Opposition Gives 2016/17 Budget an FF
The following is the Opposition’s response to the March 21st reading of the Budget Statement for 2016/17 by Hon. Premier Donaldson Romeo.
Madame Speaker I wish to join you in extending sincere condolences to the Hon. Parliamentary Secretary Willock on the death of his father. With your permission may I also acknowledge the contributions to Montserrat, including but not limited to the financing and construction of this Cultural Centre, of the late George Martin who died earlier this month. I wish on our behalf to extend sincere condolences to Lady Judy and the rest of his family.
On to the budget:
• How can the premier issue a call to action when you have not led us with positive action even in presenting this Budget Statement in this Honourable House.
• Question to the members on the Premier’s side of the house. All of those who unequivocally support the leadership of the premier please show your hands.
• It is rather offensive that the Hon. Speaker did not have a copy of the budget presentation to read and follow as the Hon Premier was speaking? That level of disrespect is embarrassing for Montserrat. It was heard around the world
• The Hon. Premier said budgets are about people. What is there in this budget that makes the people of Montserrat feel that they are a priority? More hard times on the horizon. The N budget of last year has become a double F budget this year. I will elucidate later.
• We must undertake a radical shift the Hon premier said if we are to build a better Montserrat. Yet there is no radical shift in thinking. One sentence and nothing more, no ideas no examples, no plans for a radical shift. That is not leadership.
• The Hon Premier said we are all together in one team. If that is so, how is it that Hon. Dr Buffonge had to publicly request a copy of the budget statement in this Hon House? Is it that Hon. Dr. Buffonge is no longer part of the PDM team? The leader often determines who is on the team. If that is the way the official PDM team members are treated how can we who are outside the PDM take the Premier at his word when he says we are in one team.
• The Budget statement does not take into consideration the issue of Brexit (British exit from the European Union) and the potential consequences for Montserrat and other British Overseas Territories in terms of aid flows particularly from the European Union.
• If Brexit is approved by the British voters by referendum, then Montserrat will no longer be part of the European Union Overseas Countries and Territories Grouping.
• This is important issue since Montserrat will stand to lose its capital donations from the EU currently 29% of the capital budget. This is extremely important in light of the following statement in the Budget noted as follows:
Page 20-21/ Capital Expenditure Programme
• “Despite challenges, Government is proposing to allocate some $38.77 million to its capital programme for the upcoming fiscal year. This is financed through approximately 70 percent DFID funding and 29 percent EU funding with a minor contribution of 1 percent from other donor agents.”
Correspondent Banking Issue
•The Budget Statement is silent on the very critical issue of correspondent banking and does not cite this as a major risk issue locally or regionally.
Madame Speaker, the Hon Premier also said we are public servants serving people not as masters in the way we behave or treat one another. Hon Premier, actions always speak louder than words. It is easy to say words in this Hon. House but can we take you at your word; you need to start with
the way you and some members of your administration treat Montserratians who are just prepared to stand up for the same justice you speak of.
The Hon Premier said reform is only possible because, last year we took time to clarify policy objectives and then ensured that those objectives were fed into Sector and Strategic plans.
Madame Speaker we need to reflect on the statement. What was the reform we had between last year and this year as reflected in harmonised Sector and Strategic Plans. Did not the PDM meet that planning framework when they came to office? We had established one of the best public sector planning frameworks in the Region.
So yes blame us for that but tell us what policy objectives you had to clarify.
ECONOMIC AND FISCAL REVIEW
Madam Speaker given the size of the Montserratian economy a rate of growth of 0.5 per cent could easily be a statistical error. The Hon. Premier said growth was a result of reassessment and rebalancing of the Capital objectives of Montserrat.
Madam Speaker I do not know which economic theory that purports to follow. It simply flies in the face of common sense.
That is so because the Premier said in the same paragraph that the rebalancing created an expected lag during the reprioritisation process.
What does rebalancing objectives mean? Clearly Madam Speaker we were fed with a load of platitudinous waffle not just in that paragraph but in the whole statement.
Government Surplus/ Pages 8 & Page 9
• “We expect recurrent expenditure to total $115.8 million for 2015-16. This is $12.44 million less than the budget estimate of $128.24 million. Madam Speaker, this government has maintained a fiscally responsible approach to government expenditure. The recurrent balance, the difference between recurrent revenue and recurrent expenditure, is projected to yield a positive balance of approximately $5.55 million (unaudited). You cannot blame the decline in the exchange rate for the decline in the recurrent
revenue from grants. We had a negotiated rate of $4.20 to the sterling. Have you lost that arrangement thus taking the foreign exchange loss?
