Caregivers, low earners to benefit from Cook Islands Budget

Money has been set aside in the Cook Islands 2023 budget for caregivers and people on minimum wage to get a pay rise.

The Budget has been approved by Cabinet and is now with the Public Accounts Committee for review. Any recommendations will need to be approved by Prime Minister and Finance Minister Mark Brown, before it is debated and accepted.

The minimum wage will increase from NZ$8.50 an hour to $9 on 1 July.

The caregivers' allowance - which goes to people looking after elderly or people with a disability - will increase from $200 per month to $300, and again to $400 in July 2024.

Prime Minister Mark Brown said in Parliament the support was important with the cost of living increasing.

"Just as plants rely on each other for support and nutrients, individuals in a nation must support and uplift each other to thrive and flourish," Brown told MPs last week when the Budget was first tabled.

Brown said inflation had been the highest the country had ever experienced at 12.1 percent from March last year to 2023.

Over that same period, he said food prices rose by 20 percent.

The minimum wage increase is expected to cost the government $1.5 million over four years. While $3.4 million over four years has been set aside for the caregiver allowance, the destitute benefit and power subsidy.

The Budget also provided $600,000 over the next four years for the third tranche of teachers pay increases and $1.2 million over four years to recruit health personnel.

'New chapter' for economy

According to the Asian Development Bank (ADB) the Cook Islands GDP shrunk by 29.1 percent in 2021 - well exceeding contractions of other Pacific nations the ADB had data on.

However, Brown said "a new chapter in the post pandemic journey" was signalled when Hawaii Airlines made the maiden post Covid-19 trip to Rarotonga on 20 May.

The prime minister said GDP was predicted to grow by 12 percent in the 2024 financial year and continue its upward trend in 2025.

"While our country has been through a great trial with one of the largest falls in GDP in the world, we are still standing, and the future looks promising.

"We have encountered some tough times on the way, yet we have emerged from them with remarkable fortitude."

'Inconsistencies' say opposition

Opposition leader Tina Browne told Cook Islands News there were inconsistencies to the Budget's approach.

"It speaks about diversifying the economy, and yet it doesn't seem to give much thought to agriculture, which appears to be in a coma," she told the paper.

"I thought it would've been a good idea to boost agriculture as a means to address cost of living."

Cook Islands United Party leader Teariki Heather also speaking with the Cook Islands News said it was a "mean budget" in many ways.

"The most vulnerable in our community are still hurting, and I don't think this Budget does enough for them," Heather said.

In his Budget speech, Brown said the net debt to GDP ratio was expected to be 37.8 percent by the end of the budget year from 45.6 percent in 2022/23.

"That's actually a very modest debt to GDP ratio when you compare to other countries in the region who are hovering to near 100 percent debt to GDP and in a very debt distressed situation."

Prior to Covid-19 the country's net debt to GDP was below 20 percent. Brown said allowing to borrow the money got the nation through the pandemic.

In Parliament, Brown thanked New Zealand for its Covid-19 support.

"There significant contribution of $21.4 million dollars in budgetary support this year alone and an overall support of $107 million dollars over the last four years, has been a cornerstone of our economic recovery."

Brown also thanked China, Japan, Australia and the ADB.

Last week, New Zealand's Prime Minister Chris Hipkins announced $15 million to the Cook Islands to support the ongoing recovery from the pandemic.

The Budget was now with Public Accounts Committee to be reviewed and will be debated in parliament again on 19 June.