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PM: Govt performing reasonably well
Prime Minister Dr Keith Rowley says the country is not at a standstill as the Government has continued to reduce expenditure while protecting economic stability. He said the Government had done well and they were now moving towards anticipated growth at a lower level of national expenditure. He also acknowledged that there was room for improvement.
In this Q&A with the Sunday Guardian, Rowley responded to questions on issues ranging from economic growth and job losses, to property tax and agriculture.
He also stated the need for the private sector to rise up and play its role, and answered questions on issues such as the Sandals resort proposed for Tobago and the Couva Children’s Hospital.
Q: Are you satisfied with your Government’s performance since assuming office in September 2015?
A: We came into office in September 2015, after a period of protracted economic stagnation, five years of record breaking levels of government expenditure followed by a collapse of the country’s revenue base due to the precipitous fall in oil and gas prices and production, “the perfect storm” of negative economic circumstances. Under the circumstances we have engaged the situation reasonably well, but there is always room for improvement.
There is a perception that the country is at a standstill with zero to little progress on economic growth and development. Does your Government intend to implement any short-term plans or policies to stimulate economic activity to at least allay the fears of the population?
The country is not at a standstill. We have been reducing expenditure whilst protecting economic stability.
The primary objective of this Government at the time of taking responsibility for the state’s affairs was to prevent a collapse of the economy and the social fabric of the society which could have resulted from the dramatic revenue decline, a reality largely driven by external market conditions. We have done that well and are now moving towards anticipated growth at a lower level of national expenditure.
The national circumstance of revenue collapse where government expenditure is the main driver of the economy is not the best place to be demanding instant economic growth.
The undisputed imperative at the early life of this Government is to reduce expenditure down from $63 billion per year downwards to about $50 odd billion, nearer to the revenue side of under $50 billion. Unpleasant as it is we are forced, at this time, to cut our size to fit our cloth.
The Government is following its common-sense plan of now moving forward with public works and economic infrastructure as well as encouraging and supporting private sector initiatives which should see us returning to economic growth even as we strive to bring our fiscal operations closer to balance.
All of this being done as we continue to carefully borrow some money for an ambitious development programme in areas of economic diversification and overall development in T&T.
The magnitude of this task and the demand for instant solutions such as growth must be viewed against the fact that during 2010 to 2015, with energy prices high and record levels of borrowing, there was little or no economic growth and no diversification of the economy, even as we saw $16 billion additional raided from the National Gas Company. This Government has no such luxury even if we wanted to behave like that.
The People’s National Movement 2015 manifesto, now government policy, stated that you had spent the last five years developing policies to “rebuild our country and our economy, restore confidence, equity and social justice, and enhance and improve every area of national life.”
Placing this statement in the context of the current economic challenges resulting in job losses and other social repercussions, how have you aligned those ideals with the reality of our financial situation?
A closer examination will confirm that all our efforts to date are in keeping with the letter and spirit of the commitment in that phrase.
What must be taken into account at all times is that we are now required to do much more with less and some of the necessary solutions are not without some pain, especially to those unfortunate citizens who are directly affected especially where job losses are involved.
It is against this background that the Government is struggling to rebuild a sustainable economy which brings with it new job opportunities.
The private sector has a major role to play here and we trust that they will rise to the occasion.
The theme of the PNM’s manifesto was “Let’s do this together” but some of the Government’s decisions, for example, the property tax implementation remains a source of confusion for citizens. Do you feel Government has had some difficulty with clearly communicating the implementation of the property tax to the national public?
This is a perfect example of doing it “together.” This is a tax that will be based on the value and use of property on an assumed ability to pay.
No taxation system is perfect and few people like to pay tax so resistance and complaints are par for the course but at the end of the day, the majority of citizens will see the need for some taxation to service the country and will cooperate and make their reasonable contributions under the provisions of the existing law which applies evenly from Charlotteville to Cedros, from Carenage to Sangre Grande, from Port-of-Spain to Chaguanas.
Why did the Government choose to impose property tax on residential properties before commercial and industrial properties?
The main reason is because there exists a fairly good base in the form of valuation rolls across the country whilst there is virtually little on the rolls for commercial and industrial. The exercise will move smoothly into establishing and updating these categories in short order.
The perception of “tax, tax, tax” surrounds the Government. What do you feel is necessary to balance taxation with economic stability or growth?
It is kind of annoying to hear those who wasted and stole significant amounts of public monies in times of plenty being in the forefront of objection to a reasonable tax, even as we are going through enormous challenges to keep body and soul together in a period of serious revenue collapse.
In our first budget in 2015, we increased the personal allowance from $60,000 to $72,000, meaning that more money is left in the hands of income earners at the base of the earning scale. We reduced VAT from 15 per cent to 12.5 per cent.
Taxation in this country is reasonable and progressive and we believe that this view is shared by the wider national population.
Has the Government done enough to facilitate private sector investment aimed at promoting economic growth, earning foreign exchange and creating new jobs?
The one thing that cannot be said is that there is not a huge basket of incentives available to the private sector.
What is also true is that for one reason or another, most of these “incentives” are not taken up nor are they inspiring enough to motivate the private sector to take advantage of them.
What incentives are available for the private sector to promote the creation of new jobs, earning of foreign exchange and to facilitate economic growth?
We keep hearing about the “need for incentives” without any reference to any specific ones over and above what already exists. We would welcome the identification of the specific absent incentives.
