BUDGET STATEMENT 2004 continued...

National Security
Mr. Speaker, earlier in my presentation I made it clear that the Government has declared war on the criminals who are now terrorising the society and I pointed out some of the new initiatives we shall be taking. In addition to these, the following shall also be done:
We shall increase the police presence in our communities and improve their response time as well:

- The fleet of vehicles and equipment available to the Police Service will be increased.
-New police stations shall be constructed over the medium term at Gasparillo, Brasso, Roxborough, Arima, Belmont, Matura, Besson
Street, Matelot, Manzanilla, Piarco, Oropouche and Old Grande Tobago. Construction work will continue on new police facilities at Couva and the Headquarters in Chaguanas.
-One thousand additional Police Officers shall be on duty by the end of this year.
-We shall continue joint efforts between the Police and Defence Force including joint patrols and the operations of the new Confidential Crime Unit. Plans are being considered for Army Camps to be established at Hope Estate Tobago, Champ Fleurs and Golconda.

We shall enhance the technological capability of the Police Service:

-We shall install a Police Computer System to transmit voice, data and video to police vehicles on patrol or in pursuit of criminals. We shall expand the automated fingerprint and mugshot systems to subdivisional headquarters. We shall widen the communication network of the Ministry of National Security, to more adequately service all security systems and agencies via its high capacity microwave backbone and point to multipoint system. We shall acquire Reporting and analytical tools, including GIS linkages to the Magistracy and High Courts, Prisons and other agencies.

We shall place heavy focus on training:

-Priority areas will include Narcotics Investigations, Intelligence Gathering and Analysis, Money Laundering, Drug Enforcement, Forensic Training and Bomb Disposal Techniques. We shall establish an Officer’s Training School.

We shall continue the partnering with communities:

-Community Policing will be increased as well as the promotion of civil community across the country.
-There will be focus on a multi-agency level with involvement in social and youth development and national safety initiatives, through ongoing liaisons with other Ministries, agencies and programmes like the Civilian Conservation Corps, Artisan Craft and Skills Programme and the National Service Programme.

Prison Reform
We shall embark on this most critical matter of Prison Reform. The Penal System will be further enhanced with the upgrading of facilities and the introduction of rehabilitation programmes for inmates. Improvement of facilities at the Youth Training Center and reconstruction of the Golden Grove Inmates’ Dormitory are to be undertaken. Furthermore construction of a new Medium Correctional facility for Tobago will commence in 2004.
The focus on Correction Administration will be done through a predominantly restorative, rehabilitative paradigm. The process of therapeutic jurisprudence will be emphasized as the Prison Service works towards moving the penal institutions away from a retributive mode of operation.
We shall therefore introduce a Parole System in Trinidad and Tobago to promote rehabilitation. This will also reduce over-crowding and its deleterious effects in our nation’s prisons. The Prison Industry and other best practice methods for meaningful reintegration and resettlement for the ex-prisoners will be utilized. There will be close collaboration with the Center for Criminology and Criminal Justice, of the University of the West Indies and other strategic stakeholders in attempting to realize this objective.

Legislation
Mr. Speaker, one of the most important elements in our fight against Crime is Legislation to improve the management of the Police Service and to deal with the new phenomenon of kidnapping. Unfortunately, we have not, so far, been able to get the support of the Opposition in this most critical matter. It is my fervent hope that there will be a change of heart on the other side and that we can get together to protect the citizens of this country from the criminals in our midst.

VII INVESTMENTS IN SOCIAL CAPITAL SOCIAL PROGRAMMES

Mr. Speaker, notwithstanding the strong growth performance of the economy over the years, we continue to be challenged by the need to empower significant sections of our national community. You will recall that last year we introduced a number of programmes to assist the disadvantaged and vulnerable groups. I must report that these programmes have been very effective and it is now our intention to intensify this effort. Among the supporting documents laid in Parliament for the first time is the Social Sector Investment Programme which identifies comprehensively the scope of Government’s social programmes.

