In its sim­plest con­struc­tion, the bud­get is a state­ment in which the Gov­ern­ment out­lines its rev­enue sources and ex­pen­di­ture plans. Tax­pay­ers are al­ways re­luc­tant to part with their hard-earned cash. Jean-Bap­tiste Col­bert, Louis XIV’s fi­nance min­is­ter fa­mous­ly de­clared that “the art of tax­a­tion con­sists in so pluck­ing the goose as to ob­tain the largest pos­si­ble num­ber of feath­ers with the small­est pos­si­ble amount of hiss­ing.” Sim­i­lar­ly, when tax­ing com­pa­nies the ob­jec­tive is to raise rev­enue with the small­est pos­si­ble amount of eco­nom­ic and po­lit­i­cal dam­age.

The 2018 “Spot­light on En­er­gy” ex­pend­ed much ef­fort in demon­strat­ing that en­er­gy com­pa­nies were not pay­ing their “fair share” of tax in T&T. This com­ment is re­peat­ed in sev­er­al OECD coun­tries. Apart from the rhetoric, there have been no re­al changes to the en­er­gy sec­tor tax­a­tion regime. There were no new in­cen­tives ei­ther. Yet the medi­um-term en­er­gy out­look is bleak, as en­er­gy prices, pro­duc­tion vol­umes, and in­comes are de­pressed. The non-en­er­gy sec­tor is al­so de­pressed as are ex­port vol­umes, as COVID-19 con­tain­ment mea­sures have af­fect­ed all economies fur­ther com­pli­cat­ing mat­ters.

In this sce­nario, it will be dif­fi­cult to ex­pand na­tion­al in­come. The on­ly re­al­is­tic op­tion is to man­age ex­pen­di­ture ei­ther by be­com­ing more ef­fi­cient or by re­duc­ing non-es­sen­tials. This re­quires clear pri­or­i­ties, a dif­fi­cult propo­si­tion in the best of times. The fi­nance min­is­ter has in the past boast­ed that he has re­duced to­tal ex­pen­di­ture from $60 to $50 bil­lion. Sub­si­dies and trans­fers were al­so re­duced from $30 to $25 bil­lion. But that is still large at 50 per cent of ex­pen­di­ture. In re­al­i­ty, the fi­nance min­is­ter has sim­ply left bills un­paid (WASA, TTEC, TSTT, con­trac­tors, ser­vice com­pa­nies, tax and VAT re­funds etc.).

In the short run, the fi­nance min­is­ter can change lit­tle. To be­come more ef­fi­cient every or­gan­i­sa­tion must ad­dress three key is­sues: peo­ple, process­es, and sys­tems. Gov­ern­ment is an or­gan­i­sa­tion and the rule ap­plies even more to gov­ern­ment bu­reau­cra­cies. This re­quires de­tailed work not gen­er­al­ly cov­ered in a bud­get speech and en­com­pass­es mea­sures which are pedes­tri­an and un­sexy, but crit­i­cal. This process has not be­gun.

The 2021 bud­get is a wa­ter­shed mo­ment. Whilst con­ces­sions must be made to cater for the im­pact of COVID-19, it is im­por­tant to de­vel­op a new ap­proach to the fu­ture. Like any or­gan­i­sa­tion, the Gov­ern­ment must adapt or be­come dys­func­tion­al. That is why T&T has con­tin­ued to de­cline in the ease of do­ing busi­ness rank­ings. It is not a “nice to have”; it is a mar­ket fun­da­men­tal. The en­er­gy sec­tor will con­tin­ue to play an im­por­tant role but cur­rent world re­al­i­ties can­not be ig­nored.

Cli­mate change is forc­ing the world to repo­si­tion and adapt to an en­vi­ron­ment in which oil and its de­riv­a­tives will play a less im­por­tant role. Whilst LNG will have a con­tin­u­ing role, there are many new and larg­er play­ers mak­ing the mar­ket­place more com­pet­i­tive.

2019-2020 was a bad year for LNG prices and whilst there is no one in­ter­na­tion­al price, in­creased out­put by the var­i­ous play­ers have re­moved mar­ket ar­bi­trage pos­si­bil­i­ties (sell­ing gas in oth­er high­er-priced mar­kets). When re­gas­si­fi­ca­tion and trans­porta­tion costs are fac­tored in, the nom­i­nal price dif­fer­en­tials be­tween dif­fer­ent mar­kets dis­ap­pear and mar­ket equiv­a­lence is ob­tained. That is, there is one un­der­ly­ing net price. This is the main rea­son why ex­ports of cheap US gas to high­er-priced far east des­ti­na­tions have dropped like a stone in 2020. Notwith­stand­ing the high­er nom­i­nal prices, there is no prof­it in it, con­firm­ing the clas­si­cal mon­e­tarist the­o­ry “Mon­ey is but a veil”.

T&T gas re­serves ac­count for less than one per cent of the world’s re­serves. The State used its oil wind­fall in the mid-70s to in­vest and de­vel­op nat­ur­al gas; first by de­vel­op­ing a petro­chem­i­cal ca­pac­i­ty for down­stream pro­cess­ing. The 1986 oil price shock forced the Gov­ern­ment to pri­va­tise and to be­come a busi­ness fa­cil­i­ta­tor, not an in­vestor. Then in the mid-1990s it al­tered pol­i­cy and moved up­stream by de­vel­op­ing LNG ca­pac­i­ty but on­ly with a small ten per cent stake in Trains 1 and 4. T&T en­tered the mar­ket in its for­ma­tive stages tak­ing ad­van­tage of the ear­ly gains. Those prof­its are gone. Now the re­struc­tur­ing of Petrotrin has con­firmed that the State has nei­ther the pa­tience nor the deep pock­ets to repo­si­tion it­self as a long-term in­vestor. NGC may own the pipelines, but it does not own the gas. That re­quires ex­plo­ration ca­pac­i­ty, the risky end of the busi­ness. BP and Shell, not NGC, con­trol the mar­ket.

The T&T mod­el is based on for­eign di­rect in­vest­ment with­out which there is lit­tle growth. Gov­ern­ment is an en­abler and in­flu­encer: it can de­vel­op the en­abling en­vi­ron­ment, but it must al­so be­come lean ef­fi­cient, an ob­jec­tive which it has not graced with even lip ser­vice. The dri­ving force is the pri­vate sec­tor, not the Gov­ern­ment, re­quir­ing a new less com­bat­ive, more col­lab­o­ra­tive ap­proach.

Di­ver­si­fi­ca­tion takes time and is a “try­ing” process. On in­de­pen­dence, In­dia pri­ori­tised the teach­ing of math­e­mat­ics and sci­ences. When the dig­i­tal rev­o­lu­tion ar­rived, In­dia had an abun­dant, ad­e­quate­ly, trained nat­ur­al re­source (peo­ple), on the right scale, to take ad­van­tage of the op­por­tu­ni­ty.

Now is not the time for pop­ulism. What is need­ed is lead­er­ship to ex­plain the re­al­i­ties, change di­rec­tion, and en­gage the coun­try.