2013/2014 Mid Term Budget
By Hon. Dr. Hubert A. Minnis, Leader of the Opposition February 26th, 2014
Mr. Speaker, I rise as Leader of Her Majesty’s Loyal Opposition to make my contribution to the debate of the Mid-Year Budget Statement.
I thank the good people of Killarney whom I have the great honour of representing in this Honourable House for the trust they have reposed in me and I thank the thousands of supporters of me and my Party around this great Commonwealth.
I also want to thank my parliamentary colleagues for the excellent presentations they have made during this exercise.
Why Have a Mid-Year Budget Statement?
We are here because the last FNM Government introduced this process of a Mid-Year Budget Statement into the budgetary process. Within three weeks of coming to office, the FNM Minister of Finance announced it in his Budget Communication in this place on 30th May, 2007.
Nine months later, on the 25th February, 2008, the FNM Minister of Finance included the following in his Mid-Year Budget Statement:
“The Mid-Year Budget Statement … is concerned primarily with how the current fiscal budget is actually performing in relation to the plans and projections put forward as the Government’s goals and objectives in the Budget Communication. It is specifically an opportunity for Ministers to report to Parliament and the Bahamian people on the progress they are making on the programmes established for their portfolios in the current fiscal year, to determine its adequacy and to make the case for any additional expenditure which may be required.
Thus, this opportunity is specifically structured for Parliamentary review of the performance of the Budget midway during the fiscal period. This Mid-Year Budget Statement therefore adds an important element of accountability to the Budget process in which the Government is obliged to review the progress of its performance in relation to its stated objectives mid-way in the fiscal year. My Government is honoured to have had the opportunity of introducing this new landmark in strengthening our parliamentary process and making government more accountable to the people.”
At all material times between 2007 and indeed up to last year’s Mid-Year
Budget exercise, Members Opposite derided this exercise ridiculing it as a waste of time.
We are accustomed to this. We all remember that Members Opposite accused us of acting unconstitutionally when, during our first term in office in 1992, the financial year was changed from the calendar year commencing on January 1st and ending December 31st . They even threatened to take the Government to Court on the matter. Sane minds prevailed and they never acted on their threats.
It was enlightening also when Members Opposite returned to Government in 2002, they did not entertain reverting to the old Calendar- year fiscal period which had been characterized by late-night deliberations on the Budget during the Christmas season; upon occasion lasting up to Christmas Eve.
Then again, Members Opposite, after much protestations and consternation over our moving the Opening of Parliament Ceremony outside into the sunshine of the Public Square in August, 1992, also determined to continue our practice during their 2002-2007 term in Government and again now beginning in 2012.
Lack of Accounting in the 2014 Budget Statement
It is regrettable therefore, that in this, the first occasion at which Members Opposite have not raised an objection to participating in this important exercise of accountable Government, the Minister of Finance has presented a Mid-Year Statement that fails to provide helpful insight into the adequacy or otherwise of budgeted programmes in the various Ministries and Departments.
If we accept the Minister of Finance ‘s Statement, there is no need for any Supplementary appropriations as all Ministries and Departments have spent up to or less than appropriated by Parliament. No unforeseen circumstances have arisen to cause the Minister of Finance to sign any Contingency Warrants!
The Minister of Finance began his Mid-Year budget statement not by giving an accounting for his Government’s success in creating the many jobs promised and anticipated in his Budget Communication but by repeating the same kinds of promises that won his party an election; promises of Jobs and more jobs.
Government Admits Foreign Direct Investment is their Only Hope for Jobs Creation
Now, just shy of two years in office, the Minister of Finance is still promising jobs. And he provides a litany of foreign investment proposals, some long in place and undergoing timely refurbishments and or expansions – like Kerzner International, Albany, Sandals Emerald Bay and Club Med in San Salvador, or moving forward as scheduled prior to May 2012 as at Baha Mar, while other “proposals” are simply the subject of hope-filled exploratory talks with existing and former investors as at Ginn and Breezes.
Some of his references to these proposals included phrases like:
a) “We are in Contract with…”
b) “We are reviewing proposals to provide major attractions in Grand
c) “Discussions are underway” for acquisition and development of Bird
Cay and Whale Cay. (Where I believe serious environmental concerns exist as they do with regards to his heralded deep water jetty in Bimini, being constructed upon a coral reef.)
Still, the Minister of Finance has included all these proposals in his calculation of new jobs creation – counting his chickens before they hatch. Of course this is par for the course.
