Economist: Patrick Manning, tell us where the oil money going!

TT Economist, Dr Dhanayshar Mahabir, is challenging Prime Minister and Finance Minister, Patrick Manning, to tell the nation where the surplus from the recent rise in the price of oil is going, and if so, how will it benefit the poor people and the general population of the country in the upcoming Budget. He suspects that with the PNM government’s five-year term almost half-way there, the national community can expect more money being forked out, especially to benefit public servants. In an interview with Sunday Newsday last week, Dr Mahabir issued a challenge of transparency to the PM, pointing out that since January 2002 when the PNM government came into office, not much developmental work and not too much progress with the economy has been made over the past two years. He was speaking in light of Manning’s recent postponement of the 2004-2005 Budget presentation which was initially planned for early September and has now been arranged for October 6.

As a result, he suspects that government may hasten its spending over the next two-and-a-half years as it prepares for another round of elections. With more spending of the Treasury Bill expected, he hopes that government will be able to assure its citizens that the money will be distributed wisely, and not pocketed by “greedy” individuals. “We can expect an increase in the spending tempo. One can expect a public sector investment programme of close to TT$2 billion, which is usually less than this amount due to spending constraints,” he said. Dr Mahabir pointed out that there have been noticeable increases in the wages and salaries Bill, which he suspects will be close to TT$6 billion, as negotiations in salary increases for public servants were recently concluded. “Beside the recently concluded negotiations in salary increases for teachers, other trade unions have also been lobbying for salary increases for police officers and other public servants,” he said.

He felt that government will most likely acquiesce to these demands because of the increase in revenues from the rising price of oil and gas. The economist recalled that the last Budget was based on  expectations of an oil price of approximately US$25 a barrel. “For most of the year, the price exceeded the US$25 a barrel by a large margin. What I am not hearing from government is how much revenue they have actually collected, over and above what was expected, and what has the government done with the money,” he said. He strongly felt that the Finance Minister had these figures, but was withholding the information from the public. Dr Mahabir also warned that government must be careful of “overspending” so as to avoid putting the TT economy in the red zone. He pleaded with Manning as Finance Minister to ensure that the surplus revenue be saved, since oil prices are not constant and can fall at anytime, plus the fact that oil and gas reserves would not last forever.

Crime/social ills need management, not more money

Dr Mahabir believes that investments were more needed for improving management skills at the various Ministries, rather than pumping more money for raw resources, in order to tackle some of the social ills currently plaguing the society. Pointing out that a few Ministries, such as National Security and Health, received resources such as vehicles and equipment over the past two years, he noted that if the problems were due to a shortage of resources, then they would have been easier problems to solve. He wants to know, for example, what happened to the vehicles that were given to the Ministry of National Security over the past years, the ambulances and operating equipment which were given to the Ministry of Health for the various hospitals, and more money for Education, even though there is still a high drop-out and failure rate of youths coming out of schools. “We’ve heard that the police vehicles were disintegrated. This is an example that the problem is about managing the resources, not getting more resources. When the problem is not because of a lack of resources but rather, because the resources are managed poorly, then the challenges we face such as high crime rate and poor health services, will never be solved,” Dr Mahabir said.

“Throwing more money for resources will not solve the problem.” The economist felt that government was not balancing its Budget properly and because of uneven distribution, some services in TT will suffer. He provided as an example, the fact that a lot of money is pumped into the police service, while the army receives much less and they too could be used to help in the fight against crime with the use of  a para-military organisation to supplement the police. Dr Mahabir suggested that the Minister of Finance take measures in this year’s Budget, to ensure that the money is efficiently allocated and spent to beef up managerial skills at the various Ministries. “If government does not take management efficiency seriously, there will be a tremendous waste of money and the national population will not benefit from revenue distribution,” he said. Dr Mahabir is concerned that if the management of resources is not handled efficiently, TT will become a highly “inefficient” society and not become the 2020 vision as mandated by the PNM government.

