Hon. Philip ‘Brave’ Davis
Deputy Leader of the Her Majesty’s Official Opposition
Progressive Liberal Party
To the 2009/2010 Mid-Year Budget Debate
Mr. Speaker I rise on behalf of the constituents of Cat Island, San Salvador and Rum Cay on this the mid-year report for the fiscal year 2009/2010.
The opportunity to participate in the growth and development of this country through elected office is a sacred honour and solemn privilege. A privilege that must be earned continuously through the quality of representation rendered. With every opportunity that I have to speak on behalf of the people of Cat Island, San Salvador and Rum Cay I am deeply humbled for the confidence that they have reposed in me and will continue to work tirelessly in my representation of them and to make this country better than I met it.
Mr. Speaker, it seems to me that we as elected parliamentarians should remember this simple truth: We are in this Honourable House to deal solely with the people’s business…the people’s business! We are not here to pursue Narcissistic flights of fancy or to pad the pockets of our campaign contributors! We are here to get things done!
In this spirit Mr. Speaker I cry shame on this government for their gross failure in managing this economy! In the worst global financial crisis in recent memory this government has inflated the National Debt, and in so doing risked the financial security of our children and our children’s children and what’s worse they cannot show anything for it!
Mr. Speaker, this government has squandered its opportunity to take this country forward and their actions have left us in the middle of the street with our pants down and hands out. We have become as Warren Buffet aptly puts it, reliant on the kindness of strangers.
The Member for North Abaco should be ashamed of himself and he should immediately apologise to the Bahamian people for his abysmal stewardship of the economy – since he is in an apologetic mood. In the words of the Member for Bamboo Town – who has joined my choir this country “is heading in the wrong direction! It is a disgrace!
Mr. Speaker, the contribution from the Member for North Abaco was long on talk and excuses and woefully short on solutions! It is cotton-candy politics at its best – all fluff and not an ounce of substance!
This, now the third year…the THIRD YEAR of his administration and they are still talking about streamlining revenue collection! My God man, stop talking and just do it! Bahamians are tired of hearing all this talk…fix it! The member for North Abaco likes to parade around town saying that he is leader, then for God’s sake man lead! Stop playing silly games with the Bahamian people and lead!
I have never before in my life heard or read a contribution that was so out-of-touch from ordinary Bahamians…so far removed from reality. After reading it, I can only speculate that the Member from North Abaco is more focused on retirement than with the areas of his portfolio!
Mr. Speaker, so delusional was the Hon. Member from North Abaco that he failed to realise that his government cannot meet the VERY criteria that he raises in his very communication.
The member states that the medium-strategy of his government is to:
Maintain, “fiscal flexibility in order to be able to deal with any worsening of economic conditions”.
Well Mr. Speaker, as National Debt is already at a staggering 46% of the Bahamas’ Gross Domestic Product and climbing, as our economy continues to contract, how does he really expect to do that? What fiscal head-room does this government actually have? How much debt does the government intend to saddle the Bahamian people with?
The Bahamas has established a prescribed limit for its National Debt and that limit is 40% – so I submit Mr. Speaker that no such fiscal flexibility exists and should NOT exist. In short Mr. Speaker, as a result of this government’s brazen mismanagement of taxpayer money, we are in an economic straightjacket, waiting for our friend’s to the North to come visit and spend some money – what an impotent state for a country laden with potential and opportunity.
Mr. Speaker, the Bahamas’ level of debt is a serious problem and a reason for grave concern. The Member for North Abaco is borrowing like there is no tomorrow. The rate and level of borrowing is unprecedented and much of it without merit. Government has fallen considerably short of its revenue projections, by and large due its failure to stimulate the Bahamian economy in any meaningful way.
Mr. Speaker, North Abaco and his government continuously boast of their economic management and financial prudence. Nothing is further from the truth. It is all smoke, mirrors that can’t stand the light of day. The proof is in the pudding.
Near the end of last year, the Standard and Poor’s rating agency downgraded the sovereign debt rating of The Bahamas from A to B+. This rating is an indicator of our country’s ability to repay its debts. For the first time in recent memory, we have been downgraded due to the fiscal recklessness of North Abaco and his government. The other side may disagree all they wish. They however are increasingly in the minority. The views I express here today are not simply those of Philip Davis, the Progressive Liberal Party and the majority of Bahamians but also Standard and Poors.
