Waiting to exhale
BRIDGETOWN, Barbados, Tuesday May 15, 2012 - The summer of our discontent is upon us, as the private sector starts to feel the strain of three years of trying to hold itself and its employees together, all the while being undermined by an administration hell-bent only on preserving its own workforce.
With nothing to show for the almost $1/4 billion more extracted from businesses and individuals in fiscal 2011-2012 by just four taxes - Value Added Tax ($188 million, up 25 per cent); excise taxes ($17 million, up 12 per cent); personal taxes ($27 million, up seven per cent); and import duties ($5.6 million, up three per cent) – the economy is stalled. It is stalled as we head into the summer period, which relies on the Crop Over season and an influx of “Bajan Yankees” to help keep things afloat, but is really not the best time for the foreign exchange-earning sector.
We have a ponderer for a Prime Minister, and a one-track-minded Minister of Finance who never saw a way to take more taxes out of your and my pockets that he didn’t like. So while the Prime Minister sounds off on how he might consider helping an airline which his own administration did not save when it could have intervened a few months ago, we also have a Minister of Finance who is yet to face the nation and explain how he can justify sucking out another $230 million in taxes while still leaving Government with $1/2 billion in deficit.
The reason: No change in expenditure except for hiving off around $100 million in subsidies to four institutions and calling them loans, which Government must guarantee.
How long can this go on? How long can we endure the disconnect between the citizens and an intransigent Minister of Finance who sees no need to explain how his austerity measures are going to save us when clearly they are not? Running such an expensive administration while refusing to treat seriously any calls for a reduction in the workforce has meant that money which should be used for building and repairing infrastructure has not been available.
"We are caught in a downward spiral brought on by failed austerity measures"--Pat HoyosIn its first fiscal year, the Democratic Labour Party (DLP) administration spent $232 million on capital works, the next year $168 million, followed by $108 million, and in the fiscal year just ended a mere $93 million, less than half what it spent in its first year in office.
In the last four years before the DLP came in, the Barbados Labour Party administration spent $224 million (2004-05), followed by $252 million, $250 million and $238 million on public works. (Source: Central Bank of Barbados First Quarter Review, Page 12.)
Drive around Barbados and you will see what happens to a country when it spends way too little on taking care of its roads, bridges, buildings, parks, sidewalks, roundabouts and other public facilities.
We are caught in a downward spiral brought on by failed austerity measures, which only take more and more out of the pool of money available for consumer and business purchases, business start-ups, casual employment and other spending which makes the economy turn over.
We are Greece and France waiting to happen as the nation finally exhales and breathes a sigh of relief when the present administration is finally thrown out of office.
This is by no means an endorsement of the current Opposition, which was correctly thrown out at the last elections for its arrogance and mistakes in handling the economy. We all remember the bungling that led to GEMS losses, the inflation-hiking cess (six per cent on imports), multiple millions wasted on Cricket World Cup – possibly the biggest financial flop of a public sporting tournament ever – and unimaginable rises in land prices due to an over-heated real estate sector which, like Frankenstein’s monster, the former administration created but could not control.
This week the country will hear a major speech from Opposition Leader Owen Arthur at the Barbados Employers’ Confederation luncheon. In recent times, despite his mistakes in the past, he has shown himself ready to take the helm with many initiatives and good ideas for moving the country forward.
It will be up to Mr Arthur to convince the public that his team can do better than the current administration, but given the latter’s internal disconnection and its inability to lead the economy out of the darkness of austerity, that barrier should not be too hard to surmount.
Pat Hoyos is a business writer and Publisher of the Broad Street Journal. This article originally appeared in the Barbados Sunday Sun.