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What Budget?

Albert Brandford

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Barbados needs a Budget like yesterday. And the Budget must set out for the country a short term economic recovery plan while laying the basisfor restructuring in the medium term. – Leader of the Opposition Mia Mottley, July 15, 2010 Press conference.I MUST confess to being a little nonplussed by the insistent calls from the Opposition for Government to present a budget.Leader of the Opposition Mia Mottley has been the most strident and persistent of her folk, doing so publicly at least once a month for the past three months.Why?It has been my view for some time now, and it coincides with an argument publicly put forward by former Prime Minister and Minister of Finance Owen Arthur that the Estimates of Revenue and Expenditure – traditionally presented to the House of Assembly in March before the start of the financial year on April, 1 – is in fact a Government’s budget.And “that exercise having been completed, there is no legal obligation on the part of the Minister of Finance to present to Parliament any other budgetary measures”.“However, the Minister of Finance may, if he deems it necessary, introduce at any time into the House of Assembly ‘budgetary proposals’ which under the Provisional Collection of Taxes Act means any proposals for the purpose of raising revenue to meet public expenditure.”OptionalAs I have noted before, Arthur quite rightly believes such proposals are an “option” open to a Minister of Finance and not a legal requirement.He also recalled for the history buffs that in some years, there have been two sets of budgetary proposals – some as late as November – and in 1975, the then Minister of Finance Errol Barrow did not even present a budget but made his proposals in a televised “fireside chat”.Mottley, however, clearly holds a different view than her former leader, since Prime Minister David Thompson has already fulfilled his legal duties by presenting the Estimates 2010-2011 to Parliament.She has insisted, nonetheless, that Thompson present Financial Statement and Budgetary Proposals this year as a matter of urgency as the Barbadian public and sectors of the economy “cannot take the pressure any longer”.“This country needs urgent action in the form of a Budget,” Mottley told a joint Barbados Labour Party (BLP) St Michael North East/St Michael Central meeting on June 13 at Combermere School.“Companies cannot hold strain for much longer. Travelling officers are not receiving their travelling [allowances] and pensioners, who expect assistance with the payment of their water bills, are not receiving that assistance.“The country needs a Budget to know how the tourism industry would be stabilised over the next 12 to 14 months. The Thompson administration provided $25 million to assistthe tourism sector, but claims in excess of $75 [million] were submitted.”Almost one month later, July 15, she charged that little was being done to revive the economy and that Government could not pay its bills, while the productive sectors – tourism, manufacturing, international business, agriculture – were not earning foreign exchange.Mottley was “disappointed” that with the country in dire straits, there was a deafening silence from Government with nothing being heard from Minister of State in the Ministry of Finance, Senator Darcy Boyce, or Acting Prime Minister Freundel Stuart.“We are standing in the middle of the road with an 18-wheeler truck bearing down,” she observed. “And the two Ministers of Finance – Boyce and Stuart – are standing idly by without a word.“Barbados needs a Budget like yesterday. And the Budget must set out for the country a short term economic recovery plan while laying the basis for restructuring in the medium term.“A cut here and a cut there will not help any household or business in this country see their way forward. We need to restructure both Government’s operations and the productive sectors urgently.”What is even more surprising to me about this issue was the way in which the administration has appeared to bow to Mottley’s desires, and after months of “deafening silence” has just announced that a Budget will come after all “sooner rather than later”.Stuart told the Democratic Labour Party’s (DLP) 55th annual conference last Sunday that the administration, with its substantive leader out on medical leave until September 15, would not be rushed to a Budget.“Parliament rose on Tuesday last [August 17] for its summer recess until October 19,” Stuart noted. “Thereafter, at a time to be determined, our response to the effects of the challenges on Barbados will be shared with the country in a Financial Statement and Budgetary Proposals.”He said there would be nodecision regarding Barbados’ future without every aspect being channelled for assistance.“All of this will be preceded by exchanges with the representatives of labour and capital, and a full meeting of the Social Partnership, over which either the Prime Minister or I, will preside.”This is my question: is this a response to Barbados’ needs, or Mottley’s carping?If we accept Arthur’s postulation that we already have a Budget then what Mottley is really calling for is a “policy statement” setting out how Government would wrestle down the economic and fiscal challenges.Given the draconian tax measures of Thompson’s first Budget in 2008, it is unlikely that this administration will have the chutzpah to slap another set of imposts on already heavily burdened individuals and households – some laid off, and where there may only be one breadwinner, possibly on short time – simply to raise revenues.That leaves us then with a “policy statement”.Earlier this year, Government released what it called a Medium-Term Strategy (MTFS) 2010-2014 document aimed primarily at reducing the fiscal deficit, and keeping economic growth at acceptable levels by focusing on the foreign exchange earning sectors.Policy on revenues?Revenue policy“The policy will be to improve efficiency of existing revenue collecting agencies and carry out a comprehensive review of the existing tax framework to return the tax base to its relative size. (Reverse the direct tax reforms?) It is also expected that as policies to drive economic growth take effect, then revenues should benefit from increased economic activity,” the MTFS said.Since Government is virtually out of room to tax, here are two key spending reductions for its budget fromthe MTFS: “Place caps on the transfers to the statutory boards, statutory corporations and Government-owned companies such as the Queen Elizabeth Hospital, Transport Board, Barbados Agricultural and Development Marketing Corporation and the University of the West Indies”; and “eliminate transfers to other Government-owned corporations and authorities such as the National Housing Corporation (already being done at Constant and Coverley!!??) and the Barbados Water Authority.”No special budgetary proposals (Budget) are needed to take Barbados out of this current fiscal situation and onto a more sustainable plane. Government need only look again at the MTFS, and not allow Mottley to goad it into further confusion with itself.

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