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Re: Panday's response to 2005-2006 budget

Mr. Speaker, the rotting from the head does not end with Khan, Williams and Bereaux. It continues with the now infamous Landate project which is owned by the wife of the Minister of Housing. It has now been established beyond the shadow of a doubt that materials were moved from the Scarborough Hospital Project to the Minister's Landate project, but we don't yet know if Landate or someone else paid for the materials. We also do not know if Landate benefited from other services such as labour and equipment associated with the project. Usually, Mr. Speaker, internationally funded projects enjoy a certain amount of tax forgiveness, e.g., VAT. Did Landate benefit from such concessions? Of course we will be told that they did not but I have no intention of falling for that. Because of this and other scams the people of Tobago are being denied a hospital, which has already incurred a cost over-run of over one hundred million dollars ($100,000,000) after merely laying down the foundation.

The inquiry into the project unearthed some important collateral evidence about how the PNM does business and how they intend to construct all the projects mentioned in the Budget.

It came out during the Inquiry, from testimony of Mr. Winston Agard, CEO of UDECOTT that:

1. NH International Caribbean Limited (NHIC) got the award to construct the Customs and Excise building on Richmond Street, despite warnings to the UDECOTT that NHIC's sub-contractors lacked expertise and did not follow instructions;

2. NHIC was notified that it was successful in its bid for the Sarborough Hospital in February2004 but the Articles of Agreement was not signed until March 2005 and it was not a general practice to sign in this manner.

3. A similar situation arose in the award of the contract to NHIC for the Siparia Administrative Complex.

4. UDECOTT also awarded a contract to Warner Construction and Sanitation Company for the Blenheim housing project in Tobago although Warner's bid should have been nullified by the failure to submit a tender bid.

Mr. Speaker, do you see why the PM wants to create all these new state enterprises? Their "no rules" approach is their way to enrich their friends. The Minister of Housing admitted publicly that he is a friend of NHIC's boss, Mr. Emile Elias. Without rules, not only are they able to enrich his friends, they are also able to enrich themselves.

These episodes remind us of how Minister Saith benefited from debt forgiveness of over $15 million with FCB carrying the major burden of the cost. It also reminds us the Project Pride fiasco in which we spent hundreds of millions of dollars and had nothing to show for it. We are also reminded of the La Brea Industrial Estate and many more. This is the PNM's way of doing business. Now they want to legitimize their style with "no rules".

The head of the PNM is now completely rotten; the rest of the body will soon decay. The Government has blamed the Public Servant for it failure to deliver on it Budget promises as its justification for the introduction of these new State Enterprises. Over the years several hundreds of millions of dollars have been allocated to maintain the Public Service; what will become of them? Will personnel required to staff these State Enterprises come from Public Service or will they be new personnel? If the Public Servants are to be seconded to these State Enterprises then what difference will it make to levels of performance? But if the Government intends to hire new personnel what will become of the Public Service? What will they do? The management strategy of this Government is that if an institution is not working create a parallel one instead of correcting the short comings of the existing ones. That is the rationale behind the SAUTT. It is a wasteful exercise.

Mr. Speaker, it is essential that the rules of accountability and financial control be strictly adhered to or else our oil wealth will vanish before our very eyes as was the case with our previous windfall. The rules are there. We do not have to create new ones. We merely have to enforce the existing ones.

Mr. Speaker, I now come to:


Mr. Speaker, the Government wants this population to believe that the economy is in good hands and that prosperity will be ours forever. But the people are not fooled and they have made it quite clear that they do not believe the Government's propaganda.

In a UWI Ansa /McAl survey published in the Sunday Guardian of July3, 71% of persons surveyed said that they did not support the Government's decision t build the Tarouba sporting complex and 58% said that they did not support the Governments decision to increase the national budget by $3 billion. Asked how they felt about the Governments handling of the economy, 22% said poor, 20% said very poor and 39% said fair, i.e., 42 % are totally dissatisfied.

Thank God we are dealing with an enlightened population. All of the Government's multi-million dollar public relations campaigns have not fooled anyone. This is one case where the perception and the reality are the same. The reality is that this PNM is doing an absolutely rotten job of managing the economy.

