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Andrew Holness' Budget Presentation 2012

Release Date: 
Friday, June 1, 2012 - 10:30

Opening Comment to the Speaker

Mr. Speaker, I have been in this Honourable House now for 15 years. Certainly, not as long as you. However, you will recall that on my first entry, I was sworn in as MP for only 10 days. The seat was voided and ‘recontested’ twice. After a short sojourn I was finally returned to my rightful place. So shall it be again as history is will repeat itself. I know, Mr. Speaker, you will identify with what I am saying as history has repeated itself for you, again you are occupying the Speaker’s chair.

Reminders of the need for fairness and balance are not necessary, in truth you have been even handed and judicious. I would like to continue this favourable judgement of your handling of the House, particularly today when I am sure I will need your protection more than normal.

Thanks to my family

Mr. Speaker, as you know, when one enters the political arena, you take your family with you. While we as politicians may be able to brush off the cut and thrust of politics as sport, part of the game, the effect on our family is much greater. My wife and my mother are here today and I want to thank them for their support and forbearance during my political career.

Report Progress in the West Central St. Andrew

Mr. Speaker, I want to acknowledge and thank the people of West Central St. Andrew for their abiding faith in me and report the progress we have made. The constituency has changed materially during my tenure.

Crime has been reduced significantly,

There is greater access to education and training, measurably, literacy rates are increasing. Drews Avenue Primary, Balcombe Drive Primary, Seaward Primary and Dupont Primary all showed increases in their literacy results last year. We tend to give lip service to the importance of literacy as a country. When I came to West Central St. Andrew, the literacy rates were in the 20 and 30 per cent range. Now they are hovering around 50 and 60 per cent based on the Grade 4 Literacy Test. In the time I have been privileged to be their representative I can speak to the qualitative difference greater access and greater quality in education has made in the life of the people. No doubt we still have boys on the corner, but as a result of greater investment in early childhood and primary education and some form of secondary education, more of those boys can read, and more of them are better able to understand and appreciate the realities of their circumstances and reason their life path away from crime. I am sure the Member from South St. Andrew can report similar progress as we both have invested heavily in literacy intervention programmes.

An important development to note, is that small business persons have started to take advantage of the reduction in crime. A commercial zone is now emerging on Bay Farm Road and Olympic Way. In the next 5 years I will be concentrating my efforts on consolidating the commercial growth in the area by continuing with certain infrastructure development in roads, an infant school, a police station and a commercial complex. The idea is to create a virtual commercial district between Olympic Gardens and Molynes Gardens. I have started discussions with the PIOJ and JSIF under the community development and rewenal programme to assist in funding and design. We want to support the natural entrepreneurial talent and the independent spirit of our local people so that they can in turn support their community with employment, investments, and charity. It is through the local effort of small business supported by the markets in their communities that economic opportunities will be created to alleviate the general hardship faced in such areas. My role as their representative is to see to the provision of education, security, health and infrastructure to support the natural economic potential that exists in our people. Not much different from what governments must do on a national level.

Thanks to the constituency organization

Mr. Speaker, all that we have achieved would not be possible without the hard work of a team. In particular I want thank my Councillors, Delroy Williams and Cislyn Brown (now retired) who were there from the begin and recent addition to the team Councillor Christopher Townsend. Additionally, I want to recognize members of my constituency executive who are here today Elizabeth Reid and Veronica Baker to name a few.

Thanks to my support staff

Mr. Speaker, the public only sees the final production of the political show. However, behind the scenes there is a whole team at work that make it happen and some of them also face the same vicissitudes of political fortunes. I want to thank my advisors, my office administrative and support staff, and the many volunteers who have all come on board to assist and contribute to the project of building a new Jamaica.

Mr. Speaker, I have not had a chance since transitioning from being Minister of Education to acknowledge the valuable work of the civil servants and technical experts I have encountered from:

    the Ministry of Education, where I know the current Minister continues to benefit from their experience and dedication,
    the House of Parliament, where we as MPs can all attest to the responsiveness of the Clerk and her staff from the deputy clerks to the orderlies.
    and of course, Mr. Speaker, the Cabinet Office and the Office of the Prime Minister.

