CONTRIBUTION TO DEBATE ON MID-TERM BUDGET
CHESTER COOPER, PLP DEPUTY LEADER, SHADOW FOR FINANCE
EXUMAS AND RAGGED ISLAND MP
FEBRUARY 12, 2020
I rise on behalf of the good people of the Exumas and Ragged Island to contribute to the mid-year supplementary appropriations proposed by the government.
Before I begin by formal remarks, may I offer my profound thanks and gratitude to the many men and women in uniform, who diligently serve our country in trying circumstances, particularly in the aftermath of hurricanes. On behalf of our leader and the official opposition, we thank them for their service.
Additionally, the people of Ragged Island have asked me to specifically commend Petty Officer, Edmond Jeremiah Butler and his team that recently served in Ragged Island. Also I offer special commendation to a team of officers that I met at Duncan Town Ragged island holding things down in most depressing circumstances just after hurricane Irma: Petty Officer Gary Rolle, Leading Seaman V. Adderley, Able Seaman L. Darling, Able Seaman D. Duncombe, Marine Seaman C. Higgs, Marine Seaman J. Rolle, Marine Seaman L. Rolle, Marine Seaman P. Stubbs, Marine Seaman F. Forbes, Marine Seaman C. Sawyer. We thank them for their service.
The mid-term budget communication
I would say at the outset that I find this entire exercise to one steeped in subterfuge, duplicity and mismanagement of our national finances by this administration.
And it is all being carried out under the guise of killer storm that has laid bare the ineptitude of this administration and, quite frankly, its lack of a plan or vision for this country.
It gives me no pleasure to say these things.
I had hoped against hope that this administration would do well.
As a businessman, I understand quite well that a rising tide floats all boats.
Even through all of its shameless blame casting, shifting targets and lack of intellectual rigor the other side has brought to this place when dealing with critical national issues, I had hoped for the best.
But the lack of aptitude one continues to discover with this administration is an endless abyss into which all hope fades.
Listen, I’m many things: A father, a husband, a brother, a businessman.
But I’m also a politician.
As are we all in this place.
And while I enjoy politics, I don’t always like to make things intensely political.
So, understand that what I’m saying isn’t necessarily political, it’s practical.
What we have before us simply makes no sense.
And it amazes me to see members opposite to tie themselves in knots trying to make sense of it.
Let’s review what’s being proposed.
The government’s aims to borrow another $600 million on the backs of the Bahamian people and drive government debt well past $8 billion this year.
The government will borrow, in total, by the estimates contained in the supplementary appropriations tabled, more than $1.3 billion this year.
This will constitute borrowing well over $3 billion since this administration came to power.
The deficit this year will near $700 million.
The Credibility Deficit
What is more alarming that this deficit, is the massive increase in the “Credibility Deficit”.
The Bahamian people don’t listen to anything you say anymore.
The Bahamian people simply don’t believe you anymore.
As I’ve said before, this is record borrowing, record deficit spending and record debt.
This from an administration that vowed just a couple years ago to bring down the debt, reduce the borrowing and balance budget.
You increased VAT, sharply and recklessly when we repeatedly told you not to, yet somehow, money management is still poor.
Vendors can’t get paid on time.
But, of course, travel perks for Cabinet ministers and their spouses have increased.
But isn’t reminiscent of your ill-fated attempt to increase MPs salaries.
How cruel and how insensitive.
Where the money gone?
This administration has borrowed $3 billion and has very little to show.
With this borrowing and the 60% hike in VAT. People are asking what in the world you did with all this money?
Bahamians wants to know where the borrowed money gone?
They want to know where the Dorian donated money gone?
They want the list of the recent donor pledge conference, as you promised.
I asked for the Irma report on at least three occasions. The people of Ragged Island want to know where the hurricane Irma money gone?
So much for transparency. So much for accountability.
You must and will give an account. Whether you like it or not.
But what we see happening now is what we warned about when the government foolishly raised the rate of value-added tax, by 60%.
Aside from the stunning hypocrisy of it all, given how vehemently some on the other side opposed its implementation in the first place, including Killarney himself, we underscored the real danger in seeking to extract more from Bahamians without a functional growth strategy.
We warned that this strategy of narrow deficit management alone was foolish.