Mr. Speaker, I am talking about Standard and Poors – a truly independent international rating agency! If you don’t want to trust my words then trust theirs! They have advised North Abaco and his Government to limit government spending! Yet in the face of sound advice they have continued to borrow and spend as if money is going out of style! North Abaco has found it fit to heap added expense on the backs of poor people in this country at such a time! His focus is on political mischief and catering to special interest and not our drowning economy and international reputation! North Abaco’s politics is more important than the welfare of this country!
The advice of the S & P and downgrading of our economy is on the heels of sharp criticism by the International Monetary Fund with regards to North Abaco’s chronic mismanagement of the economy. Mr. Speaker, in the long term interest of the Commonwealth of The Bahamas, it is time North Abaco to heed sound advice and press brakes. We are on a slippery slope.
Expenditure vs. Investment
Mr. Speaker, I am going to deal now with how the government spent all this money. There has been plenty back and forth on this one Mr. Speaker, so I am going to take my time and speak slowly so that we could put this to bed!
Mr. Speaker, let me say here that I understand Keynesian Cyclical Economic Theory. I understand what the government was trying to do – at least what I hope they were trying to do. I understand the theory that in periods of economic contraction governments should increase spending – I have no quarrel with that! Indeed, in the face of the recent global crisis the governments of the United States, United Kingdom and EU member states all pumped huge sums of money into their financial systems to thaw frozen credit markets and stimulate economic activity.
Unfortunately though for us here in the Bahamas Mr. Speaker, the government’s spending spree lead by the member from North Abaco were NOT stimulative!
The government spent just under one billion dollars in varying packages that they claimed was their stimulus plan. Yes, Mr. Speaker, you heard me correctly; they spent just under a billion dollars. Some of the projects Mr. Speaker included, the Road Improvement Project, the construction at LPIA, dredging of the Harbour, the Arawak Cay Container Port Relocation project, the New Providence Cleanup and Beautification Project amongst others.
Mr. Speaker, to those that simply do not know any better, these projects may appear to “stimulate” economic activity but they do not and have not, and unfortunately the honourable member from North Abaco and Marco City seem not to know any better. I guess to them Mr. Speaker, government is spending money and Keynesian economics says you spend money when things tough, so everything must be good with that! Not so fast! We must be reminded Mr. Speaker that the Bahamas is an importing nation! Our economy is consumptive. The Hon. Member for Marco City even admitted at his Party’s convention that 60 cents of every dollar spent on Capital Works makes it way out of the country!
The government’s attempt to “stimulate” economic activity was shot in the leg before it got at the gate Mr. Speaker as they were losing 60 cents on the dollar as soon they signed the contracts. I am no Agro-Economist but that don’t seem smart to me! That’s point number one Mr. Speaker – the government leaking money from the get-go!
Add to that Mr. Speaker that the projects (save one) will NOT create revenue streams and as such is ‘dead’ money. The only project Mr. Speaker that could potentially pay for itself in the long-term was the dredging of Nassau’s harbour to receive the larger cruise-liners now in operation. Every other project will NOT produce additional streams of revenue and therefore represent losses. What makes the losses even that much harder to swallow is that the government has borrowed money in order to fund them. The result Mr. Speaker is a toxic cocktail of higher national debt with government revenues at best remaining the same. Invariably, this will mean the following:
Higher taxes to cover the debt
Cancellation or suspension of government programs
Reduction of the public service
Sale of government assets
Reduction in Bahamas’ economic rating by independent financial agencies (we of course have seen this already, first with the Moody’s reduction in October of last year and most recently with the S&P’s reduction)
Mr. Speaker, that is the irrefutable and for some inconvenient truth. This is the crux of the FNM government’s abject failure in economic affairs – the inflation of the National Debt on non-income producing projects. It is apparent Mr. Speaker that this government doesn’t know the difference between an expenditure and an investment! For their edification, expenditures cost you money, investments make you money!
