MAKE BETTER USE OF OUR RESOURCES
Thursday, December 24th, 2009
DENIS KELLMAN’S COLUMN- THE DEBATE
AUGUST 21, 2006
This week, the Minister of State in the Ministry of Finance responded to the Shadow Minister of Economic Affairs on pertinent issues as it relates to the economy of Barbados. This response coincided with advice given to the Government five years ago when they borrowed US$150 million as an insurance policy. At the time they were told not to borrow the money, because of our high level of foreign reserves and liquidity in the local banking system. The Minister also made the point that the CESS Tax increased the revenues of Government and dampened consumption, with this I concur. What the Minister now needs to explain to the public is how the contraction in the economy would provide foreign exchange to repay the debt. Surely one would understand the punishing of consumption, but one would also agree that the solution has to be completed by rewarding investment and labour. This country needs to understand the importance of higher productive investment and greater efficiencies of labour.
I have said previously, that we need to better use our resources to ensure that we maximize our returns. I have already written that we have enough living space that can easily be converted to rooms using Community Tourism concept. This Government has partially accepted this concept and has started the process of rewarding room providers by their new piecemeal taxation approach. It is a beginning to the process, but in these economic times, what is needed is a strong and direct dosage of tax reform.
This Government will complete its tax reform and when it is completed, it will not have any effect on restructuring the economy. Our country is sick and it needs direct inflows. Minister Mascoll must now admit that he agrees with what I have been saying. It is also clear that the Minister agreed that the problem has nothing to do with revenue. This Minister must convince the private sector that generating local revenue is good, but the revenue that will put us where we will once again have economic independence is the one that creates foreign reserves.
The private sector is not interested in real tax reform because they have been able to work the system by employing “Tax Accountants”, when they should be employing “Costs Accountants” to reduce their production costs. Capital gains have worked well in this country by persons having the capacity to work the system. This comment should not be seen as a criticism, but should be seen as a reason for tax reform.
We are seeing a situation in this country where persons are now not working their assets to provide continuous revenue, but selling them to secure capital gains without having to worry about the incidence of tax. Our country is on a sellout spree where the capital gains factor is now more important than the profit factor. Profit should never be seen as a negative and Government Policy and taxation systems can no longer be anti-profits nor wages and salaries. It must be seen positively, because when investment and output from workers are rewarded, we will be able to reduce costs and excite investment. Let us be leaders not followers.
Previously, we had a problem of land sales on the West Coast due to the environment, land tax and the aesthetic problems. Our fear must now be about the conversion of our productive plant in the tourism industry from being a place where you pay for a holiday to one where you own a holiday. This will create serious long term problems for the country unless the persons selling the properties reinvest the money in productive properties. Persons selling idle land to increase the revenue earning capacity by earning foreign exchange must be encouraged. We must now look at our opportunity costs as it relates to the sale of our land and other assets. “Our aim must be to increase our foreign exchange earning capacity and not our foreign exchange.”
The next five years will be our most testing years. It means therefore, that the structure of Government must change. This country would be the best served when the Prime Minister is seen like the president of the United States. No Prime Minister should be a Minister in these trying times, when he or she has to supervise such a large Cabinet, which seems to be getting larger, because of CSME and the impact of Globalization on the domestic economy.
It is rather interesting that the CSME is now being referred to as CSM and the press seemed willing to accept this new description without giving credit to the person who was bold enough to say that we should drop the “E” and concentrate on the possible. I felt then, and still now, that in order for CSME to work, Barbados would have to devalue its dollar. For some reason, everybody sees the “E” in the economy as currency, but I see it as the working of the resources in the CSME to the advantage of the total Caribbean and exporting them to generate the foreign reserves for the Caribbean. Another good approach as to how it can work should be the example of LIAT to Barbados. It is the interest of Barbados and Trinidad to set up a fund to work the resources of Guyana to keep their citizens at home to help develop the most resourceful country in the CSME. It is unfair to lure the Guyanese away from their resources. As this occurs, others do not have any direct connection to the liabilities of CARICOM are moving in and exploiting the resources that belong to the Guyanese.
I have been informed recently that the wage quoted in Guyana to the workers is not paid when the worker arrives in Barbados. You are now getting five for the price of one. This fact has served the employment statistics well, but has worked against the Bajans and the Guyanese. Our Caribbean brothers and sisters cannot be seen as statistics when they have to offer us their labour. The Social Partnership must speak to this and should understand that sooner, rather than later, that these workers will be treated like the Red Caps.
The Social Partners need to warn persons in senior positions not to threaten workers for their rights. The contract signed by the Red Caps now makes them workers like them with the same rights and conditions. Persons who are employed as human resources managers should protect the rights of the Red Caps also, as I know they would.
Today, it is my punishment, tomorrow it might be yours. As workers we need protection. If you doubt me, ask some senior bankers who thought they had jobs up to age sixty-five until they received their package.
The problem facing this country will soon be seen as a Social Partnership problem, unless their voices are heard speaking against policies that are not working in the interest of our country. They must produce evidence that their suggestions are not being accepted by the Government. Labour cannot be blamed because they have accepted their share of responsibilities during those testing years. In terms of money, the Private Sector has done its part, but it has to understand that this country has to be governed by new and enlightening ideas. The days for membership are over and what is needed for the country is what is best suited for it and not any one particular group. Everything should be done to ease the social tension in our country. The best group that can do this is the Private Sector. This group has done too much for Barbados and they must now ensure that their contribution is not depreciated by a group that is interested in survival only. We cannot allow this patient to die. We must maintain our control of it. The “Blue peter Sharks” are in the “calm” again, let us not be devoured by them. Let us sell to expand investments, not to create savings.
Small countries in the Caribbean must first provide enough work for their citizens. The measurement can no longer be based on forty hours, but what would give the country the advantage in what is it producing.
What is needed is moonlighting and a shift in taxation to allow workers to increase their disposable incomes without increasing the costs of the products, investors seeing a better bottom line and Government increasing revenue by real growth in the economy. What I am seeing is Government putting foreign workers against locals and creating social problems within the CSME, when we should be helping each other by developing countries and not individuals.
Let us fight the bigger goal. Let us deal with the statistics that would not only look good on paper, but would enhance the lives of our Caribbean people. Let us remember what Eric Williams, Manley, Burnham and Barrow sought to achieve. We must solve the problem by our actions and not by statistics, where all the resources of the CSME countries are being tapped effectively in the interest of their citizens and then for the wider CSME. When this occurs, we can say that CSME is working. This can only occur when the resources of Guyana is worked for its citizens first, and then for the wider CSME. We have to work to see Guyana where it used to be in the sixties. We must stop seeing Guyanese as workers and see them as owners of natural resources in need of capital to realize their dream. Guyanese as workers will only help a few in the Caribbean, but Guyanese as owners of resources will help the whole Caribbean. Stop limiting the education of the Caribbean.
The Late Leroy Brathwaite will be sadly missed. If they were ever constitutional lawyer, he was it. The party will miss his contributions. The Kellmans extend deepest sympathy to his family and friends. May he rest in peace.
Peace, love, unity, truthfulness, wisdom and understanding.