The Myth of PLP Job Creation
The Minister of Finance and his supporters continue, incorrectly, to assert that they created some 22,000 jobs during their first term in office between 2002 and 2007.
The record shows that during its tenure in office between 2002 and 2007, 18,800 jobs were created; less than was created by the FNM during its first term in office. Indeed the period of greatest job growth in our recent history was between 1997 and 1998 when some 9,100 jobs were added to the economy in a single year.
The records show that under the FNM, between 1992 and 1997, 20,555 jobs were created. Between 1997 and 2002, again on the FNM watch, an additional 18,065 jobs were created. That is a total of 38,620 for the ten year period 1992 to 2002. What a record!
Following an especially calamitous 2 years of global economic and financial crisis which caused our economy to shed 17,000 jobs between 2008 and 2010 our economy began a slow recovery under the responsible stewardship of the Government led by my Party.
By May 2012 the Department of Statistics Reports, 5,525 jobs had been created.
Then, Mr Speaker, Members Opposite took over the management of our economy in May 2012.
In short, Mr Speaker, the modest growth that had resumed on our watch was halted and joblessness is increasing on this PLP Government’s watch.
When the PLP came to office in 2012, the Department of Statistics reports some 28,125 persons were unemployed. Today, 21 months following the election of Members Opposite the Department of Statistics records over 30,285 Bahamians
unemployed! The unemployment rate in 2012 was 14.7%. Today, it stands at 15.4%. That means that instead of the numbers of jobs increasing on Members Opposite watch, more people are unemployed than on the FNM watch.
When Members Opposite came to office in 2012, some 83,935 women were employed in our economy. Today, on their watch, just 82,170 women – 1,765 fewer, are employed. In 2012, the Department recorded 79,395 men employed in the economy, in 2014 that number increased to 84,425 – – – meaning 5,030 more men were employed including some 4,100 Chinese engaged on the Baha Mar Resort development work site since 2012.
Under the FNM, following the recession, our economy gained a net additional 5,525 jobs. Since Members Opposite came to office 3,265 additional net jobs were added to the economy – nearly half as many on the FNM watch during a comparable period of time!
Today there are still 8,590 fewer employed persons in our economy than existed ahead of the recession in 2008. In short, the loss of jobs resulting from the Great Recession has not yet returned. An additional 5,285 persons have joined the labour force since the Great Recession. And, every graduating class of high school and college classes increases the labour pool annually!
If this Government were to keep its pledge of creating 10,000 new jobs (not taking into account that they have long missed their self-imposed limit of doing so within their first 100 days in office) during their term in office, the employment picture would still be worse than when they assumed office because of the additional persons entering the work force annually.
I recall again that when this Minister of Finance last led the Government – between 2002 and 2007 – he often followed statements on commitments to do something with the refrain: “so said, so done”. Clearly he continues to believe this to be true. In his mind at least, his intentions and his hopes and aspirations at reducing unemployment is equivalent to reducing joblessness.
We know otherwise. In the overwhelming majority of cases, it was really just a matter of ‘so said, so said’ because little is actually accomplished.
“These are jobs, more new jobs, Mr. Speaker” was the refrain repeated by the Minister of Finance 30 times as he listed foreign direct investment proposals in his Mid-Year Budget Statement. It seems that the Minister expects that having heard the words “more jobs” repeatedly, even the unemployed will believe that these mythical new employment opportunities exist in real time.
We are not so foolish nor are the unemployed to accept or believe that! The Minister really should not be so disrespectful of the Bahamian people.
No stimulus for Domestic Investment
I listened carefully to the Finance Minister listing of some 23 new “proposals” involving Foreign Direct Investment.
From this Government, whose election mantra was “Believe in Bahamians”, I heard only one Bahamian investor’s name called; that is Mark Holowesko. Well, we all know that Mr. Holowesko believes in The Bahamas and in Bahamians; he is the son of the distinguished former FNM President of the Senate, Lynn Holowesko. We add our congratulations and appreciation for Mr. Holowesko’s investment in his country and we trust that his development is benefiting from all the incentives and support available to resort developers in our country.
It is shocking, Mr. Speaker, that this “Believe in Bahamians” Minister of Finance and Prime Minister responsible for the Bahamas Investment Authority, has based his entire hope for the creation of jobs in our country on foreign investors. Twenty one months after coming to office he would only identify just ONE Bahamian project to hold up as a job creating development started on his watch! It is regrettable how exclusively he identifies his job creating policies with foreign direct investments with little recognition of domestic investment and its potential.
