CONTRIBUTION TO 2020 2021 BUDGET DEBATE
CHESTER COOPER, PLP DEPUTY LEADER, SHADOW MINISTER OF FINANCE,
EXUMAS AND RAGGED ISLAND MP
JUNE 8, 2020
When I came to this House three years ago, I had a very specific intention to focus on bringing about change.
Some would say that this is a fanciful notion given that the Progressive Liberal Party suffered a historic defeat and it is hard to make things happen in opposition.
But I believe in the notion that we can change things if we each do our part.
I didn’t come here looking for money – I have already found success in business.
I didn’t come here looking to make connections – I’m quite well connected as it is.
And I didn’t come here looking to make friends – I have lots of those.
I came here to be a voice and an advocate for the people of the Exumas and Ragged Island.
I came here with the hopes of doing my part to deepen our democracy.
I came here hoping that we would see a better Bahamas for my children – ages 20, 10 and 8 – and for all those in their generation.
I came here to serve, to move the needle and leave things better than I met them.
As a poor, God-fearing boy from an obscure, little-known part of The Bahamas who did extremely well, I came here to contribute to our country.
And I came here, at the very least, to attempt to make sure that this administration did not do too much damage in its tenure; to make sure the most vulnerable were protected.
I lived in this category for a time in my life.
I believed I could do this by speaking truth to power and pointing out the flaws in some of this administration’s worst ideas.
I believed I could do this by always offering not just criticisms but suggestions, and always proposing forward looking progressive solutions.
I feared that the inexperience of many in this administration along with a super majority would give way to stubbornness and arrogance.
I feared that the political vindictiveness that manifested itself early on would only get worse.
I feared that the same hypocrisy we witnessed on the campaign trail would become entrenched.
I feared the tendency to make outlandish claims without proof or validation would become the norm.
And I feared that a lack of insight into what the priorities of the government should be would cost us dearly.
I note today, with no joy whatsoever, that all my worst fears have been realized.
To put it succinctly, this administration has been one, big, unmitigated disaster.
I’m afraid I have no charity left for those who sit opposite, and it ain’t personal at all.
And I want you to know I am not alone.
The Bahamian people have watched in horror, as have I, as the Minnis administration has bungled its handling of our fiscal and other affairs by making bad decision after bad decision.
The Bahamian people are left dumbstruck by the lack of vision of this administration.
In my opinion, they trust nothing you say, because you don’t live up to your promises and you abandon what you claim are your convictions – such as transparency and accountability – at the drop of a hat.
This latest budget is disappointing, uninspiring, unimpressive, unbelievable and frightening.
It represents a missed opportunity to press the reset button and does nothing that I can see to make The Bahamas more resilient.
It includes nothing that makes me feel we will be better off in 12 or 24 months than we are today.
The budget is treading water; borrowing big but not doing big things.
Unprecedented times call for unprecedented leadership.
This budget does not display the leadership the Bahamian people need during these times.
The minister’s communication today
Before I get too deep into my speech today, I want to take a minute to reflect on the presentation of East Grand Bahama today.
I won’t respond to all of it, because I’m here to talk about the tabled budget and the tabled budget communication.
But I find it incredible, and strange, that as we are facing an unprecedented national crisis, we hear the minister of finance go on and on about what the PLP did.
Half the time spent was talking about years past.
The Bahamian people want to know the way forward, not to walk with you down memory lane.
Newsflash: This is your third budget, might be time for you to move on.
I think, perhaps, the member for East Grand Bahama seems to be struggling with the notion that government is continuous.
He keeps talking about old bills.
If government is continuous and if it is the correct thing to do to pay first in and first out, I am left baffled why he continues with this, three years in.
I am advised that on assuming office in 2012, the PLP met a borrowing resolution for $546 million, but had to borrow and additional $100 million from the IDB to complete the roadworks.
It is just is what it is.
There was a time to explain their position on the state of the government’s finances when they assumed office in 2017.
That time was 2017.
We’re now in 2020, and this administration borrowed $3 billion and increased VAT by 60 percent and the Bahamian people say you they have very little to show for it.
Let me explain how we arrive at $3 billion.
Go to page nine of your previous estimates for 2017/2018; you can clearly see that you, the FNM administration, borrowed $753 million.
Now go to the current estimates.
On page seven, you would see in 2018/2019 $1.09 billion was borrowed.
On that same page look at the 2019/2020 column; $1.35 billion was borrowed.
This equals $3019 billion dollars.
That is the figure we are dealing with.
So, when I say that you borrowed $3 billion, in addition to raising VAT by 60 percent with very little to show for it, according to the Bahamian people, these are the numbers I am talking about.
This isn’t a difficult concept to grasp.
The minister should stop obfuscating and speak to what this administration did and intends to do with the people’s money.
The real flip-floppers
Members opposite, and their party surrogates, have tried to label me as a flip-flopper for previously suggesting the government borrow one to two billion dollars to whether and recover from the COVID-19 crisis.
That’s quite cute.
It is also both laughable and sad that the main defense of this terrible budget, your budget, is to point to the opposition’s ideas.
But it is also telling of their lack of ideas, and what appears to be a worrisome lack of reading comprehension by members opposite and their surrogates.
They were good ideas, that could have helped and I stand by every word I said.
Can the member for Killarney say the same?
Was it not he who voted against value-added tax and said increasing taxes and implementing new ones was the lazy way out, only to flip-flop and increase value-added tax on the backs of the Bahamian people?
Did not the member for East Grand Bahama say in this House on May 3, 2015 that VAT was “regressive and an unfair burden on the poor?”
Unlike me, he came to this House and flip-flopped big time on that.
Did not the member for East Grand Bahama say we needed a proper accounting of the VAT money before they came to office, only to flip-flop when he became minister and say it was right there the entire time?
Speaker after speaker screamed from the rally stage asking “Where the VAT money gone?”; only to have their chairman and the finance minister later admit that nothing illegal happened, and that they knew it all along.
That is what you call a flip-flop.
Was it not the current minister of finance who earlier this year said we were not going to borrow from the International Monetary Fund only to flip-flop and do just that?
