IS SETTLING OLD SCORES MORE IMPORTANT THAN SAVING OUR ECONOMY? Jadia Jn. Pierre-Emmanuel Press Secretary to the Prime Minister Over the last two weeks, I have listened as talk show hosts, reporters, political agents and others share their views on Saint Lucia’s current economic challenges. Many of the arguments, though scripted and rehearsed, are based on emotion and bias and remotely removed from the actual facts. The voices and story lines are not new, but I must ask, Is this the time to settle old scores or is it more important to save our economy? In many of the arguments presented on the talk shows and social media, figures have even been distorted, all in an effort to support the absurd argument that the Saint Lucia Labour Party (SLP) has ruined the economy as a result of poor spending and “padding” of the public service. It is as if the Labour Party was in office for the past ten years! While the Prime Minister has stated publicly that he is not interested in the blame game, I believe I have a duty to present the facts and respond to the inaccurate statements that are currently in circulation. THE PUBLIC SERVICE FROM 2006 TO PRESENT One of the questions that has drawn the most emotional and inaccurate responses is, “How is government spending its revenues?” The SLP has been accused of “padding” the public service and hiring too many consultants. Let us examine the composition of the public service. To do so, we will review what the SLP left in 2006 and what it found upon assuming office in 2011. • When the SLP left office in 2006, there were 3,065 civil servants. By 2011, that figure grew by 323, to 3,388. • In 2006, there were 2,038 teachers and in 2011, there were 2, 311. This represents an increase of 273. • By 2011, the 941 police officers were complemented with an additional 116 officers to bring the number to 1,057. Meanwhile, the fire service was increased by 54 to 284. • Between 2006 and 2011, nursing remained relatively untouched. In 2006, there were 234 nurses, while in 2011 there were 236. • Upon assuming office in 2011, the SLP found fewer doctors in the service. In 2006, there were 88 doctors, while in 2011, there were only 73. • Contrary to what the United Workers Party (UWP) has said, the top management of the public service increased under their watch, from 54 in 2006, to 69 in 2011. Apart from these increases in the public service, there was an unprecedented increase in contracted workers and consultants under the UWP. What is even more alarming is the number of appointments made and contracts renewed months and sometimes, mere days before the 2011 General Elections. Consider this: Between March 2010 and November 2011, the UWP hired forty three (43) consultants. The current Leader of the Opposition, Hon. Dr. Gale T.C. Rigobert was hired as a consultant in the Ministry of Finance and earned $8,300.00 as a basic salary. A Macro Economic Consultant was hired at a basic salary of $20,000.00. Other appointments included an Insurance Consultant, a Land Use Consultant, a Financial Administration Advisor, an Institutional Development and Policy Review Consultant, a Tax Intelligence Consultant, a Tax Collections Consultant, to name a few. Even a journalist found himself on the Governments payroll and earned $4,000.00 monthly while still employed in the private sector. Let us not even mention the consultants with no offices or portfolios. The Government currently has thirteen (13) consultants. Yet, there is an outcry that this government has hired too many consultants and as a result, cannot pay the public servants. Contrary to what is being said the composition of the public service has remained relatively stable from 2011 to present. In an Address to the Nation, in January 2013, Prime Minister, Hon. Dr. Kenny D. Anthony revealed that there was an increase of 124 persons in the public service and a $9 million increase in the wage bill before the 4% increase. According to the Prime Minister, Of those 124 new employees, 40 were employed in the VAT Office. Additionally, there were 39 new Police officers, 12 new nurses, 5 new fire officers and 4 new appointments in top management, that is, Grades 19-21. There were also 24 new daily-paid workers. The remainder of the increase was made up of retroactive payments to top management of the Civil Service of $2.7 million, based on the recommendation of the Salaries Review Commission, which was implemented by the previous Government in 2010 without parliamentary scrutiny or sanction. How does a 124 increase in highly critical areas compare to an increase of nearly 1000 by the UWP? How? THE COST OF THE PUBLIC SERVICE As a result of large increases in numbers between 2006 to present, there were consequent increases in the cost of the public service. Mind you, our public sector is not too large when compared to other territories but there is a wide gap in