Introduction:
Now that the general election is over, and the nation has indicated its distrust, or indecision, of the two main parties, the marginal majority held by the DLP must, nevertheless, be treated with the respect and seriousness which the urgency of the nation’s predicament deserves. It is, however, an opportunity for the DLP government to start afresh, and, whatever the impulse, the prime minister must take a firm grip on policy and drive through his ideas. This is now his government, the electorate have given him a mandate and it is his moment to make history. He now has an opportunity to write his name in the nation’s story comparable to that of Errol Barrow or even Grantley Adams. Equally, he can go down as another Bernard ‘Bree’ St John or Erskine Sandiford, as someone who made very little impact on the nation and who is remembered for all the wrong reasons. After appointing his Cabinet, the first thing the prime minister – and at the time of writing only the attorney general has been appointed – should do is draft a ten-year development plan, with radical pathways for dragging Barbados, kicking and screaming, in to the 21st century.
Reforming the Public Sector:
Some civil servants, in their arrogance or ignorance of democracy, boast that while politicians are there for short periods, they are there for a working life. One of the first things the prime minister should do is to dis-abuse them of this nonsense. However, this does not mean entering territorial fight with senior civil servants; the changes must be carried out with civility and professionalism on both sides in the interest, most importantly, of present taxpayers and future generations. The failure of politicians and civil servants to work effectively together will in any case impact on the quality of service the general public receives. But, it is to improve the efficiency of this service that changes must be made.
First, he should appoint a policy delivery unit in his department by reforming the so-called general management and coordination services unit, with the authority to intervene right across the entirety of the public sector to ensure that policy is being adhered to and in being implemented in agreed time limits.
This could be funded by cost-savings. At present the unit has one permanent secretary on an annual salary of about Bds$147926, a chief research officer ($98087), a director of communications ($88182), a senior administrative officer ($88182), and other positions, including a cleaner, a so-called general worker, seven maids, two telephone operators, three driver/messengers, a fulltime messenger, one senior messenger, four clerk/typists, two stenographer typists, three clerical officers, and a maintenance coordinator, a total of 51 staff at a cost of over Bds$2m a year.
This is the staffing levels and positions that have been in existence since Adam was a lad, many of them totally irrelevant in a modern age. Instead of a departmental cleaner, why not form a central government cleaning department with responsibility for cleaning all government offices, and privatize it, giving ordinary people the feel for being entrepreneurs?
In this day and age there is no need for so-called maids, to do what? Just put a couple electrical tea-makers in offices and let the staff get on with it; why two telephone operators, just let calls go through to the available staff members who can transfer those calls as relevant; three driver/messengers, a senior messenger, a fulltime messenger, can all be replaced with a simple well-staffed post room; four clerk/typists, two stenographer typists (an oxymoron since a stenographer is a typist), can be replaced by giving all members of staff should have a personal computer on their desks, all departmental drivers should be formed in to a single pool with a three-year government contract to provide their services. And the permanent secretary, senior administrative office and director of communications could all be replaced with a head of department and a press officer, all bringing about enormous savings. Little additions such as template letters, style sheets for report writing will go a long way towards improving efficiency and cost reductions. Reforming the public sector is not principally about reducing staff numbers or cutting costs; it is in the main about making the public sector more efficient and effective in its delivery of services to the public.
Training is also important.
We need to reform our educational system, the administration of justice and the rest of the criminal justice system; we need a traffic control system, and a proper environmental policy. Finally, any reforms of the public sector must have at its centre the full use of the diversity of talents who at present are under-utilised. Working in the public sector must become one of the most prestigious ambitions of our brightest and best coming out of any university, including the University of the West Indies. But they must be given the freedom, in an orderly way, to develop their ideas and reach for the top so that the nation, the very people who pay for their education, could ultimately benefit.
Economic Reforms:
The first challenge for the government is to drive down both the deficit, while at the same time encourage savings. This can be done by increasing VAT on certain luxury items (alcohol and unimportant luxury goods), the introduction of a tourist visa reasonably priced (Bds$30) will fund the BTA, for example. There are numerous other cost-saving initiatives that could be introduced. One just needs common sense reasoning, not economic expertise, to realise that government cannot borrow to pay civil servants salaries, rather than raise the necessary revenue. Common sense tells us that if we are underperforming the global economy, and indeed the regional one, then our economy we are in dire straits. What handsomely paid technocrats are paid for is to come up with solutions to these problems, even if they are not fully accepted by the decision-makers.
With Governor Worrell, despite the lessons of Economics 101, we know what he is not in favour of: decoupling and even devaluing the Barbados dollar from the Greenback, spending any part of that massive war chest we have as foreign reserves; creating a new retail bank to financialise the system; widespread public sector reforms; the presence of Canadian-owned banks.
However, what we do not know is what he prefers, what his answers are to these historic economic problems, deep structural problems that clog up the system and have nothing to do with the 2007/8 crisis – and that is what he and his senior team are paid for. Prime minister Stuart does not have the luxury of sitting back and waiting for a miracle to happen, like the academics and technocrats, it is his job to rescue the nation’s finances.
We know, based on its most recent projections, the central bank is basing the nation’s economic recovery on the traditional tourism sources of the UK, Canada and the US to themselves recover; but these economies – even the Canadian – are not as strong as they used to be. Without repeating the numbers, if is worth saying that to make a simple point. According to Tony Rennell, three years ago the Chinese comprised about four per cent of hotel guests; now they comprise a third.