Interesting how that works.
I also recall on August 23, 2016 the member for Killarney said the downgrade of our sovereign credit rating by Moody’s showed the agency’s lack of trust in the then prime minister and his government.
If that is the case, then what does the recent downgrade of our sovereign credit rating by Standard & Poor’s and a negative outlook by Moody’s say about the level of trust in our current prime minister and his government?
I told you to be careful celebrating downgrades.
I warned you that these things often come back to haunt you.
And, of course, who could forget the member for Killarney’s pre-election pledge to “engage and execute a real sale of Baha Mar to a qualified and respectable purchaser who believes in Bahamians” and then doing no such thing?
In fact, they now try to take credit for its success.
A whole crew of shameless flip-floppers you are.
What should have been done
I told you in this House in March that you should have gone early and gone hard with bold fiscal action.
I told you to identify loan facilities between $1 to $2 billion dollars in a low-interest environment.
Money was cheap at the time; yet, you failed to act.
I suggested that the total stimulus could be a combination of direct borrowing and public private partnerships for projects to create much-needed jobs and stimulate the domestic economy and use a portion to pay debt coming due in the near term.
Listen to me carefully now, I said: “If the crisis is shorter or flatter that we now anticipate, any excess may be used to pay-down existing high interest debt, reducing future debt servicing pressure.”
I suggested hundreds of millions of this money could be used for temporary employment programs.
Many of you may not appreciate this, but low-income level spending puts money right back into the economy, community convenience stores, stimulates small businesses, spurs employment and grows the economy.
In fact, the government gets some back in the form of VAT each time it circulates.
You didn’t listen and you missed an opportunity.
I suggested that the government appoint a Debt Management Committee with a mandate to review, and recommend advice on the efficient management and structure of the country’s debt, comprised of representatives from the Ministry of Finance, the Central Bank and private sector experts.
But you did not.
I suggested the government seek to issue up to $1 billion in bonds over the next year: long-term zero-coupon COVID Bonds with terms of 40-50 years or longer of up to $350 million; medium-term COVID Bonds with a maturity date of up to 10 years of up to $200 million; and short-term bonds up to 5 years, targeted at banks of up to $500 million.
Yet, you did nothing in this vein.
At least $150 million of the borrowed funds should have been used to build state-of-the-art digital infrastructure, eCommerce, telemedicine, online education and eGovernment where persons in the remotest parts of Grand Cay or Matthew Town could access government services at a click.
With digitization we can pivot our financial services industry to FinTech, InsureTech using RegTech and SupTech.
You had 10 weeks to figure this out and source it.
Yet, you did nothing along those lines.
We suggested you take advantage of the low cost of oil to reduce cost of electricity at least by 25 percent to increase GDP by at least 1 percent.
Oil was $20 per barrel then.
It dropped to near zero a few weeks later.
Yet, you did nothing of the sort.
Oil is now trading at over $40 per barrel and raising by the day.
We suggested the government take $250 million and invest immediately in real food security.
This would have met our current in country demand and set us up to reinvigorate our agricultural exports.
I see now there is just lip-service to food security.
There’s nothing bold about the $3 million allocated to that.
You should have taken $200 million to make available in grants and loans to small and medium size enterprises.
You did not, and now, many businesses that could have been saved will not reopen.
I told you to spend $50 million on food and rental assistance.
You did not, now many will face eviction after the emergency order is lifted.
Many landlords will have to pay catch up with their banks and may be subject to higher interest rates.
You could have done so much more.
But you didn’t.
Now you sit here and make jokes about what I suggested to stimulate and shore up the economy.
While you joke and scramble for political points, your inaction has cost us.
We will likely suffer greater economic decline than our regional counterparts as a result.
The global gross domestic decline as a result of the pandemic is projected at 3 percent.
The United States’ decline is estimated at 6 percent.
But, The Bahamas is projected to have a GDP decline of 12 percent.
That is four times the global average; and twice that of the declines expected in America.
It speaks to our lack of resilience.
It speaks to a need for bold structural reform.
We suffered a downgrade since this started; it is arguable that bold action could have warded that off.
Now, the interest rate on our paper is trading at up to 15 percent.
The minister of finance should quantify the actual dollar loss, opportunity cost to the Bahamian people.
I told you to borrow to transform The Bahamas, not just to pay the bills.
You have borrowed more than $3 billion in three years with very little to show for it.
You will likely exceed borrowings of $5 billion in five years.
Big borrowing should equate to big things.
We need a plan that will grow the economy by 5-8 percent.
Debt is not bad in and of itself, but it should be seen as an investment of the people’s money.
Where is the return on our investment?
Good luck explaining to the Bahamian people exactly where all that money gone.
An overview
So, let’s take a look at where we are now.
This budget signals the entry of The Bahamas into the category of highly indebted small states.
An embarrassing and damaging designation which every administration prior to this one has sought to avoid.
Along with this designation comes the Scarlett Letter of fiscal management for small states: becoming a borrower from the International Monetary Fund (IMF).
I am in no way attempting to disparage the IMF, but it is important that Bahamians understand what this means and the signal it could send to the international community if we are not careful.
We still need to assess the details to see whether there are any implicit or explicit conditions.
The IMF is typically the lender of last resort for countries, just as the Central Bank is usually the lender of last resort for commercial banks.
The IMF, like a Central Bank, would lower its emergency lending rate in a crisis to encourage troubled countries to borrow.
So, the cost of funds or tenure of the funding are meaningless in this context.
The IMF loan being squeezed into the 2019/2020 budget, that the minister did not mention in any budget communication, could send a troubling signal to the world that The Bahamas is a financially troubled country.
Yet, it was none other than the minister of finance, the member for East Grand Bahama, who publicly ruled out the IMF’s original offer; no doubt for this very reason.
In fact, when the minister of finance originally sought parliamentary approval for the supplementary borrowing, the IMF was not listed as a possible lender.
Does this mean that the funding options he presented to Parliament previously have not materialized for this administration?
If so, that might signal a worrisome collapse of confidence in this administration by lenders.
