News & Media

Cyclone Winston devastated Fiji in 2016, including the village of Nayavutoka, in Ra province. The local church, pictured, served as emergency shelter for the whole community during the ferocious storm. Photo: Alicja Grocz/Oxfam

Two and a half years ago I sat barricaded inside my home in Fiji, listening to a ferocious wind travelling at an average speed of 230 kilometres an hour.

Over the howl of the wind I could hear trees crashing down outside. I didn’t know how long the storm was going to last. I didn’t know where the next tree would fall.

When the wind finally eased, I ventured outside to see if my neighbours were OK; to see if their houses were still standing. I’ll never forget that feeling.

Cyclone Winston was the biggest cyclone ever to make landfall in the Southern Hemisphere. The devastating storm left 44 people dead and 350,000 people, almost 40% of Fiji’s population, were affected. Total damage and losses from Winston are estimated at $1.42 billion: equivalent to nearly a third of Fiji’s GDP.

Anyone who’s been watching the news recently knows that Cyclone Winston wasn’t a one off. Already this year we’ve witnessed killer storms raging around the world from the Philippines to the USA, wreaking death and destruction.

Today marks a seminal moment in efforts to tackle climate change. The Intergovernmental Panel on Climate Change produced its first major report in four years outlining what’s going to happen if the world allows average temperatures to increase more than 1.5 degrees Centigrade.

Here in the Pacific Islands, we don’t need climate scientists to tell us what the impacts of climate change will be. We’re already experiencing them. We’re no longer talking about the future; people are already fighting for their lives against disasters intensified by climate change.

Most of us who are being battered by climate change are based in some of the world’s poorest countries. At Oxfam, we understand well the ruthless inequality of climate change: poor communities are five times more likely to be displaced by extreme weather than rich ones.

For us, rising seas, combined with more intense storms, are increasing coastal erosion and inundation. By one estimate, in the long term, sea-level rise resulting from 2°C of warming could submerge land across the world that is currently home to 280 million people.

The world’s atoll nations face a truly existential threat from sea-level rise; for us, our lives and our very way of life, is in the balance.

Take the situation my fellow Pacific Islanders in Kiribati face as an example. Kiribati is a large ocean state comprised of 32 atolls and one raised coral island, spread across more than a million square miles of the central Pacific Ocean, and with a population of approximately 110,000.

Almost the entire land area of Kiribati, including the whole of the main population centre of South Tarawa, lies less than three metres above sea level. Kiribati is considered one of the most vulnerable countries on earth to the impacts of climate change.

The nation’s people, the I-Kiribati, fear not only the loss of their livelihoods and security but also the impact of displacement on their culture and identity, sovereignty, and deep connection to their land and sea.

Tinaai Teaua, a member of Kiribati Climate Action Network, told Oxfam: “Land is very important. We can’t leave. We don’t want to leave. This is our home and this is our land. We should stay here. But the problem is getting closer and closer. My message to the world [is] to look at us. What our culture is like. How we are so proud of being I-Kiribati. The main message is to limit warming to 1.5°C. That was already agreed, but now they have to live up to their words.”

The case of Kiribati highlights the need for stronger international action to minimise the impacts of climate change and provide greater support to vulnerable communities. The loss of homes, livelihoods and ancestral lands through displacement epitomises the human cost and the grave injustice of climate change.

Today’s IPCC report is expected to echo the existing consensus that if global warming is to be limited to 1.5°C then concerted, bold, global action is required. Some of the world’s poorest and low emitting countries are now leading the climate fight – including Fiji and the Marshall Islands who recently committed to reduce their emissions to net zero by 2050. It’s time for all rich countries to follow suit and show how they’ll clean up their emissions and reduce their net greenhouse gas emission to net zero within a generation. No excuses.

It’s the laws and targets set by rich countries which will determine the future of the world’s poorest people. Countries like New Zealand have a moral obligation to lead the way.

How many more ‘once-in-a-lifetime’ storms will it take before our leaders face up to what’s going on and act? For too long, too many countries have talked a good game when it comes to climate change, but failed to deliver concrete action.

