Clark: Pacific Conference on the Human Face of the Global Economic Crisis
Port Vila, Vanuatu
It is a pleasure for me to address the opening of this “Pacific Conference on the Human Face of the Global Economic Crisis.”
At the outset, let me express my thanks to the Government of Vanuatu for hosting this conference. All of us are most appreciative of the hospitality of the government and people of Vanuatu. From the warm reception we have received, it is not hard to believe that Vanuatu has in recent years been voted the happiest place in the world!
In the United Nations development system we have been very concerned about the impact of the global recession on developing countries – and in particular on the least developed and low-income countries, many of which have the fewest options for implementing a fiscal stimulus and financing social safety nets.
The presence at this conference of so many high-level government delegates from Pacific Island countries, as well as from civil society organisations, academia, and multilateral, regional, and bilateral development partners is a clear indication not only that you share this concern, but also that this meeting can be a useful forum for discussion of the impact of the crisis and of policy options going forward.
The proposal to hold this conference was formally noted by the Pacific Islands Forum leaders when they met in Cairns last August. They resolved to review the recommendations from Port Vila at their 2010 summit. That gives our work here added importance.
Over these three days we will assess the impacts of the global crisis on the Pacific and the lessons learned; discuss ways to mitigate those impacts; and identify how to strengthen resilience to future crises.
Let me put some context around the challenges which the South Pacific is facing.
The IMF is now projecting that the world economy will grow by 3.9 per cent this year, after an estimated drop of 0.8 per cent last year.
The forecast improvement in the overall economic outlook, however, tends to mask the toll which the global crisis has taken on human development. That is likely to be felt for years to come.
The cumulative effects of the food, fuel and economic crises, and of natural disasters too, have adversely affected progress on the Millennium Development Goals in this region and at the global level.
Even before the crisis, a number of Pacific Island countries had been facing challenges associated with low rates of economic growth and increasing unemployment.
Advances towards the MDGs in this region had been mixed. A number of countries had shown good progress on most, if not all, goals. Some countries were lagging behind on one or more MDGs, while others were making little progress on any. The recession and other concurrent crises have made the task of reaching the MDGs harder.
UNDP’s Pacific Centre in Suva calculates that in the twelve countries for which data are available, the poverty rate has worsened over the last two years as the incomes of the poorest and most vulnerable people declined.
Only those countries with mining and hydrocarbon exports, such as Papua New Guinea, or benefiting from increased tourism and a range of reforms, such as Vanuatu, are estimated to have grown at a reasonable rate over the last year.
Five Pacific Island national economies are estimated to have contracted in 2009, mostly because the global recession has eroded their income from exports, tourism, and remittances. In Tonga, for example, the value of remittances fell by fourteen per cent in the year ending June 2009.
As global economies around the world contracted and asset prices declined, some Pacific countries also experienced reductions in investment income and capital losses from trust funds and sovereign wealth funds, adding to the fiscal squeeze upon them.
Behind the facts and figures about falling exports and remittances are the human stories of the families and communities who are affected – of those who have found basic goods and services harder to pay for and have experienced increasing levels of poverty and hardship.
Pacific media have been carrying harrowing stories of people’s struggles to meet their daily needs. There is the carpenter in Fiji who faces rising costs, but lower demand for his services. There is the single mother of three in the Solomon Islands, trying to cope with very limited income from selling produce. There is the out-of-work seafarer from Tuvalu struggling to support his family.
With families facing shrinking livelihoods, with job losses, and with governments confronting lower revenue, rising costs, and pressures to cut back on spending, men and women in the Pacific, and indeed around the world, have been facing difficult decisions. Can they afford basic health care ? What food and shelter can they afford for their families ? Will their children be able to go to school, and from where would they get the money for fees, uniforms, and books ?
So, how have Pacific Island nations responded to these challenges ?
Some have reacted quickly to the global recession, putting in place programmes to stimulate growth and domestic demand through tax cuts, infrastructure spending, and employment measures.
Some have extended the coverage of social protection to lessen the burden on their most vulnerable populations. Fiji, Samoa, and Vanuatu, for example, have been amongst those who put in place measures to reduce the costs of education. Others have begun to implement such programmes.
Most countries, however, have had little scope for far-reaching countercyclical economic policies. Their budgets were already tight, and there has been little scope for finding extra revenue or for extra borrowing.]Tough times call for lateral thinking, and for new ways of addressing the fundamental problems standing in the way of development.
UNDP has identified five areas where action could help bring about better development results.]
First, with limited countercyclical policy options available, there is a need for further improvements in the efficiency and effectiveness of public expenditure across the board. Every dollar counts – and must be carefully prioritised, with the needs of the most vulnerable put first.
The countries most susceptible to the adverse impacts of the economic crisis over the longer term will be those which do not address structural problems or prioritise social expenditures.