I will return to this issue.
If lenders are unwilling to lend to the government now, why would they be willing to lend to the government in the next fiscal year to fund a $1.3 billion deficit?
In my view, the path the country is on is quite clear and unless there is a drastic shift, it is only a matter of time before this administration goes back to the IMF, cap in hand, for additional funding.
You will blame Dorian and you will blame COVID, and they have greatly impacted revenue and finances, I get that.
We do not dismiss them.
They are incredibly challenging things to navigate.
But when the member for East Grand Bahama was blaming the former PLP administration for historic deficits we said, “hurricanes have consequences.”
It was dismissed at the time.
He seems to have now found religion now on the subject.
So, yes, Dorian and COVID-19 were the straws that broke the camel’s back, but the disaster of FNM’s fiscal management has made a terrible situation far worse.
You will one day have to face facts, and the consequences, for the role you played in all this.
This administration inherited a situation which, contrary to the public statements of the minister of finance, was anything but dire.
I will never forget that ill-fated, ill-advised “cupboard was bare” first budget rally speech.
This administration inherited a budget fully funded through a pre-arranged $400 million bridge loan, which they took full advantage of.
Not only did they take advantage of it, but they parlayed it into a $750 million loan with a 10-year note at six percent.
A $300 million bond payment is due in 2024, at last report.
Money the next PLP administration will have to find.
This administration inherited the largest single resort investment in the Caribbean going fully on stream.
They called Baha Mar a fake resort with a fake opening; remember?
If it was so fake, why does it account for 4,000 direct jobs and 2,000 indirect jobs and significant GDP growth?
This administration inherited the best performing VAT regime, in terms of efficiency, in the Caribbean with the lowest rate and broadest tax base.
This administration inherited a well restructured revenue administration plan, which included the creation of the Department of Inland Revenue, a modernization of the customs regime through the introduction of new information technology applications and new processes, and the first sustained effort to expand and update the property tax regime in recent years.
This administration inherited a system where most of the major taxes – VAT, business license, real property tax – were all transacted online, inclusive of payments by credit and debit cards.
This administration inherited plans to expand the online portal to capture other revenue, including customs duty, road traffic, passport, and immigration fees.
And what did this administration do with all that?
They disbanded the revenue taskforce.
They reduced the VAT tax base, slowing customs and real property tax reforms.
They increased the VAT rate in the face of evidence in the form of previous studies that such an increase, with ill-advised exemptions and zero ratings, would have a negative effect on revenues and the economy.
Now here we are, with a budget that sets an alarming precedent that will accelerate the country down the path of insolvency.
A budget deficit of 11 percent of GDP is simply incomprehensible, especially coming off a deficit of 6.4 percent of GDP.
And it gets worse.
The deficit in the 2021/2022 fiscal year is forecast at 6.7 percent of GDP.
When you took office, government debt stood at $6.5 billion.
You projected government debt for 2021/2022 is $10.3 billion
This represents an overall increase in debt of $4 billion in five years or a 58 percent increase in debt levels, if I believe your projections; which I do not.
You are this year borrowing at least $1.3 billion but project only $25 million extra in servicing costs.
I don’t believe that projection.
We note that government debt servicing increased from around $290 million in 2016/2017 to $400 million in the upcoming budget, and more than $400 million the budget after that.
The self-proclaimed master debt and deficit manager in our minister of finance has racked up $2 billion in deficits over two years and will likely rack up $5 billion in deficits over five years.
You say $4 billion, I say $5 billion.
All of this after increasing VAT by 60 percent on the backs of the Bahamian people.
I am saddened, but not surprised.
Psychological research has shown that if you focus on something hard enough, you will eventually get it.
I recall that when I forecasted last budget debate that debt would hit $10 billion, some jumped up and said, “No way.”
Now their own projection, which is probably low, has us at just under $10 billion in debt by the end of this fiscal year with a debt-to-GDP ratio of 82.8 percent.
And, according to your estimates, we will be at a debt-to-GDP ratio of more than 85 percent.
This is scary stuff.
Even more scary is this is not the comprehensive picture, as the government tabled a resolution in this Parliament on May 28th to convert $246 million in Bahamas Power and Light government guaranteed loans into direct government debt.
This conversion, which is to take place in July, has astoundingly been omitted from the budget, from my examination of it.
This was not even tabled by the minister of finance, but by the prime minister, who did so the day after the budget communication just before the adjournment, after speaking about restrictions in the emergency order being lifted.
He slipped it in, in the dead of night.
Why that wasn’t included in the budget the day before raises more credibility concerns.
Did they not know about it? Or is that what the PR people suggested?
This is the exact opposite of fiscal transparency.
Perhaps we are witnessing some slick accounting work will cover this before the next fiscal year under the Rate Reduction Bond, I have been reliably advised no one serious has any real interest in buying.
I will return to this rate reduction bond and BPL a little later.
Three budgets ago I warned the government about the RRB.
And you say you following my advice?
You should’ve listened to me then.
Once this transaction is included into the 2020/2021 budget, The Bahamas would be further down the path of insolvency, as the true financing required would be $1.57 billion, not $1.34 billion.
This means that within four years direct debt would have risen by a frightening 48 percent.
If my math is wrong on how this transaction will impact direct government debt, I invite the minister of finance to clarify it for me.
This deficit will all financed without any new taxes, they claim.
I don’t see how that is ultimately possible with no real plan to grow the economy.
We see the effects of poor fiscal management by this administration in one aspect by the fact that The Bahamas government’s foreign currency bond for 2024, is now trading at up to 15 percent.
Therefore, this now represents the effective borrowing rate of the government in foreign currency in the capital market.
For an administration which predicts that the budget is going to be funded through foreign currency loans, this is quite troubling.
Strangely, we see the average interest rate of government debt is projected to go down in the next budget to 4 percent.
This does not seem reasonable given that the Ministry of Finance is proposing to borrow more in foreign currency than at any other time in Bahamian history.
We wonder if the minister can confirm if it is accurate that some of the borrowing will come from the World Bank.
