MAYBE NOW, WITH the upcoming Budget that will follow the national consultation on June 28, Barbadians can finally expect to see the “hard politics” of which Prime Minister Freundel Stuart spoke during the immediate aftermath of the passing of his predecessor.
Such anticipation was raised a notch higher this past week in an hour-long presentation by Minister of Finance Chris Sinckler to the Barbados Chamber of Commerce and Industry (BCCI) that was long on politics and woefully short on specifics.
With some businesses already feeling the pinch, in the form of declining profitability, if the executives at the BCCI luncheon were expecting a lifeline from the minister, they were to be sorely disappointed.
Instead, what they received was a political platform-style tongue-lashing about their overdependence on Government grants and contracts – a kind of nipple sucking that seems to border on mendicancy – capped with a threat to hit them where it hurts most – in their bottom line.
There can be no greater threat to a business, whether it depends solely on Government for its continued existence, or even if the state is only one of its major sources of revenue.
In the face of rising and more stringent criticisms about Government’s runaway spending, including from the said private sector, the minister, with his characteristic bluster, unsheathed the fabled sword of Damocles as he warned the business executives to be careful of what they asked for while the magical fiscal consolidation plan is being prepared.
“Because of the structural nature of our deficits, significant structural adjustments to restore equilibrium will have a potential negative impact on your businesses and their bottom lines,” he declared.
“If there is one truth which has emerged from this period of economic difficulty it is that many, perhaps too many, of our private businesses are too heavily reliant on Government contracts for a large proportion of their income. Put frankly, it is as if the private sector is really an extension of Government.”
Boom!
The clear message to the businesses is that if you persist, and insist, on calling for cuts in Government spending, then be prepared for the violence done to your own bottom line.
This Government has been adamant that it will not engage in any wholesale layoffs of public sector employees, including from the heavily criticized parastatals which have been charged with, and found guilty of, almost everything from mismanagement to wastage and duplication of services.
And it has on occasion been fulsome in praise of those businesses that have stood by it through cost-cutting and other measures to hold their levels of employment.
Just how they are expected to do so now their revenues are to be slashed by cuts in Government spending remains to be seen.
Many voices have been raised against the state of operations at statutory corporations and Government-owned companies, including those calling for a thoroughgoing overhaul of these bodies, some of which, in the absence of efficient oversight, are a drain on the public purse.
Government will acknowledge that four of its major spending items are wages and salaries; interest payments; transfers to statutory bodies; and procurement.
Since we have already decided that we will not be sending home anybody from central Government, it means that expenses for wages will not be touched, and we know that interest payments are unavoidable. That leaves us with the transfers and spending on goods and services.
The minister gave the BCCI a peek into his thinking when he informed the executives of plans for consolidating some of the state-owned entities, mentioning Kensington Oval Management Inc. (KOMI), Invest Barbados, and the Urban and Rural Development Commissions.
Just what form that “consolidation” will take, we will all have to wait and see.
But if the most recent Auditor General’s Report, especially the section on Invest Barbados, is any indication of the need to stop – at the very least – the mishandling of Government funds, then we may be on the right path.
And as for procurement, while there might be some elements of wastage and inefficiency in the process, this aspect of Government’s spending may perhaps not be as significant as the perception.
So we are left, essentially, with wages/salaries and transfers. Both of these items, if reduced, will inevitably lead to layoffs in the public service and at the corporations – the very result Government wants to avoid and on which it has been priding itself over the past several months.
Just how long it can continue this charade, and dragging along with it a kicking and screaming private sector, is anybody’s guess.
• Albert Brandford is an independent political correspondent. Email [email protected]
