Introduction:
The intellectual argument that Barbados is in deep economic (and social) crisis has now been conceded by the deniers – those who talk nonsense about the nation punching above its weight and exaggerating the soft influence we have in the region and, the world. Of course, it is all self-praise, the unfortunate outcome of economic ignorance and wishful-thinking.
I have said before, and will repeat again, that: first, the narrative that we have had a period of prosperity in the first decade of the 21st century was a myth built on over-borrowing on both a household and government level, ignoring our inefficient productivity to such an extent that we even believed that life owed us a living.
The second point that needs stressing is one that is in danger of seeping in to the gilded story of our economic prosperity: again, let us concentrate it to the post-independence years, and that truth is that the official myth-making of our economic growth, generally given as three per cent annualised, is, to be polite, crap. Had Barbados had a three per cent growth rate over the last decade, compounded, our post-global recession story would have been totally different. As things stand, we are up to our necks in debt, tourism, the main driver of the economy, is in intensive care and the priest is standing by to perform the last rites, while, in the meantime, relatives are fighting over how to divide up the spoils even before the last breath leaves the body.
Vision:
Barbadian governments, of both colours, have failed to understand the basic lesson of public finance: that if your spending outstrips revenue then you will end up with a deficit. In this sense, it is no different to a normal household; arguments over whether a national budget needs to balance are theoretical. What determines the strategy, however, is reaching a consensus on the kind of society we want to produce. We can be a Brazil, US, China or India, with huge communities of hunger and poverty, while a small group of obscenely wealthy continue to live extravagant lifestyles behind their barricaded gates with their security guards and high-powered rifles.
If we need a fair and just society, something along the Nordic model, then we have to promote that above others; if the model we admire is the Anglo-Saxon one (the US and UK) then say so; or if it is the state-controlled capitalist model a la China, then let us be clear about that. The problem at present is that the DLP government is drifting along without any idea of where it is going and how it is going to get there. Senior governor macroeconomic advisers are known to be great admirers of Canada, but they do not seem to have any knowledge of recent Canadian economic history.
Under Pierre Trudeau Canadian federal taxes increased at an astronomical rate, which, along with high inflation, made Canada a basket case. However, under the Progressive Conservative Brian Mulroney, following Margaret Thatcher in Britain and Ronald Reagan in the US, the newly elected Canadian government embarked on a massive programme of privatisation. Air Canada (1988), PetroCanada (1991), Canadian National Railways (1995) – in all, over two dozens state bodies were privatised, including the air traffic control network. Why is the DLP so reluctant to hold on to a portfolio of corporations that have nothing to do with the core duties of government, apart from making ministers feel important?
Within two years of Paul Martin’s 1995 budget, spending fell by 10 per cent; the government cut defence spending, unemployment benefits, and aid to provincial governments, all once considered untouchable. Another outcome was that Canada experienced a fifteen-year boom which came to a halt only in 2009, when the economy fell in to recession. With these strategic cuts, federal spending as a share of GDP fell by five percentage points to 17 per cent in the five years to 2000. The cuts also allowed the Canadian government to balance its books during the first decade of the 21st century. For utilities and corporations providing socially important and economically strategic services, there can be a golden share giving the government the right to intervene in subsequent policy, including price increases. This is not an economic history of modern Canada, but it is a broad look at a much-admired growth model.
Reforming the Public Sector:
With an approximate 30000 people of working age on the public pay roll, it is obvious this top heavy situation cannot continue for much longer. At least a third of the public sector workforce must be offloaded on to the private sector, and this can only be done by rapidly expanding the private sector, especially the micro, small and medium enterprise sectors. By any analysis, after six years this government should have had a clearer idea of the kind of public sector reforms it would like to see.
First, and there is no way round this, whatever they do will entail a battle with the public sector trade unions; then again, this is a government that has unwritten a Bds$6m debt to the NUPW. What in the name of heaven is a government doing underwriting a debt for a trade union? Not even in the wild days of the Soviet Union was this nonsense done. However, if the government needs ideas to reform the public sector, they should take a brief look at the two obvious departments: the ministry of finance and the prime minister’s office. The ministry of finance has a budget of about Bds$50m, which could easily be reduced by 10 per cent without any impact on the quality of service received by the public. There are a director of finance and economic affairs, and a permanent secretary, both on salaries of $149928, one of those could go; there are five stenographer/typists, a position made redundant by personal computer and other forms of technology; those positions could go and the staff given an opportunity to retrain. There are a further eleven clerical officers, earning about $30000 each, five of those positions could go, saving $150000; there is an entertainment allowance of over $64000, which could be reduced by a system of reimbursements.
