PHOSPHATE MINING IN NAURUThe Nauruan economy peaked in the early 1980s. Nauru's economy depended almost entirely on the phosphate deposits that originated from the droppings of sea birds. There are few other resources, and most necessities are imported. Small-scale mining is still conducted by the RONPhos, formerly known as the Nauru Phosphate Corporation. The government places a percentage of RONPhos's earnings into the Nauru Phosphate Royalties Trust. The Trust manages long-term investments, intended to support the citizens once the phosphate reserves have been exhausted.
The Trust's fixed and current assets, many of which were in Melbourne, were reduced considerably, and many never fully recovered. Some of the failed investments included financing 1993's Leonardo the Musical, which was a financial failure, the purchase of the vacant Carlton and United Breweries site on Swanston Street in 1994 which was sold undeveloped in 1998, a loan to the Fitzroy Football Club which went into liquidation in 1996, and the Queen Victoria Village site which was repossessed in 1999.
The Mercure Hotel in Sydney and Nauru House in Melbourne were sold in 2004 to finance debts and Air Nauru's only Boeing 737, which was repossessed in December 2005. Normal air service resumed after the aircraft was replaced with a Boeing 737-300 airliner in June 2006.
The value of the Trust is estimated to have shrunken from 1,300 million Australian dollars in 1991 to 138 million dollars in 2002. In 2005, the corporation sold its property asset in Melbourne, the vacant Savoy Tavern site, for $7.5 milliion. Nauru currently lacks money to perform many of the basic functions of government. For example, the National Bank of Nauru is insolvent. The CIA World Factbook estimated GDP per capita at $5,000 in 2005. The Asian Development Bank 2007 economic report on Nauru estimated GDP per capita at $2400 to $2715.
There are no personal taxes in Nauru. The unemployment rate is estimated to be 90%, and the government employs 95% of those Nauruans who work. The Asian Development Bank notes that although the Administration has a strong public mandate to implement economic reforms, in the absence of an alternative to phosphate mining, the medium-term outlook is for continued dependence on external assistance. The sale of deep-sea fishing rights to other countries may generate some revenue. Tourism is not a major contributor to the economy, because there is little to see or do here, the climate is very unpleasant, and there are few facilities for tourists. The Menen Hotel and the OD-N-Aiwo Hotel are the only two hotels on the island.
In the 1990s, Nauru became a tax haven and it offered passports to foreign nationals for a fee. The inter-governmental Financial Action Task Force on Money Laundering (FATF) then identified Nauru as one of 15 "non-cooperative" countries in its fight against money laundering. During the 1990s, it was possible to establish a licensed bank in Nauru for $25,000, no questions asked. Under pressure from FATF, Nauru introduced anti-avoidance legislation in 2003, after which foreign hot money flew out of the country. In October 2005, thanks to this legislation and its effective enforcement, FATF lifted the non-cooperative designation.
From 2001 to 2007, the Nauru detention centre provided a source of income for Nauru. The Nauruan authorities reacted with concern to its closure by Australia. In February 2008, the Foreign Affairs Minister, Dr. Kieren Keke, stated that it would result in 100 Nauruans losing their jobs, and would affect 10% of the island's population directly or indirectly:
"We have got a huge number of families that are suddenly going to be without any income. We are looking at ways we can try and provide some welfare assistance but our capacity to do that is very limited. Literally we have got a major unemployment crisis in front of us."
The Trust's fixed and current assets, many of which were in Melbourne, were reduced considerably, and many never fully recovered. Some of the failed investments included financing 1993's Leonardo the Musical, which was a financial failure, the purchase of the vacant Carlton and United Breweries site on Swanston Street in 1994 which was sold undeveloped in 1998, a loan to the Fitzroy Football Club which went into liquidation in 1996, and the Queen Victoria Village site which was repossessed in 1999.
The Mercure Hotel in Sydney and Nauru House in Melbourne were sold in 2004 to finance debts and Air Nauru's only Boeing 737, which was repossessed in December 2005. Normal air service resumed after the aircraft was replaced with a Boeing 737-300 airliner in June 2006.
The value of the Trust is estimated to have shrunken from 1,300 million Australian dollars in 1991 to 138 million dollars in 2002. In 2005, the corporation sold its property asset in Melbourne, the vacant Savoy Tavern site, for $7.5 milliion. Nauru currently lacks money to perform many of the basic functions of government. For example, the National Bank of Nauru is insolvent. The CIA World Factbook estimated GDP per capita at $5,000 in 2005. The Asian Development Bank 2007 economic report on Nauru estimated GDP per capita at $2400 to $2715.
There are no personal taxes in Nauru. The unemployment rate is estimated to be 90%, and the government employs 95% of those Nauruans who work. The Asian Development Bank notes that although the Administration has a strong public mandate to implement economic reforms, in the absence of an alternative to phosphate mining, the medium-term outlook is for continued dependence on external assistance. The sale of deep-sea fishing rights to other countries may generate some revenue. Tourism is not a major contributor to the economy, because there is little to see or do here, the climate is very unpleasant, and there are few facilities for tourists. The Menen Hotel and the OD-N-Aiwo Hotel are the only two hotels on the island.
In the 1990s, Nauru became a tax haven and it offered passports to foreign nationals for a fee. The inter-governmental Financial Action Task Force on Money Laundering (FATF) then identified Nauru as one of 15 "non-cooperative" countries in its fight against money laundering. During the 1990s, it was possible to establish a licensed bank in Nauru for $25,000, no questions asked. Under pressure from FATF, Nauru introduced anti-avoidance legislation in 2003, after which foreign hot money flew out of the country. In October 2005, thanks to this legislation and its effective enforcement, FATF lifted the non-cooperative designation.
From 2001 to 2007, the Nauru detention centre provided a source of income for Nauru. The Nauruan authorities reacted with concern to its closure by Australia. In February 2008, the Foreign Affairs Minister, Dr. Kieren Keke, stated that it would result in 100 Nauruans losing their jobs, and would affect 10% of the island's population directly or indirectly:
"We have got a huge number of families that are suddenly going to be without any income. We are looking at ways we can try and provide some welfare assistance but our capacity to do that is very limited. Literally we have got a major unemployment crisis in front of us."
