It is understandable that remittances became the central preoccupation of the literature on Pacific migrants and their ties to their homelands, given that many of the Pacific economies have been significantly bolstered by this income. Tonga and Samoa, for example, have been among the top remittance earning countries of the world for some years and their economies would be in danger of collapse if there were any drastic decline in remittance income. For this reason, debates on the sustainability of remittances continued to dominate the literature on Pacific migration throughout the 1990s. This work was concerned with a number of questions, including:
Who sends remittances?
What kinds of remittances are sent?
To whom are remittances sent?
How much do individuals and families send?
How reliant on remittances are the Pacific nations?
What channels are being used to send remittances?
What purposes do remitters have for the money and goods they send?
How are remittances actually used?
What is the impact of remittances on the receiving nations?
Do remittances decline over time?
What kinds of policies relevant to remittances should be in place in home and host nations?
A substantial body of work now exists that addresses these questions and a report by John Connell and Richard Brown, Remittances in the Pacific (2005), provides a useful overview of the findings to date in relation to the questions listed above. In their conclusion they return to the broader context of migration, in which transnational ties such as remittances play a key role, and they argue
that maximising the benefits of international migration is crucial since it is highly valued throughout the region for social and economic reasons. As long as considerable economic challenges face island states, as their population growth rates remain above world averages, as development prospects are few, as the possibility of declining aid becomes more apparent, and as expectations rise, the ability to migrate will be crucial (Connell and Brown 2005, 55).[4]
The kinds of issues that have been discussed in the literature on Pacific remittances for many years are now affecting Fiji, which is rapidly moving towards the situation in countries like Tonga and Samoa, where a large proportion of households have members living overseas who send remittances home (Stanwix and Connell 1995). As Mohanty (2006) points out, this has been occurring only since the late 1990s, so this has been a remarkably rapid transformation of Fiji’s economy. Fiji is now dealing with including increasing reliance on remittances and how they are being used, as well as the issues of ‘brain drain’ and associated slowing of the ‘development’ processes.
An ongoing debate in the literature on Pacific migration, over whether remittances help or hinder economies, has led to a body of research into how remittances are used. As we have seen, on one side of this debate is the view that remittance-dependence is unsustainable and hinders the expansion of the local economy; on the other is the position characterised by the MIRAB model, which sees these economies as sustainable so long as migration, remittances and aid continue but views self-sustainability as impossible. Associated with the debate is the question of whether remittances are used for ‘unproductive’ purposes or contribute to savings and investment in the island economies (Poirine 1998; Ward 1997).
In the Pacific today, remittances are being used for a wide range of purposes that go well beyond simple consumption, although consumption certainly remains significant, particularly for families entirely reliant on remittances for income. Remittances are used for purposes as varied as paying debts, purchasing airfares, paying school fees and church donations, building homes and business premises, contributing to the costs of events such as weddings and funerals, and facilitating investment in businesses. In addition, it has become clear that remittances are not sent simply to ‘help the family’ but also for migrants’ own benefit: to maintain land rights, for personal investment and to support their plans for retirement. Remittances are also used in status building, as when money that is sent to kin is presented to institutions such as churches, schools and sports groups, to signal that the family is generous and prosperous (James 1997).
Remittances are also facilitating a growing informal economy; for example, goods are sent by migrants for resale through second-hand markets. Brown and Connell (1993) studied Tongan flea-markets and found that they have opened up new ways for individuals to generate income and are a means of contributing to the domestic economy through investment. Some who were selling in the markets were developing business-like arrangements with their overseas kin, sending and receiving goods to build up profits (see also Besnier 2004; James 2002). Similarly, Ward has reviewed studies that ‘proved support for the argument that the emergence of trans-national families as economic units can be a very effective form of business organisation for the Pacific Islands’ (1997, 193). Ward points out that the arrangements between migrants and kin at home are made through the informal remittance system; for example, sending goods for local businesses in the islands and return trade of agricultural products for niche markets of Pacific Islander communities overseas. Such arrangements are not recorded in formal trade statistics, making it difficult to assess how island economies are actually faring. The informal economy also makes it impossible to ascertain the full extent of remittances. Brown and Foster found for Tongan and Samoan migrants in Australia in the early 1990s that their unrecorded remittances comprised 57 per cent of total remittances (1995, 32), and Ken’ichi Sato’s survey of other studies from the 1980s and 1990s shows estimates of unrecorded remittances as percentages of total remittances varying from 23–41 per cent (1997, 174).
The question of remittance decline has been of concern to researchers whether or not they use the MIRAB model, but there has been considerable disagreement about whether this is likely to occur. A key issue that has been identified is the economic situation in the destination country; for example, in his research on Samoans in New Zealand Cluny Macpherson (1990, 1992) has shown that a decline in the national economy and the effects of government policies favouring skilled migrants can contribute to a decline in remittances. Connell also argues that remittances are likely to decline if migration levels drop, adding:
However, if the economies of the metropolitan countries are restructured to reduce employment opportunities for unskilled labour, if unemployment increases or there is political opposition to increased migration levels, the tasks of sustaining migration and remittances will be extremely difficult (1990, 11).