This is not merely the view of the general population. The IMF has expressed its share of concern and their views have received wide publicity. The spirit of the Article 5 Report of the IMF is captured in the following observation:

"There are uncertainties concerning the reserve levels, price projections and extraction rates. But preliminary calculations suggest that if the current level of public expenditure contemplated in the amended budget is maintained over the medium term, the Government may need to start drawing on its savings in just seven years to finance deficits with the savings fully depleted by 2020 and deficits rising sharply thereafter due to exhaustion of gas reserves". Is this what the PNM means by Vision 2020?

When I spoke on the budget last year, I mentioned several reports from the World Bank, the IDB and the IMF. One consistent theme in all of those reports was that T&T must be careful about its expenditures. We were warned that this is our last chance to transform the economy and to implement strategies for sustainable growth.

It is clear that the advice of all of the international institutions and of the Opposition fell on deaf ears even though the advice has had to be repeated. What is even worse is that our problems do not end there. In the IMF Country Report No. 05/6 dated January 2005, they also warned:

"In the context of the booming energy sector, competitiveness of the non energy tradable sector has become an issue of concern. Competitiveness of the non-energy tradable sector is of key importance since it is the main source of employment in the economy. In fact, despite strong growth in the energy sector, unemployment still remains high and production and export growth in the non-energy sector have been sluggish".

You see Mr. Speaker; they have not been fooled by the fake employment figures. The report further warned:

"The real effective exchange rate and the ineffective use of public funds are identified as the main competitive disadvantages of T&T's macroeconomic environment. Low scores were awarded to real exchange rate developments, governance issues, the large allocation of public funds to subsidies and public enterprises and high bank spreads".

The report went on to say:

"Despite T&Ts considerable energy wealth, social and ethnic problems remain, and the political balance continues to be delicate". Remember the President's warning.

Another important point that the Fund made was:

"The Fund's policy advice in recent years has focused on reducing the dependence of the budget on energy-related revenues, strengthening the financial system and enhancing the competitiveness of the non-energy sector. However progress in these areas has been slow, reflecting political factors and the renewed energy boom that has eased pressures to take upfront measures".

While inadequate infrastructure and debilitating red tape continue to hamper the competitive advantage that our private sector have over their Caricom counterpart the Budget removes certain allowances which enabled the sector to contribute to the social and economic development of our youths. The removal of the 50% uplift on expenditure for the sponsorship of the arts, culture and sports would deny these groups the sponsorship that is necessary to promote activities away from crime. The removal of the 100% uplift for additional employment and apprentices would have a negative effect on the provision of skilled labour for the proposed industrial expansion. This is a much better way to absorb and train labour than the criminally oriented CEPEP and URP

Mr. Speaker, between 2001 and 2005 this Government has spent over $90 billion of taxpayers' money; we have nothing substantial to show for it. The experts keep telling us that the economy is very vulnerable and we must control our spending, especially our non-productive spending. It is not only the foreign experts that are saying so. In the Republic Bank Economic Newsletter Vol. 13 No.3, published in June 2005, we are warned:

"....greater fiscal discipline must be exercised in curbing and re-directing Government expenditure. One consequence of too rapid growth in spending is strong demand pressures which when combined with our tightening labor market and a weak agricultural response can have dire consequences for the overall inflation rate and for non-oil sector competitiveness. The latter experience that characterized the seventies must not be repeated".

The IMF also made similar observations in its 2004 Article 4 Consultation. In its Public Information Notice No. 04/136 published on December 8, 2004, the Fund stated in the Executive Board Assessment:

"Directors observed that significant macroeconomic challenges remain, notably to boost non-energy investment and growth in order to reduce the high and persistent unemployment rate and the dependence of the budget on energy-based revenues. This will require determined implementation of a sound policy framework that promotes external competitiveness and economic diversification".

Mr. Speaker, the economy is not in good hands as the Prime Minister would have us believe, and the good people of T&T have a lot to be worried about. Properly managed, we can be a wealthy nation indefinitely into the future but with PNM style management we will start spending the savings in seven years and it will be all spent by 2020.