Mr. Speaker, I also want to recognize, the men and women of the Protective Services Division of the police force. I have had occasions to be in other jurisdictions and be in the care of other their protective services and it is my opinion that we have developed a service that can be compared internationally. I want to specially recognize the team of security officers assigned to me. As MPs and especially those of us who are or were Ministers, we can attest to the long and random hours we are required to be on the Job and we sometimes take for granted that the protective services officers serve those same long and random hours with us.

Thanks to colleagues and supporters of Jamaica Labour Party

Mr. Speaker, I want to thank my colleagues in the Jamaica Labour Party for the support and continued faith they have invested in me. Now, I have the privilege of leading the Jamaica Labour Party and being Leader of the Parliamentary Opposition. It is a responsibility I take very seriously. I also want to thank the workers of the Jamaica Labour Party who continue to support and hold on to the Party regardless of the shifting sands of politics. It is a challenging time for the JLP as a political party as it is for Jamaica but I relish the challenge. What more exiting a time for any leader, than to have the task now presented to build and shape a political institution from the ground up. I am sure that in short order will be called once again lead our country to progress and development.

ENERGY

Mr. Speaker I first turn to that area of our economy that affects us all and for which there must be greater urgency if Jamaica is to realize on her potential.

Mr. Speaker I speak of Energy.

ENERGY PRICES TOO HIGH

Prices of energy vary all over the world and depend on many variables. Typically they vary for residential, business and industrial customers and charges will reflect amount of usage, time of usage, among other factors including choice of fuel, efficiency of the generation plants and the reliability of distribution networks. Energy is no doubt a complex subject…but there is one simple fact:
For far too long energy prices to the Jamaican consumer have been far too high.
This cannot continue. There is no greater need for competitiveness in our economy than in the area of energy.

INCREASE IN GCT ON ELECTRICITY

….and I note that for many Jamaicans pries will be even higher given the plan of the Minister of Finance to increase the GCT on electricity consumption by 60% in one step.

Mr. Speaker, this move by the government is hypocritical in the extreme and will be remembered by the Jamaican people.

To increase a tax burden that you explicitly promised to remove is to trample on the trust of the Jamaican people, to treat them with contempt, and to take them for granted.

DIVERSIFYING FUEL MIX

Under the previous JLP administrations significant progress was made towards modernizing Jamaica’s electricity generation infrastructure and diversifying the energy mix based on cheaper fuels such as liquid natural gas (LNG), and renewable energy sources such as solar and wind power.

We expect and encourage the current government to continue on that path, to reduce our dependence oil as a source of energy, by establishing a viable LNG import facility and securing long term LNG Supplies for Jamaica.

As important as this project is Mr. Speaker, the Jamaican people expect no less than for it to be implemented in a fully transparent manner and according to the laws of Jamaica.

AMEND “AVOIDED COST” TO ENCOURAGE RENEWABLE ENERGY

However, we call on the government to go further and look at other sources of fuel. We do not wish for Jamaica to simply move from a dependence on oil to a dependence on LNG. We want a support a diversified mix of sources to secure Jamaica’s energy future.

In this light we call on the government to review policies that support the investment in renewable sources of energy. For example it is an absurdity in the extreme that Jamaica that enjoys over 300 days of sunshine each year receives less than 2% of its energy from solar. I note that the Minister of Finance announced preferential taxation treatment for solar equipment…..However that is not enough.

To really encourage game changing investment in solar and other renewable sources of energy, the government needs to revise its policy towards the calculation of the Avoided Cost that renewable suppliers of energy receive from the monopoly provider, JPS.

Current levels only serve as a deterrent to investment in renewable energy and need to be reviewed, the calculation methodology revised and the levels substantially improved to be consistent with desired outcome of having renewable energy as a significant proportion of energy generation in Jamaica.

DEREGULATION OF TRANSMISSION AND DISTRIBUTION

However Mr. Speaker, there is a further impediment that needs to be addressed. Under existing legislation producers of energy in commercial quantities must sell to the Jamaica Public Service, the monopoly provider who on sell to the customer through JPS’s transmission and distribution network. The terms of such sale including the price and other conditions set out in a contract between the producer of energy and the distributor, being JPS.

There is therefor an inherent conflict Mr Speaker as JPS is also building its own, new generating capacity that it then transports over the same transmission and distribution network to the customer.