Capital Expenditure 2015-16
• During this year, we received additional capital grants of $26.26 million. These are additional funds approved after the Appropriation Bill was passed last March. As a result, the total Capital budget for 2015-16 was $57.17 million. At the end of the fiscal year, March 31st 2016 there will be a
positive balance which rolls over into the next fiscal period of $4.26 million.
• Fiber Optics $3M; MUL Genset $8.3M; Social Housing $1.8M; Energy $3M; Roads and Bridges $1M; Sea Defenses $1.1M; Electricity Distribution $0.8M; Geothermal $4.8M the Minister MCW said the project will cost in excess of £4M so why is this not in the budget.
• Given the $5.55 million recurrent balance and the $4.26 million capital balance, we have a total positive balance of $9.81 million (unaudited).
• The Premier is boasting that the Government is being fiscally responsible because there is a surplus in the recurrent budget of $4.26M and capital budget of $5.5M. However the following are noted:
• 1. The same does not reflect fiscal responsibility; it reflects the fact that the government is poor at implementation of its various activities and projects (underperforming government). Moreover, with the Government sector accounting for between 35-40% of local economy, the government inability to fully implement is budget contributes to the down turn in the local economic situation.
• 2. The rollover of the funds from one budgeted period to another budgeted period means that the new budget for 2016/2017 will be reduced by the amount of the rollover amount. When DFID sees that the GOM is not spending the budgeted funds in any particular year, it will simply cut those out of the budget going forward. The Minister for Health intimated that of the $4M ring fenced from the hospital project only 50% was spend and the other $2M is included again or carried forward into the 2016/17 budget.
Again it must be remembered that means a real decrease in new funds. The Minister for health is still in denial about whether or not there was a hospital project, but promising a new hospital but after 18 months we are still awaiting the assessment of sites. As Wanza said anything with Reuben has to come to an end. On ZJB, she said we had no hospital but now she is talking about spending money to maintain the same hospital which she said was not a hospital. Yet she talks about empty vessels? I wonder if that was meant spoken while looking in the mirror and speaking to herself about empty vessels?
• It is very striking that the forecast for growth was mentioned in a single sentence. There was no explanation of what the 1.4% forecast means for the people of Montserrat. Even worse Madam Speaker the Hon. Premier said that it was growth in neighbouring islands that led to growth in mining here.
This suggests Madam Speaker that the efforts of our people who braved the risks and invested in mining and quarrying can take no credit to the export opportunities they worked so hard to create.
Let’s look at the true figures and reasons.
• Sand and aggregate exports were as follows 2014 – 211K tons, 2015 – 248K tons, and so far for the year 2016 – $28k tons. Royalties for 2015/16 was $371K and the remainder of the revenue increase shown in the budget was as a result of arrears paid by the port. The increased exports in 2015 resulted from the inability of Dominica to supply due to the flood damage from the tropical storm there.
• Ironically the Premier said that Public Administration continues to be the largest single contributor to local economic activity. We need to be able at this level to understand some basics. The public sector is the largest segment of the economy in dollar terms but it is public investment that generates and supports investment and growth not public administration.
• The fact that taxes are down is a clear indication that the economy is not growing. Given the structure of our economy, if the economy grows revenues will grow. Notice income tax and consumption tax are projected to be less also.
• What new projects did we hear about? In fact what projects did we hear about other than those initiated by the MDC that MCAP got blame for?
• The allocation for furnishings has been cut so where is the allocation to provide for the MCRS to occupy the new MCRS building completed almost a year now. Allocation for the occupation of the MAHLE building is missing.
• The Davy Hill and St. John’s community buildings have been stalled for months and nothing said about them nor allocations made.
• Madam Speaker was it accidental that reference to the new hospital was made in the final paragraph under Health in a single sentence? Does it reflect the reality that the Government has decided that the people of Montserrat will have to wait for several more years to get the new hospital?
Why do we need another detailed technical assessment? Have the demographics of Montserrat changed so much in the last year? The government needs to search its soul and explain to the people of Montserrat why they took this approach to the hospital. A hospital should not be thought of a symbol of any politician’s legacy. Look around the Caribbean Region. We do not name our hospitals after politicians. Get the people the hospital. Madam Speaker the health of our people must have a much higher ranking than the ego of any politician. Is it that we are now negotiating for a 12 bed hospital a move from the 32 bed facility designed by the architects hired by the MCAP government with the assistance of DFID?
