Ian Boyne, Contributor
OVER THE last few years, as the ideological and policy positions between the two parties have narrowed considerably, the Budget Debate has been more of a misnomer than a rigorous, cut-and-thrust, point-by-point debate.
Opposition Leader Edward Seaga has been less strident and scorching in his presentations; more statesmanlike and positive in recommendations, with the Opposition Spokesman on Finance Audley Shaw reaching for his proverbial scandal bag of "revelations" to add excitement to what would be an otherwise tame presentation. Finance Minister Omar Davies has made their tasks that much harder this year with his painless, no-taxation budget.
Sure, arguments will be raised about the exploding debt and doubts will be raised about the projected revenue targets. A lot will be said about what was not said and which sectors have been neglected and so on. But the average person breathes a sigh of relief that there is no new direct taxation.
For many property owners, including those on fixed incomes and those struggling to make ends meet, the fact that the anticipated increases in property taxes will not be imposed is good news, indeed. It is hard to discuss economic issues rationally and impartially in Jamaica without that discussion being cast in partisan light. So a generally positive assessment of Omar Davies' presentation will be seen as mere apology for the People's National Party administration which has allegedly "run with" a lot of things to the detriment of the country. Commentators feel that to say anything positive about the Government is to "Sell out" or to indicate that one's entire body is in the trough!
Commentators feel constrained to make disingenuous statements like "we are already at a 27 per cent taxation to GDP level so we are at the threshold, therefore it's no big thing that there are no new taxes in this budget." The same commentators who in one breath preach the Gospel of Fiscal Restraint in the next chastise the Government for making inadequate allocations to this or that sector or for raising user fees in health. You can't eat your cake and have it, ladies and gentlemen.
THE DEBT ISSUE
Some commentators will choose to concentrate on the fact that the Government will be increasing its borrowings to finance the budget, crowding out the domestic private sector and dangerously expanding our already burdensome debt. But as arch-Government critic Wilmot Perkins himself has said in his sober moments, the problem is not so much with the debt. As he has explained rationally, in a growing, attractive economy one does not have to be overly concerned about incurring debt. Just as the Finance Minister rightly drew the example of students' borrowing to finance their education and home owners' paying mortgage to finance their dream of owning a home, as not being negative.
Debt is not necesarily bad if one is showing signs of acquiring the means of financing it.
Only the dishonest would disagree with the Finance Minister when he said that despite the tight year we experienced in 2003/2004, few persons could have anticipated that we have been "here with a dollar which has been stable for close to a year. We are here with foreign reserves higher than they were a year ago. We are here with our external bond prices trading at levels in certain instances never before reached. We are here in a situation where there are several external financial institutions seeking to take us to the market."
The World Bank has hailed Jamaica as being one of the most business-friendly and facilitatory in the world. The prospects for economic expansion have never been as good in many years. These are indubitable facts which impartiality, fairness and rationality should impel us to acknowledge. It has nothing to do with "bigging up" the Comrades. It has everything to do with honesty.
The PNP's management of the free market economy has been anything but a disaster. Omar Davies has shown skill in macroeconomic management. Taking delight in now confounding critics, Davies told the House on Thursday that the comparison of targets established for 03/04 against the actual out-turn was "instructive": GDP growth of 2.1 per cent was within the range, the Net International Reserves was significantly above the target, the primary surplus as a percentage of Gross Domestic Product (GDP) was on target and the deficit was within the 5-6 per cent range of GDP. The only failure in the macroeconomic target was in terms of inflation and this is after establishing a credible track record of single digit inflation for six consecutive years.
No wonder the Minister could say boldly that "there is a clear message for our creditors at home and abroad. Judge us in terms of our performance."
The 04/05 budget is a concrete manifestation of the public good called social peace and social harmony. The Memorandum of Understanding between the Government and the trade unions provide the Government with considerable space for economic manoeuvre. That the Government was able to inspire the confidence of the trade union movement to pull off this historic agreement is a major achievement. The Minister rightly pledged not to betray the trust of the trade union which, once squandered, might never be regained.