Second, the crisis presents an opportunity either to initiate or to broaden existing social protection programmes. Measures which could be considered include school feeding programmes; cash and in-kind transfers to the most vulnerable; and cash-for-work programmes. Meeting the needs of women and children, an area of focus for this conference, is especially important.
While such measures are clearly not cost free, the evidence suggests that they can have results which go beyond the temporary alleviation of suffering. Well designed, they can help make societies more crisis-resilient over the longer term, and contribute to more stable and equitable growth.
Although countries in the region differ in their needs and in their technical and fiscal capabilities, there is much to be gained by exchanging experiences and co-operating in the design of social protection programmes. The UN can and does support such efforts.
Third, policy responses will need to advance gender equality, so that women as well as men can benefit from job creation and investments in social infrastructure. Empowering women is vital for achieving development goals overall, and for boosting economic growth and sustainable development.
Where progress is lagging on the MDGs globally tends to be related to the low prioritisation given to the needs and status of women.
Fourth, this is a time to be encouraging the development of more small and medium-sized businesses and business investment.
Many young Pacific people leave school without prospects for paid work. Small and medium-sized enterprises can help generate jobs and offset the decline in remittances from offshore. The long-term growth of any economy needs a strong private sector.
Encouraging in this regard is the programme in Samoa which introduces entrepreneurship into the school curriculum. The aim is to provide young people with the skills they need to start their own businesses.
Fifth, the crisis presents an opportunity to reorient economies to low-carbon development – building greater self-reliance and resilience for the future. The Pacific has all the scope in the world for a carbon-neutral energy future – given the necessary support for the funding and transfer of renewable energy technologies.
Worldwide, integrating efforts to reduce poverty and achieve the MDGs with those to protect the environment and tackle climate change is critical.
As we are all aware, climate change for a number of Pacific Island countries is not just an environmental or economic issue – it is about their very survival.
In responding to economic and other crises, strong leadership, vision, good policies, and concerted action are needed.
International partners also have an important role to play in supporting Pacific nations. The Pacific has committed development partners. It is to be hoped that their support for developing nations in this region will continue unabated despite the impact of the recession on their own economies.
One way to help is by keeping labour markets open to Pacific workers, including on a seasonal basis. Remittances back to Pacific nations form a significant part of the GDP of a number. They play a role in boosting family living standards and access to services, including health and education. They are also positive for mobilising funding for local community infrastructure. UNDP’s 2009 Human Development Report on migration made a strong case for enabling orderly migration flows, so that they could benefit both the source and the destination countries and communities.
The quality and the co-ordination of development assistance counts a lot too. As reflected in the Cairns Compact from last year, and in the Paris Declaration on Aid Effectiveness and the Accra Agenda for Action, both need to be improved. The onus is on all development contributors to co-ordinate closely and with governments to maximise development impact.
The UN development system has been working together to do just that in response to the economic and financial crisis, and in supporting Pacific countries to achieve the MDGs.
For example, UNDP and UNICEF, together with the Asian Development Bank, AusAID and the World Bank, have been helping a number of Pacific countries to assess the impact of the crisis on their economies and develop effective social protection measures.
UN agencies are also working with their partners to provide more access to microfinance and micro-insurance, especially for Pacific women. We work with many partners, including private sector banks and mobile phone companies.
In responding to the food crisis, FAO, UNICEF, and WHO have been helping countries in this region to introduce best practice in food control systems and food production to improve food security.
A number of UN development agencies have been assisting Pacific countries to expand access to affordable and renewable energy technologies. These programmes have taken on a greater emphasis in the context of the volatile fuel prices of recent years.
We are also supporting countries in this region with climate risk management and adaptation, and disaster risk reduction. So many countries in the Pacific are highly exposed to natural disasters – as last year’s devastating tsunami which hit Samoa and Tonga reminded us – and as the cyclone season regularly does. Disaster risk reduction must be given very high priority in national development plans and actions to save lives and safeguard vital infrastructure in the future.
Concurrent crises have taken a heavy toll on people across the Pacific, and have made it harder to achieve the MDGs.
But the peoples of the Pacific are highly resilient, and there are opportunities – not least those which could come from leveraging off the emergence of Asia as a global centre of gravity for economic growth.
The improvements in growth rates and the progress towards MDG targets observed in a few Pacific countries before the crisis demonstrates what can be achieved with good leadership, good policy, and the right level of support from the international community. If we get the basics right, Pacific nations will move forward to achieve the MDGs and other internationally agreed development goals too.
In September this year there will be a major MDG Summit at the United Nations in New York, designed to galvanize and accelerate action towards meeting the goals by 2015. I hope that the strong and united voice of the Pacific will be heard there. Action under the Cairns Compact of the Pacific Islands Forum will contribute to that momentum.
Working together, pooling our strengths as contributors to development, we can build the resilience to overcome present and future crises, and bring about lasting improvements in the lives of the peoples of the Pacific.