• Madam Speaker what is the strategic training and development programme which will provide locals with the opportunity to gain required qualifications and experience. Our people cannot gain experience if the technical cooperation officers of the current dispensation are made their bosses. Most of our most distinguished public officers worked alongside TCOs they were not bossed by them. Now we have a situation as one person described TCO in Montserrat today means Technical Control Officer. I notice there was a figure given for expenditure on new scholarships. It is interesting to compare that with the total costs of the Technical Control Officers who come here for two years and leave without really passing on skills. Let us use one example. The current acting FS was a Chevening Scholar with a Masters degree in Finance from the University of Glasgow. Deputy Financial Secretary under studying the former FS for two years, who attained the age of 55 in October 2014. She has been acting FS for two years now but will be replaced by a less qualified and experienced DFID funded person.
FINANCIAL AND ECONOMIC DEVELOPMENT
• We can commend the government for keeping a focus on Planning in the Public Sector but what are they doing that is so different to what they met in place? Where is there change? Where is the fresh thinking? Where are the new ideas? People were fed up and red up and wanted change and yes they got it. A change for the worse.
• In looking forward Madam Speaker how will the Government ensure that the savings envisaged by the exemptions in customs duty will result in saving to the home owner. The policy can easily have the reverse effect if the appropriate strategies are not in place.
• It is interesting that the Hon Premier said that contractors and labourers have struggled with continuous employment for some time now. But it is also interesting that he did not say that the sometime coincides with the arrival of the PDM and the closure of the MDC. There was no strategic effort made to replace MDC and the country as a whole paid a big price.
SMALL BUSINESS DEVELOPMENT
• Despite all the talk about the private sector becoming the engine of growth and development in Montserrat, the Budget is silent on anything to do with private sector development. No stimulus package or fiscal incentives are contained in the budget to spur private sector development or small business. Moreover, with the closure of the MDC, nothing is stated with respect to the small business financing facility that was operated by the MDC.
• When we say essential foods will be exempt from import duty what will we do to help our farmers produce food at a cheaper cost. The best food is fresh local food. Create greater incentives for farmers. Upgrade the farm roads. Improve irrigation. Help them with storage. Reducing duty does not mean a reduction in price to the consumer, it means more profit for the merchants.
• Madam Speaker while we take no issue with trying to provide any form of money relief for our people the fact remains that without strategies that result in greater investment and growth we are asking our people to share a smaller and smaller economic “Plate tart”. It simply means that no matter how we slice it, everyone is getting less and less. Madame Speaker, is this the change you and PDM promised the people.
• Madam Speaker the statements made about air and sea access sound a great deal like, tell the people what they want to hear, until we know how to get it done. Air and sea transport arrangements is where the radical rethinking
is required. It is easy to say make sure Montserrat is served by a Twin Otter and improve airport facilities.
What are the cost implications? Where are the reports from the technical experts? What are the options and alternatives? How much of this has been discussed with the people of Montserrat? Can we realistically expect to expand cruise and yacht tourism much beyond where we are without modern docking facilities? What about our Fishers and local pleasure craft owners? Government is in office to convert concepts into plans and then implement those plans. The Statement is long on concepts but short of road maps and strategies. Madam Speaker did you notice the statement that over the next ten years, by 2025 Montserrat will be a much stronger economy, with far less reliance on UK aid, more jobs and better pay, which will attract people back to our island. So what is to happen this year and next year? Didn’t they blame MCAP for taking too long?
• Madam Speaker most of us who listened could not help but get the feeling that we were witness to an obligation to present a budget statement not an enthusiastic presentation of a Government that know what it is about. The presentation lacked inspiration and confidence. The Premier had to present something before March 31 and this he did without a clue as to what he had before him. The Premier sounded like a person who had no clue what was on the page before or the page after. DOUBLE F.
• Madame Speaker when we look at the lead in statements under Capital expenditure we realize that they are vague, nebulous. Was that to cover the fact that nowhere near as much work was done as the country needed?
There was a glib statement made about projects being delayed in 2015/2016. Did the government pay close attention to what that meant to the economy and the lives of people? The people who you claim you love were shortchanged by a massive underspend on the recurrent budget. This, at a time when people were struggling to find work. Madame Speaker is this the change you and PDM promised the people?
• Madam Speaker are we going to spend a million dollars for a committee to tell us we need a proper port. We have had more money spent on consultancies on a port over the last 15 years. The government I led did not bother with a consultancy. After a charette we got on with the job and completed the design of a port with breakwater to satisfy future needs of Montserrat. This included a marina, safe anchorage for fishermen and the ferry. The design was completed with the input of regional practitioners and scientifically tested. Tender documents prepared. But as Wanza sang, anything with Reuben must go.
• Madame Speaker when we look at page 30 item 2. We see how campaign politics has crept into decision making. Increments were returned but goods and services were not increased. So we have more people working but less money for them to do their work. We increased emoluments but reduced the amount to pay for the materials with which the people must work. No increased money for school supplies; no increased money for road and building maintenance; no increase in money for hospital supplies and medicines. Within one year this PDM government has changed the ratio of PE/Allowances/Pensions to the total budget has gone way out of control.