Modern Infrastructure Support Economic Growth & Jobs Creation
While my side has been roundly criticized for its heavy investment in
bringing the infrastructure of our country to 21st century standards few have acknowledged that it is this infrastructure that will serve as the platform for our economy to grow.
I acknowledge with great satisfaction therefore, the admission by the Minister of Finance in his Mid-Year Statement that high capital expenditure over the past several years: “has reflected important investments in public infrastructure that will underpin more buoyant economic growth in the coming years.”
In this regard I note that the one bright spot in our tourism performance over the past year has been the steady climb in cruise ship passenger arrivals. It might do well for Members Opposite to acknowledge that their predecessor FNM Government dredged Nassau Harbour permitting the docking at Nassau’s Port of even the largest and most modern new cruise passenger ships.
Increased passenger arrivals means increased numbers of persons paying head taxes adding to Government revenue. This permitted the Government to pay for the full cost of the harbour dredge from the revenues collected from cruise ships calling at the Port of Nassau over just a 3 year period.
It also assisted in providing livelihoods for hundreds of independent entrepreneurs: taxi drivers, straw vendors, wood carvers and tour operators; and tourists trade for shops and restaurants in downtown Nassau.
We note with great disappointment that this Government is permitting the additional 60 acres created at Arawak Cay with the dredged materials from the harbour, to become a prominent dumping ground greeting each and every cruise ship entering the harbour.
And we also note that inexplicably, the delivery of sand and rock appears to have resumed at docks along Bay Street. It would seem that this Government refuses to buy into the planned programme to clean and upgrade our City centre regardless to the times they repeat their commitment to Urban Renewal.
We firmly believe that our investments in infrastructure – whether in roads, water and sewerage, power plants, airports, hospitals, public office accommodation have measurably improved our attractiveness to business and to investors both Bahamian and international.
And, of course, during the worst of the recession, these works created productive jobs for Bahamians.
It is small wonder that our economy continues to lose jobs today notwithstanding the unabated rate of Government expenditure. Unlike during the last FNM Government when Government expenditure was transparently dedicated to meeting priority infrastructure needs like the New Providence Road and Utility Improvement Project, the Airport Gateway Project, the new A&E Department and upgrade of the Rand Memorial Operating Theatres, the new Critical Care Block at the Princess Margaret Hospital, the new Nassau Straw Market, new government administration buildings in Grand Bahama and Abaco, new community hospitals in Exuma and Abaco, new electricity generating plants in Abaco, Bimini and Eleuthera.
As the major infrastructural investments undertaken by the last FNM Government are completed and come on stream and as no new similar productive projects are undertaken by the Government, it is to be expected that jobs will be lost in the all-important construction sector.
We encourage the Government to maximize benefits to be derived from what we started and to continue in that vein to invest in Bahamians and in our country.
We especially encourage the Government to do its utmost to open the new international airport terminal in Marsh Harbour; to furnish, equip and staff the Critical Care Unit at the PMH and the small community hospitals in Exuma and Abaco; to complete and open the rest rooms at Montagu Beach Park; and to continue in a scheduled manner, the upgrade and enhancement of public roads both here in New Providence but also in the Family Islands. Mr. Speaker, the reconstruction of North Andros Roads was planned and programmed before the 2012 General Elections. How much longer must the people of North Andros endure poor roads?
Maximizing Economic Benefit in the Tourism Sector
We are still not maximizing the full economic benefit to be derived from our tourism sector. Our air arrivals continue to decrease, and while cruise arrivals are up, we have learned that as few as 20-30 % of passengers disembark their ships. This number is as high as 70% in some competitor destinations. We continue to ignore the large elephants in the room. Our tourism product requires enhancement. Our crime problem requires redress.
We encourage Members Opposite to revisit programmes and plans
developed and left on file by us that will assist and contribute to the strengthening and deepening of local value added to our tourism sector.
“Supporting Bahamian Entrepreneurship & Business”
Beginning with our first term in Government, this side evolved a process that requires foreign investors to engage Bahamian professionals, technical, skilled and semi-skilled labour in the construction and operation of their resorts and or businesses.
We also made it a requirement that, wherever possible, international investors in our economy source locally food stuff and condiments, staff uniforms and building finishing’s and decorations for their various projects. The degree of Bahamian involvement in the construction, outfit, management and operation of Kerzner International provides an excellent example of those policies in action.
