Thank you Madame Speaker.
I take this opportunity to thank God and, the over 341,000 persons (representing 31% of the electorate) who made it possible for us to take our seats on this side of this honourable house by voting for us, thereby placing us at this time (subject to any court rulings) just three seats away from government.
Again to them all, I say thank you as I give them and the people of Trinidad and Tobago the assurance that we, on this side of the House, fully intend to carry out our oath of office and to discharge our responsibilities thereunder as the loyal opposition of the Republic of Trinidad and Tobago.
Whilst the Hon Minister boasts that the people of TT placed their confidence in his party, I say respectfully that perhaps he needs to remind himself, lest he grows more arrogant, that they received the support of only 34% of the electorate which means that 66% (two thirds) of the electorate did not support them.
In other words, his government is a minority one having garnered only about one third of the votes of the electorate.
And, as I acknowledge the maiden budget statement of the Honourable Minister of Finance, I cannot help but think, as I am sure did many others, that he had then a golden opportunity to walk the talk, to demonstrate the commitment to the talk that his party and government have been propagating, which they emblazoned on their budget documents, namely, “Let us do this together”.
Alas, he squandered that opportunity when he chose instead at the onset, some may say onslaught (even before he thanked God and the PM for the honour to present this first budget of his administration) to, in effect, insult and label the more than 720,000 persons (two thirds of the electorate) who did not vote for his party, as guilty of all manner of malfeasance including, but not limited to, greed, arrogance, corruption, betrayal , deception, nepotism and cronyism.
On another day, Madame Speaker, we can speak to those allegations and as to where guilt may lie.
On another day we can enquire into whether the member violated the Standing Orders whilst your good self was engaged busily in quelling ‘excessive’ cross talk.
On another day we can talk about whether it is betrayal to ask everyone to do this together and then alienate so many by branding them guilty of malfeasance.
On another day we can ask whether it is a betrayal when an assurance is given there will be no job loss, yet every day we read about more and more job losses.
Sunday Express 4 October 2015 – with the headline:
Contract workers feeling ‘betrayed’
“I voted for the People’s National Movement (PNM) but right now I feel like I wasted my vote.”
This was the statement by a contract worker at the Ministry of Agriculture, Lands and Fisheries in St Clair to the Sunday Express on Friday as she lamented the current climate at the ministry following a number of employees being sent home and not having their contracts renewed,
The worker, who requested anonymity, described the current climate at the ministry as being “uncomfortable”.
Madam Speaker, it is not only in that Ministry there is job loss; it is across the board in Ministries and State companies, eg Tobago, NGC, OPM etc
Also, on another day, we can ask whether it is nepotism or cronyism:
(a) when dynasties are being created so that a father holding high office will have to appear before his daughter-in-law who also holds high office and, his brother is appointed as the new Hart ;
(b) we’ll have to ask when a campaign manager of a very high official is appointed as Chairman of a very crucial state board and,
(c) we also have to ask when a childhood friend of a high official is appointed to hold a very powerful office in the GORTT.
These and many more instances of apparent cronyism and nepotism we can enquire into on another day.
Today, I want to talk a bit about deception.
Following the budget speech we did indicate we wanted to talk about deception.
It is context that gives meaning to things; otherwise all nouns are just names for the purpose of identification and all numbers are just representations of quantities.
The framing of context distinguishes fact from fiction, information from misinformation, truth from propaganda, truthfulness from deceit/deception.
If for or instance someone says that they inherited a million dollars – that sounds like a lot of money.
But if that same someone says that they inherited a million dollars together with 2 million dollars debt then, the picture changes entirely!
If a critic of the person who inherits the 1 million dollars says about the inheritor that he got a million dollars and in quick time he spent out the money and got himself in 1 million dollars of debt on top of that and, the critic describes him as a profligate spender then, on the face of it, it seems credible, reasonable.
So when context is provided and it becomes clear that the inherited windfall could only pay half of the inherited debt, then the picture changes altogether and sympathy then seems appropriate for the inheritor who finds himself in that situation. An vice versa, the converse situation will also hold.
And so it is with the presentation of the 2015 budget by the Min of Finance who, beginning his presentation with insults, accused the previous Government of spending too much and spending badly in 2015, running up the overdraft, leaving a debt in terms of payment for public servants, and leaving a deficit in excess of the projected deficit for 2015.
An so with your leave, madam Speaker I will attempt to put these things into context
There are no actual numbers for 2015 – only estimates and projections .
The financial year would have closed on September 30.
The budget was prepared for presentation on October 5.
The half yearly report until June 2015 would have been presented some days before the reading of the Budget on October 5.
The Review of the Economy would have been prepared before October, perhaps at end of September.
Most of their real figures would have been up to June 2015 and any figures for 2015 after June would have been in the realm of estimates or projections, not actual. And indeed all the budget documents point to Estimates.
The numbers are not the ACTUAL numbers, just estimated.
So let us get that straight from the start.
The Minister of Finance has been precipitous in the use of figures to make the last Government look bad and much of what he says by way of insinuation, inference and criticism has to be taken for what it is….speculation.
I notice that his painting of the TT economy as being in dire straits did not prevent him from presenting a 63 billion dollar budget, did not hinder him from announcing several high cost projects, and the criticisms of spending by the Peoples Partnership Government was perhaps merely used as a justification for bringing back the property tax, for imposing taxes on business and the general population under the guise of reducing VAT, and did not at all impede them from pursuing the rapid [racket] rail on which they spent 500 million dollars for a feasibility study already in the pre-2010 under the PNM administration.
EXPENDITURE: PP GOVERNMENT
How did we as a Government spend money during our five year term?
The propaganda is that we wasted money and that we were corrupt; but let us look at the facts of the context.
Between 2010 and 2015 we spent approximately 290 billion dollars. A far cry of the campaign rhetoric of 400 Billion.
Most of that money was spent on recurrent expenditure which are wages and salaries, goods and services, interest payments for both domestic and foreign loans and subsides and transfers.
Indeed when all is said and done less than 50 billion has been spent on capital expenditure which addressed the matter of the infrastructure deficit in the country.
When we talk numbers, the financial deficit is important but when we focus on development then the infrastructure deficit becomes important.
And the only way a Government can deal with an infrastructure deficit is to spend the money.
You cannot build a highway to Point Fortin or to Diego Martin OR build a Valencia By-pass, or build and an Interchange and Diego Martin Highway without spending money
You can’t build 100 plus schools without spending money.
You can’t build hospitals and health centres and police stations and secondary roads and agricultural roads and drains and bridges and fix landslips without spending money.
You can today travel the country and see what we spent it on.
It is all identifiable and the people, the citizens, the taxpayers of this country — those who voted for us and those who voted against us — and those who did not vote at all they can identify these.
Of the 290 billion dollars or so spent during our tenure less than 50 billion or 1/6 was spent on capital expenditure and 240 billion was spent on wages and salaries, goods and services, subsides, transfers and loan repayment.
You may say wages and salaries are too high but how do you reduce it by suppressing wages, cutting wages, or sending people home?
I know the new government has no problem with putting people on the breadline but the People s Partnership chose not to do that.
And I know that the Minister of Finance did not conceal the fact that he was vexed because we had concluded negotiations with public servants and protective services and he has a bill to pay!
I make no apology for giving workers and their families better wages and salaries.
In his budget presentation the Minister of Finance spoke more than once of fiscal discipline.
There are some who are of the view this may be a new found discovery for members on the other side. After all, what is the history of the growth of budgetary expenditure in this country? Records are there with the Parliament staff. They can check.
Let us, therefore, examine the issue of fiscal indiscipline.
In the year 2000 those on the other side were in charge of the Government, as they are now.
Central Government expenditure in 2000 was $10.99 TT billion. By 2005, rising every year it rose to $22.4 billion and, by 2009, it reached $36.7 billion. The average annual increase of expenditure was 14.53 percent.
And yes expenditure did grow under the Peoples Partnership government but, it grew at about 7.6 percent annually.
That is about half the rate that it did under the PNM between 2000 and 2009.
