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

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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:

The statement below shows the position of the over seas funds as at the begining and page 11 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.

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:-

(1)	While the actual quantity of essential imports may not be increased by migrant labour, their prices are affected by inflation in New Zealand. Essential food items in the cost of living index, like mutton flaps and corned beef, for example, have risen from 16c to 40c and 50c to 78c per pound respectively in the period from 1969–74. Other inflationary items in imports from New Zealand have produced serious inflation in Tonga for the first time in recent years.
(2)	One of the main purposes of Tongan workers going to New Zealand is to build a ‘New Zealand house’ on their return, and New Zealand is Tonga's principal supplier of building materials, including timber, roofing iron and piping. Very + if any, of the money brought back is invested productively in projects that allow import substitution or export expansion, so that in the end it simply creates a greater demand for New Zealand goods.
(3)	Further to this, residence in New Zealand leads to the adoption of New Zealand consumer habits. In the first months when returning migrants have money and no crops, they are dependent on market food and they may show a preference for New Zealand products.
(4)	Finally, with Tonga possibly sinking into this frustrating vicious circle of under- development through dependence on New Zealand, one can discern and understand page 12 the increasing use of pallivatives such as cigarettes and alcohol, which comprise a major portion of Tonga's imports and which are again predominantly supplied by New Zealand.
(5)	Expansion of exports to New Zealand is hampered by quotas on such products as handicrafts and an inadquate shipping service for such perishable crops as bananas. These obstacles in turn discourage people in Tonga from taking to export industries.