2019 2020 BUDGET CONTRIBUTION
CHESTER COOPER, EXUMAS AND RAGGED ISLAND MP, PLP DEPUTY LEADER
JUNE 5, 2019
Good afternoon,
It is always an honor to stand and address this House on behalf of the great people of the Exumas and the great and long-suffering people of Ragged Island.
I note that I have two hours to speak today.
Though I do hope and pray it does not take me two hours to say what needs to be said.
We sat in this House last week to hear a budget communication that lasted almost four hours .
Frankly, it was dull. Devoid of hope. Provided no uplift for the Bahamian people.
It was unimaginative and uninspiring.
It engendered no confidence in the future of this administration.
It had no overriding rallying theme. It lacked center. It lacked soul.
And I have to also be frank in saying that the vast majority of that was unnecessary political rhetoric.
But more on that in a bit.
When I came to this House two years ago, it was against the backdrop of an historic election that saw the Progressive Liberal Party suffer a great defeat, and swept in a Free National Movement that focused much on so-called corruption, and promises of transparency.
I thought there was a great deal of naiveté coming from the government side as it sought to demonize Bahamians as a corrupt people.
I heard a lot of piggybacking and attempts to fix or enhance PLP programs, not a lot of innovation or thorough discourse.
But I was hopeful.
I was hopeful that the FNM would move the nation forward, as they were elected to do.
I was rooting for their success, even being in opposition.
I am PLP but I am a Bahamian first, a nationalist, a businessman with a family.
If The Bahamas succeeds then we all do.
A rising tide they say, float all boats.
And so, with some level of hope, I sat through the member from East Grand Bahama’s first budget statement in 2017.
And my hope faded fast.
He used that communication to deride the PLP.
To claim they had done a disservice to the Bahamian people.
He said the PLP ran up hundreds of millions of dollars in bills, then he proceeded to borrow hundreds of millions of dollars on the backs of the Bahamian people.
I swiftly pointed out that it was the “wrong speech, at the wrong time”.
Then I sat here again in 2018, my hopes immensely tempered, wishing I would hear some semblance of sense after the hundreds of millions borrowed.
But my hopes were dashed again, as the minister and this administration did the unthinkable.
They raised VAT on the people, and tried to sell it at any cost.
This administration and their operatives made nonsensical arguments about dollar devaluation and the fate of other nations and the possibility of losing a country because they simply couldn’t manage to figure out to how to run this government without causing immense pain to the Bahamian people.
The things they railed against the PLP for – the establishment of value added-tax, the regulation and taxation of the gaming industry – they said that these same things were the mechanisms of their salvation.
And only going beyond where the PLP wisely decided not to go with these measures, could the Bahamian people be saved from certain doom.
What we understood at the time, and now it is quite plain to see, is that the ones the people needing saving from, were the members of the Free National Movement administration.
It was a dangerous move, a heavy gamble.
But they said they had the economic models.
They said they knew what they were doing.
They said they were confident they could collect the revenue and the Bahamian people could take the strain.
We told them it was too steep to soon; it would dampen the economy, increase unemployment, inflict great pain on the Bahamian people.
And now we know that they were wrong. And we were right.
We know that because we come to this latest budget communication delivered last week.
And we see a pattern of non-inspiring doubling down of wrongheadedness of epic proportions.
But before we get into the meat of this latest failed budget submitted to this House, let me explain something.
I did not come to this place to sugarcoat or to make friends.
I came here to help.
I came to contribute to a nation that has contributed so much to me.
For perspective, I was born and grew up at Forbes Hill, Little Exuma, in a level of poverty that many in this place claim to know, but surely don’t act like they’ve ever experienced.
I was the last of 12 children, raised by a widowed mother.
I had no silver spoon.
I had no prospects and no rich uncle.
What I had was a loving family, a supportive community, a nurturing “village”, and a government, a Progressive Liberal Party government, that believed in investing in the Bahamian people.
I stayed out of trouble. I studied hard.
I got a scholarship, a government scholarship, to attend university, and the village helped.
And through hard work and God’s grace, I achieved much.
And though I have given back much throughout my career and businesses, I found myself at a place where I saw politics as a chance to make a difference on a national scale.
I hear some on the other side as they constantly make references to my wealth.
They say I’m a rich man. You will hear it again before this debate ends.
I am not offended by it.
I have earned everything I have with sweat, struggle and a lot of tears.
I am proud of what I have achieved with the help of the Almighty and the loyalty and support of the Bahamian people.
But, I suppose, richness and wealth – it is all relative.
There are those who I could mention who benefited from a legacy of privilege who have amassed a bounty that would make a king blush.
Yet, they want more.
I call them the “Special Interest”.
The Special Interest in this country who are constantly protected by this government.
That’s right, this budget itself is a budget for the Special Interest.
This administration promised campaign finance reforms in the interest of their soap box “transparency and accountability”.
And I was once again naively hopeful that with those reforms we would be better equipped to limit and expose the influence of special interests.
And I came here to protect the poor and middle class from the “Wolves of Special Interests”.
Those special interests whom some on the other side would support by squeezing taxes from the poorest among us whilst turning a blind eye to numerous board appointments from special interests that apparently seeks to gobble the resources of this country, while displaying no consideration for the most vulnerable they represent.
I came to this place to protect and do all I can to uplift the Bahamian People; create opportunities and empowerment for our youth.
I came to this place to protect the struggling businessman, who wants to know the pride in building something he or she can hand down to the next generation, much like those who have so much who you so unfailingly protect.