Now why is this important to note?
You see when the Peoples Partnership came into Office in 2010 we inherited a deficit of over 6 billion dollars, the decline in growth in 2009 had been about -4.4 percent, inflation in 2010 was 10.5 percent, unemployment 6 percent, the number of murders at an all time high and serious crimes ate an all time high.
We could not on humanitarian grounds consider a cut in expenditure because we would have had to begin with subsidies and transfers.
We could not do that in the context of a global financial crisis and severe economic contraction here at home.
Prof. James Duesenberry, an economist, once explained the problem of cutting expenditure:
“it is harder,” he said ” for a family to reduce its expenditure from a higher level than for a family to refrain from making high expenditures in the first place”.
And so when the Minister talks about expenditure I want to place it in context.
The Minister of Finance is talking about deficit now.
When we came to office in 2010 you handed us a deficit of 6.8 billion dollars.
How easily you forget.
Did we raise taxes? No we did not.
Did we punish the people? No we did not.
Did we send workers home? No we did not?
Did we cut salaries? No we did not.
We put people to work – we reduced the unemployment rate down to 3.7% (2015). We gave water to the population (75%).
We fixed their roads, we improved their drainage, we expanded education (surpassing our own target for tertiary education participation to about 65%, we became one of the first countries to have free pre-school education, we expanded GATE, we outfitted a teaching hospital and a built s south campus of the UWI. The south campus contains other faculties – not a standalone Law Faculty. So when the Hon. Minister of Finance speaks about expenditure – I want to show where the expenditure went.
We gave citizens every opportunity to improve their lives.!!
But you give us a half budget which will cost the country 63 billion dollars with a deficit in your own words of $21b dollars and, in the same breath that you are talking about fiscal discipline.
You then you tell us that the real budget will come in March next year with the help of the IMF?
So, citizens of Trinidad and Tobago hold your breath as you wait to exhale when the real budget comes down later.
Let me summarize by saying that your 2015 numbers are debatable and that we will only know the real numbers some months from now.
Secondly let me make it clear that we did not engage in any profligate spending over the five year period and I also want to emphasize that monies expended can be accounted for and that the work of the PP Government over the last five years is tangible and visible to anyone who wants to see.
Let me emphasize that sizeable budgets for a country of our size did not begin with the Peoples Partnership and that the period 2000 to 2009 saw a rapid 14 percent plus annual escalation of Government expenditure.
Further in our time government expenditure grew at half the rate in comparison to the previous administration and that in our time we managed the economy to single digit inflation, almost full employment, and more disposable income in the pockets of every one.
As I said before we did all that without raising a single tax, we brought serious crime down by half, we reduced murders and gang violence and we gave everyone opportunity without discrimination.
It is true we made mistakes, in Government and in the campaign, and we paid the electoral price for it.
But in all honesty from an objective observer we governed well, we governed fairly, we governed with the welfare of the ordinary citizen in mind as a people centred government with people centred policies and initiatives.
So let me get to some of the misinformation provided.
The deficit at the end of June 2015 was $1 billion based on verified numbers. Indeed there is a memo from the Dir. Of Budgets which showed us the verified numbers.
It is difficult for me to see how $1 billion can turn into $7 billion between June and September.
The only way I can see this happening is if the Minister of Finance:
- failed to collect the $1.5 billion from the Phoenix Park IPO, the $3.8b capital repayment from TGU, the $500m dividend from NGC, the partial repayment by CLICO relating to Government’s financial support before September 30 (and I know that the current Min of Finance was briefed by the former Minister of Finance on pending cash inflows and the importance of acting on these on time) Note also that these are the same payments he referred to at p. 59-60 of his Budget Statement as “revenue mobiliation measures”)
- if he made misguided assumptions about income and
I hope sincerely that the Minister is not playing politics with the numbers because giving the impression that the deficit is larger than it actually is could have a very negative impact on the way the rating agencies view our country.
I would trust that his sense of nationalism is stronger than his partisanship as we await his explanation in the winding up.
The other issue is the issue of the depleted treasury.
First of all any Government has to make a choice between using cash or borrowing just like any business or any house hold.
The Minister of Finance under the PP govt chose a combination of cash balances and loans.
Do not forget for a minute the debts from contractors that you left for us which we had to verify and pay over time.
Now the Hon. Min of Finance is angry about the outstanding payments to public servants which is much smaller than the debt to contractors that you left us.
You also conveniently forgot that we had to find $20 billion dollars to fund CLICO.
WE also had to settle wage negotiations some from 2008 which you left us.
These obligations left at our feet were multiple times in excess of what existed in the Treasury.
One may legitimately ask – why did we not borrow instead?
Well a choice was made and so we chose a combination of available cash and as well taking loans.
5 BILLION DEBT
And what about the issue of a 5 billion debt left by us to pay public servants? First of all the Minister will give us in his winding up how he arrived at the figures.
Is it really 5 billion dollars?
Many unions asked to have their wage negotiations settled before the elections.
But even if it were why fuss about a duly negotiated wage increase for workers in the public service?
I don’t understand the annoyance. But the Minister of Finance was disingenuous to suggest that his Government will have to find 5 billion dollars in the new fiscal year to pay public servants.
Madam Speaker, teachers were paid their salaries at the end of June.
Partial payment was made to public servants in August and arrangements were made to pay most of the remainder due to them at the end of September.
A payment of $3.8 billion due from TGU was arranged to honour this time table of payments – refer to on page 59 of Budget statement.
The Minister of Finance was advised of all of this by the former Minister of Finance in a meeting requested by the present Minister of Finance.
If the September payments were made then the only outstanding payments would be the payment to the protective services which for cash flow management purposes the former Finance Minister had advised a payment in November 2015.
So it is not accurate to portray the PP Government as being irresponsible for settling wages and salaries of workers.
Not only did we manage things to ensure that obligations will be met but the former Minister of Finance advised you of what had been put in place.
STRONG MACRO ECONOMIC FUNDAMENTALS
And we have left you with several strong macro-economic fundamental indicators.
HSF stands now at US $5.7b. in the 5 years and even when energy prices fell at no time did we raid the HSF.
Gross Reserves US$10.39b – 11 ½ months import cover
Indeed in their own Budget document p. 20 of the Review of the Economy “gross official reserves continued to exceed conventional benchmarks of reserve adequacy”. So we left a lofty reserve position.
Headline Inflation 5.6%
I turn now to the energy sector and energy policy which occupied a very miniscule part of the Minister’s budget statement.
Non-energy sector grew because of our initiatives.
Madam Speaker, we know that demand for energy is a function of the health of the global economy. A few days ago the IMF forecasted that the world economy would grow by 3.1% in 2015 this compares to 3.4% in 2014. The increase in shale oil production in the United States and the increase in oil production in Saudi Arabia to its highest levels ever, coupled with news of economic deceleration in China mean the out for oil and gas prices continue to be very weak.
In his contribution on the energy sector, the Minister of Finance spoke in vague and elusive terms of and I quote “being guided by a framework of general principles” and about “stakeholder consultation” and about “commencing discussions with stakeholders on the adoption of appropriate strategies”.
I wish to sound a word of caution that the energy sector players are looking on at his statements here. These international players do not like uncertainty and indecision. As a result of the sheer size of the investments they undertake, they demand certainty and direction. What is said here ripples back to boardrooms in London, Houston and Calgary therefore impact impact on investment decision.
Madam Speaker, the Minister of Finance said that oil production had fallen from approximately 100,000 barrels per day in 2010 to 80,000 barrels per day in 2015. What the Minister did not say is when the decline started.
In 2005 oil production was 144,425 barrels per day and by 2010 that had declined to 98,179 barrels per day or a 32% decline from 2005 to 2010. Do you know who was in Government during that period of dramatically falling oil production? The PNM.
So the decline of oil production did not start in 2010 as the Minister of Finance would have us believe.
In their last incarnation in Government from 2002 to 2010 their focus was on natural gas and not on oil. In that period they ran down Trinmar.
