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THE HOYOS FILE: The Mother Of All Budgets


THE HOYOS FILE: The Mother Of All Budgets

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BEFORE THE END of May – that is, in a few short weeks – the Freundel Stuart administration is going to unveil its new budgetary proposals for the fiscal year that started on April 1.

It’s going to have to be the mother of all Budgets. Like the Massive Ordinance Air Blast, better known as the Mother Of All Bombs, dropped on suspected terrorist tunnels somewhere in Afghanistan recently, this Bajan policy version of the “MOAB” will have to be able to decimate the Opposition’s hopes of winning the election.

This is because it will be the last budget before the general election, unless circumstances deteriorate so fast that a special mini-budget has to be scheduled. So it will set the economic template on which the elections are likely to be fought, and that is why it is so important for the Government, widely believed to be going into the dustbin of history, to have private sector and labour input.

After almost completely ignoring the business community for years (whatever happened to the proposal for turning Bridgetown into a duty-free shopping mecca, for example?) and darkly hinting about legislation to deal with unions sometime back when they wouldn’t stop marching, the Stuart administration made its overtures to both business and labour earlier in the year.

And in a statement appearing in last Thursday’s Barbados Government Information Services press releases, the administration signalled that some of the recommendations made by them would be filtered into the Budget.

None of the suggestions made by either the business or labour sides of the Social Partnership have been officially released, but we have all been through the list of things that need doing so many times I am sure the only surprises will be in what gets short-listed or prioritised in the Budget speech.

Curiously, however, it appears that any major adjustments to the statutory corporations will be made outside of the budgetary proposals. I have no idea why, as these have been a feature of recent budgets.

Here’s the paragraph from the BGIS on this: “With the sense of urgency shared by all, it was felt that there were certain issues among the recommendations presented by the working groups which would be not addressed within the Budgetary Proposals, but on which engagement could start immediately, with a view to early action. Among these was the issue of state-owned enterprises [Queen Elizabeth Hospital, Barbados Transport Board, and the Sanitation Service Authority]. Information was to be shared among the groups with a view to early discussions.”

Although it has been in the air for a long time, there is now, I think, a sense that action on the economy must be taken almost immediately. Unfortunately, the Stuart administration has been quite capable of doing all of this for years, but why it hasn’t is beyond me. Why it is doing so now is, however, not beyond me – obviously it is the fact that elections are coming up and Government has little to show for its stewardship (or is it ‘Stuart-ship’?) over the past almost ten years.

The deficits that it has been running, against all advice, have caused it to build the biggest debt pile we have ever seen in this country. It has also printed more money than any other government in this country’s history, and continues to do so, since it is trapped in its own downward spiral.

The way out will be hard, and will require the approval and buy-in of both the private sector and the labour movement, and this is something that the Stuart administration should have been publicly addressing since it regained office. Instead, it has chosen to play tough with the unions, threatening them rather than working with them, and promising incentives to business that it has never produced. At the same time it has attempted to tax its way out of its fiscal deficit, with the result that it sucked up most of the middle class’ disposable income and tax breaks which people in that bracket formerly used to get mortgages and consume goods and services at a higher level.

Now, you may say that the reduction in consumer spending would be a good thing since it would relieve pressure on our foreign reserves – except that the Government kept spending more and more because it would not reduce its outlays on loss-making enterprises, and has been, until now, unwilling to sell off assets or companies in whole or in part to the private sector.

In short, what it could have done better over the past five years it must now attempt to do, or at least make a show of doing, in its last months before it has to call the election.

And finally, there’s the question of the role of the Minister of Finance Chris Sinckler.

Sinckler has been front and centre for the past several years, as he should have been, enunciating the Government’s fiscal policies. Better said, making excuses for their continuing failure.

So how do we interpret the way the press release on these social partnership consultations was summarised? Here it is (make sure you read the last sentence):

“The Prime Minister noted that the discussions were frank and robust and the need for clarity, certainty and firm action emphasised by all. The vital importance of dialogue among all stakeholders at all stages of the process towards solutions of the fiscal deficit and foreign exchange problems was stressed. The Prime Minister advised that, in this vein, meetings of the partners on specific matters will be taking place over time. The Minister of Finance and Economic Affairs also attended the meeting.”

And as if to rub salt in the wound, the following attribution for the source of the statement was given in parenthesis, as follows: “(Prime Minister’s Office)”.