There was very little about this most recent Budget presented by Minister of Finance Christopher Sinckler that was surprising, as one reflects on the enormity of the circumstances and local and political context within which it took place.
In the days leading up to the Budget, one newspaper headline said People’s Budget, and while one agrees that every Budget is essentially a peoples’ Budget, the reality of what this one needed to achieve is such that this type of “spin” was more optimism than realism.
As Sinckler proceeded, the politics of his approach was clear as he framed a global scenario that gave countries few choices and a local scenario which was made worse by a previous administration that stretched the fiscal deficit to a point where it placed our long term financial health in jeopardy.
Politically, this was his way of saying “I did not create this mess, but I will be courageous enough to fix it”.
In all of this, he skilfully avoided the logical question that relates to the fact that this current Budget should theoretically have been delivered much earlier in the year and could possibly have avoided our most recent credit rating downgrade.
I fully appreciate the fact that Minister Sinckler was given this task weeks ago. However, he is part of an administration that should have been in a position to act on these matters earlier and the Democratic Labour Party (DLP) is fortunate that in two days of debate not a single Opposition member chastised the administration for its budgetary tardiness.
The creation of political space was effective and matched by the creation of considerable economic space by increasing the VAT by 2.5 per cent. The VAT is a wonderfully effective tax collection measure largely because it sits almost imperceptibly on top of all expenses and each of us pays small amount to the “Tax man” each time we spend without thinking about it.
Once a country gets past the initial shock, an increase is easy to manage politically and it makes sense that Sinckler exploited this mechanism to create “economic space” since this one adjustment generates a similar quantity of revenue that might come from several other adjustments that would be harder to sell politically.
Once the VAT adjustments were achieved, Sinckler set about making some concessions which reflect the policy direction of the DLP administration and it was useful to get a sense of where this administration plans to go in the next two years. In the past, the DLP administration was in a similar position (1991), and the then Minister of Finance Erskine (now Sir Lloyd) Sandiford introduced the now infamous “STAB” Tax.
A major weakness of this approach was that Sir Lloyd seemed to have ignored the need to pursue policy while introducing austerity.
We therefore remember that Budget for the austerity it imposed and little else.
In this regard, Sinckler seems to have introduced some policies that impact on transport, welfare, cultural industries and the Drug Service. Moreover, by removing allowances, the Environmental Levy and recommitting himself to avoiding job cuts in the public service, he conveyed a clear indication of where DLP policy is going in the next two years.
Certainly, not all of this is necessarily positive, but we nevertheless have clear directions and can debate the “nuances”.
Suffice to say, I am comfortable with the manner in which Sinckler presented the Budget with what can be called “Ministerial Deportment” and thereafter set about defending it in more robust manner in his wrap-up.
In contrast, former Prime Minister Owen Arthur appeared less comfortable and made considerable political errors which are not inconsistent with his general tone at this time.
Arthur’s response can be compared with Mia Mottley’s response to the last Budget and indeed, that of late Prime Minister David Thompson on previous occasions.
Generally, Opposition leaders prepare and present a response which is read for several reasons.
It is the single most important statement an Opposition leader will make each year and as such should be well researched and structured. It is also a long statement and in such circumstances even the most able politician will ramble.
Arthur clearly had notes, but no prepared text and appeared disorganised as he ambled through what was at times a painful presentation.
Substantively, he “took the bait” and responded to Sinckler’s challenge of his economic policy approach which avoided or veiled additional taxes and “bought time”.
Arthur argued that he preferred an approach that re-negotiated debt payments and disposed of state assets to give “fiscal space” to help the country over this period of difficulty, while Sinckler proposed to (as he argued) impose additional burdens to help us respond to a crisis which was not as bad as he suggested.
This discourse was one that Arthur could quite frankly have avoided, since one only expected him to oppose the Budget from the perspective of hardship being created.
He, however, went further and exposed his approach to economic management at this time and gave us useful policy comparisons that make good academic fodder, but bad politics.
There were several other speeches that stand out over the two days, and on the Government’s side, I took keen interest in the presentations of Prime Minister Freundel Stuart and also that of Minister of Health Donville Inniss.
The Prime Minister’s contribution was as always well considered and delivered but added little more in terms of policy direction to the Budgetary Statement.
It is useful to note that he did not express dissatisfaction with anything Sinckler presented and this is perhaps enough to help us come to grips with the policy direction of the Stuart administration.
Inniss’ presentation was interesting because of the manner in which he set about explaining what is actually a major revolution in health care that appears to be happening almost imperceptibly. Certainly, over the next two years, we will watch these developments with keen interest.
Special mention also needs to be made of the presentation delivered by former Leader of the Opposition Mia Mottley who made good use of her 30 minutes. Several of us anticipated that much of her time would have been spent attacking the present Opposition Leader, however, she resisted the temptation to do more than was absolutely necessary and instead introduced a medium to long term economic perspective which is consistent with her current situation.
She argued at points that we needed to review the sustainability of this public service, which was expensive and inefficient.
This is a reality that has been the case for some time and her comments therefore are equally applicable to both administrations. She therefore appears to be moving to the “centre” of our politics which is an excellent position to adopt when one is removed from the leadership of both Government and Opposition.
Certainly, she is preparing herself well for any future roles and we watch with considerable interest.
Peter W. Wickham ([email protected]) is a political consultant and a director of Caribbean Development Research Services.
