Aid money lost in paradise

Kiwi aid money given to Niueans after Cyclone Heta ripped through the island two years ago has been used to prop up the Government's overblown accounts.

Niuean Treasury documents show an accounting nightmare of budget blowouts, overspending and more than $1 million missing from Donors' Funds, some of which has come from New Zealand.

When Cyclone Heta virtually flattened parts of the atoll nation in January 2004, New Zealanders dug deep, adding millions of dollars to aid sent by the New Zealand Government and aid agencies. Donor funds from global aid organisations meant for specific projects collected in the Niuean Government's bank accounts, becoming a tempting remedy when the coffers ran dry.

Niuean Treasury documents leaked to the Herald on Sunday describe the country's financial position as "critical".

One document, dated January 31 this year, says a longer-term solution needs to be found "to repay the monies we have utilised from Donor Funds to meet recurrent expenditure requirements".

Last year's accounts contained a strong warning about the missing money, thought to be more than $1 million.

"In effect the Government has utilised these funds to finance its bank overdraft. If we were to do all of the outstanding work on these projects this year we would have no funds available to run the Government."

When questioned about the accounts yesterday, Niue's Premier Young Vivian denied any knowledge, saying he was no longer Minister of Finance. Last month the Premier transferred the finance portfolio to Fisa Pihigia. He said the new minister would not be able to add any further information.

Mr Vivian did say the tiny island nation had always had money problems and the $8 million received from New Zealand each year was not enough. He said New Zealand had attractive economic packages for low-income families which lured islanders away.

He dodged questions about Niue's financial position, claiming "we have always balanced books and we will do it again". He denied the amount used from the Donors' Fund was more than $1 million.

"Things move quite dramatically and quickly on a small island country. That's one of the problems, there are far too many hats that you have to wear. And some of the details you are not too sure even if you were the minister, say, six weeks ago."

Asked if the current deficit of $400,000 would be more like $1.5 million if money from the Donors' Fund had not been used he replied, "Not quite".

The donor agencies were satisfied with the Government's performance, he said, and it would recover the money. "We have revenues in the future to restore it. It's a time factor for the projects that are agreed on, so long as we complete the projects and we have the funds to cover it. You have to juggle your funds as you go along."

Prime Minister Helen Clark said earlier this week she was not aware of relief funds being siphoned into other areas but would be asking about the matter. The Government had no plans to reduce aid because "if you crunch the budget you end up sending another exodus to New Zealand".

Niue's population, which would comfortably fit into Auckland Town Hall, is the island's main problem. Though the official headcount is 1700, locals say the real figure is closer to 1100. That compares with 20,000 Niueans living here, a number that increased after Cyclone Heta.

Foreign Minister Winston Peters said yesterday a New Zealand accountant had been sent to the island and was "working his way through the books as we speak". Various events including Cyclone Heta had caused a budget blow-out but "we believe we can get on top of it. I think the long-term prognosis is good".

He said the Government believed Niue was still viable and a $20 million trust fund set up after Cyclone Heta was critical to its future.

Auckland businessman Phillip McNicholl also believes in Niue's future. He's invested around $9 million in the form of a fish factory, two fishing boats and a noni juice plantation. He hopes the 50/50 joint venture between his company, Reef Group, and the Niuean Government, will pay dividends once the noni fruit mature in a year and the volume of fish into the factory increases with the help of Tahitian boats.