Last year I pointed out that the management of the Revenue Stabilization Fund which they said would soon be called the Heritage Fund, was sheer financial lawlessness. It is another case of the PM's "no rules" way of doing things. The Budget says that the Government will transfer $1.2 billion into the Fund but what they do not say is that the PNM has virtually confiscated these funds and given themselves power to spend the money as they very well please with absolutely no accountability. For over two years the Government has been promising legislation to regulate the fund; to date there has been none. Properly invested and spent with prudence, the RSF can make T&T a rich nation forever. Last year we were again promised that there would be legislation governing the control of the Fund; to date no such legislation has been forthcoming.

Why does the PNM refuse to set strict rules for the management of the fund? Why does the Government refuse to be accountable for the Fund? This is the people's patrimony, not theirs. It is illegal, immoral and downright wrong for the government to treat the people's wealth this way.

Mr. Speaker, this Government knows how to waste money. It does not have a clue about how to manage the country. The evidence of this is reflected in our fall in the international competitiveness rankings. The competitiveness rankings explain why some countries are able to grow on a sustained basis for prolonged periods of time, in the process pulling large segments of the population out of poverty, while others remain stagnant or, worse, actually see an erosion of living standards.

T&T fell in the rankings from 49 to 51 in 2004. We also did not do well in the Growth Competitiveness Index (GCI). This index has three parts - the quality of the macroeconomic environment, the state of the country's public institutions and the country's technological readiness. On the GCI our overall rank was 51 out of 104 countries. On the technology index our rank was 54. Our neighbor Jamaica ranked ahead of us in position number 49. We ranked 64 in the Public Institutions index and 44 in the Macroeconomic Environment Index. Having regard to our over-flowing revenues that is nothing to be proud of.

The World Economic Forum also publishes a Business Competitiveness Index (BCI). It evaluates the underlying microeconomic conditions defining the current sustainable level of productivity, the underlying concept being that, while macroeconomic and institutional factors are critical for national competitiveness, these are necessary but not sufficient factors for creating wealth. Wealth is actually created at the microeconomic level by the companies operating in the economy. The BCI evaluates two areas: the sophistication of the operating practices and strategies of companies, and the quality of the microeconomic business environment in which the companies compete. The idea is that, without these microeconomic capabilities, macroeconomic and institutional reforms will not bear full fruit.

On the BCI Index T&T ranked number 59 out 0f 103 countries.

Mr. Speaker, therein lies the reason for all of the advice and warnings that T&T is getting from every quarter. We must be more disciplined in our financial affairs or we will keep falling further behind and the living standards of our people will decline.

Signs of decline are already setting in and we must not ignore them. One area of decline is the falling levels of performance of our students in the CXC exams. In 2003 there was a 16% decline in the number of students who got a full certificate of five subjects or more. In 2002, 64% of students passed English language; in 2003 only 56% did. In 2002, 53% passed mathematics; in 2003 51% did. And while this decline has set in, we are told that two thirds of tertiary level graduates leave the country every year.

In the 2005 Budget the PM said:

"In keeping with our vision 2020 to position T&T in the global economy, we are in the process of revamping the entire education system to deliver total quality education. In the new year, we will construct 43 new early childhood care ad education centers".

Not a single secondary or pre-school has been constructed. Once more this Government has broken its promise. Meanwhile the Minister of Education, wife of the PM who adoringly proclaims her to be the best Minister of Education this country has ever had, said she is not responsible. When will this Government learn what responsibility means? The Minister occupies the office, enjoys the salary and perks, and can be seen smiling when pictures are taken as the PNM spends the country's millions on obscene public relations. When there is failure to perform though, she says that she is not responsible.

Mr. Speaker, between 2003 and 2005 the Ministry of Education has spent over $5.5 billion to educate and train our youths. Despite what the Prime Minister says real unemployment is high in the face of a shortage of skilled labour, and while we still have high levels of unemployment we find it necessary to import labor from our CARICOM neighbors after this Government has spent billions of dollars on education. In calculating the unemployment figures CEPEP, URP and other make-work programmes must be discounted as they are really hand-outs in disguise and do not provide permanent, well paid sustainable employment.