We warned that that one hurricane could kill all projections.
Now, we see a government that has collected several billion dollars in VAT revenue but will have borrowed in excess of three billion dollars by the end of this fiscal year.
And government debt has grown more rapidly under this administration than any other. Deficits larger than any other. This is trailblazing, but not in a good way.
By the time this government leaves office, on its current path, I predict that the debt will likely stand at $10 billion or more.
The debt to GDP ratio that now stands at 64.4 percent will end up being much higher than the 54% when they came into office because the economy simply cannot grow fast enough under them to outpace their borrowing.
This administration, as I have told you before, is also slowing the economy by not progressing capital projects in order to make the numbers look better than they are.
For the record, unlike my colleagues on the other side who came here misguided talking about the PLP minimize the impact of Joaquim and Matthew; let me say that we accept that hurricanes have fiscal consequences.
But, how did my colleagues on the other side magically figure out there needed to be an additional $100 million in spending on projects that had nothing to do with Dorian after the last budget passed?
There was no mention of a $30 million generator for BPL’s Blue Hills plant, I will return to this.
There was no discussion about a $40 million upgrade of Princess Margaret Hospital.
There was no word on $16 million more being set on fire to prop up the Grand Lucayan, I will return to this.
I note the prime minister’s announcement on the imminent sale of the Grand Lucayan.
I must ask, how much will that ultimately cost us?
The government has spent upwards of $100 million so far on this acquisition, by my calculations.
I would be shocked if any developer would pay the asking price for the hotel without a functional airport on the island.
I suspect we’ll be paying for that as well in some form or fashion with the history of executing bad deals that plagues this government.
Might I add, once again, in this House, that it would be most helpful to the taxpayers and their representatives in this Parliament if the government would table a comprehensive report of public expenditure for the Grand Lucayan.
I point out further that I have chided this government on its inconsistency, duplicity, and gamesmanship.
During the recent fiscal strategy report they booked payments of an additional $43 million to Grand Lucayan as an investment against sound advice and best practice.
Now they book the $16 million extra rightly as an expense.
This means that their deficit in prior period was effectively higher than reported.
And if most of the staff has gone home, when you said the whole purpose was to keep Bahamians employed, what are we really spending on this property?
During the last budget, there was no foreshadowing of a $23 million spend on a Christmas lump sum payment.
But somehow the government expects us to swallow that this was part of a public sector performance enhancement program framed as some antidote to public sector reforms.
How duplicitous. How disingenuous.
What frightens me is the sleight of hand used to just shoehorn this in after the fact.
It all flies in the face of the proposed fiscal responsibility mantra this government loves to tout.
My question is: If you were able to keep $100 million in extra spending away from the public eye until you were forced to get permission to borrow for it, what else don’t we know?
The travel perks, for instance, were never made public, by this administration.
The media found out about them and informed us all.
But that should have been the job of Cabinet.
I’ve got to tell you, that I am now really worried.
What else you are hiding?
In the face of it all, why should the Bahamian people trust you?
This government acts as if things are not dire, as if they are in control of this situation.
This government acts as if it has a handle on the economy and government finances.
As if Dorian alone were responsible for any bumps in the road.
But I read all their reports, as colorful they might be.
I go through all the legislation; all the budgets – great bed time reading.
Although sometimes they disturb me and keep me up at night.
You see, I know a mess when I see one.
If you look at just the latest fiscal strategy report from the government, you can get troubling indicators.
The government boasts that revenue is up nearly $100 million for the first six months of the year.
This was likely driven by two main things – Baha Mar, and the opening of Coco Cay.
We’ve also had the best year in tourism in a generation, again, due in large measure to BahaMar, and a strong USA economy.
I give credit to Tourism Director General Joy Jibrilu and her hard-working team, the new sleek marketing telling the Bahamian story, the Family Islands, the buzz of the marine sanctuaries in the Exumas and the world-famous swimming pigs.
And let’s not forget the self-proclaimed genius of minister – the member for Free Town.
Therefore, you would expect that revenue collection would not only be up over last year, but also be on target.
The fact of the matter is that it is not. You have squandered all that.
Revenue collection is only at around 40 percent of the target.