I came here to empower the Bahamian people.
To help break the poverty cycle, to bring solutions if I can to structural unemployment; that’s what the PLP philosophy is about.
Many who sit in here will praise the movement of a post office to Town Center Mall as a national achievement, yet fiddle while Bahamas Power and Light says one thing and does another, while still failing to provide affordable electricity and keep the lights on.
I came here because I feared for this country should the wolves of special interests convince the gatekeepers they would be good protectors of the sheep.
And I see now my fear was right.
Yes, this is a budget for the rich, connected and the powerful. The special interest.
Some people are protected, their fortunes jealously guarded, while others are expected to give more than they have.
There are those of us in here who will dismiss the failure of this administration to keep the lights on with an admonition to take a “cowboy” shower.
There are those of us in here, who will sit idly by and thunderously applaud the application of even more pressure to the poor and working class, yet say nothing when asked why we do not tax the wealthy.
Because clearly, we give tax breaks to the rich in The Bahamas. We only tax the working and middle class.
We only tax those still in the struggle. But I will tell you, that the struggle is real.
If you’re one of the lucky few who made it, congratulations, it’s smooth sailing from here with this government.
I came to this place because I wanted to create a Bahamas my children, Chelsea, Izak and Chloe, could inherit.
I came here because I wanted to empower Exuma and her people and Ragged Island too.
From Duncan Town to Williams Town, From Forbes Hill to Farmers Hill, to Black Point, to Highbourne Cay and everywhere in between.
Because there are still far too many forgotten people in our Family islands.
There’s an incredible amount of work to be done, inside and outside this place.
And I do thank my wife, Cecillia, my children and my business associates for the significant sacrifices they make on my behalf and those I represent.
I came here because I saw so many who had no voice crying out, yet still being ignored.
Much like the people of Ragged Island, who many of you think can survive on grandiose promises by the prime minister.
It is my sincere hope, that during this budget debate, our prime minister will offer an apology to the people of Ragged Island for gross neglect on the part of this administration.
It is my hope that this prime minister and the minister of education will articulate what the government intends to do on Ragged Island about the upcoming school year.
It is my hope that there is a plan in place, right now, for the provision of a nurse and some sort of clinic facility on Ragged Island.
The need for this is urgent.
These are real people, with real needs that the government is not meeting.
I cry and make noise for them because their cries have clearly fallen on deaf ears.
A failed budget
This budget is a failure.
It is painfully clear that there was heavy lobbying for and on behalf of special interest and their negotiators won.
So, I ask, who negotiated for the people?
Because clearly the special interest got tax breaks and the poor and middle class got shafted once again.
We see the new car dealers at it again.
On top of the $25 million lost in excise tax lost last year because you allow them to bring in the cars duty free and only pay taxes when they sell the car, they get even more tax breaks this time.
In the real property tax amendments, the removal of the residency requirement for home owner’s exemption for real property tax. Instead of 6 months it is now just seasonal occupancy, which could be widely interpreted and abused by rich second home owners. This is going to cost the Government millions. So the rich get loopholes and the poor gets crayons.
Yay. It’s the poor people’s time to stock their cupboard with crayons.
There is a new tax on currency conversion of 1.5% when you exchange currency. Not only does this potentially undermine dollar parity but it unintentionally encourages hoarding and a black market.
The Exchange Control regulation was amended last year to allow businesses to operate US$ accounts. So this is going to hit the poor disproportionately. In the simplest terms, as I interpret it, if a straw vendor, jet ski operator or tour operator in Exuma deposits a US$100 into their B$ account they would receive credit for only $98.50.
The rich get loopholes and the poor get taxed! How caring. It must be the people’s time.
So, I will say it again, this is a failure of a budget.
But I expect failure from a failed crew, though it does sadden me.
As far as I’m concerned, this travesty of an FNM budget has not one new idea that the PLP did not leave in the pipeline.
What a curious set of people we have in governance now. Always blaming the PLP for something, then claiming credit for what the PLP put in place.
For instance, the Small Business Development Center we hear this administration talking so much about.
It was former Minister of State for Finance Michael Halkitis who signed the deal for the establishment of that program with the OAS.
It was the PLP that determined the SBDC would be at the University of The Bahamas, to shield it from political interference.
Yet, the PLP is never mentioned when we hear of these success stories.
I wonder what the PLP sowed that this visionless government will reap credit for next.
Yes, the FNM is a visionless party that is also wildly hypocritical.
There’s the obvious, “taxing is the lazy way out”, from their leader himself.
Guess we’re not supposed to bring that up anymore.
But there’s also just the embarrassing and the shameful.
Remember when the FNM was against the Spy Bill before it was for it and passed it? Didn’t Killarney march with We March against it? How hypocritical.
Remember when the FNM said it believed in free tuition yet is standing by while tuition costs significantly go up at UB?
Remember when the FNM said the BPL exemption would benefit 60,000 households, now we understand it’s only 23,000?
Remember when the FNM said they were friends of the poor, yet gave tax breaks on caviar, new cars, planes, helicopters? How compassionate? I guess it’s dem people’s time.
Remember when the member for Southern Shores promised more money for local government in his first budget speech, yet there has been no appreciable increase?
Is it just me?
No one else remember any of that?
Aside from the lack of vision, the hypocrisy, the claiming of credit for other people’s ideas, this budget itself falls short of the standard of a budget which should be delivered to Parliament.
