It's not now or later, it's now or never

Delano Seiveright, Guest Columnist

WE FAIL as a country in acknowledging the tremendous leadership deficit that has put us in the very unfortunate state of affairs with which we have to grapple with today. With the change of government eight months ago, last year's improving economic indicators last year have gone haywire.

To date, the net international reserves have fallen by 30 per cent, moving from US$2 billion to US$1.4 billion; inflation has climbed into double digits; the dollar has moved from J$86.30: US$1 to about J$90:$1; unemployment is at its highest level in more than a decade; business and consumer confidence are at all-time lows; and the economy has flatlined and is now slipping into recession.

Beyond that, the various ministers appear to be in limbo with their portfolios, struggling to find sensible pathways to success while stacking multimillion-dollar advisers and assistants, with Finance Minister Dr Peter Phillips ostentatiously taking on 12.

To top it all off, in the midst of rough times for most Jamaicans, Tourism Minister Dr Wykeham McNeill struggles to inform the nation as to whether the £1 million (J$140 million) spent for the London Olympics promotional activities in Britain is value for money. It is a most callous approach to governance in such a very short space on time.

OUT OF TOUCH

The leadership crisis that pervades not just Jamaica, but the Caribbean on a whole, came to the fore at the University of the West Indies' (UWI) Sir Arthur Lewis Institute for Social and Economic Studies (SALISES) 50/50 conference in New Kingston. Small island developing states are, of course, fragile and have to grapple with complex economic, social, environmental and governance issues, but many of our problems can be corrected had we benefited from transformational leadership.

The conference had as its keynote speaker, Dr Peter Phillips. It closed with the prime minister of St Vincent and Grenadines, Dr Ralph Gonsalves, who spoke on the platform of the People's National Party (PNP) in the 2007 general election campaign and is affectionately known as 'Comrade Ralph' throughout the region. Prime Minister Portia Simpson Miller, oddly enough, gave 'greetings' just prior to Dr. Gonsalves' presentation.

The presentations of all three expectedly fell short of giving hope for a bright future. The closing presentation by Dr Gonsalves was well attended with an audience mainly comprising the who's who of ultra-Left-leaning academia, politicos and groupies of the 1970s, with young people in attendance few and far between. Dr Gonsalves' very humorous presentation touched on integration, the International Monetary Fund, Trotsky, Lenin, imperialism, colonialism and the Grenadian revolution. It was the equivalent of a Socialist International gathering.

Prime Minister Simpson Miller redoubled her Government's commitment to building up our regional institutions and regionalism on a whole.

SUCCESSFUL LEADERS

It would do well for all of us if we invited leaders with genuine track records of success and experience. Inviting leaders with little experience in moving anything forward, except another intellectually stimulating speech filled with entertaining wit, is a grand waste of time.

In that vein, I recall a mere two and a half months ago, a small gathering of societal leaders, in New Kingston, including the current and former ministers of finance, Dr Phillips and Audley Shaw, listening keenly to presentations by Ali Mansoor, financial secretary for Mauritius, and minister of finance, trade and investment for the Seychelles, Pierre Laporte.

Staged by the Caribbean Policy Research Institute (CaPRI) in collaboration with the World Bank, both nations offer excellent case studies on how to move successfully from austerity to prosperity, the issue of utmost importance for Jamaica and most of our Caribbean neighbours.

Both CaPRI co-executive directors Dr Christopher Tufton and Dr Damien King were quick to point out to the small gathering that one size certainly doesn't fit all, but highlighted that both Seychelles and Mauritius shared many similarities with us.

IT'S NOW OR NEVER

Ali Mansoor's presentation only reinforced what rational forces in our society know. By the year 2006, the Mauritian economy was careening in the direction of a concrete wall. Like the Seychelles, it began to suffer from economic shocks that resulted in a major fall-off for their major textile industry, with output collapsing by 20 per cent in one year, coupled with a 30 per cent fall-off in jobs.

And like Jamaica and many other countries, food and oil prices were on the rise and had a devastating impact on economic stability. Further yet, public debt rose consistently for a decade and a half and GDP growth fell to two per cent, a bad position for a country accustomed to five and six per cent annual GDP growth rates. The bad news didn't stop there as the European Union cut Mauritius' preferential access for its sugar exports.

Mauritius' newly elected government, in the midst of the crisis, made the bold call. Mr Mansoor stated: "... The minister of finance was determined to bring wholesale reform, and a prime minister willing to give him strong backing decided that if you have to do anything, you have to do it in the first year."

Then, he made the quote of the evening that raised eyebrows: "Any measure too politically demanding is unlikely to be done later, so it's not now or later, it's now or never."

Oh, how we wish Jamaica had leaders of this standard and cojones. Shilly-shallying year after year, month after month, and week after week only makes the problem that much greater. Just look at where we are now!

AGGRESSIVE REFORM

Mauritius went on an aggressive reform programme, even enlisting the help of the World Bank, former prime ministers of Ireland and New Zealand, Garrett Fitzgerald and Helen Clarke, respectively, to speak on their own country's experiences with fundamental economic reform. The political directorate, the media and the wider population were informed of the benefits of reform.

The government also had to stand up to big and powerful lobbies, including key political supporters such as the trade unions and the business elite. Funny enough, the religious lobby was left unscathed as the minister of finance felt that they needed to pray for his government as they boldly set about the economic reforms.

They moved quickly and decisively to reform their tax system. Like Jamaica's, Mauritius' tax system was a joke, with the majority of lawyers and doctors, for example, not paying their fair share, and in many cases not a dime! Mauritius put in place an across-the-board flat tax of 15 per cent on personal and corporate income. The government also instituted a simple and across-the-board consumption tax of 15 per cent and had near zero import duties. They also made it a duty to go after lavish consumers who might not have been paying their fair share. Jamaica will undoubtedly do quite well in collecting taxes if we follow suit.

Mauritius' tax reform was simple, reasonable and beneficial to those at the lower levels of the economic ladder. Taxes on interest, professional fees, and property helped greatly in making the tax system somewhat progressive. Additionally, discretionary powers to grant waivers by the minister of finance were removed and tax administration improved.

On the public expenditure side, ministries were put on a three-year rolling budget, thereby controlling spending. Labour market reform was also instituted alongside the resolve to improve the investment environment.

SOCIAL SAFETY NET

Importantly, and certainly not missed by all, was Mauritius' move to widen the social safety net. Like Mauritius, Jamaica should target training, literacy and numeracy programmes as part of a social safety net superstructure, with empowerment being the primary theme, NOT handouts. Opposition Leader Andrew Holness has advocated a sensible social-protection platform as part of a massive restructuring of a flawed Programme for Advancement Through Health and Education.

After 12-18 months of reform in Mauritius, the fruits are there to see, with growth rates of up to six per cent and unemployment on the decline from nine per cent to 7.5 per cent.

As we reflect on 50 years of Independence, where are we now with tax reform, pension reform, containing the public-sector wage bill, tackling our enormous public debt and bringing meaningful growth for our economy to guarantee a brighter future for all?

Delano Seiveright is an aide to the Office of the Leader of the Opposition and immediate past president of G2K. Email feedback to columns@gleanerjm.com and delanoseiveright@yahoo.com.