Debate Battle

• Shaw blasts PNP for financial sector meltdown • Phillips says future PNP gov’t would manage fiscal accounts

Friday, December 16, 2011



 

FINANCE Minister Audley Shaw last night poured cold water on a claim by Dr Peter Phillips that the high interest rate regime that led to the collapse of thousands of local businesses in the 1990s was market-driven and not a policy implemented by the then People’s National Party (PNP) Government.

Shaw also insisted that the PNP could not be trusted to keep interest rates down as he responded to a commitment by Phillips that a future government formed by the PNP would ensure the tightest possible management of the country’s fiscal accounts.

Both men were fielding questions from journalists in the second of three planned political debates leading up to the December 29 general election.

Phillips, in response to a question as to whether the PNP, if re-elected to office, would ensure that the country would not see a repeat of the 1990s meltdown of the financial sector, said various countries, from time to time experience economic and banking crises.

“It is true that the failure of the banking system in the mid-90s cost the country tremendously,” Phillips said. “It is also true that the Government at the time rescued the savings of all Jamaicans, rescued the pensioners and everyone who had investment in the system. There are those who, despite the best efforts of the Government and themselves, were not able to come out of that system with their businesses intact. It was very much regretted, but what we have put in place is strengthened financial regulations, in the deposit insurance scheme that will help to guarantee that such a crisis of those proportions will not occur again.”

He also sought to brush off an earlier suggestion from Shaw by stating that the PNP administration of the 1990s did not pursue a high interest rate policy, as the interest rates, he said, were market-driven.

However, Shaw, in response, said: “Call it what you want to, call it; policy or no policy, interest rates averaged 53 per cent during the 1990s. Penalties on overdraft went to as high as 120 per cent, and in consequence the productive sectors collapsed, the customers of the banks collapsed, and then the banks, all 41 financial institutions, collapsed; 40,000 businesses collapsed. It was a gross dereliction of governmental responsibility on the part of the entire Cabinet and then you had crime that quadrupled during the period as well.”

It was at this point that Phillips committed to tight fiscal management when he was asked whether he was saying categorically that interest rates would not be erratic under a future PNP Government.

But Shaw, expressing disbelief, brought the PNP’s credibility to the fore and described Phillips as the master of deferred financing as he insisted that the Opposition party could not be trusted to keep interest rates down.

Shaw said that when Phillips served as minister in three separate ministries during the 18 years of the previous Government he utilised deferred financing.

“He had the programme at health, deferred financing at national security and he was the master of deferred financing, off budget financing at the Ministry of Transport and Works,” said Shaw.

The finance minister pointed to the Hope Road project, saying that it was financed at an interest rate of 24 per cent and was placed on the budget two years after completion.

The first debate was staged last Saturday between young members of both political parties.

The final debate will be held next Tuesday between Prime Minister Andrew Holness and Opposition Leader Portia Simpson Miller.


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COMMENTS (27)

