Restoring consumer confidence
There has been a lot of attention focused on the macroeconomic environment in many of my previous articles.
This has been deliberate, since the speedy resolution of the current fiscal imbalance would pave the way for not only business and investor confidence but also consumer confidence. I recently participated in the Barbados Chamber of Commerce and Industry’s (BCCI) business breakfast on the topic of the International Monetary Fund, which I think was well received by those members present. I commend efforts like these since it provides an opportunity to discuss burning issues amongst the membership. The BCCI can also gather much valued intelligence. It speaks volumes because the need for engagement is of absolute importance if the business community is going to chart the way towards a sustainable growth path.
Taking off the BCCI hat for a moment, there seems to be little, if any coordinated dialogue or engagement being conducted with the ordinary citizen. Though I have no statistical information with which to support my claim, I would nevertheless surmise that consumer confidence if measured in Barbados, must be near to if not at its lowest for a generation. The household’s ability to effectively plan and carry out its affairs has been severely compromised by the cumulative effect of increased taxation. The income that is available to the housewife has declined steadily starting with the increase in value added tax to 17.5 per cent in 2010, inclusion of travel and entertainment allowances for tax purposes (2010), introduction of the consolidation tax in (2013), 50 per cent reduction in the reverse tax credit (2013), municipal solid waste tax in July 2014 (later deferred to December 2014) and University of the West Indies tuition fees (September 2014). In an environment where the unemployment statistics are rising rapidly and employees are working three and/or four day work weeks, the burden on the housewife faced with increased utilities, mortgage/rental payments must be unrelenting.
The choice between which bill to pay, or which child to send to school, or which meal to skip can lead to the kind of social decay that is not conducive to national development.
Individuals in households should by now recognise that public policy matters in their everyday lives, since the current circumstances in which we’ve found ourselves is a direct result of previous policy formulation. Unfortunately, the average man/woman on the street appears to have lost hope and has also developed a curious attitude that rejects the notion that better can be done. Individuals and businesses alike as the primary economic actors go about our affairs and operations with an acute single-mindedness that allows many of us to succeed and achieve our goals and objectives. We normal do so with the assumption that the policymakers have it covered. Clearly articulated, implementable and transparent public policy is the secret ingredient that drives all confidence in an economy. In every household in Barbados today, the housewife in her role as chief financial officer has to make adjustments on a daily basis to ensure that her budget is not exceeded. What were routine and mundane choices in the past, have now become hard choices in the face of very constrained budgets. Bran sandwich loaves or salt bread? Chicken, corn beef or minced beef? These are but some of the choices together with food rationing. Through no fault of her own doing, the economic dignity of the everyday housewife has been severely compromised.
To add more salt to the injury, at the time of writing, income tax refunds have yet to be delivered to give a small boost to the household budget after back to school expenses in late August/ early September. Businesses rely squarely on the housewife’s unique ability to plan effectively – without it we are all in jeopardy. Whilst engagement does not alter the existing financial situation of the household, the psychological impact is considerably different since some residual or latent confidence and faith in the execution of public policy would remain. Whilst BCCI is briefing its members, we in turn must engage with our staff, customers, clients and suppliers to help restore some confidence. It will not be easy, given the prevailing circumstances but it nevertheless must be done. The sooner individuals and businesses can stop worrying about the state of the public finances the sooner we will find that much sought after wiggle room.
• Ryan Straughn is managing director and chief executive officer of ABELIAN Consulting Services and a Barbados Chamber of Commerce and Industry (BCCI) councillor. This article was reproduced from the BCCI’s October newsletter.