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January 7 2011 news

Australia co-funds remittance reform report

Australian banks with major Pacific networks will review their remittance charges following a joint Australian and New Zealand report on the costs to Pacific Islanders of sending money to their families back home. The report titled Trends in Remittance Fees and Charges, was presented to the Pacific Islands Forum Economic Ministers Meeting in Niue in October 2010. It found that it costs an average of $21.70 for every $100 remitted, far higher than global averages.

Remittances are an important source of household income and foreign exchange for many developing countries. For many Pacific economies with typically narrow economic bases, remittance incomes have become just as important, if not more important, than traditional income earners such as tourism, agriculture and fisheries.

According to the World Bank Development Indicators Report, which publishes global remittances data, around US$470 million was formally remitted to Pacific Island countries in 2008. In countries like Tonga and Samoa, this source of income represented over 30 per cent of GDP, and over three times the amount these countries received in foreign aid.

The primary sources of remittances to the Pacific are Australia, New Zealand and the United States of America. The size of Pacific Island communities in these countries has a direct relationship to the amount that is transferred to their home countries. However, migrants are not the only providers of remittance incomes. Short-term labour arrangements that include Pacific seasonal farm workers in Australia and New Zealand and i-Kiribati seafarers also contribute to remittance incomes. In 2008, Fiji service personnel serving overseas contributed to a remittance flow of over US$150 million.

The cost of sending money from Australia to the Pacific has been trending downwards over the last two years. According to the SendMoneyPacific website which compares costs of remittances across...