You see Mr. Speaker, with expenditure of this magnitude, the honourable member from North Abaco and his government had an opportunity to invest. The government could have very easily taken a few of the billion dollars that they spent and invested in the Bahamian economy, and again for their edification here are a few ideas:
Diversifying the Economy through the investment in new industries eg. Green Energy
Strengthening the linkages between under-developed industries and the well developed ones to develop economic take-off eg. Assistance to farmers to get their produce in Hotels.
Augmenting the development of small and medium-sized enterprises (SME) through government incentives
Providing tax incentives that would encourage Bahamians to invest in the local economy and consume locally produced goods / services.
Investing in capital work projects that would generate revenue to pay-down on the high gross national debt. The simplest example of this is a high-use bridge / express-way for which a toll could be exacted and directed towards the public treasury.
Mr. Speaker, I believe in Bahamians. I believe in their ability and I believe in their decency. If that belief is shared by the members opposite, then it should have been demonstrated in their decision to give a hand-up and NOT a hand-out!
Mr. Speaker, in these difficult economic times the Free National Movement is throwing money away. At a time when we have been warned and advised to tighten our purse, North Abaco has opted to issue grossly inflated in pursuit of his own selfish political agenda at the expense of the Bahamian people.
A prime example of this is the contract recently executed between the National Insurance Board and Woslee Dominion Construction Company to construct a government complex in Abaco at a whopping $25 Million dollars. It does not take a genius to conclude that the contract is grossly inflated and the reasons why.
Mr. Speaker Woslee Dominion is the same young company that the former Christie Administration had granted a contract to construct a new straw market, the centre piece of downtown Nassau at a cost of $23 Million dollars. The Member for North Abaco was all over the place saying that they were not qualified. They were not good enough according to his administration.
Mr. Speaker, it is now clear that the same construction company is all of a sudden miraculously good enough to receive a $25 Million contract to construct a government complex in Abaco. The contract is $2 Million more than the contract executed for the Straw Market! The new complex is in the home island of the Prime Minister.
Woslee Dominion was always qualified. Unfortunately, the Member for North Abaco terminated their contract with the Government without cause. It would appear to most right minded Bahamians that Woslee has now received an inflated contract in which the penalties, losses and legal fees that were owed to them for breach of the straw market contract by the Ingraham government have been built in. If this is indeed the case millions of dollars from the National Insurance fund will be wasted and paid out due to the arrogance and ego of the Member for North Abaco.
Mr. Speaker, how else can they justify a complex costing twice as much as they are willing to budget for the reconstruction of the premier Bay Street tourist attraction. Indeed the good people of Abaco deserve good Government accommodations, offices and facilities but what about our premier tourist attraction? Should that be dumbed down now for cheap political agendas and egotistical priorities?
Nonetheless, it is time for the Member of North Abaco to do something for the good people of North Abaco. They have been good to him. I am happy for my good friends there.
Should inflated contracts be the way of dealing with poor and rash decisions made by the Member for North Abaco and his government?
Mr. Speaker, the Prime Minister is playing games. He is toying with young qualified Bahamians! He is squandering money and resources at a time when things are tough indeed. Governance is serious business. The Bahamian people deserve value for their money.
Cat Island, Rum Cay & San Salvador
My Constituents are watching and taking note of these wasteful spending. Cat Island still requires potable water.
the dock at Smith’s Bay needs repair;
corrective works to the dock at Bennetts Harbour to make it more mailboat friendly;
Bennetts Harbour needs cleaning out and dredging;
the new terminal at New Bight and the terminal at Arthur’s Town upgraded.
When you took over you met commitments – for the construction of a new clinic, administrative complex; police station, doctors and nurses residence; central high school – you took them off the table.
Rum Cay has had a makeshift clinic for years and requires.
a primary school and delegate the present building as a heritage site – being the school attended by Sir Milo Butler;
commitments for these were left on the table.
water concerns – Truck in Nassau for years.
San Salvador requires:
potable water delivered to remaining communities;
repair to the public dock;
construction of a new airport terminal building;
cable to United Estates;
High School and Primary school – commitments left on table.
Foreign v. Bahamian Expenditure
Mr. Speaker the impact and stimulus of the massive expenditure by this government has been severely limited by this Government’s over reliance on foreigners to carry out contracts that Bahamians and Bahamian companies are more than aptly qualified to perform. Yes the government may be signing millions and millions of dollars of contracts but how much of that is being left in the country? How much is being reinvested in the Bahamas so as to have a significant multiplier effect and trickle down to those who need it most?
