The criticism from the Cook Islands Chamber of Commerce and the Tourism Industry Council follows an Expression of Interest (EOI) issued by the Major Projects and Procurement Support (MPPS) division of the Ministry of Finance and Economic Management (MFEM) last week. The EOI seeks landowners interested in renting, leasing or selling land to the government to develop affordable housing for its shipping crews and their families.

The Chamber and Council questioned why public capital and administrative resources are being spent on commercial housing when private landowners have land available and commercial banks have ample liquidity to fund developments.

According to the Chamber, using state revenue to fund accommodation for government employed crew creates a direct conflict with local commercial accommodation providers, property developers and banks, all of which operate under commercial disciplines and market rates.

“The use of public funds to compete in the private sector distorts market pricing, crowds out private investment, and competes for limited domestic resources.”

The Chamber also said that diverting capital into proposed state-managed housing draws taxpayer funds away from essential public infrastructure “that remains severely underfunded”.

“When public funds are spent venturing into roles traditionally handled by private enterprise, core public goods suffer,” a Chamber spokesperson said.

“Our tourism industry, local commuters, and visitors rely on safe, resilient supporting infrastructure. Government spending must prioritise essential infrastructure that lowers the cost of doing business for everyone, rather than inflating state operations and competing against local capital.”

The EOI titled “Housing Project – Land for Accommodation” seeks Rarotonga properties that cover at least a quarter acre (1012 m²), feature relatively flat terrain requiring minimal site preparation, and offer established land tenure alongside reliable road access and utilities. For lease or rental proposals, the government requires a minimum term of 10 years.

MFEM noted that proposals will be evaluated on site suitability, accessibility, existing infrastructure, terms and overall development feasibility, adding that submission does not commit the government to any final transaction.

Anthony Tautala, manager of the Cook Islands government’s activity management system (Tarai Vaka) at MFEM, stated that the Expression of Interest for land accommodation is simply an information-gathering exercise to identify suitable land options for future consideration.

Tautala explained that there is currently no approved project, no allocated funding, no selected site, and no confirmed development proposal.

“As such, we are unable to provide specific details relating to project scope, accommodation numbers, budget, funding arrangements, consultation, or environmental assessments.”

Tautala said the purpose of the EOI is to help the government identify potential land opportunities and determine whether any viable options are worth exploring further.

“Any decision to proceed with a future project would be subject to separate funding approvals, and the usual Government decision-making processes,” he said.

“Should a project eventually proceed, all normal planning, residential development, procurement, consultation, environmental, and regulatory requirements would be followed in accordance with the relevant Government policies and statutory processes.”

Tourism Industry Council president Liana Scott said reading the MPPS Housing Project EOI and accompanying FAQ raised several critical questions.

Scott said that while she appreciates the importance of reliable domestic shipping services – particularly for the Pa Enua – and recognises the challenges of attracting and retaining skilled workers, the shortage of affordable housing is not unique to the government.

“It is a nationwide issue affecting businesses across all sectors, particularly tourism, where employers are increasingly having to provide accommodation simply to attract and retain staff,” said Scott, the general manager of the Muri Beach Club Hotel.

She questionedwhy the government was prioritising housing for its own shipping workforce and what makes their accommodation needs different from those of other essential workers, including those in tourism, healthcare and other industries.

“Should the government be entering the property development and rental market?” Scott questioned. “The Prime Minister has previously expressed the view that the government should not be in business. How does this project align with that position, and has the private sector been given the opportunity to provide these services?”

“What is the true cost to taxpayers? The FAQ refers to market-based rents and a cost-recovery model, but will this include land, construction, maintenance, administration and financing costs? Who will cover any shortfall?”

Scott challenged the government to introduce incentives for businesses to build staff accommodation.

“Our industry has previously advocated for tax incentives, including 100 per cent depreciation for purpose-built staff housing. Would this not encourage private investment, increase housing supply and benefit the wider economy rather than just one Government workforce?

“Ultimately, the question is not whether shipping employees deserve suitable accommodation – of course they do.”

She said that earlier this year, the Council submitted a proposal to MFEM recommending a 100 per cent depreciation incentive for businesses investing in long-term workforce accommodation.

“This was intended to encourage private-sector investment, increase housing supply and reduce pressure on the rental market, without the government having to become the developer and landlord.

“Interestingly, the government’s own Economic Recovery Roadmap had already identified the need to consider incentives for tourism operators to build staff accommodation.

“What has happened to this proposal, and has MFEM undertaken any assessment of its potential benefits and costs?”

Scott said that before the government commits public funds to developing housing for its own shipping employees, “surely it is reasonable to ask whether incentives encouraging private investment could deliver broader benefits across the economy”.

“The bigger question is whether the government should be investing in housing for its own workforce when it could instead be creating an environment that encourages the private sector to help address the housing shortage for everyone.

“I believe this deserves greater transparency and wider consultation, particularly when public funds are involved.”

The Chamber has also called on MFEM and the Cabinet to uphold the statutory financial disciplines established in the MFEM Act and subject all state commercial ventures to rigorous public cost-benefit scrutiny.