Gloss off the Budget

Two main concerns have been raised from various quarters. The first is that the Government’s measures may lead to an "overheated" economy — ie one where inflation is fuelled by the $1.7 billion in disposable income injected by the new tax ceilings for private and corporate citizens. The second concern is implementation — that the Government’s grandiose promises, particularly in the construction sector, will remain unfulfilled because of the shortage of skilled labour and materials.

In many of the analyses, references are made to the 1970s oil boom. The concern is that the Manning administration is making exactly the same mistakes that the Williams government did back then. Money is being pumped into development projects with no thought about sustainability. The present PNM has even resurrected the ghosts of State enterprises, by setting up 15 new companies which are supposed to ensure more efficient implementation of the promised projects.

What did the 1970s experience teach the country?

First, that a Government flush with money is apt to flush dollars down the drain. Projects were habitually over-invoiced and even then invariably completed far above estimates — and millions of dollars found their way into the pockets of party cronies. The effects on the average citizen were even more baleful. We became a consumer culture, buying luxury items in the mistaken belief that the bottom of the oil barrel would never drop out. The national work ethic suffered, since workers got high wages even when they had little or no qualifications or were not especially efficient.

And so, when oil prices did drop, the country had to go to the International Monetary Fund. It took years of belt-tightening before the economy began to grow again — but even in those lean years the government did not change the fundamentals of our economic system. It is true that certain important initiatives were taken, chief amongst them the removal of tariffs, freeing up of the foreign exchange market, and active wooing of foreign investment. But it is also true that our economic growth has been fuelled mostly by fuel.

So how has the PNM administration responded to accusations that it has not learned from the past? The short answer is, it has not. Mr Manning keeps referring to the Revenue Stabilisation and Heritage Fund as though it is a buffer against any slump in oil and gas prices. But the Fund is not hedged against Government wastage, since the PNM has not created a legal framework which would prevent the Government taking out Fund money on a whim. In respect to the new State enterprises, Mr Manning claims that they will be "subject to the highest standards of good governance, transparency and financial accountability." But such safeguards were also in place in the 1970s, and made not a dent in corrupt activities since the overseers were part of the problem.

So what is to be done? It is now clear that citizens must find some way to protect the country from the political agendas of the Government. Leaders in other spheres — business, civic groups, media, and so on — must propose strategies for citizens to take productive advantage of some of the Budget proposals, particularly in the areas of education and investment.

If citizens do not start building an ark now, they will find themselves beached high and dry when the high tide of oil and gas wanes low.