As The Bahamas is a high per capita income country we have been ineligible for loans from the World Bank for over 30 years.
If we are now being accommodated, it raises questions as to why?
What we see is the country’s debt is growing at its fastest rate in its history and effectively a large portion of the government’s borrowing, nearly $400 million in the upcoming budget, is to pay interest.
You are borrowing to pay the light bill, rather than for big, transformative things, as I suggested.
I would note that the World Bank, the Inter-American Development Bank and the Caribbean Development Bank typically do not offer budget support loans.
The IMF, however, normally does as part of its structural adjustment program.
These usually come with strings attached.
This is why we insist on seeing the term sheet and the loan agreement for the current IMF loan.
You should have borrowed cheap money earlier in the market, but you missed the boat.
You snoozed and the Bahamian people loose.
This did not have to be this bad.
On my advice, you should have spent more time seeking to grow the economy.
Had you grown the economy, the deficit would have taken care of itself.
Your lack of an economic growth strategy was most unfortunate and it cost us dearly.
You should have stopped blaming the PLP and got to work so you could account for your own stewardship.
Breaking news: You are three years in and you still blaming the PLP.
How pathetic.
It is always someone else’s fault with this crew.
The tone of the budget communication was one of partisan politics.
And that’s a problem.
You have to remember you’re speaking to a large, diverse audience.
Yes, you are speaking to your constituents and your party fellahs to run with your message.
But you’re also speaking to bankers, rating agencies and lenders.
So, you must be circumspect.
I said this after your first budget speech when you ranted about the cupboards being bare.
And then you talked about how we were on a fiscal cliff.
So, the message to lenders is “the cupboard bare and we on a fiscal cliff, now lend me some money.”
The member for East Grand Bahama said at the beginning of the most recent budget communication that we are “recovering from past gross financial management, or lack of fiscal restraint by the former administration.”
Then, not two minutes later you say “this is not a time for soaring rhetoric or empty partisan crossfire.”
Well, you clearly had time to get political.
Is it just that only we should not be political, but you can?
And, oh, you forgot to talk to your investors and bondholders.
A worrisome confidence crisis
The question of how we deal with crisis rises and falls on leadership.
So, whilst we are here heckling and laughing, we have a worrisome crisis with investors in the international bond markets.
This is very serious business.
Over the past several weeks, The Bahamas’ bonds were trading at very deep discounts, as high as 35 percent.
Said differently, if you wanted to sell them, you would have to do so at a deep discount.
This, in my view, was triggered by the downgrade by S&P and the negative outlook by Moody’s, as well as the tourism and economic shut down due to the crisis.
Never in recent history have our bonds been valued so low.
If we look at a regional comparison, Jamaica has a credit rating worse than ours but bonds not as severely impacted.
Their discount was flatter and their bond recovered faster.
I contend it’s a question of confidence.
It’s a question of leadership.
Their prime minister does not run from his country’s media seeking to avoid answering questions.
He communicates clearly.
The world watches.
The market is forward looking and unforgiving.
It does not care about local politics, but it looks for signals of confidence.
Recall now, the minister has said that it is the government’s intention to fully finance the deficit in the international market, a bad move in our view, from the same people by and large, a small community, I might add.
Bloomberg, the global leader in business and financial data, news and insights, a most credible research tool for investors, listed The Bahamas with eight other countries as the “Distressed Debt Club”, countries like Suriname, Zambia, Sri Lanka, Belize, Angola, Tajikistan, Mozambique and Argentina, which defaulted on its debt nine times during the month of May.
This distressed club label says that The Bahamas is a financially troubled country and that, without correction, a credit default is possible.
If we are not deserving of being in a club, that no nation wants to be in, what are we doing about it?
How are we telling our own story?
Are we doing calls with analysts?
Are we letting the world know that we are hurt by COVID-19 like the rest of the world, but we will rebound, and we are resilient?
Are we showing our strategic crisis mitigation plan?
Our economic growth plan?
How are we building confidence?
How are we showing leadership?
We told you three years ago, there were consequences to talking down your economy.
There were consequences to going abroad and so cavalierly talking about corruption in The Bahamas.
This does not inspire confidence.
Yes, we have a COVID-19 crisis, but this worrisome Confidence Crisis is of your own making.
For this, you must give an account, and expect that there will be consequences.
Credibility of the assumptions
After the minister of finance’s second budget, I introduced a concept of a credibility deficit.
I’m afraid it’s gotten wider.
Listen, when I look at this as a businessman and a lender, there is serious cause for doubt.
The significance is that when there is cause to question anything there is cause to question everything.
So, let’s say I’m the lender.
And, after listening to your speech filled with empty rhetoric, my financial analyst goes to summary page 3 of the estimates and goes straight to line item 9 for a cursory look.
We see a GFS deficit ratio of 11 percent in 2020/2021 and then a GFS deficit of 6.7 percent for 2021/2022 the following year, then 2.9 percent the year after that.
So, you say it’s a one off, an aberration.
Fine.
I’m the lender; I want to assess risk and I want to get paid.
If I believe you, I will lend you the money.
If I don’t, I won’t.
So, I now want to know how you are going to grow revenues.
I see $1.7 billion in 2020/2021, then $2.2 billion the next year and return to normal in 2022 at $2.5 billion.
I see you say no new taxes, so I go back to the communication and I’m trying to find the economic strategy, I want to know how you will grow revenues.
But it’s not there; no growth plans.
So, I am left with a question: Why should I believe the revenues?
No robust plan to restore Grand Bahama and Abaco.
Where is this extra money coming from?
I then go to the expense side and I see it is relatively the same.
Well, your bond is trading at 10 percent and up, which means a minimum of $130 million a year in new expenses that I don’t see money to pay for.
See, these fellahs aren’t stupid with their money.
When you come to them, there’s nothing you can tell them about the government’s prospects they probably don’t know.
They know how you make your money; they know how you spend your money.
And having watched Caribbean politics, they already know the level of spending that happens in an election year with all governments in all these countries.
So, I go to 2021 and I don’t see this extra election year spending.
I know you’ll spend it.
Everyone does.
