BALANCED DEVELOPMENT IN TT (PART THREE)

Few can deny the benefits which have accrued to the country as a result of investments in the energy sector. Some well-paying jobs have been created. Foreign exchange inflows have increased. Added revenues to the Government have enabled it to reduce taxes and provide sundry benefits.

One cannot help asking the question, how is it that Barbados with no hydrocarbon resources is able to enjoy a superior education system to ours with higher percentage enrolment at tertiary levels and with its health facilities, public transport and utilities more efficient and reliable than ours? Have our energy resources therefore been such a bountiful and unqualified blessing to us? It would seem so from the unrestrained manner in which every energy sector investment is hailed and trumpeted by the Government, whatever its value. Some people are ecstatic about the advantages of energy based development as against agricultural based or other potential and proceed to falsify the facts and thus expose prejudices and biases. They claim that the State was subsidising Caroni to the tune of $2 billion per year.

This sum represents close to ten percent of the average National Budget for the period 1996 to 2001 which would have been an allocation greater than that for any single ministry. It is a mystery as to how this figure was derived. State support for Caroni Ltd over the years averaged just over $200 million per year and not the $2 billion per year so tendentiously and brazenly publicised. If he is referring to the monies paid to Caroni’s workers as retrenchment benefits, then this is a one-off payment and not an annual obligation.

However the Government is financing the make-work and unproductive programmes of URP, CEPEP and others for over $2 billion a year. Apparently an arbitrary wall has been constructed between Government’s expenditure in subsidising State enterprises as against financing so called social programmes with no long term benefit for its participants.

If we are to put a value on these leases of Caroni’s lands to retrenched workers, one must ask what value was put and what price was paid by the Housing Development Corporation and other state corporations and agencies for Caroni’s lands which were appropriated by them. At issue here is the whole question of the restructuring of Caroni Ltd and the transformation of the agricultural sector which is to be dealt with later.

The purposes for which the Government spends the substantial revenues derived from the energy sector is of vital concern in determining whether economic development is being promoted. I have already alluded to the unproductive job creating programmes of the Government which add little value to the economy and are not sustainable.

And whatever sums the Government has expended on economic infrastructure have not generated any noticeable growth or jobs in the non-energy sector apart from construction and land development. There has been noise about the development of a Technology Park at Wallerfield but currently there seems to be much silence and we are not sure what advances, if any, have been made. Perhaps we may have to wait till the year 2020.

Much has been made of the large quantum of revenues which accrue to the Government in the form of taxes and royalties. Much of the revenues, however, have been due to the higher international prices prevailing for oil and natural gas and collected in the form of royalties, premiums and levies rather than from the operation of the plants themselves and the resulting profits which are subject to taxation, not that the two aspects of business are unrelated. In assessing the revenues actually accruing to the Government and the benefits to the citizens at large, we must analyse the larger context of societal consequences and costs. We must take into account the revenues foregone and the costs passed on to the taxpayer and the environment in which he or she lives.

This set-off should enable us to have a clearer estimate of net revenues. And when the Government seeks to attract investments in the energy sector, there is need for greater transparency in informing citizens of the guarantees, concessions and subsidies which are offered to the investor. At the end of the day, the decision may still be made to proceed with the contemplated investments but the provision of such information would make for more informed judgment and a more objective assessment of societal costs and benefits. Answers to the under mentioned questions are pertinent:-

1. What tax holidays were agreed upon and for what period, in other words what revenues are foregone?

2. What resources had Government decided to provide either for free or below cost of production, in particular land and natural gas?

3. What volume of utilities was to be made available whether water or electricity and at what cost and how much was to be diverted from domestic consumers, which is a direct cost to them?

4. Whether such utilities gift or concession would entail higher rates to the domestic consumer in the present or future, another cost to the citizen?

5. What project specific expenditure on infrastructure is to be undertaken eg port, roads and at what cost and what would bethe impact on infrastructure for the non-energy sector and indeed on the prospects for balanced development?

6. What financial provision is to be made by the Government for specific training and skills development to provide the personnel required to make the investments viable?

trevorsudama@tstt.net.tt