Good afternoon, friends.
This is a serious moment for The Bahamas. We are experiencing a sustained period of negative economic growth, an explosion of public sector debt approaching 100% of GDP, and unemployment and underemployment levels reportedly in excess of 40%.
Today the Progressive Liberal Party is presenting to the country a path forward out of the crisis, an Economic Plan to Recover, Rebuild and Revolutionize.
This Economic Plan is a core part of our Blueprint for Change, which we will release in the coming weeks, and which will cover additional issues and policy areas crucial to our national development.
It is only three months until the next budget is due. The country needs to move forward with our eyes wide open. We offer our plan to all those who believe the current path is unsustainable — to all those who believe there is a better way.
The ten points in our Economic Plan should be taken together. It is not a sequential plan to be followed one to ten; instead, the policies will work together to Recover, Rebuild and Revolutionize our economy.
There is a lot of detail in our Plan. And there is more to come. We hope that many of you will read it for yourselves on our PLP website – plpbahamas.org.
Today is just the beginning. We will be sharing the Economic Plan in many different settings with the Bahamian people, whom we view as critical partners in creating change and progress.
We encourage you to read the details of our plan.
STABILIZE THE PUBLIC FINANCES
As you all know, we urgently need to stabilize the public finances. This presents a bit of a challenge, given the government’s lack of transparency since 2017. So our first step will be to conduct a full, rapid assessment of the public finances to know the true state of things. We aim to have this completed within the first fifteen days.
That said, whatever urgent practical realities the country faces, given the economic shutdowns over the past year, we know we will need to prioritize raising revenue. Of course we are all keen for tourists to return, and there are some indications that there is pent-up demand for travel in our client markets.
But we have to do more to increase revenue. We have identified several areas of opportunity, both to bring in more foreign currency revenue, and also to bring in revenue to the treasury so that the government can meet its obligations.
We will revive the Revenue Enhancement Unit, comprised of independent professionals, to ensure that everyone pays their fair share of taxes. Under the previous PLP administration, this unit collected an average of $30 million per month. The FNM disbanded this unit in 2017, and lost $300 million in revenue in their first year alone.
We will ensure that high-end properties pay the Real Property Tax that they’re legally required to. We will also ensure that commercial and foreign-owned properties are on the Register, and properly valued for tax purposes.
To bring in more foreign currency, we will also move rapidly to collect revenue from international overflights.
We will also look to secure Carbon Credit Payments for our natural resources, especially those such as mangroves and sea grass, which act as natural carbon sinks for the rest of the world.
And we will fast-track and incentivize those foreign and domestic investments which can yield the most significant value.
Apart from the short and medium-term benefits to the public finances, these revenue-raising initiatives will strengthen our negotiating position when we have the first opportunity to re-structure the national debt in 2024.
NEED TO STOP DOING SELF-DEFEATING THINGS
One of the most important things we can do as a country is to stop making self-defeating decisions. We have lost much-needed revenue because of a cascade of poor decisions.
The revenue downturn began in 2017 – even though Baha Mar had opened successfully and the US economy was booming. Much of the blame lies with the shock increase in VAT, which meant that people had less to spend, and therefore the government earned less. The increase in VAT put the basics out of reach for many ordinary Bahamians. When consumption taxes are too burdensome, they have a negative effect on economic growth.
The government has also borrowed without investing in our country’s future: they engaged in unprecedented levels of borrowing of around $2 billion per year, with not a single new school, clinic, airport, major road or hospital – nothing – to show for it.
With the disaster of Hurricane Dorian, funds should have been prioritized to help people recover and repair their homes and communities, rather than spent on creating a wasteful new bureaucracy that has still not been able to get the job done.
We cannot afford mistakes like these.
Just as we cannot afford the reckless purchase of a hotel. There is a reason that successive governments of both parties have declined to take on the risks of purchasing hotel properties for the last few decades; it’s just a lesson the present government didn’t feel compelled to understand.
When you are in a hole, stop digging.
Don’t spend more than $150 million on the Grand Lucayan.
Don’t miss opportunities to borrow at better interest rates.
Don’t spend $20 million on sidewalks.
Don’t keep piling up the insider deals and hidden spending.
If you want credibility with your lenders, don’t spend more than $100 million in pandemic spending without reporting to Parliament and the Bahamian people.
If we stabilize the public finances and make smarter, more transparent economic decisions, progress is possible.
BRING IMMEDIATE RELIEF
Economic policies are not just numbers on a piece of paper. Our Economic Plan is about people. Nearly half of our population is unemployed or underemployed. That staggering reality means there is pain and suffering across the country.
We have a moral duty to bring immediate relief to the thousands who, through no fault of their own, find themselves in dire circumstances.
It starts with a COVID-19 Plan that goes beyond vaccines and lockdowns, to save livelihoods as well as lives. We will:
- Offer free testing to all Bahamians concerned they’ve been exposed to COVID-19;
- Eliminate restrictions not based on science;
- Strengthen isolation protocols in clinics and hospitals;
- Increase the speed of contact tracing to stop new outbreaks; and
- Engage in a public education campaign to give Bahamians the information they need to mitigate their risk, especially through improved ventilation, in their homes, churches and places of business.
- Provide free COVID-19 vaccines are available to all Bahamians who wish to take them. This would require funding to purchase vaccines directly at market rates rather than wait for subsidized cost vaccines like the COVAX mechanism.
