Public and private investment revisited
I was struck by a recent news headline that indicated that Finance Minister Hon Audley Shaw was about to go to the market with a debt instrument for US$400 million at seven per cent, in order to support government expenditure.
I was alarmed by the fact that on the same day, news was that the National Export Plan was failing, and the president of the Jamaica Exporters’ Association Vitus Evans bemoaned the fact that the Government and external donors had not lived up to prior commitments and promises.
The two stories are diametrically opposed, certainly within a global economy that is in crisis, and a domestic economy also in a crisis, but where production may be lacking, we spend huge sums on luxuries that have no financial return. So SUVs thrive while plant and machinery go to waste, and labour is tremendously underutilised.
We attempt to support wasteful and underproductive government expenditures that only serve to increase debt, not revenue. That does not qualify as a workable strategic plan, and if it were in my power I would send them back to the drawing board.
Public/private or joint investments have been at the forefront of Caricom meetings on governance, and quite rightly so, as they define several well-known ways of making investments become win-win situations, particularly within small economies like ours. The full gamut of activities, taken together in a purposeful manner, could provide a better use of limited funds and commit these to real developmental goals. Let me paint a picture of where leadership and vision can take us.
For over a year I have been advocating nuclear energy, and efficient alternative energy initiatives. Firstly, at about US$1 million per megawatt, and an expected generating cost of about 4.5 cents per kilowatt/hr, investors of $400 million could sell to the JPS at a sustainable rate that would reduce our electricity bills by over 50 per cent. Those investors could make returns after taxes that would be significantly better than the seven per cent that the Government debt would yield. In addition, the country would save about US$800 million in oil imports.
Yet, to date I have not heard any words of support from those leaders of industry that continue to cry that Trinidad pays less for electricity and that is why we are so uncompetitive. To think that business persons in T&T would willingly allow their rates to rise to our levels is just an unrealistic wish. They will not shoot themselves in the foot by allowing their politicians to get away with that fantasy, and neither should we (that is, if we have any balls).
Other initiatives such as waste to energy could produce electricity and reduce the need for more garbage dumps. As a side benefit, we could have better garbage collection and protect our environment, and that’s win-win-win. Similar initiatives with jatropha (“physic bush”) on scrub lands would provide several sustainable benefits including employment. In a country with so much hope in, and dependency on tourism, clean and efficient energy sources are paramount in protecting the very beauty of our country, and the health of ourselves and our visitors.
I have not heard any public debate about the increase in the energy demand for the additional rooms needed per million new visitors, nor the electricity demands of additional attractions to entertain the new cruise passengers coming to Falmouth and other ports. This is crucial information and needs substantial investment from the private sector if it is to be successful.
Even if we find oil we cannot afford the infrastructure cost of drilling and pumping, and this will be the purview of a few mega-multinationals already in that business. Like bauxite, we will probably earn royalties and toll fees rather than the billions those companies will add to their bottom lines. So let’s think ahead in a very pragmatic way as the cost of being oildependent is more than we earn individually from exports, remittances or tourism.
We really need to focus on areas of waste as there are so many to be confronted. If we were to effectively deal with these we would find that the savings would be larger than most areas of investment. This is a job for both the public and private sectors, and we can start with the low-hanging fruit of procedures that are duplicated without sound reasoning.
An easy example is the potential for costly carnage by the operators of public transportation and heavy equipment. In addition to the loss of life there is an underlying cost of avoidable insurance premiums for being accident-free. We have the technology and simulation equipment to train drivers of these vehicles and provide them with a certificate of competence. This US$1.5 million investment sits vastly underutilised at the Caribbean Maritime Institute and the fees would support the activities of this tertiary institution.
I therefore advocate that no person be allowed to operate these vehicles without certification. The cost savings will be much more than the current cost of careless driving, and if you add alcohol and other substance testing we could remove most of the dangerous drivers from the roads. Constant Spring and Red Hills roads could become safe routes again, instead of their current use as a “Coaster Bus Raceway”.
The problems faced by our nation require urgent attention, and in so doing they must be addressed by the appropriate groups. Governance is the responsibility of the Government, and the investment mobilisation must be the responsibility of the private sector within current or modified rules. If tax reform is required let’s do it, but in doing so accept that there is a performance and conformance requirement that rests with the business community.
The disruption of traffic on North St reminds us that the repairs are to a sewage system that has been neglected since the 1907 earthquake. This was similar to those sewage drains replaced on Harbour St in the 1990s which were four-inch clay pipes originally damaged by the aforementioned earthquake, that were never repaired. Thank goodness for Cricket World Cup as we neglected our own citizens, especially school children, but didn’t want visitors to have to walk in “it”.
Also, what about the remaining asbestos water pipes that still are used across the country, and do they have anything to do with the high incidence of breast and prostate cancers? I hope we could get some illumination from the medical sector on these matters of public health.
So, watch the soap opera in moderation unless you are getting paid for doing so. We have also got important and urgent matters to deal with for our own survival, and unlike the lawyers on television, we will not be paid if we lose.