As many of us know all too well: climate change is eating away shores and flooding homes. It’s leaving farmland bone-dry, shattering the lives of millions who did virtually nothing to cause it. It’s simply unconscionable to leave poor communities alone to deal with disasters they did not create.

The way that New Zealand, and the rest of the international community, responds to climate change is a litmus test for our humanity. It’s a test we can’t afford to fail.

By Raijeli Nicole, Oxfam in the Pacific regional director. 

Last week, we revealed that it looks like New Zealand is losing $21 million a year to unfair tax avoidance by four big pharmaceutical companies – Abbott, Merck & Co. (also known as MSD), Johnson & Johnson, and Pfizer. Some of you may have seen comments about the way we conducted the research – our methodology. We’ve got a great blog about the methodology from our American colleagues who led the research. But we want to take a slightly different angle, because the comments about our method actually support what we are saying – that if we want an accurate picture of what companies earn and owe we need more publicly available information so that we can use more robust information.

Oxfam knows that corporate tax avoidance helps to entrench poverty and inequality. In fact, tax avoidance is a matter of life and death. We found that across only seven countries, these four pharmaceutical companies appear to be avoiding paying about $167 million in taxes. That’s enough to vaccinate 10 million girls so that they don’t get cervical cancer, which kills one woman every two minutes, mostly in developing countries.

Because of this, it is critical that we talk about tax avoidance. But it is a very complex subject. Large multinational companies have huge amounts of resources that they can use to manoeuvre their business across the globe, juggling their profits to avoid paying tax. And they share little information publicly about their economic activities. This means that we can’t see what they’re doing. It is particularly difficult for poorer countries to investigate tax avoidance, yet they rely heavily on corporate taxes to provide essential services, such as preventing and treating cancer.

Our methodology was a reasonable approach to the lack of information available. We would not need to use estimates if we had access to all the information we needed to assess the potential tax avoidance practices of multinational companies like the four big pharmaceutical companies we examined. We would have the actual information. This is why we are asking the New Zealand government to make multinational companies publish key financial information.

We didn’t devise our methodology alone. Oxfam spoke with current and former executives from the top ten pharmaceutical and accounting firms, as well as other tax experts. These included people from the Institute on Taxation and Economic Policy, Global Witness, and the head of tax for a global 100 company. We also received assistance from two international corporate tax experts: the head of the secretariat of the Independent Commission for the Reform of International Corporate Taxation, and an academic who used to be a transfer pricing senior manager in Deloitte LLP. We don’t take this kind of work lightly. We wanted to make sure we used the best methodology possible in an environment where multinational companies hide important information about their operations.

Some argue that multinational companies will have low profit margins in New Zealand because of Pharmac. We thought about this, too. Pharmac is fantastic at its job, but its way of working can’t explain our findings. We found that the profit margins across all developed and developing countries were similar – on average, between 5 and 7 percent. New Zealand’s was 6 percent, so pretty much the same as all other countries. Meanwhile, in tax havens – where companies pay no or low tax – the profit margins were a whopping 31 percent. New Zealand is not an outlier but part of a common story across all the countries we looked at. Our research showed a pattern. Something is going on here in a systematic way across the globe – something like profit shifting to avoid paying taxes.

A key principle for tax is that profits should be taxed where they are made. Some argue that the driver of profitability in the pharmaceutical industry is the creation of intellectual property through research and development (R&D). Following from this, you would expect to see higher profits and higher taxes paid in countries where R&D takes place. Not surprisingly, we do not have a clear idea of where these four big pharmaceutical companies do their R&D, so it is hard to assess where they are creating value that would lead to profits. Again, this is why we’re calling for more information to be available in the public realm.

Our global tax system is broken. We need a public conversation about how to fix it. And to do this, we need public information. This is why we’re asking our government to make multinational companies publish key financial information, so we can make them pay their fair share. Tax avoidance hurts us here in New Zealand, but poor women and girls in poor countries are the ones who really bear the brunt of multinationals’ tax avoidance. They often pay with their lives.

By Joanna Spratt, Advocacy and Campaigns Director, Oxfam New Zealand.