Many new Bahamian businesses were developed as a result of my Party’s enforcement of our Bahamian-centric investment policy and many others were expanded and strengthened as a result. The spinoff in the wider economy has been tremendous. But much more can and should be done to encourage and support this development.
We were pleased to have caused several major Bahamian construction companies to be engaged by the Baha Mar Development Group in the construction of replacement of banking structures and of the replacement Cable Beach Police Station required to accommodate the multi-billion dollar resort development now underway in Cable Beach. The FNM is similarly pleased that we caused a consortium of Bahamian landscape companies to be engaged in the landscape and maintenance of the new deviated West Bay Street, also constructed by a Bahamian construction company.
We have been disappointed to learn that the “Bahamian” construction company engaged to build the Convention Centre at Baha Mar since we were kicked out of office is not an established Bahamian firm with a cadre of permanent Bahamian employees and may in fact be a “Bahamian front” providing a front office face for foreign contractors.
This is most disturbing and we ask that the Government do the necessary so that bogus Bahamian fronting companies are not permitted to bamboozle international developers into engaging them under the belief that they are real Bahamian contractors.
In this regard, I note that the announcement of a new phase of development at Albany as dramatically announced by the Minister of Finance last week. As might be expected, the Minister (or perhaps on that occasion we were seeing the Prime Minister), monopolized some 20 minutes of ZNS’ evening 30 minute news broadcast to make his announcement, reading from a script from which he found it difficult to move his eyes.
I did find it strange Mr. Speaker that the Prime Minister tried to make such a big story out of the announcement of this $140 million expansion at Albany, monopolizing ZNS news broadcast. I don’t recall him doing anything similar to that back in 2006 when he first announced the agreement for the development of what he then purported to be a $1 Billion dollar development at Albany. I suppose these are desperate times.
I register the expectation of Members on this side that more than a single Bahamian contractor will be engaged on the project to expand the Albany resort. Further, we expect that construction supplies, aggregates, dry cement, mixed concrete and cement blocks required for this construction project will not have a single, preferred Bahamian source.
With specific regard to Albany, Mr. Speaker, I recall that in 2007, the FNM required that the developers accept as a basis for receipt of concessions under the Hotels Encouragement Act, that the facilities of their resort be made positively available to the paying Bahamian public.
Will the Minister of Finance confirm that the restaurants and other facilities at Albany, and at all other resorts being approved for concessions under the Hotels Encouragement Act, are open and will remain open to the Bahamian public just as all of the restaurants, spa facilities and golf course at Atlantis are open to any Bahamian making a reservation and paying the published price for the services rendered?
Honourable Members will be aware that the Lyford Cay Club, which is a Members only Club, receives no investment concessions for its developments because that Club and its facilities are closed to the general public.
Benefits of Expanding Local Value Added in Tourism Sector
I continue my theme that we must find additional means to extract the full benefit to our economy that the tourism sector offers. Many opportunities exist – not only in construction and light industry, but in souvenir production, land and sea excursions and especially in the food arena.
We believe it is important that we begin to create a special Niche in food; envision a “Bahamas Organic Food Market.” Picture, advertisements heralding “all Bahamian” foods, fruits, vegetables, pastries, soups, and delicacies. Imagine that this does not need to target just one segment of our economy. Envision that in addition to hotels and restaurants, retail food stores, public and private hospitals, all supporting and enjoying healthy Bahamian grown, processed and produced food stuff.
The Government can lead the way Mr. Speaker, by changing the formula for sourcing food stuffs within our schools, hospitals and other institutions creating opportunities for the producers of Bahamian grown and produced foods. Such a policy will not only create new and additional sustainable jobs, it can create new Industries.
Of course for this to successfully happen Bahamian food producers must consistently meet the standards expected and demanded by Bahamian consumers.
Under the FNM Administration remarkable progress was being made by BAIC in promoting and sustaining such enterprises particularly in the agricultural area. We on this side therefore, watch with much anticipation efforts being proceeded with by this Government in North Andros at the Bahamas Agriculture and Marine Science Institute which continues to benefit from the sage advice and experience of the Honourable Member for South Abaco.
Mr. Speaker, the Government might also seek to bolster local value added to our tourism sector by supporting the development of Heritage Tourism projects as envisioned and announced by my party during the last general election campaign.
Such programmes can easily be forged both in New Providence and in our Family Islands. Here in the capital city there are many ‘low hanging fruit”. Among these are:
- Expand timely mock-invasions of our Forts – Montague, Charlotte and Fincastle: Displaying Pirates, America’s and Colonial involvement and possible invasion.
