This opinion piece first appeared in the Canberra Times on 3 February
Australia begins 2010 comfortable in the knowledge that it seems to have escaped the worst of the global economic crisis. But what about our region – the Pacific? A new report by Oxfam Australia reveals a disturbing lack of knowledge about the effects the crisis is having on our nearest neighbours.
The report shows that, at a macroeconomic level, the Pacific as a whole may have avoided the most severe impacts of the economic crisis, but the impact is being felt to varying degrees across individual countries. While Papua New Guinea, Timor-Leste and Vanuatu are experiencing high rates of economic growth, other countries, including Kiribati, Samoa, the Solomon Islands, Tonga and Tuvalu have been far more vulnerable.
They’re being affected by a combination of falling exports and government revenues, declining remittances, a fall in revenue from tourism and a loss in the value of trust funds. The fall in government revenue is already leading to cuts in health and education spending in some countries.
Overall, the crisis is reducing economic growth in Pacific countries and the majority of economies are likely to have contracted on a per capita basis last year – and are predicted to do so again in 2010.
This gives us an indication of the big picture. But what we don’t know yet is the direct impact the crisis is having on people’s lives at a household and community level.
Speculating about the impact the crisis on everyday life using macroeconomic data is not appropriate for the Pacific. The existence of strong traditional social support systems and large extended family groups can help provide people with resilience during times of crisis. In some countries, a large proportion of the population lives a subsistence or semi-subsistence lifestyle on communally owned land.
Standard economic relationships don’t always hold up in the Pacific. Economic growth has not always benefitted the local population and government spending does not always lead to improvements in health and education.
Yet knowing how Pacific households are being affected is crucial to getting the response to the crisis right, and this is something Governments and agencies like Oxfam must now put an emphasis on discovering. We need to know if people are being forced to eat less, sell their assets or borrow more money. These effects will reduce well-being and people’s chances of escaping poverty.
It’s time for Australia, and the international community, to rethink the way we view economics in the Pacific and consequently the way we can support the region through the financial crisis. To do this, we need firstly to help establish systems to better monitor the impact of the crisis and any future economic downturns at a household level.
Secondly, we need to examine how traditional support systems can be strengthened to help people through crisis, or where these systems are not meeting people’s needs, determine what additional support can be offered.
Thirdly, we must provide governments with budget support, to help ensure that vital social expenditures such as health and education are not cut, as well as examine ways social spending can be improved to make it more effective.
Finally, we must ensure that Pacific governments devise policies which ensure that economic growth leads to real benefits for all people. This will ensure that everyone in the region gains from improvements in global economic conditions.
Simon Feeny is an Associate Professor and development economist based at RMIT University in Melbourne. He was recently seconded to Oxfam Australia.
The report is available here: www.oxfam.org.au/resources/filestore/originals/OAus-GFCInThePacific-0210.PDF