There is an inherent conflict Mr Speaker, and opportunity for adverse transfer pricing, which works against the interest of the consumer in receiving competitive prices for energy.

The conflict is that new producers of energy have to essentially negotiate with their competitor, JPS for the energy that they produce to reach the customer.

This conflict acts as a deterrent to investment in generating capacity and results in little competition that contributes to high prices to the Jamaican home and office.

We call on the government to dismantle that conflict of interest, through dialogue and negotiation and in a way that is respectful of rights, by deregulating the transmission and distribution network of the monopoly provider, separating JPS into generating and transmission and distribution assets thereby allowing all generators of electricity to negotiate on equal footing with the deregulated entity that controls the transmission and distribution assets formerly owned by JPS.

This Mr Speaker will open the doors to new investment in energy, new investment in renewable energy and ultimately to greater efficiency and lower prices of energy to Jamaican businesses and residences.

ENERGY CONSERVATION

Finally Mr. Speaker the government must redouble efforts to promote energy conservation starting first with the public sector through efficient energy use and decreased energy consumption. It only requires political will.

CONCLUDING REMARKS ON ENERGY

High energy prices mean that far too many scare resources are directed towards energy consumption. Far too much money from the wallet of our brother in Grange Hill, Westmoreland and from the pocket of our sister in Portmore, St Catherine is used on electricity. Far too much money from the coffers of our small and medium sized businesses is spent to purchase energy. Energy supplied at more competitive rates would leave more room in the budget of Jamaicans to purchase other goods and services produced in Jamaica, stimulating demand and catalysing economic growth.

Energy inefficiency therefore is an impediment to growth and high priced electricity is an obstacle to progress. On behalf of all Jamaicans, we call on the government to dismantle these obstacles with concrete actions and not platitudes and promises.

Comments on the Jamaica Labour Party

Despite the outcome of the last General Election the JLP attracted 405,920 voters or 46% of the electors who voted. There are many Jamaicans who believe in the vision and promise of the JLP, and who understand the policies and programmes of the JLP. They understood that in 2007 we inherited a broken economy from the PNP, in a time of crisis and the worst global recession. Despite the odds, we were able to stabilize the economy, give critical support to the poor, improve tourism, health, education, agriculture and reduce crime, all of that in four years.

There is no doubt that we had good policies. There is no doubt that we lead effectively on critical issues, there is no doubt that overall we were a good government and that by and large Jamaica has advanced further under the four years of our administration than under the previous 18 years
of PNP government.

The Changing JLP

Certainly, no one can accuse the JLP as the current Opposition of practising devise politics. Even the most biased commentator must concede that the JLP has demonstrated forthrightness and maturity in laying out the challenges of the country at a critical time and in giving the government political space to manoeuvre without having to worry about irresponsible posturing and petty political gimmickry from the Parliamentary Opposition. I know that the government is breathing a collective sigh of relief that we have been very magnanimous, even offering support on critical national issues. I have said to my colleagues that we must be consistent in order to preserve our credibility.

We can hold our heads high, my conscience is clear. We did not seek to deceive or mislead, or play ‘samfy’ politics. We did not make promises to people we know we have no intention of keeping. We put Jamaica first, and act always in the best interest of the Jamaican People over political expediency. It comes at a cost, there are those who want us to be more politically assertive and opportunistic and may interpret the progressive posture of the JLP as weak. I am confident however, that this is kind of politics is what the majority of Jamaicans want to see. As leader of the Jamaica Labour Party and the Parliamentary Opposition, and as the first postindependence leader of this country, I have a duty, and team JLP in our reform has a duty, to pursue a new pathway in politics, one that will lead us to better policies and improve the lives of our people.

I have stated from the outset that we will not practise nightmare politics. Madam Prime Minister, we are not threatening to be anyone’s worst nightmare, ironically however, and all by your own doing, it is now emerging, that your Finance Minister is turning out to be the worst nightmare of your government, and your government is fast becoming the worst nightmare of the people.

We have resisted calling for mass protests and demonstrations, unlike you Madam Prime Minister, when you were Leader of the Opposition you put that on the table in the middle of a recession. We have resisted such loose talk and it is not for lack of cause. However we have taken a conscious decision that we are not going to play upon and opportunistically exploit the fears of the poor and vulnerable. The seriousness of Jamaica’s problems must not be lost in our politics.

