The Effect of Ten Year Austerity

Austerity has had nothing to do with economics. It was about getting out from under welfare. It’s about politics abandoning vulnerable people.

Barry Kushner, a Labour Party councilman in Liverpool

The political campaign in Barbados crescendoed to its unprecedented result last week. First time in our history a political party won all the seats contested. The euphoria of the win for 70% of those who voted has receded. The reality of going to the supermarket to buy food, pay the mortgage, avoid potholes which dot our highways and byways to compete with the joy of living in a tropical paradise.

In a boast by the major political parties, Barbadians were promised that policy prescriptions are available to fix all of our problems in the near time- yes with a little sacrifice from all our people. In the sharp glare of the post election period again there is the reality that for the last – approximately – ten years, Barbadians have had to suffer austerity measures. The prospect of having to suffer more belt tightening- though not appealing- appears to be required given the chronic nonperforming domestic economy.

As a boy attending secondary school, we were taught that the mixed economy of Barbados with its rich social services offering mirrored what obtained in Britain at the time. Over the years as preferential arrangements with the Mother country were retired, leaving our small islands to compete in an era of globalization, a lack of fiscal disciple of the public and household purses have seen an increase in debt. This has inevitable led to our ability to sustain the standard of life we have become addicted to in the 80s, 90s and 2000s.

The negative effect poor of budgeting at the household level will impact a family’s ability to satisfy its day to day needs to put food on the table, pay the bills, send the children to school, credit rating at the bank etc, the same can will be mirrored at the country level. Barbados is reported to be the third highest indebted country the world and the highest in the Caribbean region. We have been hit with a junk credit rating by the international rating agencies, AND, an a visit to the lone primary care hospital sees patients being feed dry bread and corn beef for lunch and sometimes dinner.

What Barbados has had to endure with a poorly performing economy in the period 2008 to 2018 is unprecedented. We can debate if the current state of the economy was caused by Arthur’s injudicious spending under his fourteen year rein, whether it was the incompetence if the former administration that was unceremoniously booted from office last week or both. We are at a point, we have to fix it. This is where the more academic writer writes that this is a seminal moment for the country.

Relevant Article:

The link to the above NY Times article was forwarded to the blogmaster by longtime BU family member Jah Ras Jahaziel Tafari. The article paints a picture of what happens to a country – Britain in this case – when it seeks to manage by the numbers to reduce its debt burden and deficit. It is a long article, worth the read.

  • Historic building are being refashioned, sold, razed to convert state assets to cash
  • Open public spaces community spaces sold to developers
  • Budgets of state entities aggressively slashed (this includes to welfare department)
  • Rapid downsizing with ‘itinerant jobs replacing full-time positions’ and ‘voluntarism outnumbering paid staff’

Read the article for more.

The thesis of the article is about the debilitating impact of austerity measures on a society. In Barbados we have experienced similarly.

  • Sewage on the street
  • Infrequent collection of garbage because the SSA is unable to buy garbage trucks
  • Deep potholes on our roads
  • Unreliable public transportation
  • Increasing number of vagrants and homeless people
  • Unavailability of drugs on the formulary because government is unable to pay suppliers
  • 40% reduction in enrollment at tertiary institution

The article ends with an the ominous warning that austerity is here to stay!

This is Britain, this is Barbados.

The Grenville Phillips Column – The Alternative to Austerity


Grenville Phillips II, leader of Solutions Barbados

On 21 April 2017, I attended a public meeting by the Barbados Private Sector Association and was disappointed by their austerity-based solutions to Barbados’ dire economic situation.  The Government, private sector merchants, financial institutions and individual economists are warning us to brace for austerity.  Eight years ago, austerity meant forcing most Barbadians to access their savings in order to survive.  Today, it means to force most Barbadians into poverty.

Approximately 2 years ago, Solutions Barbados published a plan to bring Barbados back from the brink of economic ruin without the austerity promised by others.  The plan is based on proven solutions and is still relevant.  However, the Government continues to ignore this plan while stubbornly pursuing its strategy; while the IMF warns of devaluation.

We have shared our plan with anyone who will listen, including the NUPW and CTUSAB.  It was also published in both print and on-line news media, and also on the radio.  To-date, the responses have been overwhelmingly positive, because the plans are workable.  The published plan consists of 4 main steps – none of which require laying-off civil servants, reducing their wages, incurring additional Government spending, or begging other countries to lend us money.

Step 1 is to increase Government’s local currency revenues to run the Government and pay local currency debts.  This can be done by reducing taxes on personal and corporate revenues to 10% of gross revenues – with no deductions.  This will make taxes easier to calculate, pay and audit.  It is also fairer.

Currently, businesses pay taxes on net-profits.  Therefore, it is possible to run a successful business for decades without paying any corporate taxes.  However, since the Government must obtain revenue, the taxes that such businesses currently legally avoid paying are extracted from the rest of us.  Well, not under a Solutions Barbados administration.

To facilitate the prompt payment of all taxes, all taxes previously owed to all Government departments will be forgiven and VAT will be abolished.  Businesses are currently being forced to pay VAT when they issue an invoice, rather than when they receive payment.  This is unfair, because businesses may not get their invoices paid until months later – or never.  Taxing businesses before they receive payment is an insidious method of taxation that can both prevent businesses from growing, and reduce their competitiveness.