In 2005 Trinmar’s production was 33,000 barrels of oil per day and by 2010 it had collapsed to 21,000 per day.
Further evidence of the neglect is the fact that in 2009 and 2010 there was no drilling in Trinmar. This is why the PNM has no moral authority in my respectful view, to speak about oil production.
The focus in Petrotrin during their last term was the Gas to Liquids project and the Gasoline Optimization Programme both of which led Petrotrin into the valley of debt. The consequence of the GOP and GTL projects was two bonds indebting the company to a massive $10.8 billion. This contributed to taking Petrotrin’s debt from $TT 3.3 billion in 2002 to $TT 12.4 billion in 2010.
This situation and the servicing of these bonds severely constrained Petrotrin’s cash position from 2010 to 2015. To compound matters the GTL project ended up as a massive failure that burnt a $TT 3.0 billion hole into Petrotrin’s books and the GOP project suffered alarming cost overruns.
That is the PNM history of managing Petrotrin between 2009 and 2010…. And yet we have a Minister now threatening the management of Petrotrin that their days are numbered? Little did the employees of Petrotrin know that their days were numbered from the day the PNM returned to office to complete the destruction of the company they were prevented from completing five years ago. And so we wait to see in the Minister’s revenue mobilisation if petrotrin would feature.
But what is the solution?
The experts of the oil industry have said that we need more of the Lease Operator / Farmout Type operations. These companies are small and nimble and have a much lower lifting cost than Petrotrin. The Opposition would like the Minister of Finance or the Minister of Energy to say what is their position is on the Lease Operator / Farmout programme and whether it would be utilised to increase production. I ask that question because a major partner of the PNM administration is the OWTU whose President has openly stated that he is against the Lease Operator /Farmout programme. He has so far remained ‘strangely silent’ however, as.
Madam Speaker, in October 2014 during the tenure of my administration we awarded some 64,000 hectares of land for the purpose of exploration to three companies.
This was the first dedicated land based bid round in 15 years. Work on these three blocks will commence in 2016 and we expect that as a consequence of this work these three companies will make discoveries of oil on land.
These three land based blocks as well as an expanded lease operator programme will bear fruit in the coming years….assuming of course that the PNM does not further sabotage the viability of these projects, and the life of the company.
NATURAL GAS PRODUCTION
On the issue of natural gas production, from late 2010 the main producers of natural gas from late 2010 the main producers of natural gas in our country began to experience supply issues.
These continue to the present day.
They are related to factors such as maintenance and maturing reservoirs.
It has been accepted that for the period 2008 to 2010, the major upstream producers went into hibernation as far as investment was concerned. The public record shows that from 2002 to 2010 the upstream companies and the Energy Chamber were literally screaming and then begging for new fiscal incentives.
But the then PNM in Government refused to facilitate with predictable results.
The records of this Parliament will show that during 2010 to 2015 in successive Finance Bills the Partnership Government passed legislation that amended the law on fourteen occasions to make the fiscal regime more competitive. These incentives, some of which were alluded to by the Hon. Minister of Finance in his budget speech have caused a resurgence of investment in the upstream.
These changes to the fiscal regime have had the desired effect. According to Central Bank data, in 2010, Foreign Direct Investment in the Petroleum Sector was $US 501 million.
For the year 2014 , which we have the numbers, that figure for Petroleum related FDI was $US 2.1 billion or a four-fold increase.
One of the main projects in the energy sector is the Juniper project which is an investment of $US 2.1 billion by BP.
This project was sanctioned in 2014 and work started on the construction of the platform in November 2014.
However the construction of the platform was disrupted by industrial relations issues. We trust that the Government would resolve these issues and get the project going.
Platform for the future
The Minister of Finance by his own admission stated that production from new wells and discoveries takes five years. By this logic the production issues of the last five years can be traced to decisions and indecision of the previous five years, that is the period 2005 to 2010.
That being said the former PP administration has left a platform for the new Government to build on.
Some of the initiatives of the last five years will show significant results in years to come.
Madam Speaker, the Minister of Finance would hate to admit it, but the fact is that the PNM administration has inherited from the Peoples Partnership Government, a comprehensive Natural Gas Master Plan which from all indications it seems they plan to discard.
This document was the product of nine months of work by an internationally recognized and reputable consultancy Poten and Partners. It is meant to be used to guide policy makers and to guide the renegotiation of contracts with the multi-nationals. It was done using broad based consultation and would be a crying shame if the PNM administration will discard this work because it was conceptualized by the Partnership administration.
The PNM administration also inherited a deepwater exploration programme that is well in train. This is being led by BHP Billiton. Seismic work is completed and the drilling of eight deepwater wells will commence in 2016.
Even further , the PNM administration also inherited a progressive forward programme of work from the upstream companies most notably BP and BG with investments in natural gas developments including the BP Juniper project, the BP Savannah exploration well to be drilled next year and the BP Angelin project that starts in 2018.
Then there is also the BG Lobster exploration well that is being drilled as we speak. BG has also started planning a joint development of Blocks 5C and 5D which is planned to deliver natural gas by 2019.
In addition as we speak BHP Billiton is doing work on its Angostura Phase III project which is a $US 400 million dollar investment. The upstream companies will be busy for the remainder of the decade thanks to the fact that they were re-invigorated during the last five years of the PP administration.
The PNM administration also inherited a comprehensive national facilities audit of the entire energy sector that was again conceptualized by the PP administration.
The contract between the Ministry of Energy and DNV of Norway was signed during the term of the PP Government. This audit will improve the physical asset base of the energy sector which is ageing.
The PNM administration has also inherited the Phoenix Park IPO which from all reports is a success. When we were in Government they were very critical of this IPO and said it would fail. They were wrong. In every category the IPO was oversubscribed.
In total it is reported that there is some $TT 2.2 billion worth of subscriptions for $TT 1.5 billion worth of shares. Given the uncertain international energy environment this IPO undertaken by the PP Government is a success.
Madam Speaker, it is a fact that the energy sector which the PNM has inherited from the Peoples Partnership Government is in a positive position even when the global energy price challenges are considered.
But you would never hear them say that.
Instead he would do his utmost to claim credit for the positive developments in the sector that had nothing to do with them, or those on that side. Deception!
Indeed I want to publicly caution the Minister and his Government to tread wisely and not jeopardize further, the good works that they have inherited.
The global economy remains caught in the doldrums which followed from the financial crisis of 2008.
The European economy remains flat, with several countries within the Euro area continuing to contract, the far East is slowing with China, one of the major engines of the global economy reflecting lower growth (many analysts believe the official Chinese numbers are overstated and that the reported Chinese growth is even lower than stated) and last Friday, the latest jobs report on the US economy, the one bright spot at the moment, suggests that the US could also be slowing.
The policy of Quantitative Easing adopted by the advanced economies seems to have run its limit and the potential that asset bubbles have been created as a result of interest rates remaining too low for too long has increased the risk of another possible financial meltdown.
The Governments of the OECD countries are at a loss on how to proceed and the global economy could be on the brink of a major reversal.
In this context, commodity prices have fallen and commodity exporting countries have seen a reversal in fortunes.
Trinidad and Tobago has felt the effect of the combination of the fall in the price of oil and gas and the constraints in increasing output.
It is therefore not surprising that notwithstanding the forecasts of growth for the local economy earlier this year by the international agencies, infact the local economy seems to have contracted for the first half of this 2015.
It is therefore important that, in this context, actions that could result in further contraction are avoided and efforts are made to mitigate the effect of the restructuring that must take place, and its effects on the poor and vulnerable in our country.
Unfortunately the positions stated in the Budget give little hope that the current Government understands the problem or have any policy prescriptions that they can offer. Instead we saw in the budget some manifesto promises plugged in, but very few revenue creating measures outside of the energy sectors and taxes.
The People’s Partnership during its term in office returned the economy to growth, addressed the infrastructure deficit that was inherited and sought to get the energy sector moving again.
While activity in the energy sector has increased several fold over where we inherited the PP Government had inherited it, output is yet to recover from the many years of PNM neglect that we inherited.
