2016 Budget Review

The 2016 budget statement was made on Monday 5 October 2015 by newly-appointed Minister of Finance & the Economy, Colm Imbert MP. Imbert is a professional engineer, so the fact that he lacked any formal certification in the financial field sparked much debate. The budget proposals have been made, so we are well past that point now.

These expenditure and revenue figures are from the Budget Statements, so no account has been taken of either actual outcomes or supplemental appropriations – this is the process used by the Government to obtain authorisation from the Parliament to exceed the approved spending limits in the national budget.

Year	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
Revenue	$24,016	$34,129	$35,126	$40,381	$49,465	$36,664	$41,284	$47,000	$50,736	$55,041	$60,351	$60,287
Expenditure	$27,918	$34,119	$38,054	$42,261	$44,206	$36,915	$49,016	$54,600	$58,405	$61,398	$64,664	$63,048
Surplus/Deficit	-$3,902	$10	-$2,928	-$1,880	$5,259	-$252	-$7,732	-$7,600	-$7,669	-$6,357	-$4,313	-$2,761

 

The stated commitment to further consultation and dialogue was refreshing –

“…the one month period since the general election has not been sufficient time to conduct full consultations with our various stakeholders. Accordingly, over the next six months, we plan to hold a series of consultations with all main stakeholders and with the country at large on the state of the economy and on the financial challenges and opportunities we face, as a country. Coming out of these consultations, we shall make appropriate budgetary adjustments, if required, at the time of the normal mid-year Review, which is carded for the end of March 2016…” (page 12)

 

The main items of concern to the JCC are –

• Public Sector Investment Program – This set the amount for capital expenditure at $7 Billion for 2016, which is 14.2% less than the allocation for 2015 (page 24). The implication of the reduced PSIP is that there will be significantly less money available for new projects and there will also be challenges to get paid for ongoing jobs in which bills have been submitted. The JCC position is that those limited opportunities must be first made available to local interests. That means spending as much as possible of that money with local suppliers, consultants and contractors so that the national economy can enjoy maximum benefits. Local content must be of utmost priority, which means limiting the involvement of foreign contractors, consultants and suppliers to an absolute minimum, only for truly exceptional cases.
• Public Procurement & Disposal of Public Property Act 2015 – “…This PNM Administration will cut out this cancer of corruption and waste as we fulfill our commitment to the people of Trinidad and Tobago to implement a modern, transparent and fair public procurement system in 2016. We are already in the process of conducting a review of the existing legislation, and we will table the appropriate amendments and operationalise the new procurement agency in the shortest possible time…” (page 24)
  In light of the greatly reduced revenues available to the State, the proper implementation of this new law is a matter of the greatest priority. The public interest requires that this new law be swiftly implemented so as to properly control transactions in Public Money and the disposal of Public Property. One of the key proposals to be advanced in this period of consultation would be to seek a formal commitment that new public procurements and disposals of public property should conform to the spirit and principles of the new law as we work towards its full implementation.
• PPP – As a part of ‘Infrastructure Incentives’ – “…We need to motivate the private sector to invest in the construction of public facilities, in particular car parks in urban areas, in order to generate employment and economic activity and to provide much needed public amenities. After consultation with all of the major stakeholders and in particular the construction industry, I propose to introduce a comprehensive and workable tax incentive framework for such facilities at the time of the mid-year review of the fiscal year 2016 Budget…” (page 40)
  This call for further private sector participation in providing public facilities would seem to be part of the move to greater use of Public Private Partnerships (PPPs). One of the JCC member bodies, the T&T Contractors’ Association (TTCA), recently made proposals to change the financial regulations which limit the extent to which banks can hold properties in their portfolio.  The purpose of that change would be to allow the local banks to use the current high levels of liquidity for PPP projects, so that local contractors can participate in these. We await the proposed tax incentives with interest.
• National Gas Company – NGC issued a Press Release on 9 October to confirm that its President and three other senior officials had been sent on leave pending certain audits and investigations. While we welcome the process of audits into these State Agencies with which there have been serious unanswered questions, it is also necessary to be particular with the NGC. In March 2014, the JCC raised several critical points arising from the huge Beetham Water Recycling Project (BWRP). Apart from our stated concerns on the tendering and evaluation process, the point was that no business case has ever been made for this huge PPP. If we are to proceed further to adopt PPP as a development model, we need to learn just what is the business case for BWRP. The entire project was ‘off-balance-sheet‘ which was another huge area of concern in terms of accountability and transparency. The NGC President, Indar Maharaj, was also (at that time) chairman of WASA, who were proposed to be the purchasers of the recycled water. It is therefore imperative that Mr Maharaj and his team be requested to take some time from their vacationing to set out the Business Case for the BWRP so that it can be considered alongside the audit results.
• Property Tax – “…We will take steps to amend certain legislative provisions, including the determination of rates, and implement the existing Property Tax Act 2009 with a view to having a fair and equitable property tax regime in place by January 1, 2016, using the old levels and old rates as a starting point. To ensure that no-one in need is adversely affected, there will be special provisions to ensure that the elderly and indigent with low fixed incomes are not disadvantaged, wherever they may reside…” (page 37).
  At least $150M was uncollected in each of the six years since the old property taxes were discontinued at the end of 2009. Given that property is a large part of our nation’s wealth, the reintroduction of property taxes is long-overdue. There are also significant additional benefits to flow from the implementation of the open, detailed database of property ownership.
• Mass Transit proposals – Apart from several medium-term highway proposals, at page 25 – “…a Mass Transit System as a high priority which will dramatically improve the quality of life of the travelling public. Discussions have already commenced with the IDB to explore affordable options for a Mass Transit System. We expect that before the end of the fiscal year, we would have taken the investment decision on this project…”
  This is a commitment to explore affordable options, which we welcome, on the basis that the process is a transparent and comprehensive one which reconciles the costs and benefits of the various options.

These are the main areas of concern which we would want properly addressed.

© 2015 Afra Raymond. All RIghts Reserved