Budget 2011 did not turn the economy around. An ambitious $50 billion plan, by an even more ambitious newly-minted coalition Government, struggled with a confidence crisis for most of the financial year. A $7 billion Public Sector Investment Programme (PSIP) lacked the impetus to kick-start the stagnating construction sector. Labour relations deteriorated and unions threatened a general strike. And more than a year after Finance Minister Winston Dookeran proposed a bailout plan for Clico policyholders in his September 8, 2010, reading of the 2011 budget which he improved upon in Parliament last month, the issue is still before T&T's courts.
Packed with incentives for the energy sector and small businesses to "bridge entrepreneurship and development," the good tidings of T&T's most expensive, and third consecutive deficit budget, fell flat. Dookeran's caveat is that the budget was couched in a three to five-year time frame which enables a continuation of the policies outlined in budget 2011 into next year's financial plan. Before the budget could have had the desired effect on the economy, there were stumbling blocks-people were saving, not spending, there were outstanding payments owed to contractors and the late appointments of directors to state boards impeded decision-making and investment.
Dookeran had said T&T was experiencing the overhang of negative growth from 2009 which impacted on the budget's objectives and its deliverables. Political promises-laptops for every Form 1 student, no Land and Building Taxes, no Alutrint-triumphed over economic ones such as reviewing an almost $5 billion fuel subsidy. The biggest infrastructure project to get off the ground was construction of a $7 billion highway from San Fernando to Point Fortin. The tunnel to Maracas remained a proposal on paper.
Investment in T&T's agricultural sector, impacted positively on T&T's headline inflation. On the other hand, improved incentives for the energy sector hasn't attracted the top tier energy players in the global market to T&T's bid round. For the moment, T&T's energy sector is challenged for natural gas.
Dookeran's attempt to realign the economy, via the National Innovation System, is still a work in progress. The areas identified as economic spaces - the south-western peninsula, east Port-of-Spain area, north coast, north-east region of Tobago and the four C's (Couva, Charlieville Carapichaima and Chaguanas)-have not yet opened up. While the local film industry and the fashion industry were buoyed by government's interest, the health sector suffered from poor infrastructure and negative publicity. The four proposed new hospitals are still in the incubator stage. Central Bank Governor Ewart Williams had lamented that the long-awaited recovery is not happening. However, he reasons that T&T can achieve a "tepid" 1.5 per cent to two per cent growth in 2011 and can sustain this for the next three years.
Here's some of the objectives that were met in the 2010/2011 Budget:
MINISTRY OF FINANCE
Tax efficiency-Implementation of a tax amnesty on filings up to 2009. As at June 30, 164,987 people had utilised the tax amnesty with net receipts of $1.765 billion. Pensions systems-Replacement of the senior citizen's grant with the senior citizen's pension which will be increased to a maximum of $3,000 per month and increase the minimum pension to retired public servants to $3,000 a month. The relevant amendments have been made to the Pension Act via the Finance Act 2011.
As at June, approximately $1.9 billion was disbursed to 76,473 people per month in respect of the senior citizens pensions. The relevant amendments have been made to the Income Tax Act via the Finance Act 2011. Last year, there were 62 first-time homeowners with claims of $620,000.
MINISTRY OF EDUCATION
The provision of quality education for all-Providing a laptop to each new secondary school students. In all, 20,300 laptops were distributed in the academic year 2010-2011 at a cost of $84 million.
MINISTRY OF LABOUR AND SMALL AND MICRO-ENTERPRISE DEVELOPMENT
Minimum wage-Increase the minimum wage from $9 per hour to $12.50 per hour. The $12.50 per hour minimum wage took effect on January 1.
MINISTRY OF SCIENCE, TECHNOLOGY AND TERTIARY EDUCATION
1. The provision of quality education for all-The Government Assistance for Tuition Expenses (GATE) programme was expanded to include Technical Vocational Education and Training.
2. Re-evaluate the Multi-Sector Skills Training programme
The MUST programme has been re-evaluated and placed under the Metal Industries Company portfolio to ensure it is managed with proper oversight.
MINISTRY OF TRADE AND INDUSTRY
1. Manufacturing Expansion- Amendment of the Income Tax Act to increase wear and tear allowance from 10 per cent to 25 per cent except for buildings effective January 1. The relevant amendments have been made to the Income Tax Act via the Finance Act 2011.
2. Expansion of the Research and Development Facility at the BDC by increasing the sales turnover criteria from a maximum of $5 million to $25 million as well as increasing the grant for single projects from $100,000 to $500,000 and for alliance projects from $200,000 to $1 million. The research and development facility was expanded and became operational in November 2010.
3. Effective January 1, expansion of free trade zones and removal of cap of $50 million. he relevant amendments have been made to the Customs Act via the Finance Act 2011.
MINISTRY OF WORKS
Reversing Inefficient Project -Cancellation of the Trinidad Rapid Rail Project.
TOMORROW:
Budget promises that were not kept.