How Tonga Aids New Zealand
The Creation of Consumer Power and Habits
The Creation of Consumer Power and Habits
But New Zealand does not profit only from a source of labour which costs nothing to produce or reproduce: it makes further profit through the creation of consumer demand for its products in Tonga.
The Tongan Statistics Office estimates that last year Tongans in New Zealand provided $800,000 in overseas funds. Private remittances to Tongan residents from overseas
jumped from $563,900 in 1970/71 to $466,800 in 1971/72 and to $1,406,900 in 1972/73.
It is expected that the figures for 1973/74 will show a further increase in private remittances to Tongan residents, about two-thirds of which are estimated to have come from
New Zealand.
In the light of this, official Tongan opinion is that migrant labour is benefiting Tonga, as evidenced in a recent editorial (28.2.73) in the Tonga Chronicle: 5
“ The Tonga and New Zealand Governments’ Workers Scheme continues to benefit Tonga, in spite of several implications that New Zealand is exploiting
Tongan workers to offset a labour shortage situation. All we know is, the scheme is pouring thousands of dollars into Tonga, and the moral complications of the scheme fall into the background.
“Inddition, the three months visitors permit to New Zealand has also enabled thousands of Tongan nationals to find employment in New Zealand, rightly or wrongly, and hence sent thousands more dollars to Tonga.
“On the whole, the contribution by workerrs in New Zealand, whether they are there legally or otherwise, is indeed a tremendous boost to the Kingdom's economy.”
Under the present circumstances, however, it is questionable whether Tongan workers are providing anything more than a very temporary boost to Tonga's economy, and whether this boost will not be followed by disastrous consequences unless remedial action is taken.
The funds remitted from New Zealand via migrant workers are soon returned to New Zealand to foot the rising import bill. The migrant worker scheme provided a handy solution to a growing balance of trade deficit as the following comments from the 1972 Ministry of Finance Report shows:
“The year's transactions show an adverse visible trade balance of $5,405,845, being an increase of $1.301,160 on the 1971 deficit of $4,104,685.”
The agricultural production figures and the external trade results show conclusively the vulnerability of the Tongan economy to fluctuating agricultural production and the vagaries of world commodity markets. They emphasize the need to explore other sources of earning the foreign exchange with which to meet imports. Various efforts were being made to diversify exports and to reduce the present over-dependence on agriculture as a foreign exchange earner.
The following comparative table shows the total value (to the nearest $20) of imports and exports for the years 1968 to 1972:
Year | Total Value of Imports 6 ($) | Total Value of Exports ($) | Excess of Imports over exports ($) |
1968 | 5,150,440 | 3,846,340 | 1,304,100 |
1969 | 5,087,520 | 3,398,680 | 1,688,840 |
1970 | 5,539,440 | 2,676,380 | 2,863,060 |
1971 | 6,304,920 | 2,200,240 | 4,104,680 |
1972 | 7,455,920 | 2,050,080 | 5,405,840 |
The statement below shows the position of the over seas funds as at the begining and end of the financial year 1967–68 to 1971–72 together with details of recepts and payments during each year. Figures for previous years are in brackets.
1967/68 | 1968/69 | 1969/70 | 1970/71 | 1971/72 | |
$ | $ | $ | $ | $ | |
Balance as at 1 July | 246,055 | 793,411 | 872,409 | 1,330,557 | 437,400 |
Plus Exports | 4,270,979 | 2,935,688 | 2,737,697 | 2,070,161 | 1,835,078 |
4,517,034 | 3,729,099 | 3,610,106 | 3,400,718 | 2,272,478 | |
Plus Invisibles | 2,389,589 | 2,263,240 | 2,749,126 | 2,988,264 | 4,747,001 |
6,906,623 | 5,992,339 | 6,359,232 | 6,388,982 | 7,019,489 | |
Plus Loans and Aids | 513,768 | 590,941 | 597,050 | 584,942 | 556,189 |
7,420,391 | 6,583,280 | 6,956,282 | 6,973,924 | 7,575,678 | |
Less Goods and Services | 6,626,980 | 5,710,871 | 5,625,725 | 6,536,524 | 7,378,386 |
Balance at 30 June | 793,411 | 872,409 | 1,330,557 | 437,400 | 197,292 |
Migrant labour may be one alternative means of earning overseas funds, but the
social effects of migrant labour are such as to militate against any long-term improvements in the trade inbalance with New Zealand. In 1971, for instance, total imports
from New Zealand were valued at $2,252,831 (total value of imports from all sources
$6,070,074) and exports to New Zealand were valued at $764,495 (total value of
exports to all destinations, $2,200,232). Imports from New Zealand alone therefore
exceeded the total of exports to all destinations. Unfortunately, migrant labour is
causing imports from New Zealand to increase at a faster rate than remittances and
exports can compensate. This happens for the following reasons:-
5 Tonga's only paper, sponsored by the government and run from the Premier's Office.
6 Included in the total value of imports were commodities which required no payment from Government overseas reserves.