The existing programmes that have been expanded include the National Social Development Programme which has been allocated $100 million. The allocation for CEPEP has been increased to $225 million to strengthen the training and developmental component of the programme. The Textbook Rental/Loan Programme, the School Nutrition Programme and the Free Student Transportation Programme have all received significant increases in allocations. The increased allocations to the Sports Plus and Sport Training and Enhancement Programme reflect the emphasis we are placing on the development of Sport.
New programmes to be introduced in 2004 include:

# The Community Development Bursary Programme, for which $3.7 million has been allocated;
# The Geriatric Adolescent/Partnership Programme has been allocated $3.0 million;
# The Adolescent Mothers Programme to be introduced in 2004 has been allocated $3.6 million;
# The Community Improvement Services Limited has an initial allocation of $5.0 million for 2004;

In addition to these Programmes, the Government is taking several initiatives in support of our agenda for social programmes:

# The establishment of a Children’s Authority which will champion the rights of children;
# The completion of a National Plan of Action on Children which will develop concrete strategies for the development of children;
# The Establishment of a Child Indicators Monitoring System as a basis for evaluating progress;
# The Restructuring of the Social Services Delivery Systems to facilitate more targeted and efficient delivery of services;
# The Completion of a National Policy on Social Development will provide clear direction for the programming of social expenditure;
# The establishment of a Monitoring and Evaluating System for the Social Sector to facilitate more effective design of programmes;
# The finalization of Policy positions on Ageing, School Health and Gender will establish the framework for developing effective interventions;
# The establishment of a Criminal Injuries Compensation Board and Unit will provide a mechanism to assist victims of crime;
# The development of a Comprehensive Plan for Support to deportees and ex-Prisoners as an integral aspect of rehabilitation; and
# The implementation of a Family Court Pilot Project will improve the efficiency of the judicial system.
Mr. Speaker, in addition a number of new programmes will be administered by the Ministry of National Security:
# Military Led Academic Training Programme to focus on youth who completed secondary school but did not graduate with a full certificate;
# Military Led Youth Apprenticeship and Reorientation Training Programme to focus on youth who left the secondary school system at an early age;
# National Service Programme, aimed at young persons between ages 18 and 30 to engender community and social responsibility;
# Halfway House for Male ex-prisoners to provide a treatment facility and temporary shelter for male ex-prisoners with no accommodation;
# Remand House for Young Female Offenders to provide a suitable facility for young female offenders under the age of 18 years;

Additionally, we shall ensure:

# A Family Life Management Programme to offer training in parenting, family and life skills development to be administered by appropriate Non-Governmental Organisations;
# The expansion of the Disability Grant to provide additional support for persons with disabilities.
# The Rehabilitation of Child Labourers Programme to address the phenomenon of children scavenging in landfill sites which will be implemented in conjunction with the International Labour Organisation; and
# The Relocation of Socially Displaced Elderly to Homes for Older Persons to provide more residential care to the socially displaced elderly person and to reduce the number of persons living “indefinitely” at the Assessment Centres.

Creating opportunity for the youth
Mr. Speaker, I now turn to Youth and Sport.
Mr. Speaker, our National Sports Policy emphasises both the individual and socio-economic value of Sport. The Sport Commission of Trinidad and Tobago has recently been established to implement the strategies outlined in the National Sport Policy. The Commission has been mandated to pursue the development of Sport as a viable business activity. The Government recognizes that the participation of the Private Sector is a critical factor in such a venture. Therefore, the Government proposes to expand the existing fiscal and other initiatives to achieve this objective.

VIII OUR TOBAGO PRIORITIES

Permit me now to turn to Tobago, for which I have a special responsibility as Minister for Tobago Affairs. I am pleased to recognize, the fruitful and harmonious relationship that now exists between the Central Government and the Tobago House of Assembly. This is due in no small measure to the quality of PNM governance on both islands of the Republic. Indeed, this is quite a change from the bad old days, and the improved relationship has enhanced the programme delivery capabilities of both levels of government. This explains why, as a Central Government, we can take special pride in the achievements of the Tobago House of Assembly over the past two years.

