Show me the money
I’M HERE today to report that I shall be leaving Newsday immediately and taking up the post of Energy Consultant in the President’s office, as it seems to me that my services are needed much more urgently there than here at the People’s Paper. See, the leaders of this country have admitted that they do not really know how to fairly distribute the nation’s gas and oil wealth. Thus, as someone who has absolutely no training in business, economics or accounting, but what I think is a fair amount of common sense, I shall be happy to give some suggestions to President Richards. Not too long ago there was an article where President Richards at a function asked the audience the following question regarding poverty, and I quote: “How did we come to this (poverty), in a country that boasts of considerable revenue from our energy industry and others? Is the gap between the rich and poor widening? If so, why?”
Why indeed? Well heck, if the President doesn’t know why this little island in the bottom of the Caribbean still has almost a third of its population living belong the UN Global Poverty Index line, while simultaneously and paradoxically being the number one provider of natural gas to the richest country in the world, then he needs more help than I thought. Starting from tomorrow as the new self-appointed advisor, I shall be advising Max — if he doesn’t mind me calling him that — that there is in fact something he can do to help the wealth reach the present and future generations of all citizens, and it’s called a Heritage Fund. Many people have suggested such a fund many times before but to no avail, even though it has worked wonders for many countries around the world. I know that we like to imitate places like Britain and the United States, but I am going to suggest that we perhaps follow the example of another country — Alaska — when it comes to accountable and sustainable financial management of natural resources.
Allow me to give you a brief history of oil in Alaska. In 1969, a very large oil field was discovered in Alaska’s Prudhoe Bay that the state sold to an oil company for a whopping $900 million. Alaska’s budget for that year had originally been $112 million, so now the question arose — what should they do with the hundreds of millions of dollars that was now at their disposal? As more and more oil was discovered in Alaska, all came to agree that oil, being a non renewable resource, may one day run out, and thus the oil money must benefit the citizens and not just the oil companies. Thus the Alaska Permanent Fund was established which, by law, ensured that “at least 25 percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue-sharing payments, and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments.”
While in Trinidad the average citizen is kept in the dark about exactly how much the State is earning from oil and gas revenues (although we recently learnt that the Revenue Stabilisation Fund is about to get a nice fat deposit thanks to soaring oil prices over the last year), what kind of royalties and land rents they have negotiated, or where the money really goes, in Alaska every citizen understood that a piece of that oil wealth belonged to each one of them, and not just government ministers who like silver Mercedes Benzs. Now, it tends to be a trend internationally that countries which are rich in valuable natural resources are often the ones stuck in poverty. The fact that most of the diamonds in the world come from Africa should be an apt example. This usually has to do with corruption and greed, so one very important aspect of the APF is this beautiful law which states that the principal of the fund cannot be spent without the vote of the people through a national referendum. That means that if, say, the government were to propose putting $50 million into something like CEPEP, we could effectively vote NO, and instead vote that a proper hospital be built somewhere that desperately needs it. Wouldn’t that be nice?
Another attractive function of the Alaskan Permanent Fund Corporation is distributing the oil wealth into the hands of every Alaskan citizen, literally. So every year every Alaskan man, woman and child gets a cheque in the mail, usually worth over $1000, simply for being a citizen of their lovely country. Imagine the PNM sending you a yearly cheque for $1000 in the mail just for being a Trini! Now, there are of course many, many other highly technical aspects of the APF (which, did I mention, is today worth over $25 billion!), but the most important principle that we can learn from it is that one day our own economy may not enjoy these high oil prices, so the money that is earned right now in an oil or gas boom should be invested carefully, wisely, and to the benefit of all present and future citizens. Makes sense, doesn’t it?
We all know Trinidad is rich in resources and a haven for multinational energy corporations who know we are ripe for the picking, so should a Heritage Fund be established and put into effect right here in TT, that would effectively mean that 25 percent of every dollar our Government receives from bpTT, Atlantic LNG, BHP Billiton, British Gas and every other multinational energy corporation, by law, would be deposited into a Trinidad and Tobago Permanent Fund, and we would all have a say in where the money goes. But sadly, in the same way that no one had ever heard of NEMA or seen an advertisement for emergency preparation before the hurricane season was already violently in full swing, when it comes to saving for a rainy day it tends to be a case of “too little too late.” So years down the line, don’t be surprised if our political leaders are still standing there asking the eternal question – “Where did the oil money go?” It seems like it is a question that nobody will ever answer.
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"Show me the money"