This failure is alarming, given the traditional apolitical stance of the Ministry of Finance in presenting fiscal numbers.
The standard for budgets is included in the International Monetary Fund’s (IMF) Manual of Fiscal Transparency.
And, honestly, for an administration that likes to refer to the IMF so much, I find their failure to adhere to the manual when presenting the budget quite puzzling.
Here is what the manual says this about budget data:
“Budget data should reflect recent revenue and expenditure trends, underlying macroeconomic developments, and well-defined policy commitments.”
On both accounts the government has failed.
The government has inexplicably increased revenue growth trends and decrease expenditure trends without explanation.
How can the government justify the withholding of payment to BPL as demonstrated in this budget for the period up to March 2019?
Or the non-payment of the insurance for the police, prison officers, defence force officers, customs officers, immigration officers and judicial officers as reflected in the numbers up to March 2019?
To ignore critical payments or inflate revenue numbers to meet some arbitrary deficit target is not right and reflects a minister and government desperate and disconnected from the reality of The Bahamas.
The government has simply ignored this basic principle and put forward a set of numbers with little or no reference to the commitments already stated and in the public domain.
I note, for example:
The lack of funding for the free tuition commitment for Bahamian students at University of The Bahamas.
The inclusion of cruise port revenue in the revenue figures of the budget given the government’s commitment to privatize the port.
The absence of any forecasting for the proceeds from the sale of the Grand Lucayan, although a Letter of Intent is supposedly signed.
And that’s just to name a few of these examples on the expenditure side.
On the revenue side, it is even more alarming.
The minister of finance, apparently in seeking to avoid breaching the limits in the Fiscal Responsibility Act, appears motivated to make the numbers work.
Why should we believe any of these revenue projections when the projections for 2019/2020 were so far off target?
The revenue numbers, in my opinion, can’t be trusted.
It is unfortunate that the minister would seek to empanel a Fiscal Council with this failure to meet revenue targets so fresh in the mind of the public and this Parliament.
If the Fiscal Council is to have even a shred of credibility, it has no choice but to immediately dispute the revenue estimates in this budget.
The IMF’s Manual on Fiscal Transparency, your friends, mind you, says this about revenue estimates:
“Realistic revenue forecasts are especially important since relatively small errors in forecasting this large aggregate can have a large impact on the fiscal balance given that expenditure is often difficult to adjust in response to revenue shortfalls. Revenue forecasts should be fully explained in terms of recent revenue trends, likely macroeconomic developments, and the estimated impact on revenue of any emerging consequences of existing tax policies and of any new tax changes.”
Very little of that appears to have been taken into account here.
The IMF Manual, these are your good friends, also speaks to something called internal consistency:
“Crosschecks of internal consistency of fiscal data should be undertaken, and the effectiveness of these procedures reported.”
In this case, the minister of finance has clearly failed.
As of March 2019, the average monthly revenue was $188 million per month leading to a projected year-end figure of $2.252 billion.
The minister, without any explanation, has estimated the year end figure to be $2.413 billion.
This difference of $161 million has allowed the minister to project a year -end deficit of 1.8 percent rather than 3 percent.
If he is wrong as I contend, his budget deficit won’t be $229 million but more than $400 million on this point alone.
There is no credible financial analyst who would accept these figures at face value.
So, really, this is all for naught and the credibility of this minister and the Ministry of Finance which he heads has suffered further damage.
After the minister’s second budget I introduced a concept of a credibility deficit.
I’m afraid it’s gotten wider.
This minister is concerned about the GFS deficit, but should be more concerned about the “credibility deficit”.
Yeah, you have a Credibility Deficit.
Bank tax regime
The minister’s treatment of the new tax regime for banks is also curious.
I would hope this isn’t a case of his famous poor modeling and he doesn’t end up inflating the business license’s projected yield.
Bahamian commercial banks pay business license of 3 percent of gross revenue and bank license fees.
The bank license fees were returned to the Central Bank to pay for the regulatory cost of supervision.
The minister is proposing that this continues but is showing this figure in a separate line but not reducing the business license revenue by the corresponding amount.
He is doing the same thing for premium tax collected by the Insurance Commission and remitted to the central government.
This is now called a dividend from the Insurance Commission, which for presentation purposes has been subsumed in business license fees for several years.
So, the true business license number by my calculations needs to be reduced by at least $40 million.
Therefore, I submit, that business license revenue in the 2019/2020 budget may be overstated by as much as $40 million.
This, when you to add to the true shortfall of this year of what I explained is likely to be $400 million, means that next year’s starting deficit without any tax adjustment could be $440 million.
This is a huge amount and unless addressed would effectively cripple the government operations in the coming year.
That, or this fanciful spending planned for next year will be shelved, just like it was this year, in order to hit the legally mandated deficit target.
When one looks at such a startling shortfall of revenue, one would think the minister would seek to close the loopholes as he has been talking tough on tax collections.
However, going over the fiscal documents, it all appears to have indeed been all talk.
The minister covers for the failure to restart the Revenue Enhancement Unit during the current fiscal year as promised in last year’s Budget Communication by putting forward an amendment to allow the financial secretary to hire contract workers to collect taxes. We heard this talk and flip-flop on this REU unit before.
Business license issues
The creating of four different start and end of tax year periods for business license registrants is one of the worse ideas that can be found in this budget.
Why did the government not just make it easier to pay quarterly in arrears for large businesses?
That would have improved the ease of doing business.
Instead, the government will likely create a compliance nightmare for itself, and this is for a tax type where you already have a compliance problem.