Jamaica’s Debt Problem

Jamaica’s debt problem is well known, I don’t intend to delve into a thesis. Simply to say that every year our government spend more than it earns. To do that, every year we borrow and every year we borrow more to the point where for the last 14 years or so, we are now borrowing to repay debt. This is unsustainable. The Minister of Finance, in opening the Budget Debate last Thursday explained the situation using the analogy of a family crediting goods from Miss Myrtle’s shop without paying down their bill, until finally Miss Mrtyle sends back to say she will not ‘trust’ or ‘credit’ them anymore goods.

If we continue to be locked into borrowing as we are now, the immanent outcome is that at some point we will not be able to repay our debt. However, our creditors like Miss Myrtle crediting goods to a family racking up a huge bill, will not wait until we are at that point where we can’t repay. Like Myrtle, our creditors, the IMF and other multilateral agencies, and the international capital markets are watching and monitoring our debt levels, and they are sending back a message to say they are not ‘trusting’ us with any more debt until we show that we are serious about addressing some of the structural faults that predispose us to chronic borrowing. In plain Jamaican talk, In plain Jamaican talk, the assessment of the Jamaican Household by Miss Mrytle is similar to that of the IMF, the international capital markets and other multilateral agencies, no more loans (or more accurately no more loans at favourable interest rates) until you have taken actions to correct the imbalance between what you project to spend and what you actual earn. I want Jamaicans to understand that Jamaica has had no draw-downs of new funds from the multilaterals since January and we are yet to hear of the receptivity to Jamaica’s explorations in the international capital market. We are now at that critical point where, to paraphrase1 the Minister of Finance, Miss Myrtle has ‘locked shop’ on Jamaica. Everyone is now waiting to see what measures this Government has taken in this budget to show that we are serious about correcting the fundamental structural problems of our economy that causes us to be hooked on borrowing year after year.

The Policy to Reduce Debt Dependency

Mr. Speaker, when the JLP found it necessary to seek IMF support during the recession, we agreed on a comprehensive Memorandum of Economic and Financial Policies (MEFP) and communicated it in a letter of intent to the IMF. This plan is available for all who wants to see on several websites including the website of the IMF. Though developed under a JLP administration, it is effectively a “national” plan that details an approach to structural reform of the Jamaican economy. The actions specified in the plan represent the ‘must do’ regardless of political administration, regardless of local political context or preference. Essentially it sets out certain actions we should take and certain measurable targets we should meet. We could summarize these under 5 broad headings as necessary treatments for the Jamaican economy.

1 “The bottom line, Mr. Speaker, is that as a country, access to loan markets is being reduced until we begin to pay down our debt…And the inescapable precondition of the IMF’s seal of approval is that Jamaica must embark on a programme that will steadily reduce our debt over the medium term.”

1. Tax Reform
2. Public Sector Reform and Public Sector Wage Management.
3. Pension Reform
4. Divestment of Loss Making Enterprises
5. Fiscal Responsibility.

The Member from North East Manchester, the former Minister of Finance explained in his Budget presentation how much we had achieved measured against those broad headings. We had done all the preparatory work in every area and implemented or met most targets.

1. On Tax Reform the former Minister outlined the significant achievements in tax administration and compliance. Importantly we tabled a green paper on tax reform and we were prepared, with a new mandate, to institute the fundamental measures need to once and for all fix our tax system. The Current Minister of Finance has inherited significant work on which to build in this area. He has not done so.

Tax Package is not Tax Reform

The tax package he announced last Thursday is being paraded and confused with tax reform. While there are elements of tax reform, in the tax package. The tax package is NOT tax reform. As usual the Minister talks a good talk, we know the script well, we have been talking about tax reform now for almost 15 years and we have been only making incremental changes. We know too well what will happen with the Minister’s three year implementation proposal. By then the policy cycle will be too close to the election cycle so tax reform will not get done. Tax Reform is necessary to increase compliance, and broaden the tax base, but in the context of Jamaica, tax reform must be used as part of our growth inducement strategy. It must all be used as part of our strategy progressively equalize imbalances and remove distortions in our economy. This Minister, more than any other Minister of Finance since tax reform has been proposed has the opportunity to truly reform the tax system in creative ways. Instead he has turned an opportunity into a crisis.