But you’re expecting me to believe you won’t just cause it’s you.
Now I get worried and I start to question the credibility of everything.
So, there is now a credibility deficit in my mind.
And I don’t know if I want to lend you my money.
I tell you that as a businessman, and a financial services professional who speaks with investors every week.
I can tell you that I have very good gut instincts on these issues.
You have serious storm clouds ahead.
The numbers don’t add up
To me, and to lenders, the numbers just don’t add up.
I don’t see any reason presented here to believe the revenue projections will return to pre-Dorian levels by 2022.
They might, but I need more than a maybe if I’m a lender.
I need a plan, a road map.
We are told that the Economic Recovery Committee is hard at work; yet is has not reported on any initiatives to restore economic viability.
We have heard that they are working on a framework, but that’s about it.
We’re in week 12 of this thing.
It’s been long enough now to where we should have some more clarity on all this.
Had you not abandoned the National Development plan against my advice you would’ve had the framework of a roadmap to work with already.
Trim more fat
When we look at the elimination of waste, I don’t think that is dramatic enough.
We see breakfast and lunch being eliminated at the House of Assembly, but let’s be serious.
That is a symbolic gesture and, frankly, a bit laughable.
There’s no real impact on that to the budget.
In fact, the new budget is still $60,000; almost twice as much as it was before you hiked it last year.
We are maintaining spending levels.
In fact, expenditure is actually up overall by almost $40 million.
So, these things don’t really make a dent.
You claim that travel will be limited to only trips that are essential.
No one believes that, leading up to an election.
You said it before and then increased the per diem and allowed spouses on more trips.
You say you’re taking back the red plates from ministers, but they shouldn’t have had them in the first place.
If you want to move the needle on expenditure, this won’t do it.
You puff up and announce these things in your budget communication, but they don’t produce meaningful results.
We should be asking why we still see duplications in expenditure, spending money on NEMA and the Ministry of Disaster Recovery and the Disaster Recovery Authority and its numerous consultants and positions – all without a comprehensive plan for the restoration of Grand Bahama and Abaco.
We hear you rave about the $515 million in capital expenditure, but when you peel back the layers of the onion, there’s really only about $130 million extra in public infrastructure spending.
I saw Carmichael was in the newspaper asking for a $500 million capital works budget.
But they only gave him about $50 million extra.
I know Carmichael must be unhappy about this.
Particularly when you examine the history of this administration to choke capital works to get closer to their budget targets.
I see you have about $11 million more in there for social services – most of it for food assistance.
That’s a good thing.
I like that, but I don’t like that you pour more money into the same framework.
The temporary increase in NIB benefit for elderly people also looks good on paper.
But I don’t like how vague it is.
I wonder how an elderly person proves they’ve been impacted by COVID-19.
I think if you want to have meaningful impact you should just do it across the board for everyone on pension.
Sounds like people will have to jump through more hoops just to get a little extra.
That’s some of what we do see.
What we don’t see
Let’s take a few minutes and focus on what we don’t see.
This budget lacks any sort of strategic focus on the immediate and medium-term issues the country is faced with, such as our skyrocketing debt-to-GDP ratio, our unprecedented fiscal deficit, and any sort of economic recovery being at best two to three years out.
This budget provides a description of the current situation with no real focus towards solutions any time soon.
There is no real discussion on fiscal reform in this budget.
Given the challenge the country is faced with, where is the discussion on fiscal reform?
In fact, where is the Fiscal Responsibility Council?
Will the minister confirmed when they last met, if ever?
And whether they have reported?
Interest payments alone on existing debt stocks are projected to come in just under $400 million in 2020/2021.
The recent downgrade of The Bahamas’ sovereign debt will only place added pressure on this debt servicing, particularly the interest payments.
What is the plan to arrest the growing deficit compounded by COVID-19 and Hurricane Dorian?
The minister of finance, in his budget communication, referenced a government debt figure of $9.5 billion.
While there is a discussion of a Debt Management Unit, what is the plan to address the growing debt problem?
How will we pay it back?
Why can’t we see in the estimates a spreadsheet of all loans totaling the $8.2bn debt?
That can’t be too difficult?
And it would be transparent.
What is the plan of attack?
Are we just hoping the opening of the economy to international travel and foreign exchange earnings will address this problem?
State-owned enterprises
We heard the intention to cut subventions to state-owned enterprises, as we also heard the minister say three years ago.
But where is the strategic focus to address the hemorrhaging of the treasury by these state-owned enterprises?
Where are the efficiency studies?
Where are the business plans?
It is one thing to say there will be cuts, it is another thing to do a deep dive into the operations of these enterprises.
Subsidies to SEOs almost $400 million.
We must critically analyze how our investments are performing in the Bank of the Bahamas, the Arawak Port Development, Cable Bahamas, ALIV and BTC.
I am also troubled by the fact that SEOs will be allowed to add user fees in light of the proposed reduction of government subsidies.
So, as usual, we don’t fix the problem, so the people will pay anyway.
Seems pointless to say “no new taxes” but warn people that new user fees may be coming.
Not to mention the Rate Reduction Bond fee you claimed was coming months ago is still waiting in the winds.
BTC allocation
There is a significant allocation of a whopping $63m over the next three budget cycles to be paid to BTC for legacy pension liabilities, that continues to grow.
This seems to be an admission that the CWC deal was an egregiously bad one.
But this was an FNM deal, yes?
The current prime minister sat in this place and as a member of Cabinet and approved this bad deal, correct?
I am glad we can finally admit that the FNM effectively gave BTC away for $210 million.
Now we are sending some of that money back.
The minister of finance is effectively condemning the prime minister who sat in the Cabinet and was a party to that bad deal.
I do thank the minister of finance.
Drawing on my pensions expertise and best practice, I will say to you that without a definitive and comprehensive strategy this will be an ongoing problem for the government that might see the return of the entire $210 million to Cable & Wireless.
How entirely sad.
Foreign direct investment
It is interesting that for a government that boasted about signing billions of dollars in foreign direct investment, we heard no specific mention of FDI projects in the budget communication.