wages. From 1997 to present civil servants have received a 39.5% increase in wages and salaries. This is the highest increase over the same period, in the region. The sharpest increase in the cost of wages and salaries is as a result of an ill- advised salary increase of 14.5%. Wages and salaries increased by 3% in 2008/9, 4% in 2008/9 and 7.5% in 2009/10. In effect, the cost of wages and salaries increased from 255.64 million in 2006/7 to 342.30 million in 2010/11. To put it differently, the UWP increased the wage bill by 86.66 million dollars and had to borrow to meet these increases. Of course there was additional pressure as a result of the 4% increase granted by this Government last year. SAINT LUCIA’S PERFORMANCE Another question that is widely debated too is What took us to this point so quickly? It did not change so quickly. The writings were on the wall but we ignored it. Our economic performance over the last seven years has been dismal. While the economic and financial crisis swept over the world in 2008/9, our Government made no adjustment to mitigate the subsequent fall out. While the United Workers Party was on a spending spree, our economy was contracting. I have heard many say, Unlike Kenny Anthony, the UWP has grown the economy. Let us set aside the flashing mirrors and examine the facts. Since 2000, the highest growth in the economy has been under the SLP, with Dr. Kenny D. Anthony as Minister for Finance. In the year 2006/7, GDP grew by 8.65%. The second and third highest growth figures were achieved under Kenny Anthony (7.65% in 2004/2005 and 4.41% in 2003/4). Over a five year period, 2002/3 to 2006/7, Saint Lucias economy grew by 16.85% or at an average annual rate of 3.37%. The UWP was elected on December 11, 2006. The records from the Ministry of Finance reveal that in 2007/8, growth was -0.41%, while in 2008/9 the economy grew by 3.44%. In 2009/10, Saint Lucia registered growth of 0.62% and -0.22% in 2010/11. Despite a pronouncement by then Finance Minister, Hon. Stephenson King that the economy grew by 6% in 2011/2012, actual growth was 1.33%. Over the five year span, the economy grew by 3.37% or at an average annual rate of 0.952% Who then, is better at growing the economy? UNPRECEDENTED EXPENDITURE DURING DOWNTURN When we should have been prudent, the Government was enabling Dr. Keith Mondesir to defraud the state of taxes. When we should have been exercising constraint, Allen Chastanet was renting tents from overseas for $800,000.00, spending $500,000.00 on telephone bills and had no difficulty paying almost one million dollars for twenty drunken minutes of Amy Winehouse. When the world was cutting back, the UWP was purchasing derelict buildings that remain a burden to this country. Need I remind you of the deals that caused Saint Lucia to lose lands in Black Bay and Canelles, the monies paid out from Communication and Works with no work done or the payment of grossly overestimated invoices? Millions were squandered with no regard for the future of the country. THE NEED FOR ADJUSTMENT The biggest challenge facing Saint Lucia now is its inability to borrow. Saint Lucia has gone past its prudential limit and lenders are saying no more. This is not entirely Saint Lucias fault. The anxiety is also as a result of difficulties in the region. Barbados, Grenada, Antigua, have all embarked on adjustments. Investors have had to accept losses on investment and are becoming more careful with new endeavors. This has made it difficult for the Government to raise money on the regional securities market. The 2013/2014 Budget was based on a projection of $266.5 million dollars to be raised through bonds and $38.9 million to be sourced through loans. In the end, only $45.5 million was raised through bonds (a deficit of $221 million), while $29.3 was raised in loans (a deficit of 9.6 million). This left a financing gap of $230.6 million. What then would be the option but to reduce expenditure? If 53% of Governments current expenditure is on wages and salaries, why wouldnt there be a move to cap the wage bill? Since last year, there have been significant cuts in the capital budget. There is no more room to increase taxes and subsidies have been reduced. Government has stripped its communications bill and has reduced spending on goods and services. This can only contribute a small portion of what is needed to keep the country afloat. Therefore, just as we would do in our households, Government must review where it is spending the most. If not the wage adjustment, what do we do? Do we hand over our country to the IMF? Do we wait to default on our loans? We cannot allow our economy to crash while some use this crisis as an opportunity to settle old scores. I await some suggestions that amount to dollars, cents and sense to deal with Governments fiscal situation. END
Posted on: Thu, 19 Jun 2014 14:48:00 +0000