The forgiveness of debts to Government should have happened as part of our 50th anniversary jubilee celebrations.  However, only a few select persons benefitted financially from those celebrations.  Therefore, everyone will start with a ‘clean slate’.  In exchange, all new non-payment of taxes will attract a penalty of 10 times the value of the outstanding amount for those who blatantly refuse to pay.  Those who refuse to pay taxes under a Solutions Barbados administration will be competing unfairly in our economy, and that will not be encouraged.

Step 2 is to increase foreign currency revenues in order to pay for imports and foreign currency debts.  This can be done by temporarily reducing taxes on all foreign currency earnings to zero.

Step 3 is to increase productivity in both the public and private sectors, and reduce wastage and unnecessary costs in the public sector.  This can be done by managing all public services to the ISO 9001 Quality Management System.  Parts of the ISO 9001 system can be implemented across the entire public service immediately, to the benefit (and relief) of those who deliver and receive Government services – at no additional cost to Government.

One low hanging wastage fruit is to stop public workers from paying income taxes.  Currently, the private sector must pay additional taxes, which are then given to public sector workers, who then give it to the Government.  The accounting bureaucracy and costs required to manage the taxation of the estimated 25,000 public workers can be easily avoided.

Step 4 is to depoliticize the public service.  In a Solutions Barbados administration, public workers will be selected and promoted on merit alone.

Any of these steps taken by themselves will not pull Barbados back from the brink, because frustrated public services can frustrate the entire process.  Therefore, they must all be taken together.  We need an increase in local and foreign currency revenues, and a better managed and depoliticized public service.  The Minister of Finance is strongly advised to examine our plan before we run out of viable options.  We continue to be available to discuss it.

Grenville Phillips II is the founder of Solutions Barbados and can be reached at

Austerity Consortium Alias

Submitted by Hamilton Hill

This missive is directed to the Austerity Consortium herein after referred to as AC. On very good authority this motor mouth nuisance has it that it is you to whom these concerns should be directed. Firstly I should not be faulted for painting the pictures that show you and yours in a bad light. My ability to eloquently verbalize is the result of programs put in place long ago by Errol Walton Barrow, the very same ones this administration seems driven to bring obliteration to. For starters AC, as poor as we were neither sister, brother nor myself ever went to school hungry back then. Today such an occurrence is commonplace. We attended everyday,and they were four of us.That number today go in shift,two at a time. You must realize my dear AC that the pronouncements made from the political platform are expected to be reflected in policy.While it is foolhardy to believe that any party has ever kept every promise made, there is only one party that has ever so shamelessly broken all. Care to guess which one buddy? In the face of it all there is now the attempt to intimidate us into silence.

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Barbados Economy in Neutral

Credit Photo:Bajanfuhlife Blog

Credit Photo:Bajanfuhlife Blog

Everywhere Barbadians on the Rock turn we are being bombarded by talking heads on the economy economists included. Many have forgotten it is the economists who are mainly responsible for the economic policies which have helped to wreck our economies.

After about six years of a stalled economy Barbadians are being warned to brace for more hardship to be delivered in the ‘Budget’ promised in a few weeks. We are told an IMF document has been circulated to stakeholders for comment, a process anchored by a 3-man committee headed by retired Permanent Secretary William Layne.  One important stakeholder, the public, is left to speculate the full content of the IMF document. We have become so use to NOT being embraced in the process by our government, it provokes little or no response by the majority of citizens.

BU’s position is consistent. If there is no confidence shown by key stakeholders in the economic policies of government we will go nowhere fast. A further point: all the focus is being placed on tweaking fiscal and monetary policy to reposition Ship Barbados but nothing about  a change in the conspicuous consumption behaviour of Barbadians.  Nothing about aggressively incenting export led projects. After the ‘pretty’ talk the Barbados economy is driven by consumption behaviour which soaks up scarce forex. It makes good sense to improve efficiencies how we do things in country to benefit from the cost savings but we have to earn foreign exchange to pay our bills if we want to maintain a reasonable lifestyle.

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Barbados at the Crossroads

Submitted by William Skinner
Peter Wickham political scientist ‘...gets almost all his polls right and has only missed one big one here...’

Peter Wickham ‘…gets almost all his polls right and has only missed one big one here…’

At some point, an individual has to look at life and determine whether it is going the direction he or she would want it to. Countries must do the same. As I survey the political scene and pay rapt attention to the rapidly decaying socio – political environment, I am forced to ask myself if Barbadians are really serious about the direction the country is taking.

It is obvious to all objective citizens that the country is in turmoil as it transitions from the quaint little village to the world stage. A stage for which it failed to prepare. Hal Austin, a regular contributor to this blog, got it right sometime ago, when he opined, that we were perhaps fooled by the praise that we constantly heaped upon ourselves and that which others gave us. We were told by the world’s top diplomat that we were “punching above our weight”. We bestowed the title great economist on former Prime Minister Owen Arthur. We declared Errol Barrow the father of the nation. We have thrown about the word brilliant with great carelessness. For example, Leader of the Opposition Mia Mottley has been accused of being brilliant! We are a people who declared we had the best of everything: the best education system; the best roads; the best hospital; the best schools and of course a literacy rate of 97% percent.

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