Jamaica Unite
12/16/2011 - 8:58 PM
PP would have gain more credibility from the Jamaican people last night if for once they admitted that a collapse of that nature should never have happen, and given that it is the same leaders at the helm, give us the assurance that they have learnt a lesson that has now prepared them to move forward... but no... they still blame everybody else...
Mark Forbes
12/16/2011 - 7:04 PM
Am I to believe that, in the event a fire was approaching the house, Shaw's fan club would tell their families to roll over and go back to sleep? That would be the equivalent of what Shaw is saying he did about the recession. We are lucky that while he was there reassuring no one but himself, other measures that were taken before prevented complete destruction. It is evident that the fire brigade (the IMF) should have on spot before Dec.'09 and he is to be blamed for the delay.
Mark Forbes
12/16/2011 - 6:45 PM
People, please try to get some independent info. Shaw had nothing to do with int. rates etc. If these macro. variables were a bus he wouldn't even be a loader man. He is nothing but a passenger here. All his budgets seems like he just throws some figure together and makes adjustments according to how they are criticised. Do you people realise that the fact that the IMF agreement was woefully negotiated is not up for debate? I have sen nothing to believe he has anymore knowhow than a fifth grader
A T
12/16/2011 - 6:36 PM
What about the public sector wages? That is the 27 billion dollar question.
bobby digital
12/16/2011 - 4:53 PM
Both Chubby politicians laughing all the way to the bank with Jamaican people money..GodSpeed Jamaica!
St. Ann
12/16/2011 - 4:52 PM
@Tom Stroke. The only reason you getaway with using 1200 characters is because your comments are always pro-JLP but I just wanted you to know that most people don't read your comments because it's lacking in reasonable thinking and what you say with 1200 characters other bloggers say more with 500 characters.
Paul Gentles
12/16/2011 - 4:36 PM
Sad, quite sad, seems there is no financial credibility by all those who propose to be our govt.
Quite concerning, alarming even that huge sums of money have been" invested/divested" without parliamentary oversifght. Is this legal? Are we only living in a pretend democracy - the argument for accountability has never been stronger.
micky moto
12/16/2011 - 4:26 PM
I was impressed with how Shaw handled the debate. He seemed more composed and that added to the quality of the debate. Phillips on the other hand went into the debate as if he was already defeated and it worked against him. I don't like how the PNP has unilaterally stated that JEEP will funded by JDIP and THF funds that are soley based on tourism head tax.
After the debate I feel more confident that the JLP is better to handle the finances of this country, even though I had my doubts before.
PL BOGLE
12/16/2011 - 2:52 PM
@ Tom Stroke. “one could see the effort by him to bob and weave around the issue of trimming the size of the public sector”. If education, health care, and fighting crime are important to development, then it’s difficult for the any gov’t to cut the public sector wages to 9% of GDP, there have to be growth.
The JLP gov’t has no appropriate, or made any effective steps to address poverty. We must address the problem of poverty in our country, this problem continues to grow. If we choose to ignore this issue, our country and will suffer. The JLP has no plan for the poor.

Caleb Barrett
12/16/2011 - 2:32 PM
Shaw was completely caught out by Phllips's question about him taking a 11 billion loan without Cabinet approval and off-budget. So how can this man curse the MOU's and deferred financing when he is doing the same thing?
Also Shaw pretty much accepted that he was untruthful to the country at the start of the recession. What an admission! More lies? Is that what we can expect?
So what is the deal with the medicine we are supposed to be getting. Shaw couldn't even be honest about that!
Jakan 2011
12/16/2011 - 1:18 PM
I don't think MOU man and the PNP get it. The operative word to watch is "TIGHT". They always want to be tight. Tight and economics DON'T WORK and that is why under FINSAC MAN things were always TIGHT. SO TIGHT that everything and everyone STIFLED. Get rid of TIGHT and let go the economy. Having reasonable regulations is not tight. TIGHT is having UNREASONABLE and stifling regulation and no economy can move under such conditions
nervous investor
12/16/2011 - 1:08 PM
There can be no serious argument - Shaw won the debate (substance and demeanor), Phillips was weak and, I thought, his manner did not inspire trust in his responses.
@Hugh Maxwell - you say "The article is shallow, and absent of any depth". Please help us (the less educated plebes) by comparing and contrasting the expressions "Shallow" and "Lack of depth".

