Cook Islands: Ministry of Finance

Cook Islands Ministry of Finance News

Cabinet Finalises the 2014/15 Budget

The Government put the final touches on the 2014/15 Budget which will see a small underlying budget surplus in 2014/15.  The Budget will be tabled when Parliament resumes in late October. Finance Minister Mark Brown was happy to report that Cabinet had presented to MFEM a fiscally responsible budget, which would remain in an underlying balance position in 2014/15. 
 
"We have now handed the budget back to MFEM who are now working on finalising the budget documentation with an aim for an end of October session of Parliament".  
 
“The resumption of Parliament will demonstrate that the CIP Government is moving on with the business of governing and delivering to the people of the Cook Islands, rather than talking about why it would be nice to be in power.   Over the next few days we will demonstrate what it means to be in Government.  The CIP Government prefers to be talking about what we are delivering to people in terms of health, education and investing in infrastructure.  We will let the opposition talk about themselves and what sort of coalition they might dream up.”
 
Minister Brown pointed out that he and other members of Cabinet and Caucus would be updating the community over the next few days on new initiatives in the lead-up to the presentation of his fifth budget to the Cook Islands Parliament.
 
“When Parliament sat after the elections, the CIP demonstrated clearly that it was a united force behind the Prime Minister.  Now, the united CIP team through the 2014/15 year will show to the people the returns that a united, stable and responsible government can deliver to the community.”
 
The 2014/15 Budget will see funding increases in key community service areas such as health and education.  The recent focus on infrastructure will continue and further funding will be made available for marketing in Tourism, and an increase in the local pension for those aged seventy will apply from 1 January 2014.
 
“We are a hard working government who has been focussed on delivering to our people.  I say, watch our walk and come along with us, don’t listen to the talk and speculation of others”
 
[END]
 

Cook Islands Telecommunication Principles

The Policy Framework and Intentions

Telecommunications are a key driver of economic and social development in what continues to be an increasingly fast moving knowledge intensive global environment. Telecommunication services today are akin to the old trade routes which opened up economic opportunities and transformed the global economic environment.

The sector requires dynamic and innovative participation, ensuring the sector delivers on the opportunities and potentials which are and will become available.

A clear policy mandate for the sector is required to enable participants to invest, innovate and deliver services to the community. The Government of the Cook Islands has endorsed the following key policy principles for the sector. The sector should:

• provide affordable and quality telecommunication services to all people in the Cook Islands;
• establish an environment for the sustained adoption of technology which will assist in the public sector delivery of services such as education and health;
• establish an environment where economic services such as banking and commerce can be delivered more effectively and real time;
• establish an environment where services which are/were traditionally delivered by analogue means can be provided through a digital service;
• establish an environment where new services can be quickly provided; and
• be an investor friendly environment for attracting additional investments into the sector.

The Government clearly believes that the provision of world class telecommunications infrastructure and information is the key to rapid economic and social development of the country. The availability of affordable and effective telecommunications for households and businesses is at the core of the vision and a major goal of these principles. The major actions of the Cook Islands Government going forward are aimed at this vision and will include:

• the introduction of a less prescriptive legislative regime;
• changes to management of the spectrum; and
• reduce barriers to enter the telecommunications market.

Additionally, the Government will continue to have a number of roles in the sector including:

• as the policy and law maker;
• a major consumer of telecommunication services;
• hosting an independent regulator; and
• as a minority owner of the incumbent operator, Cook Islands Telecom.

As mentioned previously, telecommunications is, and will continue to be for the foreseeable future a key enabler for the continued economic and social development of the Cook Islands.

As a service based economy the importance of reasonably priced effective telecommunications is a key to continued productivity and growth. Efficient and effective telecommunications is crucial to innovation and the creation of new services within the Cook Islands.

The Government wishes to ensure that the sector is structured in a manner that participants will maximise investment, strive for innovation and aim to provide improve service provision and reduce prices.
Universal Access

The Government wishes to ensure that the people of the Cook Islands have access to universal service which entails the provision of affordable and equitable telecommunications and internet services to every individual or household on demand. Such universal access would encompass at the minimum the following, telephony and internet services need to be:

• provided at affordable rates;
• of good quality and acceptable standards;
• available or accessible regardless of where people are located within the Cook Islands; and
• accessible to a larger proportion of the population of the Cook Islands.

Efficient and reliable provision of telecommunications services

Telecommunications is ubiquitous; this basic service is required by almost all individuals, government agencies and industry. The Government will continue to advocate and promote the efficient and reliable provision of telecommunications services.

A network which meets the needs of the people of the Cook Islands

The Government wishes to see the development of a robust and secure telecommunication network which will provide seamless coverage aimed at closing the digital divide and driving socio-economic development. Essentially, this would revolve around:

• continuing to encourage an inclusive knowledge society by providing for the proliferation of affordable and high quality broadband services across the Cook Islands; and
• allowing for innovation in the sector which will see a faster evolution of the mobile device as an instrument of socio-economic empowerment for Cook Islanders and visitors to the Cook Islands.

