An­tho­ny Wil­son

On Tues­day, new Fi­nance Min­is­ter Lar­ry Howai sat down at his of­fice, on the eighth floor of the Fi­nan­cial Com­plex in Port-of-Spain, for a short in­ter­view with the Guardian Me­dia Ltd's chief ed­i­tor-busi­ness, An­tho­ny Wil­son, in which he stressed that his man­date is to get the T&T econ­o­my grow­ing, even if it means con­tin­ued fis­cal deficits in the short term. Howai, who took ear­ly re­tire­ment as CEO of State-owned First Cit­i­zens on June 24, al­so pro­vid­ed in­sight in­to his think­ing on prop­er­ty tax­es, di­vest­ment and pub­lic sec­tor wage in­creas­es.

Q: How has the first week in of­fice been for you?

A: It has been pret­ty hec­tic. I was sworn in on Mon­day and had to go to the Sen­ate the same af­ter­noon, which took all of my time.

I have been try­ing to meet the var­i­ous heads of de­part­ments and get ori­ent­ed and get an overview of where our fis­cal po­si­tion is and do I have mon­ey or don't I have mon­ey.

And then try­ing to get or­gan­ised with Cab­i­net and F&GP (the Fi­nance and Gen­er­al Pur­pos­es com­mit­tee of Cab­i­net)-at­tend­ing my first such meet­ings and try­ing to un­der­stand how they work.

We have al­so had meet­ings with some of the Cari­com Fi­nance Min­is­ters, which I had to get or­gan­ised for be­cause I was dropped in­to the mid­dle.

It has been hec­tic try­ing to catch up very quick­ly on is­sues that need­ed ur­gent de­ci­sions and to ori­ent my­self ful­ly to the min­istry. I am still in the process of do­ing that. I have not com­plet­ed that as yet.

Q: You men­tioned get­ting an as­sess­ment of the fis­cal po­si­tion, which would de­ter­mine whether you would need to bor­row or whether there is ca­pac­i­ty to bor­row. What is the coun­try's fis­cal po­si­tion to­day?

A: It is ac­tu­al­ly a lit­tle bet­ter than we had pro­ject­ed, from what I am see­ing, but there are still three months to go to com­plete the fis­cal year and I am told that there tends to be a "catch­ing up" of ex­pen­di­ture in the lat­ter three months of the year.

The out­turn is pro­ject­ed to be slight­ly worse that we had orig­i­nal­ly an­tic­i­pat­ed, but that is still sub­ject to see­ing how best we can man­age the process be­tween now and the end of the fis­cal year.

One of my first ar­eas of fo­cus would be to try and see how best I can en­sure that we come in at least where we had pro­ject­ed to be in terms of the over­all fis­cal po­si­tion.

Q: How im­por­tant for you is bal­anc­ing the 2012/2013 bud­get?

A: For me, the is­sue is re­al­ly growth more than try­ing to bal­ance the bud­get. I saw your very nice ar­ti­cle on aus­ter­i­ty vs stim­u­lus and it was very per­ti­nent.

I don't think that it is an ei­ther or sit­u­a­tion and in fact there are ar­gu­ments on both sides. Many of the ar­gu­ments are com­ing down on the side of the Gov­ern­ment mak­ing up for the slow­down on spend­ing by the pri­vate sec­tor in or­der to en­sure that the econ­o­my does not go in­to re­ces­sion.

I was read­ing an ar­ti­cle in the Fi­nan­cial Times by Krug­man and La­yard last week in which they were say­ing that the IMF had done an analy­sis of 173 cas­es where aus­ter­i­ty had been put in place and in most cas­es such aus­ter­i­ty had led to eco­nom­ic con­trac­tion.

I am not say­ing that there is go­ing to be no aus­ter­i­ty. I recog­nise that we have to look for val­ue for mon­ey and I recog­nise that there would clear­ly be ar­eas that we would have to pay at­ten­tion to en­sure that we man­age our ex­pen­di­ture prop­er­ly.

But I be­lieve we do have a good fis­cal po­si­tion. Our bal­ance of pay­ments and for­eign re­serves con­tin­ue to be strong. And there­fore there is room for us to try to cre­ate the con­di­tions un­der which we might be able to grow the econ­o­my.

The im­por­tant thing is to en­sure that when we spend mon­ey, we should cre­ate val­ue in what­ev­er pack­age of stim­u­lus mea­sures we might de­ter­mine are re­quired.

I de­liv­ered a speech for the Com­mon­wealth Busi­ness Coun­cil about three weeks ago for the Queen's Di­a­mond Ju­bilee. One of the things I point­ed out to them is that while aus­ter­i­ty and stim­u­lus have been jux­ta­posed, when re­al­ly we should be talk­ing about what makes good com­mon­sense.

