‘Where it Began’
It began 50 years ago with the granting of independence when T&T embarked on its journey as an independent nation full of aspirations and high ideals. It was stated at the time…
“I have given to the nation as its watch words…. DISCIPLINE, PRODUCTION, TOLERANCE, they apply as much as to you the young people as to your parents. The discipline is both individual and national. The individual cannot be allowed to seek his personal interests and gratify his personal ambitions at the expense of a nation. We must produce in order to enjoy.
Wealth does not drop from the sky for any individual or any nation.
Reduce production, skylark on the job, take twice as long to do a job and make it cost twice as much, do any of these things and in effect you reduce the total amount available to be shared among the total number of people.
You don't pull your weight and you fatten at the expense of others… some of you have ancestors who came from one country, some from another, others from a third. Some of you profess one religion, some another, others a third or fourth.
You in your schools have, like the nation in general, only two alternatives: You learn to live together in peace or you fight it out and destroy one another.
The second alternative makes no sense and is sheer barbarism.
The first alternative is civilised and is simple common sense.
You the children, yours is the great responsibility to educate your parents, teach them to live together in harmony. The difference is not race, or colour of skin, but merit only -difference of wealth and family status being rejected in favour of equality of opportunities.
I call upon all of you young people to practice what you sing today and tomorrow to translate the ideal of our national anthem into a code of everyday behaviour, and to make our nation one in which every creed and race find an equal place”.
The address by the Honourable Dr Eric Williams, the first Prime Minister of Trinidad and Tobago to the Independence Youth Rally on August 30th 1962.
It is prophetic to note that the audience of that day 50 years ago, is the adult population of today who are charged with the responsibility of charting the way forward for their children and the generations to follow.
How would the ‘audience of that day’ be rated TODAY, with regard to adhering to those watch words, given to us on 30th August 1962?
It is suggested that we would be rated as having performed and continuing to perform very poorly and a brief examination of Dr. Eric William’s message would suffice to demonstrate this:-
DISCIPLINE - The individual cannot be allowed to seek his personal interests and gratify his personal ambitions at the expense of a nation.
PRODUCTION - We must produce in order to enjoy. Wealth does not drop from the sky for any individual or any nation.
TOLERANCE - The difference is not race, or colour of skin, but merit only -difference of wealth and family status being rejected in favour of equality of opportunities.
No additional comment is required as our collective shortcomings in respect of each of the above are evident on a daily basis in the course of our lives, in the media, in our schools and in our Parliament.
‘Where to from here’
The Minister of Finance and the Economy presented his maiden budget on Monday October 1, 2012 appropriately captioned ‘Stimulating Growth, Generating Prosperity’.
Various commentators have opined on the merits and demerits of that presentation and it will only be determined in the future whether the strategy adopted has been successful. However, there have been some notable commentaries that demand further consideration, some of which are highlighted below:-
1. Reporting on Performance
Budget Reports of recent years have been notoriously lacking in providing an ‘accounting to the country’ for the delivery of the stated objectives, financial and otherwise, from prior budgets, and the 2012/13 budget was no different. It is recommended that such reporting should be a standard feature of all future budgets allowing the population to appreciate ‘what was promised’ and ‘what was delivered’.
2. Periodic Reporting
Our Publicly Quoted Companies have a quarterly reporting obligation to their shareholders and we suggest that the Corporation Sole adopt a similar approach by establishing and adhering to a periodic reporting cycle that will enable all sectors of the population to be fully informed of the progress of the economy in the context of the budget measures announced.
3. Our Path to Developed Status
Notwithstanding the laudable objectives of the 2012/13 Budget, “Stimulating Growth, Generating Prosperity”, there exists a void in the country’s economic landscape with no clearly enunciated path guiding us collectively to the goal of sustainable growth and long term prosperity.
As the former Central Bank Governor, Ewart Williams, was recently quoted as saying, “the Vision 2020 plan of the previous People’s National Movement was the closest document to a proper plan for the future that the country has seen”.
Such a plan is fundamental to our future serving to mobilize the country towards common goals rather than the ‘every man for himself’ or ’dog eat dog’ syndrome that currently pervades our society.
There has over the last 50 years been a constant call to ‘diversify the economy away from the vagaries of the international oil and gas prices’, but to date that diversification remains a distant goal.
The Oil & Gas Sector is still very much the ‘driver of the economy’ contributing 45.3% of GDP in 2011 and 36.9% of total tax revenue (2012 – 35.4%), as well as a significant portion of our foreign exchange.
The latter percentages represent the contribution from the oil companies only. The percentage contribution from the Energy Sector as a whole would be significantly increased (to perhaps over 50%) if the petrochemical sector was also to be included.