FDI is still the fastest way to grow the economy. While the global environment presents challenges for FDI, why have we not heard anything about projects that would have been in the pipeline?
What significant domestic investment projects have you been able to inspire?
What is the latest on Royal Caribbean and Disney and Carnival and Baha Mar and Hurricane Hole, Children’s Bay Cay and Wynn?
Hope you’ve forgotten about Oban; the Bahamian people won’t ever forget Oban though.
What is the status of the recent projects announced for Abaco and Long Island?
Why have we not yet heard the latest about them?
We have not heard any plans about growth that would be expected to take place in the Family Islands.
No plan for the Family Islands
I maintain that the best chance of a swift recovery lies in Exuma, Eleuthera and the Family Islands.
But again, you have no plan.
Our Family Islands have low population density and offer the greatest potential for low-impact and local ownership, such as boutique hotels and Airbnb where perhaps more money stays in the economy.
The COVID-19 pandemic has brought us into an era of social distancing.
There may be a shift from large mega resorts to smaller properties for a significant segment of travelers.
The country will be challenged with a reduction in foreign exchange earnings.
The demand for imports and the growing foreign currency debt levels, will place inordinate pressure on the reserves.
What are the alternatives to shore up the reserves, other than foreign currency borrowing?
It is one thing to talk agriculture for domestic consumption or the country’s digitization, where is the discussion on earning foreign currency outside of tourism?
This continued focus on import substitution, does not earn foreign currency.
The idea of a substitution to reduce the demand for foreign currency is not the same as focusing on those industries that are more export-focused to earn the foreign currency, like pharmaceuticals in Freeport.
The Family Islands, with all of its bio diversity, with each island presenting the potential for a unique experience, is a no-brainer for diversifying the tourism product and augmenting our foreign currency earnings.
But this requires investment in the Family Islands.
It requires a plan for each Family Island.
This is what a PLP government will do.
Three years in, still no plan, no strategy and no vision.
Where there is no vision, the people perish.
Grand Lucayan
I note that there was nothing substantive on the Grand Lucayan in the budget communication.
I know this administration was hoping we would all forget about it, but that’s not going to happen.
COVID-19 has impacted the cruise industry with titans like Royal Caribbean being particularly hard hit.
We deserve to know the status of the sale of the hotel I begged you not to buy; since you claim that you take my advice.
Clearly, you’re all still firmly rooted in your delusion that this should continue to be booked as an investment.
We paid more than the appraised value, we paid out the employees, it’s been a cash drain on a monthly basis and we still carry a mortgage on it.
We bought it for more than it was worth and still pay for it out of the public purse.
This has all gone as predicted – which is spectacularly badly.
We would appreciate a thorough update on what is the status of the property you bought with our tax dollars.
This is a prime example of your disastrous fiscal mismanagement.
Time to get real (the numbers really don’t add up)
I also don’t see an administration in touch with reality when I look at the revenue projections.
To me, they appear overly aggressive, as were all your failed targets so far.
Gaming tax, you project, will increase by more than 40 percent.
How is this possible when up to 50 percent of the workforce is not working or won’t be fully back to work for at least another year?
You project export duties will increase by 256 percent.
I hope you are right, but I don’t believe that either.
I’m not sure how you got to that, but it certainly doesn’t seem achievable based on the dearth of announcements on enhanced exports.
You project insurance dividends will be increasing, yet premium taxes will decrease as many people may have no choice but to allow their policies to lapse.
With net assets of roughly $14 million and net income of roughly $3 million, someone will have to explain this plug number of $18 million – $23 million per annum in dividends from the Insurance Commission of The Bahamas for the next three years.
Even the government claims it is decreasing its premiums to $60 million.
No explanation on how?
I don’t see how this is possible based on the average payouts over the last 15 years.
Based on the third quarter actuals, the forecast of $15 million for Real Property Tax seems inflated and needs explaining too.
The same can be said of stamp duty on mortgages of $8.7 million.
As is the case of excise taxes normalizing at $251 million in 2021/2022, despite steady rate reductions and a shrinking economy.
Then there is revenue of $600,000 from stem cell research even though I understand the only clinic in Freeport remains closed since Dorian.
I do not believe the expected revenue can be achieved and as such the deficit will likely be higher unless the government cuts back even more.
In the capital budget, the $84 million for renewable energy and restoration stands out because it is in the allocation of the Ministry of Finance rather than the Ministry of Works, which makes me wonder if this is a subsidy for an operating entity and not related to any new project.
Perhaps the minister of finance can explain.
The same logic applies for the $12 million for water and sewerage projects also in the Ministry of Finance’s capital budget.
In addition, the overlapping of responsibility continues with both the Ministry of Works and the Ministry of Disaster Recovery having funding for a National Disaster Recovery Project.
It also doesn’t seem realistic to me for there to be a projected 25 percent reduction in rent allowances for foreign diplomats this upcoming fiscal year that reverts to the previous level in the 2021/2022 fiscal year.
The same goes with respect to dues to regional and international organizations.
Has the government agreed to make a certain number of diplomats homeless or bring them back home?
Has the government negotiated discounts on our international obligations?
These are obvious questions that arise.
By the way, we strongly dispute unemployment estimates provided by the Ministry of Finance. Our estimate is more in line with comments by the member for Yamacraw who said unemployment is in the range of 50 percent.
Let’s not forget that Department of Statistics number before COVID-19 was in the 10 percent range.
I think even that was grossly underestimated as it excluded Abaco and Grand Bahama; the two islands with the highest unemployment, that represents roughly 20 percent of the nation’s GDP.
Business people need the government to be transparent and accurate in order to plan and strategize.
That’s the least that should be expected.
Hurricane Dorian
Let’s turn our attention to Hurricane Dorian. 35
Hurricane season is here again.
I don’t mind telling you that I find the response to Hurricane Dorian restoration by this administration to be inadequate and anemic.
Here we are, nine months later and the people of Abaco and Grand Bahama still cry out for aid.
Reports are that there are still people living in tents.