Despite the expenditure of over $90 billion in four (4) years many citizens in Trinidad and Tobago are experiencing declining standards of living as a result of unemployment, poverty and rising prices. Inflation is now rampant in many sectors of the economy. The Central Bank of T&T Statistical Digest for December 2004, provides the index for retail prices in various sectors for December 2004 using January 2003 as the index base. It showed the following inflation data:

* Food and non-alcoholic beverages increased by 31.8%

* Alcoholic beverages by 4.%5

* Rent by 7.2%

* Furnishings by 7%

* Transport by 7.9%

These figures do not cover post December 2004 data for which inflationary trends are expected to continue, and in many sectors be much higher.

Recent data released by the Central Bank confirms inflationary trends with headline inflation rising to 6.9% for the 12 month period ending February 2005. It should be noted that the increase in food prices comes not from higher prices for imports but from inefficiencies at the ports and from the rising cost of doing business in T&T.

Some of it is being generated by the local financial sector. T&T's stock market in reaching astronomical levels at April 2005, stood at 1500, an increase of roughly 400% in less than three years.

The Government now finds itself in a Catch 22 situation: if the Government cannot achieve what it says it is going to do in this Budget then it would have deceived the people; if it can by a some miracle achieve all that it says it is going to do the it will further fuel inflation in the economy.

Mr. Speaker, the Opposition is aware that price trends reflect liquidity flows in the investment markets. The increasing growth of credit and money has consequences not only for the prices of industrial and consumer goods, but for the prices of investments as well. Needless to say, we are of the opinion that a moderately increasing stock market is a prerequisite to prosperity, as it provides capital to the markets and investment returns to the investor. It our view the cause of inflation in a debt-based economy as T&T can be attributed directly to the Government induced trend in the creation and expansion of credit by an inappropriate monetary policy.

Since rates of borrowing and lending are related to stock-market confidence in the investment market, we can only conclude that the link in the credit growth is an attempt by the Government to inflate the economy to growth and temporary prosperity, thereby producing inflationary pressures in the economy. A stock-market rise of 400% in three years can only attest to an economy with flawed spending and monetary policies by the present Government. Further, inflation in the real-estate sector has also reached bubble proportions.

The net effect of this inflation is to reduce purchasing power. Just ask any consumer.

Given the resurgence of inflation in our economy, the key question therefore is: Has the present PNM Government adopted an inflationary policy in an attempt to create growth and prosperity in the short run? In our view, the motto of the Government is "if you cannot produce sustainable non inflationary growth through sound fiscal policies then inflate the economy and create an illusion of growth and prosperity in the country".

The Opposition is of the view that real and sustainable prosperity can only be achieved by non-inflationary growth which in turn is achieved through subdued inflation fostered by disciplined fiscal and monetary policies. In our view reckless creation and assumption of debt by the Government and its institutions, excessively expansionary monetary policies and rapid rise in expenditure of over 30% with a weak agricultural sector, demonstrates flawed fiscal and monetary policies of the Government.

As a consequence of an excessively expansionary monetary policy, interest rates are now at historically low short term levels, with spreads between T&T dollar rates and US$ rates between 1.5% and 1.75% when using US treasury rate of return and comparable LIBOR based security rate of return. The immediate impact of low interest rate differentials provides currency exchange rate pressure on the TT dollar-US dollar exchange rate since these differentials do not reflect TT dollar currency risks. In simple words, to the investor, it is not worth holding TT dollars and the investor is not compensated adequately for risks associated with the T&T economy. This is why there is enormous downward pressure on the TT dollar and the Central Bank has had to intervene to support the TT dollar. In other words, capital flight has started. Coupled with the desire of many businessmen to flee from the ravages of murders, kidnappings, rapes robberies and other violent crimes capital flight is likely to become worse.

Mr. Speaker, in my reply to the last two reply to the Budget presentations I outlined principles, strategies and tactics for a new model of economic development for T&T. I also quoted evidence where the international institutions had all endorsed what I said. So once again I must point out:

1. We need to articulate sector specific development plans.

2. We must foster intense competition among firms.

3. We must develop strong industry clusters.

4. We must encourage strong consumer groups throughout the country.

5. The Government must provide a facilitating environment for all sectors of the economy. For example, it must not discriminate against agriculture.

6. Information technology must be leveraged for competitive advantage.

7. Development must be based on the strengthening of the knowledge capabilities of the population rather than the exploitation of natural resources.

8. It is firms that compete, not nations. Therefore we must create an environment where our firms are internationally competitive.

