It is a crying shame that a Minister of Finance who attempted to dodge the economic bullets fired by his own gun should end the Budget Debate as the most responsible person in the room.
But there you had it, as I realized at 2 a.m. last Friday morning: Chris Sinckler, possibly the worst-performing Minister of Finance ever to grace the halls of Cabinet, coming across as the wisest head in the debate.
But instead of attacking him for financial politicking, of prescribing cough medicine for a serious influenza, the Opposition, led by Mia Mottley, backraised him by denouncing the entire Budget on the basis of the new policy mandating students to pay roughly 20 per cent of the total cost of their University of the West Indies education.
You would have thought that this was the only thing to discuss in the Budget.
My criticism of the Government is that it did not go far enough.
How can you criticize the Government for poor policies or inaction which – along with an admittedly poor international economy – have helped put us in the revenue decline we are in, and then criticize it for cutting expenditure?
Mr Sinckler, through his Medium-Term Growth and Development Strategy (MGDS) document released in June, signalled that, finally, after years of dithering (that is, “holding the hands” of the public servants) the administration would act.
I realize that the MGDS is not supposed to be the one and only source of data, but let me do a rough comparison of what it called for and what was done.
The Revised Medium-Term Fiscal Strategy states at Page 38: “During the first year of the strategy the main adjustments will be on the expenditure side . . . (T)he bulk of the cuts will have to come from non-interest recurrent expenditure to the tune of an estimated $233.7 million . . . . By front-loading the expenditure adjustments, Government, as shown in 2014/2015 and onwards do(es) not have to make any major amendment.”
Front-loading means that you have to do that $233.7 million in the remaining five months of this year and keep it going for the next seven years. If Mr Sinckler had done that, the cuts would have totalled over $460 million on these direct expenses alone over the next 19 months.
Instead of these admittedly draconian cuts, Mr Sinckler has announced total cuts in these areas of $89 million in the last five months of this year and $196 million next year, a total of $285 million to the end of March 2015.
It’s not enough, despite what the Opposition has said ad nauseam during the debate.
The Minister of Finance also took up the MGDS recommendation to remove up to 25 per cent of the estimated $200 million in value added tax (VAT) waivers awarded each year.
According to the MGDS, an Inter-American Development Bank study had shown that the Government “could be losing” up to $206 million a year by giving out such waivers and recommended doing this from next year, 2014-2015.
He also put on additional taxes, with a total revenue increase expected from all these measures of $150 million, two-thirds of it to come in next year.
So instead of lowering expenditure by $466 million over two years and reducing waivers by $50 million in Year 2, for a total of just over half-billion dollars by the end of March 2015, Mr Sinckler is hoping for a reduction in expenses of $285 million and revenue of $150 million, for a total of around $435 million by then.
Clearly, he is hoping that if he can get all those projects up and running, the economy would be stimulated enough to produce the rest of the revenue in VAT and other taxes to meet the shortfall and accomplish the goals of the MGDS in a slightly different way, with less infliction of pain.
This assumes that removing that extra $150 million, much of it from direct taxation on the better-off and that new solid waste tax added to land tax bills, will not lead to a further reduction in the economy if people spend less on discretionary items in order to keep their own budgets intact.
It is this Government which bears the most burden for the fiscal mess we are in, not the international economy. That is why I think Sinckler has failed as Minister of Finance.
However, with the exception of Owen Arthur, who appears to be out of the mainstream of the Opposition these days, I see nobody on that side who is right now a credible candidate for Minister of Finance, should they ever win the Government.
Maybe they will surprise me. But to leave Mr Sinckler’s proposals as the only credible ones in the House of Assembly by indulging mainly in gallery-directed outbursts is to recuse yourself from offering a viable alternative Government to the people whenever the opportunity might arise.
• Pat Hoyos is a publisher and business writer. Email pathoyos@gmail.com