The chairman of the Disaster Reconstruction Authority, John Michael Clarke, said in the February 11, 2020 edition of The Nassau Guardian, that power would be fully restored throughout Abaco in May.
It is now June and this has not happened.
We need to have a real plan for reconstruction after Dorian.
Construction on those islands would spur development.
Maybe we should look at the Cayman Islands experience with Ivan and the renewal and restoration that boosted economic activity.
We also know that the salt water from the taps in Grand Bahama is still not considered potable.
This really is unfortunate.
The people understand that things can’t happen overnight.
But nine months is not overnight.
If that is sufficient time to incubate and bring a human life into the world, then it should be sufficient time to restore the power and fix the water.
The Rand Memorial Hospital is still badly damaged.
And the main hospital on Grand Bahama still operates from a tent.
The Grand Bahama International Airport remains destroyed.
I recall telling you to buy the airport on the cheap, or acquire it in the public interest if you had to, so that it could open immediately and proper commerce could resume quickly to spur the economy.
But, again you dithered.
Now, when you go buy it for millions of dollars, I suppose you will say I told you to buy it.
See, I operate in a world where you move when the conditions are optimum.
Timing is important in these matters.
So, buying the airport in a particular sort of circumstances makes sense.
When those conditions change, the move no longer makes sense.
This works for investments, borrowing, hiring, stimulus, etc.
You have to strike while the iron is hot.
Things were one way then.
So, when you take my advice, remember that execution matters.
Nine months later, circumstances change and the opportunity is not as ripe.
Or, to put it in non-business terms: When you snooze, the Bahamian people lose.
To put even more simply: I told you so.
I am also still waiting, as is everybody else, for an accounting of the pledges and donations stemming from Hurricane Dorian.
I’ve been asking, on several occasions now, for a report on pledges and donations from Hurricane Irma and have yet to receive that.
I’ve also been confused as to where are the new building codes you promised.
I guess we’re just going to do it as we were doing before.
I don’t know why we say things just to hear ourselves speak.
In Abaco, you must come clean on the status of the Wilson City Power Plant and when it will be powered.
The people are concerned that many of the NGOs that provided some hope have now left the ground.
The people are concerned that at the start of what is forecasted to be an active hurricane season there are still too many rooves with blue tarps.
The people are still concerned about the inadequate WiFi and telephone communication networks.
You said its still the people’s time in Abaco, but the people are not pleased.
COVID-19
On top of dealing with Dorian, we are also dealing with the coronavirus epidemic.
I have deep reservations about the path we took in all this.
We seemed to have started off well with the health aspects but the competent authority seems to have gotten giddy with power and then things pretty much fell apart.
The member for Yamacraw, stood in here on his political soap box and called me all manner of ungenerous things last week for explaining that people are still hurting and they are not getting help fast enough.
I don’t know how to make it any clearer.
If the government orders your business closed, if the government tells you to stay home from work and hinders your ability to make a living, then the government must make sure your basic needs are met.
And this administration, in my opinion, which is shared by many, did not react robustly enough to meet those needs.
Now, you can cry and pout and whine about where blame should be placed all you want, but the facts are what they are.
It has taken too long for this administration to mobilize food delivery.
That is just what it is.
My team mobilized it on Exuma when you did not.
We were proud to be able to stand in the gap.
There is no reason on God’s green earth that the government, who has access to the increased VAT money, should not have moved as quickly and as effectively as some members of this Parliament.
Catch all the feelings you want about it.
I am unapologetic with that.
The response to businesses could have also been better.
That only 20 percent of help for businesses was delivered at last report is also distressing.
That the promised rental assistance turned out to be nothing of the sort was also disappointing.
Social Services
This ordeal with the coronavirus has brought front and center something we chose to ignore as a country for too long: the startling economic inequality in this country.
We have far too many in this country who go without on a daily basis and who are living lives of subsistence.
It is critical that we address this.
People should not have to cry out in the media to receive help to feed their families or get the medical attention they need.
Again, we need to make food assistance more readily available and accessible with dignity.
We need to make housing assistance a more seamless process.
And we don’t need it 12 weeks from now. We need it right now.
This would mean making housing more affordable and rental assistance accessible with dignity.
This would mean making NIB more efficient.
By the way, what is given by NIB from the unemployment insurance scheme is the people’s money.
There is no need to boast about the money NIB paid out through the benefit or the assistance program.
The government closes your job, the government has a duty to assist in a timely, hassle-free and dignified manner.
Rate Reduction Bond
Making lives easier would also mean bringing down the cost of living.
One of the most critical factors in that is the cost of electricity.
We all heard in this House that the heralded rate reduction bond would fix the so-called decades of mismanagement of BPL.
Well, where is it?
It’s been seven months.
Are you going to blame the failure of it to close on coronavirus as well?
COVID-19 impacted global commerce, it did not end it.
The RRB was for $650 million.
We were told that more than $300 million of that was to retire old debt.
Yet, here we are soon to debate the assumption of nearly $250 million of that debt by the government.
This raises many questions about relations with creditors and amplifies the worrisome confidence crisis.
The RRB was supposed to fund the building of a new power station at Clifton.
What is the status of that power station?
Construction was supposed to start months ago.
Now, we hear crickets.
Are we still not allowed to talk about it?
Does the U.S. Securities and Exchange Commission still have us under heavy manners?
I am deeply troubled by what is happening.
This is non-transparent nonsense.
If we have another summer like the last one, I hope somebody will be handing in their resignation.
The people can’t take much more of this.
We have to deal with BPL once and for all.
The investment in renewables in the Family Island is welcome, but I question if this will deepen Bahamian involvement in our energy sector or further erode it.
By the way, there is still no clarity on the cocktail of deals at BPL.
We hear about Shell, and GE and Wartsila, all a mish mash that does not seem transparent to discerning Bahamians.
Exuma
Three years ago, I came here to represent the people of Exuma and Ragged Island.
I am very proud of what the Team Cooper movement has been able to achieve, notwithstanding the odds.
And I am equally unsatisfied with the attention government has paid to my constituency.
Three years in and the mini hospital is still not up and running with adequate staff and resources.
People are at unnecessary risk of dying.
