Mon | Sep 25, 2017

Political parties promise jobs aplenty; agree on current economic programme

Published:Sunday | February 21, 2016 | 2:00 AMSenior Business Writer
Audley Shaw (left) and Dr Peter Phillips (right) greet each other at a legislative committee meeting in 2014.
Opposition spokesman on finance, Audley Shaw.
Finance Minister Dr Peter Phillips.
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Even for rhetoric, both political parties have promised a lot of jobs.

Compared with the 180,000 persons officially unemployed, the ruling People's National Party (PNP) has undertaken to deliver 100,000 jobs over the next five years.

The Jamaica Labour Party (JLP) is promising to create up to 100,000 more jobs than that.

And that's not including 80,000 construction and hotel jobs, which the Opposition says can be created through the establishment of its "Jamaica's Sun Coast, Jamaica's Fun Coast" project proposal, which seeks to develop tourism around Port Royal through to Harbour View and east to Morant Point in St Thomas.

"This coast contains 50 per cent of Jamaica's heritage and provides unequalled opportunity," the JLP Manifesto, said without expanding on how it proportioned the "heritage" it allocated to that geographical area. But it hopes to develop an "infrastructural criteria" for constructing hotels, villas, casinos, shopping and wet land reserves and parks.

No timeline was given for this development, but the political party led by Andrew Holness proposes that by promoting rainwater harvesting, which requires installation of water catchments and gutters on buildings, it can generate additional employment for up to 10,000 persons, while solar photovoltaic (PV) and solar water-heater installations can create another 6,500 jobs.

The JLP says that growing more cane and thus producing more bagasse for energy can result in 4,000 seasonal positions for workers, and building out Kingston, through the urban renewal initiative, presents employment for up to another 7,000, not including the 10,000 permanent posts that will be created when an international financial centre is finally established there.

That pales in comparison to the 20,000 additional jobs that can come from manufacturing and agribusiness, by the JLP's estimation, through food processing, furniture production as well as the assembly of apparel and electronics.

BOOST IN SPENDING

By eliminating the 25 per cent personal income tax on workers who earn up to $1.5 million, and raising minimum wage from $6,200 to $8,200 a week, the Opposition expects that the consequent boost in consumption spending will lead to additional employment to the tune of 20,000.

The JLP figures that the expansion of the hotel sector, which should see some 8,000 additional rooms come on stream within the next five years, will result in 30,000 more jobs, whereas the PNP supposes it can lead to 40,000 more jobs.

The ruling party puts forward only one other definitive figure for its job-creation platform, which, it says, will see 100,000 more persons employed. Business process outsourcing (BPO) will create 20,000 jobs in three years. The JLP figures the BPO sector can generate up to 40,000 jobs in five to seven years.

And while the PNP doesn't commit to an employment figure attributed to the development of a global logistics hub in its manifesto, the JLP said that its vision for a multi-modal transportation system, which integrates rail, sea, land and air, can generate up to 25,000 construction jobs and an equal amount of employment on an ongoing basis upon completion of the project.

Rhetoric aside, there is some basis for heightened expectations for employment.

The National Water Commission (NWC) sewerage expansion plan calls for US$1.2 billion in investment over the next five years. The Kingston Container Terminal expansion project being undertaken by Terminal Link-CMA CGM Consortium will see US$500 million invested in the first phase alone. Some 2,500 of the 8,000 hotel rooms expected to be built over the next five years are currently being developed.

What's more, the Barnett Technology Park in Montego Bay is privately developing 800,000 square feet of office space for the BPO sector, while the Government, between Port Authority and Factories Corp-oration, has almost a million square feet of space planned across sites located in St Catherine and in St James. At 60-70 square foot per person employed by the sector, this could translate into substantially greater employment.

Plus the Government, in which the PNP currently has a 42-21 seat majority, still has over US$200 million to spend out of external financing it secured from China EXIM Bank for its major infrastructure development project, the implementation of which was originally scheduled to run to February 2018.

Still, neither political party would take a gander at what growth will look like over the next five years.

GLARING ABSENCE

Even more glaringly absent from the manifestos of the two political rivals is any questioning of the tough economic programme overseen by the International Monetary Fund (IMF). The next government (whichever political party is ruling) has to fill a gap on its wage bill, which could mean significant public-sector job cuts, to meet a key target set by the multilateral agency for the upcoming fiscal year, beginning April.

It also has to implement a public-sector reform programme that will see most public-sector workers begin to contribute to a retirement fund. While it is easily argued that the implicit public pension liability equivalent to some 40 per cent of GDP warrants the pending change, the contribution will wipe out the salary increase granted to many under the most recent public-sector wage agreement.

Under the IMF programme, both parties are also committing to further tax reform, and, in their respective manifestos, they say they will reduce rates on certain taxes JLP promises to lower stamp duties and estate taxes; the PNP reductions are aimed at GCT, asset tax, and income tax; and both say they will lower transfer taxes.

The ruling party goes on to propose that benefits under the Urban Renewal Act would be extended to urbanised parts of rural areas, while the opposition is proposing the reinstatement of junior stock market benefits, which afford companies listed on the Jamaica Stock Exchange a five-year tax concession (previously ten years). No more concessions will be handed out after March.

