Chief Ed­i­tor, Busi­ness An­tho­ny Wil­son ex­plores the back­ground to T&T's re­liance on sub­si­dies to sup­port the econ­o­my.

In the orig­i­nal 2016 bud­get, the Gov­ern­ment al­lo­cat­ed 52 per cent of the coun­try's bud­get to trans­fers and sub­si­dies.

That's an ex­pen­di­ture of $34.7 bil­lion out of to­tal ex­pen­di­ture of $66.4 bil­lion that is used to low­er the cost of ed­u­ca­tion of the na­tion's chil­dren, re­duce the cost of drugs to treat di­a­betes and hy­per­ten­sion and build hous­es for the na­tion's low to mid­dle-class cit­i­zens to live in.

The huge ex­pen­di­ture on trans­fers and sub­si­dies is al­so used to re­duce the amount of mon­ey that T&T res­i­dents pay to fill their cars with gaso­line and low­er the amount of mon­ey that comes out of the pock­ets of bread­win­ners to pay elec­tric­i­ty and wa­ter bills.

Trans­fers and sub­si­dies touch every­one in T&T, from the new­born whose moth­er pays noth­ing to de­liv­er her ba­by in a pub­lic hos­pi­tal to the re­tiree who is able to trav­el by wa­ter taxi from San Fer­nan­do to Port-of-Spain for free.

Many as­pects of life in T&T are sub­sidised – from the cost of go­ing to To­ba­go by air or fast-fer­ry to the two per cent mort­gage in­ter­est that some peo­ple pay for their state-built hous­es.

To put the trans­fer and sub­sidy al­lo­ca­tion in con­text, at $34.7 bil­lion it is near­ly three times more than the next largest al­lo­ca­tion, which is the cost of per­son­nel ex­pen­di­ture at $12.6 bil­lion.

T&T has been able to sub­sidise the cost of liv­ing for its cit­i­zens large­ly be­cause of the tax­es that Gov­ern­ments have col­lect­ed from the liq­ue­fac­tion of nat­ur­al gas (LNG) by the multi­na­tion­al en­er­gy com­pa­nies that op­er­ate in the coun­try.

At­lantic LNG's Train I was com­mis­sioned in 1999. In that year, the Gov­ern­ment's to­tal bud­get was $10.5 bil­lion with $3.2 bil­lion be­ing spent on trans­fers and sub­si­dies, some 31 per cent.

Five years lat­er, the amount of mon­ey the Gov­ern­ment was able to spend al­most dou­bled to $20.6 bil­lion, but the al­lo­ca­tion for trans­fers and sub­si­dies near­ly tripled to $9.2 bil­lion from $3.2 bil­lion.

Af­ter the 2004 fis­cal year, the ad­min­is­tra­tion, led by the late prime min­is­ter Patrick Man­ning, be­gan to in­crease the trans­fers to the pop­u­la­tion, es­tab­lish­ing Gate in 2004 and ex­pand­ing it in­to free uni­ver­si­ty ed­u­ca­tion for all in 2006.

Giv­en the first flush of LNG dol­lars, the Gov­ern­ment was able to es­tab­lish the Chron­ic Dis­ease As­sis­tance Plan in Feb­ru­ary 2003 which pro­vid­ed cit­i­zens with free pre­scrip­tion drugs and oth­er phar­ma­ceu­ti­cal items to com­bat many chron­ic health prob­lems.

Many oth­er so­cial pro­grammes fol­lowed or were ex­pand­ed.

But the price that T&T re­ceives for its oil and gas ex­ports to­day is a frac­tion of what it was ten years ago, which means that the rev­enue that the Gov­ern­ment is able to gen­er­ate from the en­er­gy sec­tor has col­lapsed in the last two years.

T&T faces a dou­ble wham­my be­cause not on­ly are prices much less, but the amount of oil and gas be­ing pro­duced here has fall­en steadi­ly for the last ten years.

In Au­gust, the Min­is­ter of Ed­u­ca­tion an­nounced the scal­ing back of Gate.

The re­al fear among the pop­u­la­tion is that oth­er trans­fers and sub­si­dies could be scaled back – or even elim­i­nat­ed – as well by the Min­is­ter of Fi­nance in his month-end 2017 bud­get.