Encouraging Investment

The Government believes that continued investment is required to ensure continued development in the sector. Market pressures and competition for the provision of improved and less costly services should lead to greater investments for those firms who wish to meet market demand and keep market share.

Therefore the Government will create greater flexibility in the telecommunications market to ensure a competitive environment exists without compromising but rather complementing its other objectives, in particular universal and affordable access for all Cook Islanders.

Promote efficient interconnection arrangements between network providers and other providers

Competition in the sector will only occur if entrants are able to interconnect their facilities with those of the incumbent or other market players and to do so at terms that allow the entrant to provide the service at competitive levels of price and quality. A ‘fair and reasonable’ interconnection policy is a critical input to foster competition in telecommunication markets.

Spectrum Management

The spectrum is a key government asset, and as a result it is crucial to promote the efficient use of spectrum.

The Government wishes to regain the management of spectrum. This will see a move towards liberalising spectrum use so that it will enable the use of spectrum in any band to provide any service in any technology and enable optimal utilisation of spectrum through an appropriate regulatory framework.

A new approach to spectrum management will allow the regulator to spectrum and allocate alternative frequency bands or media to service providers from time to time to make spectrum available for introduction of new technologies for telecom applications.

Fair, objective, and transparent Licensing regimes for service providers and network providers

Establishment of a commission to licence the three major areas including:

• spectrum licensing;
• service provider licensing; and
• network provider license

Additionally, it will allow for an efficient approval regime for apparatus.

Multi-media approach

Government recognises the convergence of electronic media and will take a ‘whole of media’ approach with all forms of telecommunications, including radio and television broadcasting, incorporated into one piece of legislation.

Click here to download.

 

MFEM Annual Report to the Public Service Commissioner for 2013-14

The Ministry of Finance and Economic Management (MFEM) is a key institution of the Crown. It is a
pivotal agency in the public sector responsible for revenue collection, expenditure, economic policy
advice, collecting statistics and managing official development assistance (ODA) on behalf of the
Crown.
The Ministry is one of the largest agencies (in terms of employee numbers) in the Cook Islands and it
covers a vast range of activities, due simply to its role as the manager of public monies. Ultimately
the Ministry’s achievements are not just of its own makings and efforts, to be successful the Ministry
needs to work closely with others, in 2013/14 many of its achievements are shared with others, such
as the implementation of the HRMIS/payroll with OPSC, rolling out the whole of government IT
network meeting with OPSC, managing the Te Mato Vai project with Infrastructure Cook Islands are
just examples.

To view the full report click here.

Implementation of the 2013 Tax Review

MFEM has released a progress update on the implementation of the 2013 Tax Review, which outlines that 27 of the 31 recommendations have been implemented. Outstanding issues include funding and recruitment of a Tax Outreach Officer; implementing online tax returns; the delay in the increase of NCD goods duties until 1 January 2015.
 
The full report can be obtained from the MFEM website.
 
The changes resulting from the tax reform were aimed at simplifying the system and ensuring that the Cook Islands has a competitive regime which remained simple and equitable.   The Tax Foundation is an American tax research organisation which publishes the International Tax Competitiveness Index.  The index aims to compare a country’s overall tax environment particularly in terms of investment and how to start and how to grow a business.
 
According to the Tax Foundation, New Zealand ranks as the second most competitive tax system among the developed nations.
 
Elements that counted in New Zealand’s favour were a progressive income tax with a relatively low top tax rate of 33 per cent, a broad based VAT (99 per cent coverage) with few exceptions, the forth lowest VAT rate in the OECD, relatively low corporate tax rate of 28 per cent, an infinite loss carry forward for business, credits for tax paid in foreign jurisdictions, and property taxation based on land values.
 
New Zealand also has no property taxation (apart from local Rates), no capital gains tax, no inheritance taxes, and no gift taxes.
 
“The confirmation of New Zealand as one of the world’s most competitive tax systems would suggest that the Cook Islands tax system would also be rated extremely highly if we were included in such a ranking.” Said MFEM Economic Advisor James Webb.
 
“There are many similarities between the Cook Islands and New Zealand tax systems. Like New Zealand, we have no inheritance taxes, no capital gains tax, we allow for tax paid on overseas income, and we allow for loss carry forwards for businesses in the same way. 
 
Also, our VAT is almost identical to New Zealand’s GST, with a relatively low rate and a broad coverage.
 
One could even argue that elements of our system are even more competitive: our income taxes are actually lower (our top rate is only 30 per cent), and our corporate tax rate for local firms is only 20 per cent (compared to New Zealand’s 28 per cent). 
 
We can still make improvements to our tax system, but it’s reassuring to know that we have moved down the right track to making our tax system one of the most competitive in the world.”
 
For the full press release please visit our Press Release page.
 

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