From a fiscal standpoint, the parties appear quite similar in their promises, except that the JLP has gone much further. It promises to eliminate personal income tax (PAYE) for persons earning up to $1.5 million. Holness says that would benefit approximately 118,000 persons who currently earn more than the $592,800 threshold.

Financing that promise could be very expensive. For example, if the average salary of person who currently earn more than the current threshold and below the proposed one is $800,000, the Government would be foregoing $6 billion in taxes. If the average is $1.2 million, the Government will have to give up $18 billion.

REMOVING 'MANDATORY FEES'

Moreover, the JLP is proposing to "remove mandatory school fees at secondary schools by increasing funds per child in the national budget".

Because there are actually no mandatory school fees in place at secondary schools, this might not have any impact on the budget at all. However, if the promise is meant to fully fund secondary school education, it could tack another $1 billion to $4 billion on to the budget.

Currently, the Government spends $2.7 billion for tuition assistance for the approximately 205,000 students enrolled in high school. That's approximately $13,200 per student. An education ministry survey of high schools last year showed that auxiliary fees, as they are called, range from $6,000 to $41,000 per student.

Both political parties also say they will divest public bodies to promote investment and public sector efficiency, and even consider listing some of them on the JSE, such as the Factories Corporation and the Urban Development Corporation (UDC).

The PNP didn't list any that it had in mind, but the JLP named at least one entity that could prove to be sensitive to say the least. It proposes to list the NWC on the JSE, making 49 per cent available for public purchase.

To investors, the utility hardly looks attractive, given that it conservatively loses upward of $2 billion a year, has debt totalling over $70 billion, and has no capital base to speak of. The opposition apparently figures that reducing non-revenue water by 30 per cent by "fixing leaking pipes"; encouraging rain water harvesting; and increasing access to potable water in rural homes from 60 to 85 per cent might make it a viable investment. But making the utility truly profitable could have severe social consequences - imposing a hard and fast rule that customers will be denied service for non-payment of bills could prove problematic.

A long promised south coast highway is back on the table for both parties. The PNP said that the first segment connecting a 106-kilometre stretch from Harbour View to Port Antonio is expected to begin in a matter of months. The second segment is supposed to connect the 131 km from Negril to Mandeville.

The JLP envisages this particular run differently. It proposes that the road runs from Kingston to Morant Bay, and that the Highway 2000 phase from Glenmuir to Williamsfield be reinstated. Then, the southern highway would connect to Vernamfield, which is earmarked for an enterprise zone under the Opposition's plan.

For tourism, the JLP says it wants to expand marinas in Ocho Rios and Montego Bay, which along with Port Antonio, would be marketed to attract mega yacht visitors. Establishing a new regime for inbond merchants is also expected to boost tourism receipts. The provision of grants and concessionary loans for upgrading small hotels and villas as well as assistance in developing programmes for advertising and marketing also forms a part of the Opposition's proposed plan, which includes the promotion of ganja and medical marijuana availability.

Cannabis regulations for cultivation, transportation, retail (teahouse and therapeutic services), manufacturing and processing are expected to be finalised this year, according to the ruling party.

CULTURAL SITES

The ruling party says it wants to work with the KSAC, UDC, National Gallery and international partners to develop various sites across Kingston to showcase rich music and cultural heritage, as the city has been designated under the Creative Cities Programme as a Music City. The PNP also says that a pension scheme for tourism workers is expected to become operational by 2017, while employees in the sector will also benefit from a housing programme currently being planned with the National Housing Trust.

Additionally, the PNP once again promised to seek greater linkage potential for local businesses to supply the hotel sector with a range of goods and service that can be produced locally - which is estimated at $70 billion.

It is likely that the continued expansion of agro parks proposed in the manifesto f the party led by Portia Simpson Miller will contribute to increased linkage between agriculture and tourism.

However, the JLP feels those parks could be developed further into agricultural economic zones, where grading, packaging and processing of produce can take place.

Holness' party also figures that niche markets for spices and herbs, such as turmeric, ginger, thyme and sorrel, could be developed, while placing orchard production of mangoes, guava, sour sop, June plum, passion fruit and avocado all on the table.

The ruling party is proposing the implementation of fisheries bill in 2016 to create new licensing authority; expand aquaculture outside of agro parks; develop of the Basa specie; and exploit new deep water species. Its take on agro processing, as spelt out in the party's manifesto, calls for the use of liquefied natural gas (LNG) fuelled temperature controlled warehouse to ensure produce gets to the market via an unbroken cold chain in the best condition thus reducing post harvest losses.

LNG is being introduced to the island as Jamaica Public Service Company (JPS) undertakes the conversion of 120 megawatt of generating capacity at Bogue, St James, to natural gas, and the construction of a 190MW plant fired on natural gas in Old Harbour, St Catherine.

Another 80MW of renewable energy, through solar and wind, is expected to be commissioned by next year. And the Office of Utilities Regulations has received bids for licences to generate up to 37MW of electricity using wind, solar, waste and biomass.

Simpson Miller's party said that it will continue to promote energy diversification.

The JLP wants to enforce energy efficiency standards and codes for appliances and buildings which aims to reduce energy consumption in new buildings by 50 per cent by 2020, and ensure that all new buildings use "zero net energy" by 2025.

To do this, the opposition says it would renegotiate JPS's licence to include provision for net billing and power wheeling.

camilo.thame@gleanerjm.com