Clear­ly, there are op­por­tu­ni­ties to ex­pand in cer­tain ar­eas and to en­sure that there is con­tain­ment of ex­pen­di­ture in oth­ers.

Q: What would be some of the ar­eas that you are look­ing to ex­pand on? Tra­di­tion­al­ly, that has been through cap­i­tal ex­pen­di­ture and in the 2012 bud­get there was quite a large cap­i­tal ex­pen­di­ture al­lo­ca­tion.

The is­sue is, as you just point­ed out, the min­istries are rush­ing to catch up the al­lo­ca­tions in the last three months of the year.

In that rush, there may be short­cuts be­ing tak­en.

So the ques­tion is, do you the plan to con­tin­ue to ex­pand the cap­i­tal bud­get in the up­com­ing fis­cal year?

A: In terms of the re­main­ing months of the cur­rent fis­cal year, I have a very good per­ma­nent sec­re­tary so I am very com­fort­able that she would en­sure that when­ev­er pay­ments and bills come in that they would be prop­er­ly scru­ti­nised and that there is full trans­paren­cy. I al­so need to say that what­ev­er is re­quest­ed would be pay­ments for projects al­ready start­ed. You can't stop a drain half-way, it has to be com­plet­ed.

In terms of next year, when I look at the growth of the econ­o­my, we have three phas­es: In the short term, there would have to be a mea­sure of fo­cus on in­fra­struc­ture and cap­i­tal projects.

Right now, giv­en where in­ter­est rates are, the net present val­ue of in­fra­struc­tur­al in­vest­ments is prob­a­bly the high­est that it would be any­time in the fu­ture. So it makes sense from a net present val­ue point of view to look at some of these in­vest­ments.

I have al­ready told the Min­is­ter of Plan­ning (Dr Bhoe Tewarie) that I would like to see those in­vest­ments lo­cat­ed in the con­text of the Na­tion­al Phys­i­cal Plan that they have de­vel­oped. It shouldn't be that the Gov­ern­ment has to pave a road be­cause some­one is burn­ing a tyre some­where. It has to be in the con­text of an over­all plan.

I have asked the min­is­ter to share that plan with oth­er mem­bers of Cab­i­net in a suc­cinct way so that min­is­ters can un­der­stand what is be­ing done and that the plan can be used to in­form the re­quests for bud­getary al­lo­ca­tions for the year.

In the medi­um term, there would be a fo­cus on the down­stream of the en­er­gy sec­tor and the man­u­fac­tur­ing sec­tor and the tourism sec­tor. To the ex­tent that we might be able to in­vest in ad­di­tion­al plant ca­pac­i­ty for the tourism sec­tor, it would give a boost to the econ­o­my, but al­so it would al­so al­low us to re­pay the monies we put in.

Then in the longer term, the im­pact of in­vest­ment in hu­man cap­i­tal de­vel­op­ment and oth­er ar­eas of the econ­o­my.

Q: Do you have an ide­o­log­i­cal or philo­soph­i­cal pre­dis­po­si­tion against prop­er­ty tax­es?

A: No, I think that prop­er­ty tax­es are things that we should con­sid­er. How we ac­tu­al­ly go about do­ing it , how the bur­den is spread is im­por­tant and what the costs are, are things we need to look at very care­ful­ly.

I have not had time to look at that is­sue at all. In fact, the whole is­sue of tax­a­tion at this stage is new to me in terms of get­ting my mind around all the is­sues.

Fis­cal pol­i­cy is a big part of what the Min­istry of Fi­nance does and there­fore I have to look at in­no­v­a­tive ways in which we can look at the tax struc­ture with a view to en­hanc­ing rev­enue. Now that does not nec­es­sar­i­ly mean in­creas­ing tax­es. I had an in­ter­est­ing con­ver­sa­tion with the PS in charge of that area and she point­ed out to me that there may be ways in which you can re­duce the tax and in­crease the take.

Q: I was ask­ing you about bal­anc­ing the bud­get and you were say­ing that growth was more im­por­tant in the short term, than fis­cal bal­ance. Does T&T stand the risk of a neg­a­tive cred­it event if the up­com­ing bud­get has the prospect of putting the coun­try too much in deficit.

A: It is not my in­ten­tion to ex­pand the deficit.

It is my in­ten­tion to re­duce it. For ex­am­ple, I was talk­ing about con­struc­tion and tourism and I was talk­ing about the pay­back pe­ri­od. In oth­er words, I might run a deficit to­day, but I know how I am pay­ing for that deficit-from the cash­flows from the project.

In look­ing at ways to stim­u­late growth, I recog­nise that it could im­pact on my deficit, but I will seek to do so in a way that en­sures that there is clar­i­ty in how the debt would be re­duced.

In terms of how I look at the deficit, I will be look­ing at in­vest­ments that will pro­vide pay­back over time.

