How our money is spent

We are not referring here to the increase in electricity rates announced on Thursday by the RIC. That measure will see residential customers paying 39 percent more every two months for their electricity supply. This is not an onerous increase for most home-owners, especially given the fact that electricity usage is controllable. Additionally, the RIC has made recommendations that will cushion the impact of rate increases on lower-income households.

No doubt even these modest increases will arouse dissatisfaction on the part of consumers. Yet far more expensive are the indirect methods by which the Government has been getting money out of citizens. RIC chairman Dennis Pantin revealed one such attempt at the media briefing on the new electricity rates. According to him, the RIC had to turn down the Government’s plan to finance the aluminium smelters, the University of Trinidad and Tobago (UTT), and other projects through the TT Electricity Commission.

If this is so, it betrays an amazingly backward fiscal policy on the part of the Government. Why would the Government wish to use a State utility to finance projects of any sort at all? TTEC is a monopoly and, in a small island like ours, open competition between companies is not a viable strategy for the supply of electricity (though, at the same time, a more forward-thinking administration would remove all taxes and other fees attached to private generators). This means that TTEC is run at a level of inefficiency and wastage that would probably ensure the demise of a private company.

Yet, in that scenario, the Government wanted to finance mega-projects through TTEC. The proposal was, naturally, couched in investment terms, with the Government wanting TTEC to use its revenue to put $3.29 billion over five years into these various projects. Apparently, however, the RIC was unconvinced that this “investment strategy” would pay equivalent returns, and only allowed $800 million to be earmarked for investment. Mr Pantin has asserted that this refusal prevented a cost of $1.9 million being passed on to the consumer.

He is, however, oversimplifying the issue. TTEC is not run as a commercial organisation. Between non-transparent contracts negotiated by Government with PowerGen and Trinity Power, and with a subsidy for fuel and other supplies, electricity is neither produced nor supplied at market value in Trinidad and Tobago. But production costs do not magically change because some companies get advantageous contracts or because the Government provides subsidies. Somebody has to pay, and that somebody is usually the ordinary taxpaying citizen.

Had the Government been allowed to proceed with its desired $3.29 billion investment, the cost would have been borne in some form or fashion by these same citizens. It may be argued that, in a well-ordered society, it is right that the better-off bear a larger burden than the less fortunate. This is true, except that the poor do not escape the consequences of Government’s fiscal adventurism. It is the Government’s construction mania which, more than any other single factor, is driving inflation and so raising the cost of living for all citizens — and, when the cost of living goes up, it is the poor person who suffers most.

The RIC has ensured that the Government will not be tapping into TTEC for its projects. But, since these projects are going ahead anyway, the public needs to find out how they will be financed. Only then will citizens discover if their tax dollars are being spent sensibly or not.