Cook Islands Prime Minister Henry Puna’s ‘self-preservation postures’ show a man far removed from the reality of the financial situation of this country, the Democratic Party claims.

Party leader Wilkie Rasmussen says figures in the Ministry of Finance and Economic Management Fiscal Update for December 2014 show that the Government's operating balance has exploded to a deficit of $500,000 (US$392,000) from a surplus of $9,000 (US$7,000) announced in the budget in June 2014.

“It appears that Financial Secretary Richard Neves and his Minister Mark Brown knew of this upward trend of financial deficits with the country's operating budgets and gave the public misleading figures to create false confidence,” he says.

“It is an extraordinary upsurge of negative balance, noted for instance within the last two months.”

Something is going amiss with the Government’s financial accounting and it is happening right under the nose of the Prime Minister who appears not to see it because he is too busy trying to save his own skin, claims Rasmussen.

The forecast from the December Fiscal Update, signed by the Minister of Finance Mark Brown, shows that the deficit trend will continue to climb and will peak at $3 million (US$2.3 million) in the 2016/17 financial year, says Rasmussen.

“This is untenable because of the reckless spending by this Government on travel and the so-called year-long ‘celebrations’ to commemorate our 50 years of self-government.

“So far I understand, about $85,000 (US$66,000) was spent to hold the musical concerts at the start of the year and I assume this comes out of the $500,000 appropriated for the commemorations.”

However, Minister of Finance Mark Brown says Rasmussen’s statements about the economy have more to do with his ambitions to become the seventh Minister in a Teina Bishop-led government than a coherent discussion on the government’s fiscal position. 

“The Half Year Fiscal and Economic Update is precisely that: an update based on new information gathered in the two months before the end of December,” he says.

“This has allowed our team at MFEM to model, in very conservative economic terms, new projections for the end of the year estimates.”

Their assessment indicates less than expected revenues for the year and that the small operating surplus of $9000 that we expected will now be revised to a $500,000 deficit, Brown says.

“If we look at the big picture, this means that out of the $123 million (US$96 million) budget for this financial year we expect a $0.5 million ($0.3 million deficit.

“To put this into perspective, this amounts to a deficit figure of 0.4 per cent of the operating budget - not quite the ‘fiscal explosion’ that Wilkie refers to.” 

“I am confident that when we reach the end of the financial year the actual figures will bring us back to surplus.

“A number of factors were taken into account by the team in making the revised figures. One was on the lower than expected rate of tourist arrivals for the year ended December. Another was the delay of major project work due to the prolonged electoral process.” 

Budgets are forecast to three years out and provide a guide to ensure prudent financial management decisions are made, Brown says.

“I would expect the country to start to reap the benefits of our significant infrastructure investments over this time and a significant increase in economic growth that will speed up our shift to surplus.”

Brown says he shudders to think of the finance team that Wilkie would assemble, especially when he thinks back a few years to the time when a government with Wilkie as Minister of Finance left the Cook Islands in a mess the country is still paying for today.

“It is becoming apparent to more and more people that his desperate desire to appoint Teina Bishop as Prime Minister is so that he can be employed as seventh Minister. It’s not really for the good of the country.”.