- Urgent repair of our Water Tower.—this along with the 66 steps are two major attractions especially for cruise ship passengers.
- Promote the creation of environment based tours to include for example Blue Hole Tours:
- Fox Hill, Colony Village
- Mermaid Pool (Carmichael)
- RM Bailey Park
- South Ocean (Golf Course)
- The Caves West Bay St.
- The parks managed by the Bahamas National Trust, and of
- Clifton Park
- Tour of Gambier and Fox Hill Villages (oldest settlements)
Many of our Family Islands are ripe with heritage sites, Eleuthera, Cat
Island, Long Island and Abaco providing obvious opportunities as do Bimini and Andros.
Such projects present wonderful opportunities for the development of small Bahamian businesses and the creation of jobs.
Co-operating for the Benefit of Bahamians
Mr. Speaker, Responsible Opposition Parties hold the interests and concerns of citizens dear. That is why this Opposition will not restrict itself to criticizing what we see as flawed policies of the Government only; we will also continue to put forward our vision for a better Bahamas. We will collaborate and share ideas that we believe will be beneficial to the Bahamian people if adopted and put in place by the Government. We are pleased to be associated with any initiative that will bring better for Bahamians.
The Struggle to Reduce Crime
On behalf of the FNM I commend the members of Royal Bahamas Police Force for their valiant efforts to prevent crime, enforce the law, and bring law breakers to account before the Courts. The Police Force works under very difficult circumstances. It is right that their effort and their sacrifice are acknowledged by all.
I do not propose to use the continued high incidence of crime as a political football. It is regrettable that while in Opposition, Members Opposite chose to make crime a political issue. It is even more regrettable that now as Government, Members Opposite appear incapable of removing themselves from the management of the police force and the release of timely, accurate statistics on the state of all crime in the country.
We all know that crime began its relentless upward tick in The Bahamas when drug traffickers began infiltrating our borders beginning in the 1970s. The fallout from the trade damaged the social and familial fabric which had previously protected and guided our young people. Today, the wreckage of the drug trade is spelled out for us by almost daily shootings or other violent assaults against persons and disregard for the property of others.
It is urgent that we acknowledge our problems without seeking to ascribe political responsibility and begin, systematically and collaboratively, to reform anti-social behaviours that demean human life. In their place we must build up among our people a respect and value for duty, good character, honesty, responsibility, integrity, morality and honesty.
We will not achieve this Mr. Speaker, if we fraternize with law breakers. We cannot do this if we excuse criminal behaviour. And we will not do this if we amend our laws to meet the demands of convicts and other law breakers while ignoring the pleas for help from law-abiding citizens.
Further, the Government’s security and policing plans and policies have deflated morale in our security forces because of the re-engagement of retired officers, some of whom hardly performed while previously employed.
Crime is damaging our economic and social wellbeing. In too many neighbourhoods, residents do not feel safe whether in their homes or on the streets.
- Too many of our young people are being killed or maimed
- Cruise Passengers are being cautioned when disembarking; many are
choosing to remain onboard cruise ships while in our ports and
- air travelers are being notified about the dangers to be encountered even in
our busy downtown areas.
While in Opposition, Members Opposite held out that they had the solution to crime. In office, some of them have armed themselves; security for senior members of Government has been dramatically increased at the residences of certain others and for a number of others as they travel about our city streets.
In the meantime Bahamians await the introduction and implementation of crime remedies so prominently promised during the campaign.
Providing for a Healthier Bahamas
The 38th Vice President of the United States, Mr. Hubert Humphrey once said:
“the moral test of any government is how it treats those who are in the dawn of life – it’s children, those who are in the shadow of life – its sick, a government that would not provide hope and meet the needs of the sick is a government without compassion and represents a nation without soul.”
The Free National Movement is proud that in office we developed a comprehensive plan for healthcare in The Bahamas. We were building the health bridge to the future with the intention of providing equal access to quality healthcare to Bahamians from Bimini in the north to Inagua in the south.
Mr. Speaker, I was privileged to serve in a government, and indeed to be a part of an amazing history of compassionate care for the sick and for those in the dawn of life, that made the single largest investment in healthcare infrastructure this country has ever experienced.