The evidence is there to show! The Goodwood and Mason Hall Secondary Schools, the construction activity at the Milford Road Esplanade, and the Tourism Rolling Plan that has been the catalyst for the increase in tourist arrivals from fifty-six thousand in 2002 to an estimated seventy-five thousand this year. The advanced work on the L’Anse Fourmi Charlotteville Road and the new Scarborough Hospital, the confirmation of the purchase of an inter-island ferry and the projected start of the extension to the Crown Point Airport
Terminal in January 2004 all reflect the impact of the meaningful collaboration between the Central Government and the Tobago House of Assembly; a collaboration that has reinforced the bonds between the two islands and the two levels of government. Indeed, the PNM-led Tobago House of Assembly represents a fitting example of how the government’s financial resources can be used efficiently and effectively to improve the lives of all citizens.

Looking ahead and bearing in mind my statement a year ago that Tobago needs to “Catch up” with Trinidad, the recurrent budget for Tobago for fiscal 2004 stands at $734 million and the development budget at $166 million. Beyond this, the Minister of Finance will assist the Assembly in accessing funding up to a maximum of $400 million to undertake urgent and critical capital investment projects. This is a first for Tobago and means that, for fiscal 2004, the total resources available to the Assembly will amount to $1.3 billion. Therefore, over the next fiscal year, with the resources provided both on a cash basis and through the new funding facility of the Assembly, some of the projects Tobago will be able to undertake include:

! The reconstruction of the Scarborough Library;
! The Transportation Hub in Scarborough;
! Desilting of the Hilsborough Dam;
! Expansion of the Crown Point Airport Terminal;
! Expansion of the Scarborough Jetty;
! A new Financial Complex;
! The Roxborough Plaza and Market; and
! Construction of a number of bridges and repairs to secondary roads.
This budget provides the platform on which Tobago and Trinidad can expect to reach our common 2020 destination as partners – side by side – and for the benefit of every citizen in both islands.

IX FISCAL OPERATIONS - 2004

Mr. Speaker, the total estimates of expenditure for the financial year 2004 is $22,331,591,613, of which the sum of $16,042,116,932 is to be appropriated. The sum of $5,919,474,681 represents a direct charge on the Consolidated Fund while $370 million represents expenditure from the various Funds.
Mr. Speaker, this expenditure is disaggregated as follows: -

TOTAL RECURRENT EXPENDITURE $ 20,284,091,613
Personnel Expenditure 4,923,345,994
Goods and Services/Minor Equipment 2,525,089,609
Current Transfers and Subsidies 4,830,463,355
Transfers to the Tobago House of Assembly 734,111,461
Transfers to Statutory Boards/Similar Bodies 1,432,442,585
Debt Servicing 5,838,638,609
TOTAL DEVELOPMENT EXPENDITURE 1,677,500,000
TOTAL DRAFT ESTIMATES OF EXPENDITURE 21,961,591,613
TOTAL FUNDS 370,000,000
GRAND TOTAL 22,331,591,613

The total recurrent and capital expenditure on Government’s fiscal operations is projected at $19.105 billion, which represents total expenditure of $22.331 billion less principal repayments and sinking fund contributions of $3.226 billion. On our revenue account, we expect to generate $18.792 billion with the major sources of revenue being Income Tax of $2.766 billion, Corporation Tax of $6.773 billion and Taxes on Goods and Services of $4.276 billion. Our fiscal balance for 2004 is a deficit of $313 million taking into account revenue of $18.792 billion and expenditure of $19.105 billion. Mr. Speaker, while we believe that our public debt, which currently represents 51.8 percent of GDP, is manageable, we are of the view that the growth in debt must be contained. We therefore would continue to pursue strategies to reduce public debt. We have been aggressively refinancing our high interest rate, domestic debt in order to achieve maximum savings in our current low interest rate environment. Additionally, in this fiscal year we shall extend the refinancing to our foreign debt in order to benefit from the soft international financial markets.

