Weathering the storm

By Raffique Shah
October 04, 2015

Raffique ShahTomorrow’s Budget presentation by Finance Minister Colm Imbert is the most eagerly anticipated Appropriation Bill in many years.

The main reason for heightened interest is the depressed state of the economy. With low oil, gas and commodities prices, hence lower-than-normal revenues accruing to government, citizens are waiting to see just how the new administration proposes to navigate the ship of State.

Coming in the wake of five years of plenty, during which the People’s Partnership Government enjoyed buoyant oil prices (averaging US $85 a barrel) and revenues that allowed it to be extravagant (it spent around $300 billion), Minister Imbert will be seriously disadvantaged as he tries to persuade people that we must modify our lifestyles and adjust our attitudes if we are to emerge from this crisis a stronger nation.

For far too long, and that includes boom-times when the PNM was in power, people have grown to expect “de govament” to cater for their every need, from cradle to grave: remember the “baby grant”?

The many make-work programmes that were intended to cushion the jobless as they transitioned into productive labour have long morphed into permanency.

People from the lower and middle-income brackets have mastered the art of accessing free government housing, refusing to pay rents and mortgages that are scandalously low.

Squatting on State and even private lands has evolved into the right to ownership, as legitimised by the PP, that as the law-abiding who are prepared to pay for housing suffer in overcrowded silence, denied opportunities that the lawless seize by brute force.

Under successive governments, too, the culture of dependency has straddled the class-strata.

Many contractors thrive only because they can access government or state agencies’ contracts, often through connections. If you think I refer only to persons in construction, think again. There are suppliers of goods and services who have become millionaires by feeding in the public trough, once they are prepared to give “kickbacks” to the right persons.

All of the above, and more, have had a negative, even deleterious, impact on productivity. This country’s economy is running on around 50 percent of its potential, and I think I am being very generous in my estimate.

In the public and private sectors, and across the strata, from CEOs and managers to shop floor workers, few people actually produce at levels consistent with what they are being paid for, and fewer still operate at optimum levels.

But I digress, only because I think of the huge challenge Imbert and his colleagues in government face as they try to convince the citizenry that we all need adjust our lifestyles if we are to cope with the lean times ahead.

To begin with, Government does not need to spend more than $60 billion a year, which is where the profligate PP took us over the past five years. They increased expenditure from $46.7 billion (2009-2010) to $66 billion (2014-2015), the latter since revised downward.

Why do we need to spend such a huge sum, increasing every year as if there is some unwritten rule that compels Government to so do?

Between fiscal 2009 and 2010, when oil prices fell from over US $100 a barrel to as low as $30, government’s revenue fell from TT $49 billion to $36 billion, and expenditure was cut from $44 billion to $36 billion.

The country did not collapse. People did not die, en masse. In fact, the only casualty was the Patrick Manning Government, and that had nothing to do with the cutbacks in expenditure.

Yes, some increases in spend cannot be avoided. Based on pre-election industrial agreements that saw most public sector workers get a 14 percent increase, Government’s wages and salaries bill moves up from $8 billion to $11 billion a year.

But there are goods and services on which significant savings can be had if fair, competitive tendering is embraced. In fact, in all such contracts that are coming up for renewal or re-tendering, Government should seek to negotiate downward.

On the expenditure side, too, large items such as GATE, CEPEP and URP must be closely scrutinised to ensure that only those who qualify benefit. GATE cannot mean open season for any quack, and the other two are supposed to offer employment on a rotational basis, not permanent.

The controversial fuels subsidy must be addressed, but on a managed, phased basis. VAT should be re-imposed on non-essential foods and social mitigation instruments (food card) should be given only to the destitute, not shoppers who drive Mercedes!

Most importantly, if the Government can come close to eliminating corruption and wastage, there will be a few billion dollars available to the Exchequer.

Seriously, I think we are more than capable of weathering this economic storm.

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