D.K. DuncanDESPITE HIS apology for the more superficial considerations of tone, perception and manner, Finance Minister Omar Davies has some critical questions to answer. Those questions involve issues of truth and consequences, motive and trust. To be more specific, when did the Minister know that the fiscal deficit would be increased significantly, from $15 billion to $30 billion? What was it that caused this major increase? Was he or the public officials aware of the consequences of this increase and when were they aware? What were the real considerations in the decision-making process in allowing the deficit to become so large, that it is now "unsustainable".
He also needs to answer simply and directly the questions put to him by Opposition Spokesman on Finance Audley Shaw in Parliament on January 21, 2003. The answers he gave to the person at the constituency conference is fraught with grave implications.
ACCOUNTABILITY
On April 29, 2002, eleven days after Minister Davies made his 2002/2003 Budget presentation, the Prime Minister tabled Ministry Paper No. 19 in Parliament. Aimed specifically at Ministers of Government, the paper included the following principles on Ethics and Governance:
1. Holders of public office are ACCOUNTABLE for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.
2. Holders of public office should be as OPEN as possible about all the decisions and actions they take. They should give reasons for their decisions and restrict information only when the wider public interests clearly so demands.
TRUTH?
Dr. Davies has made a formal response, by way of full-page advertisements in the two daily newspapers, to criticisms of his recent speech to the N.W. St. Andrew P.N.P. Conference. In the response he suggests that it was the expenditure on flood damages which "had contributed to a widening of the deficit which now has to be corrected as it was unsustainable". Is this true? Ralston Hyman, writing in the recent Sunday Herald reminded us that the target presented for the fiscal budget in April 2002 was 4.4% representing an over-expenditure of $15 billion. This was public information. Two months after the elections of October 2002 the Finance Minister revealed to Parliament that the excess expenditure over that which was budgeted for (fiscal deficit) would be $30 billion or 8.4% of GDP. - a further increase of $15 billion. The Minister told Parliament how this additional figure of $15b was arrived at. He is to spend $8.2b for net additional SALARY PAYMENTS, $3.8b for higher interest charges, $1.1b to local authorities, $900m to Blue Cross, $350m for Local Government Elections and $200m for increased pension payments. This adds up to $14.55b. There is NO REFERENCE TO FLOOD DAMAGE EXPENDITURE. It is this extra $15b which has caused the present crisis emanating from this "unsustainable" fiscal deficit of $30b. (8.4% of GDP)
CONSEQUENCES
The most significant factor contributing to the $15b increase in the deficit is the $10b public sector salary payments for which only $2b had been budgeted. This new $8.2b for public sector salary payments includes additional payments for Parliamentarians and Councillors. When did the Finance Minister know of this and what did he do about it? He needs to tell the nation simply, clearly, and directly who got the net additional salary payments of $8b and WHEN did they get it.
He needs to tell the people of Jamaica as well as Audley Shaw and the person who asked the question at the NW St. Andrew PNP conference. The comrade asked, "Could nothing have been done about it before?" In other words, when the Finance Ministry paid out the $8.2b, was the Minister aware of the effect on the Fiscal deficit and its consequences? Was he aware of the "social and economic cost to the society" Ralston Hyman outlined some of these costs in his article:
1. "It is the massive
fiscal deficit which has been fuelling liquidity, which is being used to purchase the United States dollar.
2. It is the deficit, which is causing the slide of the dollar to continue.
3. It is the deficit, which has forced Standard and Poors (S&P), the international ratings agency to change its outlook on the Jamaican economy from stable to negative
4. -- the deficit has resulted in a "crowding out" of the private sector at a time, when the government needs to reduce its net spending- that is reducing its expenditures, while increasing its revenue intake."
MOTIVE AND TRUST
There are many more questions for Dr. Davies. One more will suffice for now. Based on his full-page advertisement, was he lying on himself when he suggested in his speech that the choice, theoretical or not, was between expenditure on highways and flood damage? An apology is not enough for any Minister of Finance who knowingly allows the fiscal deficit to move from $15b to $30b. It cannot be true, using the Minister's own figures, that this was caused by expenditure on the floods. The Minister says "On reflection, I think the tone and manner in which I addressed the conference was regrettable, and for this I apologise unreservedly." This apology may be necessary but it is definitely not sufficient. It is not his style but his spoken word and action that is under scrutiny. The people of Jamaica are suffering as a result of actions, not tone, manner or perception. One love, One heart.
A dental surgeon, Dr. D.K. Duncan is a former General Secretary and Minister of Government in the PNP administration of the 1970's.