We have gone through the tax package presented, the private sector working group proposal, and the deliberations of the tax reform committee and based on our owns plan there are many areas of the package that we would have done differently. I will speak to three. Previous speakers have pointed out some areas already.

We Say no to tax on books

Mr. Speaker, placing a tax on text books is not tax reform. The current Prime Minister, then Leader of the Opposition called us a wicked government for attempting to tax literacy, when in our search for revenue we flirted with that tax. Look at you today, so quiet on this matter, how ironic. I was then the Minister of Education and I believed philosophically that such a tax was not in the best long-term development interest of Jamaica. Furthermore, in a few years most content will move to digital format. I recall vividly the Friday evening when I visited my colleague at the Ministry of Finance and with the BIAJ and the tax team we reversed the decision. Taxes, like prices, are a signalling mechanism in markets and society. The government should use its tax policy to signal the importance of literacy to society. Do not tax books. How do you expect to restore equity in a society if there are disincentives placed on the tools of education?

We say no to tax on animal feed and seeds

Mr. Speaker, we would not have placed GCT on animal feed and seeds. Again, this in keeping with the principle of using your tax system to signal strategic direction and support for agriculture. However, there is another reason. Though GCT should be theoretically a pass through cost for the farmer, where he could net off the his GCT input cost against his GCT collections from sales. Most farmers are below the threshold to enjoy the pass through effect of the GCT. What really happens is that the small farmer has to treat this newly added GCT as in input cost that he must bear. It can be argued that he could increase his sales price to cover his lost margin. Of course this has a general inflationary effect. All increase in taxes, particularly consumption taxes have a one off delayed effect on inflation. However, food prices and the agriculture market in general are susceptible to exogenous shocks, weather, gluts or shortages, and imports of cheaper goods. Marjority of farmers are price takers, they will not always be able to recover the GCT they bear by increasing their prices. The net effect of this tax will be to make small farming unprofitable. This is not the intention of tax reform.

We say no to taxing the poor Mr. Speaker, I want to spend a few minutes on taxes on basic food items. From the outset I made my position clear, when the Prime Minister was silent on the subject publicly but privately telling her Party that she is not for taxes on basic food items. I am for tax reform but I do not support taxing the poor. In the discussion about taxing basic food items an important point has been missed. We agree and would have implemented measures to widen the tax base because that is consistent with tax reform. There are consumers who can afford to pay consumption tax on basic food items who benefit from the general GCT exemption on those items. If we could find a way to get those who can afford the GCT to pay, then we could increase revenue intake without affecting the poor and vulnerable.

That is what tax reform is about. How do you design systems to get those who can pay to actually pay, and spare those who are unable. Social protection reform is there part of tax reform. Were, I the Prime Minister, as I had outlined in my inauguration address, I would have come January 1 embarked on a massive restructuring of the PATH programme. We have been studying two countries (one in Europe of similar size to Jamaica, and one in South America) that have recently used technology to create an integrated and comprehensive database of all their citizens. That links, banking, taxes, health, security, education, and other areas, into a common account for each citizen. Under our revised social safety net programme, once you are selected as a beneficiary you will get a bank card, which would be charged periodically with your benefit.

The present PATH programme is a good programme, however it is plagued by two complaints. Firstly the present programme focuses only on a narrow segment of the poor population, which leads to complaints that the present Beneficiary Identification System is flawed and excludes deserving persons. We would have widened the criteria for selection. The second complaint is that the method of transfer is inefficient and exposes the beneficiary to discrimination. I know that many elderly persons have complained that they have to travel long distances to collect their cheques and many times they have to contend with long lines and boisterous crowds. With our proposed system there would be no hassle.

How would we pay for this? We had already raised the prospects informally of reforming and expanding the social safety programmes of the government with the World Bank. The initial upfront capital outlay would have to be supported by a development loan.

However the maintenance of the programme would come from the net increases in taxes from consumers who could afford to pay GCT on basic goods. This net increase in taxes would be transferred to the expanded safety net programme. I will say more about our social protection policy over time. It is also important to say that we would have reduced the GCT rate to the proposed 12.5 per cent as this is also consistent with another fundamental principle of tax reform which is to as increase the spending power of the citizen as that is the ultimate stimulus package.

