Smith: Budget Proves FNM Visionless
Published: Thursday June 11th, 2009
PLP MP for St. Thomas More Frank Smith summed up the FNM's 2009/2010 budget as being proof that the "emperor has no clothes". Mr. Smith pointed out how the recent comments of a prominent backer of the FNM about the deficiencies of this budget proves that the FNM is better at getting elected than they are at governing. You may read Mr. Smith's presentation in full below.
Remarks by Frank Smith Member of Parliament, St.Thomas More Subject: Budget Communication- 2009/2010 June 8th 2009
I thank the people of St. Thomas More for the privilege to speak in this place. I reaffirm my pledge to do so with reason and with reasonableness but also without fear. I shall follow the truth, convinced that it is truth which builds and sustains trust. Mr. Speaker, I shall use information from this budget to demonstrate: (i) this budget is a disaster. At best it well leave the country greatly exposed to serious risks; and (ii) it has been presented by a Prime Minister who is better at winning elections than at governing, a reality which is particularly tragic to the country because in his Cabinet are persons who have not shown the courage or the stature to tell their leader the truth.
Why a disaster? At its core, what is this Budget saying to us all? The answer lies in a summary as follows: (i) the world is in economic crisis-- a crisis which has nothing to do with us except as victims. Our Government has made no mistakes, and if only the world in general and the United States, in particular, could get its act together, everything in The Bahamas will be A-OK. (ii) Despite the view that our Government has made no mistakes, this economic crisis caused by the world in general, and the United States in particular, is impacting The Bahamas in a variety of ways most noticeably in declining levels of Government Revenues and increasing levels of unemployment. (iii) In the face of this crisis caused by the world in general, and the United States in particular, and without one acknowledged mistake by our Government, that Government though brilliant and caring, is understandably unable to do anything meaningful other than to tinker with some administrative arrangements as we all wait for global economic conditions to improve, probably by 2012.
Mr. Speaker, in summary that is what this Budget seeks to convince the Bahamian People.
Mr. Speaker since the Free National Movement has been returned to Office, the Rt. Hon. Prime Minister has resumed the practice he had from 1992 to 2002 of attending Junkanoo. So at the time of crafting this Budget, he would have known that, during one of those parades, the One Family Junkanoo Group had a theme –“Things Tough- What Ya Ga Do?” This theme was brilliant and inspiring precisely because the first part was so true, and the second part sought to cause us all to search deep for answers. One Family was reminding us of a lesson from old ‘when the going gets tough the tough get going’. The question from One Family was that citizens of a free and sovereign nation, in these hard economic times “What can you do?”
But alas! This Budget answers the question of “What can you do?” by essentially saying “not much”. Not much, but wait for the world to get its act together.
That is a disaster of a response to the question posed by the One Family Junkanoo group – “T’ings tough – What Ya Ga Do?”
Firstly, the Budget is a disaster because it does not reflect the Bahamian way-- that spirit which allowed so many of our parents to toil and make something out of nothing. No excuses. Just making things happen such that the sons and daughters of maids, taxi drivers, fishermen and straw vendors could climb mountains which the parents themselves could have only seen as dreams. This Budget’s betrayal of the true Bahamian way is particularly hard for the 5,000 or so persons who are expected to graduate this year from high school not only because the Budget offers no prospect of a job, but it also fails to help them to understand the spirit of sacrifice which created the modern Bahamas.
Mr. Speaker, that is just disaster number one about this budget.
Secondly, this Budget is sending a terrible message as to character—it simply breaks or ignores real obligations of a democratically elected Government. Obligations are not conveniences which can be dismissed with the simple line “I do not have the money”. Mr. Speaker, obligations are obligations. Expressed differently a deal is a deal. It is simply a matter of immorality to respond to tough times by converting obligations into conveniences as the Budget does to many sectors of our Society.
Mr. Speaker, that is disaster number 2, about this Budget.
Disaster number 3 is that the Budget rests on a foundation of falsehood. The falsehood is that “I just do not have it”.