Not satisfied with immersing just the Department of Inland Revenue in a nightmare scenario, it follows that those who compile national statistics will be dragged into this nightmare as well.
Perhaps the minister did not realize he has responsibility for the Department of Statistics and business license data is an important data source.
However, I get the impression from the current fiscal budget and the one that is being proposed. I must question whether the minister is not too concerned about the reliability of statistics.
Another example in folly, or perhaps design, is exempting the revenue of wholly owned subsidiaries from business license once 90 percent of their sales is to the parent company.
This, in essence, is legalizing a method of some entities, such as large construction companies, in The Bahamas to avoid paying business license taxes.
The tax for them would now be on the margin i.e. the difference between what they charge the final customer and their internal cost provided by their subsidiary for the good or service.
The decision to allow a taxpayer to choose a tax year for assessment would lead to a reduction in the business license base and ultimately in the amount of revenue collected.
It would be better to decrease the rates across the board rather than create loopholes for special interests.
As for the exemption of revenue derived from export services for business license fees, it is clear that the minister does not understand how much revenue the large communications companies derive from foreign based counterparts in things like roaming fees, which would now all be exempt.
Speaking about the communication sector, I did not see an explanation for the 75 percent reduction in communication levy revenue in the budget.
Nor did I see an honest explanation for making the VAT exemption for electricity permanent.
An audit of the two large power companies to determine how they account for the VAT exemption would be very interesting.
I say again, this is a budget driven by the “Wolves of Special Interest”.
Credit where credit is due
In the Budget Communication, the minister speaks of several initiatives without providing credit to the work of his predecessors.
This is an act of extreme bad taste.
Without the work done by the minister of finance and the minister of state for finance in the last Christie administration to modernize the Ministry of Finance, the country would be a lot worse off and the present minister of finance would have little to talk about in his communication except for his failure to achieve the revenue, expenditure and perhaps deficit goals in his budget.
Since the minister won’t do it, let me do it for him.
We would like to thank the Right Honorable Perry Gladstone Christie and the Honorable Michael Halkitis for the new chart of accounts – thank you.
We would like to thank them for the upgrade of the financial management system inclusive of the eventual replacement of the JD Edwards and SSA Global System. Thank you so much.
For the establishment of the Small Business Development Centre, we would like to thank the former ministers and the PLP. Since we like to talk so much about the PLP.
For the establishment of the inter departmental revenue taskforce, the Revenue Enhancement Unit, reporting to the minister of finance, we’d like to thank the PLP.
For the engagement of PWC to determine whether the Ministry of Finance was fit for purpose in a modern Bahamas, we would like to thank the PLP.
For the engagement of KPMG to examine public service pension reform, and the further engagement of an actuary, Mr. Derek Osbourne, to develop a framework for this reform, I’d like to thank the PLP.
I would note that this framework is currently in place for the University of The Bahamas and can be used as a model of pension reform going forward.
In short, you really don’t need to hire more consultants to figure it out.
The PLP already did that for you.
For the Electronic Single Window now dubbed Click2Share, that should have been launched two years ago, I would like to thank the PLP.
For the modernization of the property tax regime and outsourcing collection to experienced private agencies, I’d like to thank the PLP.
For the new Public Procurement Framework, let’s all take a moment, and thank the PLP.
IDB dependence
The 2019/2020 budget also reflects an alarming reality, that the Government’s dependency on the Inter-American Development Bank, and now the Caribbean Development Bank, to determine its development priorities for the government through the provision of funds.
But strangely, this administration seems not able to use the funds provided as none of the active projects had any disbursements up to March 2019, which is an indication of the inefficiency of this administration in managing these programs as the government is paying commitment fees on the undisbursed balances of these loans.
Also, for some inexplicable reason the government in its proceeds from borrowing is showing it would receive another $32.5 million from the IDB for an Air Transport Programme loan having budgeted for such, and I believe the minister of tourism and aviation confirmed receipt of these funds during this fiscal year.
If this is a mistake, I would recommend that the General Borrowing Resolution be immediately amended to account for the lack of availability of these funds.
The CDB streetlighting loan was approved by the CDB in December 2018 and it now coming to Parliament almost six months later for approval.
The Government should explain why it is borrowing money to invest in infrastructure owned by BPL.
On the face of it, this loan makes no sense as BPL, the entity providing the service is not obliged or committed to take any action.
Should not the loan be made to BPL?
Does the technical expertise exist within the government to run this program or would this be forced on BPL when it is focusing on fixing the major power generation issues in New Providence.
Is this also designed the way to cater to the “Wolves of special interests”.
Rate Reduction Bond
With respect to the Rate Reduction Bond, the minister in his communication did not mention the RRB when he provided what he called good news about making VAT exemption on electricity permanent, but this is material matter and warranted some commentary.
The RRB, I am told, could lead to increase in electricity bill by at least $0.06 a kwH on monthly bills this year, which could be a greater than 12 percent increase in the utility bills for BPL customers.
This would negate any savings afforded by the VAT exemption and for many large commercial businesses would be a potentially fatal blow.
I would have thought that the minister of finance would have use the opportunity of his communication to give some relevant information as the RRB levy is, for all intents and purposes, a tax.
But perhaps I ask for too much. Perhaps I will get their “wolves of special interests” to ask the question.
Tourism boom
As it regards our number one industry, the government appears to be wasting away the benefits from the opening of Baha Mar and the rise of Caribbean tourism.
