Disappointed by Rowley’s budget contribution

I could not help but feel a sense of disappointment on hearing the contribution to the budget debate by the PNM Leader and Opposition Leader, Dr Keith Rowley. At a time when one might have expected leadership, incisive detail and sound alternatives to what he perceives as negatives in the budget, all we ended up with were regular punctuations of opinion, bitterness and a number of personal attacks that were as needless as they were ill-fitted for such a debate.

Where the Opposition Leader failed, I wish to revisit the major elements of the PNM government’s failure.

In spite of hearing many say that the constant reminders of the “sins” of the PNM as a government are unnecessary, I believe, in fact, that they are necessary. It is the PNM’s approach between 2001 and 2010 that has created the current conditions, for better or worse, and it is vital that their policies be revisited in the context of today’s reforms and economic planning.

The PNM as a government is marked by a few major factors. They promptly began a housing and mega-project drive that created a sudden acceleration of activity in a construction sector that needed to grow organically if it was to become sustainable and successful.

Rather, what we had was a government bullying its way into becoming the lead investor in what was already a successful and stable economy, actually crowding out the ability of small, medium and large businesses to earn their own competitiveness stripes.

Year after year, we saw massive expansions of the national budget, with significant portions of money being allocated to increasing recurrent expenditure and programmes such as URP, Cepep and a host of other programmes for which the training and skills development were focused on serving make-work demands, not long-term knowledge and high-skills demands.

We would all recall the Auditor General’s complete horror over highly questionable Cepep expansions and allocations without any sense of  planning.

As the former PNM government was led by a geologist, one would also have expected strong energy policies that would have laid a performance base that would outstrip what we all know to be natural output declines. The PNM’s energy policies, in fact, failed the sector at the most critical end—the upstream.

From 2005, oil production began collapsing and the rate of collapse of output far exceeded calculations of natural declines. Reports have indicated that the declining output was the result, not of maturing of fields, as much as they were simple maintenance issues that Petrotrin and the Ministry of Energy failed to monitor and institute.

Bid rounds to encourage further exploration in oil and the critical gas sector also failed miserably, and by the time the new Government took office in 2010, the sector had very low levels of exploration drilling. Today, we have seen the turnaround through measured fiscal incentives and energy policy with exploration, the services sector, bid rounds and overall activity significantly increasing.

The economic fundamentals were also allowed to suffer under the PNM government, as while we saw an expansion of foreign exchange reserves, increased injections to the Heritage and Stabilisation Fund and increased GDP in the non-oil sector, one must contextualise this to the extremely high energy prices and inflowing revenues.

The onset of the global financial crisis in 2008 bared the PNM government’s very careless planning as the T&T economy was forced into a corner where it was left with almost no wiggle room for a deceleration of capital expenditure. The government’s panic actions to rapidly scale back expenditure left in its wake many companies going belly up, many debts unpaid and a sudden contraction of the economy.

In sum, this was the result of the PNM’s miscalculation of what true diversification is, and also of stifling the private sector’s ability to pursue competitiveness, organic expansion and leadership in a free market economy.

The 2012 scenario, while some details are still to be articulated during the budget debate as regards industrial projects, has proven not only a return of confidence in the local economy through private-sector credit expansion, but also a return to stability after three years of economic shrinkage since 2009.

It is now also clear why the present Government structured its policies to tighten the social safety net during its reform phase, which worked to alleviate the full impact of suffering on the most vulnerable in the society.

Now, out of a misfiring of fiscal policy for almost a decade, we see moves to actually push the private sector forward into leadership in the economy, a financial services sector that is once again raising its head and taking its lead role back, an agriculture sector being given more strategic attention than ever before, a tourism sector that is being supported into becoming the powerhouse that it can be, an energy sector that is welcoming new energy players never before seen in T&T and an economy poised for even greater stability through true sustainable development, rather than government- induced, transient boom and bust phases.

A return of confidence in the local economy, a re-energised thrust into diversification, a strengthened energy sector expecting $20 billion in investments in 2013, a return to economic growth, and a sustainably managed social services sector all amount to reason for comfort. These notwithstanding, if there were factors unseen, all we were left with from the Leader of the PNM Opposition was harshness and bitterness, punctuated by misleading opinion.

Jairam Bhola
via e-mail