PRIME Minister Bruce Golding blew away the People’s National Party Opposition in the first part of the budget debate last Tuesday. It was Golding’s best budget speech since he became prime minister in 2007 and it ranks among the best by any prime minister. The view that the Opposition’s debate was light does not detract from the high quality of the prime minister’s presentation. The Opposition will have to organise itself better in the sectoral debate to follow, because Jamaicans want and demand a strong Opposition to keep the government on its feet.

Golding’s presentation was replete with realities and challenges. The realities include the need for fundamental changes in which we govern and manage our business, as management of government’s finances over many years has been the biggest stumbling block to growth and development. Monetary recklessness led to inflation of over 100 per cent in one year. Whenever ends could not meet we borrowed to bridge the gap and today 48.34 cents of every dollar we spend goes to service and repay the debt. Another 28.57 cents is used to pay wages and pensions. So all we have left to do all the other things that government is required to do is 23.09 cents. Since the start of the recession we have lost US$2.7 billion in export earnings, J$16.5 billion in bauxite revenue and J$5.7 billion in General Consumption Tax. This is a reality which government has to face when it sits at the bargaining table with public sector workers who demand wage increases, when it tries to pacify citizens protesting against roads and lack of water, or is called upon to roll back taxes when the revenues cannot cover what we are already spending.

When a country’s budget accounts for more than 50 per cent of its Gross Domestic Product – the goods and services produced – that is a country going nowhere. In some other countries, GDP ranges from 14 to 27 per cent, except for the United States which saw a percentage increase from 20 to 40 per cent and is grappling with this crisis. In 2007, Jamaica’s GDP was 56 per cent. Reducing the GCT to 43 per cent this financial year is still too high, but though headed in the right direction is a challenge for the country. Government has laid down a strategy which presents many challenges.

These include eliminating the fiscal deficit – the gap between the income of government and what it spends – and building up surpluses to cushion the country through external shocks and natural disasters; reducing government borrowing so that more resources are available for those who want to invest, do business and create jobs; reducing the debt to GDP ratio and the cost of servicing the debt so that more of the taxes collected can be spent in critical areas such as education, security and justice, health and infrastructure; reforming the tax structure and spreading the tax burden more equitably to encourage people to invest, do business and create jobs; transforming the bureaucracy into an institution capable of delivering services efficiently while encouraging and facilitating doing business and creating jobs; providing a framework of transparency and accountability so that people will have confidence in what the government is doing and how it is managing their money; enabling Jamaica to be globally competitive in areas that will attract investment, create jobs and provide prosperity for our people. All of these core elements are aligned to the overreaching goal of Vision 2030 of making Jamaica the place of choice to live, raise families and do business, Golding said.

Golding removed a misconception about providing jobs. It is not the government’s business to create all the jobs needed. Government employs 100,000 people. Government’s job is to create the conditions that provide jobs. Jobs are created and economic growth occurs when people invest, do business to produce goods or provide services that have value and for which there is a demand. The investment climate is at its best today. Five years ago 64 per cent of the banking system credit was gobbled up by government. Today the figure is down to 39 per cent which means that more money is available in the banking system for investment. In the past high interest rates were an impediment to investment. Today the interest rates are the lowest in 40 years.

The prime minister spoke of the success of the security forces in fighting crime. However, he should be reminded that on many occasions in the past there was marked success, but this did not hold for long mainly because past and present administrations did not provide adequate social programmes.

Pickersgill is right

The Opposition spokesman on transport Robert Pickersgill was quite right to caution Finance Minister Audley Shaw for a reference he made in relation to the Finsac Enquiry in the House of Representatives last Wednesday. Pickersgill described Shaw’s reference as inappropriate as the commission was still meeting. Shaw’s response was that it was a public enquiry and he was quoting from articles that had appeared in the press.

Once proceedings of a commission or court are under way, one should not discuss the matter publicly or try to influence the commission or court in any way.

In this context, perhaps Pickersgill ought to have a word with Patterson, who was prime minister during the financial meltdown and the Finsac fiasco. Speaking last week at the Sir Arthur Lewis Institute of Social and Economic Studies 50-50 Forum, “Surveying the Past to Inform the Future”, Patterson said mismanagement of the banks triggered the financial meltdown of the 1990s. The truth is that Patterson should accept some of the blame because he, as leader of the government, allowed then finance minister Dr Omar Davies to impose back-breaking interest on bank loans, which at one time rose as high as 70 per cent. The then government was responsible for crippling mostly young, black entrepreneurs. The commission should ignore what is said outside its hearing.

Change of heart?

Patrick Hylton seems to have had a change of heart now that he is managing director of the National Commercial Bank as opposed to when he was managing director of Finsac. When he was wearing his Finsac hat, I had asked him to provide me with a list of debtors of banks which Finsac took over for bad loans and loans which were written off or reduced. He said then that it was against the banking laws to do so. Now he wants debtors’ files to be opened to public scrutiny. There has been no change in the law. Patterson also said he would publish the lists, if certain conditions were met. The issue eventually fell off his radar.

Journalistic ethics require me to state that I have an interest in the enquiry as I lost one year’s interest on investments.