What Minister Peter Phillips has done with the obvious complicity and agreement of the Prime Minister is to tax the poor and use tax reform as a disguise. Placing GCT on basic food items, without developing a system of protecting the poor violates the principle of equity that guide tax reforms. Effectively you are saying that someone who is poor, that is someone with income of less than JA$125,000 per annum, an estimated 17% of the population in 2010, should be required to pay the same amount of GCT on basic food items as someone earning a $1 million yearly. This is not equitable and I would not have done it. It amounts to a rape of the poor, but some persons accept it because you did it with a smile.

No incentive or encouragement for production and investment

Mr. Speaker, no one can argue that tourism must contribute more than it does presently, however I believe this present tax package will be a disincentive to growth and investment in the industry. The Opposition Spokespersons on Finance and Transport and Works dealt with some of the issues involved here and the Spokesperson on Tourism will deal more comprehensively with our approach and plans for the sector. I have consulted with several business persons and the prevailing view is that package will have a net negative effect on production and commerce.

Mr. Speaker, while we more than anyone else understands the need for fiscal consolidation at this time, I urge the government to consider carefully the shrouding effect this tax package will have on consumer confidence and spending, and business outlook and investments. The net result of that will be a low tax intake which defeats the purpose of the tax package.

2. On Public Sector Reform and Public Sector Wage Management we faced some difficulties in moderating wage demand. This no doubt had an impact on our ability to contain expenditure. In fact, for us to demonstrate progress to our Multi-lateral partners it almost became a requirement that we reach agreement with the unions on wage bill moderation. Former Minister Arthur Williams led this process of extended but necessary negotiations. Our government also established the Public Sector Transformation Unit that did a thorough examination of the Public Sector in a report that was reviewed by the PAAC then chaired by the current Minister of Tourism and passed by the Parliament. Our government started to implement aspects of this report which set out a road map to equitably rationalize the Public Sector.

3. On Pension Reform we tabled a green paper and established a committee to review the
proposals.

4. On Fiscal Responsibility and Management we did all that was necessary to fast track the Fiscal Responsibility legislation which are now governing our budgetary processes and fiscal accounts. We implemented the central treasury management system and started the difficult but necessary process of expenditure cuts.

Here, Mr. Speaker, I want to say a few words on the fiscal management of the government. The Minister in his speech is projecting that existing taxes will grow by 8.2%. I am not certain that is a realistic assumption, in light of the fact that that last year tax revenues only grew by 5% and the projected GDP growth rate for this fiscal year is not much different from last year. Immediately I see a gap emerging in this budget. Last year, revenues and grants underperformed by J$7.6b even though the country enjoyed token growth of 1.3%.

In relation to the Governments J$19.4 billion in new tax revenue measures, the Government may only be able to collect 70% of this figure, considering the general newness of some of these taxes, issues of avoidance, and general reduction in consumption and investment. Assuming that the government collects 70% of the new 19.4 billion tax measures and realizes expansion in existing taxes comparable to last year, this would results in a possible shortfall of around J$15.2 billion. Even if I were to be generous and assume a 90% collection of the new tax measures, I don’t see the government seeing its existing tax revenues growing as projected, the government would likely still have a substantial shortfall of about JA$11.0. In light of this, I do not believe the government will meet their primary and fiscal balance targets for 2012/13. How that will play out in the your dealings with the IMF is to be seen.

5. On the Divestment of Loss-making Enterprises we would have fulfilled most of the targets set, divesting Air Jamaica, and the sugar factories, and we were at an advanced stage with the divestment of CAP, which still remains outstanding.

Mr. Speaker from the medium term recovery plan laid out to the IMF, we recognized that it would bring some hardship to the poor and vulnerable. We however, recognized that it was an opportunity for us to fix the economy and finally place our country to really address the fundamental social issues that have held us back as country. We understood that we could not move unilaterally and that we could only move as fast as the people wanted us to move based on their understanding and outlook of the conditions we faced as a nation.

