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Budget should set new course

Budget should set new course Minister of Finance Chris Sinkler. (FP)

By PETER WICKHAM | Sun, November 21, 2010 - 12:02 AM

Some weeks ago on the occasion of Prime Minister Freundel Stuart’s swearing in, he reminded reporters of the need for all ministers to be sworn in “afresh” since they would now become members of his Cabinet.

This apparently innocent statement communicates the profound significance of the change in political guard which requires much in terms of policy and political statements from the Stuart administration; however, it is ironic that this statement was the Prime Minister’s only indication thus far that he appreciates the urgency of important political activity.

In the absence of direct communication from the Prime Minister regarding the shape and focus of his administration as well as his preferred political style, we are left to construct images of his political agenda based on associated events, and tomorrow’s Budget is the most significant event to date.

It is interesting that we are to get a sense of the new administration’s direction from the person the public previously identified as the preferred successor to the late Prime Minister David Thompson.

One would have thought it wise for Stuart to define his own administration, instead of giving his “power” to someone in his Cabinet with considerable political clout based on his governmental role and national popularity.

This scenario is presumably not accidental and implies that our new Prime Minister is either supremely confident or prefers to allow his Government to define itself at this time. Notwithstanding, analysts and commentators can only work with what they are given and we therefore need first to contextualise this Budget.

This would be the third Budget to be presented in the Democratic Labour Party (DLP) administration and while the first two did not move mountains, it is argued that this one needs to have a most profound economic impact.

Our economy continues to be gripped by a global recession that persists and our credit rating continues to slip. The most recent downward movement of that rating was directly related to our Government’s slowness in containing its growing fiscal deficit which is the type of objective that this year’s Budget should have set for itself several months ago.

I remain convinced that there is no good reason why the previous occupant of the office of Minister of Finance (in his acting capacity) did not present a Budget closer to its due date; however, that opportunity is forever lost.

The tools available to a Minister of Finance that can contain Government’s fiscal deficit are surprisingly few and not surprisingly, painful, regardless of what “spin” the Opposition places on this issue. Certainly, it would be ideal if the economy could be stimulated to produce more jobs and profits for Government to tax; however, this process takes time and this is a luxury Government does not have.

We can therefore expect relatively more short-term initiatives that increase Government’s revenue or reduce its spending, both of which are likely to cause some discomfort, which like the proverbial medicine is necessary to keep this patient alive.

Economics aside, the Budget will also inadvertently make several political statements regarding the priorities and general direction of this new administration; and first and important among these is the matter of calling a general election.

This option is always open to a Prime Minster, and new prime ministers who were not elected (like Stuart) are well-advised to seek their own mandate.

It is unlikely that Stuart would lose an election that is called at this time; however, he would want to ensure that he did not emerge with fewer seats than he has now and with several of his seats being marginal, the Budget would need to prepare a decent “batting wicket”.

All things considered this will be a very difficult thing to do, but we can perhaps see the extent to which Sinckler “tries” as an indication of the extent to which an election is likely.

The day after Sinckler’s presentation will come the reply from Leader of the Opposition Owen Arthur and one expects him to be at his technical best.

No doubt, his response will combine highly technical language with reflections on his 15 years in office intended to demonstrate that he is more technically competent, more experienced and better able to handle the job of Minister of Finance than Sinckler.

One expects this; however, we need to see how well (or badly) Stuart defends his Finance Minister and if thereafter his Finance Minister retains his portfolio, to get a sense of Stuart’s thinking.

Stuart’s ministerial assignments are consistent with what was determined by the previous Prime Minister who was clearly trying to plan succession and lighten his own burden.

As a result, we now have a situation where Stuart is essentially responsible for the chairmanship of the Cabinet and committing our troops to war, which will leave him considerable time to reflect on life. In all fairness, this is a situation that is no different from the case of Jamaica, Guyana and Trinidad and Tobago, and one that I have encouraged for Barbados at our stage of development.

Notwithstanding, it is peculiar for a Prime Minister who recently inherited his job and is yet to receive his own mandate to have as little power as Stuart does and one wonders if he will take the opportunity to empower himself following the Budget.

Apart from these major indicators, the Budget will be a time for major “politicking” and over the course of the week to follow, those of us with an interest in politics will watch and listen attentively how the political lines are drawn on both sides of the House and how this impacts on our political culture in days that follow.

 Peter W. Wickham (peter.wickham@caribsurf.com) is a political consultant and a director of Caribbean Development Research Services.

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