Terms of Reference

National Council For Building a Better Fiji
Draft Terms of Reference for National Task Team 2: Growing the Economy

Introduction

The National Council’s overall objective is to rebuild Fiji into a non-racial, culturally vibrant and united, well governed, truly democratic nation that seeks peace and progress through merit based equality of opportunity, justice and the mutual observance of everyone’s human rights.

The bulk of Fiji’s history, as an independent nation has been marked by the weakening of democratic traditions, particularly over the past two decades. Worsening economic and social conditions beset Fiji today. Fiji’s problems are clearly deep-rooted and complex. And there are no quick, simple or easy solutions. Given such a situation, the people of Fiji, individually and collectively, need to come together to contribute actively to help resolve the country’s deep-rooted and most fundamental problems, to help build a better Fiji for all. With this as our collective, national objective, Fiji’s people, and particularly leaders at all levels, in individual communities and the society as a whole, need to place Fiji’s national interest ahead of any personal and sectional interests.

To facilitate this process, the National Council, through its three (3) National Task Teams (NTTs) will conduct a nation-wide, informed consultation process to diagnose the problems confronting Fiji and to seek sustainable solutions to these problems. The consultation process is to be “informed” in the sense that facts on the current state of the nation and economy, and preliminary and tentative analyses of the causes of the problems confronting Fiji will be widely distributed, with the dissemination of information being in forms that can be readily accessed and understood by the wider community across the nation.

Fiji’s long-term trend rate of growth has continued to decline – and at an accelerating pace in recent years. Fiji’s place in the United Nations Human Development Index has fallen from No. 42 in 1975 to No. 92 in 2005. The political and economic uncertainties have severely eroded confidence, particularly of the business community, with a consequent fall in private capital investment. The state of the nation’s infrastructure (roads, water supply) has deteriorated severely. High government deficits have increased government debt (from 44% of GDP in 2001 to 52% of GDP in 2006), and added to the pressure on the balance of payments, requiring an intensification of foreign exchange controls and restrictions on bank lending to the private sector. Recent changes in export markets for garments and sugar (together with the land lease problems) have forced Fiji to begin to make some structural adjustments but Fiji has proved to be a “slow adapter’. This has exacerbated the social costs of the adjustment process. The pace of structural adjustment must be increased, and the factors contributing to this problem addressed and resolved.

The National Task Team 2 will focus on Growing the Economy, and its role is (a) to oversee the organisation of the factual, diagnostic and analytical work and its effective dissemination throughout the country; and (b) to faithfully summarise and report back to the National Council on its deliberations and recommendations on each of the following four (4) Priority Topics related to Growing the Economy.

Priority Topic 1: Clarifying the Respective Roles of Government, Private Sector and Civil Society.

Define the role of government vis-a-vis those of the private sector and civil society and make recommendations about the areas in which government should reduce its involvement and, conversely, the areas in which the government should become more involved.
Make recommendations about the areas in which it would be advantageous for the government to work in closer partnership with the private sector and/or civil society to enhance growth (or the country’s growth capacity) either by working jointly on projects and programmes or by engaging these other sectors more closely in decision-making and conflict management. This review should encompass, in particular (but not necessarily exclusively), the infrastructure sectors (Land Transport, Marine Transport, and Water), the health sector, and the issue of social health insurance.

Review the regulatory environment governing business activity and make recommendations on any reforms that would reduce the costs of doing business and reduce the dominance of Government in private sector decision making.

Make recommendations on the ways in which civil society organisations might strengthen their roles as advocates for the groups they represent, gatherers of information that is useful to government (and society) but is not provided from any other sources, and co-partners with government in both decision-making about service delivery and in service delivery itself.

Make any other recommendations considered appropriate to clarify the role of government, the private sector and civil society and the way in which these cooperate with each other.

Priority Topic 2: Growth, Equity and Sustainability

Review macroeconomic policies and make recommendations, as considered appropriate and necessary, to revise macroeconomic policy settings or longer term policy targets relating to (for example) the government’s budget balance, government debt, interest rates, inflation targets, balance of payments, exchange rate regime and foreign exchange controls.
Consider mechanisms to promote the greater compatibility, consistency and credibility of government’s economic policies (e.g. a Fiscal Responsibility Act as in New Zealand) and make recommendations as considered appropriate.
Review structural adjustment policies (such as the government’s export strategy, regulatory policies and labour market arrangements) and make recommendations, as considered appropriate and necessary, to improve or strengthen these policies.
Reviewing the effectiveness and adequacy of the law and resourcing of environmental management arrangements and make recommendations as considered appropriate to strengthen all the mechanisms and processes available to ensure the environmental sustainability of development activity in Fiji.
Make recommendations on mechanisms to ensure the adequate and timely supply of leased land (without jeopardising the ownership of any of the land currently owned communally by Fijians) to meet the needs of the productive sector and the need for land for housing and, in particular, social housing, in urban areas.
Make any other recommendations considered appropriate to promote more rapid growth, improve equity or ensure environmental sustainability.

Priority Topic 3: Development of the Financial Services Sector

Review progress with the work already underway (under the aegis of the Reserve Bank of Fiji) intended to deepen and increase the sophistication of financial markets and make any recommendations considered necessary in relation to that work.
Review the adequacy of existing prudential supervision legislation, regulations and procedures and make recommendations that would help align legislation in Fiji with best practices international.
Review the need for capital controls and make recommendations for further policy development in this area.
Review and make recommendations on the sustainability of the long-standing government policy relating to the investment and management of funds under the National Provident Fund.
Assess the scope for further liberalisation and more competition in the management of superannuation funds and make appropriate recommendations with a view to increasing competition and reducing the riskiness of superannuation fund investments.
Assess the scope for the provision of cost effective financial services in rural areas and outer islands and for appropriate consumer protection and education in these areas.
Make any other recommendations considered appropriate to encourage the development of the financial services sector.

Priority Topic 4: Development of Resource-based Sectors

In addition to the difficulties encountered in accessing land, identify any other factors inhibiting the development of the resource-based sectors in Fiji (agriculture, fisheries, forestry and minerals) and make recommendations for changes to legislation, regulations, policies, the regimes for ownership participation, taxation and managerial arrangements as considered appropriate to facilitate the more rapid expansion of these sectors.
Make any other recommendations considered appropriate to encourage the development of the resource-based sectors in Fiji.
In undertaking this work, National Task Team 2 is to take into account any studies already completed in any of the above areas and undertake further investigations only where it is considered that this is required to complete the needed work satisfactorily. NTT2 is to consider the priorities to be accorded to tasks, to outline a timetable for the implementation of the activities recommended, and ensure that work is appropriately sequenced.

In consultation with the Head of TASS, NTT2 may request the preparation of literature reviews and commission Issues and Discussion Papers (IDPs) to assist it in its deliberations.

NTT2 may establish a number of Working Groups (WGs) as it considers appropriate and necessary, to accomplish the diagnostic work under the foregoing listed Priority Topics. Each WG will need to report back to NTT2 within specified timelines.

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