As we all know, the gestation time for new investments in the energy sector is between 7-10 years and the challenges with output which we faced from 2012 had its genesis as far back as 2005.
Based on the fiscal changes introduced in the last three years, several of the energy companies engaged in seismic studies.
The positive results from these coupled with the facilitative regime which was introduced has caused BHP Billiton to decide to commence exploration activity next year and BP has commenced work on the Juniper field.
The results of these will not, however, come to fruition for some years given the long gestation period needed.
It was disappointing to hear the Minister speak of the changes which the PP Government made to the fiscal regime when that in fact had been the catalyst that has begun to restore the energy sector to life.
These changes will certainly be one of the pillars on which future growth will be built.
In the context of what is happening globally and our own local challenges, the process of balancing the Budget must assume some level of priority but this must be done without dislocating the entire economy and without placing into greater jeopardy the poor and vulnerable..
Recognising this the Government had started this process, first by bringing the fiscal position close to balance this year, notwithstanding the fall in the price of oil and had started the process of the restructuring of the economy with an increased emphasis on Public Private Partnerships in the context of more stringent Government finances.
Before we left office, arrangements were put in place for the construction of several schools and a similar number of early child care centres using the PPP model with the assistance of the IDB.
Madam Speaker, the statements that have been made in this Budget Speech shows that the new Government at times seem is more concerned with scoring political points than in dealing with the fundamental problems facing the country.
One of these political points relates to the ‘Treasury being depleted’. With the fall in the price of oil the Government has had to deal with the resulting cash flow implications.
The fall in the price of oil from near $100 per barrel down to currently about $46 (at January) has affected the cash inflows to Partnership Government.
However the cash flows of the Government remains strong and with prudent management can withstand the challenges that the country faces.
However, closer management is needed now than a year ago or even 5 years ago.
It is quite correct to say that prior to leaving office the Government’s overdraft balance at the Central Bank had built up as a result of the fall-off in revenues.
The former Government was aware of this and had programmed cash inflows to deal with this problem. Again the same maters contained in the budget on Pg. 59
- $1.5 billion from the TTNGL IPO
- Close to $4 billion from the loan repayment due from a state enterprise
- $500 million as tax/dividends from another state enterprise.
- In addition, the end of year tax payments conservatively estimated at $6 billion was due to come in, and
- Arrangements for a $1 billion loan was also being made to deal with any issues of delayed timing in any of the expected receipts. close of fiscal 2015
The effect of this was that cash inflows over the 7 week period from September 7th was projected at $13 billion.
This was sufficient to put the Government in a strong cash position and to provide operating cash flow to the Government, given that the Budget would not be approved until the end of October.
However, the projected cash inflows needed to be strongly followed up and needed to be properly managed.
It should also be noted that the inflows from the IPO and the dividends/taxes identified earlier (together amounting to $2 billion) would not only have tided the Government over the period to month end but would also have resulted in a very good fiscal outturn for the 2015 fiscal year.
Given that the Government had shown a balanced fiscal outturn for the first six months of the last fiscal year (2015) with a small surplus of $47million which had deteriorated slightly to a deficit of about $1 billion for the 9 months to June, a cash inflow of $2 billion prior to the end of September would have resulted in the Government showing a far better fiscal out turn for the year than any of the rating agencies would have expected given the fall in the price of oil and gas prices .
I note now that the Minister has said that the figure has ballooned to $7billion.
Although I am aware that the figure is only an estimate given that the Budget numbers for 2015 revenue and expenditure would have been prepared before the end of the fiscal year the Minister needs to provide a detailed accounting of this change during his winding up.
I have noted that part of the increase seems to have arisen from the increase in capital expenditure.
He needs to explain how a further $4.5bn in capital expenditure occurred in the three months when only $3.9bn was spent in the previous 9 months and he needs to give specifics on the amounts, the purpose and the dates on which the major payments were made.
I look forward to his explanations since while it may be good politics for him to say that the PP Government was profligate in its spending, he needs to remember that whatever he says is carefully monitored by the rating agencies and can affect Trinidad and Tobago’s international standing.
Going forward I want to emphasise that there are exceptional cash flows to be generated from the resolution of the CLF/CLICO crisis and these can be used to repay debt or to assist with the management of cash flows as the Government brings the management of the economy in line with sustainable cash flow generation.
In addition we should note that the country has strong financial buffers.
The foreign exchange reserves are strong, the HSF has over US$5.7 billion (having increased from $3.8 billion in 2010), inflation is in single digits, unemployment is among the lowest in the world and debt to GDP is at 46%.
The new govt with astute management the economy can weather the tighter cash flows and bring the economy to a sustainable level in the face of lower revenues.
However I am not at all confident that that Government is up to the task or has the capability to manage the current situation as far as the proactive management of its cash flows are concerned.
The extent that of his inability to understand is demonstrated when the Minister spoke of the cash balance when they demitted office in 2010 without reference to the billions of dollars owed to contractors and the funds that needed to be injected into Clico.
As I have said while he also spoke of a $5bn debt arising from the wage negotiations, he did not adjust for the payments that have already been made to teachers and the payments made to partly to of the civil service prior to September 30 nor did he adjust for the fact that approximately 20% of the payments are deducted as taxes prior to actual payment so that the net effect is considerably lower than he stated. So in his winding up would like the hon. Minister to show us how he arrived at that figure.
As a consequence of his Government’s inability to manage an economy which has to face up to the challenges of the changes in the global economy, we do not trust that the new Budget being prepared in the next few months they would attempt to blame us for their inability to manage the situation.
The current environment calls for proactive management, visionary leadership and the ability to create partnerships with stakeholders throughout the economy.
It also requires especially that the poor and vulnerable are not unduly impacted, not only because this is morally justifiable but also because it ensures social stability and continuing commercial activity which keeps business activity going.
The PP Government of 2010-2015 has shown that it is possible to balance the fiscal outturn notwithstanding lower oil prices and also had a clear plan for ensuring that the economy continued to perform strongly in the years to come.
But what have we received instead?
Madam Speaker, driven by a need to condemn the previous PP government, the Minister of finance has completely abandoned the government’s responsibility to lead us in these difficult times, when our economy is impacted by global events beyond our control.
We had refused to be hysterical, or to panic the population when energy prices fell rapidly at the start of fiscal 2015. We took appropriate measures. We preferred to guide or help the mental adjustment to the facts, of turbulence in the world economy, and the resulting decline in our real revenues from the energy sector.
Madam Speaker, the Minister presents an irresponsible internally contradictory budget statement which seeks to continue the adversarial election campaign; not to unite our people for the necessary adjustment or the change in thinking, and ideas, that must be imperative if we are to transform our economy from dependence on energy.
It is farcical and dangerous to blame the previous PP Government for the recession in China or for the global financial crash or the other geopolitical factors responsible for the dramatic decline in oil and gas prices. To blame me or the PP government for the state of the world economy generally or the energy market particularly is nothing but irresponsible and does nothing to lead a national consensus of how we must all adjust and work to transform our economy from dependence in energy.
Indeed the Minister appears to be setting the stage for when his plans fail by placing his responsibility on the shoulders of the private sector when he says:
“The recovery of the economy will depend critically on the reaction of the private sector to the improved business environment and other measures being introduced to ease the labour shortage and improve productivity and we ask the private sector to partner with the government to make its share of the required investment to bring about economic revival.” (pg 56)
Sadly with due respect there is little in the budget to generate business confidence, to motivate significant investment and in fact nothing in this budget which if implemented successfully would ease the labour shortage and improve productivity .
Listening to the Budget Speech I wondered if the Minister was aware of the facts when he stated his government’s intention to
“…RESTORE our international reputation, especially with investors, multilateral institutions and credit rating agencies.”
While there has been significant country’s economy which have resulted in minimal ratings adjustment, the country’s international ratings remain strong.
