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Three ways to reduce deficit


MICHAEL RAY

Three ways to reduce deficit

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IT IS PELLUCIDLY CLEAR that there are basically three ways to reduce Barbados’ fiscal deficit.

One method is to earn more revenue, another is to spend less money, and the third is a simultaneous combination of earning more revenue and spending less money.

According to some local opinions, the selling off of “family silver” to earn more revenue is similar to getting rid of the inheritance and legacy best left for successive generations.

Other opinions suggest that privatisation as a solution could see an increase of cost to an already heavily taxed population.

Not left out of the various options is the getting rid of overweight by cutting the “belly fat” existing in some statutory corporations.

There is a school of thought informing that the functions of a number of entities can be performed by departments of other ministries within Central Government, thereby reducing unnecessary costs.

It stands to reason that Government has to take a position by analysing each entity, determining the cost-benefit and decide which ones will be privatised completely, which will be shared in a public-private partnership and which will be subsumed under particular ministry operations.

Take the example of the National Conservation Commission (NCC). A reading of the profile and functions suggest that this entity can be taken over by other arms of Government, subject to a prior, thorough cost-benefit analysis exercise.

Looking at the first six functions of the NCC, it is not difficult to recognise:

Functions 1 and 2 can devolve to the Sanitation Authority and the National Housing Corporation.

Function 3 to Defence & Security, National Housing Corporation, Coast Guard and the Coastal Zone Management Unit (CZMU).

Function 4 to the Ministry of Transport and Works and Coast Guard.

Function 5 to Sanitation Authority and Defence and Security.

Function 6 to the Sanitation Authority, the National Housing Corporation, Ministry of Transport and Works, Defence & Security, Coast Guard and CZMU.

Function 7 relates to advice from the board to the relevant minister.

Ultimately, cost-benefit analyses can show what is to be kept, what is to be thrown away and what is to operate as a public-private partnership.

– MICHAEL RAY

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