While the focus has been on the CSA’s strike action and the bizarre events we have observed, life goes on. The governance of the State has to be pursued despite the challenges. We are ending a financial year and very soon the Minister of Finance has to present his plans for the financial year 2013 – 2014. I believe this is the most important budget that will be presented as it will be “a line in the sand” defining of fiscal policy.
The OECS is at its most crucial hour, and the role of St. Lucia as the largest economy within the Union, carries a huge responsibility. We have to see ourselves as not merely striving for the betterment of St. Lucia but also having a pivotal role in stabilizing the region. It is in this context that the demands of the unions must also be placed.
In the Budget Address of 2012, the Minister of Finance outlined three point plan for recovery:
1. Jobs Creation ‐ Creating jobs by a series of short to medium term
measures that will boost our productive sectors and provide much needed
support to our social agenda;
2. Construction Expansion ‐introduce measures to encourage
investment in construction and housing aimed at creating further jobs and
restoring our social and economic infrastructure; and
3. Fiscal Consolidation ‐ Introduce a set of fiscal measures to improve
Government’s revenue base, reduce the deficit and achieve fiscal
strengthening.
The Budget of 2013 will undoubtedly be a continuance of the implementation of this three point plan for recovery. One would therefore wish to present some ideas for acceleration of the recovery.
FISCAL CONSOLIDATION
In 2012 we saw the implementation of the VAT and while the revenues were lower than expected, one believes as the commercial sector settles in, the income from VAT will increase in the next financial year. So I believe that there is now very little that Government can do to improve its revenue base. The attention has to be now focused is on the reduction of expenditure.
Government remains the largest employer in St. Lucia and will remain so for quite some time. It will not be prudent to reduce the size of the public service at this point. The Public Service must however become more responsive to cost reduction measures. There are plenteous opportunities for expenditure reduction in the following:
• Telecommunications cost, simple use of Skype for calls
• Water usage
• Stationery
• Fuel consumption
• ICT costs
You can fund a significant agricultural programme from these savings. I estimate we are talking about over $ 20.0 million. I am proposing that all such savings be targeted towards agriculture.
The following is how the plan works. Every Government Department is given a budget for the above expenditure. There is a target of 10% saving which if achieved generates a bonus payment of 1% to the staff and the surplus goes towards an Agricultural Renewal Programme Fund. If the saving is above 10% then there is a higher bonus payment to staff. Everyone in a particular arm of government will be working together to switch off lights, computers, photocopy machines and generate saving to the country.
CONSTRUCTION EXPANSION
The Minister of Finance has to accept the brutal truth that there are systemic failures in implementation of the Public Sector Investment Programme. Projects are stuck for years for no apparent reason. This has to be addressed in this year’s budget. In March 2011, the Caribbean Development Bank approved loan funds for the rehabilitation of the island’s infrastructure after Hurricane Tomas. Two years after these funds were approved; it is a profane thought to consider the level of draw down on these funds.
The Government has to understand that it is important to draw down all loan funds in an expeditious manner. Your focus must be to bring in these loan funds into the economy. We are gathering interest on loans because of these organizational weaknesses. This cannot continue and if heads (and tails also) have to roll to get these projects going then the leadership has to come from the Prime Minister’s Office.
I would also strongly recommend that the Construction Stimulus Package be revisited. I think it was badly conceived and should be tweaked to ensure that the country benefits from foregoing $ 45 million dollars in revenue.
Government’s housing programme seems to have some generational curse. Successive governments have struggled to get an effective housing policy implemented. We have to break that generational curse as this is an important aspect of construction expansion. I would strongly suggest that the Government starts with land development only, and provide service lots and possibly starter units. The land is available, and there is a lot of idle equipment around.
JOB CREATION
The jobs will be created from the fiscal consolidation and the construction expansion. I believe the social agenda through the NICE and SMILES and others have been well received. I still have my misgiving about STEP, I think for rural communities in Canaries and to a lesser extent Anse La Raye, such programmes are very important. I cannot agree with STEP in the urban setting, where adhocism in the use of these workers is prevalent. I would prefer that these workers get involved in the maintenance of schools and Health Centres, than cutting grass at the side of the road.
The Minister of Finance has a challenge in the presentation of the Budget 2013-2014, we are in a very delicate position, and if at any time the phrase “all hands on deck” is relevant, it is now. This tug of war with the forces of exogenous shocks can only be won when we all as a nation are pulling in the same direction. No one can stand with their hands in their pocket; we all must hold the rope now.