In recognition of this the Leaders of the 2 most powerful Asian nations, Japan and China, visited our shores and pledged bilateral cooperation in areas of diplomacy, economics and cross-cultural collaboration:
- In July 2014, His Excellency Shinzo Abe made a courtesy call on Prime Minister Persad-Bissessar at Diplomatic Centre during his visit to Trinidad for the first Japan-CARICOM Summit. PM Bissessar made reference to the fact that Japan had requested a TT Embassy in their capital city Tokyo.
- In June 2013, President Xi Jinping of China became the first leader of that country to visit our twin-island nation. Clearly China recognized T&T as a leader in the region and by extension the world. The discussions held in T&T promised to boost trade and financial cooperation between the two nations
Additionally, Vice President of the USA Joe Biden upon the direction of President Obama, visited Trinidad and Tobago as part of his three-country trip to reinforce partnerships in the Americas. This is another testament of Trinidad and Tobago’s stellar reputation as a global leader despite being a small-island state.
WAIVER OF SCHENGEN VISA FOR EUROPE
I note in our Administration we made history when we lobbied for and successfully negotiated the waiver of the Schengen Visa which is required to visit most countries within the European Union. Charge d’Affaires of the European Union Delegation to T&T, Daniela Tramacere, welcomed the recent signing of the waiver and hailed it as a great development.
“We are pleased to be able to announce today that TT citizens can now travel to the Schengen countries in Europe visa free. We know that there are many who have been waiting for this development to plan their trips to Europe and we are happy to welcome them to visit. The doors to Europe are wide open,” Tramacere said in a release.
FOREIGN DIRECT INVESTMENT
Perhaps the best indicator of confidence in a country’s economy comes in the form of direct fordeign investment. Trinidad and Tobago is a regional leader in Foreign Direct Investment (FDI) and under the PP Administration FDI among small Islands grew consistently to historic levels.
In fact according to a UN Report, Trinidad and Tobago alone accounted for 27 percent of total global FDI inflows amongst SIDS (small island developing states) in 2014.
YEAR FDI Inflows
USD (in billions)
GLOBAL PARTNERSHIPS IN TRADE
In the last 5 years under then PP Administration, Trinidad and Tobago strengthened and enhanced our position in global trade as evidenced by multiple bilateral trade agreements and partnerships with regional powerhouses such as Guatemala, El Salvador and Panama.
- Guatemala : A partial scope agreement between the two nations, was signed where trade in products such as manufactured textiles, beef, cheeses, meats, fruits, and others, from incurring tariffs. Since the Ministry of Economy of Guatemala announced the negotiation of a partial scope agreement with Trinidad and Tobago, the sectors represented in AGEXPORT (agricultural, manufacturing and services), was noted to have labeled T&T as an ‘attractive market’ and expressed their interest in exporting, due to high business potential and investment attraction this country represents .
- El Salvador : After four rounds of negotiations, El Salvador and Trinidad and Tobago successfully concluded negotiations on a Partial Scope Agreement to strengthen trade ties and cooperation between the parties. This agreement opens the door for increased trade which currently ranges from between $60 million a year in products of mutual interest such as metal cans, plastic products, cosmetics, medicines, furniture, leather, tuna, and packaging from El Salvador; and petroleum and petroleum products, natural gas, matches and spices, among others, from Trinidad and Tobago.
- Panama: Trinidad and Tobago formalized diplomatic links with Panama in May, 2010 via the resident Ambassadors of both countries in Washington D.C. This diplomatic move bore fruit as in October, 2013, the Minister of Foreign Affairs of the Republic of Trinidad and Tobago and the Panamanian Minister of Commerce and Industry, formally signed a Partial Scope Trade Agreement between the two countries .
As the information presented reveals despite the effects of the international financial crises, we remain able to attract significant FDI, a fact that cannot be denied.
EXPENDITURE NATIONAL SECURITY
Madame Speaker, I turn now to National Security and again, look to the true figures to remove the public relations flavouring the Finance Minister has attempted to add to a very serious undertaking.
The budget is about the very daily lives of people, and facts and figures must be stated as they are, not as you dream about them being.
Madame Speaker, the budget Statement pp 31-34 stated: “… reduction in crime represents the foremost demand by our citizenry”
“Our first priority is to establish an optimal security apparatus” Budget Statement p. 36:
“Consistent with our policies, I have made appropriate allocations to the various sectors …National Security: $10.810b”
This news was welcomed by many throughout Trinidad and Tobago as National Security received the biggest slice of the budget.
In an immediate response, the Hon Prime Minister took the forefront (as reported in the print press) to herald that the biggest slice was for Crime and National Security.
The headline in the Trinidad Guardian on 6th October 2015, pg A5 was “Biggest slice for crime control- PM”
The Trinidad Guardian on 7th Oct 2015, Vox Pop asked:
“How should the govt prioritise the $10b allocated to reduce crime”
The Editorial in the Newsday on 7th Oct 2015, page 12 stated:
“One of the most striking aspects of MOF … maiden budget is how the overall allocation for National Security has increased ….10.8b. … 2014/15 budget was $6.9b.”
“According to PM Dr. Keith Rowley’s count, it is the first time since 1956 that the National Security Budget has been so supreme.”
But here again Madame Speaker, the facts and the figures are very stubborn things, and they will eventually drown out the fiction.
The 10.8 billion to Nat Sec is comprised of several things.
- The PP Government’s allocation to National Security was in fact more than $6.9 B since in addition to National Security and TT Police Service budgets, it also included about $1.b under the Ministry of Justice. Therefore the total allocation was approximately $8 Billion.
- The increase in 2016 is because several subheads have been brought under the Ministry of NS from other ministries
- The increase is also because of the increase in personnel expenditure (wages and salaries etc) which were settled by the PP government and has nothing to do with crime fighting initiatives of this government
Call on Min of Finance and National Security to say in this debate what NEW have you done in the fight against crime? What within your expenditure pattern is new? Even the ships we ordered from Damen, it is in here.
Payments were made in your own books for Damen and Chinese vessels. Minister spoke about locking down the borders – but what new is in here??
Since August the government of TT was issuing ten-year passports.
REVENUE – TAXATION MEASURES
Increase in personal allowance for all individuals from $60,000 to $72,000
Since individuals would have been paying 25% tax on the additional $ 12,000 prior to the Minister’s budget, the effect of this increase will add $250/mt to those taxpayers (12,000/ 12 months * 25 percent income tax)
The Effect would be an increase of $250 disposable income per month or 250/31 – the princely sum of $8 per day which PWC says will “boost consumption and this should contribute to the much needed economic growth.”
The reality however is that the additional VAT, increase in fuel costs BL and GFL, and NIS effectively negates any benefit hopeful citizens could have received from this measure.
Increase in rate of business levy
The Business Levy was primarily aimed at persons/businesses reporting losses and who would therefore be remitting NO corporation or income tax as a result of the unprofitability of their business.
The proposed increase in the rate by 200% constitutes the highest rate of business levy since its inception, and will increase the tax liability of those persons whose businesses are already making a loss or negligible profit.
In the current economic climate with rising cost of doing business, falling revenues and profits, this penalizes the Small and medium sized businesses and may in fact contribute to them going out of business.
That could be seen as another penalty for small business development.
The Minister however in raising this tax seems to recognize the adversarial effect his budget will have on SMEs , viz sending them out of business.
How else does one explain that with an average of 219.3m in revenue from the business levy between 2010 to 2015, he raises the tax by two hundred percent but the actual increase in revenue being projected is not a commensurate 200% but instead at 175 percent of that?
How exactly does he arrive at that figure?
Is it that they expect that more SME businesses will simply close their doors because they cannot afford to pay this 200% increase?
Green Fund Levy
The suspicious underlying trend continues:
With the GFL at 0.1 percent the average over the years 2010-2015 was $354.7 million per year.
The Minister in increasing this tax by two hundred percent should have netted an increased revenue of 200 percent. Instead, in the revenue Estimates, the Minister’s 200 percent increase in tax according to him will yield $ 544.5m which is significantly less than the $709.4 million it should have been netted.
Again….one wonders how the Minister arrived at his calculations…what is he not telling the population…clearly he is projecting a fall in revenue to businesses.
And now, how does this affect the population?
