Editorial | Impact of poor investment choices
When corporations make poor investment decisions, there are usually far-reaching consequences for their viability. When governments make poor investment decisions, various sectors of society are impacted, and the effects are usually felt strongest by the very poor.
The Montego Bay Convention Centre and the Trelawny Multi-purpose Stadium are turning out to be poor investment choices on the backs of the Jamaican taxpayers.
It's therefore appropriate for the Public Accounts and Appropriations Committee (PAAC) of Parliament to demand that the tourism ministry devise an economic plan to staunch the bleeding at the centre, that has been in the red since it began operating in 2011.
Management, maintenance, security, utilities, and manpower are all items being billed to this underused building month after month. In the case of the Trelawny stadium, there is a report that ruminants have taken over, although the facility continues to rack up hefty monthly maintenance and security fees.
Tourism Permanent Secretary Jennifer Griffiths told the PAAC this week that there are no plans to close the conference centre or to privatise the facility. She declared that the centre is important for Jamaica "as the country further expands into the conventions and meetings market".
We imagine that similar persuasive arguments were used to convince the Government of the day that this facility was indeed necessary to enhance Jamaica's competitiveness in the conventions market. The state-of-the art facility was built by the Urban Development Corporation through China-based COMPLANT.
But after construction of the facility and the engagement of international firm SMG on a seven-year contract with responsibility for booking and event management, the results have been less than stellar.
Despite earning World Travel Awards year after year, guests are not tripping over themselves to get into the facility, and expenses continue to exceed revenues. As their contract comes up for renewal, the question must be asked: Why has SMG not had better success in its marketing campaign on behalf of the Montego Bay Convention Centre?
Time for a decision
At a time when the national Budget is under severe pressure, it is crucial that policymakers have a good understanding of where to spend resources so that the country gets the greatest bang for its buck. Just like huge corporations, the Government has to make a decision as to which obligations are mandatory and which are discretionary. Many times politics carries the day, and decisions based on flawed measurements are allowed to proceed because the expectation is that they will be eventually justified by future election results. When government decisions are based on unreliable data, the consequences can be felt throughout the entire state enterprise.
Did Montego Bay really need a convention centre at the time it was built? Is this investment one that has the potential to impact the quality of people's lives in 10 or 20 years? Should a stadium have been built in Trelawny for a one-off event staged by a dying sport?
Government policy will always be influenced by the political and social environment. But policy crafted during a time of economic buoyancy will obviously be different from that formed during times of austerity.
Politicians spend a small part of their time thinking about business, and there is anecdotal evidence to suggest that public officials can be terrible evaluators of potential investment and they tend to make poor choices that result in bad outcomes. There are many instances where budgetary constraints have forced cuts to important infrastructure programmes such as road and bridge-building, and maintenance and environmental projects. Investment decisions should not be based on politics, but on merit. It's a fallacy to think state money will never run out.