DR TEWARIE has already spoken about the mid year review so I won’t deal with much of the details but there are some fundamental issues which I will address.
More than fifty years ago Winston Churchill said:
“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
Yet here we are more than fifty (50) years later facing a downturn in the economy and all we are seeing are increases in taxes in all areas that will impact negatively on the population and increase the hardship of the citizens of this country.
I have stated previously that the VAT reduction was one of the biggest PNM con jobs ever.
The PNM manifesto talked about the 2.5 per cent reduction but did not give the slightest hint of what was really planned.
They kept their promise and reduced the VAT but then sent people into shock as they re-imposed VAT on most of the 7,000 items my government had made VAT free as a measure to aid in poverty eradication.
The result was a significant increase in the cost of living and extreme hardships for tens of thousands of people, mainly the poor.
The PNM philosophy on VAT is that it is a very clinical revenue collection instrument.
That contrasts with our people centred approach of using state revenue to fund social programs.
That is why we took the VAT off 7,000 items so that we could provide a measure of relief for the small person.
So while we developed and introduced policy to help the poor and less fortunate, the PNM’s focus is taxation without any plan to help the people.
We always found a way to manage our scare resources so that the greatest benefits always went to the largest number of people.
And tonight I want to make a promise to you.
We are going back in government. That’s certain as night follows day.
And when I am back I will remove the VAT from all those items and reinstate the VAT free status on those 7,000 items.
The increase in the cost of fuel is already having a negative effect on people, especially the poor. With both diesel and super gas up by 15 per cent, transport costs have gone up and this is having an impact on the cost of goods and services.
We have seen the devastating effect of the rise in fuel prices from the Budget in September when there was an immediate increase in the cost of living when super gas was increased from $2.70 to $3.11.
Now the subsidy is literally gone and although some people might easily afford the extra cost at the pump the real effect is far from the gas station. It is everywhere else and the person who feels it most is not the vehicle owner but the one who has no car. This one act of pushing up the cost of gas and diesel will push up the cost of living and drive poor people to desperation.
GATE will now have means testing applied to it as a policy measure even before the GATE committee has reported and the changes will come in the new academic year. The policy has already been set so the role of the committee is just to bless it. We created GATE through our dollar for dollar program and as a caring government we expanded the GATE when we entered government in 2010. We are going to keep the GATE wide open … and it will be available to all.
My sisters and brothers the budget review that we heard on Friday was the biggest disappointment in terms of planning for life during harsh economic times. It was just a tax grab aimed at pauperizing the less privileged.
It also demonstrated clearly what we said during the general election campaign that the PNM’s rapid rail project was not feasible due to cost. Now they have scrapped the idea, proving that they had no mass transportation plan other than their vanity project.
Just over seven months ago, in spite of falling prices for oil and gas, your PP government was managing the economy well.
Today what we are seeing is a rapid decline and a devalued dollar. The PNM has taken a robust economy, and through their lies and misinformation has caused uncertainty and fear by trying to blame their abysmal failure on the previous administration.
And the worse is yet to come. In six months nearly US$ 1 billion of our foreign reserves have been depleted.
By August 2015, we had about US$10.4 Billion saved. By November it was down to US$9.6 Billion. And reliable statistics show that by the end of March it went down US$9.3 Billion.
Compare that with Foreign Exchange Reserves during the PP term of government and you would see an expansion of about 22 per cent between 2010 and 2015.
Last Friday, during the Prime Minister’s Questions session, the PM was asked a straightforward question – what is the status of our Foreign Exchange Reserves?
He said ‘no significant change’, and then said ‘they have remained the same’.
But that wasn’t enough… the MOF refuses to let a deception past without jumping into the middle of it.
The MOF said – ‘foreign reserves didn’t move an inch’ – both of these men stared the nation in the face and bluntly deceived 1.3 million people.
The truth as revealed by Central Bank Data:
Date Net Official Reserves – US$ Millions
Mar 16 $US9.3b
So Foreign Reserves were US $10.3 billion in Sept 2015 and was US $ 9.3 billion in March 2016
In August of 2015, the Foreign Exchange Reserves we managed, and increased, stood at US$10.4 Billion.
As at March 2016, the Foreign Exchange Reserves, after just six months of the PNM, fell to US$9.3 Billion.
US$1 billion, and almost a full month of import cover has been eaten up by the PNM, and they deny it, telling you instead foreign reserves are stable.
The government must tell us what was that $US 1b used for in six months.
That wasn’t all; MOF told the Parliament, with a straight face, that the TT dollar exchange rate has declined by just 3.7% to approximately $6.61.