Madam Speaker, it is obvious that these costs will be passed on to the consumer by way of even higher prices.
Increased Registration threshold
The effect of increasing the registration threshold for VAT to $500,000 constitutes an increase in the cost of doing business particularly for small businesses and new start-ups, as they would not be able to claim their input VAT through the VAT system. They lose that.
This does not affect existing big businesses but when this is tied to the BL and GFL, it constitutes what could be called a three strike, a triple whammy against small and micro enterprise businesses.
Every parlour and shop will feel this , every small retail outlet, every person seeking to open a new business will feel this…unless you are a big businessman it won’t matter to you in which case you would cross the limit and be able to reclaim VAT. Big business doesn’t pay the BL – they pay Corp Tax.
Importantly too, what would happen to those who have currently abided by the law and registered but have not crossed the 500,000 threshold. Would their VAT registration be automatically cancelled?
The reduction of VAT from 15 to 12.5% percent is for the benefit of whom? Already the items which may be described as essentials to life: foodstuff, medication, etc. are vat free.
So it is more likely that persons involved in the purchase of luxuries and non-essentials are the ones who will benefit from this reduction in VAT –
Deception? What the Minister of Finance is really offering the population is an INCREASE in the money every person spends on VAT, because the vulnerable, the poor, the single parent households, the elderly , those most in need are now going to be penalized by having to pay VAT on a wide range of secret items which previously had no VAT.
They have now taken to using the VAT as a weapon against the vulnerable and in favour of their friends in higher income brackets.
And therein lies a fundamental difference between the Peoples Partnership in Government and the PNM in Government.
In 2008, whilst I was in Opposition I contributed to a motion brought by then MP Harry Partap on high food prices. I pointed out that under the PNM during the period 2002 to 2007 food prices had increased by over 200 percent. At that time I called for the removal of VAT on ALL food items in the short term whilst we work towards increasing our food production.
I am proud to say that, under the Government of the People’s Partnership, we took a decision to improve the livelihood of every citizen in this country by removing VAT on all food items, making it quite clear that luxuries remained subject to VAT.
Here it is now this govt is seeking to undo that protection for people in its FIRST budget!
Not only by raising the prices of food and other items on their secret list by 12.5 percent.
It is a fact that prices will escalate by substantially more than 12.5 percent as a direct consequence of this government’s taxation policies.
Today we see the level of deceptiveness within the numbers.
The Minister glibly announced a reduction in VAT and glossed over the fact that the average citizen will in fact have to be paying MORE for FOOD and basic items in the grocery. Food inflation will increase.
The Minister already knows what items will now become VATable… he must know! Because he was able to calculate what the tax returns will be. You can only know that if you know what items you will tax!
Tell us your targets.
The list of zero rated items as contained in Schedule 2 of Chapter 75:06 include:
The Minister must tell us which foods he is going to tax – is he going to force citizens to pay more for coffee? Sardines? Ghee? Curry? Corn beef? Crix? Ketchup? Macaroni? Cooking oil?
- Personal Hygiene- Soap, tooth paste, deodorants, sanitary towels, diapers
- Health- Prescription Medicines, Pharmaceuticals, Diabetic Equipment, Equipment for injured or disabled, Eye wear
- Agriculture- Equipment, Chemicals, Pest Services, Seeds, Veterinary Services
- Meat & Poultry
- Transportation- is the Minister going to make us pay VAT for PTSC Bus services? Domestic travel between T&T, CNG Vehicles
- What about Water and Sewerage supplied by a public authority?
- Aviation- Imported by or supplied to the State or State Corporations
- Energy Sector- Equipment used in the Energy Sector such as drill rigs, ships, rig and platforms supply vessels heavy lifting installation cranes, Natural Gas, Crude oil, CNG, Solar (panels, heaters and lights), Wind Turbines
- International Freight and ancillary Services- such as port and harbour services, docking, air craft land, parking and housing, airport navigation services
- Housing- Renting of a Property
- Construction- equipment, machinery or components
- Information Technology- Computers, Phones, Tablets, along with equipment necessary for use of all mentioned
- Communications and Networking
- Marine Equipment and Repairs
- Steel Band Instruments
- Sports- Equipment and footwear
These items directly impact citizens.
These items were ALL selected because the removal of VAT from them effectively contributed to the welfare of our at risk citizens directly as in the case of food, transport and water and sewerage, or indirectly as in the case of books and construction equipment.
The multiplier effect of this proposed institution of VAT on these items is a retrograde step, which will have obvious inflationary repercussions, undoing the last five years of fiscal management which kept inflation in single digits.
But the deception is more deliberate?
INCOME FROM VAT
The Minister in his budget speech said;
“The combination of widening the base, increasing the collection and compliance, and reducing the rate is expected to yield $ 4 billion.” (pg 63). How did he arrive at these calculations? Which items di he identify to make them up?
In other words citizens will have to pay an ADDITIONAL 4 billion dollars in VAT as a result of these measures….and that’s bad enough a deception by itself. If the Ministers words are to be believed….. But can we believe him?
As I said the deception is in the numbers. Page 9 of the Draft Estimates of Revenue, under the head Taxes on Goods and Services, subhead 07 Value Added Tax
2014 actual $5.745 billion,
2015 est $7.183 billion
2015 Rev est 6.705 billion
2016 Est 12.364 billion…..
At the point of writing his budget speech the Minister was fully aware that the Revised estimate of VAT revenues in 2015 was 6.7 billion.
At the point of telling the population he was fully aware that the additional VAT revenue he expected to get was not 4 but almost 5.7 billion. He misled the nation. It appears that he misled us all.
What to believe?
And that is why he has not specified the list of items which HE deems non-essential and which will now face an increase in price overnight of a minimum of 12.5% – because we have to also include the cost of the BL, GFL, fuel prices, NIS and other costs .
Another point to consider in this deception, is that while he says the items that he thinks are not essential, he still thinks that it will result in VAT revenues almost doubling! Minister needs to explain how he calculated the numbers.
IN order for people to keep buying these items, despite the now clearly substantial increase in prices …that these are KNOWN to be so important that people will continue to buy them nonetheless… why? Because they HAVE to.
Otherwise the increase in prices will have resulted in people moving away from these items….instead it appears CLEAR that he expects that the items he intends to raise the price of, will continue to be purchased….regardless.
Alternatively the Minister is seeking to position himself as a super Minister….who amazingly enough managed to do better at raising revenue than he said in his budget speech.
In any case the Minister must tell us the reason for the deception.
And the more you go through these documents the more deception is revealed.
The Minister revealed that this PNM Budget deficit was $21.4 billion. In other words he planned to spend 21.4 billion more than what he said the revenues were.
He proposed to generate $18.6 billion from a series of sources.
The majority of this, some $13.4 billion comes from :
Partial repayment by CLICO relating to Government’s Financial Support
- Proceeds from the initial public offer of TTNGL Limited
- Capital repayment from Trinidad Generation Unlimited
- And dividends from NGC
which are one off payments, ALL of which were put in place by the People’s Partnership before we left Government, and had absolutely NOTHING to do with the Minister of Finance.
As such the only real initiatives this Minister was able to introduce to generate revenue to spend on HIS vanity projects came from the listed items on Pages 58 and 59 of the Budget Speech.
Again let’s examine the facts as presented:
- Start of Reform of the VAT system – I have already indicated that the Minister really expects to snatch $5.7 billion in VAT from these measures –
- Enhance tax collection and compliance (the Revenue Authority will not be implemented during this financial year so how exactly the Minister proposes to undertake this is unknown)
- Fuel subsidy reduction – no revenue
- Increase the business levy $327.5 million
- Increase Green Fund Levy $544.5 million
- Property Tax $200 million
- Tax on gaming industry – undisclosed
The total revenue the Minister expects to get from these sources as diluted from the budget documents is some $6.772 billion and this does not include any anticipated revenue from taxes on the gaming industry.
Yet the Minister in his Budget Speech said that he expects to “mobilise” $5.2 billion from these sources.
The Minister needs to tell this country where the difference of $ 1.572 billion is vanished!
