A request for a drawdown of $1.3 billion from the Capital Development Fund (CDF) to provide the Government with budgetary support received heavy weather in the House last Tuesday before being approved.

The CDF, which is financed by revenues from the Bauxite Levy, came under fire from Opposition MPs who charged that the funds, which are technically earmarked for development projects, were being used by Government to pay debts and finance expenditure instead of for capital development.

Longtime critic of how bauxite revenues are used, Audley Shaw said the drawdown from the CDF, the third for the year, went against the mandate of the fund, especially considering that bauxite was a finite resource which would run out in “a maximum 50 years’ time”.

“The country can see no new investments to take the place of this depleting resource,” said Shaw, while repeating his call for a special fund of $500 million from bauxite revenues to be used for human and infrastructural developments in mined-out communities.

“It is all going into paying debt and none to the citizens of this country, it is almost an insult when members come to this House and talk about goat herds being established,” said Shaw in reference to goat-rearing projects established on reclaimed lands by the bauxite companies.

He projected that the country received $25 million in terms of what was returned directly into the communities from the fund, which, he said, represented only about one per cent of the annual earnings from the industry locally.

Shaw received support from Pearnel Charles who noted that problems such as drought in some bauxite-producing communities were exacerbated by the companies which, he said, destroyed water tanks in order to mine, and who used to supply trucked water to residents but stopped after mining ceased.

However, Government spokesmen have long maintained that the CDF has been utilised by successive governments to shore up the budget since its establishment in 1974 by the Michael Manley-led PNP Administration to compensate for the OPEC oil price shock. It was initially set up for the financing of industrial development towards increasing export competitiveness.

They argue that without the transfers, taxes would be higher or services less.

But economist Dennis Morrison, a former chairman of the Jamaica Bauxite Institute, notes that starting from 1974 when the levy was imposed, increasing proportions of levy inflows were instead directed to financing the Government’s budget in the face of the economic instability that followed the massive increase in oil prices.

Morrison, in his Observer column, said that while significant investments from the fund were made in productive assets such as Carib Cement, JPSCo, some projects in the agricultural sector and low-income housing, very little, if any resources were directed towards the expansion of existing or new manufacturing capacity.

“After the late 1970s, almost the entire yearly inflows from the levy went to support the Government’s budget, except for the period in the early 1980s when the Agro 21/Spring Plain experiment in winter vegetables was undertaken,” noted Morrison.

House Leader Peter Phillips also commented Tuesday that the funds were being utilised in the country’s interest regardless of which fund they ended up in.

“When schools are built, whether it comes directly from the Consolidated Fund, it happens,” said Phillips who noted that there were numerous developments across the island that were financed from bauxite returns.