Home' Trinidad and Tobago Guardian : September 19th 2013 Contents BG18 | COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt SEPTEMBER 2013 • WEEK THREE
This commentary offers a frank assessment
of elements of the 2014 national budget.
A e e
Under the Westminster system of government,
the Prime Minister has unrivalled powers, hence
the constant reference to dictatorial tendencies.
He or she has the power to appoint and replace
the members of the Cabinet. It is a structure
with a trickle down effect where the Cabinet
allocates the resources of the country so in the
end everyone is almost beholden to the Prime
As expected, the recent Cabinet reshuffle left
the Minister of Finance unchanged. In delivering
his budget, the minister displayed a refreshing
understanding of the issues and it is the first
time in more than a decade that there is an
experienced finance professional in the Cabinet
with full accountability for finance.
Yet the burning question is whether he has
the necessary support and power within the
Cabinet in order to deliver on the long list of
pronouncements in the 2014 budget, most of
which has been brought forward from prior
You will recall there was a time when the
Prime Minister appointed himself as the Minister
of Finance and this was so for obvious reasons.
In business, the right hand of the chief executive
is often the financial controller. This needs to
be the case in government as well.
Given the lack of political capital currently
enjoyed by the administration, the Prime Minister
would do well to demonstrate tangibly that there
is a significant and irrevocable role for Howai
in the "inner circle" given his credibility amongst
large segments of the population. The country
may very well be better off in terms of imple-
mentation and execution.
We basically must get to the stage that when
Howai says jump, it is only a question of how
E e e
We are in election season but there has been
the suggestion from the Government that this
is not an election budget. I beg to disagree and
to further state that this and every budget for
the past decade or more have been election
How does one justify the fact that ten years
ago, our expenditure was one-quarter of the
size it is now? So that you appreciate the number,
I am talking about a country living comfortably
on $15 billion in 2003 and now budgeting expen-
diture of $61 billion in 2013.
Has our infrastructure and quality of life
improved in similar proportion?
With five general elections in ten years between
2000 and 2010, it was all about electioneering
and political expedience. That is why subsidies
and transfers have been ramped up and remain
at current elevated levels as it is a mechanism
to win or maintain votes.
Those transfers and other misdirected expen-
diture have caused inflation which then neces-
sitated a higher rate of increase in salary adjust-
ments within the public sector, which then
further increased the level of recurrent expen-
diture. It is a vicious cycle of waste.
The administration may have had little choice
politically since once a hand out is given it is
political suicide to remove. Thus, the simple
maintenance of the unproductive largesse when
it may have been economically prudent to reduce
such expenditures represents an election budget.
Let us not fool ourselves on this one.
Much has been made of a $61 billion expen-
diture package. Those opposed will have a field
day on this matter, but pause for a moment
and think, a feature that is sometimes alien in
All our measures of performance are based
on year on year analysis. Government expen-
diture drives much of our economic activity
and, as I pointed out last week, if expenditure
were to be held steady year on year, or worse,
still reduced, our economic growth will fall off,
which will lead to another round of finger point-
ing.If we are honest in our call for accountability,
it must be on both sides and there must be a
call for Opposition members to explain from
an economic and financial perspective how and
why our expenditure levels moved from the
aforementioned $15 billion in 2003 to $54 billion
in 2008. It cannot be a case of "it wasn t me"
since they were supposed to be following an
agreed plan, and the boast is that this plan will
be reintroduced with a 2030 timeline.
When $54 billion went to $45 billion in 2009,
the economy went into a nosedive and it is only
now we are beginning to see some signs of
growth. Recognise and appreciate that growth
is returning as our expenditure levels have once
again gone past the $50 billion mark.
Note that during the period of rapidly increas-
ing expenditure, our inflation rate jumped sig-
nificantly. The often referred to Vision 2020
plan called for an annual inflation rate of five
per cent, yet we got to 15 per cent without so
much as an educated excuse far more for an
apology. That inflation has come down to more
reasonable levels is more in part to a reduction
in the rate of increase in Government spending
in the economy and a cooling in international
commodity prices as opposed to any specific
Regardless, our spending power has declined
by 50-100 per cent over the last decade, a sure
recipe for poverty and places more reliance on
Overall it shows how much each year s per-
formance is dependent on those prior. It also
shows that poor governance in one year or over
a period can stay with us for years to come. We
have introduced seven years (2001-2008) of
mal-expenditure of biblical proportions.
We continue to misallocate resources except
the rate of increase in the misspending is less.
Don t expect anything more than seven lean
years (2009--2016) before simple year on year
changes extricate us from the mess. This, of
course, excludes the opportunity cost of 14
It is time for both sides to stop playing politics
and accept their responsibilities and their fail-
Crime has been the singular biggest issue
facing this nation over the past 13 years. We
have now moved from Operation Anaconda to
Operation Hope, we have moved from stubbornly
insisting on a failed Minister of National Security
to, on average, changing one every year.
Yet for me the most amazing part of the dis-
cussion on crime was the recent question from
leaders in the private sector regarding the "rein-
troduction" of a highway patrol and a rapid
response unit. The question was asked as to
whether one ever existed. The truth is it did
and this was back in the late 1990s.
It is amazing to me that a government that
campaigned on the issue of crime is only now
after four years seeking to reintroduce what is
a basic part of any security apparatus. In order
for a population to feel safe, there must be a
comfort that there is someone to call in an
emergency. This is as basic commonsense as
you can get. It has taken four years to recom-
mence that conversation when a blueprint was
already in existence and functioning when many
of the current protagonists were last in govern-
Even more amazing is that the knowledge of
its existence is a distant memory as it reflects
how far we have gone down this path of a spi-
ralling crime situation. Delving deeper into this
issue brings out the conclusion that we often
deserve what we get.
Accusations have been passing back an forth
about the offshore patrol vessels, the award and
cancelling of the contract, the arbitration matter,
what the vessels was supposed to achieve and
who is to blame. We are now discussing different
vessels and drones.
Does that discussion make any sense if, as
a nation, we cannot sustain and support some-
thing as simple as cars and motorcycles for a
highway patrol and a rapid response unit from
one political administration to another? In the
five years that these units went from functioning
to oblivion, we were showboating on crime by
requesting proposals for billion-dollar equipment
in the form of 360 degree radar, patrol vessels
and attack helicopters.
Years later, we, as a nation, have woken up
from under a rock to realise we are spending
too much per capita on national security. Yet
after the purchase and installation of all these
grandiose equipment, can we afford to maintain
it?Observe the state of disrepair of the average
police car and draw your own conclusions.
In business, there is the KISS principle, which
means "keep it simple, stupid". Our politicians
on both sides have seemingly gone out of their
way to focus on the last "S" as opposed to the
There are many more stories to tell, so maybe
I will continue this next week.
Ian Narine is a broker registered with the
Securities and Exchange Commission.
Four untold stories on the 2014 budget
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