In the medium term, our commitment to fiscal surpluses will reduce Central Government’s borrowing requirements and contain our indebtedness. The use of off- budget expenditure, which has become far too common, will be minimized and eventually discontinued. Finally, we intend to exercise tight controls on the operations of our State Enterprises, which have been the main cause of the increase in debt in the recent past. However, as a result some restructuring in this sector there may be some inevitable one-off financing costs giving rise to some increase in public debt. Mr. Speaker, our Budget for this fiscal year is based on a projected average oil price of US$25 dollars per barrel, a GDP growth rate of 4 percent, and an inflation rate of 2.7 percent.

X. FISCAL MEASURES 2004

Mr. Speaker, to give effect to our policy agenda in 2004, we propose to implement the following:

1. Removal of Tax on Savings
One of our stated objectives over the medium-term is to improve the savings rate of the country, and to this end we propose to eliminate the 5% tax on interest income earned by resident individuals who invest their money in Trinidad and Tobago. This measure will apply whether the investment is denominated in local or foreign currency. However, the following individuals will not benefit from this measure;

! Non-resident individuals who will continue to be charged withholding taxes on interest income;
! Resident individuals who earn income from foreign bank accounts and other investments abroad.

2. Increase in Allowance for Pensioners
Mr. Speaker, the plight of our pensioners is a continuing concern of the Government. While the increase in the NIS pension payment will undoubtedly assist, more is required. The Government is addressing this issue and an appropriate announcement will be made in due course. For fiscal 2004, however, the Government will provide some assistance through the Income Tax Act.
Currently, resident individuals over the age of 60 years benefit from a personal allowance of $30,000. With effect from January 1, 2004, we propose to increase the allowance to $40,000 and extend the personal allowance to include non-residents over the age of 60 years in receipt of Trinidad and Tobago pensions.

3. Increase in the Disability Grant
Currently the disability grant of $600 per month is applicable to citizens 40 yrs to 65yrs.
Mr. Speaker, the Government proposes to increase the grantt from $600 to $650 per month, and reduce the minimum qualifying age to 18 yrs. This benefit will extend to legal residents. The Public Assistance Act will be amended accordingly.
The additional expenditure is estimated at $72 million.
This measure will take effect from December 01, 2003.

4. Allowance for Sports, Art and Culture
While I must commend the private sector for their very valuable support so far, there is need for further deepening of their involvement in the future development of sport, art and culture. In order to catalyze the flow of corporate resources into sports, education and local culture, the Government proposes to increase the ceiling from $450,000 to $1,000,000 for sponsorship in the arts and culture, sports, audio, visual or video productions reflecting local culture/entertainment.
Mr. Speaker, this measure will be extended to all companies under the Corporation Tax Act and the Petroleum Taxes Act and will result in an estimated loss of revenue of $2 million.

5. Gaming
Mr. Speaker, the gaming industry continues to thrive in Trinidad and Tobago, and we have seen a proliferation of new devices in particular slot machines. These devices had attracted a tax of $2000 per annum whereas tax rates on the more traditional tables ranged from $8,000 to $60,000 per annum.
The Government proposes to increase the fee on slot machines from $2,000 per annum to $10,000 per annum, the fee for regular Poker Tables from $8,000 per annum to $20,000 per annum, and with the exception of pool tables which will fetch a fee of $2,000, the unspecified tables and devices will now attract a fee of $10,000 per annum. Fees in respect of all other specified tables, such as Baccarat and Roulette Tables, will be increased by twenty-five per cent.
These increases will take effect IMMEDIATELY.

6. Settlement of VAT refunds
Mr. Speaker, the existing provisions of the VAT Act require the Board of Inland Revenue to be liable for accrued interest at the rate of 1% per month if refunds are not settled within six months. Claims are increasingly being made on the basis of incomplete applications, and although the law seems clear to most, the Government proposes to remove any doubt that interest on outstanding refunds will only begin to accrue after six months from the submission of a completed VAT return.
This measure will take IMMEDIATE effect.

