New Zealand government officials have spent the past week in Rarotonga, assessing whether the border can be reopened between the two countries.
Cooks businesses have been calling for New Zealand to lift its tourism blockade, which has almost wiped out the country’s revenues and forced it to turn to borrowing to stay afloat.
Technical officials from New Zealand Ministry of Health, Customs and Immigration NZ met with a range of Cook Islands counterparts over the past week, to work towards establishing a quarantine-free travel zone between the two countries, once safe. “The priority remains to protect our populations from Covid-19,” the New Zealand High Commission emphasised.
The three realm countries – Cook Islands, Niue and Tokelau – use the New Zealand dollar and are vulnerable to its rise and fall on global markets. But their banks have no access to Reserve Bank of NZ funding, nor to upcoming programmes like Funding for Lending that are intended to drive down interest rates.
This means that New Zealand has hit the realm countries’ tourism operators with a double whammy: not only has it effectively shut down their economies by turning off the tourism tap, but it has left their businesses and homebuyers paying interest rates ranging from 8.5 to 18 percent per annum.
A new Cook Islands Private Sector Taskforce report, sent to the Cook Islands Prime Minister on Saturday (NZT) and supplied to Newsroom Pro today, reveals that companies’ reserves have largely been used up, shareholders are more and more reluctant to continue to inject money, underlying prices have anecdotally risen, and redundancies are now accelerating.
“Many have told us they are weeks away from permanently closing their doors. Some businesses simply cannot borrow anymore and have no way of obtaining the necessary cash. This in turn will mean they cannot pay suppliers, so the effects are far-reaching.”
– Cook Islands Private Sector Taskforce
“There is a significant risk of some businesses closing within a few months if there is no additional support available and quarantine-free travel is not in place by the end of December 2020,” the report warns.
“Many have told us they are weeks away from permanently closing their doors. Some businesses simply cannot borrow anymore and have no way of obtaining the necessary cash. This in turn will mean they cannot pay suppliers, so the effects are far-reaching.”
Resort owner Tata Crocombe, a former Bank of the Cook Islands chairman, has been calling for Cook Islands to be integrated into the NZ banking system to allow the country’s businesses greater access to affordable finance.
“We are very fortunate to have New Zealand as a buffer and supporter. New Zealand has shown the world how to fight and contain this disease, and we have benefited from that.”
– Mark Brown, Cook Islands Prime Minister
And New Zealand’s Reserve Bank assistant governor Christian Hawkesby told Newsroom there had been a number of conversations over the years about closer banking connections between the two countries, but at present any discussions were being led out of the Ministry of Foreign Affairs.
In Cook Islands, the borders are open only to returning Cook Islanders, residents or work permit holders (and the occasional New Zealand official or air force personnel). There are only 25 to 30 passengers coming in on the once-a-week flight from Auckland, all of whom must be interviewed and tested prior to travel.
The new Prime Minister Mark Brown discussed implementing full managed isolation this weekend, after news of a new community case in New Zealand, before meeting with his Cabinet and softening his position. He is, however, looking to introduce face masks, applauding the New Zealand rule that they be used on planes and public transport.
“I think New Zealand is being very proactive in adding another layer of precaution and protection in the community,” Brown said. “This approach is also providing an extra layer of protection for Cook Islands people and everyone in fact, living in New Zealand.
“As we all know, a face covering helps to stop the spreading of droplets when people speak, laugh, cough, sing or sneeze. Wearing masks saves lives, that’s the reality. I have asked my officials to prepare a mask wearing strategy for Cabinet to consider in the near future.
“We are very fortunate to have New Zealand as a buffer and supporter. New Zealand has shown the world how to fight and contain this disease, and we have benefited from that.”
“The priority remains to protect our New Zealand and Pacific populations from Covid-19. We will not commence quarantine-free travel until our countries can be fully assured it will be safe to do so.”
