Financial Secretary Office News

Financial Secretary Office News

Press Release: False declarations result in successful prosecutions

On 21 March 2018 Cook Island Customs (Customs) successfully prosecuted the captain and engineer of the Ecuadorian flagged vessel the Nino Maravilla which is currently berthed at Aitutaki.

The two offenders were prosecuted under section 261(1) (a) and (c) of the Customs Revenue and Border Protection Act 2012 for providing false declarations on entry into the Cook Islands. This is the first time Customs have brought a prosecution under this provision. The offences carry a maximum fine of $3,000 when heard before a Judge.

Both offenders held prior criminal convictions for which they had served prison sentences in the US and were subsequently deported for. Both offenders failed to disclose this information when completing their arrival cards.

Both matters were heard before three Justices of the Peace at the Court in Aitutaki. Counsel for Customs, Geraldine Ryan, emphasised the seriousness of the offending, and stressed the importance of the protection of Cook Islands borders.

In delivering their sentence the Justices of the Peace found the defendants guilty in all respects. The court handed down the maximum fine allowable by Justices of the Peace, being $1,000 for each offender with court costs of $50 per offender.

As a result, clear precedents have been established for future Customs prosecutions under this provision. The outcomes represent a significant win for Customs, and sends a strong message that Customs are serious about border protection and will not tolerate breaches of its law.

The outcome also highlights the result of excellent collaboration at the border between local law enforcement agencies as well as international agencies such as the New Zealand Customs Service, Australian Federal Police and United States Department of Homeland Security who provided crucial intelligence and on ground support during the operation.

26 March 2018


PRESS RELEASE: Cook Islands Graduation from Official Development Assistance

Following strong economic growth in 2014, 2015 and 2016, the Cook Islands Government was notified by the Organisation for Economic Cooperation and Development (OECD) that it was on the list of countries that was likely to reach high income status by 2017. This list is utilized by the OECD’s Development Assistance Committee (DAC) to determine eligibility for Official Development Assistance (ODA). 
In June 2017 a Cook Islands’ Government official, together with New Zealand Ministry of Foreign Affairs and Trade (MFAT) Officials, visited Paris to present an argument to the OECD for additional time to address gaps in the current economic data on the Cook Islands. Key to this argument was that graduation should be based on Gross National Income (GNI) data. The Cook Islands does not currently produce this data, as a result Gross Domestic Product (GDP) was being used to determine eligibility. 
The problem with this approach is that primary income, or rents that flow in and out of the economy, are not included in GDP statistics. In this case, like in many small island economies, the Cook Islands measurement of GNI is likely to be much lower than GDP. It is possible that GNI will be below the ‘high income’ threshold required for graduation.  
If the Cook Islands graduates prematurely due to inadequate data, this could have serious long-term negative consequences for economic development. Key issues to consider in the case of premature graduation are; the high cost of running government due to the geography of the Cook Islands, with many islands scattered over a large distance, vulnerability to natural disasters and economic downturns in Australia and New Zealand, and the cessation of community development programs most of which is funded by ODA.
In July 2017, the OECD agreed to provide the Cook Islands until the end of 2018 to develop GNI data. Since this time, the National Statistics Office of the Ministry of Finance and Economic Management (MFEM) has been working closely with MFAT and the International Monetary Fund’s Pacific Financial and Technical Assistance Centre (PFTAC) on the development of this data. 
At this stage, revisions are being made to our GDP (economic growth may not have been as strong as we thought). In addition, flows out of the country have been picked up that suggest that GNI will be lower than GDP. Therefore, it is possible that the Cook Islands will not graduate. Much more work needs to be undertaken over the next 15 months to determine the level of the Cook Islands’ economic development and the Cook Islands Government acknowledge with appreciation the support of the Governments of New Zealand and Australia, as well as the IMF for the current work on economic data.
In addition to the work being done on the Cook Islands economic data, the Cook Islands Government is undertaking an analysis on the sectors that would be affected in the event of graduation, to inform a possible transition plan in the event of graduation. It is envisaged that the Public Sector Leaders Conference on 23-24 October 2017 will also serve as a platform to engage with stakeholders on programs/projects that could be affected by graduation in order to provide the Government with a clearer picture of fiscal, social and economic implications. 

Press Release: Preliminary Results for the Year ended 30 June 2017

The Financial Secretary Garth Henderson would like to advise that Cook Islands Government has released preliminary financial results for the year ended 30 June 2017. 

 Operating revenue for Government was up 15% on last financial year and 20% up on the 2016/17 budget estimates at $171.5 million. Improved tax revenue was largely due to the record number of tourist arrivals in 2016/17 and higher than expected fishing revenue.

 In addition to positive operating revenue results, operating expenditure was managed well, coming in 2% below budget at $125.76 million. 

 The net operating balance of the General Government Sector as at 30 June 2017 was a surplus of $45.76 million compared to the 2016/17 budget estimate of $14.2 million.

 Due to the large capital expenditure planned in 2016/17, original fiscal balance estimates were for a deficit of $16.3 million. As a result of delayed capital projects and increases in revenue, the actual fiscal balance in 2016/17, as at 30 June 2017, was a surplus of $32.8 million. Actual Capital Expenditure was 46% lower than estimated at $20.8 million. Recent history illustrates that there is likely a maximum amount of absorptive capacity in capital of around $20 million per year. 

 These positive results were largely reflected in the 2017/18 Budget which revised up 2016/17 estimates. Going forward, the surpluses from 2016/17 will be required to fund capital projects that were delayed in 2016/17, such as Te Mato Vai and Mei Ti Vai Ki Te Vai, in addition to new capital projects such as the Manatua Cable, which are planned for the next four years. To ensure fiscal prudence, and to ensure that the fiscal balance adheres to the fiscal responsibility ratios, new expenditure will be limited during this period. 

 The full reports are available on .

 Fiscal Balance of General Government – June 2017

fiscal balance

26 September 2017