by Cato Rand
So Jamaica has signed a staff level agreement with the International Monetary Fund (IMF), taking us one step closer to an economic programme supported by a 48-month arrangement under the Extended Fund Facility that will see the country being provided with US$750 million.
The government has agreed to a number of preconditions to be met prior to the deal being finalized. One such precondition is for the country to reach a primary surplus (the amount by which Governmentʼs total expenditure exceeds total revenue, excluding interest payment on government debt) of 7.5% of Gross Domestic Product (GDP). At present the primary surplus is approximately 4 %. In order to meet this surplus, the government needs revenue of some J$65 billion dollars as outlined by Dr. Adrian Stokes on the current affairs programme ‘Direct’ aired on CVM TV on Wednesday February 27, 2013.
The NHT Raid
The Government has instituted a tax package geared at raising some of this revenue and intends to take J$11.4 billion per year (for 4 years) from the National Housing Trust (NHT). According to Peoples National Party (PNP) Government and its operatives; such as the Prime Minister herself, Portia Simpson-Miller, Govt Senator Lambert Brown, Finance Minister Peter Phillips and Attorney General Patrick Atkinson, it is perfectly legal for government to do so. And with the country staring at worsening economic times there are more than 45 billion reasons to justify what would hithertofore been seen by members of the PNP as a raid on NHT funds if it were the Jamaica Labour Party (JLP) that formed the government and having such intentions.
Just imagine what PNP operatives, their sycophants in the media and what passes for academia in Jamaica would be saying if it were the JLP that had proposed taking this money from the NHT.
The Prime Minister has been making the rounds saying that critics of her government must offer alternatives to this removal of funds from the NHT. But there are no quick fixes to the economic crisis the country now faces. A major feature of how our country has been governed is that our leaders institute policies supposedly to solve one problem which then have unintended (albeit predictable) consequences in the long term that will dwarf the first problem and make the new problem that much harder to overcome. (And speaking of crisis. What are the implications for the Jamaican economy if Venezuelan president Hugo Chavez loses his battle against cancer? I suspect prayers for his recovery do not emanate only from Caracas.)
Change in Economic Model
It is time for us as a society to put Jamaica on a path towards prosperity. It is time for us to begin the transformation towards limited government. Jamaica’s precarious economic situation has arisen primarily because for over 40 years successive administrations have been expanding the role that government plays in peoples’ lives.
Big government has caused in Jamaica low economic growth, excessive borrowing and onerous taxation and thus we have now reached the point where we are saddled with a J$1.7 trillion debt, which at some 140% of GDP is unsustainable.
Where were Jamaica’s economic savants when the PNP was pursuing that inane high interest rate policy in the 1990’s, in which it made more sense for someone with large sums of money to invest in government bonds and then go sit on the beach rather than investing in businesses that would put persons to work?
I can recall then Finance Minister Davies being named Man of the Year for 1998 by one of our broadsheets and the government being lauded by their cheerleaders in the media each time one of its bonds was oversubscribed, as this reflected the confidence the market had in the Jamaican economy.
Our academics should have been urging government not to pursue this foolhardy policy and exhorting persons not to buy these bonds as doing so would only be sowing the seeds for economic catastrophe – a place we have been at for some time but now patently obvious to even the most financially and economic illiterate among us.
Its time we acknowledge that our country has been grossly mismanaged for many years and we must begin to put in place the necessary strictures to curtail the power of government so that our politicians can’t do everything that they want whenever they want.
Change in Governance Model
We should start with separation of powers in which the elected representatives do not simply rubber stamp policies put forward by the Cabinet. Thus Members of Parliament must not be Government Ministers. This will also increase the pool from which we can select persons to head government ministries. Thus we get the best financial mind available to be Finance Minister and not have to settle for someone in the House of Parliament, for example a Peter Phillips or an Audley Shaw.
Think about this Jamaica – we once had Seymour ‘Foggy’ Mullings handling our finances. I wonder when it would have been Mrs. Simpson Millerʼs turn?
And we must ensure that Parliamentarians truly represent the interest of their constituents by making it mandatory that they reside in the constituency that they represent (with the necessary rules to prevent carpet bagging of course). Let them experience first hand the plight of their constituents on a daily basis not just being informed what is happening when they descend from on high. Can a Desmond McKenzie really know the ills of West Kingston? And what about a DK Duncan who lives in the Corporate Area but is Member of Parliament for a constituency in Hanover.
We then need to limit the size of government eliminating unnecessary Ministries. For example there is no need for a Ministry of Sport or Tourism. Respective sporting disciplines are ably served by associations, comprising private citizens and stakeholders in the tourism industry can develop and promote their respective products. What is the purpose of the Ministry of Tourism when there is a Jamaica Tourist Board? Why is Caymanas Park owned by the government?
We should also significantly reduce the number of Parliamentarians (as my RightFromYaad colleague wrote a few years ago), which now stands at 63 (and set to increase by 2 in the near future.) We could easily get by with half that number. And by making the legislature separate from the executive, Parliamentarians will have more time on their hands and can reasonably serve a wider geographical area. A larger constituency will also lessen the impact of and hopefully eliminate garrisons.
A smaller government will need less revenue thus leading to less taxes being levied on the citizenry and less borrowing.
I do hope that Citizens Action for Principle and Integrity is successful in its efforts to get the Courts to prevent the government from being able to take monies from the NHT. It cannot be that government (it matters not which political party is in office) wherever they find monies of private citizens it deems as surpluses, that such funds can be made available to the government – even to save us from crises (which the government has created by the way).
Could I take my neighbour’s funds to prevent my family from starving to death? You would see how quickly the government would throw me in prison.
It is now time for our country to wake up and realize that we have allowed government to become this Leviathan which rather than facilitating, actually impedes economic growth. We will not lift hundreds of thousands of our people out of poverty with an economy that has averaged less than 1 percent increase per year in GDP over the last 40 years.
An embryonic economy such as ours should be clipping along at close to 10 percent increase in yearly GDP so that our citizens can adequately feed, clothe and shelter themselves. Government could then properly fulfill its core functions of protecting our rights and ensuring among other things that our Police when called upon, do not respond that “no vehicle is available”; and that fire stations have trucks that are operational and don’t arrive at scenes of fires without water and a fire hydrant nowhere in sight.
There is a saying that nations like man ultimately do the right thing after they have exhausted all other possibilities. Let us now make sure that the financial crisis we now face pushes us to make that cultural shift from the altruist/collectivist worldview that has put us in this bind, to one of reason, science, individual rights so that individual Jamaicans can maximize their God-given talents and fulfill their dreams.
It is time now for us to begin that march towards peace, progress and prosperity. We need Vision 1962 not Vision 2030.