Mr. Speaker, that is why the FNM government gave priority attention to the Public Hospitals Authority assigning almost two hundred persons from the “52 weeks skills and jobs training program” to the PHA. More than 70 of those persons were to be trained as Anesthetic Assistants, Surgical Technicians, Patient Care Assistants, Emergency Medical Technicians, and other support personnel, so as to ensure a ready pool of trained support staff to meet the increased demand in service capacity at the new health institutions under construction in New Providence, Grand Bahama, Exuma and Abaco.
Those successful in the health component of the 52 week jobs and skills training program were amongst the best qualified persons engaged in the program – some being graduates of 2 and 4 year college programs.
Inexplicably, when this government discontinued the 52 week jobs training programs all of these professionals were left unemployed and the medical facilities were left short staffed.
I can only imagine the sense of disappointment among those young people when they learned they were no longer needed. After all they had not only trained, but were certified as technicians and rightly looked forward to promising careers in our Public Health care system.
But Mr. Speaker, of greater concern to the Bahamian people, must be the lack of vision on the part of this government that chose not to engage trained Bahamian technicians to provide services required in our health system.
I am advised Mr. Speaker, that today there are no medical doctors available in Cat Island, San Salvador, Kemp’s Bay, Andros; Spanish Wells, Bimini, and Steventon, Exuma. I am also advised by patients and relatives that the Nicholl’s Town Clinic in North Andros has serious challenges with both mold and air conditioning.
Improving the Standard of Living of Bahamians
I want to repeat my side’s commitment to continue support for all initiatives meant to improve the standards of living of the Bahamian people. This necessarily includes our ardent support for improved and increased transparency and integrity in the conduct of Government business.
“Bahamian ownership in the economy”
The time is now past for giving only lip service to Bahamian- ownership in our economy.
The Minister of Finance has made a rather large “hill of beans” out of a new BTC deal constructed with the help of smoke and mirrors. He has proudly declared that his Government paid nothing for the deal. Only in one sense is it true that they paid nothing. It is also true that they got nothing! Paid nothing; got nothing! But in a broader sense the unprovoked and entirely unjustified attempt to recall a decision of a sovereign government may exact its own future cost.
BTC continues to be majority privately owned and controlled by CWC.
We encourage the Government to move forward with plans left in place by our side to sell 9% of the profitable BTC enterprise to the Bahamian public. That is how Government’s create wealth for its citizens. And that is how Government promotes, assists and supports increased ownership in the economy by Bahamians.
We also state our preference and recommendation that CWC also place a per centum of their 51% shares in BTC on the market so that more Bahamians are able to become owners of shares in this this profitable business. This would not be new to CWC as it has adopted that position elsewhere in the region.
“Protecting the Vulnerable in Society”
The time is now past, Mr. Speaker, for permitting our most vulnerable, our
children and the elderly to go unprotected. We on this side are especially
concerned to see that at this time of high unemployment and underemployment when as many as 30,000 Bahamians are unemployed and thousands more are under-employed, this Government, which claims to be of and for poor people, cannot match the expenditure of the FNM Government in bringing relief to those most in need.
They say one thing but do another! If we accept figures presented by the Minister of Finance, in the first 6 months of this fiscal period this Government neglected to spend some $3 million allocated for programmes designed to reduce the harshness of being poor.
“Wasteful Expenditure while the Poor are Neglected”
And, Mr. Speaker, this Government has found it impossible to expend those monies allocated and budgeted for the poor at a time when they are overspending on overseas travel and entertainment.
The Tables accompanying the Mid-Year Budget Statement reveal that the Office of the Prime Minister has, in the first 6 months of this fiscal period, expended some 86% of its full 12 month allocation for travel AFTER transferring an additional $170,000 into the Item.
The Ministry of Foreign Affairs has also exceeded its travel Budget Allocation, expending some 55% of its annual allocation AFTER transferring another $45,000 into its travel Budget.
I demand that the Prime Minister keep his public pledge to provide an accounting for his extravagant international travel during which he treated an excessively large delegation to a tour of Rome and London. He promised to do so and to date he has neglected to do so. I call upon him to do so now; the people wait!
Accountability in Government
The Guardian newspaper last week revealed that some championing the introduction of the Value Added Tax in official circles are not what some of us would have expected. This is indeed enlightening and highlights the need for the Bahamian people to be made aware of the tax status of those who seek to lead them and to tax them — and to tax them still more!
It should not be that ‘tax cheats’ are sitting over us imposing new taxes even while they fail to pay their way as required by law. I for one, Mr. Speaker, believe it would be appropriate for the people of The Bahamas to be informed on the tax status of their leaders beginning with the Prime Minister and Minister of Finance and the Leader of the Opposition.
