Balancing the Budget

With oil prices substantially higher than they were prior to last year’s Budget and Government revenues from crude and natural gas on the rise will Government be tempted into a repeat of the intemperate spending which be devilled the PNM during the 1970s oil boom, or will it prudently set aside the burden of the excess revenues for the proverbial rainy day? Admittedly, Junior Finance Minister Senator Conrad Enill has assured the country that Government would be placing all public sector areas under strict financial scrutiny, and that Ministers would become more involved in the auditing of all bodies under their jurisdiction. Nonetheless, Government is under pressure by trade unions to increase salaries and wages and maintain existing employment levels; by consumers to discourage any move by public utilities to seek a hike in rates and by business who want a further reduction in corporation tax and personal taxes.

All too often, depending on which side of the political divide the individual or group making the accusation may be, Government spending is described as excessive and partisan. For example, Government has embarked on a programme to construct 6-10,000 subsidised housing units annually as well as to provide an expanding number of jobs under the Unemployment Relief Programme (URP)  and CEPEP at a cost of hundreds of millions of dollars. The Opposition United National Congress has described the location and allocation of the housing units as designed to affect the outcome of future elections in favour of the ruling People’s National Movement, and the choice of URP jobs or CEPEP contracts as favouring members and/or followers of the ruling Party. 

In turn, the fares charged commuters by the PTSC are uneconomic. They would be even more uneconomic should Government yield to present demands by bus passengers for it to acquire additional units to operate the service. This would result in a tapping into additional energy revenues with no hope of recovering the initial cost, and if the Corporation is given enough money to enable it to purchase sufficient units to operate a regular and efficient service, will mean an expenditure in excess of $200 million. An economic fare which would cover the cost of the purchase and operating of the new and existing units may be seen by the average commuter as beyond his/her reach. Should the Minister of Finance include provisions in the 2004 Budget for the acquisition of additional buses without urging on the PTSC to seek a fare increase, he may be committing a substantial share of increased revenues from oil and gas as well as subsidising a section of the population.

Meanwhile, a Parliamentary Joint Select Committee has been told that the Water and Sewerage Authority (WASA) owes in excess of $3 billion and that the Trinidad and Tobago Electricity Commission (TTEC) is in the red to the tune of several hundred million dollars more. And while bailing out the utilities may not be considered by most people to come under the standard definition of squandermania or intemperate spending, it will still be a case of large-scale disbursing, in the Budget, of newly won revenues. This, along with CEPEP, URP, each of which is a form of dole, the provision of new buses and housing units will bite deeply into the combined oil and gas windfall, and effectively reduce the amount of money needed to be set aside in the 2004 Budget for the proverbial rainy day.