We have already seen the government building up a portfolio of three and four star hotels and one five star, the Hilton, which it runs on a franchise. Yet, for totally inexplicable reasons, we have seen the government underwriting Bds$70m and rising to fund the Four Seasons white elephant on the false belief that what tourists really need to come to Barbados is another five star hotel – while the others remain under-occupied. This is the economic reasoning of the mad house. Not only that, does our medium to long-term tourism plan include marketing to the Chinese, the fastest growing international travelling sector?
In any case, is tourism the only answer to our catastrophic economic underperformance? We already have a world-class premium product, and have done for the last three hundred years, rum, yet compared with its peers (other spirits) Barbadian rum is seriously underperforming. I have been calling for the past few years for a legal definition of Barbadian (Bajan) rum, which goes unnoticed in a political culture dominated by lawyers. Can Barbadian (Bajan) rum be defined by the breed of sugar, the manufacturing of the molasses, the art of distilling, what exactly is it? If we do not legally define out rum Bajan rum will become a generic product like Demerara sugar and we will lose that intellectual property right.
Infrastructure Improvements:
The new DLP government should use its first 100 days to launch a massive Keynesian ten-year infrastructural plan in which many of the traditional communities, including all the slums in the middle of the city, should be bulldozed and rebuilt. It should turn areas such as Nelson Street, Wellington Street and the surrounding areas in to a modern garden communities, complete with play areas for children, offices, one, two and three bedroom homes, offices and shops, along with a school(s) and places of worship. They should have free wi-fi, a cycle park, a skate board park, road tennis facility and community halls with gyms. It should improve Palmetto Square and make it an extension of our main shopping thorough fare, with decent retail shops and offices; it should improve Tudor Street, Baxters Road, Suttle Street, New Orleans and that entire district. I have already suggested a small theme park linking Culpepper Island to Ragged Point, in a way that has not been done since Sir Grantley Adams filled in the sea between Pelican Island and the mainland to form the port. They should also carry out a cost/benefit analysis on developing a dry ski slope in the Scotland District, two or three nationwide leisure centres, a good dolphinarium and more. In short, he must give the impression of thinking. There are those who will pour scorn on these plans on the grounds of funding; but they are all fundable, an issue that I have dealt with elsewhere and will be quite prepared to do so again.
Funding:
Government should put a compulsory purchasing order on the entire area, then draw up the necessary plans complete with completion costs; then it can approach the money markets to raise the money, using the development as collateral, it can auction off parts of it to foreign direct investors, or it can become more cautious and develop the area gradually, giving existing property owners first refusal on the new apartments.
There could also be dual pricing: one for locals and one for second-home overseas buyers, including Barbadians. Priced correctly, the overseas buyers could part-subsidise the funding for locals. Government should enter the money markets, institutional and retail in a robust way, using its fiscal muscle to attract investors.
For retail investors, it should take lessons from Greece and Israel and launch a Diaspora Development fund, either closed or open ended, with taxed investments, tax-free growth, and tax-free dividend withdrawals, after a set period, say five years. There must be a reason why people want to invest in Barbados. It should launch a premium bond, based on the UK example, to fund the leisure sector; introduce a compulsory long-term saving plan, based on the Singapore or the US 401(K) models, or even the UK’s ISA plans.
We need to draw up a portfolio of assets that could be sole off: the Government Printery, Transport Board, the hotel portfolio as mentioned, instead of selling CBC auctioning a licence instead for a second television station, impose a tax on mobile (cell) phones, get rid of the vulgar ZR vans, impose a new tax regime on churches and other places of worship and secular charities – the list of possible revenue-raising policies is endless.
Analysis and Conclusion:
All over the world there is an intense debate going on between regulators, politicians, academics, think-tanks and the press over the financial crisis and policies to return troubled economies to growth. Even in Italy, Spain and Greece, where the technocrats have intervened, the discussion has been robust and informative. Yet, for deep cultural reasons, there is none of this echo in Barbados; there is a mistaken belief that the minister of finance, the governor of the central and their advisers know best – leave it to the ‘experts’. But an opened, informed debate can produce remarkable results if all the participants are honest about their knowledge and biases.
Only this week I attended a meeting with a eurozone central bank governor – it was under Chatham House rules so I cannot give too many details – organised by the Centre for the Study of Financial Innovation, which should have been relayed to the Barbadian public. First, it showed that even when the governor is a highly respected academic s/he is not a fount of all knowledge. Sometimes in a crisis other people, especially those working at the coal face, have workable ideas and suggestions that may be, just may be, worth trying. This may not be the Barbadian way of doing things, but changing behaviours is one of the challenges of innovation.
Instead of seeing this crisis as doom and gloom, it should be seen as an opportunity to refine our governance and re-structure our systems to make them more relevant for a modern, high-tech world. Despite the resistance of the central bank governor and his supporters to new ideas, we are still waiting, five years after the global banking crisis, for the green shoots to spring from their alternative suggestions. All we get, however, are excuses: that it is a global problem, that our major trading partners are having problems, everything but sound proposals to answer the uniqueness of the Barbados economic situation.
In the final analysis, the sham that masquerades as a legal system, including the long delays and questionable expertise, will block any hopes the government, and many senior business people, have of making Barbados a leading regional – even global – financial centre. Business people need legal certainty, competence, good non-banking professionals and sound governance if they are to do business from offshore jurisdictions. To attract reputable international businesses we need a competent and transparent regulatory system, and the Financial Services Commission is not it; we need a proper ombudsman service representing the interests of consumers; we need a proper banking network to provide the credit needs of businesses. They also need high-quality supporting services, including first-rate middle and back office workers – so far, apart from the local CFA Institute branch, there is no evidence of this. In fact, government could spend some of the money it is wasting on the UWI on funding able young people through the CFA Analysts exams.
The ball is now in prime minister Stuart’s court, it is his to drop or serve with passion. There can now be no excuse.
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