It is not true to simply assert that the Government has no money, with which for example, to pay insurances for nurses. How can one say one has no money when this very Budget is affirming that in taxes, the Government will collect over a billion dollars and will borrow hundreds of millions more. The Government has money. Plenty of it and to whom much is given, much is expected. Thus, the Government has to make choices as to who gets what from that money pool. That is the truth---not the absence of money, but the need to make choices and this Budget reflects the absence of a preparedness to be consistently honorable in making those choices. Thus, the Budget, for example, is reflecting a choice to keep Junior Cabinet Ministers at large salaries and with perks including chauffeured cars, essentially for doing nothing but providing the assured loyalty which keeps a Prime Minister in Office.
Some may say that this is a small thing. That would be a mistake because prudent fiscal management begins with an acceptance of the need to be honorable, the mindset that every dollar counts and an acceptance that if one takes care of the pennies the dollars will take care of themselves.
The fact that the Budget fails to do so is disaster number four. Consequently, there are countless other examples where highly questionable choices have been made when this Government was deciding who will get and who will not get from the pool of money collected in taxes from borrowings.
One particularly interesting example, of a peculiar choice is provided by the owner of one of the country’s largest farms. Specifically, he reminds us that ‘the Department of Agriculture began with only 37 people shortly after political independence in 1973 and has now increased to about 400. During this period, agricultural production in the country has decreased to one tenth of what it once was. Mr. Speaker, it is a Government choice, reflected in this Budget, which allows that situation to continue. I repeat the point, the owner and operator one of the Country’s largest farms reminding us that “The Department of Agriculture began with only 37 people shortly after political independence in 1973 and has now increased to almost 400 while agriculture production in the country has decreased to one tenth of what it once was.
And let me hasten to say that the proper response to this unfortunate choice is not to start sending people home – no hatchet is necessary- what is necessary in these times is leadership - leadership with a vision that will properly use the talent and human resources in the Department of Agriculture—Leadership that would cause the Department to be a part of the solution to the economic crises we are in.
Why can I be so certain about this? Mr. Speaker, I lay on the table several photographs. I represent that I personally took those photographs and I did so since this debate started. Among other things they show bags of onions – spoiled but laying in inventory at the Produce Exchange.
Mr. Speaker as I speak truth to power, the picture of weak leadership comes increasingly into focus. On the expenditure side of Government finances, it is mainly about who will get and who will not and the choices reflected in this Budget speak loudly that under this Government the country at best is spinning wheels. That is the reality because this Government, via this Budget, reflects a lack of purpose - vision if you wish. The most obvious sign of weak leadership.
In leadership, there is a difference between being biggity and being strong. In leadership, those who are biggity are often those who are weak and this Budget exposes this Government as being led by one who is biggity, but wanting in leadership.
Weakness to be blunt.
The lack of vision, the reality of weak leadership is even more evident from a look at the revenue side of this Budget. That evidence of weak leadership is reflected in the absence of meaningful calls for and programs to encourage our people to do more to build the country with our own hands; meaningful calls for and programs which reflect an understanding that economic growth is an important element of development but real sustainable progress must go further, or an acceptance of the philosophy of development which respects the role of self reliance today as a key for tomorrow. No wonder the Chairman of the Government’s National Commission on crime says that this is a time for new leaders to sing new songs of patriotism. No wonder a former FNM Cabinet Minister was recently on radio with the charge that “boys now sit where men once stood”
Mr. Speaker, these are not extremist views. Go through this Budget. A lack of purpose and weak leadership are so evident as to raise the question as to how is it possible for the Prime Minister and his cabinet to not be able to think of one way to take new initiatives to create one new and sustainable job which in turn could help to raise some revenues to prevent the Government from literally breaking contracts be they with nurses, doctors or teachers.
Why in response to the question things tough; what ya ga do- we cannot find one idea to -grow more -fish more expertly -create more things to sell to the visitors who do come.
Slick public relations aside, how can a leader possibly be strong if he cannot find one way to get our visitors to spend more at Clifton Heritage Park for example, or to support the Junkanoo community to make and/or sell anything from cowbells to costumes; from drums to dance lessons? Slick Public relations aside, how can a leader possibly be strong and in these times present a Budget which cannot see promise anywhere in the whole world of fashion. For surely he must realize that just as there is today less agriculture than when he first became Prime Minister in 1992, there is less work being done by fashion designers and seamstresses. Not to mention there being less manufacturing.