Diversify TT economy to provide more jobs

The economist felt that government was not doing enough to fully diversify TT’s economy. He said while he is aware that natural gas and oil generates the largest amount of foreign reserves and revenue for the economy, it does not generate enough jobs for the people. Dr Mahabir recommended that government open up the service and manufacturing sectors, construction, retail trade, financial services, local government and tourism sectors. “TT needs a very large non-oil sector that is capable of creating more sustainable rather than transfer jobs, and the non-oil sector needs to grow rapidly,” he said. Dr Mahabir said when people have more sustainable jobs, they will be able to take care of the needs of their families and will not turn to crime in desperation. He is also concerned about the neglect of the agricultural sector and is hoping that government will focus on a developmental policy for agriculture in TT, which will also help in the generation of employment and ensure food security.

Dr Mahabir said if government diversifies the economy to expand all of its services, it will create linkages for further economic growth and job creation.  President of the TT Manufacturers’ Association (TTMA), Anthony Aboud, said the Association has also recommended that government’s focus and attention must be the growth, strengthening and sustainable development of the non-oil manufacturing sector. He said the revenue TT gets from oil and gas must be used for economic diversification in sectors such as manufacturing, agriculture and services. “We must recognise that whilst the finite and diminishing resources of oil and gas provide the nation’s main revenue, the other sectors are needed to provide sustainable employment, social stability and to reduce our dependency on and vulnerability to a single industry,” said Aboud.

The TTMA president said the light manufacturing sector offers the most potential to create sustainable jobs through productive effort. However, Aboud lamented that today’s environment offers little encouragement to further invest in plant and equipment, experienced management and/or deeper technology. The TTMA stated that the need to foster investment and entrepreneurship, while simultaneously encouraging export trade, is pivotal to the development of the manufacturing sector. “We recommend that through sector analysis and cluster development, further downstream and forward integration of the oil and gas industry should be pursued,” he said.

Increased equity distribution —  happier TT

Pointing out that one of principle components of wealth for lower and middle-class earners is the ownership of a home, he felt that this was becoming more and more out of the reach of ordinary citizens. Dr Mahabir said despite government’s home-ownership drive, he felt that some of the houses were still much too expensive and seemed unreachable for the poor. He suggested a more even distribution of State lands which will be more affordable for lower income earners, and an easier payment plan such as what was done with “sousou” lands concept years ago. Dr Mahabir said if government concentrated only on housing developments in marginal constituencies, it will run the risk of squeezing out a large portion of TT’s middle and low income earners, which it needs for human and capital development. He noted that a number of people, especially the middle-income earners, were migrating and it was because they are disillusioned because they feel they will never be able to obtain property and a place to call their own.

Supermarket Association: Reduce price of gas and food

The Supermarket Association of TT (SATT), is pleading with government to reduce the price of gas in the upcoming Budget, describing it a great sin against the poor people of the country. In a statement, SATT said: “The increase in the price of gas has been the greatest sin committed to the poor in this country because they are the ones who have had to face the cost of fares and goods.” “The government should reconsider the price of gas and basic utilities which could be now revised given the increase in oil prices and of course, the increased revenues.” It is also demanding that the price of food be reduced. One way which it suggested that government can do so, is by removing or reducing tariffs such as the Value Added Tax (TAX) on some imported food items. “The reduction of tariffs on imported items will also support the larger importers to provide goods at reasonable prices. The full list should be revised,” it stated. The Association’s representative, Robin Persad, explained that the reason why TT was being affected by a lot of high prices was because of a number of import duties on imported food items.

Chief Executive Officer of the National Agricultural Marketing and Development Company (Namdevco), Sam Dowlath, agreed, stating this was one of the reasons why government needed to facilitate more local production and try its best to decrease TT’s extremely large food import bill. “TT has to try and depend more on its own local produce as much as possible. The last food import bill was approximately TT$2.1 billion. That is a lot of money for imported food and it is not a healthy position for any country to be in,” he said.  SATT suggested that more revenue be invested into the agriculture sector and provide tax incentives for businesses in order to pay reasonable wages to the young persons entering the supermarket sector to create more stability in the workplace. “The lobbying for the government’s input in agriculture is critical to the future of our country. Our supermarkets are willing to become outlets for sale of the agricultural products and there is a dire need for a strategic plan to encourage development in this area. The supermarkets also see the need for industries to preserve and process the food that is being grown as there could be great waste,” the organisation stated.