By the way, no amount of self-praise is going to convince serious analysts that the minister of tourism’s hyperbolic comments about the bullish tourism numbers represents a renaissance in our product initiated by him.
He knows it has very little to do with him but its cool to ride a wave.
We know he is just the luckiest minister of tourism ever.
And we are happy for him and more so the Bahamian tourism industry and the Bahamian people.
However, what he has done is shamelessly, in my view, sought to appropriate credit to himself that is due to others who toiled in the face of his and his party’s unrelenting and mean-spirited criticism in trying to get Baha Mar operational. Now, Baha Mar is wonderful.
In addition, The Bahamas’ success is not unique.
Throughout the Caribbean, countries are experiencing a rebound in numbers.
Just look at Jamaica, St. Lucia, Cayman and Cuba.
All these countries have seen record breaking growth in tourism numbers.
The one difference from The Bahamas is that their investment pipeline is strong, whereas we have very little.
But we have Oban. An oil refinery deal mired in confusion, conspired by convicted criminals, where allegations of corruption persist.
Meanwhile in Aruba they are seeking ways to ensure that the closure of their refinery is permanent.
Outside of the Disney project for South Eleuthera, no significant investment in the tourism product has been announced by this government.
If the Grand Lucayan sale was close to reality the repayment of the so call equity investment would have been incorporated in the budget.
Yet, it is not.
I can personally tell you that this drop of public and private sector investment is worrying for our future economic prospects and this worry is compounded by this poorly prepared budget and an FNM administration that does not inspire confidence.
Squandered goodwill
What can be said about this administration is that it will waste no opportunity to squander good will and favorable macroeconomic conditions.
Never before have we seen a new government squander so much goodwill in such a short time.
There was a window, though my fear now is that it is closing before we can take advantage of it, that presented great opportunity.
With a global economy on the rise, no hurricanes in the last year and record tourism numbers, there was an opportunity to put the country on track for real economic expansion.
Instead, this administration borrowed billions, raised taxes and could not meet its own revenue projections.
And instead of concrete explanations that make sense, we get trite, superficial, platitudes laced throughout the communication, designed to camouflage this administration’s incompetence.
But know that the window may be closing.
There are storm clouds ahead in the global economy.
The U.S. economic slowdown is becoming more a probability.
The trade war the U.S. is involved in China will likely contribute to that slowdown and increase the cost of consumer goods for us in The Bahamas.
And in the face of these clear and present challenges, what do we get?
A budget and a minister who re-arranges the furniture whilst the house is flooding.
Here we go again
What’s really startling about this budget communication is that one can hardly tell where politics ends and real communication begins.
But I’m no longer surprised.
I would though, like to commend the professionals at the Ministry of Finance for work they do. There are many good people in public service who often get lumped in with bad apples.
I dismiss this notion that those in the public service are not at the top of their game, as I recognize their contribution to nation building.
When the minister delivered his first budget communication, I said it was the wrong speech at wrong time.
And here we are again.
For instance, the government has borrowed in excess of $2.5 billion, whether for refinancing or whatever.
Borrowing is borrowing, no matter how many times the minister tries to stand to his feet to object and claim people are misleading this House.
What is misleading is that in light of all this borrowing, the government only had one paragraph on debt at page 16 of the budget communication.
You have an obligation to explain to the Bahamian people why you borrowed $2.5 billion and what you did with the money.
Nothing on the amount or ratios as they increased.
So much for “transparency”, I guess.
In my opinion, we have a minister of finance who has a bad habit of speaking down to people who are expert in the finance field with more experience than himself.
When he talks about the budget he acts as if he is the only minister of finance in the history of this country who has any sense who knows what he is doing.
He belittles icons in finance and their contributions, like Sir William Allen and James Smith in newspaper articles and through the suggestion that before he came, as he did on page 5 of his budget communication things were wildly and negligently out of control.
However, I recall budgets with lower deficits, lower expenditure and much more expansive capital works programs where revenue projections were often met and sometimes exceeded.
This country has never defaulted on its debts, it has never lost its dollar parity, it has grown economically, though not fast enough, in my opinion, before this current minister of finance came along.
And I suspect we’ll be just fine when he is no longer minister of finance after the next election; time longer than rope.
We have a minister of finance who talks about no new tax categories.
Of course, he doesn’t mention the increase in taxes within categories.
Cute, but where is the transparency?
I note that this government went to great pain to say it wants to increase the Ease of Doing Business.
But the Ease of Doing Business Committee is in yesterday’s Nassau Guardian saying that they are disappointed and that the government is not doing nearly enough.
The government says it wants to build a 21st century infrastructure as a new foundation for growth. I honestly don’t see where this is being done.
You mean the road paving the prime minister announced in his national address?
I don’t think that’s going to cut it.
The government says it will invest in education to break the cycle of poverty. I’m not saying that’s not being done. But I don’t see it laid out where meaningful steps are being made in this regard.
I hear a lot of what we would like to see.
But I don’t hear or can’t find a roadmap to that place.
The government says it wants to invest in renewable energy to create a sustainable future.
Surely this is a joke.
The government doesn’t know whether it’s coming or going with BPL.
And there certainly is no green city in Ragged Island, two years later.
One day it announces a deal with Shell for X amount of generation.
The next day it has some side deal with Wartsila for some of that generation.
Yesterday, they said they had another deal to encroach more on territory that was supposed to be for Shell.
Meantime, the government doesn’t plan to get serious about renewables in the Family Islands, the most practical place to start.