• Revenues are not increasing. Our TCOs know that. We have to understand the dynamics here. If HMG provides 62% of the budget as support we have to very clear what our future revenue strategies are going to be. It cannot be to look at asking our people to pay more direct taxes. Tax revenues account for 83% of locally generated revenue. We need to be careful how much more tax we try to extract from our people. Imagine what will happen next year when we have a DFID Financial Secretary; DFID head of MCRS, and so on.
It is disappointing and indeed sad that we in Montserrat in 2016 are expressing gratitude to DFID, the Governor and the FCO for providing a strategic steer with regards to budgetary and technical support and in taking forward our programmes – page 38 paragraph 2
• Does this mean that we cannot steer ourselves for our own budget or is this PDM code for we know who is really running Montserrat?
• Here is an example of this based on a communication from the Governor’s Office.
• We have noticed there’s a cruise ship in today. Could someone let us know whose ship it is and the arrangements under which it is here? How many passengers and crew are there and what are the passengers going to be doing on island?
• Could I also repeat the Governor’s request to be informed weekly in advance of any passenger vessel arrivals, other than the normal ferry service, given her responsibilities for marine safety?
• Since she is responsible for marine safety why is it that we don’t have a working police launch for the past few months now. That’s what she must deal with not giving permission for cruise ships to come here. But the Premier like it so because he has good relations.
Comparison of Approved Estimates 2015/2015 to Budgeted Estimates 2016/2017
Overall Government revenues are projected to decline from $128.2M to $125.9M. This decline in revenue is based on the following projections:
1. Local revenue declines from $48.6M to $47.3M. This represents a decline of ($1.3M or 2.7%)
2. Budgetary Aid declines from $79.7M to $78.7M. This represents a decline of (1.0M) or 1.3%)
The projection of a decline in the Government revenues is an indication that the Government does not expect or anticipate the economy to perform. In fact is more likely the economy will remain flat or decline.
The following are the major areas where local revenues are forecasted to decline:
1. Plant & Workshop $900,000 to $600000 decline by $300,000
2. Telecom. Licenses $2,140,500 to $997,600 decline by $1,142,900
3. Previous Years Reimbursement $890,000 to $20,000
Of great note and importance is Import duties which is forecasted to increase from $6,050,000 to $6,165,300. This represents an increases of $115,300.
This is inconsistent with the Budget Speech announcement whereby the Government plan to exempt construction building materials, furniture and equipment, plus essential or basic food items from import duty.
The exemption of these items from import duty should result in a decline in the revenues from import duties to less than half of the amount budgeted.
There is no express provision in the Budget 2016/2017 for any expenditure related to Tourism. I suspect that this may be covered under subventions; however GOM should not be providing subventions to a Tourist Board that does not exist.
Also the notation Vote 15 (Office of the Premier) in the budgetary numbers suggest the new tourism master plan should be produced and approved by Cabinet in financial year 2016/2017, while the new tourist organization should be enacted in the 2017/2018 financial period.
A figure of $395,100 was contained in the 2015/2016 budget as tourism management and development consultancy. We are not sure what stage this project is at and the way forward. Remember that a TDP3 was approved in 2014/15 fiscal by DFID to include a tourism development plan.
Information and Broadcasting
The financing for Programme 152, Information and broadcasting is covered under the Office of the Premier. However, there is no provision for the completion of the ZJB Building or its furnishing with equipment and furniture etc in the Budget. Nothing is also provided under the Capital estimates.
• There is nothing in this budget that shows how Montserratians are in control of our destiny at this point in time. There is no sense that we have a say in what is really import. There is however a sense that we are more pliant and
suppliant than we are courageous and committed.
• There is nothing in this budget that suggests that we are being lead strategically by the people who were elected to lead us. The sense we get is that the budget reflects Governments’ way of doing things – out of a sense of necessity held together by a thread.
• Ordinary people seek us out to help them find solutions. The TCOs don’t do that but that fine. We are here to serve the best interest of Montserrat so we understand the dynamics. Persons who voted for change are now fed up with what they are getting by their vote for PDM.
• Madame Speaker, the PDM team says they could negotiate and get more but now they are complaining that they getting less. They said they have repaired the bad relationship we had with HMG and now they are on good terms. We got more money every year year now for the second year they are complaining that they are getting less. The minister for health begging please help me out. We will.
• Premier some of your advisers like to say that Reuben is always criticising the Government and will not share ideas. Thanks to the UWI it was possible for me to share ideas with the people of Montserrat recently without rancour. But let us remember that it was you and the same advisers who said let us get rid of REUBENOMICS. The people can now make a judgement.