And so I call on the Prime Minister to provide for the information of Members of this Honourable House and of the Bahamian people, a list of the residential real property tax status of all members of the House of Assembly. We can at least begin there.
Repeatedly, the point has been made, Mr. Speaker, that if Bahamians paid the taxes now required of them by law, the Government revenue would be immensely improved.
I submit that it is no exaggeration to presume that if the collection of these taxes is substantially improved, the imposition of this new tax which is so painfully agonizing the Bahamian people would not need to proceed at this time, and perhaps may never need to proceed. Furthermore, an enlightened policy on Real Property Tax need not be a burden on the average home-owner but would arrest the neglect of huge amounts of commercial properties, leading to a considerable expansion of economic activity, consequent upon such an enlightened Real Property Tax policy. Such a policy could lead to a revitalization of the City of Nassau, for example, as dormant properties are encourage out of hibernation. One important characteristic of the Real Property Tax is that properly implemented it is a progressive tax. Let us at least begin there.
Certainly, before proceeding with the expensive creation of still another tax collection Inland Revenue Agency, might we not insist that the Customs’ Department, the Real Property Tax Department, the Business Licence Department and all other revenue collection agencies of the Government more efficiently collect monies owed to the Government?
It is putting the horse before the cart to engage expensive consultants, create, equip and staff a new unit to collect a new tax when no effort is being made to collect what is already owed?
Mr. Speaker, we on this side do not look at the fundamentals of democracy – transparency, fairness, integrity – as promises or dreams to aspire to; we believe very strongly in these principles. We governed with these principles as our hallmark and we look forward to continuing our march to making them fully the reality in The Bahamas when we return to office following upon the next general elections.
The Bahamas needs focused leadership, steady and competent hands at the helm of Government.
We, on this side, are convinced that we do not now have such a Government. We believe that too often there are too many hands on the wheel of Government and each is seeking to steer the ship of state in a different direction.
The Bahamas ship is drifting, taking on water, sailing in the heavy seas of high violent crime, joblessness (especially our young and female population), enduring reckless mismanagement of public finances, and an erratic, inflammatory and reactionary immigration policy. And all the while the Government fiddles, traveling excessively, spending money as if in the midst of a flush and postponing making decisions on matters of critical importance to our economy, to our financial stability and to our security. It is a government which seems endlessly in an election campaign continuing a program of promises to the people.
Revenue Performance & Expenditure Control
Revenue performance for the first 6 months of this fiscal year show alarming shortfalls over projections in some critical areas, most glaringly in the tourism sector. For the first 6 months of this fiscal year air and sea departure taxes and hotel guests’ taxes show a shortfall of some $26 million. Clearly this must be having an impact upon employment, upon the number of persons engaged and on the number of hours worked each week in tourism.
And notwithstanding all the Real Property Tax giveaways meant to increase compliance by delinquent tax payers, revenue receipts from real property tax is also down – by $5.5 million.
Gaming Taxes are down by $3 million.
Stamp Tax – on real property purchases, mortgages, cheques and the like are also down — by $5.4 million.
Excise taxes collected on fuels, automobile and wines and spirits for example, are also down – by $10 million.
This does not indicate economic recovery Mr. Speaker; this indicates that our economy is not expanding and growing. It suggests that the economy is stalled and may be shrinking.
It seems that what this Government doesn’t understand is that you can’t continue to exempt some favoured, pampered businesses from taxation, make tax giveaways to delinquent tax payers and then expect to collect the revenue at the level required to run the Government.
It would appear that the Government expected to replace its tax giveaways with revenue projected to be collected from the stack of new taxes and fees introduced in last June’s Budget exercise – on business licences, bank licence fees, an environmental levy and with a 1% Customs’ Processing Fee attached to all imports.
Last year, the Minister of Finance projected raising $28 million from increased Business Licences; $23 million from increased Banking Fees, $11 million from the Environmental Levy and $20 million from the Customs Processing Fee. That’s a total increase of $82 million.
I must admit that it is difficult to comment on the Government’s expenditure performance based on the statistical information tabled with the Mid-Year Budget Statement. I am unable, for example, to determine whether what is being reflected as reduced expenditure may not in fact simply reflect a slow roll-out of projects, or delayed or non-payment of bills — bills outstanding and owed, for example, for gasoline provided for judges’ motor vehicles in Freeport; for replacement parts to
permit repairs to police vehicles throughout the country; for settling accounts with construction contractors engaged by the Government, or for payments to vendors for goods and services supplied to Ministries and Departments.