Exuma has the capacity to be a main economic driver for The Bahamas.
But we need the new airport and the hospital like yesterday.
Exuma is a high-end destination that has pent up demand for the affluent to travel.
We were coronavirus free and I recently spoke about the plan we put together to safely re-open the economy.
Exuma has the potential to be an aviation hub for the southern Bahamas and to interact more closely with the rest of the Caribbean.
We also have the potential to train pilots on Exuma if we make the investment.
Medical tourism is also a very attractive possibility for Exuma.
We have the nicest beaches and the clearest water in The Bahamas.
We have to do much more with Exuma, and for Exuma.
You promised more money for local government from the first budget but that has been elusive.
All I hear is how they on the other side want to win the seat.
Well, you can forget about it.
That’s not going to happen
Exumians don’t like bad treatment.
But you don’t need to win it to focus on it now.
Now, after we win the next election things will start to move more quickly.
But you’re in power right now.
We pay a lot of taxes into the treasury.
The people of Exuma really shouldn’t have to wait for the PLP to take office again to make things happen.
Ragged Island
Nor should the people of Ragged Island.
I am happy that we have an investment in renewable energy on Ragged Island.
Though I am told that the panels are installed in the flood zone.
The investment hasn’t translated into anything useful yet, but after ignoring the people for over two years, we’re happy that someone in government is at long last checking for Ragged Island.
Ragged Island can be much more.
We could set up a nice cottage industry with salt on Ragged Island.
We will form a local co-operative to move this along.
Not only can we mine and sell the salt locally and for export, but we could also set up salt spas, tours, etc.
We could have a good business with eco and heritage tourism on Ragged Island as well.
We don’t have to have a ton of traffic, but we could see some good numbers if we make the investment.
There’s also incredible fishing off Ragged Island that would attract international fishing enthusiasts.
I would also like to see an investment in a more tangible monument to commemorate the fallen heroes of the HMBS Flamingo built on Ragged Island.
People should never forget what happened there.
That history must be told and commemorated.
I will never forget you, Ragged Island.
Bold, decisive, visionary leadership needed
You know, this is a beautiful country we have, with limitless potential.
We are only 400,000 people.
That is not a vast number.
We don’t have to live like this.
If we make smart investments, we can reap the benefits.
That’s what a PLP government will do.
We need to reform our education system to cater better to the needs of our population and equalize more of our people.
This happens through better teacher training, more parental involvement, reformation of community organizations and giving people a fighting chance.
We need to digitize our economy even further.
There are those whom this digitization would not capture, but we must bring them along.
This has been done effectively in Estonia and Greece and Singapore.
Not only will it make it easier to do business, but it will give us a modernized framework on which to grow.
We need to make more investments in small and medium-sized enterprises.
I went over this in my COVID-19 plan.
The one with the two billion dollars y’all keep talking about.
The one y’all didn’t bother to read.
All you saw was “two billion dollars”.
I’m proud of that plan, and I will lay it on the table.
There’s some good stuff in there.
We need to further streamline the investment process with the Bahamas Investment Authority; to also encourage and shepherd significant domestic investment projects it would lead to more growth.
That is what a PLP government will do.
Growth is the key to the future.
We want to be more than just a country that manages debt.
We want to grow our economy.
We need that big push in agriculture and fisheries.
We can feed ourselves, then others.
We can do it now.
We need to spur the pharmaceutical industry in Grand Bahama with more incentives and stronger business development and recruitment of companies.
We need to harness our natural resources and invest the proceeds in the people.
There is a Mexican company named Oceanus International that is right now offering sand export and sale services to the world.
And it’s happening while the budget said the Department of Lands and Surveys will collect a total of a meager $24 dollars from aragonite mining in the 2019/2020 budget cycle.
I promised to ask for clarity on this in this House.
Is Oceanus authorized to mine aragonite in The Bahamas?
If so, when was Oceanus granted a permit to dredge aragonite in The Bahamas?
Is Oceanus subcontracted to dredge in The Bahamas? If so, by who?
What are the terms of this permit and what was the cost of the permit?
What are the concessions Oceanus claims it has been given?
Who are the principals of Oceanus and who are their local representatives?
How much aragonite has Oceanus dredged in The Bahamas?
How much aragonite has been exported out of The Bahamas by Oceanus?
Has the customs department approved such exports and in what quantities?
Why is the revenue for aragonite mining budgeted at only $24, when a company has a permit to dredge our natural resource and is currently marketing this service throughout the world?
In 2018, the minister of the environment announced that Cabinet was reviewing a report on the value of aragonite and the requisite mitigation of the effects of mining and that a report would be made to Parliament.
What is the status of this report?
I asked these questions weeks ago and nobody answered.
We must be accountable on issues regarding our natural resources.
We have to protect and empower Bahamians.
If not, why are we even here?
We need to ease doing business in this country, and stop just paying it lip service.
We need to make The Bahamas better for her people.
Not for us.
Not so we can boast and claim credit for lower deficits.
We need to lead the people.
We need to chart a course for a future Bahamas that is filled with promise.
Or, again, why are we here?
This all stems from leadership.
Real leadership isn’t determined from how one navigates in times of plenty; it’s how we chart our course of out crisis.
Bahamians have become disillusioned with leadership in this country.
Why do you think we change government’s so often?
The confidence isn’t there.
The inspiration isn’t there.
Bahamians must be inspired to dream again.
They feel as if the country is stuck.
Our youth and millennials and Bahamians living abroad feel disillusioned.
They feel as though we’re all just spinning our wheels because politicians only want power for power’s sake.
I know I speak for my colleagues on this side when I say we want power to harness possibility.
To shift a The Bahamas to a country where dreams are only limited by the vastness of your imagination and your dedication to hard work; not the circumstances of your birth.
We seek power to drive this country forward.
To leap forward with bold, decisive, visionary leadership.
It is something that is sorely lacking in the leadership of this administration.
But God, in all His wisdom, will see The Bahamas through.
May God bless the people of the Exumas and Ragged Island.
And may God bless the Commonwealth of The Bahamas.