It can only be weak leadership which would have the country sign a European Partnership Agreement (EPA), one benefit of which is that it allows greater access to larger markets for our musicians and entertainers and in the very first Budget after signing that (EPA) make no provision to promote and support the immense possibilities in these area. Why must the country continue to ignore voices like Dr. Nicolette Bethel, a former Director of Culture, as she concludes that “politicians have not done their research on culture, and how it can benefit the economy.”
Weak Leadership Mr. Speaker, returning briefly to Agriculture, it is only with weak leadership in this economic climate to have the Produce Exchange look like this - photographs which I lay on the table. In doing so, I assure Parliament that I took them personally—again, since this debate started. They provide just a glimpse of what is essentially a rat hole.
Mr. Speaker, it is only with weak leadership that a Government would so blatantly ignore so many public calls for more action to help pull our people together as we search for the best ideas without regard to narrow partisan considerations.
Being biggity is not the same as being strong. Strong Leaders know that what we in fact seek, we already have, provided we focus properly and effectively on what it is we do in fact have—deep inside. Thus another basic disaster of this Budget is that it seeks to convince us as a people that all we have is impotence in the face of an economic crisis over which it says we have no control.
I have a little book called The Art of Power. It points to the reality that being a strong leader is to demonstrate and foster five key traits: faith, diligence, mindfulness, concentration and insight. This Budget demonstrates so firmly that its author, our Prime Minister is disastrously lacking in each of these areas.
Faith is about confidence. Surely leaders with faith, that is confidence in themselves and their people would not seek, as this Budget does, to convince us collectively that we are essentially helpless in the face of economic conditions. Mr. Speaker, speaking truth to power is to acknowledge that there is no any single answer to our economic challenges but a collection of supposedly small initiatives could make a material difference. In fact, a recently published report from a private sector group called “The Economic Summit” point to opportunities for movement along the road of transformation/strengthening of our nation’s economy.
Disaster But alas! A leader, biggitty but in reality weak, presents a Budget which ignores such readily available advice.
Disastrous This march along the road of transformation/strengthening of our nation’s economy requires greater diligence from our Government. More diligence - that is working more on promoting the best and highest selves. Given that truth, how long - will the Government via this yet another Budget ignore call after call to take public policy action to reduce the rate at which Bahamians are drowning themselves in consumer loans. After all, this reality is greatly aided by a Government policy on salary deductions. To illustrate, I have a copy of a pay slip from a teacher. It shows that after salary deductions from loan payments this teacher is taking home $165.36 per month. Why would a government in 2009 allow that? This is a teacher who happens to be, a single mother with a need to find a place to live to cover utilities, grocery, personal grooming and other upkeep. Is this Government so void of diligence/intelligence as to not appreciate a relationship between this actual take-home pay and the low national grade point average of which the business community complains so loudly? How could a Government bring to this Parliament a Budget which is so silent on such significant realities? Prime Minister, in the event your Deputy did not tell you at the end of December 2008, consumer installments credit in The Bahamas was in excess of $2.2 Billion dollars, and as a consequence, the average Bahamian is taking more than 10% of his or her monthly salary just to pay the interest on these loans. This is before fees for late payments or other charges.
Disaster. Disastrous.
Mr. Speaker, mindfulness is the energy of being aware of what is happening in the present moment. Strong leadership demonstrates and promotes a greater degree of mindfulness than what is shown in this Budget.
The Government’s handling of the closure of the Four Seasons in Exuma provides a significant and timely example of a lack of mindfulness. Does the Prime Minister or any of these Ministers not appreciate that when a Four Seasons Hotel closes it becomes news, major news throughout the Resort development community all over the world? Would they not appreciate that reality creates an urgent need for the Government to be active and visible in that resort development community to protect what is really our key national asset – our brand – Brand Bahamas? Specifically, how could the Prime Minister not appreciate that without visible Government intervention, there is real danger that the closure of the Four Seasons Hotel will deepen the perception among potential developers that resort developments in The Bahamas are not sustainably viable? Do they not understand that any movement in that direction will make it significantly less likely that many partially completed projects around the country will ever get to the finish line?
Weak leadership.
