Trickle down budget?

Prime Minister and Minister of Finance Patrick Manning’s statement that Government was seeking to attract industries to Trinidad and Tobago “all of them having significant implications for employment in Trinidad and Tobago” may not lead to the level of job creation that it suggests. Inferred by the Prime Minister’s statement, however unwittingly, is that employment levels in Trinidad and Tobago are about to surge upward, and dramatically. Unfortunately, however, foreign investment in the highly competitive age of globalisation has tended, increasingly, to favour the establishment of capital intensive as opposed to labour intensive industries. This is a far cry from the decade and a half following on the introduction of the 1950 Aid to Pioneer Industries Ordinance when with a combined investment of less than $200 million during this period approximately 7,000 jobs were created.

Today, save for duty-free industries, foreign capital tends to shy away from anywhere near large scale job creation. In addition, an investment of billions of dollars can result in a mere 120-130 permanent jobs. Admittedly, thousands of jobs are generated during the construction of the plants, but these are short term and should not be equated by citizens with long term employment. Manning, who was commenting that the 2004-2005 Budget would reveal plans by Government to translate increased revenues into sustainable employment for citizens, should detail, when he delivers the Budget, administration strategies aimed at having the added revenues from crude and natural gas trickle down to the broad mass of people.

In turn, there should be emphasis on the encouraging of expanded domestic capital investment in Trinidad and Tobago through the provision of special incentives. We need hardly remind that domestic investors are more likely to create the additional jobs needed locally than foreign multi-national investors, who are competing with China and the Far East mindset. But Government must make investment in this country just as attractive to the domestic investors and potential investors as it has made to the foreign investors. In turn, Government should adopt a policy which would require that a certain percentage of the shareholding in industries being established in this country by multi-nationals or other foreign entrepreneurs be retained for Trinidad and Tobago resident nationals.

Not only will a not insubstantial portion of the profits be retained locally, but it is likely that the nationals would be encouraged to re-invest part of their dividends in companies here and lead to the creation of additional employment opportunities. In addition, Government which is committed to a policy of encouraging domestic savings should make it possible for and attractive to persons on retirement pensions through an increase in the tax allowance for those above the age of 65. For not only would this likely mean an increase in domestic savings and with it the capital available for investment, but it would allow for the retirees to purchase more goods and services and turn more money around within the economy. This would, in turn, lead to the creation of additional jobs.