IT WAS AMUSING TO HEAR Prime Minister Freundel Stuart say he is finally ready to have a conversation with the public on the state of affairs in the country, particularly on the economy. Having admitted that there are problems, he concluded, however, that the time for action is not yet upon us.
As early as 2009/10, the Government attempted to put action in place with the implementation a Medium-term Fiscal Strategy to address the concerns at the time. Things are worse now than they were then.
Having not failed at the polls in 2013, perhaps, Prime Minister Stuart is fortified in the view that performance does not matter in politics; what matters most is rhetoric.
The two fiscal years, immediately before and after the general election of 2013, were the worst ever in the history of Barbados. The year before 2012/13 saw the almost doubling of the fiscal deficit. The year after 2013/14, the fiscal deficit reached almost $1 billion.
To accommodate the fiscal recklessness, the Central Bank’s printing press went wild. It has not stopped since. Coinciding with the wild printing was the plummeting of the foreign reserves in April 2013 and the slide has continued. The reason for the slide was admitted, almost four years later.
In August 2013, a Budget was presented. By December 2013, the intention to lay off thousands was announced. In March 2014, during The Estimates Debate, Minister of Finance Chris Sinckler delivered a Ministerial Statement. There was no Budget in 2014.
In the fiscal year 2014/15, the Government’s wages and salaries bill fell by $68.2 million. So, thousands were in fact laid off. At that time, the vulnerable were not to be protected. They had already played their part in the previous election and so, they became the sacrificial lambs.
By June 2015, the minister of finance delivered his Financial Statement and Budgetary Proposals. The theme was “completing the job”. The job was “an agenda for fiscal reform, debt sustainability and economic growth”. On each agenda item, the Government has failed and failed miserably.
Ironically, by the end of 2016, a call for fiscal reform by the former governor of the Central Bank was one of the reasons why he was asked to resign or be fired. It is suggested that such a call was going against the fiscal policy of the Government. Pardon me, the Government’s agenda for fiscal reform is now eight years old.
In the last quarter of 2016, a minister stated publicly that most of the people laid off in 2014/15 had been rehired. There is a pattern of behaviour that is being repeated.
It is now 2017 and the lack of fiscal reform is still at the heart of Barbados’ economic woes. It is now being argued that protection of the vulnerable is responsible for the failure to reform the fiscal system. This is even more amusing.
There is a falseness about the refocusing of the Government’s message to protect the vulnerable. The question is, who are the most vulnerable in Barbados today? And furthermore, how have they been protected?
From a public policy perspective, the most vulnerable, narrowly defined, receive welfare and social services. In this year’s Estimates document, the Ministry of Social Care, Constituency Empowerment and Community Development received $82.4 million out of the total expenditure of $4 549.5 million. This constitutes 1.8 per cent of the total expected spending of the Government.
So who else constitutes the vulnerable in the society?
Let us describe them as the working poor, a phrase that is very familiar to Prime Minister Stuart. The best example of the working poor in Barbados is the collective Civil Service. These workers have not had a salary increase for several years. They are paying more taxes. The cost of living has increased. By any definition, they have less take-home pay than before.
The most cruel cut to the workers, private and public sector, came with the removal of allowances and deductions for income tax purposes in the June 2015 Budget. At the time, Minister Sinckler declared that it will raise only $9 million. It was argued that he will raise much more.
The recent Estimates document shows that personal income taxes increased by almost $100 million in fiscal 2016/17 over 2015/16. The increase is a direct consequence of the removal of the allowances and deductions. Two years later, the evidence is clear that the removal was devastating for taxpayers.
Unfortunately, it is wont to be the boy on the burning deck. This wont is built on a commitment to truth.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party advisor on the economy. Email: [email protected]