In fact, only a truly weak leader will present this Parliament a Budget which shows a lack of appreciation for the real danger that the closure of Four Seasons Hotel may well cause other potential developers to conclude that it is not possible to make money as developers of resorts in The Bahamas. Mr. Speaker, my fellow Bahamians this is a very serious matter- an extremely high price for the weak leadership which slick public relations has sold to this country as the opposite.
As it turns out within an hour or two after the Prime Minister had presented his Budget to this Parliament, the Chairman of Bahamar, was pleading to the private sector for greater awareness of the potential fallout from the closure of the Four Seasons Hotel. A strong Prime Minister would not be dismissive of this type of advice, especially from a person who is a credible investor by any measure. Mr. Speaker, the risk to our country is real, and this Budget ignores that reality to our collective peril - PLP & FNM. In fact, it shows just how unwise it was to have dismantled the Ministry of Investments because if this Ministry were still in existence there would have been greater clarity as to who should now be doing what and there would be more resources focused on being proactive.
Mr. Speaker, concentration allows leaders to deal with first things first. In the context of this Budget a strong leader would have carried the country beyond operating on the basis that one’s political opponents are so void of sense that, whatever they did was so stupid that it had to be stopped, reviewed, or cancelled.
This type of action has real consequences. For example, think Mr. Speaker of the plight of straw vendors who continue to be forced to operate their businesses under a tent while the Island experienced rains as heavy as we did recently. Besides reinforcing the perception that we remain a third world experience, inventories are destroyed. People suffer real losses. Yes, Mr. Speaker everyday the evidence mounts that many continue to suffer, and continue to do so because of the unwise policy of the Government which led directly to so much stop, review and cancel. The truth is that this Government inherited a financial situation which reflected the best of times, and this Budget now reflects the worst of times. All in essentially two short years.
Disaster
Mr. Speaker, being biggity is not necessarily the same as being strong and this Budget exposes the great weaknesses of our national leadership.
Insight, Mr. Speaker, from a leader is a quality rooted in looking so deeply as to have the capacity to show one’s followers the path out the suffering. That is clearly absent in this Budget. Furthermore, in fact this Budget helps to shine light on a larger truth – that from 1992 when the Free National Movement first came to power to date the standard of living of the average citizen of The Bahamas has decreased and is in further decline. I repeat, from 1992 to date the standard of living of the average citizen of the Commonwealth of The Bahamas has decreased and this Budget serves notice that it will decrease further.
Two things we know from that verifiable disaster:
- during that period, the current Prime Minister has been in Office for 12 out of the 17 years.
- the country’s economic performance during the other five years were better than the country’s performance during the twelve years he has served as Prime Minister. His callng his predecessor “wutless” does not alter that reality.
In fact it is becoming increasingly apparent that an enduring legacy of this Prime Minister’s total tenure in office is that he would have presided over a decline in the standard of living over the average Bahamian.
Before ending this aspect of my address, I point to yet another disastrous aspect of this budget. Inherent in this Budget is the view that all we have to do is wait for the world in general, and the US in particular, to get their acts together – Hopefully by 2012 and The Bahamas will inevitability return to the proverbial “good old days”. Earlier, I made reference to remarks by the Chairman of Bahamar. In that same speech he urged the country to not simply assume this inevitability. I add my appeal to all who love the country—it is not written in the Bible or in any global constitution that it is inevitable that once the U.S. economy improves, the personal circumstance of the average Bahamian will necessarily improve, and do so quickly.
In terms of inevitability of an economic recovery in The Bahamas, this budget ignores the reality that much change is taking place in America. And every element of change has implications for us. For example, just last week the Wall Street Journal published a report that the American Public is responding to the economic challenges by increasing their level of savings. We have to be concerned that such a shift could be a harbinger of fewer luxury vacations or the maintenance of fewer vacation homes.
In terms of the suggestion of an inevitability of economic recovery in the Bahamas, this budget also ignores the reality that the world is changing and every change has implications for us. For example, since the start of this budget debate, the Organization of American States OAS has voted to allow Cuba’s reentry into that body.
Even if economic recovery were to come to the Bahamas, there are some for whom the damage has been done so badly, that it will take them years to recover.
Just focus briefly on the matter of home ownership. Generally, mortgage lenders maintain a policy which requires borrowers to prove at two, but more typically three, years of continuous employment. Thus, persons who have recently lost their jobs will likely need two to three years after they do get a new job before they can again be eligible for a typical mortgage. That is a predictable consequence of what is happening now.