D T
12/16/2011 - 1:07 PM
If we vote for a candidate based on performance these politicians will have no choice but to perform better. Dr P should have accepted the blame for the financial meltdown and said we learned from that and move on. How can we trust these guys with the economy when they wont change they wont accept the blame. While the JLP has it flaws they have done a better job with the economy, I believe given the time the PNP had and if they continue we will see some stability in JA.
Mark Forbes
12/16/2011 - 1:04 PM
None of these gentlemen fully articulated the problems and solutions going forward. But because of all the pre-debate braggadocio and for saying Phillips was inexperienced in what turned out to be a tame draw, Shaw loses. How long does the JLP expects to dine out on the growth of the 60s and 80s, which were the result of building the infrastructure for the bauxite industry and US Cold War aid respectively? When is Shaw going to drop his Opposition attack dog persona? Isn't he now the FM?
Omar Daley
12/16/2011 - 12:39 PM
I wonder, what could be the aim of the reporter by being one-sided? For persons who did not get to see the debate and would turn to the paper for an appropriate recount of what transpired this would obviously mislead them. What's the motive behind this report, if there is any?
Tom Stroke
12/16/2011 - 12:17 PM
The emphasis of my comment is not so much on the fact that Mr Shaw clearly won the debate, but more on the fact that sell-out Peter Phillips did not give the impression that he really understand the gravity of the issues. Look at the synopsis of his responses to the issues in this article. One could see him often referring to notes as if Omar prepared his arguments. Today, the details of how JEEP is to be financed remain murkier than the mud lake on Melrose Hill in Mandeville. How many so-called short term jobs that JEEP will provide remains a mystery. If at few days to the election the PNP cannot adequately explain this JEEP, which is suppose to be the center that will form a response to the rumor that the USA may slip into a second recession, the economic turmoil in Europe, and to growing Jamaica, then when will the answer come? Sell-out Peter from his answers did not give me the comfort that the PNP would be a government that would be willing to make the tough and unpopular decisions; one could see the effort by him to bob and weave around the issue of trimming the size of the public sector. It gives the feeling that efficiency is not apart of the PNP’s vocabulary. Mr Shaw on the other hand gave me the impression of a man with a firm grip on the issues and also a man with a plan.
Hugh Maxwell
12/16/2011 - 12:13 PM
The article is shallow, and absent of any depth.
Al Vanawic
12/16/2011 - 12:11 PM
@Robert Manley. The reason they are skirting around the issue is becausse both men know that it is the IMF going to run the country next year if they are going to get more money to borrow.
Verlis Morris
12/16/2011 - 12:05 PM
This article's only aim is to highlight Dr. Phillips' weaknesses @ C Gordon. However, if both candidates weaknesses and strengths were commented on @C Gordon wud not be at a loss. Also, an economist's analysis of points put forward would be enlightening, instead of the above babbling I just waded thru ... While I'm not sure if Shaw won, I strongly believe Phillips buried himself, despite the analysts!
Horace Kerr
12/16/2011 - 11:44 AM
So apparently this article is about up-selling Mr. shaws achievements in the debate. I watched it and contrary to the analysts that gave Dr. Phillips the edge I think it was disappointingly even. Mr. Shaw who is in his field should have easily blown away Dr. Phillips but didn't or couldn't. And I could be wrong but wasnt his answer about the Bus purchase, defered financing as well?
Only A Jamaice
12/16/2011 - 11:43 AM
Shaw is doing the samething with the buses
J L
12/16/2011 - 11:31 AM
Shaw man-handled Peter Philips. Philips looked and sounded tentative and unsure of his words. He was for the most part defensive as if waiting for Shaw to drop one on him. It is mind-boggling that some analysts are saying Phillips was better prepared. He might have studied for the test but he did not pass. Phillips blamed the banks, not his administration's negligence, for the 90s meltdown but offered up tighter govt. regulations as the surety that it would not happen again. Contradictory.
Caleb Barrett
12/16/2011 - 11:21 AM
The Observer could try to be less partisan. Phillips won the debate, and there was a lot more spoken about than this narrow report says. Seriously! What about the discussion of the future? This article is focusing on events of 20 years ago that took up about 3 minutes of the debate.
Robert Manley
12/16/2011 - 10:50 AM
Too much skirting around the answers by both men however Shaw won the debate hands down. Peter was nervous and breathing heavily and got upset in the end.
Dalton Whittaker
12/16/2011 - 10:21 AM
How can a Government in control of finance caused such a colaspe under its watch? I believe Jamaicans should give chance to new governance and see where it will lead. The country has seen the Jamaican dollar stabilized under the current governing party. If we want a better future for our country, be it PNP or JLP, we have to make some sacrifice to move the country forward. We can pull out of this quagmire. There's still hope for a better Jamaica if we as a people stand together in solidarity.
Stephen Fox
12/16/2011 - 10:00 AM
Both candidates acquitted themself well. On one hand Mr Phillips presents credible arguements that seem to imply that the PNP is starting to get it. On the other hand Mr Shaw appears to be a sincere person who has lived through the 18.5 years of PNP majority and who is determined to foster a growing economy. Actions speak louder than words and Mr Shaws actions with regard to the economy outweigh Mr Phillips words. At least they both agree on the tax fairness and tax collection question.
C Gordon
12/16/2011 - 9:22 AM
What is this article saying?