Decreasing migration levels can have a significant impact; Ahlburg points out that ‘the continued flow of new migrants is critical to the continued growth of remittances’ (1991, 3). Ahlburg also sees the aging of current migrants and increasing migration of entire families as potentially contributing to remittance decline. He discusses the difficulty of home governments instituting policies to encourage remittances and suggests:
Perhaps the best the home country can do is create a good macroeconomic environment where domestic investment opportunities can develop. Such an environment is supportive rather than regulative. Political stability also seems to be important if funds are to flow to the home country (1991, 53).
A further factor that must be considered in relation to the sustainability of remittances is the willingness of migrants to continue to contribute financially to their homelands (Spoonley 2001). As Paul Spoonley points out, migrants may decide to prioritise investment in their own welfare and success over their obligations to kin and community. A decade earlier, Kerry James questioned the MIRAB model’s assumption that ‘transnational family enterprises’ would help sustain remittances, arguing that kin networks could continue without remittances, by obligations being met through ‘trading partnerships, overseas hospitality to migrant workers, and other forms of help’ (1991, 2).
Although some studies have shown that many individuals and families maintain remarkably high levels of remittances even 20 years after migration (e.g. Brown and Foster 1995), there are other factors involved in the overall picture of remittance sustainability. The demand for remittances is increasing as the cost of living in the islands increases and people desire more consumer goods, while at the same time communities in the diaspora are growing and local demands on people’s resources are increasing, creating a tension between obligations to local community and people in the islands. Some migrants’ remittances decline or even cease as family members migrate and if migrants themselves do not plan to return to live in the islands this can also reduce their tendency to remit. The literature on the sustainability of remittance shows that all of these factors and more combine to influence the remittance practices of migrants, making it difficult to predict with any accuracy the future of remittances in any of the island countries.
Overall, the general consensus tends to be that remittances could be maintained for some time if current migration levels are sustained or increased, but even that will not guarantee an indefinite flow of remittances to the islands. Cathy Small sums this up in relation to Tonga:
Remittances will eventually both slow and transform in kind, and both of these processes will have to do with the larger demographic and economic factors in which the global family has come to be embedded. Neither emphasizing Tongan traditions nor bolstering Tongan identity will keep remittances flowing or family ties strong, for the foundations of Tonga’s transnational families and economies lie elsewhere—in global processes occurring outside Tonga (1997, 198).
The long term sustainability of remittances must also be considered in relation to the second generation, who, when they remit at all, tend to do so at significantly lower levels than their parents’ generation, as discussed later in this chapter. Another factor is whether temporary worker schemes are continued, as these can generate ongoing remittances. As mentioned above, these have been in place for some time in New Zealand and a similar scheme was introduced in Australia in 2009, but they are subject to the whim of changing government policies.[5]
A final point to be made in relation to remittances is that most of the literature on this topic for the Pacific is concerned only with money and goods sent from the diaspora to the homeland. However, as Connell and Brown remind us:
In almost every context remittances are bi-directional, and the remittances sent from home countries are most likely to be composed of goods of various kinds, usually foods and handicrafts…In some cases these represent altruistic gifts associated with the essential element of reciprocity; in others they stem from self-interest, pump primers for continued remittances from destination countries (1995, 11).
James observes that among Tongans, ‘the contraflows of goods continually remind migrants of their economic and social obligations toward the home-based members of family networks’ (1997, 3). Tongan goods are used within the migrant population, including as gifts to widen the support network and help them with opportunities for social mobility, and so, in a sense, reciprocate the money and goods sent by that population (see Addo this volume, Evans 2001). These ‘contraflows’ are not insubstantial and in a study of Tongan migrants in New Zealand, David McKenzie estimated that the flow of goods, and even some cash, from Tonga to these migrants equalled an average of 43 per cent of the value of their remittances to Tonga (2006).
[4] Connell and Brown also edited a special issue of the Asian and Pacific Migration Journal (1995) on ‘Migration and remittances in the South Pacific’. In recent years Connell and Brown have investigated the migration of skilled health professionals from the Pacific and their remittance practices (Brown and Connell 2004, 2006; Connell 2004, 2006b; Connell and Brown 2004). Connell has also looked at the return migration of these workers (2009; this volume). Richard Brown and various colleagues have also contributed a body of work on remittances since the early 1990s examining factors such as unofficial remittances and the informal economy in the islands (Brown 1995; Brown and Connell 1993); the sustainability of remittances (Brown 1997, 1998; Brown and Foster 1995; Brown and Walker 1995; Walker and Brown 1995); and the relationship between remittances and investment (Brown 1994; Brown, Foster and Connell 1995; Brown and Poirine 2005).
[5] The issue of temporary labour schemes has been discussed in Chand (2005), Hughes and Sodhi (2006), Maclellan and Mares (2006, 2007), and a report by the World Bank (2006). There have also been briefing papers for the Australian government on the topic (e.g. Millbank 2006) and a Senate inquiry into Pacific Region seasonal contract labour (Parliament of Australia 2006).