Just look at the New Providence road improvement project. Mr. Speaker millions have been paid to an Argentinean company for work that Bahamian companies have proven the capability to perform. The work is of no superior quality to that done by Bahamians. The road works have been plagued with delays, queries, and complaints of unfair compensation and discriminatory practices by Bahamian workers and subcontractors while hard earned dollars that will have to be repaid by Bahamians are being sent out of the Bahamas to help and build up Argentina.
Mr. Speaker, look at the quality of the work done by the joint-venture between Bahamas Hot Mix, beneficially-owned by the Member for St. Anne’s and Bethel Trucking on the Tonique Williams Darling Highway. Indeed it would seem as though the Member for Farm Road has more confidence in the ability of Bahamas Hot Mix to construct quality roads than his political leader, the Member for North Abaco. I and my colleagues would support a fairly tendered contract to be given to a qualified and competent Bahamian any day over a foreign company. We have confidence in Bahamians regardless of their politics.
Mr. Speaker, should the Government wish to maximise the impact of its expenditures, I would advise them to look to competent young Bahamians. During such dire economic straits, we need to be in a position to make sure that as much as possible that moneys earned from Government contracts are re-invested in the Bahamas.
There is a need to change the model that seems to be the accepted practice of the present Government – that is to hire a foreign company and have that company subcontract Bahamians. Should we wish to limit the bleeding of our economy, it is high time that the Member for North Abaco demonstrate his faith in Bahamians by giving the primary contracts to qualified Bahamians and permitting them to contract foreign consultants whenever additional expertise is required.
Arawak Cay Port – Poor Planning and Environmental Degradation
Mr. Speaker, the poorly planned and ill-conceived commercial shipping port at Arawak Cay is another prime example of the ineptitude of this Government. There was no consultation, no proper environmental studies or general planning.
Mr. Speaker, this government is so rudderless, so clueless in its dealings, that it started to expand the port at Arawak Cay without even having an agreement in place with the effected shipping companies. In the Business Section of The Tribune of January 28, 2010, under the headline ‘’Dead in water’ fears over port’, it is reported that this government and the related parties are at an impasse and no agreement is in sight. The agreement that can’t be signed, is the same one that Members from the side opposite swore to the Bahamian people in a town meeting was signed. Against the objections of environmental experts and residents in the area, this government proceeded Mr. Speaker, only to now find out that no agreement is in place!
Mr. Speaker only God knows how you can justify spending public money to build a port for companies, yet not have a contract with those companies, but this government did it! The government played fast and lose with the people’s money…this time to the tune of $70 Million dollars!
PI Ready Mix
The Mail Boat Association
Mail Boat Company
CC Enterprise Bahamas Ltd.
Blue Flag Ltd.
Inter Island Feeder
Island Terminal Services
Container Terminals/Tropical Shipping
Bahamas Hot Mix
Sea Truck Ltd.
Betty K. Agencies
Tycoon Managements Ltd
Crowly Caribbean Services
Mr. Speaker, on the face of it many of the proposed shareholder in the port company appear to be shell companies with no track record in the shipping industry in the Bahamas. I call upon the Member for North Abaco, the Member for St. Anne’s and the Member for Marathon to disclose to the Bahamian people who are the share holders of these companies?
Mr. Speaker it would seem as though the Member for St. Anne’s is a beneficial owner of or directly related to at least three of the companies that I have listed. Is he still leading negotiations with himself on behalf of the Government and people of the Bahamas? The Bahamian people deserve better.
Mr. Speaker, listed amongst the proposed shareholders is Bahamas Hot Mix which is beneficially owned by the Member for St. Anne’s. When did this company start engaging in shipping and matters related to the port? The Bahamian people deserve an explanation! This sort of foolishness must stop and it must stop now!
What is even more outrageous Mr. Speaker, is that this project has already destroyed Saunders’ Beach. If you drive down West Bay St., you would think that an atom bomb had gone-off. It is a disaster. The once beautiful scenic drive along West Bay Street has been destroyed. Trees have been uprooted and the extension to Arawak Cay has – just as the environmental experts warned – shifted tidal flow and washed away all of the sand. Ordinary Bahamians have lost another important recreational space and can see nothing but milky water and eroded beachfront. This government should be ashamed of itself!