In the coming weeks, the Government will publish for public information and encouragement the full range of existing incentives as its contribution to this conversation.
Are there opportunities for job creation to earn foreign exchange and economic growth downstream of the natural gas sector?
These opportunities are there but will only be realised if there is investment in downstream activity. That is where the Mitsubishi plant, currently under construction in La Brea, comes in. That is the purpose of us pursuing some aluminium and any other business for which our installed electricity usage gives us an advantage. We are also working in expectation that the receiver at ArcelorMittal steel plant could find an investor who could see interests at Pt Lisas.
What signal is the Government sending to the private sector by increasing the green fund, business levy and tax rates of income over $1 million?
These are all deductible from profits and no serious investor or business will cease their operations as a result of these contributions. Reason being that they are still making encouraging profits.
Would you agree that the current exchange rate penalises exports and subsidises imports?
I don’t know about “penalise,” but the economics say that the statement is fact and is one of the many challenges that we have to deal with by carefully encouraging export earnings and discouraging a wide range of low-priority imports.
Do you not also agree that the Government needs to find a way to flip the script so that the environment in T&T subsidises exports, adding value to local production, and penalises imports?
We, as an open society, have a much bigger problem and it is all about taste. Unfortunately we have grown up on a taste for things foreign and we as consumers pay lip service to your nice logical suggestion, but aren’t you also demanding a broader stream of foreign exchange in the bank and am I not among the few who consistently eat ground provision and local fish, fruits and vegetables?
How has Government protected the most vulnerable or lower-income groups from the current economic situation?
Mainly by maintaining the whole fabric of the “social safety net” even as we embarked on the necessary overall reduction in government expenditure. We have reduced taxes at the base, cautiously reduced subsidies on fuel, maintained rates on subsidised water, electricity and public transport etc, and have kept URP and Cepep going even as we embark upon some serious restructuring to affect some deficiencies in these programmes.
Crime is plaguing the nation and remains the biggest concern facing citizens today. A 2017 IDB report which looked at crime in five Caribbean countries, of which T&T was one, indicated that while policing has benefited from increased financial resources, crime prevention strategies remained under-resourced and ad hoc.
That might be an IDB report, misleading as it is, which is not reflected in the reality of any T&T internal report.
Has the Government done enough on crime and what is your Government’s plan on crime reduction?
We can never claim at any time that we have done enough on crime fighting, especially when violent crimes, murder are part of the daily news. The Government’s plan is to sustain the effort to get a more effective Police Service and supporting crime fighting agencies.
We are working on reducing the availability of firearms on the streets, eliminating police corruption in order to build public confidence and trust, improve detection levels as we carry out programmes geared towards directing young people away from the attraction to a life of crime. We are also working on improvements in the criminal justice system and improvements in the prison system.
Agriculture continues to remain on the back burner with each administration. What are Government’s plans to diversify the economy as it relates to agriculture?
We have made some significant headway in having a growing supply of planting material and now we are looking for more farmers and making land available. Everyone can carry on an energetic conversation about agriculture and farmers but the last thing they would do is get their hands dirty with soil or feel the sun on their back with sweat running down their brow. We are trying to encourage a whole new generation of people who can find niches where they can make a good living in the endeavours of farming through planting of crops or animal husbandry.
You entered government with new, younger faces, as well as older experienced ministers. How satisfied have you been with the performance of your appointed ministers?
I am reasonably satisfied that the team is working well and as I observe the tasks ahead will make adjustments for greater effect as we progress.
Are there any plans for a Cabinet reshuffle as Government approaches its two-year mark?
Is that a milestone? Well, we are not quite there yet eh!
What is the status of discussions with Sandals for a resort in Tobago? And are you confident this will boost tourism in Tobago?
I am absolutely convinced that if we can have this project as envisioned then it will be a major boost to the economy and general landscape of Tobago. A lot of currently underutilised resources would come alive for the benefit not only of Tobago but of Trinidad as well.
We have set up the negotiating teams and Special Purpose Vehicle (SPV) and the work is progressing smoothly. Public consultations should begin soon in keeping with the provisions of application for the necessary approvals.
Given the current issues with inter-island transport between T&T, is a proposal to build a port in Toco in discussion and would the port come to fruition? Will the private sector be encouraged to run a ferry service as is done in other countries, eg BVI?
We are a little way from there at this time, but if the private sector is so motivated it will be a step in the right direction.
When will your Government have the Couva Children’s Hospital operational?
We are about to receive the report of the committee appointed by Cabinet to examine and present proposals from the private sector. As soon as we have this the Cabinet will determine the next step with the private sector if there is one. We are as anxious as anybody else to have this hospital in the system. It is not a “children’s hospital,” it is a hospital with a full adult component so we have to integrate it into the overall system with or without private sector involvement.
What has been your biggest challenge since becoming Prime Minister?
Managing the economic levers to create opportunities and confronting chronic, systemic corrupt practices as they exist across the board.
You have said that integrity and morality in public life is a hallmark of the PNM and your Government has remained critical of the UNC/People’s Partnership for presiding over a period of wastage and corruption. What has been done to penalise or charge people for these alleged acts of corruption?
That is a matter for law enforcement. We await their responses to the cases that we have or will present to them. The Government is a complainant on behalf of the people but the Government has no power other than to find the justifiable evidence and present it to law enforcement and that is going on.
TOMORROW: Political analysts Derek Ramsamooj and Dr Hamid Ghany weigh in on the PNM Government’s performance.
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