Mon | Jul 24, 2017

Mark Rickets | It can be done, it must be done

Published:Sunday | January 1, 2017 | 1:00 AM
Andrew Holness

"The price of greatness is responsibility."

- Sir Winston Churchill

Today is the beginning of the year, and Prime Minister Andrew Holness in a New Year Message will, understandably, give hope to his people by highlighting expected improved performance in various sectors of the economy.

This message will stand in contrast to our country's low per capita income, forthcoming increases in utility bills and taxes, continued rise in the poverty index, and the large number of illegal settlements islandwide. Because of this, the prime minister, while retaining a measure of optimism, should be upfront and level with the nation by saying that it is impossible to complete this year the second and final portion of the tax package promised to earners in a specific income bracket.

While the prime minister would be reneging on an important plank of his election campaign, giving grist for the mill to his detractors, and at the same time upsetting those likely to benefit from the tax package and those who might have elevated him to miracle worker, his willingness to be straightforward and upfront by asking the disappointed to understand and bear with him might stand him in good stead among the wider population.

The economy is still too sluggish to be hidebound by election guarantees rather than prudent economic policies. Being human and putting aside his election promises as of right now would allow the Cabinet to spend more time focusing on the priority issues the nation faces currently.

 

RAISE THE BAR

 

We must acknowledge that some countries can brand or define themselves as prosperous because they truly are; others experiencing shared and balanced growth and development can claim that it is prosperity time now, thus providing an impetus to its people. We are not there yet. As a society, we have to lift the bar higher as far as discipline, responsibility, and efficiency go before we can lay claim to prosperity.

Yes, the prime minister's New Year's message will underscore the likely benefits that will flow from continued increases in business and consumer confidence, from an upgrading of the country's credit rating by an international credit agency, and by continued relationships with the multilateral institutions, including the IMF, the World Bank, and the Inter-American Development Bank.

He will also take special pride in articulating benefits likely to flow from his having established the Economic Growth Council (ECG), led by the successful and dynamic entrepreneur Michael Lee Chin.

An intangible benefit of the EGC in a country not sufficiently at ease with capitalism, growth, large corporations, big businesses, is that the word growth, as both a necessity and a positive, is being more and more incorporated into our language. As Jamaicans would say, 'You speak it into being.'

The continued growth in tourism and the increases in cruise ship arrivals provide a fillip to towns all along the north coast and sections of the south coast and would be referenced in the prime minister's speech. So, too, would the strong growth in BPOs and the increasing demand for higher-valued skills.

The reopening of the bauxite alumina plant in St Elizabeth, with its far-reaching multiplier effect, could not have come at a better time as the country attempts a new trajectory in terms of annual average growth rates in contrast to the anaemic figures of the past.

The new public-private sector initiatives as far as investment goes, which the Government is choreographing to spur development, will take centre stage when the first phase of the revitalised passenger segment of the Jamaica Railway Corporation (JRC) gets under way from Montego Bay to Appleton. The JRC's potential role in enhancing the tourism product comes by way of providing the linkages cross country and engaging and exciting tour operators, airlines, and cruise ships of available land-based travel options.

Agriculture provides some opportunity for hope with sugar lands coming back into production this year, and, now, with greater emphasis on the linkages between agriculture and industry, value added will improve.

Against this background of hope are the realities of daily life in a highly indebted country that has underperformed for decades and has had to bolster its revenues by securing more than US$2 billion from multilateral institutions in the last four years. This means management, accountability, efficiency, and letting your people know exactly what is taking place are the only way to deal with what is clearly a difficult balancing act.

Each year, for the past four years, $11 billion has been taken from the National Housing Trust (NHT) to shore up the Government's budget. The last of the $11 billion has been drawn, meaning that the budget this year will be absent that $11 billion, which was crucial over the past four years. Using the NHT to prop up the budget deprives the Trust of the opportunity to respond to the housing needs of its contributors and affects construction and development activity nationwide. The prime minister has vowed not to go to the NHT trough anymore, but where does he turn to to cover the budget shortfall? Does he cut even more needed government programmes from an already bare-bones budget? Or does he raise taxes?

His problem is much deeper than that. He came to office with costly election promises, which made no sense enacting last year, but he did, bypassing priorities that were far more demanding such as increasing the capital budget of the JCF to levels that would have given it a much better fighting chance at combating crime. No doubt he was convinced that with an emphasis on growth and job creation and with a more uplifting message tied to prosperity, as against the singular theme of austerity, he would have got sufficient increases in government revenues to contain crime, to provide tax refunds for taxpayers in a particular income range, and to make auxiliary fees optional.

Well, things have not worked out exactly as forecast, and most times when that happens, leaders, instead of levelling with the electorate who entrusted them with their vote, try to be miracle workers, or take from Peter to pay Paul, or use smoke and mirrors to cover up what is being done.

It is hard for leaders who have so many people dependent on them to acknowledge miscalculations at the outset. I believe truth and humility and bold, no-nonsense, and visionary leadership are characteristics that resonate with people.

Can you imagine if the prime minister told his audience that with the Government having no surplus revenues, he now has to raise an additional $33 billion in taxes to satisfy the $17 billion needed to pay the second portion of the tax refund, $11 billion to replace funds from the NHT, and an estimated additional $5 billion to cover auxiliary fees and more frequent days for the school-feeding programmes? People would be asking some serious questions, as to why.

 

TACKLING CRIME

 

The prime minister, going a step further, could let the people know that no country can tolerate the level of lawlessness and crime and violence that we are experiencing and that he is finally putting everything into this long overdue priority, which has its roots in weak family structures, inappropriate nationwide education and training, and in garrisons.

Moreover, he and his government must champion institutional reforms to address deep-seated bottlenecks in the economy. Essentially, the prime minister has to acknowledge that it is action time now in terms of efficiency in government and the reduction of waste. Four years ago, the Government wrote off $230 billion in cumulative unpaid taxes and, already, uncollected company taxes, property taxes, and the outstanding employers' contribution to NHT are climbing at a worrying pace.

The waste in buildings rented by Government and the high cost of patronage and corruption must be addressed in a hurry. When all this happens, people will start believing that Jamaica is finally open for business and ready for growth. With such transformation, prosperity will be a realised target, not simply a slogan.

-  Mark Ricketts, economist, author, and lecturer living in California, was chief economist of the Vancouver Board and Trade in Canada; deputy chairman of the Jamaica Stock Exchange; assistant editor of the Financial Post, Canada's largest financial weekly newspaper. Email feedback to columns@gleanerjm.com and rckttsmrk@yahoo.com.