And as we’ve seen in other years, this administration simply cannot meet the bullish projections in revenue it puts out.
The minister finally conceded that he tinkered unnecessarily with the Revenue Enhancement Unit.
I think he did it because it was a PLP initiative, even though it brought in almost $30 million a month by his own admission.
How duplicitous. How disingenuous.
What this government never does is explain why the revenue targets can’t be met.
Instead, it cuts spending in critical areas that could benefit the economy with the aim of meeting its deficit targets.
And we now know that all of that has now gone out the window.
The FNM now predicts it will be back on track sometime in 2024.
I doubt that projection as well, but we did tell you.
In my opinion, the decision with the greatest negative impact has been the deferment of recurrent and capital expenditure in the first two years of the term to meet the deficit targets, in light of this poor revenue performance.
What we now see is a government that is no longer able to the ignore these liabilities and as a result expenditure is tracking higher than is budgeted and will likely continue to track higher than is budgeted, given the public and political pressure to commence a real hurricane recovery program in Ragged Island, Abaco and Grand Bahama.
Impact of Excessive Borrowing
This government has borrowed so much money, I think Eddie Minnis had this administration in mind when he wrote and sang the song “living in the hands of the finance man”.
Even the IMF came bearing gifts. They said in their report that “the IMF stands ready to support The Bahamas, including through its emergency financing facilities.”
This means up to another $200 million with no strings attached.
How very nice of them.
I would note, that The Bahamas currently owed the IMF nothing.
If this wasn’t so dire, we could make some obscene jokes about this notion of “no strings attached”.
But dire it is, and at the rate this government is going, it is not out of the realm of possibilities that we can be living in the hands of not only the finance man, but the IMF as well.
Will the minister of finance say, whether he saw the draft of this report that offers IMF funding and whether or not it was encouraged or whether or not it is being contemplated?
Where is the transparency?
What we see too often is the guise of transparency, but really, when we dig deeper or the second it is convenient for this administration, transparency goes out the window.
So, there is the frightening question of what else we don’t know and the even more bone-chilling matter is how long this administration is locking the Bahamian people into various arrangements without transparency.
The downtown port, for example, where the heads of agreement was laid only after the relevant bills were passed.
The Grand Bahama airport, for instance.
Where there may or may not be a deal.
Various no-bid contracts
This rate reduction bond and the various machinations at BPL with changing stories involving Warsilla and Shell, for example.
No mention of Shell in the $650 million bond debate as I pointed out, only to learn weeks later of a major transaction with Shell with no details.
I asked then, not a word.
Now assets being owned by the Bahamian people are being sold, it appears, without their approval.
The Bahamian people don’t know what we are being signed up for, and what our commitments will ultimately be.
We don’t know what is being done on our behalf that doesn’t require upfront parliamentary approval.
You got on your soap box early, using what turned out to be fluffy words only like “transparency, accountability and responsibility”.
The Minnis administration has mismanaged the economy resulting in record taxes, record borrowings, record debt and record deficits.
Now this bring this “dog’s dinner” mid-term budget communication in an attempt to explain it all, but it falls short.
Another soap box word particularly by Killarney himself has been “corruption”.
But Transparency International says the Bahmas dropped from 28th to 29th in 2019 compared to 2018. They noted further that in their 2019 global corruption barometer survey that 45% of respondents thought that the Bahamas became more corrupt in the preceding twelve months. Then, a report in the Tribune last month said The Bahamas rated high in a bad way on bribery under this administration.
When I reflect on those rants on corruption, including in the international community, I can’t help but to think of Proverbs 23:7 that proclaims “as a man thinketh in his heart, so is he”.
What the numbers tell us
I digressed on the issue of lack of transparency, but let’s turn our attention back to the numbers.
The government says we have Dorian to thank for the position we now find ourselves in.
It appears that one disaster has led to another.
Let’s look at the numbers.
Last month, the minister of finance, 20 weeks after passage of Dorian came and essentially told us the alarming news that the government is still not in a position to definitely state what its borrowing program will be.
Let us contrast this with the aftermath of Hurricane Matthew when the last administration set out a definitive borrowing plan in a matter of days and debated it in short order.
