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Editorial: Wanted - deeper debate on infrastructure

Published:Tuesday | November 3, 2015 | 11:00 AM

It's a simplistic assumption that people in government don't understand that it is cheaper to maintain and repair existing infrastructure than to have to replace it, as Noel Brown, and others, seem to think is the case.

A better explanation of why Jamaica's public infrastructure "is crumbling around us", as Dr Brown put it, is that the country's governments have, over many years, made bad economic decisions. The upshot: They can now afford neither to maintain nor to replace.

However, Dr Brown, who heads the School of Engineering at the University of Technology (UTech), and others in the sector who commented in this newspaper on the island's decaying roads, bridges and other public facilities, have, hopefully, ignited a broader discussion on how to fix the problem.

That demands more than assertion, such as that by Kavian Cooke - who oversees the mechanical engineering department in Dr Brown's school - that the issue is the "lack of political will to do what is right to take the country forward".

The backdrop against which this issue exists is important. For 40 years, until recently, Jamaica's Government went on a borrowing binge, creating a public debt that was nearly one and a half times the value of annual national output. That has recently been lowered to 126 per cent of gross domestic product (GDP).

The problem was that the country didn't consume the borrowed money in ways that led to growth, sustained economic expansion, and job creation. Some was wasted, stolen maybe, and a lot went to recurrent expenses to maintain an overlarge, inefficient bureaucracy, rather than to critical infrastructure. As the Government borrowed more and more, the price of debt became more expensive, and the private sector found it more efficacious to lend to the gourmandising Government than to invest in the real economy.

But higher interest rates meant that an ever-higher proportion of Government's Budget - 57 per cent in 2009-2010 - went to debt servicing, rather than being spent on maintaining infrastructure. This, of course, couldn't continue.

 

JAMAICA'S DEBT PROBLEM

But the economic fix has brought another problem of its own. The arguments of the deficit deniers notwithstanding, Jamaica has little room to borrow. It was forced into fiscal containment, including running, under the island's current agreement with the International Monetary Fund, a primary surplus of 7.5 per cent of GDP. The process has been painful, but from a public-sector deficit of around 11 per cent of GDP in 2008-09, Jamaica is closer to a balanced budget.

The debt as a ratio of GDP is down, and the current account deficit is in single digit, a quarter of the nearly 13 per cent of four years ago. Jamaica's global competitiveness is improving, as is confidence in the economy.

All this is yet to translate into robust growth and the level of increases in taxes with which to finance substantial public-sector investment on infrastructure. Neither can the Government borrow significantly to do that.

We agree with Dr Brown's observation that without proper infrastructure, Jamaica won't realise its Vision 2030 dream for development. That's obvious. The real issue is to solve the problem.

Part of the answer rests with some of the kinds of things that are being done, like public-private partnerships, or solely private initiatives. But the various professional organisations and learning institutions need not wait on Government to produce the ideas.