Mon | Nov 12, 2018

Mark Ricketts | Audley Shaw's Budget bungle

Published:Sunday | March 26, 2017 | 12:00 AM
Mark Ricketts
Audley Shaw, minister of finance and public service, has been criticised in several quarters for a tax-heavy Budget.

"What's even more disgusting is that politicians won't even try. Jamaica's last two governments were criticised for oversize Cabinets. Instead of using the first opportunity to set a different tone, this JLP government appointed 18 ministers (many 'without portfolio') and five state ministers. USA (population 319 million) has a 15-person Cabinet, including the attorney general, and Germany (population 81 million) has 16 Cabinet ministers."

- Gordon Robinson, attorney-at-law

This year's $710-billion Budget, with its $27-billion deficit, is terrible. On the expenditure side, it does not prioritise allocations in relation to the country's pressing needs in areas such as crime, social dysfunction, praedial larceny, and lawlessness on our roads. It maintains an emphasis on entitlements, redistribution, and election promises and continues to overfund education despite that ministry's less-than-stellar performance.

On the revenue side, apart from raiding the NHT, an ever-increasing wider net is cast on non-conventional sources such as health insurance premiums and on traditional taxable items, including motor vehicles/driver's licences, alcohol, tobacco, fuel, as well as lowering the base to capture an increased number of electricity consumers.

Energy and transportation have massive flows through impact, so relentless and onerous taxation in these areas tends to have a disproportionately negative effect on the economy. A point of some significance is that the previous government, in four years, raised some $56 billion in additional taxes, and this government is at $31 billion, with only two plate appearances so far.

What I see in this year's Budget is an unimaginative pulling together of itemising revenues and expenditures; gross underfunding of agriculture and the national-security sector; the continued funding of unnecessary ministries and ministers; and procrastination in disposing of assets, suggesting that there was inadequate lead time for this year's Budget preparation to incorporate major funding from this source.

To know what should have been the priorities in the size of increased budget allocations, listen to the cry of Jamaica, fed up with crime and violence, which cost the country $60 billion between 2010 and 2014 and is the biggest retardant of growth. Ten billion dollars more should have been allocated to the national-security sector, including the JDF, the prisons, and the JCF, as well as the criminal-justice system.




Other major priority allocations should have been our social environment, with its high level of dysfunction driving crime and lawlessness, and combating praedial larceny, which has been devastating for farmers and fishermen.

Don't we feel the tears of anguish as carnage continues unabated on our roads and lawlessness takes centre stage, and yet substantial and meaningful allocations were not offered in the Budget - What of craters masquerading as potholes, feeder roads in disrepair, and infrastructure and buildings inadequately maintained?

Listen to the pain and silent outrage of security guards who work 60 and 70 hours a week but couldn't even afford attractively priced health insurance, which was offered to them recently prior to Government's injudicious taxation on group health premiums. Security guards, like farmers, teachers, policemen, nurses, and other hard-working Jamaicans hurt when Budget allocations are not growth-inducing.

While Government raids the National Housing Trust, it projects woefully inadequate starts to bring the nation's housing stock to levels required for the expected growth in tourism and BPOs. So there go more captured land, illegal settlements, and social water.

A priority the Government must satisfy is the huge payment of $310.4 billion on its domestic and international debt of $2.18 trillion. The size of this debt is a result of decades of low growth and misguided policies and the implementation of Budgets, like the current one, which keeps us impoverished and enslaved.

I know the JLP made election promises, but how can Government continue on this path to fund so much in the way of entitlements and redistribution without first tidying up its affairs by being efficient, as well as having the necessary resources in place to fund a growth inducing budget? Remember! It takes cash to care.

In recent years, our outrage at excessive tax-and-borrow budgets has been muted because much emphasis has been placed on a decline in our debt-to-GDP ratio, but unless our economy grows, this is false comfort. Our debt in 2013 was $1.9 trillion, and by December 2016, it stood at $2.15 trillion.

Every Jamaican, man, woman, and child will now owe on average, $707,000. It also means that within four years, our national debt will not have decreased, but increased instead by $280 billion.

Because so much of crime can be traced to social dysfunction, Budget specifics should have included larger allocations to hire more psychiatrists and at least a thousand more social workers to do yeoman's work in challenging neighbourhoods, communities, and families.

Much more should also have been allocated to ensure revision, passage, and implementation of laws geared at behaviour modification so as to address the pressing issues of absence of individual initiative and responsibility; weak parenting; teenage pregnancies, which now account for nearly 20% of births; mothers without work and without resources who keep having children which they can't afford; and wayward fathers.


Restore justice centre


Also required is a physical space (not a church or police station) agreed to by residents in communities all across Jamaica that will be the Restore Justice Centre. The centre would be administered by retired teachers, postmistresses, judges, farmers, policemen, and others who have earned the respect of their community and who will act as mediators, having received courses in problem solving, anger management, and counselling. They will have the necessary complement of support staff.

Husbands, lovers, wives, children being abused and bullied could go to the centre for help, and, hopefully; with strong community effort, there would be reconciliation between aggrieved parties. This whole enterprise of structured reconciliation based on mediation would have to be a movement sweeping the nation.

Our expenditure on combating praedial larceny is a joke. Our budget for agriculture, agro-processing, and fisheries, and our approach to education in this sector over the years is a promise to deceive. We couldn't be serious if we really wanted to put a dent on import substitution.

Agriculture's stingy budget would have to be doubled immediately. We could pay for all this by reducing the number of ministers and ministries and cutting $20 billion from the education budget and still achieve enhanced growth prospects with a better matching of educational output and the needs of society. The budget for education has increased 18% in three years to $98.75 billion. Transformation has to occur in the area of technology and training in this bloated, stodgy, and, at times, unimaginative ministry, which holds in its hands so much of our children, our adults, and society's future.

Government should have better prepared itself for this year's budget arrival. With assets of more than $1 trillion, return on investment is putrid as many state enterprises are bedevilled by mismanagement, waste, corruption, patronage, and injudicious acquisitions.

From early last year, Government, aware of the state of our economy, should have pulled together a team of financial brokers, accountants, valuators, and experts in IPOs, arbitrage, and acquisition and mergers and have them bundle several of its assets in three or four companies, with shares attractively priced for sale in both the domestic market and the diaspora. This means that funds would have already been in place to influence the direction of the budget.

The budget I am proposing would have stamped a new approach to governance where efficiency, priorities, economic growth, and living within our means replaced entitlements, redistribution, the absence of individual initiative and responsibility. It would allow the society to track measurable improvements in areas they deem high priority.

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