SBDC
This minister says the government wants to take a focused approach to expanding support for Bahamian entrepreneurs and small businesses. A nice notion, but the SBDC is not well resourced enough to make a transformative impact in the overall economy in the short term, though I do applaud its successes.
Among them is Keniqua Burrows, a passionate educator, and former Teacher of the Year at L.N. Coakley High School, who stepped out on faith to open Exuma Christian Academy.
Keniqua was intent on blazing new trails in education in a difficult space.
I have no doubt she will do so. Best wishes to her and I offer my full support as I have demonstrated in the past.
What I believe though, is that there are many more Keniquas out there.
However, the SBDC has only been promised $25 million over 5 years by this administration.
A PLP government will dedicate at least $250 million over 5 years to the development of small and medium sized businesses in its next term in office.
That’s how seriously we take this sector. We mean business. Serious business.
We understand it is the driver of economic growth and employment.
We also believe the FNM should commit to listing in full the grants and funding made available through the SBDC.
That is, after all, what transparency is about.
Infrastructure
The government says it wants to build a 21st century infrastructure as a new foundation for growth. I honestly don’t see where this is being done.
You mean the road paving the prime minister announced in his national address?
I don’t think that’s going to cut it.
The government says it will invest in education to break the cycle of poverty. I’m not saying that’s not being done. But I don’t it laid out where meaningful steps are being made in this regard.
I hear a lot of what we would like to see.
But I don’t hear or can’t find a roadmap to that place.
The government says it wants to invest in renewable energy to create a sustainable future.
Surely this is a joke.
The government doesn’t know whether it’s coming or going with BPL.
One day it announces a deal with Shell for X amount of generation.
The next day it has some side deal with Wartsila for some of that generation.
Yesterday, they said they had another deal to encroach more on territory that was supposed to be for Shell.
Meantime, the government doesn’t plan to get serious about renewables in the Family Islands, the most practical place to start.
And your talk don’t line up with your action. You underspend your current years capital budget by $92 million and then you cut your next year’s capital budget by 25 percent.
The one thing you are consistent with is having talk that don’t line up with your actions.
This is why you have such wide credibility deficit.
Your words can no longer be trusted.
The cost of the FNM’s dithering
As opposed to being focused, what the FNM has done a great deal of is dithering.
For example, the FNM’s stop, cancel and review 2.0 lead to an at least 15-month delay in introducing new engines at BPL; the direct cost to BPL would average at least $10 million per month.
This is a conservative estimate just from the continued use of the most expensive fuel possible.
The actual cost to the public cannot be measured. You can’t really put a dollar value on suffering, can you?
The FNM’s dithering led to the disruption of the post office opening, ending in a windfall to a minister and an eyesore on a heavily trafficked highway.
The FNM’s dithering has led to the delay in completion of the baseball stadium, meaning millions of dollars in cost overruns.
The FNM’s dithering has led to increased interest due to a failure to pay legitimate debts on time.
The FNM’s dithering and witch hunts has led to millions of dollars in so-called forensic audits.
Of
course, this supposed transparent government won’t reveal the costs of all these
audits.
So
much talk about old bills. Still finding bills, the minister says, under every
nook and cranny.
This, after borrowing billions and increasing taxes massively.
What I find interesting though, is that no one is disputing the bills.
By paying them they accept the concept of continuous government.
So where is the morality in still having not paid the bills two years in?
This administration is to be condemned.
They should be condemned for not paying the people.
Should they not pay them on a “first in, first out” basis?
Where is the morality in not doing so?
BTC
In relation to BTC.
Perhaps I’m reading it wrong, but this government’s approach to the BTC pension liability seems to be an admission that the BTC deal was a bad one.
But this was an FNM deal, yes?
The current prime minister sat in this place as a member of Cabinet and approved this bad deal? Correct?
Can we finally admit that the FNM effectively gave BTC away for $210 million?
Now they 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 for validating the point the PLP has been making all along.
Further, the liability continues to grow every day the pension issue is not addressed, it grows exponentially.
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.
Real estate tax changes
Let’s, for a minute, speak about the impact on the real estate sector.
The VAT amendment bill 2019 is seeking to repeal stamp taxes on realty transactions and replace it with VAT at the same rates as those currently charged as stamp tax.
That is not in and of itself offensive. However, there are some exceptions to the general rule that may prove problematic.
For instance, Clause 16 of the bill says developers will not be able to claim input credits for real estate purchases.
The fact of the matter is that as it stands now developers are not able to claim credit on stamp tax.
However, I’ll try to explain why I view these changes as a huge issue.
The reality is that the tax increases to developers have an inflationary impact on the cost of real estate.
It also inconsistent with the ability of other industries to claim input credits on purchases necessary to create final products.
Under the current stamp tax regime, developers are entitled to transfer land between companies provided there is no change in beneficial ownership without the payment of tax.
Whist this provision is maintained, it now has the caveat that should the new company sell within a 7-year period, the tax becomes payable.
This provision puts developers in a less advantageous position than which they presently enjoy and creates a significant tax liability to accomplish land transfers which are often necessary to complete projects.
Once again, it doesn’t appear that the government is thinking through the changes.
There also appears to have been no broad consultation with the industry.
I have spoken to several prominent realtors who said they had no idea these changes were coming.
I see you learnt very little from how the last budget was botched, through lack on consultation and pretending to be all knowing.
While there may be some beneficial impacts with some aspects of the changes intended, there is also the need to make sure the government understands the full scope of what it is doing.