Mr. Speaker on many issues we waited on consensus. On others we had to lead because the matters were urgent. When I took the reins of the government it was clear to me that we cannot continue to delay the inevitable. In deed implementing the five broad policy heads would be medicinal for the country if properly and skilfully done. We have said here today some of the things we would have done differently and how we would have cushioned and even advance the interest of the poor and vulnerable in the society. What was presented here to us as budget was not medicinal, it will not help recovery, it will not inspire Jamaica to say yes there is a light at the end of the tunnel as was promised by this government. The light you thought you saw was the Peter Phillips and the Portia Simpson Miller tax train coming at you without mercy. This Budget is not the bitter medicine, there is no promise in it that the economy will grow, that there is deep, careful and thoughtful people running the country. This Budget is a clear breach of trust and the people are coming to that understanding.

Hypocrisy of the Government

Mr. Speaker, in December 2009, the administration of which I was a part was faced with an extraordinary fall-off in revenues due to the global recession that to threatened to cripple normal government operation to the point where we probably wouldn’t be able to meet salaries. At the time we had just engaged the IMF and submitted our Medium Term Economic Programme and we need to secure the tax revenue in order to show that we are taking steps to help ourselves off debt. It was quite unusual, but it was a desperate time. We had to reluctantly bring an emergency tax package just before Christmas. Within hours of the announcement, howls of condemnation came from the then Opposition. The PNP muscled up against it. They organized protests, they characterized the government as wicked and uncaring. Here is what the then Leader of the Opposition said, quotes in the Observer Newspaper of December 18, 2009, ‘Despite the pronouncement of the Government being caring and compassionate, they found it possible this afternoon to impose most oppressive tax packages ever on the backs of the Jamaican people”.

Omar Davies said in the same article, that he had made a proposal for a special cess of 5% on treasury bills that would have brought in conservatively JA$10b. He went on to say, “It is interesting that the government would seek to entertain the wrath of 90% of the population by this tax package, rather than implement a tax which I have had discussions with major players in the financial system and there is not one of them that has expressed opposition to this”. After careful review of our delicately poised situation as country and our genuine concern for the impact on the poor, the then Prime Minister and the Minister of Finance consulted with the IMF and rolled back the proposed taxes.

This government is faced with a similar predicament, except of course that today they don’t have the excuse of a recession and the Opposition is far more responsible in its pronouncements and signalling. I believe however, that it is fair to use the Prime Minister Simpson Miller’s own words then, to describe her own budget now. Despite the pronouncement of this PNP Government being caring and compassionate and seeking to balance the life of the people with the demands of the country, Prime Minister Portia Simpson Miller imposed the most oppressive tax packages ever on the backs of the Jamaican people. Why didn’t you insist on the fairer tax proposed by Dr. Davies, instead of placing this taxation on basic food items without any provision to protect the poor who would be exposed. That is oppressive Madam Prime Minister.

Your words have come back to haunt you. Madam Prime Minister you played on the fears of the poor and vulnerable and told them that you could do better. The people believed you and gave you power. They gave you power because they believed you would protect them and make life better for them. With this tax package the people feel you have deceived them. You never really wanted to help all you really wanted was power. Now that you have the power what are you going to do with it?

Madam Prime Minister, you carried the line that the JLP government did not care for the poor, the vulnerable and disabled. Your mantra is that you love the poor. Care and love is measured by what you do, not by what you say. A part of saying you care is providing in your national budget real assistance to help those in need, but also to give them social mobility through education, training and business opportunities. A government really cares when it commits to provide increasing social protection for those in need. The PIOJ in its Economic and Social Survey of Jamaica, compiles every year a table showing the governments total social protection expenditure. I have done an analysis to find out who really puts their money where their mouth is when it comes to caring for the poor. In the last four years of the previous PNP administration (between FY07/09 and FY011/12 and sharing FY07/08 equally as an election year) cumulatively only JA$25.86b was spent on social protection programme across the government. While in the 4 ½ years of the JLP government between FY07/09 and FY011/12 (sharing FY07/08 equally as an election year) 71.4 billion was spent on social protection, in fact in 4 years we doubled our budgetary expenditure on the poor, vulnerable and children, even during the world recession and the fall off in our revenues.

