Government's tourism logic backwards

And so the President of the Samoa Hotels Association, Tupa'i Saleimoa Vaai, feels aggrieved by this newspaper’s reporting of his critical comments about Government support amid recent economic downturn. 

In an about-face that happened to follow a dressing down from finance Ministry chief Leasiosiofa'asisina Oscar Malielegaoi Tupa'i pointed the finger at this newspaper for “sensationalising” his words. 

Leasiosio spoke out about how much the Government has done for the tourism industry in Tuesday’s edition (“Finance chief disputes tourism neglect claims”).

Tupa'i responded to the C.E.O.’s rebuttal of his claims by pointing the finger at this newspaper, saying we had twisted the truth.

“We are very appreciative of the Government’s help,” Tupa’i said in comments made to the Samoa Global News.

Perhaps we missed the meaning of comments he made to this newspaper’s reporter - reproduced in full context in a story on today’s front page - when he said: 

“There are so many businesses [that] are on the verge of closing down within the coming years if there is no substantial assistance.

“We are still pushing towards trying to get [the] Government to look at how they can assist the industry but I guess it’s not on the Government’s priority list.

“There seems to be no appetite at the moment from the Government to assist.”

His meaning did seem clear at the time. (And precisely the kind of thing one might expect a person whose job it is to represent the interests of the hotel industry to say).  

But for any misinterpretation, miscomprehension or sensationalism on our part for taking these words to suggest the industry felt overlooked by the Government, well, we can only hope Tupa’i accepts our apologies. 

We actually thought he was onto a fine point indeed until his change of tune. 

But it was with Leasiosio’s response that we really took issue.  

"I'm shocked that they're saying [the Government] has not been helping,” he said in comments to the Samoa Observer made on Monday. 

Shocked is not something the man tasked with steering our economy through COVID-19 downturn should be when the topic of tourism business closures is raised and whether he ought to be doing more to stop them. 

The pandemic and the resulting closure of national borders has dropped the sector’s revenue down so much that the only thing that could possibly save it is direct cash injections from the Government.

That is hardly a radical idea. Governments world over have been spending money keeping their best revenue-spinning industries afloat so that they might continue to earn money once the threat posed by the pandemic has receded. 

After all, it is not just the fate of tourism operators that hangs in the balance but one-quarter of the nation’s Gross Domestic Product.

When asked whether the Government ought to be shelling out and offering the industry financial assistance for the duration of the pandemic, Leasiosio offered evasions but no answers.

But the facts about Government assistance to the industry are in the open. 

It has passed two economic relief packages aimed at helping industry and consumers since the national borders were closed: in April and in May.

The idea, then, that they have not done anything to support the industry lately, as it stares down the barrel of possible collapse, seems justifiable. 

About $12.5 million or 20 per cent of the first package was directed toward the private sector, which is, in the context of $2.2 billion economy, a pittance.

The second package was only a little better.

But deeper analysis of these measures showed they were not what economists would classically call “stimulus” measures at all, namely the distribution of money by the Government with the goal of jumpstarting the economy. 

Instead, we saw loan relief; electricity subsidies; and S.N.P.F. and A.C.C. contribution holidays.

These were measures designed to ease the pressure on otherwise healthy businesses but they offered little to those whose main revenue source had dried up.  

But the reality was that even this relief was more meagre than it first seemed. 

By June it had emerged that only ten hotels - out of some 140 across the nation - were in a large enough class to qualify for the Government’s 50 per cent discount on their tariffs. 

(Besides there is little point in making it cheaper to keep the lights on for businesses with no customers to use them). 

Leasiosio’s response to the charge the Government had been inactive relied on referring to indirect measures passed by the Cabinet to help the private sector, such as the recently announced easing of state of emergency restrictions to include slightly lengthened trading hours. 

Here we detect an obvious logical flaw. The state of emergency measures were passed by the Government. For it to take credit for slightly loosening constraints it has itself imposed on tourism as evidence it is helping the industry seems like backwards reasoning. 

If the Government really wanted to undo the damage its emergency measures have caused the industry, it might have, instead of extending market trading hours slightly tackled the more consequential issue of Sunday trading restrictions.

Sunday is traditionally a beach day in Samoa. If the Government were really serious about trying to foster a domestic tourism market it would make it possible for Samoans to do things such as swim and catch ferries on Sunday. But it hasn’t. And it won’t. 

The only instance to which Leasiosio could really point to the Government injecting money into the hotel sector was the estimated $10 million it had spent on hotel bills by placing passengers in quarantine.

This, we will concede, is a good example of exactly the kind of thing the industry needs. 

But it could also be noted that the Government hardly had any choice in booking these rooms if they wanted to continue to keep the nation free from the pandemic. 

Instead Leasiosio pointed to piecemeal initiatives targeted at the broader economy rolled out on a monthly basis, such as pension and National Provident Fund payments.

How much, if any, of these ended up in hotel cash registers is questionable.

“With so [much assistance given from the Government] that's why I am surprised,” Leasiosio said. 

That statement from the C.E.O. was hard to swallow.

But not as much as the defence of the Government’s tourism assistance policies that was to follow: the money being pumped into the national carrier, Samoa Airways.

One need only look at the nation’s accounts, debt levels and recent budget deficit to realise that the Government has very little fiscal room in which to move.

The old truism that every dollar spent on one area must come at the expense of another becomes doubly true in an environment like this.

And it has been clear that Samoa Airways, something the C.E.O. would have us believe should be counted as support for the tourism sector has been in fact depriving it of money.

We have this year seen two concrete examples of this but there are doubtlessly more en route. 

One was this newspaper’s expose that the airline was $400,000 in debt to the nation’s most iconic hotels, Aggie Grey's Hotel and Bungalows. 

Aggie Grey’s is one of the few tourism businesses not to have let any of its staff go amid this downturn. But for all that it has been unsuccessfully chasing down an enterprise owned by the Government for a sizable debt that dates back to this April and before. 

The second was a line item of “private sector” stimulus included in the Government’s stimulus package: $1 million allocated to Samoa Airways, designed, apparently to help the airline settle its debts.

That money was evidently not spent making good on the Aggie Grey’s account.

But it could have gone to hotels who really needed it.

The Government’s logic on Samoa Airways is backwards. 

It is presented to the public as a boost to the tourism industry; a chance to attract passengers to Samoa. It might do so in some other environment. 

But when global tourism has all but ground to a halt, pouring money into the national airline has the opposite effect. 

As the Government prepares to sign a new lease for a new aircraft that will not be able to take passengers into Samoa for an unknown period, Leasiosio might wonder as he signs off on the expenditure whether it might benefit Samoa’s economy if redirected elsewhere.

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