The tabling of the resolution from the Caribbean Development Bank loan in this place for a policy-based loan is an indictment of the minister of finance and his stewardship of that ministry.
The priority should have been to begin the debate on the borrowing resolution as the government cannot function without cash, which, in my opinion, is in short supply because of what I can only term gross fiscal mismanagement.
The CDB loan represents less than 10 percent of the funding the minister claims he needs.
Keep in mind that there is also an existing facility in place for $100 million from the IDB.
Yet the government only wants to access $80 million of that facility before committing to another loan.
Though the government has yet to fully draw down this facility, no one has explained why.
We would have expected the minister to share with the public what issues are preventing the government from getting access to these urgently needed funds.
Whilst people suffer.
During the substantive budget debate, I highlighted how this government seems not able to execute IDB and CDB programs efficiently.
So, if in nearly six months, the government cannot draw down from an existing facility, we should expect it to take about a year to draw down from the CDB loan.
When they put this IDB loan in place none other than Killarney himself gloated in this House on January 30, 2019 that it was the fix-it for the aftermath of the hurricane “so that our economy can immediately rebound.”
Yet, almost 25 weeks after hurricane Dorian it is not fully drawn; whilst people suffer still.
Perhaps his understanding of “immediately” differs from what those who have been impacted by Dorian understand it to mean.
In either case, we can expect no immediate relief or support for the hurricane rebuilding effort on that front.
Even more alarming to me is that the minister of finance during his presentation of these numbers, did not initially announce the club deal with the local commercial banks to meet the government’s urgent cash needs.
What is the reason for the delay?
Is it because of concerns about the fiscal position of the government or more ineptitude in executing these kinds of agreements?
The minister of finance also tells us that the revenue the government will forego from Abaco and Grand Bahama amounts to $200 million.
I simply do not believe those numbers.
We must remember that both island economies were already supported by significant concessions prior to the storm.
For Abaco, it was the Family Island Development Act.
For Grand Bahama, it was the Hawksbill Creek agreement and the incentives for east and west Grand Bahama, in addition to the Family Island Development Act.
We must also consider that the government says in its projections that the tax revenues lost from Grand Bahama and Abaco will be reduced over the next three years.
But the tax-free zones are in place for three years.
What I see is a minister using Dorian as an excuse for poor revenue performance.
The numbers for the first quarter prior to Dorian showed no improvement in yield over for the prior year.
The numbers from the first six-months revenue performance show more trailing revenue projections though the government boasted a boost over last year.
But if we remember, in the prior year the government was trending $400 million below projections and was only able to hit targets with accounting gymnastics in the last quarter, including withholding payments and other expenses; booking additional sums to Grand Lucayan, for example, as an investment.
The government claims it is all about transparency.
However, this transparency does not appear to extend to actual expenditure for the hurricane recovery effort.
We heard estimates, but not actual spend.
This speaks to very little being done in the aftermath of the hurricane.
I’m not surprised by that, based on what we see on the ground, but it should be pointed out that this game the government is playing could actually hurt donor efforts.
Donors want to see that the government has some skin in the game.
The public should also know what the government has spent helping Bahamians recover from the storm.
The government expects us to foot the $16.5 million allocated for temporary housing and related facilities.
The only facilities for temporary housing we are aware of is the incomplete dome city on Abaco.
But the government has said that project, which it claims cost $6.4 million, is to be funded fully by donated funds.
What, then, is the $16.5 million for?
The government has allocated $12.9 million to facilitate food and accommodation assistance programs for displaced storm victims.
What, then, is the $16.5 million allocated for temporary housing and related facilities really for?
The government has allocated $11 million for unemployment.
Then what purpose does the National Insurance Board unemployment benefit serve?
In fact, how much of the tab did NIB pick up directly?
When we look at the capital allocations, it is interesting that we do not see a breakdown of what is to be provided by island given what we have just gone through.
For example, there is no funding for the Grand Bahama International Airport.
The government claims it is negotiating to purchase it.
I told you months ago to strike while the iron was hot.
This advice was courageous and it was free.
The point was that you had an obligation to do all in your power to immediately normalize this key gateway for locals and tourists and not be held hostage by a private concern that may not be acting in the national interest.
I re-iterated that your obligation was to the people and the economy.
You waited too long.