Indeed, not since before the first election of the FNM to Government in 1992 have so many suppliers and contractors gone unpaid by the Government. And so, we do not believe or accept that the picture presented by the Minister of Finance with respect to expenditure accurately represent what is owed by the Government for goods and services provided to its ministries and departments.
And so, I ask that the Minister of Finance inform this Honourable House of the level of payments being held up for example, because of cash flow difficulties at The Public Treasury.
It is not unreasonable for one to wonder whether some expenses are being pushed into the second half of the fiscal year to create better “Optics” for this Statement.
With regard to revenue, I note that the revenue side is less vulnerable to the distortions that effect expenditure and here some explanation is required for the big fall-off in Tax Revenue of $51million or nearly 10%.
In particular the fall-off in Tourism Tax of $26million is concerning as it represents a drop of more than 27%. This reflects a revenue weakness for which the Minister should have an explanation.
In any event, contrary to what the Minister of Finance says in his Statement, Recurrent Revenue is not buoyant. Contrary to any assertion to the contrary, revenue is not up by $36million over last year. In point of fact, the numbers presented show that revenue is $5million below the level for the comparable period last year; a discrepancy between the Minister’s Statement and the Tables.
The over-riding import of this Mid-Year Statement is the fact that it confirms that this Government continues on course to post the largest two-year budget deficit that has ever occurred in the nation’s history after posting the single largest deficit in the previous year!
The Minister of Finance expressed confidence that he could in fact do better than the deficit target this year. He referred to greater expenditure discipline and greater attention to revenue collection but these are not yet reflected in the numbers. It is not possible in this Interim Budget to find any basis to support the Minister’s optimism. Clearly any improvement over the original Budget exists only in the Minister’s mind and that benefits no one.
The Minister continues to say how he was convinced when he came to office of the need to return Government finances to sustainability while deliberately ignoring the impact of the greatest global recession in more than eighty years that also preceded his return to office. But he came to office and in his first Annual Budget proceeded to accumulate the greatest deficit the country had ever seen and reinforced that deficit accumulation in his second Annual Budget. He obviously misses the irony in all of this.
And in his second Annual Budget and in his Budget Statement he continued to say what he ‘plans’ to implement while pointing out the absolute necessity of acting decisively. It would be comical if it were not so serious.
Given these circumstances, I find it difficult to understand the Government’s decision to choose this time to introduce another exemption from Excise Tax – this one for vehicles imported by the Government. Granted that the payment of this tax is truly only a paper transaction but what about all other Government imports – for equipment and machinery for hospital and schools for example. Was this simply to facilitate the import of more luxury vehicles for Cabinet Ministers?
I recall some consternation by Members Opposite, most especially the Deputy Prime Minister, when the Financial Secretary made an order for a Mercedes Benz for the Prime Minister’s official use prior to the General Election. It was delivered several weeks or months after the Elections. No similar concern has been expressed about a similarly luxurious Lexus for the Deputy Prime Minister’s official use since the Elections. Is this new exemption a signal for the future?
Tax Reform & VAT
The Great Recession of 2008 – 2009 accelerated the pace at which tax reform has had to come about in The Bahamas.
The FNM was and remains committed to Tax Reform.
The Great Recession also increased the Government’s Debt to GDP ratio beyond our normal and usual ratio. The FNM in its 2012 Manifesto listed as third among its priorities in a new term, behind fighting crime and growing the economy, the reduction of Government Debt. And we committed to “accelerate taxation systems reforms to reduce dependence on border taxes and broaden the tax base”.
We have heard the argument by the present Government in support of the introduction of a Value Added Tax (VAT) in The Bahamas.
And we remember that the Minister of Finance did warn at the time of his Budget Communication last May, that he would be coming back to the House to secure an additional $70 million in revenue that had not been provided for in the 2013-2014 Budget Estimates.
Mr. Speaker, we on this side do believe that a proper balance of public finances is desirable. It will result in a decrease in the rates of growth of Government debt, an increase in employment, a reduction in tax exemptions, and improved fiscal discipline.
But we are not convinced that enough effort has been made to maximize revenue collection from existing taxes: – real property tax, customs’ duties, business taxes and Road Traffic chief among them.
And, while we are committed to tax reform, based on what we have seen, read and heard so far, we are not convinced that a VAT is the way to go to achieve our goal of reforming our tax system and broadening its base. In short, the FNM is not onboard the VAT Train!