As someone whose word simply cannot be trusted, he tried to talk tough and said that he will ensure it does not decline further to below a certain value.
Then he said the general perception of a shortage of US dollars for business is untrue, despite the challenges businesses now face.
Now remember, this is also one of the reasons the PNM used to justifying the hardship they inflicted on citizens.
But do you know what the Unit Trust Corporation is selling US dollars at? The average rate in the last few days was TT$6.85 to US$1.
Black marker at $7 and $7.50
So the truth is that the TT dollar has already declined past the level that the MOF assured wouldn’t happen.
And the MOF isn’t bothered, because, ‘the people have to make sacrifices’.
And although they are telling you that the dollar has not been devalued beyond 3 per cent, the reality is that it is higher.
It used to be around $6.37 TT dollars to $1 US dollar.
In the past six months it has been as high as $6.61 TT dollars to $1 US dollar and some financial institutions are selling a US dollar for as much a TT$6.85.
And with all this we are not seeing any real policy that addresses poverty eradication, which was a hallmark of my government’s policies.
I have told you on many occasions of how we would have dealt with the economic downturn with our focus on developing economic systems to benefit different sectors with a focus on education and training and social programs aimed at eradicating poverty.
Our plan was and continues to be for the benefit of the largest number of people because we are a party of the people.
We have always worked with the people to create people-centred development not for one region or city but for every part of the country.
That’s in sharp contrast to what we have today – a government that is obsessed with power, with no plan for dealing with the economic problems we face. And those problems have been created by this regime.
A PP government would have faced this storm, fixed the problems and continue to fund social programs from national revenues.
MORE Lies and Distortions of the MOF
Credit Rating Agencies
“Madame Speaker, you should note that the previous Article 4 consultation should have taken place one year ago in March 2015. However, the previous Government, obviously afraid of the effect of a negative IMF report on the outcome of the 2015 election, chose to avoid a visit by the IMF to Trinidad and Tobago in 2015.
In similar fashion, the previous Government postponed a scheduled review by Standard and Poor’s Financial Services, an international credit rating agency that this country subscribes to, as well as a review by Moody’s Investment Services, another international credit rating agency that we subscribe to. Clearly, they were afraid of what these international agencies might find.”
The facts are:
(i) Moody’s came to Trinidad and Tobago in March 2015 and based on feedback Mr Howai provided to you as PM, you instructed him to pursue further discussions in April 2015 in Washington, which he did.
Moody’s subsequently adjusted the TT rating downwards by one notch and their next scheduled visit would have been one year from that time in March 2015, ie March 2016
(ii) S&P’s visits are usually in December.
In December 2014, S&P visited as per their usual schedule and their next scheduled visit was for December 2015.
During the year, however, officials of S&P met with Dr Tewarie and commented that they were pleasantly surprised, and encouraged, that the first half of fiscal 2015 was so well managed.
(iii) The IMF visited in January 2015 as a preliminary visit and were scheduled for another visit before the middle of the year.
The IMF’s internal protocols on country assessments is that they would defer their visit if a particular country is about to go into a general election.
By April of 2015, due to the fact that a general election could have been called at any time, they postponed their meetings in T&T.
On all counts therefore, the MOF completely misrepresented the issues.
CLICO and MHTL Shares – Arbitration
Imbert “However, by September 2015, when we came in, all that had occurred in the 2010 to 2015 period was, as result of an irresponsible breach of a shareholders’ agreement, a contentious arbitration and an order to the previous Government to sell Clico’s methanol shares at a price considered by many to be $2 billion below market, thus losing billions of dollars of asset value in the process”
German shareholders of MHTL, whose interest in the billion-dollar company is held in a company called Consolidated Energy, allege that the Government transferred 6.54 per cent of Methanol Holdings (Trinidad) Ltd held by CL Financial to Clico on September 16, 2009.
The transfer of those shares to Clico gave the insurance company a 56.53 per cent stake in the methanol company—and a majority position in MHTL.
KfW, the German financiers of MHTL and Consolidated Energy—comprising German companies Proman, Helm and Ferrostaal—are claiming that the transfer of the shares from CL Financial to Clico is in breach of the loan, security and shareholder agreements by which MHTL was established and operates.
” We must also avoid the mistakes made in the last 5 years (i.e. underinvesting and under-saving).”
According to the quarterly reports of the HSF in June 2015 the HSF had US $ 5.7 billion. The June 2010 report said the fund had US$ 3.0 billion. This is a 90% increase in the HSF.
Therefore the PP in five years saved more money than the PNM in the 8 previous years.