This is kind of framework in which a UNC Government would have conceptualized a Budget to the country forward.

What is the probability that PNM will do any of this, Mr. Speaker? I would say: absolutely zero! They are like a dog in heat when it comes to winning elections and no amount of good economic reasoning will rank ahead of voter padding, low cost bribery to their supporters, propaganda and political violence.

The Energy Sector of Trinidad and Tobago- Natural Resource mismanagement

Mr. Speaker, I now turn to the energy sector of our economy. Globally, demand for oil, natural gas, petrochemicals and metals are soaring like never before. The main driver of this demand is the burgeoning Chinese economy and growing demand from India. Today, the reality is that a number of factors have converged to drive prices to all time highs. High global demand for crude has coincided with a refining bottleneck in the USA which has been exacerbated by the impact of hurricanes Katrina and Rita on the refining sector in the US Gulf Coast. Added to all this is the persistent problem of instability in the Middle East.

This demand for energy has pushed prices for oil and natural gas upwards in the past 12 months. Following Hurricane Katrina, the price of crude oil crossed the 70 US dollar per barrel mark. As of last week Friday, the price of natural gas at the Henry Hub was $14.50 per million British Thermal Unit. Mr. Speaker, while both oil and natural gas have been fetching high prices on the international market, the prices of ammonia and methanol have also been buoyant.

Oil and Gas revenue and taxation

In the last financial year revenue accruing to the Government from oil and gas was 11.1 billion. The Minister of Finance has stated that this figure is set to increase to 18.1 billion in fiscal 2006. Indeed revenue from oil and gas increased by some 230% from 2001 to 2004. But, as one prominent local economist put it- the problem is not revenue the problem is expenditure. We may want to expand that to include incompetence and a lack of vision. Mr. Speaker, there can be no doubt that the energy sector is the center of gravity of the Trinidad and Tobago economy. For this reason the energy taxation policy is critical to ensuring that we maximize our returns from these depleting assets.

Last July, government reformed the Supplemental Petroleum Tax regime. Looking at these reforms one finds it difficult to believe that it took the Government almost 2 years to come up with these changes. A further examination of this taxation regime reveals that the PNM has not shifted away from the "Tax and Spend" policies that were a common feature of their economic policy in the 1970's and belong to the "old school" of economic policy.

With particular reference to land based operations, the new regime does absolutely nothing to encourage operators to invest or to re-invest in exploration, development and production. Hardest hit in this arrangement will be the Independent sector of the oil industry which operates mainly on land and is made up of the Lease Operators and Farmouts. The Lease Operator/ Farm Out programme was established by the NAR administration and as has been a tremendous success. However, with the decline in rates of production and with operators operating in an increasingly marginal basin, there was need for a tax regime that could stimulate re-investment. This new tax regime does the exact opposite.

The sad irony of all this is that the Government constantly mouths that it wants locals to get more involved in the oil industry. The Independent sector is almost exclusively owned and run by nationals of Trinidad and Tobago. If ever you wanted an example of local content and the empowerment of nationals it is the Independent sector. It would seem that this Government is not about local content- it is about local contempt. Mr. Speaker there is a school of thought that what this Government really wants is to completely destroy the Independent sector of the oil industry.

Given the sad reality of this new tax regime we can expect that oil production, less production from the Angostura field, will decline in 2005. To add insult to injury, the length of time between the advertisement of a bid round and the signing of Production Sharing Contracts is approximately 18 months.

Mr. Speaker, with regard to natural gas the Minister gave little detail about the reform to the natural gas taxation regime saying only that they would be moving to a system based on fair market value natural gas prices. Natural gas production is now three (3) times more than oil production on an equivalency basis. The Minister therefore owes a duty to the country to explain how the Government calculates its revenue from natural gas. The Minister owes a duty to demystify these revenue figures.

Natural Gas reserves

Mr. Speaker, I now turn to the critical issue of natural gas reserves. In last year's Budget debate the Minister of Energy announced that the proven natural gas reserve figure declined from 20.76 trillion cubic feet to 18.81 trillion cubic feet. Thankfully BP made a significant find of almost 2 trillion cubic feet of gas in late December of last year.

