Budget Speeches Analysis of Opening Statements 2012-2015 pt 2.

In 2012, after lecturing parliamentarians on the need to rebuild confidence in the state, to act responsibly, to pay debts, to protect the rule of law, to ensure that revenues are spent wisely, and to promote investor confidence – you know the sort of thing, K goes on to present “a social contract that we have signed and must deliver” that will “give pride to its people, give surety to the investor, give freedom of mind and energy to the youth, and give a level of trust to all, residents and non residents.” Well, three years on, I guess the jury is still out on that one.

Should we be as surprised by the PM’s words as he himself appears to be?

Should we be as surprised by the PM’s words as he himself appears to be?

Unwittingly perhaps, K admits, whilst apparently wandering around in some desert somewhere, that the previous government was not entirely to blame for the country’s woes. “In these arid days, better days invariably require that we find better ways. That path through the desert means that we must identify what oases we can maximize as we move towards unleashing the untempered waters of sustainable growth.”

I will not even attempt to explain how one “leashes”, never mind “unleashes untempered waters”, that is to say waters that are not lessened or moderated in any way, which is what untempered means, especially in the desert. Look, Dear Speechwriter, if the goddamned waters were not lessened or moderated in any way, how can they be in need of being “unleashed”?

K really ought to have a chat about metaphors with his speechwriters. Or perhaps they really do see him as a messiah wandering in the wilderness.

In 2012 K saw the need to tackle unemployment, rein in fiscal management, and review existing modes of doing business; investment promotion and facilitation had to take centre stage to induce foreign direct investment flows. Also, K admitted the need to re-skill, retool and refocus human resources to promote growth, and create new jobs in existing and new sectors. It seemed almost as if he were bestowing absolution to the government he replaced, and putting the burden on private industry to get its act together.

The future for Saint Lucia looked grim: “Our international rankings will invariably continue to fall as others place a greater emphasis on making the right reforms.”

But then, almost as an afterthought, K remembers, his attention glued to his rear-view mirror, how much he despises the previous government and goes on a rant about the “ever increasing discovery of mismanagement and poor decisions … unclear deals, projects commenced without clear lines of finance, imprudent purchases, the reckless and undervalued disposal of state assets.”

K also recalls that we were then in the second financial year in the OECS Single Market and Economy. I imagine we all now “have a better appreciation of the possibilities that exist within our new harmonized economic space, particularly in terms of business expansion and partnerships.” K declares that his budget would “shift our state onto an upward trajectory of sustained growth.” Well, maybe. Huh?

In 2012 K said, “Our current debt level is about 71 percent of GDP up from 65 percent in 2011.” (Actually, outside agencies give a higher level.)

He went on to say, “If we continue on our current path, without making the necessary fiscal adjustments, then, by 2015 the debt-to-GDP ratio will soar to 90 percent. This path is clearly not sustainable.”

Well, where are we now in 2015? These are figures issued by the IMF World Economic Outlook, October 2014:
2011 = 67.0%, 2012 = 74.1%,
2013 = 79.6%, 2014 = 84.6%.

Clearly K is pretty far down a path he himself has characterized as “not sustainable”. Since he came to power the debt level has risen unacceptably. Equally unacceptably, Real GDP Growth continues to shrink, according to the same IMF World Economic Outlook, October 2014:
2011 = 1.3%, 2012 = -1.3%
2013 = -2.3%, 2014 = -1.1% (estimate).

The numbers speak for themselves. In 2015, K has clearly been heading down an unsustainable path since the beginning of his present administration.

In 2012, K declared that he had fashioned his speech “to be a speech of plain, straight talk. I am anxious that it is understood by every Saint Lucian citizen.” So let’s take a peep at some of K’s “clearspeak”:

“We had a State that was buoyed by an agricultural sector cultivated upon the soils of preferential market access. We now know these soils to have been shifting sands, and in the wake of its sinking, the bed of foreign subsidies has turned to quicksand, filled with the unemployed, particularly in our once thriving agricultural communities.” And K considers himself a teacher? Duh!

K then goes on to discuss “the troubling fundamentals” such as “our natural resources are simply not sufficient to sustain our standard of life”, “We will always remain largely dependent importers”, “persistently high unemployment, especially among our youth”, “high vulnerability due to economic and natural shocks”, “our small size and location”, “natural events”, and “fiscal deficits and high debt levels”, all issues faced by many governments past and present in the region. K even goes so far as to state, “In effect, the operations of Government are not sustainable in the long run, without adjustments.”

