Submitted to BU as a comment
There is no great mystery to the 1.5 billion. The borrowing is the price for keeping the employees in government and statutory corporations employed during a recession, providing the same level of access to social services (like free university education, bus fares at 1.50), providing support to the hospitality industry and a modest fiscal stimulus.
Wages and salaries were 783.7 ml in 2008 and and 881 ml in 2009. Transfers and subsidies (payments to the university, community college, QEH, BTA, Transport etc, to subsidize their salaries and other costs), were 1,075 billion in 2008 and 1.135 billion in 2009. Capital expenditures (which Ince does not seem to understand) were 286ml in 2008 and 283 ml in 2009.
To put some context the salaries and wages bill was 797.6 ml in 2007, transfers and subsidies were 901.7 ml in 2007 and capital expenditures were 241.4. Our fiscal problems did not start with the new administration. The recession and hence slow down in revenues shows how vulnerable the economy is on the fiscal side. The fact that the previous off budget spending is now clearly highlighted also means that we can observe the issue more clearly (no more Greece style accounting).
Now when professor Howard suggested that we slow the rate of increase in UWI students he was nearly crucified. I noted that Mascoll (who works at UWI) took that off the table as a corrective measure, despite the fact that UWI is one of the largest transfers.
When Robinson spoke of a vat increase he was cursed out of town.
When Estwick said wage freeze he was shouted down by the unions in particular.
When Owen said that we needed a large fiscal stimulus people said what a great economist he is (he needs to explain how a large fiscal stimulus is compatible with a moderate fiscal deficit).
Motley has said that wages in the public sector are not to be touched.
Can someone please tell me how we are to solve the fiscal problem and meet all the above demands?
In my opinion the government has carried the economy for two years of recession and we have all benefited. Whatever you think of Hartley he is right on the employment statement. unemployment at 10.6 % is a great achievement in the current context. However, I don’t think the government can continue this for much longer, it either needs to make some further spending cuts and/or raise taxes.
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