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, but that’s not going to happen.
The government is still in a state of delusion and booking this as an investment.
As I said when I addressed the 9-month fiscal snapshot, there is an inherent disingenuousness in the full characterizing of the Grand Lucayan purchase as an equity acquisition.
We paid out cash and incurred debt through a mortgage with Hutchison to essentially nationalize a hotel that is losing money, that we acquired for significantly more than the reported appraised value.
If, for example, you buy something for $65 million and it’s only worth $50 million, the $15 million is an expense and it affects your deficit.
And if you’re losing money, and you keep pumping money in, it’s an expense that increases your deficit.
The minister understands full well how this should work.
The sale is nowhere near imminent and will not be complete by the end of this fiscal year. Much of it is an expense, plain and simple.
As are the funds associated with running it and separating employees.
Only in the make-believe world of FNM accounting does this not count as expenditure.
Perhaps when the prime minister makes his contribution he will tell us what is to become of the Grand Lucayan, exactly how much will be spent by the time we are finished floating it and fixing it up for Royal Caribbean, and exactly when the heads of agreement will be signed.
Tax breaks
I note that the minister of finance touted certain tax breaks in his budget communication.
I regard most of these as window dressing – gimmicks designed to distract from the pain of carrying on the massive VAT hike.
I hope the minister of health will inform the minister of finance that the people cannot eat pens, crayons, pencils and construction paper.
I call this the Crayola Budget.
That’s fine if you want to save parents 50 cents on a box of crayons, but how about taking the pressure off them with regard to their light bills?
In this Crayola Budget, the smaller refrigerators and stoves are now reduced.
Well, your rich FNM friends don’t buy them.
And the people who live in spaces where they fit can’t afford them.
As I said, gimmicks in the Crayola Budget.
Now, taking duty off musical equipment and commercial trailers is something I applaud.
Now you talking sense.
Banning plastics and Styrofoam. Good stuff.
With the increase in pollution and cancer in the Exumas and The Bahamas in general this is a necessary step.
But remember, you must educate the people so they understand the scope and timelines of what’s being proposed.
This is why I love the Exuma Pride Initiative, it is forward looking and links environmental stewardship to the needs of the people.
I hope the minister of health and the minister of the environment speak to this.
See there. Don’t say I never said anything nice about you and your Crayola Budget.
But, the spirits and beer amendment is a curious one.
For “microbreweries”. That’s cute.
I’d like to know who truly benefits from that.
Will the Minister now rise on a point of order or point of information and tell the Bahamian people which “wolf of special interest” is driving this initiative?
And then there’s the permanent exemption to water and light bills under a certain amount.
Well, your light have to be on to benefit from that. Those thousands whose lights are off. Nothing in this budget for you. And thousands more will miss out on it.
This must be the people’s budget.
We have duty reduction on new cars from 65-45 percent in this Crayola Budget.
Well, the poor can’t afford new cars.
And small and medium operators don’t sell new cars.
Sorry this budget is not for you, this is the People’s budget.
So, who is this Crayola Budget for?
The no tax on estate planning property is a clear giveaway to the rich.
So, if I buy property and put it in trust for my children, it’s duty free.
Nice loophole exploitation by the rich. Yay! It’s the people’s time!
Now how many Bahamians can afford that?
Why would you take that tax off of those who are most able to pay while increasing VAT on the poor and middle class who feel it most?
Exuma
Turning to Exuma, as has been well established, the people of Exuma are a proud people.
We don’t beg for government handouts, but we do want to receive basic fairness.
This budget proposes to cut our allocation for Exuma local government by 33 percent from $530,000 to $360,000.
This is disgraceful!
Local government in Exuma requested $1 million and for good reason.
The Exumas are growing rapidly in terms of the economy and population. Great Exuma alone is 44 miles.
The Central Bank noted in its February data that the number of room nights sold in Exuma grew by 46.0 percent compared to just under 22 percent for New Providence.
Also, the total number of room nights sold for the year increased in Exuma by 55.9 percent compared to the previous year.
Why, then, would you cut the local government budget?
This is simply foolish. We should be investing in the revenue generating sector of our economy.
I sincerely hope this is a mistake, but the mistake was apparently made in no other island.
If this is not a mistake, it is a wicked and spiteful act of this government and I assure them that there will be hell to pay.
I can’t imagine why this administration would want to undermine the credibility of local government in Exuma and the good Exumians who volunteer.
Except to score some cheap political point at the expense of the people who pay the taxes.
It’s not your money. It’s the tax payer’s money and the people of Exuma put a significant amount into the treasury. We expect our fair share.
I assure you Exumians won’t fall for your nonsense. And a PLP government will increase it the minute we are back in office.
We remain on the move in Exuma.
We are planning a youth center.
We are providing scholarships for kids to go off to school.
We are connecting in our communities and helping each other like never before.
We remain undeterred.
The best thing this administration can do for Exuma is to fix the schools, fix the roads, give us the allocation we ask for and finish our mini hospital and build that airport.
I note that the airport is supposed to be dealt with in short order.
Another brainchild of the PLP with the initial design and funding organized by the PLP; delayed by the FNM’s inability to focus.
Public has lost all hope in the FNM
What is telling about this budget is that in terms of the general public there has been very little discussion about it.
People have tuned this administration out.
We talk about it in this place and it is indeed important, but the people no longer care.
This is because the FNM and the minister of finance have failed to connect this budget to everyday people’s lives.
People no longer view the FNM a factor in bettering life for Bahamians.
