By Raffique Shah
February 20, 2023
As someone who has long advocated the dismantling of over-generous subsidies for a number of goods and services, many readers may find my change in position opportunistic, and proceed to lump me with politicians who thrive on hollow rhetoric such as “freedom for the masses”, even the more vacuous slogan, “freeness for the masses”.
These are flights of fancy that the younger among my generation when our larger-than-life giants like Guevara, Ho Chi Minh, Patrice Lumumba and Malcolm X walked among us, preaching revolution through which we would establish an egalitarian world.
We were dreamers, of course. There never was, nor will there ever be a society in which all men are equal—which is what egalitarian signifies. We may be equal in the eyes of the courts of justice, before the laws that govern us, but even at this level one wonders just how equal can we be in a wider world where those who control the wealth or those who are physically superior will always win-out over their weaker, poorer countrymen.
While the revolutionary leaders I mentioned above, and others spread elsewhere in the Third World sought to bring some equity among their citizens insofar as attempts were made to achieve economies that were more just, even that was destined to fail.
The seed of equity in the economy was planted by leaders like Dr Eric Williams, not surprising by using instruments, particularly in the state-owned heavy industry sector which they as government controlled.
What they would do is establish payment based on levels of consumption by users with the poorer among, say, users of electricity and water, paying rates that would increase as consumption increased. In such systems, theoretically, consumption, hence wealth and usage, will determine costs.
Thing is, it never quite worked that way since everybody enjoyed whatever subsidy—and these amounted to hundreds of millions per year. Everybody will pay identical price per unit consumed (water, electricity) while the wealthy who consumed much more than the poor also enjoyed the generous subsidised lower rate in the first “band”, and maybe the second, in electrical units or volume of potable water supplied by WASA.
In this scenario, the subsidy meant little or nothing since every consumer paid the subsidised rate for the first band of water or electricity they consumed. The wealthy and poor were treated equally, both enjoying subsidised rates which clearly made no sense.
The Regulated Industries Commission, which determines water and electricity rates, still had to face government for final approval, and every government had its voter bank to consider.
Additionally, the commercial and industrial business sectors which were paying most in the upper band cried foul: since they were the biggest consumers overall, they argue that they should pay an even lower rate by virtue of the higher consumption.
When competitive classes clash by virtue of their interests, the centre cannot hold. All will fall down. Worse, governments in the face of a major economic crisis cannot impose new, higher rates that the utilities will want just to cover their overheads and pay to break even, far less make a profit.
To add to Government’s woes, WASA has earned a reputation of being the worst such organisation in the world. I cannot in conscience call for consumers to pay for services not rendered, for adequate water not supplied.
In conscience, too, I cannot ask the NGC to sell T&TEC natural gas for lower than the cost of production and ask that potable-water consumers pay below cost for water that may well be wasted through hundreds, maybe thousands, of leaks and other breaches in WASA’s pipeline network.
With the economic crisis—no significant increase in production and sales of oil and gas—people will continue to suffer through higher prices for basic living goods and services. So, what does Government do? The Prime Minister Dr Rowley repeats often enough the mantra “if not now, when”.
Some civic and business organisations have suggested such increases be phased in over a period of time, such as three to five years. That is one proposal I find palatable. Government must find ways of trimming expenditure that may be necessary but not urgent.
Dr Rowley and Colm Imbert boast of good management during some extremely lean times. On this they are partly correct. The windfall in energy crisis came unexpectedly because of the Covid pandemic and Russia’s war against Ukraine.
While the world remains a riskier one globally, hardly will there be wars cropping up everywhere. China, for example, may keep the fear factor high in dealing with Taiwan. But it did not move to being one of the most powerful nations on earth by being a bully.
In a stable world any good government can manage the revenue and expenditure side by phasing in direct consumer taxes or utility rates.