of dollars every year in the Pacific, in my view this is money well spent as we seek to improve conditions and stability in the region. Having a settled and prosperous Pacific region must be in NZ’s best interests internationally.
WHAT DO WE SPEND?
New Zealand will spend about $1.1 billion in aid to our Pacific neighbours over the next three years. This is reasonably evenly split between 13 Pacific nations, while another $257 million has been assigned to a regional fund between now and the end of 2021. In 2018/19 our government has planned to spend $339m: to put this into perspective, our total fiscal budget for the same period is $86.7b, so our Pacific aid budget will account for 0.4% of this in the year.
ECONOMIC AND CULTURAL LINKS
Rather than “leeching” from the NZ government, our country has benefitted significantly from Pacific labour since the 1970’s, this resource often meeting our more physically demanding and lowly paid jobs. This year over 10,000 Pacific workers will arrive on our shores employed in seasonal jobs, such as fruit picking. Our 2013 census reported that 7.4 per cent of our population identified as being Pacific people. In addition, while our Pacific neighbours have relatively small economies, collectively their sum is considerable as New Zealand currently exports over $1.5b pa worth of products and services to the region, this amounting to around 13 times more than we import from these countries.
The aid New Zealand gives to Pacific nations is spent on a wide range of programmes aimed at improving education, health, economic development, good governance and climate change preparedness programmes. A $9.5m programme in the Cook Islands, for example, is designed to improve numeracy, literacy and so greatly enhance the job prospects of secondary school students. A $3.0m scheme in Samoa helps small businesses by providing access to credit and business advice and training.
Relative to New Zealand, all Pacific nations have a much lower per capita GDP. According to the World Bank, Samoa has per capita GDP of about $6,600, about one-tenth of the New Zealand figure of $65,000 while most other Pacific nations are even worse off.
New Zealand’s aid helps to improve living standards for people in the Pacific Islands. However, a key reason for spending this money in the Pacific has nothing to do with immediate economic or cultural benefits to New Zealand nor its humanitarian impact. Foreign Affairs Minister Winston Peters laid out New Zealand’s reasons for being involved in the Pacific when he spoke to the Lowy Institute earlier this year, highlighting the national security challenges that he saw in the region.
“The modern world opens trans-boundary security challenges, including gangs; criminal deportations; drug production and distribution; cyber and financial crime; and aviation and border security. New Zealand’s national security is directly affected by the Pacific’s stability,” he said.
“We seek to assist Pacific Island countries to achieve sustainable economic growth and improved financial management as the primary engines of lifting living standards and funding vital government services”.
CO-OPERATIVES CAN HELP
And this is where the co-operative business model can help.
These are member-owned (as opposed to investor-owned) organisations that are democratically run, open membership, self-supporting and here for the long term. Financial benefits are provided to members on the basis of the volume of product supplied, or the amount of business transacted, in a given year. These commercially-driven organisations collaborate effectively and give back to local communities along the way. Profits are returned to Members each year by way of dividend and therefore retained locally. Co-op (and mutual) businesses are all about endurance and long term survival which must be good for any country, large or small. Without doubt, this business model is the most closely aligned towards supporting the UN in achieving the 17 Sustainable Development Goals by 2030.
Looking at the leading Pacific nations in Melanesia, for example, most have maintained if not grown their co-operative presence within their respective economies in recent years:
- Fiji, gained independence in 1970, population 900,000, estimated 400 active co-operatives, over 2.0% pa. growth over the past 10 years
- PNG, (1975), population 8.1 million, over 6,000 active co-operatives, over 3.2% pa growth over past 10 years
- Solomon Islands, (1978), population 600,000, estimated 130 active co-operatives, declined by over two thirds since independence
- Vanuatu, (1980), population 270,000, estimated 350 active co-operatives, 1.3% growth pa over past 10 years
- Kiribati, has not gained independence, population 115,000, estimated 276 active co-operatives (only 15 co-ops back in 1975).
The vast majority of co-ops across these five nations are very small and include the following industries: arts and crafts, coffee, fisheries, beef rice, copra oil and food retailers. So while there has been growth in numbers, barring the Solomon Islands, there is a real need for support in the following areas if there is going to be a step change made in the right direction:
- Advocacy for the co-op business model
- More support from respective governments
- Business skills including best practice governance, planning, cash flow management
- Support for start-ups including writing constitutions, co-op structures and ownership models, raising capital
NZ is best served to continue to support the Pacific Islands not only for its own trade opportunities and required seasonal labour here in NZ, but also to help ensure its own international security and intelligence.
The cooperative business model can help the Pacific nations economies grow stronger through member ownership, profits returned to members (suppliers, staff or customers) each year, and profits retained locally. Co-op principles lead to business endurance and true sustainability economically, environmentally and socially which can only be good for all Pacific nation economies.
Pacific nations need business management skills and while some NZ aid programmes are targeting this area, much more needs to be done. Industry organisations such as Cooperative Business NZ can help here but, like the Pacific Island nations themselves, we need the funding to do this.