They now view the government as covetous of their money and blindly devoted to having clean books, but dismissive of the need to foster an environment of prosperity.
Because of this government’s assault on the people, most who work for a living don’t expect anything but inconvenience and hardship.
This uncaring FNM administration has put the “numbers before the people”.
The people have come to believe that the politicians care more about the affairs of government, the ability to borrow at better terms and decrease deficits, than their very lives.
Are reduced debt and moving away from deficit spending and paying less in debt servicing important and impactful of people’s lives?
Absolutely.
But with these past three budgets, the government has failed to resonate with the people.
Because when it speaks, it only speaks about itself.
The minister talks about how well the government has done for itself.
Yeah, “how great though art”.
But it has done it at the expense of the people.
The minister has failed to connect the affairs of government to economic growth for Bahamians.
This is because the truth is, the FNM is doing the opposite with its practices. Its policies are harmful.
It is, in fact, hindering economic growth.
Government should never place its own welfare above that of the people who fund it, whom it exists to serve.
This is a cardinal sin.
An affront to democracy.
A budget communication, particularly one that takes more than three hours, should do much more than lay out numbers.
It should chart a path forward for the people.
Hidden in the figures is context that a minister should be able to communicate. He has failed to do so.
A government should not cause its people unnecessary pain.
But that is what this government has done.
It has pulled money out of the economy for its own selfish reasons.
The government is now, in essence, competing with the private sector for Bahamian disposable income.
There was no good and valid reason to chart such a drastic course.
You’ve hurt the Bahamian people with this approach.
Can’t you see it?
The missed targets, the lack of robust economic growth.
The inability to make any meaningful impact on unemployment, create jobs for the thousands leaving school this month.
This government has done the opposite of what it should.
It should have made people’s lives better through helping improve their economic situations.
A PLP government will ensure there is more money in more pockets.
But you have only made things worse.
And why?
To pay off bills incurred by the PLP?
What a petty, vindictive reason to put your Bahamians through so much pain.
You put your politics before the people.
I doubt very much they will forget it.
What would have been appreciated by Bahamians would have been some sort of vision for opening up our economy.
But it is expected that this administration would wash its hands of any responsibility to foster a sound economic environment.
I would have liked to have the government moving forward on legislation to decriminalize small quantities of marijuana and legalize medicinal cannabis, and harness the industry to create new jobs and opportunities.
I would have been interested to hear a real plan for BAMSI to reduce our dependence on foreign foods and get more Bahamians into local organic farming.
I would have liked to have heard a real push toward reducing energy costs.
Make no mistake, no one is fooled by what I believe is a clear gambit for the special interests to stake out claims for energy production and distribution in this country.
Perhaps we could have heard of broader investments in National Insurance for the construction on pre-schools and daycare centers so that more women who had recently given birth could re-enter the workforce.
I know you’re bankrupt of new ideas, I’m telling you now that this thing you call Terra Firma, or whatever you call, it is a non-starter.
The day you think you will transfer government building owned by the Bahamian people to some company to benefit special interest, there will be hell to pay on that as well.
Be ye warned! Be ye warned!
It would have been nice to hear about a broad investment in public transportation on New Providence.
But alas, we did not hear this.
What I see is a budget that has little to do with the people and more to do with international agencies.
The minister of finance claims that no international agency dictates to the government of The Bahamas.
Though I fail to understand the difference when the result is the same.
Does the IMF, or the minister of finance for that matter, understand that for many Bahamians, we saw ourselves surpass our parents in education, in home ownership, in business ownership, in investment and achievement?
However, this generation that we see before us, in the aftermath of the Great Recession, is faced with achieving less than the generation before for the first time since Majority Rule.
I see that the minister of education agreed with a University of The Bahamas study that said our men who are in prison for violent crime are disproportionately high school dropouts.
What are we doing about this, while we come here and laugh and bang on tables?
That’s a legitimate question.
Will we continue to allow our boys to fail out of a system at such an alarming rate?
I would rather change the system in its entirety before we let that happen.
Yet, you cut social services and urban renewal budget by $1.5 million.
Yet, you cut Youth, Sports and Culture by $4 million.
Yay. It’s the people’s time.
So, who will make an investment in the people? Who will fight for the people? Who?
Will we be the last generation of men and women who lead?
Do we stand by while the dreams of those who come after us slip further and further out of reach?
Or do we get serious about impacting the lives of our people?
Are we going to continue to make silly, arrogant remarks about the prime minister governing for 10 years while he plans his political future?
Or do we get desperate about the situation that exists today?
What Bahamas will he, in his mind, govern for another eight years?
One where children continue to have little to no hope?
One where parents decide between paying the mortgage, if they’re lucky enough to get one, and putting food on the table?
What Bahamas does this government want to leave in place?
One in which it can brag about some checklist it completed, or one in which people see more opportunity?
One in which it can brag about what they did for the powerful and connected?
Someone, at some point, should wake up and focus on economic growth, for the people, creating a more progressive and prosperous Bahamas.
A PLP government will build a nation that our children will be proud to inherit, connecting all Bahamians; grounded in the wisdom of the past and harnessing the creativity of the present to develop a future where our youth can have aspirations to not only survive but to thrive.
Not only to have jobs in existing and new industries.
Not just to have jobs but to own our Bahamas, to build and grow their own business and carve out their niche and their piece of the pie.
Exuma and Ragged Island thanks you, Mr. speaker.
May God Bless the Commonwealth of The Bahamas.