In analyzing natural gas reserves three fundamental questions must be asked: how much is there; how long will it last and how effectively is it being utilized? At the end of 2004, natural gas was utilized at a rate of 2.7 billion cubic feet per day. On a yearly basis this works out to approximately 1 trillion cubic feet of natural gas.

This figure is expected to increase to approximately 1.5 Trillion Cubic Feet per year when one takes into account the fourth LNG train that will consume an addition 800 million cubic feet of gas per day; then there is the M-5000 methanol plant and other projects. Added to this there are several other petrochemical and metal plants to which this Government has committed natural gas with more being mentioned in this year's Budget? The question that faces this country is: Are we exploiting our natural gas reserves at an unsustainable rate? At the rate we are extracting natural gas we would have 12 and a half years of proven reserve left. This is something that should cause the population to sit up and take notice.

What is troubling is that the Government continues to run the energy sector without a proper plan. The Government has no guiding policy for natural gas utilization. When we left office we had a Natural Gas Master Plan. What has happened to that document?

Today, the friends and family of the PNM in the Natural Gas Export Task Force and the National Energy Corporation continue to sign MOU after MOU with potential investors without much thought about our natural gas reserve scenario. This Government is treating our natural gas asset as thought it were a bottomless pit with no end. They believe that the gas belongs to them and as such they will do with it as they please.

Openness and Transparency

Mr. Speaker, over the last 4 years, the Government has run the energy sector, particularly the downstream sector with a disregard for openness and transparency. This Parliament only hears about proposed new petrochemical plants after the ink has dried on the MOU that has been negotiated in the closeted corridors of the National Energy Corporation. I wish to remind the Government that the hydrocarbon asset of Trinidad and Tobago belongs to all the people of this country and not the select few PNM board appointees.

I wish to remind the Government that they have committed this country to the Extractive Industries Transparency Initiative. That the Extractive Industries Transparency Initiative is yet to be implemented in Trinidad and Tobago should come as no surprise. The last thing this Government wants for the energy sector is transparency.

Local Content

Mr. Speaker, one of the biggest issues facing the energy sector is the critical issue of local content. Local content doesn't only mean fabricating offshore platforms in the Labidco estate.

When we look at the range of services that are needed by the upstream sector, we see that the high end services are all sourced outside of Trinidad and Tobago. The design and planning of wells and platforms and the high end consultancies are all outsourced to Houston and Dundee. We have to begin the process of moving the industry from the low end of the service pyramid to the high end.

The other aspect of local content that this Government has failed to address is the involvement of local capital in the energy sector. In the last year First Citizens Bank, RBTT and Guardian Holdings Limited launched funds aimed at investing in the energy sector. These financial institutions should be congratulated for this initiative. However a lot still has to be done.

Revenue Stabilization Fund

Mr. Speaker, the one thing standing between the PNM and a total repeat of their disastrous economic policies of the 1970's and 80's is the Revenue Stabilization Fund which they want to re-christen the Heritage and Stabilization Fund, just as they renamed the Dollar for Dollar programme - GATE - and thereafter claimed paternity. They renamed COSTATT UTT and claimed innovation.

This is the same Revenue Stabilization Fund that they openly criticized when they were in Opposition. Back then the Member for San Fernando East described this fund as a "hair-brained" scheme. I suppose he believes that the Tsunami Shelter in Tarouba is a better idea. The Revenue Stabilization Fund was established by the UNC administration to ensure that we save some of our country's wealth for our children. We make no apologies for establishing this Fund; it is an accomplishment of which we are extremely proud. The Fund represents a fundamental departure from the slash and burn, cut and thrust economic policies of the 1970's. Those policies led this country to straight to the IMF in the 1980's.

After 4 years of dilly dallying and with much prodding from international agencies the PNM has reluctantly endorsed the fund. But, Mr. Speaker, a horse can be led to water but whether it will drink is questionable. With respect to the proposed strategic investment portfolio of the Revenue Stabilization Fund, who will determine what constitutes a strategic investment? Would strategic investments be made in developing the non -oil sectors such as manufacturing, the information technology sector or the agricultural sector? Would the strategic investments increase our dependence on an already dominant the oil and gas industry or reduce it? Given this Government's incapacity to think outside the oil barrel, can we expect that such investments would involve buying equity in LNG tankers and LNG re-gasification terminals?