You snooze, you lose, as they say.
I told you then that not moving expeditiously could be the death knell for Freeport, which would mean a funeral for the economy of Grand Bahama.
I encouraged the government to invest under certain conditions, even doing a compulsory acquisition if necessary, in the public interest.
Though it looks like Hutchison will fleece this administration again, and ultimately the Bahamian people again, after sitting on the insurance payout once again.
Out gunned and fleeced, just like you were out done on the Grand Lucayan deal.
I hope this time they at least pay us for the toilet paper and the hand dryers.
Also, there is funding for electrification of the islands? It’s easy to assume its for Abaco but I still question what, if any, funding has been allocated to Grand Bahama and Emera?
And under what conditions? What is their responsibility?
What funding has been allocated to the Grand Bahama Utility Company?
Or is the minister satisfied that production and distribution of non-potable water by this company can continue indefinitely?
It is with dismay that 25 weeks after Hurricane Dorian, that salt water still comes out of the taps in Grand Bahama and this administration seems impotent in doing something about.
This is disgraceful!
What I gather from this budget is what I gathered from the last.
And that is that this is all a precursor to tax increases in the 2020/2021 budget, and I don’t see how you will avoid it.
So, don’t come here telling us that the EU and OECD wants new corporate taxes, because it will be of your own making.
You have been reckless.
You have been naughty and now ask the Bahamian people to pay.
And what is the government’s big plan for recovery?
Why, more bureaucracy, of course.
Why have one person do it efficiently when you can channel it through 10 others and frustrate the process?
And why further frustrate the people, as they suffer still?
The new structure of the Ministry of Disaster Recovery and the new Disaster Reconstruction Authority is, in and of itself, a disaster.
We call on the prime minister, the substantive Minister of Disaster to now undo this woeful experiment.
On the issue of the disaster recovery, I also see the government plodding headlong into another policy position that could end up hurting those who are most affected by Dorian.
The government says it will give up to $10,000 for home repair and rebuilding.
I don’t believe that is robust enough, even the permanent secretary in the ministry is in yesterday’s Guardian saying it likely won’t be; but every little bit helps.
However, the government said if you qualify for the recovery there are certain stipulations.
You can only get half of what you qualify for up front. Then an inspector has to come and verify that the money was used for the rebuilding purpose in order to get the other half.
So, this doesn’t make much sense.
If you require them to show a purchase order, what do you think they’ll do with the money?
The government also says government funds from the Small Home Repair Program can only be used to purchase supplies from government approved Bahamian vendors.
In contrast, the government’s own Small Business Development Center is offering loans and grants to businesses without any restriction on where to buy goods.
And how does one become an “approved vendor”?
It’s a determination that the politically-appointed person makes.
Two vendors sell the same lumber but only this vendor is approved.
Three vendors sell tile, but only a certain vendor is approved to accept government funds?
It’s nonsensical, really.
In fact, it looks like an attempt at cronyism.
I watched the town meeting on Grand Bahama last week and was struck by how lost and defensive the politically-appointed government officials were.
When Bahamians complain that aid is not reaching them fast enough, that the government is not reacting in a manner that best benefits the people they have the pleasure to serve, they would rather argue the point than concede they could do better.
How sad whilst people suffer.
I must also express deep concern for what the government is not telling us about BPL and how nothing in this budget reflects what is being planned for BPL that the minister refuses to tell us.
When we bring up BPL in this place, or the scandal involving the termination of the former chairman and board, we are told by the minister responsible that we must not talk about it because it is before the courts.
Now we must all sit silently by while our assets are sold off without so much as a by your leave by the Parliament of The Bahamas?
We are also told we must not ask about the terms of this deal because the United States Securities and Exchange Commission supposedly has ordered a quiet period?
Are we more accountable in this place to a federal agency of the United States than to the Bahamian people who put us here?
The chairman of BPL’s recent statements state in no uncertain terms that BPL bills will increase by 15 percent of average monthly use. You came and told the Bahamian people it would increase $20 – $30 in average. I take no delight in saying I told you so. This might have been amusing if it wasn’t so distressing.
How are we not to be concerned that this might lead to a further recession of the Bahamian economy?
To tell us we are looking at 15 percent increase in energy bills is no joke.
