Aubyn Hill | Jamaica’s near nil growth in two decades dominated by PNP
AS WE near an election, apparently, but still only maybe, it can be argued that the most important economic number is 23 - almost.
Why? Because for 22 years and nine months out of the last 26 and three-quarter years, the People's National Party (PNP) has ruled Jamaica.
When the Portia Simpson Miller-led PNP took over the political reins, and the political warhorse Dr Peter Phillips was handed the economic levers of the nation, the country was coming off four quarters of growth annualised at 1.7 per cent, after the worst economic debacle in approximately 80 years and coupled with oil price spiking to a historical high in excess of US$147 per barrel.
During this period of historical worldwide and local economic difficulty and challenges, and exceptionally high oil prices, Jamaica's economy during the Jamaica Labour Party (JLP) administration in the first two to three years, after it came to power in 2007, suffered through consecutive quarters of low and negative economic growth.
During this period, the Bruce Golding administration was obliged to meet the very high civil service salary increases that were agreed by the previous PNP administration and this, in part, led to the breakdown in the arrangements with the International Monetary Fund (IMF).
Faced with this array of economic challenges, the JLP was able to get back to four quarters of growth before it handed over power to the current administration, stabilise the currency for at least the last 18 months in power at about $86 to US$1, and left the NIR at about US$2 billion.
Well, since December 2011, when Mrs Simpson Miller became prime minister for a second time, growth has been negative to below a minuscule one per cent. Dr Phillips' tenure has been one characterised by this negative and statistical blip that is mentioned swiftly in passing and in soft tones as 'growth'.
We are told rather loudly and often about the number of IMF tests that have been passed without mentioning that, without any accompanying economic growth worth the name, majority of Jamaicans have faced severe economic hardships and a cascading level of taxes in order for Dr Phillips and the Economic Programme Oversight Committee (EPOC) to boast about those passed tests.
The near 23-year reign of the PNP over the last 27 years has all been like the past four years, in terms of the economic and social hurt that has been heaped on Jamaicans. One thing is very consistent: the PNP have produced a long history of low or no-growth economic record as the Government of Jamaica. Their record is meandering at one per cent or less for the years they have been in power since early 1989.
Economic growth and fiscal discipline
From before the signing of the Extended Fund Facility with the IMF in May 2013, there were a few of us - more these days - who kept saying that unless there was complementary economic growth of a consistent and high enough level, the Government would have to tax Jamaicans and Jamaican businesses mercilessly to meet the payment amounts and fiscal targets agreed with the IMF.
We were told by Finance Minister Phillips on signing the IMF deal, as well as the EPOC co-chair and supporting economists, that economic growth would be the natural outcome of following the stringent fiscal consolidation arrangements the PNP administration signed with the IMF. We are now well on to four years in a five-year term of the Government and growth of a respectable figure has not yet arrived.
The disregard by the Government to fashion a serious growth-facilitation plan and implement it is born of the PNP's experience of not ever doing such a plan. It should be clear for all to see that the PNP has no clue or understanding of the importance of economic growth to the economy, and so gives it short shrift; and have ridiculed those of us who have pointed to the shortcomings in the absence of a viable and facilitatory growth plan.
Dr Phillips and his Cabinet colleagues have made out fiscal discipline and consolidation - read tons of taxes, real austerity - to be the main reason the regulatory and legislative tools exist. Sure, we can pass IMF-related tax and waiver legislation in no time flat, but Cabinet cannot find its way to debate and bring as legislation a viable growth plan and a respected minister to lead the drive.
The real truth is that the Government could use legislative and regulatory tools it possesses to encourage businesses to invest in new fields such as renewable energy and real estate investment trusts (REITS).
The smoking National Solid Waste Management Authority dumps could be converted at private investors' expense into energy-producing entities, with the same kind of deal offered to the sugar cane industry to produce a lot more renewable energy from bagasse. Smart government policies could serve to alleviate the current downturn in international sugar prices with a new stream of income from the by-product of sugar manufacturing. Other low-hanging import-substitution possibilities exist, which simple legislation that adjusts government buying practices could turn into local industries.
Another apparent impediment is the belief and practice of this PNP Government that fiscal discipline and robust economic growth are mutually exclusive.
It would seem that the belief exists on the part of Dr Phillips and his Cabinet colleagues that once the fiscal-consolidation plan was deployed growth would appear miraculously. An even more insidious and painful belief - painful to taxpayers and the poor - is that growth will come from the crippling austerity plan. It hasn't happened yet, nor should anyone expect it anytime soon.
This Government knows how to tax Jamaicans. They certainly know how to borrow money. But they also make it clearer and clearer everyday that they simply do not know how to grow the economy at a rate that can produce sustained jobs and income for ordinary Jamaicans.
Aubyn Hill is CEO of Corporate Strategies Ltd and chairman of the Economic Advisory Council of the Opposition Leader.