The MOF also spends over $233000 on temporary staff, why is this? It smacks of bad management; some of these people should be made permanent staff and the other positions got rid of. There is also a department called the Budget Administration, one of those departments they have simply because they have always done so. Staffed with a deputy permanent secretary on just over $121000 a year, a chief budget analyst on $98000, two senior budget analyst on a total of $$67000 and six budget analysts, grades one and two, each earning nearly $34000 a year. Ideally, the department should be closed, and at best the minister should get rid of the deputy permanent secretary, one of the senior budget analysts and three of the budget analysts. There is also a tax administration section, which comes under the minister, whose work could easily be transferred the Inland Revenue, saving a total of $285000.
In fact, the ministry of finance needs a thorough root and branch clean out, including the VAT depart. This department alone is typical of public sector inefficiency, costing more than they collect in revenue. With 103 staff, including a two principal auditors, ten senior auditors, 21 auditors, 17 tax officers, 15 clerical officers, one maid/messenger, one stenographer/typist and one telephone operator, along with a customs officer grade 0ne, and two customs officers grade two. The VAT department is out of control, and that has nothing to do with the mounting amount of uncollected taxes and the bogus $25000 its pays staff as a so-called plain clothes allowance.
Then, of course, there is the shadow department, the so-called Supervision of the Insurance Industry – whose duties have now been transferred to the Financial Services Commission. The $300000 the department costs should now be savings. If they have all been transferred already, then the FSC should have to explain how it has accommodated the positions of supervisor of insurance, a deputy, an assistant supervisor of pensions, and eight insurance officers, grades one and two. What do these officers do? Who do they supervise? How they supervise them? What are the outcomes?
Space restricts me from giving more details, but we can look at the Central Purchasing Department, General Management and Coordination Services, the Economic and Social Planning Unit, the Statistical Department, the Barbados Competitiveness Program, which costs taxpayers about $380000 a year; then there is the absurdly named Public Investment Unit, costing over $1m a year, whose work must be the most mysterious of all. Scrap it and save $1m a year.
Analysis and Conclusion:
We can also go through every civil service department with a fine tooth comb, if we want to talk about reforms and savings. But, first, there must be intent on making savings and improving efficiencies, in accepting the reality of a small island economy, with no natural resources, no dynamic economic sector, and a public payroll that is overloaded. The simple lesson for Barbados, instead of the arrogance of over-confidence, is that we have got to ready ourselves for a lowering of living standards. If we do not then we are in denial.
Although this message should be preached from every pulpit, every platform, every rum shop, the truth is that it is not as scary as it should be.
In Britain we have had to lower our standard of living, or, in the old terms, tighten our belts: eating out once a week instead of twice; buying own-brand gin instead of more expensive brands; travelling by public transport instead of taking a taxi on those special occasions. When this reality comes home to most Barbadians, including our politicians, then the nation will realise that at best we have about fifteen years to fix the economy, or three parliamentary sessions; failure means being relegated to the bottom tiers of global economies.
Prime Minister Stuart is like some religious denominations, happy preaching other worldliness, while avoiding having a social gospel to deal with the trials and tribulations of this world. He has an escape clause, when it comes to discussions about competence, all he says is that he delegates; but there is no excuse for the inability of the finance minister to devise a workable programme to rescue the economy.
In his formidable book, Aftermath: the Cultures of the Economic Crisis, Professor Castells tells us of new socio-economic formations which will emerge from the aftermath of the global crisis. There will be those business models based on the emerging technology, new cooperative and mutual business formations, a much reduced public sector and a highly organised services sector, mainly around finance and networks of micro-businesses. With some luck, this government will start looking at alternatives to a failed system, of putting young men and women in jobs, by suspending income tax and national insurance for a two-year period for tradespeople taking on apprentices or the private sector offering jobs to non-relatives or the children of close associates. It could do worse than setting the SJPP on a project of bringing some of our great houses back to life, including the Eyrie Great House, some of those abandoned in the Garrison, our Heritage heartland, Sam Lord’s Castle, and many more.
All these are projects that we do not have to wait for Chinese handouts to get working on, employing qualified trades people and trainees across a range of trades, from plumbing and electricians, to designers, architects, and carpenters. As things stand, senior ministers and their advisers are sitting on their hands, doing nothing.
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PS: I have no interest in the commercial development of St Lawrence Gap, although I wish the entrepreneurs well. Wrong picture used by the Nation..
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