I sort of suspect he is still twiddling the knobs on his set, trying to find the right adjustments, just like in the very old days of television when the screen admonished viewers “Please do not adjust your set. Normal service will be resumed as soon as possible.”

Amazingly, for a government that has borrowed, according to its own propaganda, record amounts of money, K gave as an example of unsustainable operations “high levels of borrowing” whilst admitting that “government is spending much more than it earns in revenue. As a consequence, the debt burden of Government moves upwards, with more and more Government revenue going towards debt repayments.”

Past a certain point, says K, “only agencies such as the IMF will intervene” and he adds this dire warning, “I do not believe I have to say much more about these consequences. We just have to look at the fate of the other Caribbean islands that have had to resort to such bitter medicine” and names Jamaica, Trinidad & Tobago, Dominica, St Kitts & Nevis, and Grenada as recipients of IMF interventions. On the face of it, these nations are no worse off than St Lucia despite their acceptance of IMF assistance, but K thinks differently,.

Despite recent SLP boasts of record borrowing, K understands that “there comes a point where you cannot borrow your way out of debt … In effect, you stare bankruptcy in the face.”

K turns to historical realities, at least as far as he sees them. He points out that between 2003/4 and 2013/14, wages and salaries increased by 69%, the public sector grew by 13.7%, a growth driven by a 26.1% increase in the number of police officers, a 25.8% increase in fire service officers, a 16% increase in doctors and a 10.1% increase in civil servants. Many received promotions, which moved them into higher salary bands over time. “All this,” according to K, “accounts for the nearly 70% increase in wages and salaries in a little over ten years!” Frankly I am not quite sure where he thought he was going with this argument (perhaps he was still wandering in the desert looking for oases) because not many citizens would object to an increase in the number of police officers, fire service officers or doctors.

While pointing out the terrible effects of interest payments on loans – “Interest payments more than doubled between 2004/5 and 2012/13, from $67 million to $137 million, or by about $70 million annually” – he does not shirk from borrowing more.

Food subsidies, presumably introduced to help the poor, were clearly going to be targeted making life even more difficult for the sector of the population that believes most fervently that K is their saviour. Well, at least no one can accuse K of currying favour amongst his voters. In fact, using K’s own figures, it might appear to some that the UWP government actually did more to help the poor feed themselves. “In 2004/5, Government spent about $1 million on subsidies. By 2011/12, this figure reached $29 million.”

Paying back loans is clearly something K does not enjoy doing. “This is further compounded by the fact that we have had to make principal payments on debt as well.”

K addresses the contentious issue of Travel & Subsistence, “a matter that gets lots of attention in the minds of some as an area of great savings.” And states rather tantalizingly, “Last year, $12 million was spent … However, unlike what many believe, international travel accounts, under the passages head, was only $700,000 last year.” That’s all he said, leaving it to his listeners to juggle 12 million and 700,000 in their heads and make them come out as the same amount.

K seems to have realized that it is impossible to save your way out of a recession without increasing income, well maybe, because he goes on to say he is going to make us tighten our belts even more. “We are making reductions, but the impact on our overall deficit will not be sufficient. Later I will make mention of the ways we plan on making further reductions.” It sounds a bit like starving the people but expecting them to work harder for less.

Of course, like all boys, K loves toys. “We are even introducing a vehicle fleet tracking and management system to monitor Government’s fleet and reduce on operating and maintenance.”

I think I am fairly safe in saying that the vehicle fleet tracking system will be as effective as the surveillance cameras at Bordelais and in Castries due to lack of maintenance, lack of monitoring, and deliberate tampering.

Let me end today’s segment by quoting K once again. “Saint Lucia has a spending problem. It would be nice to believe that we can simply go out there and make more money immediately, but making more money will mean gaining new skills, becoming more marketable, finding more jobs. We cannot do this overnight. Our first step must be to cut back on expenditure. We have to become thrifty and reduce our expenditure until such time that we can do better.”

Clearly three years in office again have brought home some sense of reality. K started his term by lecturing parliamentarians on the need to rebuild confidence in the state, to act responsibly, to pay debts, to protect the rule of law, to ensure that revenues are spent wisely, and to promote investor confidence. He went on to say that he had signed a social contract that he must deliver, one that will “give pride to the people, give surety to the investor, give freedom of mind and energy to the youth, and give a level of trust to all, residents and non residents.”

Well, three years on, he has yet to deliver.

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