The Revenue Stabilization fund was designed to take into account the reality that oil prices are subject to cyclical trends. Mr. Speaker, the problem with the oil price is that it is subject to the law of gravity. What goes up must come down. One of the most respected energy consultancies in the world, Cambridge Energy Research Associates has recently stated that globally, supply could exceed demand by as much as 6.0m-7.5m barrels a day later in this decade. In such a scenario they predict that oil prices could be reduced by 2007. Added to this, analyst predict that with more LNG capacity just around the corner and with more countries joining the Atlantic Basin LNG trade, the days of high gas prices in the United States may well be numbered. In such a situation the Revenue Stabilization fund would be the only thing standing between this country and an economic precipice.

The Opposition also notes that the Minister neglected to mention anything about the introduction of legislation to administer the Fund. We wish to caution the Government that this fund must be insulated from political intrusion and that all investments must subject to Parliamentary scrutiny.

Resource curse

Mr. Speaker, there is a school of though among energy economist that hydrocarbon wealth can be an obstacle to productivity and competitiveness. In extreme cases this is called this the "resource curse" or the "curse of oil". One only has to look at many of the oil rich countries of the world to see that there is some merit to this thinking. In his latest book, The World is Flat, New York Times columnist, Thomas Friedman notes that:"As long as monarchs and dictators who run these oil states can get rich by drilling their natural resources- as opposed to drilling the natural talents of their people- they can stay in office forever. They can use oil money to monopolize all the instruments of power-army, police and intelligence- and never have to introduce transparency or power sharing." Thomas Friedman may well be describing the unraveling of Trinidad and Tobago over the past 4 years under this PNM administration. In 16th century French philosopher, Jean Bodin, aptly captured the resource curse when he noted that: "Men of fat and fertile soils are most commonly effeminate and cowards; whereas contrariwise a barren country makes men temperate by necessity, and by consequence, careful, vigilant and industrious." Mr. Speaker, the 2004 Global Competitiveness Report further adds that "natural resources result from endowment, not economic competitiveness". The report finds that countries with lower levels of productivity are more dependent on natural resource exports. The main reason for the onset of a "resource curse" scenario is poor governance an obvious consequence of which is economic mismanagement. PUTNA'S POISONMr. Speaker, for as long as I can remember successive Governments have been talking about diversification of the economy away from its dependence on oil. This huge oil windfall that we are experiencing provides us with the best opportunity we have ever had for so doing. The manufacturing sector is fairly well advanced. In the circumstances, I would have expected to hear and see more done for agriculture, especially in the light of rising food prices. In the Budget speech the Prime mouths the usual clichs has mouthed for the past four (4) years. The PNM totally misunderstands the potential for agriculture and the culture that is associated with the sector. Only the most ignorant would not know that two acres of land is not a viable agricultural holding; but that is exactly what he and Putna have done to the thousands of workers of Caroni. How can any of these peasant farmers (for that is what they have created) benefit from the Budget proposals of a subsidy of 50% on the purchase of machinery and irrigation equipment. Will they buy tractors and other equipment to cultivate two (2) acres of land? What will they grow? Cabbage and tomatoes. How much? With a measly 2 acres they will not be able to afford a donkey cart. They will have to till the soil with their hand forks, spades and hoes as peasant farmers do .You have condemned these people and their generation to be the hewers of wood and the drawers of water. But then, maybe that is PNM's intention.With no security of tenure, remoteness of the holding from the residence of the holder, no protection against praedial larceny, no infrastructure, no contiguity of holdings, no roads , no traces, no water, no irrigation, this scheme may be described as "PUTNA's POISON'. You know the story of Putna, don't you? One day when you are old and grey, rocking away your sins in an old rocking chair... I shall tell you.CONCLUSIONMr. Speaker, this may very well be the last Budget reply I shall deliver to this Hon House in this capacity. The time has come for me to move on to other things and other places, where the world is not collapsing around me, where the air is rare, where men can hold their heads high, where duty is pure and its performance is not hindered by the desire for the trappings of office, where desire for worldly things give way to peace and bliss. That is my wish. And may I add that I hope that this simple peroration will not be misunderstood as I so often am.


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Panday's response to 2005-2006 budget
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