So I urge my fellow Bahamians to not take too literally the forecast in this budget which suggests that all you have to do is to hold on until 2012.
I turn now to the Budget in terms of how it proves that this Government and its’ leader are no longer worthy of the public’s trust. A key to maintaining trust is a consistency between what is said and what is done.
For example, two years and eight days to this day the Prime Minister assured the country of the following: -“good paying jobs for unemployed Bahamians” -“income growth for those who were unemployed” - “Reduced poverty, particularly in our inner city areas and our family islands” Mr. Speaker that was two years and eight days ago.
None of this happened.
Despite that reality this Budget shows that to June 30th 2009, the deficit will be the largest in the country’s history - more than double what had been projected just last year. I repeat, we are in a financial mess and nothing of consequence which was promised two years and eight days ago has happened.
This is significant because the red ink would have been more tolerable if from the time this Government came back to office in 2007 to now investors on BISX had not seen the value of their holdings decline by more than $800 Million, if more development and sustainable matters had taken place, if the deficit was as a result of growing pains and we had more to show for it. But clearly that is not the case.
Thus, beyond the public relations hype, the reality facing the Bahamian people is that yet another promise is about to be broken. This one is the promise which has been made that the sales proceeds from the sale of BTC will be used to build a new hospital. It now appears more probable that these proceeds will go to reduce the mountain of debt which exists despite the fact that so many promised initiatives remain just that - promises.
Speaking truth to power, let me point to two other examples as to why this government is less and less worthy of the public’s trust. If it were not so serious, the first of the two could be seen as a joke.
Mr. Speaker, in the face of the terrible crime scourge facing this country, this Budget is making it cheaper to own a gun because it reduces the rate of duty for the import of guns- all guns from BB guns to Bazookas. How can this make sense? Especially when the same budget is slashing the financial provision to fight crime and maintain law and order. Is this a way of announcing a shift in policy to one which is encouraging each citizen to take the law into his or her own hands?
I turn to the second matter which shows why this government is less and less worthy of the public’s trust. Mr. Speaker, at page 28 of this Budget Communication, the Prime Minister makes a statement which is interesting in its precision. - I quote: “at the end of June 2009, the stock of Government debt is expected to stand at just over $2.9 Billion or just over 38.9% of GDP” Mr. Speaker, note the precision – the date - being at $2.9 BILLION was to be the end of June 2009; ratio of 38.9%. Clearly, these specifics were important to the Prime Minister. He does not disclose why. One possible explanation could be his sensitivity to his numerous prior efforts to paint the PLP in a negative light and an awareness that those efforts have helped to plant in the public’s consciousness a sense that once the figure is below 40%, everything is okay.
In fact, that idea of being below 40% will no doubt, have been one of the reasons he would have been referring to the Government as having the ‘head room’ to borrow more.
Now Mr. Speaker, the Government, like many individuals, operates with term loans as well as with overdrafts. As a matter of practice, overdrafts because of their fluctuating nature are not included in the Prime Minister called the “stock of Government debt” I repeat when the Prime Minister said that the “stock of Government debt” would, at the end of June 2009, be at $2.9 Billion, this would not have included overdrafts. While this is in line with general practice given the precision which was clearly so important to the Prime Minister and since his percentage was so close to the magical 40% it would appear that he would have better served the public if he had explained the reality. Secondly this reality of overdrafts not being included in the stock of government debt sometimes leads Ministers of Finance to use it to mislead the public—to “cook the books”, so to speak. Mr. Speaker, please note that I am not making an accusation, but pointing to a risk.
How it may be asked, could this practice of not including overdrafts in what is called “the stock of Government debt” be used to “cook the books”? The answer is as follows:
As the Government approaches its fiscal year end of June 30, a Minister of Finance may deliberately finance Government borrowings by use of overdrafts rather than term debt.
Shortly after the fiscal year end, a Minister of Finance would then convert much of the overdraft to term debt.
The effects would be:
At the end of the fiscal year the reported “stock of Government debt” is in reality understated.
Months pass before the public gets to know the truth. Let’s not forget—for Government fiscal purposes, June 30 is the end of one year and July 1 is the start of a new year.