What is really going on with this budget? Where de money gone? In this one instance, this Minister of Finance managed to make 1. 572 billion, vanish?
The mathematics simply does not add up
Madam Speaker, I want you to follow me closely in this next matter. I want to show you yet another example of what THIS Minister refers to as “transparency” and “accountability” for public expenditure.
The Minister said in his budget speech
“Madam Speaker for fiscal year 2016, after CAREFUL SCREENING and REVIEW, we attempted to contain expenditure to $61.8 billion, the equivalent of the revised estimates for 2015.”
Note: “careful screening and review…” and recall that he we had established that he had already done his comprehensive review and had the public servants at the Ministry doing their own assessment etc etc etc ..So initial estimate was 61 billion, 8 hundred million dollars.
“However, faced with the obligation of payment in 2016 of public sector arrears of $5.0 billion…”
So that means the expenditure was now going to have to be increased to 61.8 + 5 = 66.8 billion .
He goes on:
“…we adjusted expenditure downwards by 3.7 billion..”
So we now have $66.8 billion – $3.7 billion = $63.1 billion or 63 billion 100 million dollars.
The Minister continues:
“…bringing total expenditure for 2016 to 63.0 billion, inclusive of the 5 billion in arrears.”
And this is the man who we have as Minister of Finance!
In the blink of an eye, in plain sight he makes one hundred million dollars disappear.
(And while he may rush to say that he rounded the figures off from 63.1 to 63…the fact is that he clearly stated 63.0 billion was his final figure.)
In his conclusion the Minister told this country that he his budget speech was not shrouded in secrecy and was done in a way for the ordinary man to understand.
Instead its sleight of hand, Madam Speaker. Deception
The Member for Diego Martin North East in the post-Budget media briefing at Parliament on Monday 5th October 2015 said:
“We are convinced that our studies and figures are accurate and we simply want an international agency to confirm and validate our numbers.
“Our target is to initiate commencement of this project by the end of September 2016. We are giving ourselves a year to make sure all the costings are correct, the approach is correct and to secure a contractor.”
(Source: Govt looks to woo Chinese bankers, Guardian, Wednesday, October 7, 2015,
What “studies and figures” is the honourable Minister referring to? Is it the disastrous multi-million dollar Parsons Brinkerhoff Quade and Douglas Comprehensive National Transportation Study and the Mass Transit System (CNTS) Study that this entire rapid rail scheme is being based upon?
The same CNTS Study that Member for Diego Martin North East was forced to admit in the other place on May 08th 2007 was unsatisfactorily executed by Parsons Brinkerhoff, but nonetheless he went on to give the same company the job to conduct the $37 million Mass Transit Study.
A Newsday article published on Thursday March 25, 2010 says:
“With nothing substantial to show, except for site visits by the Environmental Management Authority (EMA); persons doing field surveys and a letter and questionnaire from the National Infrastructure Development Company Limited (NIDCO), to possible affected persons, reports indicate that the Rapid Rail Project has already cost this country’s taxpayers more than $500 million in consultancy fees.”
Madam Speaker, it should not be lost on the population that the Minister attempts to justify his unsubstantiated his decision to pursue the racket rail and to do so expeditiously, by reference to the IDB:
“They have offered to finance this project and the IDB does not finance projects of this nature unless they are satisfied that it makes sense.”
This Minister committed his government
“to consult with the population at large on all matters of national interest, as we move forward”.
I challenge the Minister to tell the country when he consulted them on this matter. Who did he consult? Were the maxi taxi associations aware of the threat to their livelihood? Is the likely rush to remove the subsidies a way of motivating the population towards increasing the cost of transport and thereby making the racket rail financially viable?
Tell us who the “we” that is involved in this project is, the “we” that just happens to have updated studies and figures for a project not justified five years ago, and around which so many allegations of corruption swirled…
I challenge the Minister to show us the studies and figures. Release the information to the public, after all this is taxpayers money that is involved.
Flash back to the Guardian of Thursday 14th December, 2006 when the Member for Diego Martin North East, then Minister of Works and Transport arrogantly dismissed the legitimate concerns of three independent groups.
In a letter to then Prime Minister Patrick Manning, dated November 30, 2006 the Joint Consultative Council, the T&T Manufacturers Association and the T&T Transparency Institute called on the PNM government to stop plans to build the rapid rail, pending further studies on its viability, the establishment of a transit authority and a two-stage tendering process for Design-Build-Operate-Maintain projects.
This national uproar was fuelled in part by the October 2006 revelation that a consultant on the Parsons Brinckerhoff team had a clandestine interest in “one or more” of the companies tendering for the rapid rail project and this obviously compromised the independence and integrity of the entire study.
Yes. The same organisation that was paid millions to produce a flawed report but was nonetheless given another multi-million contract to conduct another study by none other than the then Minister of Works and Transport, [and now current Minister of Finance]… who for some reason
Despite this most serious cause for concern, Minister Imbert had dismissed the trepidations of these three organisations by saying that although he had not seen the letter, the project will go ahead.
In response to the civil society groups he is quoted as saying:
“I think they are attempting to determine policy for the Government, which is the purview of the Cabinet”
(No stopping of rapid rail project—Imbert, Guardian, 14th December 2006.
In other words – he did not then and does not now care about the opinions of civil society.
Among the multiplicity of problems relating to the “racket rail”, we are yet to know what would be the true cost of this project.
According to the Trinidad Express of August 12th 2015, the Minister of Finance said and I quote:
“I have gone through all my files, all my files, and I have found cost estimates for the railway which we have updated and streamlined and I can tell you here tonight that the cost of the railway from Diego Martin to Sangre Grande is the same price as the cost of the highway from San Fernando to Point Fortin.
$10 billion to build that highway from Pt Fortin, $10 billion to build the railway from Port of Spain to Sangre Grande and to San Fernando.
That is the cost estimate that I have found.”
Updated and streamlined how? And when? Given his shoddy record in this respect we demand full details and transparency of the process undertaken.
So the Hon. Member is saying in August 2015 that this will cost $10 billion dollars.
In 2012, the former Member for Port-of-Spain North/St. Ann’s West, during her contribution to the Appropriation Bill, 2012 on Monday, October 08, 2012 said to this very Chamber:
“On Friday last, the Member for Oropouche and Leader of Government Business kept harping at the $485 million spent by the PNM Government on the design and initial paperwork for the rapid rail project.
Mr. Speaker, expenditure on this project was projected to be $20 billion, and as such the $485 million expended to complete the design and preparation of bid packages and which represents only 2 per cent of the cost of the completed project is certainly not unreasonable.”
$20 billion is the same figure cited by the Trinidad and Tobago Manufacturers’ Association (TTMA) back in 2006 when they raised serious objections to the “racket rail”
The proposed rapid rail project is expected to have a capital cost of $20 billion and an annual operating and maintenance cost of $3 billion. That works out to TT $8 million per day, a cost that will be borne largely by the taxpayers of this country.
Those of us in the House that day recalled how Member for Diego Martin North East lashed out at the TTMA for its dissent.
In January 2007 during a breakfast meeting with the business community T&T Transparency International vice-chairman Victor Hart questioned the changing cost of the project over the past three years from $20 billion to $7 billion.
He called for a financial feasibility study to be done before the contract for the rapid rail system was awarded.
However, it was reported that the Member for Diego Martin North East in his capacity as Minister of Works and Transport “discarded the suggestion”. (Imbert: Trains to run from Grande to Westmoorings, Guardian, Wednesday 17th January, 2007)
After almost fifteen years of PNM waffling over the figures, we still do not know what will be the true financial cost of this “racket rail”
And is it $10billion TT or $10 billion US – the US figure is the one quoted in the report which had been given to NIDCO before we came into office in 2010.
But here is what we DO know Madam Speaker.
The racket rail in 2010 which we fought against is the same racket rail the Minister is trying to foist on us today.
