Thu | Aug 17, 2017

Editorial | A deep deficit of trust

Published:Tuesday | April 4, 2017 | 4:00 AM

Prime Minister Andrew Holness perhaps misapprehends the deeper issue behind the resistance to his Government's plan to essentially abandon the Tourism Enhancement Fund (TEF) and channel the cash from the US$20 levy on airline tickets to Jamaica into the Consolidated Fund.

So, Mr Holness told tourism interests that the TEF would continue to do what it has done for the past dozen years: enhance Jamaica as a tourism destination.

"I want to assure you that the developments that you have will be financed and facilitated under the new management of public resources," he said.

Yet, this is only partly about whether the administration will find the money to support TEF-type projects. More fundamentally, it is about trust, or, more correctly, people's distrust of their Government.

Indeed, it is an attitude reflected in the more than 90 per cent of Jamaicans who perceive the bureaucracy to be corrupt, and the fact, according to a 2014 survey on attitudes to democracy in Latin America and the Caribbean, that on a scale of 0 to 100, Jamaicans rated their Parliament at 31.9. Political parties were even worse, at 28.1.

It is the same distrust that caused a similar initiative, but involving other agencies, to be stillborn a decade ago, having been proposed by the then People's National Party (PNP) administration.

The current matter concerns Finance Minister Audley Shaw's announcement of a review of a number of cash-rich agencies, starting with the TEF, the Culture, Health, Arts, Sports and Education Fund, and the Jamaica Civil Aviation Authority and their planned collapse into the Consolidated Fund. This is part of a broader initiative to maximise the management and use of an estimated $200 billion in cash lying about in state agencies.

The idea may seem logical, but experience raises a red flag. "We take great offence to the even remote possibility that the funds of the TEF could be arbitrarily removed from the oversight of (its) board," the Jamaica Hotel and Tourist Association (JHTA) responded.

The clear concern is of being placed "at the mercy of a capricious government", as Prime Minister Holness put it last week in acknowledging the likely concern of public-sector employees that a new pension bill did not have a timetable for the establishment of a proposed segregated pension fund for the Government to begin to contribute to it, and how much.

 

A BLACK HOLE

 

In 2006, Omar Davies, as finance minister, promoted the consolidation of, and a single payment regime for, payroll taxes: the education tax; the National Insurance Scheme (NIS) payments; as well as contributions to the National Housing Trust (NHT) and the training agency, HEART.

There was consensus that the arrangement would reduce transaction costs to firms, but people feared that once paid, most of this money would fall into a black hole, irretrievable by the agencies. Or, as Earl Samuels, the then CEO of the NHT, euphemistically characterised his concerns, it would possibly lead to "an interruption in the normal flow of funds" to the Trust.

The fiscal accountability arrangements of recent years, supported by civil-society oversight, have improved the situation. Problems, though, remain.

In this respect, the Government should postpone, if not permanently shelve, its plans to ensure greater transparency and for buy-in from stakeholders. Further, Mr Holness should be aware that there is a wide trust deficit to be closed.