I gave this backdrop to frame the following questions:
Does the Prime Minister still believe that at the end of June 2009 the stock of Government debt will stand a $2.9Billion?
If not why not?
Since this budget was presented to Parliament did the Government draw down any loan?
- If so, how much?
- If so why would the Prime Minister have not anticipated the need to draw down the funds within days after he would have presented this Budget to this Parliament?
If so, was that draw down used in any way to cover previously unauthorized excess overdraft and or to assist with meeting the Government’s payroll of May 2009?
If such draw down took place but for purposes other than the above, would the Prime Minister outline those purposes?
If the Government did draw down any funds, is the Stock of Government debt not already in excess of 3 Billion – far higher than what has been predicted to the end of June.
Is it true that the Government publishes 2 estimates of GDP?- one called the “nominal GDP” and one called the “real GDP?”
If so, would the PM explain the difference?
If so, would the PM explain which of the 2 measures of GDP was used to calculate the 38.9%?
If so, what would have been the comparable ratio if the other measure had been used?
Which of the two measures of GDP is more widely regarded as the prudential norm and realistic?
Mr. Speaker, I raise these questions in the national interest and without seeking any short-term partisan political advantage.
In doing so, I draw to the attention of this Parliament that there are rumors of significant intensity from nominally creditable sources, that when this budget was presented to Parliament the Government was operating with Overdraft levels far in excess of what had previously been approved by its bankers and even before its month-end payroll. The rumors further assert that to make the month-end payroll, the Government had to plead for a special temporary credit facility which was granted on the basis that a term loan would be converted to bring the overdraft back in line.
Mr. Speaker, a recent Bahama Journal quotes the managing partner of one accounting firm and the immediate past president of The Bahamas President of The Bahamas Chamber of Commerce as sharing the view that that The Bahamas is in a “financial crisis”. They are correct. Just how deep a crisis? Very. Certainly deeper than we were in just a few months ago partly because this Budget uses up the head room that the country has to borrow. And it does so at a time when:
- The Government is providing no answers, and continues to refuse to listen to the crescendo of voices appealing for a greater sense of national unity.
- There is a shrinking GDP and a rising debt – a combination which is deadly.
- Global oil prices continue to trend upward. As I speak, the price of a gallon of gas at one distributer in New Providence has climbed back above $4.
Just think Mr. Speaker, of how exposed this country now is in terms of where we would be if, at any time during this summer, oil prices were to climb anywhere near to where they were last summer - only this year with the so called “head room to borrow” having been eaten up by this budget.
I end with a sign of the times.
During the last campaign a particular Financial Analyst was quite visible and vocal in his efforts to have this government elected. Two years later, just last week, this Financial Analyst, wrote a newspaper column about this budget which reflects a virtual resignation that this said budget has no significant element of what the Financial Analyst called “reform” and his assertion that as a result “the country will see no fundamental change”. Mr. Speaker, I urge this Financial Analyst and the countless others who worked to get this government elected and are disappointed in this government’s performance to look on the bright side. For there is one really significant positive in this budget. The Government has been exposed as being without vision and the Emperor has exposed himself for being without clothes - Better at winning elections than at governing.
Mr. Speaker during a campaign, money and other resources can support the public relations program to convince the electorate that being biggitty is the same as being strong. The process of Government offers no such opportunity because the results speak for themselves. MR. SPEAKER DESPITE THIS DISASTROUS BUDGET THERE IS A WAY – FOR EACH OF US TO WORK HARDER; WE CAN AND MUST DO MORE AND MORE TO BUILD OUR RESPECTIVE FAMILIES AND STRENGTHEN OUR NEIGHBORHOODS; WE CAN AND MUST COMMIT LESS CRIME AND NOT CONDONE WHATEVER CRIME WE DO SEE; WE CAN AND MUST, EACH OF US DO UNTO OTHERS AS WE WILL HAVE THEM DO UNTO US, BE IT AT HOME, WORK OR PLAY – IN SHORT FOR EACH OF US TO REALLY SEEK TO DO JUSTICE, LOVE MERCY AND WALK HUMBLY WITH OUR GOD. MAY THAT GOD, GRACE OUR EFFORTS.