This Government is one hell bent on breaking down. Mr. Speaker, that is the Modus Operandus of the Member for North Abaco. In the name of politics and his own ego he abandoned the port planned for South West New Providence. We must mature politically so as to not to abandon well though out and sound projects simply because it was conceptualised by another administration. Good governance requires that we follow through with the best plans and ideas in the interest of the people of The Bahamas regardless of their origin. Instead we have the makings of a port in the centre of the touristic district of Nassau.
Mr. Speaker, containers, barges and a commercial port will be the first and last impression of the majority of visitors to our shores who travel here by cruise ship. And first impressions are lasting. I have heard the Member for Marathon on several occasions attempt to justify this poor policy decision by stating that there is a touristic district and commercial port side by side in Miami, Florida. Indeed that may be the case, but the truth is the matter is that we compete with established destinations like Miami for tourist dollars. They are our competitors. The objective should always be to better than the competition. Our tourism product is presently challenged as it is.
Mr. Speaker we must also ask what about the future of the fish fry and cultural centre at Arawak Cay?
What makes the decision to place the Port at Arawak Cay even more outrageous and a waste of taxpayer’s money is the admission by Member’s opposite that within fifteen to twenty years New Providence will outgrow the port presently under construction. Where then is the long term planning? The next generation of government and political leaders will be faced in the next 15 to 20 years with a grossly inadequate port. Mr. Speaker to me it makes no sense. Bahamians will still be paying for this new port through high taxes long after the port has outlived its usefulness.
No matter what spin North Abaco and members opposite may place on the port at Arawak Cay the disaster is there for all Bahamians to see. Mr. Speaker, this port is an example of the poor planning of this administration, environmental negligence and wasteful spending.
Hotel Corporation of The Bahamas
Mr. Speaker, this Government is operating without any plan. Through its recklessness it is causing hardship on productive Bahamians. Look at the state of the Hotel Corporation of the Bahamas. It is a disgrace and I cry shame! It is an example of the way Hubert Ingraham and his uncaring Government treats Bahamians. They have shut the doors. They have sent workers home. Some persons have been there over thirty years. The doors were closed on December 31st. I am advised that the employees of the Corporation received one letter dated 25th September, 2009 and nothing further.
The letter reads:
“I am directed by the Board of The Hotel Corporation of The Bahamas to inform you that a decision has been taken by The Government to wind up the operations of the Corporation and to repeal The Hotel Corporation Act no later than 31st December, 2009.
Accordingly, I am also to inform you that arrangements will be made in relation to various categories of staff for the settlement of appropriate termination benefits, particulars of which will be communicated to you in due course.
The Corporation wishes me to express appreciation to you for your valuable services over the years.”
Mr. Speaker, they have heard nothing since. The Minister has no answers. The Permanent Secretary has no answers. The Board of the Hotel Corporation of The Bahamas has no answers. I raised this issue several weeks ago. The Deputy Prime Minister and Member for St. Anne’s was interviewed by the Press and failed to provide any answers.
The staff was last paid on December 14th- over 12 weeks ago. They were sent home in December but the Hotel Corporation Act has not been repealed. No severance has been paid. No pension exists. Productive Bahamians have been sent home by this Government. These people have school fees to pay. They have light bills to pay. They have mortgages. What are they to tell the Bank? Hubert Ingraham sent me home? In a tough economy the Ingraham Administration are proving heartless. The staff of the Hotel Corporation, many of whom have given over a quarter century of service to this country need answers. Many of them are well below retirement age. Mr. Speaker they deserve an answer.
Mr. Speaker, every casino license in this country is owned and vested in the Hotel Corporation of The Bahamas. Every casino in The Bahamas has a lease and management agreement with the Hotel Corporation of The Bahamas. What about the future of these casinos? Where is the plan? Has this Government simply closed the Corporation to open another entity with the same functions? Where is the sense in all of this?
Mr. Speaker, We must question whether all of this was Government’s way of getting rid of some people who they thought was PLP? Why have so many other persons been made to suffer and experience economic hardship as a result? Bahamians are Bahamians regardless of race or politics.