We are the Government that has demonstrated real care for the poor during a time of crisis. What has the new PNP Government done, they have cut social protection expenditure, from JA$20.363 to JA$16.28, even as they have place taxes on basic food items which constitute a disproportionate share of the basket of goods the poor consumes. If that is not iniquity then I don’t know what is. As I said this tax package is not tax reform, it is a ‘hodgepodge’ of measures designed to scrape up revenue from where ever they can get it without care and consideration, strategy or direction. This is not bitter medicine, the measures the JLP was proposing would heal this country, the tax package brought to this house is a poison pill designed to kill off the growth industries in telecommunication and tourism, dry up consumer spending, and worst of all further impoverish the poor.

Mr. Speaker, my mind goes back to Tenniel, the Prime Minister’s friend and how she must feel after this Budget. More than that however, I recall watching a young lady on television ostensible from the Prime Ministers constituency, and she made quite a profound statement. She said we are tired of chicken-back, Portia win now so we are going to get oxtail and mutton, PNP tun up di ting. And I reflected on her I as wrote my conclusion, the betrayal she must feel. How mislead she must feel. How tricked she must feel. How angry she must feel. Those that are able to share directly in political benefits may be able to afford the promised oxtail and mutton. How many of the almost 470,000 Jamaicans below the poverty line are you going to carry on JEEP…5,000?

Trust Deficit

Mr. Speaker, the Minister of Finance in his presentation called for a new and binding covenant for stability, equitable growth and prosperity. He then goes on to accuse the former Minister of Finance of having a trust deficit. This is the Finance Minister who when he was Opposition Spokesperson on Finance harassed the government that we have not met any test and that they would negotiate a new IMF immediately as they were elected. What progress have you made on the five broad policy headings that will secure an IMF deal? Lots of good talk, but after 5 months, no action. The IMF deal has expired, how much longer do you believe it will be before you can secure a new one. Minister, it is you and your government that is fast developing a credibility deficit with the people. Minister, I will only make a covenant with the people of Jamaica.

Mr. Speaker, the solemn promise to remove electricity of GCT cannot be allowed to pass. This was not a promise made by one of your Ministers, this is a promise made by you the leader of a country. If I had made that promise, your supporters and sympathizers would be preparing to march against me if I didn’t fulfil it in the time specified. Prime Ministers cannot have two different standards. Your word is your bond. At your 2010 conference you committed to looking at tax incentive to spur growth. Where is that in the supposed tax reform represented in this budget. Here is what else you said at the conference, as reported by the Gleaner of September 20, 2010.

With the constant sound of a new theme song…”Eli”, Simpson Miller said she was …when I put my hands on the Bible, I will not only swear to uphold the laws of our land, I will swear to uphold the honour and dignity of the office to which I was elected. My advice Prime Minister is that you have two options, remove completely the tax of electricity, or come to the people, as I have had to do and tell them the truth about our situation. Here is a glorious opportunity to finally end what I call the politics of the poor. This business of playing on the fears of the poor for political gain must end. This kind of politics has kept us poor and distracted us from the real issues of economic growth and development. Other countries have prospered and grown because they have abandon the politics tricking poor people for their vote. That leads to better policies that leads to better benefits for the poor and vulnerable. We have gone the route of socialism and better must come, better never came, we went the root of black man time, I am a young blackman nothing has changed, then we went the route of Portia for the poor, nothing has really been done to break the cycle of poverty in this country that path is now revealed to be a sham. I see another one coming, let us get power for the people, CCJ and Queen. Well when you tell me how CCJ and queen going to end poverty in this country then you will have my support.

Right now, the JLP has only one mission and that is to end poverty. We will resist any attempt to introduce any political distraction to that process. You are government and we are the Opposition, we intend to keep you on the straight and narrow path of economic recovery, a single focus of finally ending poverty in this country, of fulfilling the true potential of Jamaica.

Of ensuring that every child in Jamaica can feel entitled to education between 3 and 18 years, to ensure that every Jamaican can household can have access to proper housing, that there is peace law and order in this land. That youth in Jones town see a better way out, and that Tower Hill and Mall Road can get their roads fixed, water in their pipes regularly and garbage collected.

And Tenniel can finally see what she is working for when she gets her pay cheque. And my friend can finally get her two meat plate of oxtail and mutton. Can you imagine if we could really have a politics of truth where as a nation are able to confront our fears and concerns in a honest forthright way, lawd have mercy and watch Jamaica grow.

 

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