– Ministry of Foreign Affairs
Despite having had no Covid-19 cases, the Rarotonga community has been encouraged to socially distance – including restrictions on congregational singing in church.
They have a local contact-tracing card that can be swiped by 355 participating businesses and community organisations. There are more than 5000 contact-tracing cards in circulation, in the community of about 12,000.
As the New Zealand officials visited, there were more face masks visible on the streets, and Cook Islands Tourism Industry Council president Liana Scott said customer-facing businesses had installed acrylic screens. But the New Zealand officials had been “tight-lipped” about their findings on their visit.
The country’s Ministry of Finance was disclosing little information, she said, so it was hard to know whether they were paying the costs of business grants and wage subsidies from reserves or borrowings. The government had offered a business interruption loan at 1 percent interest, if paid back within a year, or a 3 percent rate if taken out for three years. “This has been a godsend for many businesses, although quantity-limited depending on how many staff you employed,” Scott added.
Chamber of Commerce president Fletcher Melvin said there was a review of the banking system underway, as Cook Islanders were paying very high interest rates – but it was important to avoid hasty decisions that might cause any of the retail banks (Bank of the Cook Islands, Bank of the South Pacific, and ANZ) to quit the market.
“There does need to be a closer alignment of our banking systems due to the nature of our trade with New Zealand,” Melvin said. “They are the largest trade partner so it makes sense financially to streamline and connect where possible the banking systems.
“The urgency for this to happen is probably due to the complexity of this happening but it is definitely something that government is looking at and we are keen to see the report completed.”
A New Zealand Ministry of Foreign Affairs spokesperson said New Zealand had provided $22 million in additional financing to the Cook Islands, and $10 million to Niue, to support each country’s economic response to the impacts of Covid-19. Officials were continuing to work together to monitor the impact of the crisis on Cook Islands and Niuean economies.
However, there were no immediate plans to include their banks in the New Zealand banking system. “The Reserve Bank of New Zealand’s legal remit only covers the New Zealand financial system,” she said. “Any integration of banking and payment systems with New Zealand would be a long-term structural change with significant implications for IT systems, bank registration and supervision, and is ultimately a question for the Cook Islands.”
The past week’s official visit to Rarotonga would determine how, and when, the two countries could safely resume quarantine-free travel. “Officials from New Zealand and Cook Islands are working diligently to ensure all the prerequisites to safely recommence quarantine-free travel are met,” she said.
“The priority remains to protect our New Zealand and Pacific populations from Covid-19. We will not commence quarantine-free travel until our countries can be fully assured it will be safe to do so.”
Discussions were also underway between New Zealand and Niue officials to work towards recommencement of quarantine-free travel, the spokesperson said.
Cook Islands Secretary of Health quits
Dr Josephine Aumea Herman, the Secretary of Health whose expertise in epidemiology has been critical to Cook Islands stopping Covid-19 at the border, has announced her resignation.
Her New Zealand counterpart, Director-General of Health Dr Ashley Bloomfield, acknowledged her work. “The Ministry of Health recognises Dr Herman’s strong links with the New Zealand health system,” he said. “The Ministry acknowledges her passion for improving the health of Pacific peoples and her work in the health sector in New Zealand and the Cook Islands. We wish her all the best for her future career.”
New Zealand’s Ministry of Foreign Affairs also paid tribute. “New Zealand officials have worked closely with Dr Herman as she has led Te Marae Ora [the Cook Islands Ministry of Health] since April 2018,” a spokesperson said. “Her expertise and leadership have been a strength and asset as our two countries work together to combat Covid-19. We wish her well when she steps down from the role in 2021.”
Dr Herman has spent much of this year based in Auckland, working to broker New Zealand health support for Cook Islanders in the face of the Covid-19 crisis, and undergoing medical tests for health issues of her own – medical care that, as is often the case for Cook Islanders, is not available in Rarotonga and the country’s 14 outer islands.
