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Time to wake up
Posted: Monday, August 22, 2011
By Derren Joseph
August 22, 2011
I rarely watch television these days as I spend more and more time on the Internet. Both online and offline however, for the better part of the past month, the economy has been the subject of much discussion. Only the most naive amongst us, and apparently some of those in the labour movement, continue to believe that we are immune to what is happening in Europe and the United States. An article in the August 13 edition of The Economist describes the world's economy as being in a sorry state and "flat on its back, feeble and growing weaker." It goes on to say that in the past week the "signs of alarm at its condition have multiplied…In Europe, yields on Italian and Spanish ten-year bonds rose above six per cent. America fretted at seeing its credit downgraded by one of the big ratings agencies.
Around the world, stockmarkets tumbled, with some recording their biggest one-day falls since 2008." On Facebook, I am a fan of Talk City 91.1 FM. Kudos to whoever manages their Facebook page as I do enjoy following First Up daily using the frequent status updates during this morning programme. One morning, I noted a quote from Jason Julien: "People have forgotten that hard times can come our way, because we've had over a decade of prosperity… We cannot fool ourselves that we will escape hurt as the USA goes through its economic problems and a possible double dip recession…" He went on to say that, "We have been living beyond our means for quite some time, and we cannot continue to do so. Our revenues are much less than our expenditure."
The present administration campaigned on a platform of among other things, eliminating the property tax and stopping the aluminium smelter. I am concerned, because as has been recently stated by Ryder Scott's senior petroleum engineer Larry McHalffey, the country's total proven gas reserves continued to fall over the past several years, dropping from 19, 674 billion cubic feet (bcf) in 2000 to 13,460 billion bcf at the end of 2010. This level has been described as a "new and critical low."
McHalffey also commented that more exploration and production, in an attempt to replace what is being taken from the gas reserves may not be the answer since the global demand for fuel has fallen. This is nothing new. We continue to be dependent on a commodity for which global demand has been falling and which will one day run out. Yet the government strangely believed that it could turn around years of deficits without clearly identifying and detailing a plan for sustainable economic diversification. Do not get me wrong, I am not the biggest fan of increased taxes, reduced subsidies nor of downstream industries; but if that is what will plug the growing hole in our national accounts and put us on a stronger economic footing, then they need to be considered.
Personally, I believe it to be just a matter of time till investing in heavy downstream industries, like the smelter, are reconsidered by the government. Realistically, there is little alternative given the consistently poor performance of all the other sectors which we have been told would replace the revenue flows lost by falling energy revenues. From what has been disclosed to the general public, none of these other sectors have performed in a way that would convince any right-thinking person that the population should now sit back and relax, as replacement revenue streams have now been found.
We must wake up. Tourism is one industry which has the potential to substantively contribute to the Treasury. I note that some tourism decision-makers are asking for twice the marketing spend. Yet they still cannot demonstrate a return on investment (ROI) for existing spend. It is noteworthy that there is at least one nearby island that fills more planes (with inbound leisure visitors) and hotel rooms with less marketing spend than we currently have. I hope we get it right.
I am pleased to see that the Trade and Industry Minister Stephen Cadiz announced Tobago's "Magdalena Grand Beach Resort" is set to be (re)opened in November. Some of us have also noted that the Planning Minister, Senator Dr Bhoendradatt Tewarie speaks as if he is crafting a plan for developing tourism—let us keep an eye on the Chaguaramas Development Authority (CDA). The focus on seemingly disconnected activity and the absence of any strategic plan from the Tourism Ministry (at least available to the public) makes these interventions from other government ministries most welcome.
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