7. Petroleum Pricing Arrangements
Mr. Speaker, we are all becoming increasingly aware of the need to preserve the environment and the impact of the environment on human health. Here in Trinidad and Tobago our people are making greater demands that we institute measures to protect and preserve the environment consistent with our commitments under international agreements on the environment.
A major concern of the Government is the increasing exposure of our citizens to the effects of lead emissions, which can lead to serious health problems, particularly in our children. The continuing use of leaded gasoline poses a serious threat to the health of our nation.
The Government has therefore taken the decision to immediately begin phasing out leaded gasoline from the Trinidad and Tobago market. A new grade of unleaded gasoline of 92 Ron, will be introduced on a phased basis and will replace the leaded super gasoline on the local market by April 1, 2004. Regular leaded gasoline will also be completely phased out of the domestic market by that date.
The phasing out of leaded gasoline will be accompanied by differential adjustments on the wholesale and retail margins leading to adjustments in the retail prices at the pump.
The following price adjustments will take place with immediate effect. The new unleaded 92 Ron grade will enter the market at the retail pump price of $2.70 per litre. The retail pump price for leaded 95 Ron gasoline, it will replace, will be increased from the current price of $2.45 per litre to $2.70 per litre. The retail pump price for unleaded 95 Ron gasoline will be increased from the current price of $2.85 per litre to $3.00 per litre.
The practice by owners of diesel vehicles to mix auto diesel fuel with kerosene also constitutes a major source of environmental damage.
This practice is linked to the current pricing regime for the two fuels. In order to remove this incentive, the Government has agreed to unify the prices of both auto diesel and kerosene at $1.50 per litre.
Mr. Speaker, producing companies are also being required to bear an increased share of the cost of switching away from leaded gasoline.
Accordingly, the levy of 3 percent of gross income payable by oil producing companies will be increased to 4 percent. This increase will not apply to producing companies whose output is below 3,500 barrels per day.
The additional revenues estimated at $249 million, which will be derived from this increase, will be used to fund a number of programmes geared to poverty alleviation and job creation as follows:

• the reforestation programme in the sum of $50 million;
• an expanded Unemployment Relief Programme including the expansion of the women’s component of the programme directed at female heads of households, to $200 million, an increase of $64million of which $15 million will be used to expand the women’s component of the programme;
• drainage and other community projects in La Horquetta, Maloney, San Juan, and Laventille in the sum of $50 million, and
• an increase in the Community Environment Protection and Enhancement Programme to $225 million.

Mr. Speaker, we expect to generate a considerable number of jobs through these programmes.

XI. CONCLUSION.

Mr. Speaker, as you can see, we are moving relentlessly towards our goal of transforming Trinidad and Tobago into a developed nation by 2020. We have been honest, open and transparent. We have exercised responsibility in our financial management. We are ensuring sustainable economic growth and wealth accumulation for both present and future generations
We are expanding the social and physical infrastructure for the benefit of all our people We are bringing increased benefits to the entire population, including the vulnerable and disadvantaged We shall continue the path of reform and modernization of both administration and the economy We shall equip our nation with the capacity to survive and succeed in the fiercely competitive global environment. This Budget shall serve as a further unifying force in our society. None has been left out. All shall benefit. This is a Budget for all the people.
We govern for all, the rich and the poor, the weak and the strong, the Young and the Old. All children shall be better educated, all sick better cared for, all elderly made more secure, all disabled more respected. There shall be greater advancement of the young, more business development for the entrepreneurial and more employment opportunities for all.
There shall be greater security in Trinidad and Tobago.

I now exhort all citizens to do their part for the betterment of our nation. Let us all work hard, observe the law, be committed to family and country, co-operate with the authorities, lend a helping hand in our community, and together we shall make Trinidad and Tobago one of the best places in the world. Mr. Speaker I beg to move.