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Balancing worth of the Budget

Published: 
Sunday, October 8, 2017

In choosing his theme for budget 2017-2018, “Changing the Paradigm: Putting the Economy on a Sustainable Path,” Finance Minister Colm Imbert got what the objective should be right. The total dependence on oil and gas has to end, he concluded.

Additionally, he made it clear that the comforts afforded residents through subsidies and transfers to WASA and T&TEC cannot be continued; and he took another chunk out of the petrol subsidy.

The issue though, is whether the measures proposed are potentially transformational of the economy, from one heavily dependent on energy, to one in which the local private sector becomes fully involved in export production and import substitution to earn and save foreign exchange.

Beyond the spreading of the productive sector, does Finance Minister Imbert, backed by the Cabinet, mean by “Changing the Paradigm” a shift away from the dominant capitalist/free market economy to a more equitable and people-oriented focus of the political economy, to foster economic development without marginalising the majority?

In relation to a few elements of the presentation designed to spread the economic base, Minister Imbert recognised the need for a programme of import substitution to reduce the $6 billion dollar food import bill. To this end, he proposed a $100,000 grant to encourage farmers. However, he ignored what farmers say is their main need, secure land tenure; without it little can be done.

Ownership of the means of production would be truly transformational if farmers were to own the land.

Immersing CPEPP and URP workers in agricultural and agro-industrial production needs to be done after decades of talk about going back to the “original intent” of the programmes.

Targeting the export manufacturing sector to receive preference for the purchase of foreign exchange through an Exim Bank, and a promise of an export allowance are useful initiatives. Needed is a detailed plan to remove government bureaucracy, and to use T&T’s foreign missions to assist with the search for markets outside of Caricom. The Finance Minister, however, continued to resist having the exchange rate increase to a more realistic level, one which could make our exports more competitive internationally.

His is a legitimate concern that the prices of necessary imports will soar and create an inflationary spiral if the exchange rate were allowed to drift. The technocrats have to find a way for the value of the currency to fall to a more realistic level with protection for the vulnerable.

Cultivating entrepreneurial talent through a grant to promote innovation is critical; the relevant minister must now outline a dynamic programmatic approach.

Outside of the repeated promises of the benefits of Sandals, there was little that was new to stimulate the tourism industry with its potential for important linkages to production.

On the other major issue of the need for a restructured tax system that is progressive, and requires that high income earners and corporations pay commensurate with their earnings, Minister Imbert made an attempt.

The inability to implement proposals is a serious deficiency. Implementation of the planned progressive property tax regime, and the establishment of the T&T Revenue Authority can bring a more dynamic approach to taxation, and the desire to spread the net wider than it now reaches.

Understandably, it could not be reasonably expected that in one, 12-month programming, Minister Imbert would have dismantled the 500-year old economic pattern of producing a one-crop for export while importing everything else.

However, the start has not been very compelling. Neither has it signalled clearly enough that the Government has a creative intention and approach to initiating the required transformation. For instance, there was nothing of significance regarding an innovative ICT programme.

I have deliberately focused on the budget proposals for elements of the non-oil export and import substitution sectors. However, aside from Minister Imbert’s “badjohn” talk, the new tax regime for the energy sector is vitally important; the re-organisation of Petrotrin is another monster task.

Beyond the spreading of the productive sector, does Finance Minister Imbert, backed by the Cabinet, mean by “Changing the Paradigm” a shift away from the dominant capitalist/free market economy to a more equitable and people-oriented focus of the political economy, to foster economic development without marginalising the majority?