Has the Government considered the substantial legal and administrative cost of winding up the Hotel Corporation at this time? Is this the time for this? This Government has more than enough on its plate right now. From the letter provided to the staff we understand that the Government intends to repeal the Hotel Corp Act. However the Member for North Abaco has also advised that he intends to porogue Parliament this month. There is no notice of any repeal. Mr. Speaker what was the rush? Why were these people sent home with no plan in sight?
Solutions to Move the Country Forward
Mr. Speaker, this is the sixth budget or mid-term budget by this Government in 33 months since returning to office. While it is a privilege to participate in and contribute to this debate on behalf of the good people of Cat Island, Rum Cay and San Salvador, it is indeed a waste of time and serves as a public relations exercise to mask the failures of the present Government. The reality is that we will be back here in three months to debate the budget for 2010/2011 fiscal year.
Mr. Speaker in 1992 the Member for North Abaco stated and I paraphrase:
“Our homes are being auctioned off. Cars are being repossessed and sold. School fees can’t get paid. Lights are turned off. Babies pampers can’t be bought and babies crying for food. Things are tough…”
17 years later many Bahamians are experiencing that same agony and reading those words back to him.
Mr. Speaker, no matter how much they dress up the numbers the average Bahamian is experiencing hell. The unemployment figures are extremely dated and fail to take into account the considerable number of underemployed and discouraged workers that presently exist in our economy. Mortgage arrears are on the rise and Bahamians are finding themselves on the verge of financial collapse.
Small businesses are dying. People are being laid off. The prospect for jobs seems unlikely. Hundreds of Bahamians spent last night in darkness. Government social assistance for most Bahamians is a day late and a dollar short. This is the reality of the Bahamas in March 2010.
It is apparent that this Government does not have all the answers yet they have seen it fit to go it alone during these tough times.
We can do better and we must do better as the people of The Bahamas are depending on all of us on both sides of the political divide.
Hard times and misery knows no age, race, socio-economic background or political affiliation.
We are in this together. It is more than two and a half years into the term of this Government. It is time to stop blaming the Progressive Liberal Party for everything that is not going right in The Bahamas – after all the Member for North Abaco has been Prime Minister for 12 of the last 17 years.
Mr. Speaker, it is time for the Prime Minister to take ownership. He can be assured however that my colleagues and I are willing to assist and do our part to move the country forward.
Mr. Speaker, it is for this reason that I encourage the Prime Minister to include her Majesty’s Opposition in more of the decision making as it affects plans to revitalise and stimulate the Bahamian economy.
Although we are considerably advanced in terms of the present economic recession, I also implore the Prime Minister to convene an economic conference with the brightest minds of our country so that we may collectively determine and put in place without delay policies and initiatives to ensure that the Bahamas rises out of this recession economically stronger and more resilient than ever before. It is time to seriously discuss the economic model of the future Bahamas. It is unlikely that our present model will continue to provide Bahamians with the standard of living to which we have become accustomed. The Progressive Liberal Party is ready and willing to fully participate in such an exercise. The Bahamas belongs to all of us and no man is an island.
In the interim, there is much the Government can do to improve the overall economic health of the country. There must be an increased focus on small businesses and commitment to aid them in succeeding. There are areas such as souvenir manufacturing that hold tremendous potential for young Bahamian entrepreneurs and can positively impact our balance of payments. Small businesses also provide meaningful and sustainable employment. It is necessary for the Government to provide the proper framework.
It is time that this Government becomes serious about supporting and giving substantial contracts to Bahamians. As leaders we would have failed if 36 years after independence we cannot find qualified and competent Bahamians to carry out infrastructural works in The Bahamas. Mr. Speaker, Bahamians are more inclined to retain and invest their moneys in the Bahamas thereby positively and meaningfully stimulating our economy.
Mr. Speaker, during these tough economic times the Government ought to be fiscally disciplined and prudent. Government ought to resist the temptation to inflate contracts and engage in political patronage. Every penny counts. Wastage and expenditure with no long term economic or social impact is dragging our economy and economic prospects into the gutter.
Mr. Speaker, there are better days ahead for the Commonwealth of The Bahamas.