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Budget debates of the '70s (Final)

Published:Thursday | April 29, 2010 | 12:00 AM
Lance Neita

Lance Neita, Contributor

Arguments for and against the International Monetary Fund (IMF) were to dominate the Budget debates 1978-80. The stage was set when Finance Minister Eric Bell announced on March 14, 1978, that a new IMF programme was being negotiated, with an agreement for a US$250 million extended fund facility expected by mid-May.

This would replace a 1977 two-year stand-by facility which had been suspended as a result of the country's failure to meet the net domestic assets requirements in the fourth quarter of that year.

The understanding included a wage guideline ceiling of 15 per cent, devaluation of the dollar and other measures crucial to the agreement, but which would push up prices on a number of consumer items.

Special sitting

A special sitting was called on May 16 to examine the terms and conditions. The debate was vigorous and the Opposition pulled no punches, calling on the Government to renegotiate or resign. Hugh Shearer weighed in on the wage guidelines, which he called unbearable. Michael Manley made an impassioned plea to the unions to support the measure.

Edward Seaga's alternatives included recommendations for stimulating growth and tightening expenditure. In that context, he made first a call for the establishment of a Contractor-General to ensure greater government accountability.

He occasionally used humour to drive home his argument. "Chicken back, Mr Speaker, which has become chicken forward, or chicken chassis, has flown out of reach of the poor as it is now up from 17 to 38 cents per pound."

"The Budget called for expenditure of $1.6 billion. The Opposition spotted shortfalls in the revenue side of the Budget and challenged the Government to reduce "wasteful spending on its socialist programmes".

The 1979 debate opened on June 14 against the background of torrential flood rains which devastated large sections of western Jamaica.

Bell presented estimates of $1.7 billion and set a target of three per cent real growth as the Government attempted to "stabilise the economy after a year of adjustment to the IMF loan".

An increase in oil prices cautioned the minister to assure Jamaica that gas prices would not pass $4 per gallon (bearing in mind the infamous gas demonstrations in January that year).

It was Manley who again stole the show when he announced a 10 per cent increase in the minimum wage, moving it from $24 per week to $26.40.

The following year, 1980, saw a new finance minister (the third since 1972) when Hugh Small was named to succeed Bell after the latter's sudden resignation on March 24.

Bell resigned following a recommendation made by the People's National Party's National Executive Committee to reject the IMF programme. The Cabinet accepted the recommendation.

Small made his first and only Budget opening speech on May 20. He proposed expenditure of $2,075 billion to be funded from increased tax revenues, as well as foreign exchange to be sourced from an alternative economic path. There was consternation in some quarters when white rum was increased from 30 to 35 cents, beer from 60 to 70 cents, and cigarettes from $1.30 to $2.

Irreconcilable gap

The Opposition saw an irreconcilable gap between expenditure and revenue, challenged the viability of any alternative path proposed by the Government, and put forward foreign investment as the only hope.

But there was a major event scheduled for later which obviously occupied the minds of the parliamentarians during the debate.

Elections were to be held that year, and the Throne Speech started and ended on the election theme, evoking a spirited response from the MPs eager to get on with the campaign. The speech was coupled with an appeal for an end to political violence. A Gleaner editorial on May 20 warned that "the nation may be tempted to doubt the sincerity of that plea if the terror on the streets continues unabated".

With that, the curtain was brought down on one of the most volatile and event-packed decades in the history of our parliamentary budget debates. And the terror in the streets continued.

Lance Neita is a communications consultant. Comments may be sent to or