Columns

The year that might have been

Claude Robinson

Sunday, December 30, 2012    

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THE year 2012 started out differently from how it is ending. It began with Portia Simpson Miller being sworn in as prime minister for a second time. She declared that she had been "tested and tempered" and had "emerged a stronger, better prepared person" to lead the country than when she first took the helm in 2006.

With the domestic economy in disarray and with the global crisis of capitalism deepening at the time, the country needed the kind of leadership she promised.

Also, with 2012 as the 50th anniversary of Jamaica's political Independence and the year of the London Olympics, there was expectation of a political rebirth of sorts and even higher hopes of a record medal haul from the games. Usain Bolt, Shelly-Ann Fraser-Pryce and the other Olympians did not disappoint.

Disappointment was almost everywhere else. By year end, the country had surrendered most of the 'feel good' associated with the phenomenal achievements of Jamaican athletes at the Summer Olympics and the celebratory aspects of the 50th anniversary of Independence.

These have largely given way to the depressing reality of an underperforming economy, uncertainty about a long-awaited new agreement with the International Monetary Fund (IMF), and troubling questions about many areas of national life.

Hurricane Sandy devastated agriculture in the eastern parishes and slowed remittances and tourists from the north-eastern United States; the global recession continued to depress recovery of our vital bauxite/alumina industry; and no quick solution to high, uncompetitive energy prices was in sight.

We approached the end of 2012 with data and projections from the Bank of Jamaica (BOJ) and the Planning Institute of Jamaica (PIOJ) confirming that the economy is back in recession and will likely close out the financial year in decline. The slide in the value of the Jamaican currency continues; and our national reserves fall as the BOJ intervenes in the market to defend the dollar.

The year started with much greater optimism. Mrs Simpson Miller overcame a relentless negative advertising campaign waged by the Jamaica Labour Party that sought to demonise her, mock her intellectual capacity, managerial competence and suitability to be prime minister of Jamaica.

But a significant majority of the Jamaican electorate rejected the false characterisation. They, in effect, said they trusted the PNP leader to take and implement decisions that are in the best interest of the country and not the special interest of the privileged and those with access to power. They wanted to believe that 'people power' was not a campaign slogan, but a policy agenda.

They ignored a plea from then Prime Minister Andrew Holness for an opportunity to administer "the bitter medicine" which, he said, the Jamaican economy needed in order to be restored to a healthy state of growth and job creation.

The wide margin of the PNP victory also confirmed the profound disapproval of the Bruce Golding Administration's handling of the US request for the extradition of Christopher 'Dudus' Coke — a disapproval that did not disappear with Mr Golding's resignation that paved the way for Mr Holness's ascension.

We now know that the prime minister's resolve to use state resources to stimulate employment through the Jamaica Emergency Employment Programme (JEEP) in the short and medium term fell short of popular expectation; so did the expectation of a quick deal with the IMF, following the failure of the previous JLP Administration to live up to their side of the bargain.

Budget signalled a difficult year

The difficulties that we would be called on to endure in 2012 were signalled when Dr Peter Phillips, the minister of finance and planning, presented the 2012/2013 budget.

That budget called for record new taxes of $23.4-billion. It required sacrifices from all social classes and economic sectors: More basic food items started to attract General Consumption Tax (GCT); the tourism sector was asked to contribute more through GCT as well as a new room tax on tourists; importers of high value items, including luxury cars, were to pay more; businesses that currently pay no taxes at all were asked to pay an annual flat tax of $60,000 minimum.

By year end, as the economy contracted, the Government was reporting that revenue targets were being missed.

Dr Phillips had cast his budget in a particular context that we should not forget: Jamaica's debt of $1.7 trillion (128 per cent of GDP) was not sustainable. Debt servicing accounted for $334 billion, more than half of the $612-billion Government planned to spend in 2012-2013. Debt and public sector wages together account for 78 per cent of the projected expenditure.

That leaves just 22 per cent to equip and operate the security forces, schools, hospitals; to fix drains and gullies; fill potholes that increasingly look like craters; provide some food and the barest necessities for the poorest amongst us; give unattached youth a reason to believe in the future. It can't be done.

Hence the need for an agreement with the IMF to shore up the foreign reserves and renew confidence among lenders, investors and consumers.

Before the Christmas break, when he was still expecting to ink a deal before December 31, Dr Phillips told the country that two major issues stood in the way of an agreement: The pace at which Government can reduce the debt and the elimination of waivers that the minister may grant to some taxpayers and certain conditions.

He wants more time to reduce the debt and he wants the flexibility to grant waivers where they make sense for job creation or other policy goals. And by year end, we also heard from several public sector union leaders that their members were not willing to take another two-year wage freeze, having done so for the current wage period.

These and other issues in the society, including a wobbly criminal justice system, a still intolerable murder rate, poor performance in education and urban blight demand the type of bold, open and transparent leadership that did not materialise in 2012, despite the promises. The people need to know what are our options and what is expected of us. Uncertainty must give way to certainty.

Our politics has been too dysfunctional and has been a main contributor to our national underperformance in the 50 years of Independence. A lack of agreement on broad national objectives, political tribalism, the triumph of political considerations in national decision-making, and winner-take-all approach to the exercise of power are some manifestations of the dysfunction.

Over the period since Independence, the people have successfully thrown out governments they consider to be failing. And the results have been accepted by both sides. That has been a strong feature of our democracy which we should not scoff.

For 2013 and beyond, the people in all their civic and community spheres have to find new ways to make our elected leaders more responsive to our needs.

kcr@cwjamaica.com

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