CONFIDENCE HIGH
The Government not only comes into this budget year with the blessings and goodwill of the trade unions but, perhaps more importantly, with the confidence of the capitalist class. It has been a long time under both JLP and PNP administrations that the private sector has been as confident, bullish and optimistic. Not since the first couple of years of the Seaga administration of the 1980s has the capitalist class been as hopeful and confident about Jamaica's economic prospects. It is not the best of times for the Opposition JLP: Its message of gloom and doom and impending collapse is simply not credible and is certainly not being taken on by the private sector.
Listen to the leading private sector people. Listen to the interviews with the captains of industry and commerce on the Breakfast Club. Read the interviews of the leading entrepreneurs in the Business Observer and the Financial Gleaner and read their articles, and you see the optimism and positive expectation brimming over. Read of the many expansions of domestic companies, absolutely falsifying the view of financial analyst Ralston Hyman who made the incredible statement that the Government is only pushing foreign investments and that domestic investment is not growing.
The business class feels comfortable about the P.J. Patterson administration. In my interviews with many of them, they are expressing pleasant surprise that interest rates have been tumbling and yet the exchange rate is not slipping. This was formerly thought to be almost impossible in the Jamaican scenario. It's the confidence that the market is expressing, these private sector people are saying to me.
Leading private sector people in the financial, commercial, manufacturing and service sectors are speaking even more excitedly about Jamaica's future than Government spokespersons. You can touch the contagious enthusiasm. The Opposition is in deep trouble. Its job is to convince people that the sky is falling. A sensationalist-seeking media might oblige, but many persons are not taking the bait.
The robust confidence of the private sector, the significant projected increases in investments in bauxite, tourism, information and communications technology (ICT), infrastructure, and the critical support of the trade union movement have given a significant psychological boost to the Government and acts as a damper on the Opposition. The fact that there is no major tax package in this budget should also buy the Government some social peace, or at least contain the social tensions. If the Government were pursuing a reckless neo-liberal policy, then the Opposition JLP could safely depend on "the fire next time".
But among the most important statements made by Minister Davies in his Budget presentation was that "Governments do not exist simply to meet fiscal targets. Whilst I have stressed the absolute necessity of meeting fiscal targets, let me hasten to state that we do not view this target as an end in itself. Governments are elected to respond to the needs of the people and so our commitment to working to develop the human resources and to raise standards of living is in no way diminished by our commitment to make the fiscal targets." This is one of the most progressive statements made by this Minister who sometimes seems to have forgotten his own progressive roots. Stressing the necessity of both fiscal and social responsibility, the Minister said, "Anyone who would try to posit the one against the other is engaged in a fool's game."
ENCOURAGING ENTREPRENEURSHIP
The PNP administration does need to stress the fact that neo-liberal reforms, as important as they might be, are not ends in themselves. There are a number of countries, particularly in our Latin American region, which have achieved the right macroeconomic targets and which have failed to expand employment, living standards and the quality of life. The Government has not made drastic cuts in social expenditure and employment and has sought to protect the poor and marginalised.
"Despite the constraints," the Minister assured, "we are going to work to improve the social sectors." I was happy to hear the Minister give us his Government's commitment to "ensure that those who are most deprived are not forgotten as the economy expands," which often happens in countries pursuing Washington Consensus policies.
I await the Prime Minister's presentation to see whether there will be meaningful initiatives and incentives to expand small business development and to really encourage entrepreneurship. Succeeding governments in Jamaica have not shown the kind of imagination and commitment to really build entrepreneurship. This is a challenge to which the present administration must rise.
Entrepreneurship is crucial to Jamaica's development and it is not enough to provide incentives for entrepreneurs in the ICT sector, as announced by the Finance Minister. We have to seriously expand small and medium-sized businesses in Jamaica to deal with the employment deficit in this era of jobless growth. Here the Government will have to come up with some of the activist state ideas espoused by Eddie Seaga. Perhaps Seaga might give the Government some good suggestions, as he has done without fail for the last few years.
Also, the Government's ability to improve tax collection without provoking a backlash, especially among small business and professional people, will depend to a large extent on its ability to foster a national vision and to build national cohesiveness. The Prime Minister's speech will be a critical one in this regard. He has to come good this time. He has to provide the framework within which his Finance Minister's package can work.
Ian Boyne is a veteran journalist. Your comments are welcomed at ianboyne1@yahoo.com.
