FHTA Tourism Talanoa: What’s in Your Budget Request?

FHTA Tourism Talanoa: What’s in Your Budget Request?

Fiji Hotel and Tourism Association, 14 June 2024 – Never mind who tells you it is – national budgets are different from household budgets.

Everyone knows that governments can create money. Most people also recognise that governments don’t simply produce all the money needed for every demand because it would lead to inflation.

Inflation is the decrease in the value of money. For instance, if there’s an abundance of pineapples this season, resulting in a surplus, the price of pineapples drops.

Similarly, if there’s an excess of money, its value declines. That’s inflation.

So inflation (not taxes or borrowing) is the limiting factor for government expenditure.

And with external forces pressuring small island developing states like ours, Fiji’s economy can be considered still fragile, fresh out of a pandemic that ate away at its bones, albeit currently holding steady in its recovery efforts.

As a Small Island Developing State (SIDS), Fiji is already on the frontline of multiple crises, that remote economies like ours are prone to.

We face many challenges, including natural disasters, being highly affected by climate change, high import and export costs, and being heavily reliant on external markets due to our narrow resource bases.

Add inflation to this base list.

Every industry is exposed to all these challenges before their individual, industry specific challenges are added to further complicate a business environment where productivity and a decent profit margin can be expected.

Why would you bother to be in business at all otherwise?

If you are in the public sector, then your business is all about providing a service or a product that the government believes is necessary for the population to access. If you can deliver this service or product well (efficiently, on time and as expected) without wasting government-provided funding, then no doubt your ministry has put together its usually slick budget recommendations and you can sit back and hope to see much of the same.

Suppose you have not delivered according to expectations as a government agency, ministry, or division. In that case, we imagine there have been some stressful meetings and collective hand-wringing to submit what you hope is a convincing argument for why your budget submission should be supported this time around.

That inflation I noted earlier is forcing more fiscal prudence all around, because short of printing more money (and adding to inflation), Government must ensure we carve out a balance between expenditure (that includes reducing a nasty debt) and enabling revenue-earning industries to perform to their highest levels.

For private sector industry submissions, if you’ve been allowed to submit and present your budget proposal, then you’ve probably been allowed the time to shape your arguments about how you can overcome some, if not all of your current challenges; were the government to consider your recommendations.

We have ourselves crafted a comprehensive submission for the 2024-2025 National Budget and welcomed the opportunity to present it with what we hope was relevant context to some of our challenges.

It was not just a list of requests. Rather it is a strategic roadmap that we align with Government’s vision of sustainable development and economic resilience.

The expectations for tourism to continue to perform at high levels get higher each year, but as the industry continues to develop and promote its products and services to enable higher yields, it does so with increasing costs to food and beverages, to labour costs that are now 30% higher than in 2019, to increasing fuel costs and higher reliance on imported fresh produce.

By addressing key challenges and untapped opportunities within tourism, our submission highlights our commitment to fostering a thriving industry that benefits both the economy and society.

Two main points underpin our submission: skilled labour accessibility and continued economic growth.

The fundamental core of a thriving tourism sector in Fiji hinges on the availability of a competent and well-trained workforce.

The urgent need to focus on our current immigration policies, recognising the importance of Technical and Vocational Education and Training (TVET), understand the futility of demanding employers pay a training levy (unfairly called the FNU levy) that isn’t utilised for training (only 1% of the 10% earmarked for it is claimable): are key factors that will determine whether we can develop the required infrastructure required for future tourism development and continued economic growth.

We need skills to build roads and bridges, to maintain and staff hospitals, to teach our children, to fill empty positions in hundreds of government offices so that those many forms we have to fill in can be approved, to drive future electric buses, to construct and connect the power, water and sewer lines, and to be the law enforcement that protects our communities from crime and drugs.

Every industry wants access to the skills and expertise required to meet global standards, drive innovation, and support long-term sustainability and competitiveness.

Our proposal advocates for significant investments in airports, ports, and key attractions, as well as transportation, telecommunications, and digital infrastructure improvements.

We have discussed removing impediments to growth and opportunities and reviewing outdated legislation or policies that restrict industries like tourism that have outgrown them.

We have called for targeted investment in specific areas to enhance connectivity, improve visitor experiences, and generate significant economic benefits for our communities. Short-term economic benefits require simplified policies and longer-term benefits require more detailed investments that have been identified.

Simplifying administrative processes and reducing bureaucratic hurdles are also discussed as these enable businesses generally to focus on being compliant and more productive through business efficiency.

We have challenged the total disregard for how tourism businesses operate regarding the VAT Act that forces the industry to implement monthly reconciliations and have called on the review of the Act to be completed.

Resolving ambiguities and streamlining the tax regime will reduce compliance costs and administrative burdens, further attracting investment and fostering growth.

As the budget announcement later this month (fingers crossed) approaches, there is optimism that these efforts will lead to a resilient, inclusive, and thriving tourism industry, benefiting Fiji’s economy and its people.

Remember the words of Albert Einstein: “In the middle of difficulty lies opportunity.”

Through resilience and perseverance, we will turn challenges into opportunities for growth and success, but only if we get the basics right.

People-centric focus first.

Fantasha Lockington – CEO, FHTA (Published in the Fiji Times on 14 June 2024)