Q: On the is­sue of in­vest­ments, to what ex­tent do you in­tend to fas­track some of the pro­pos­als that Mr Dook­er­an had in the cur­rent bud­get, in­clud­ing First Cit­i­zens.

A: I have not been briefed on what may have cre­at­ed any is­sues with those par­tic­u­lar ini­tia­tives. But cer­tain­ly, if there are things hold­ing them up, I would try to un-snag those is­sues.

It would in­clude all of the ar­eas that deal with some form of pri­vate sec­tor par­tic­i­pa­tion in those busi­ness­es. There may be one or two ar­eas in which we can deep­en that part­ner­ship.

Even in terms of fu­ture in­vest­ments, I am look­ing at the ex­tent to which we might be able to bring the pri­vate sec­tor in to a num­ber of projects be­cause it adds a lev­el of com­mer­cial jus­ti­fi­ca­tion to projects if can bring the pri­vate sec­tor in.

It's al­so a mat­ter of con­fi­dence and trans­paren­cy.

I know that the trade unions have had con­cerns about that process (of di­vest­ment) one of the things that I have to do is en­gage them in a dis­cus­sion so that I can un­der­stand the con­cerns they have.

Q: On the is­sue of trade unions, one of the big fights that Mr Dook­er­an had was with the labour move­ment over the five per cent wage cap.

The pub­lic sec­tor trade unions may be look­ing for high­er wage set­tle­ments in the pe­ri­od go­ing for­ward.

What is the prospect of that?

A: What we need to look at is not so much what you are paid, but what val­ue you cre­ate and, there­fore, one has to look at it in that con­text.

I have nev­er re­al­ly looked at things in terms of what it is go­ing to cost. I nor­mal­ly look at things on the oth­er side-what am I get­ting in re­turn. In that case, I ei­ther say it makes sense or not. That's the per­spec­tive I nor­mal­ly would bring to some­thing like this.

Q: What can the Min­istry of Fi­nance do to mit­i­gate the rate of in­fla­tion?

A: A big is­sue is what's hap­pen­ing with food prices.

I think the Cen­tral Bank has tak­en a quite cor­rect, de­lib­er­ate de­ci­sion to leave the re­po rate where it is.

Be­cause if you in­crease in­ter­est rates, you choke off the parts of the econ­o­my that are do­ing well and you are pe­nal­is­ing them be­cause there is one sec­tor that is not do­ing well.

I cer­tain­ly sup­port the de­ci­sion to keep the re­po rate where it is.

Q: What im­pact has the col­lapse of the CL Fi­nan­cial em­pire had on the lo­cal econ­o­my and what is the prospect of NEL II be­ing re­solved in the near fu­ture.

A: Again, I have not been ful­ly briefed on what needs to be un­snagged to make that hap­pen.

I'm find­ing that there is a law that stops you from do­ing near­ly every­thing that you want to do in Gov­ern­ment.

We made a com­mit­ment to the EF­PA pol­i­cy­hold­ers and we in­tend to ho­n­our that and I would like us to move as quick­ly as pos­si­ble to deal with it.

I do recog­nise that it is time for us to speed up that process and bring it to a close so that we can move on.

Q: Do you think speed of im­ple­men­ta­tion is im­por­tant in gen­er­al?

A: We need to ac­cel­er­ate our pace of im­ple­men­ta­tion. From the out­side-and I am speak­ing like some­one like you rather than as an in­sid­er be­cause I have on­ly been here for a week-it seems to me that there are a num­ber of in­sti­tu­tion­al bar­ri­ers that slow down the speed of im­ple­men­ta­tion.

Ex­e­cu­tion is a chal­lenge every­where. The pri­vate sec­tor is now mov­ing to this triple bot­tom­line con­cept: prof­it; gov­er­nance and cor­po­rate so­cial re­spon­si­bil­i­ty. Gov­ern­ments have been more on the oth­er side in terms of cor­po­rate so­cial re­spon­si­bil­i­ty than com­mer­cial.

I think the an­swer is some­where in the mid­dle just as the an­swer about aus­ter­i­ty and stim­u­lus is in the mid­dle.

I see my­self as some­one who now has the re­spon­si­bil­i­ty to bal­ance this triple bot­tom­line in a more ef­fec­tive man­ner, so that I recog­nise there are so­cial costs as well as eco­nom­ic costs and I try to find a way to bal­ance the two.

Q: How would you mea­sure your own suc­cess as Min­is­ter of Fi­nance?

A: One of things you may choose to judge me on is did the econ­o­my grow or not. It would have to be some of that but al­so was it bal­anced growth.

Did we lay a good foun­da­tion for the fu­ture be­cause I don't want to sac­ri­fice the fu­ture for the present. Al­so, did I iden­ti­fy the right ini­tia­tives to get the econ­o­my go­ing and did those ini­tia­tives cre­ate val­ue for mon­ey.