In 2010 citizens directly affected formed a group called “The Movement to Stop the Rapid Rail”
Those brave citizens braved the wrath of the dictatorial PNM government and fought against the this project which would have seen the destruction of at least 1000 homes in their villages, disrupting the lives and livelihoods of close to 5000 persons.
Additionally the project would have mandated the closure of close to three dozen large, productive farms and more than 50 smaller ones, all which substantially contributed to food production for the nation (Rapid rail battle continues, Newsday, Thursday, March 25 2010).
Today the Minister is promising a return to that.
5000 plus people to be displaced, homes to be destroyed, over 86 farms to be closed, maxi taxi operators along the route to be displaced, and the barrage of support small businesses, already penalised by the PNM will lose their livelihood.
This is the price of the Minister’s fascination with trains.
And this is not just my view Madam Speaker.
I refer you to the Guardian newspaper of Sunday 14th October 2012 under the caption “Rowley wrong on Rapid Rail.”
The journalist wrote then:
“…the rapid rail project is a costly and flawed engineering solution to an economic problem that the (then) Opposition Leader should reconsider.”
“But that is not the only flaw in Dr Rowley’s analysis. The Opposition Leader suggests that the findings of a feasibility and engineering design study commissioned in 2006 suggest that not only is the project feasible but that significant work had been done which would have taken the project close to procurement.
There are two problems with this study. The first is that it was conducted at the height of the gas boom, where both our level of traffic and the level of revenue which sustained it were unsustainable, and are not likely to be repeated in the near future.
The second is that the feasibility study was done at a time when T&T enjoyed a fuel subsidy which would have distorted the transportation demands.
Both the Association of Professional Engineers and the T&T Manufacturers Association voiced strong objection to the rapid-rail project on technical and not political grounds. It is now accepted good governance practice that elected governments should first attempt to achieve buy-in from key constituencies when undertaking massive infrastructure projects.”
Madam Speaker, I agree! But I wonder if the writer will still stand by his words or whether his convictions change when he is instructed by the Minister of Finance. I suggest that the writer, one Maxie Cuffie, needs to tell the country whether his convictions are for sale.
UNNESSARY DUPLICATION TRAFFIC LIGHTS
Minister of Finance Colm Imbert, Budget Statement 2015-2016 stated:
“We plan to remove all traffic lights from Port-of-Spain to Sangre Grande by constructing overpasses and interchanges at strategic locations along the East-West corridor.”
Let us remember that all traffic lights have already been removed from Grand Bazaar to the Port of Spain lighthouse.
Madam Speaker, what is curious about this is that it services the exact areas that the rapid rail was focused on, and the same clientele. So why the duplication? Is it a case of jobs for the boys? Both mega projects involve significant land acquisition and massive capital outlay…and are by definition mutually exclusive. Why then is the Minister pursuing both? And especially if the country is in the crisis he says it is in.
Again I wonder whom he consulted in this matter and when? Maybe the Minister can advise the country about the feasibility for this project or is it , as I suspect , an attempted red herring to divert away from his racket rail obsession. This Minister simply cannot be trusted.
THE RE-EMERGENCE OF THE IMF AND THE REAL BUDGET
THE MINISTER HAD NO TIME
The budget speech is riddled by references to the Minister’s newness, and the limited time he had in presenting the budget and therefore that is why he presented a litany of vague manifesto promises without costs, start or end dates, etc. It was almost an attempt to justify why the Budget speech was so vague, but that’s not what it was.
However what are the facts?
He boasted on page 3
“Madam Speaker, my pre-Budget consultations allowed me to establish the underlying principles of programmes and policies for restoring confidence and for rebuilding the economy of Trinidad and Tobago – an exercise which will require collective effort by every citizen.”
Those are certainly not the words of a man who was rushed into doing a budget.
Further, the Minister in page 5 of his budget speech said:
“This Government placed high priority on the conduct of a rigorous and unbiased assessment of the state of the economy. This was done with a view to devising appropriate solutions to confront our immediate and developmental challenges.
Officials at the Ministry of Finance had been undertaking their own economic assessments and had identified a range of solutions for addressing these challenges. Several previous missions from the International Monetary Fund (IMF) have conducted their own indepth review of our economy in their annual Article IV Consultation Reports. I have reviewed these Reports and I have also met with major stakeholder groups since assuming office who have provided me with their own assessments of the economy as well as their own solutions.”
In other words, by the time he came to present this manifesto, he had already consulted and done this rigorous assessment of the state of the economy. Recognizing his own incompetence, he then confessed as to who the real writers of the future of this country is, who the PNM planners are , into whose hands the PNM have placed the country.
Glibly the Minister exposed who his advisers are when he revealed:
“We have also benefited from the findings of an IMF team, who came at our request, just after the Election.”
The Minister of Finance within one month of being elected has taken this country to the IMF.
In preparing this speech then, what he has done is prepare the way for the conditionalities he will introduce …in six months time.
Deception..sleight of hand.
He has presented what he says is his government’s budget….and simultaneously confessed that this budget is to be reviewed and the revised… a more appropriate word may be revealed…the REAL budget will be presented in March. This has nothing to do with his newness….as a matter of fact he is using the time to benefit from the public sympathy to continue the PNM election campaign into the Local Government Election before he exposes the real budget to the citizens.
Look at the mega projects he reveals…they are all in regional corporation seats he is hoping to win in the Local Government Election.
It is after the election that we will see the IMF policies in full bloom….
He promises property tax…STARTING at the old rates…to be reviewed.
He spoke of reduction in subsidy on fuel and STARTS with 15 percent …to be reviewed
Add other issues to be reviewed
Did you hear about taxation for online shoppers in his budget speech? He did not say a word about it…but he confessed to looking at it :
“It is an area of tremendous leakage of foreign exchange but it is not simple and it is something we will be studying over the next year. But we wouldn’t be rushing to put any tax on online shopping at this point in time because it is too complicated….
Daily Express Oct 7th 2015 Pg 4.
So what else did he selectively leave out that’s coming …we have already established that what has been done in this manifesto he calls a budget is designed to create financial hardship among those least able to manage it.
The Minister speaks of sharing the burden, even the unions joined in the PNM chorus of the need to share the burden. In reality, it is only the lower and middle income who are sharing this burden.
The IMF’s history is known its practices and recommendations are standardized.
Their key structural adjustment measures include:
- Privatizing government owned enterprises and government provided services. (Already we have heard the PNM Minister of Energy advise Petrotrin that their days are numbered.)
- Slashing Government spending (More to come in March)
- Exchange rate adjustments and foreign exchange liberalization
- Higher interest rates
- Elimination of food subsidies, grants (OMG does this sound familiar?)
- Alleged liberalization of the economy
These measures and others tend to impact greatest on the working class and the poor.
Madam Speaker, in the many years that I have served this country, I have tried in my every action as alderman, MP, Prime Minister and Opposition Leader to ensure that my actions always are directed to the benefit of the most vulnerable.
This Budget while purporting to spread the burden of the structural adjustment measures the Minister seems inclined towards, appears to most severely penalise those very persons least able to bear it…the working class and the middle income. .
This budget is inflationary and will erode the purchasing power of citizens undoing the excellent work my government did in containing the inflation rate to single digits. It contains no policies designed to stimulate business, agriculture, tourism or any other sector. It contains no plans to treat with the rampant murder rate which appears to have escalated since this government assumed office. I’m reading that Sept was the bloodiest month in our history. The Budget 2016 appears designed to punish the vast majority of our citizens whom he chastised at the start, but will affect every man woman and child.
What is perhaps worse is that the Minister admits that more severe measures are forthcoming as if these weren’t bad enough…and he does that while pushing vanity projects like the racket rail and a Toco port for which he belatedly admits no feasibility has been done.
This will get worse. The Minister clearly has his priorities and in this we have ours on opposition side.
We are not in Govt – they are and we wish them well.
In conclusion I pray as always May God bless our Nation and protect our citizens.
THE HON. KAMLA PERSAD-BISSESSAR, SC
THE LEADER OF THE OPPOSITION
HOUSE OF REPRESENTATIVES
9TH OCTOBER 2015
(CHECK AGAINST DELIVERY)