Although we are all truly tired of COVID, it is irresponsible to pretend that vaccinations will magically make things better overnight. New, more transmissible variants have been found in many countries around the world, and Florida is leading the United States with case numbers of these new variants. We should not wait for a repeat of last July and August, when a small number of cases exploded into thousands. We cannot afford to repeat that disaster.
I’ll note here that despite the government’s propaganda on this topic, The Bahamas has performed quite poorly on COVID in comparison to a great many of our regional neighbors. When measured by cases and deaths per 100,000, The Bahamas was outperformed by many Caribbean nations, including Haiti, Jamaica, Barbados, and Trinidad and Tobago.
With the right policies in place to stop COVID outbreaks, even if more transmissible variants come to our country , we can avoid more lockdowns, and focus on alleviating the economic crisis.
Many Bahamians are worried about an increase in their taxes. But increasing the tax burden for ordinary Bahamians would be both immoral and terrible economic policy.
We will instead reduce VAT to a rate of 10%, across the board, for twelve months. This is not a huge difference, but it will put consumers in a position to afford a little more of what they need to get by, which will help get the economy going again. The government receipts are likely to increase, as more transactions will yield more VAT payments. We plan to re-assess this rate after a year.
People need food. The current government programme does not do enough to help hungry Bahamian families. It is regrettable that the government elected to provide food by using a wasteful bureaucracy, giving $1 million per week to an independent organization. The government still has not disclosed to the public how much of that money went to providing food, and how much went to the organization.
Our approach will be different. We plan to use the RISE pre-paid debit card. No more standing in the hot sun waiting for vouchers that can only be spent at a particular store, or receiving a box of the same cheap provisions every week that someone else has decided you should eat. We will increase the amount people receive as well, so that it is reasonable and in line with the high cost of living. As people will be able to buy food from shops all around the country, this will also help the hundreds of small businesses struggling to stay afloat.
In addition to the VAT reduction and change in food assistance, we will also bring immediate relief with housing assistance. Already too many Bahamians are sleeping on friends’ floors and in cars.
We will work with tenants and landlords to reschedule rent payments in line with people’s short-term ability to pay, providing some breathing room until the economy recovers, and avoiding a severe homelessness crisis.
We will also increase funding to social services for rental assistance.
Where landlords are relying on rent to pay mortgages, we will work with lenders to reschedule their payments to avoid defaults.
We will work with banks to keep home-owners in their homes, delaying a portion of mortgage payments for qualifying individuals until the economic recovery is underway. Our main objective is to avoid allowing the crisis in homelessness to grow.
This is not the only section of the economy where we need to bring urgent relief. In collaboration with the private sector and NGOs, we will implement additional immediate relief measures for the islands of Abaco, Grand Bahama and Ragged Island, as they continue to rebuild after the devastating hurricanes.
As I mentioned a few moments ago, one of the key elements in our Plan is to find ways to get the economy up and running properly again.
With so many people unemployed, those who are working have to support greater numbers of people. We will recommend to the National Tripartite Council that they move towards a minimum wage of $250 per week in the private sector. (Under the previous PLP administration, the minimum wage was also increased by 40%.
Our goal is to phase in a livable wage, so that everyone who works is able to live with dignity and in a way that is acceptable in a modern Bahamas.
Further, In our effort to reduce the cost of living and the cost of doing business, and facilitate industry growth, we are also going to target a reduction in the cost of energy by 30 percent during our first term by mobilizing a comprehensive plan. This will include targeting 30 percent renewables on the grid by 2030 is consistent with our 2013 national energy plan.
Finally, the government can bring immediate relief by addressing the arrears owed to many government vendors and the salary arrears owed to public servants.
By first stabilizing the public finances, and then stopping the waste and the economic mismanagement currently underway, we can and must bring immediate relief to the many thousands of ordinary Bahamians who are desperate to move forward with their lives.
THE NATIONAL DEVELOPMENT PLAN & OUR ECONOMIC PLAN
Our PLP Economic Plan, like every credible plan, must start with a vision for the future.
The National Development Plan and Vision 2040 provide a roadmap for the development of our country, and include a comprehensive policy framework to guide the government.
Both were developed in partnership with the Inter-American Development Bank and in close cooperation with the University of The Bahamas, Civil Society and The Bahamas Chamber of Commerce and Employers Confederation. Bahamians from every walk of life and across the political landscape contributed to the National Development Plan.
This is the most robust strategic guide ever created to support the development of our country. Despite the shocks from Hurricane Dorian and the Covid-19 pandemic, it is still the sturdiest guide to where we want to be and how we should get there.
Our Economic Plan marries the practical realities of our current situation to the Vision and Recommendations set out in the National Development Plan and Vision 2040.
THE RIGHT LEADER FOR OUR TIME
Our plan to Recover, Rebuild and Revitalize the economy has been created In line with the founding mission and values of the Progressive Liberal Party: we will always put the Bahamian people first.
Our leader is former deputy prime minister, minister of public works and chair of the National Energy Task Force, he brings valuable experience to address the many challenges we face.
He understands the kind of reforms we need to ensure better, cheaper, more sustainable forms of energy for the future. He has negotiated initiatives including major savings for The Bahamas in the past, as it relates to lowering the cost of Electricity to the Bahamian taxpayer.
We are very fortunate to have in our Progressive Liberal Party a deep bench, filled with expertise and innovative thinking. Our leader, Philip Brave Davis, embodies this approach.
He will now present more details of our PLP Economic Plan.