New Caledonia: Beautifully expensive

by on 26 January, 2016

pi-nou-anse-vata-beach-mustcaption-rf-noexp-allsites-940x300At the beginning of January, my fiancé and I travelled down to beautiful New Caledonia—a French haven in the Pacific Ocean. While there are similarities with Australia and it reminds me of Queensland in some ways, I observed that New Caledonia’s standards of living are similar to, but markedly lower than our own. Once I arrived back home, I started looking into why and the reason became clear: exorbitant tariffs that raise the price of foreign goods, as well as a government monopoly on telecommunications.

Prices for basic consumer goods, groceries and other essentials, as well as café food, are all about 50% more expensive, if not twice as expensive as our own depending on the good or service in question. This is no coincidence: New Caledonia imposes a range of tariffs on imported food and goods. There is a minimum 5% tariff on the value of all goods, a further “general tariff” on other goods which is usually about 21%, a port and airfreight tax of 1-3%, customs duties of 0% to 20% and a further “locally manufactured products tax” (TCPPL) designed to make imported pasta, yoghurts, chocolate and ice cream unaffordable. There are also consumption taxes levied on imported products and agricultural tax. It is not hard to see how taxes could raise the price of overseas goods by a third or more once compliance costs are added on top. Indeed, the Australian government openly points out that New Caledonia’s “high cost of living [is] partly owing to heavy market protection.”

Luckily, Australia’s tariffs are low compared to the rest of the world and our living standards are correspondingly high. Yet unions, the Greens and to a lesser extent both the ALP and the Liberals have refused to embrace free trade. We saw this for example with the CMFEU’s media campaign against freer trade with China.

New Caledonia’s monopolised telecommunications industry is a sterling example of poor government service provision. Equipping ourselves with a SIM card complete with mobile phone and data usage would have made getting around, contacting relatives overseas and seeing the sights a lot easier. But the island’s Post Office has a legal monopoly over the provision of internet, mobile phone and telecom services and its offices were literally the only places on the island where SIM cards were available. Its opening hours were restricted to office hours, it closed entirely for an hour’s lunch, and closed for the day at 4pm. Moreover, prepaid SIM cards in New Caledonia were remarkably expensive at $81 per card (6195 XPF), which is more than ten times the price of a prepaid SIM card in Australia. International calling cards, which would have reduced charges further, were entirely unavailable in Noumea thanks to the monopoly. The Office seems more interested in ensuring that its employees receive extraordinary benefits than in delivering services to New Caledonians, let alone tourists.

In Australia, by contrast, any tourist can arrive at the airport and buy a basic prepaid SIM card for $20 to $30 with a range of carriers, many of them with airport shops catering to new arrivals. They are sold in a range of shops, milk bars and other stores, meaning that it is possible to buy one and call a relative or friend 24 hours a day, seven days a week. The contrast with New Caledonia’s monopoly provider could not be greater.

In these circumstances it is a wonder that in Australia the ALP and the Liberals have looked at New Caledonia as a something of a model to espouse. Back in 2007, Kevin Rudd established a monopoly on fibre cable internet in this country via the NBN, which has proven a waste of time and money. While the Liberals initially campaigned against the introduction of the NBN, they refused to privatise it while in office, promising instead to deliver fewer services at a lower cost. Promises aside, under both parties the NBN rollout has been accompanied by years of ongoing delays, price controls that ban the NBN from raising prices to meet demand, and bans on competition from private sector high speed fibre cable providers. And as is typical of government projects, the NBN is likely to blow its original whopping $41 billion taxpayer-paid budget under both parties. It is projected to cost $73bn under Labor and between $46bn to $56bn under the Liberals. It is strange that the Australian government is is so committed to preventing Australian from accessing affordable, privately provided high-speed cable internet simply because it cannot abide the very thought that their pet project may suffer for it. At least the NBN’s monopoly is limited to high speed cable internet and did not extend to other telecom providers. Otherwise we would be left as badly off as the New Caledonians.

As for the holiday itself, it was quite enjoyable. My fiancé and I relaxed on the beach for a week, reading literature and generally lazing about like satisfied cats. It was a wonderful experience, but we may go somewhere a little less expensive and a little less quiet in future.

Vladimir Vinokurov is a solicitor and a deputy Victorian State director of the Australian Taxpayers’ Alliance. The views expressed here are his own.

Vladimir “Zeev” Vinokurov is a solicitor and a deputy Victorian State director of the Australian Taxpayers’ Alliance. The views expressed here are his own.

One thought on “New Caledonia: Beautifully expensive

  1. That is just idiotic to compare a SIM card in a tourist destination to the NBN. Turnbull/Abbott deliberately destroyed the most important piece of infrastructure that will be built this century for purely political reasons. Nick Ross researched this topic for 2 years and clearly explained why ubiquitous fibre to the premises is the best investment the government could possibly make.

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