We are told nothing definitive on this.
Yet, you came here and insisted we borrow $650 million for an as yet undetermined period of time.
We call on the minister again, to lay the comprehensive business plan and strategy paper for BPL on the table.
As it stands, its decisions seem dizzying, haphazard and ad-hoc.
No transparency, even though the Bahamian people have to pick up the tab.
This is unconscionable on the part of this administration.
It has been clear for some time to anyone with ears to hear and eyes to see that we are probably going to have a rough go of it for 2020.
The government’s own estimates point to a contraction in the economy in 2020.
The recent Central Bank report clearly states that growth will be subdued in 2020, with rebuilding post hurricane set to be countered by increased imports to support that and a reduction in tourism capacity.
“Employment conditions are projected to dampen,” noted the Central Bank. “On the fiscal front, costs associated with the reconstruction of lost infrastructure, replacement of fixed assets, and social welfare support following the storm, are expected to weigh on the Government’s budget.
Funds from re-insurance receipts and donations from local and international institutions should defray some costs, however, most of the fiscal gap will likely be sourced from domestic and external borrowing.
The bank says an overall outturn for 2020 is projected to feature a net contraction in balances.
This is not good news.
Bahamians have a hard-enough time now finding work.
This administration has disadvantaged them by taking more out of their pockets through increased taxation.
The latest effort by the government to crush an already burdened middle class now coming in the form of real property tax re-evaluations.
Some people report their property tax bills have jumped by tens of thousands of dollars.
Their properties now assessed at values that they cannot get on the open market.
If the government could not collect $400 million in outstanding property tax previously, what makes them think they can collect even more?
Some of them even say these bills have been backdated to apply retroactively.
Where does the government imagine Bahamian working and middle-class families will find this money?
Unlike the FNM’s special interest fat-cat friends, Bahamians don’t have Swiss bank accounts and trust funds that can be accessed when these things pop up.
The government should tread very carefully.
What we see in this mid-year budget and the fiscal snapshot are telling of this administration’s modus operandi.
They have targets but no real strategy.
VAT collections are projected to increase, yet there is no explanation as to how even in the face of no revenue from Abaco and Grand Bahama, as well as the underperformance we know occurred last fiscal year.
We crave transparency, the real kind.
Not the sort this government plays at.
But all we get are accounting gimmicks and ever-changing targets.
We ask for answers, but all we get are excuses.
The opposition is tired of it.
The people are tired of it.
This administration has been most neglectful of its duty to the people.
We do not trust them to change moving forward.
We do not trust them – period!
We believe that too much borrowing is being snuck in under the proverbial umbrella of Dorian. We are offended that Dorian is being used as a smoke-screen to cover the blunders, ineptitude and incompetence of this Minnis administration.
We pray for the people of The Bahamas.
In particular, those who suffered under Dorian and those who suffered more under this administration’s mismanagement.
But know this: a new PLP administration will bring more sanity to governance.
- We will bring real innovation, technology and eBusiness, creating efficiency and make doing business easier. We will make tangible improvement, not just try to fix the rating. I found it most distressing to find that an operative of this government is calling around attempting to coach respondents to the ease of doing business survey. Either it is easier to do business in The Bahamas or it is not. This attempt to fix the survey is not acceptable and is likely to damage the reputation of our country.
- A PLP government will effect real and meaningful improvement! A PLP administration will mobilize an aggressive growth strategy!
- We will re-launch the National Development Plan, engaging all Bahamians including the diaspora to deploy the best ideas for long term sustainability.
- We will focus and support new industries and more effectively manage, regulate and harness our natural resources for the benefit of the Bahamian people.
- I have said before that we believe small and medium sized businesses create jobs, opportunities and wealth and we will invest $250 million in five years in this sector.
- We will work with financial services industry to appropriately pivot to remain buoyant, relevant and feasible.
- We will dedicate our time and energy and resources not on fluffy words but to create jobs, opportunity and an improved quality of life for all.
Our people, have suffered enough from the bad decisions, bad policies and bad legislation of this government.
We pray that God will bless and rescue the Bahamian people.
May God bless the people of Exuma and Ragged Island, and may God bless the Commonwealth of The Bahamas.