The abundant revenues from this sector have provided GORTT with the wherewithal to provide the population with everything from:
free education, from nursery to tertiary;
free public healthcare and pharmaceuticals;
subsidized air and sea bridge and
subsidized gasoline and diesel
…albeit at an immense non-sustainable cost.
The warning bells have however been sounded (but is anyone listening) with several noteworthy commentators (who I have taken the liberty to quote) expressing concern:
Gervais Warner President and CEO of the Neal and Massy Group of Companies noted at the Trinidad Chamber’s Budget Meeting that “time was running out” for the T&T energy sector; and Derek Hudson, President of BG East Africa and former President of BG Trinidad and Tobago, noted that T&T does face an energy cliff and actions need to be taken to prevent the country from “falling off the cliff”.
There is no doubting that the T&T Energy Sector is a mature sector that is in natural decline. New reserves (whether oil or natural gas), which are the life blood of the industry, are harder to find; are less prolific; are more costly to produce, all at a time when the competition for capital is intense.
It is likely that in order to maintain our competitiveness for that capital we will have to give more and retain less and we must be prepared to do so.
The curtailment in the natural gas supply (whatever the reason) has been damaging to the T&T petrochemical sector.
It has resulted in reduced revenue flows to GORTT in the form of lower taxes and less foreign exchange inflows to the country.
Most critically, it has damaged the business case for T&T as a reliable and attractive location for new capital intensive energy downstream projects.
We must be aware that the multi nationals operating within T&T have no allegiance to T&T as such and will remain here as long as it is economically viable to do so. It is not impossible or unique for plants to be closed, dismantled and relocated to another country.
Indeed, Methanex has recently done so in relocating a Chile plant to the US on the basis that Methanex ‘will be taking a more flexible approach on equipment, to moving it around, if we have to’.
Ewart Williams reflected that “there are indications that perhaps there isn’t all that much oil and gas for that long a period of time (i.e. 10 – 12 years)”.
We cannot sit back and think that its business as usual and all is well in the sector, as ‘the cliff’ may be around the very next bend!
4. The Road to Diversification
Ewart Williams also reminded us that, in 1962, the plan was to use the energy revenues to transform the economy so that when the oil and gas was ‘no longer running like water’ the standard of living would remain high.
He expressed the view however, that ‘government revenues are being wasted, with the bulk of the money ending up in construction activity and (being spent) in malls, things that are not sustainable’.
The challenging question of how to go about ‘diversifying the economy’ was the subject of a recent symposium at which it was noted that the country has to find a way to pursue long term development plans despite the politics.
The Vision 2020 plan was such a long term development plan and was a private sector initiative which arose out of concerns from within the private sector that the significant gains from taxes flowing to the Government would be ‘wasted’ if not properly managed and used for sustainable development.
Whether one agrees or disagrees with the contents of that plan there can be no doubting the fact that ‘a plan’ is imperative if we are to establish a national path to diversification and thereby offer a sustainable future for the next generations.
Failing this, ‘political expediency of the day’ will undoubtedly prevail.
As Ewart Williams noted in response to the commitment of the Minister of Finance to reduce the budget deficit by 1% every year:
“Which Government, Which Prime Minister, two years from elections is going to let you do that? - You can’t”
It should be clear to all that there is no easy path leading to economic diversification. In the turbulent global economic climate of today there are no ‘fairy godfathers’ and no one to do us and our economy any favours.
The MoF and other commentators have noted that the competition for foreign direct investment is intense and we are no longer the preferred location for such investment. It is therefore imperative that GORTT move expeditiously to identify and remove all impediments to economic activity within its purview.
The commitment to improve T&T’s ranking (68th) in the World Bank Ease of Doing Business Rankings by identifying and committing to address the areas in which we have under-performed is a most positive development.
Similarly the plan to improve the other policies and procedures which have hampered business development is most welcome and we look forward to the timely and successful implementation.
It is imperative, therefore, that we continue to work that much harder to re-establish our competitiveness and re-gain the competitive edge.
Our diversification must be built around a solid platform using our comparablel advantages as the cornerstone of such a development plan.
To this end the MoF has once again identified the priority sectors that are to drive the diversification of the economy. These are:-
information and communication technology,
downstream energy industries,
creative arts and
the maritime sectors.
These sectors have been the focus areas for some years now and it is unclear as to what headway (if any) has been made in developing the sustainable industries of the future.
Certainly, there is no ‘Point Lisas II’ success story on the immediate horizon and one suspects that the population at large also remains skeptical as to whether these sectors can deliver the much needed sustainable economic benefits.
The developments announced with regard to the Financial Institution Support Services appear to be the most promising and offer a real prospect of creating an internationally competitive industry capable of creating quality jobs for our workforce and generating essential foreign exchange.
We must however be aware that we are not alone in pursuing this initiative as other ‘small economies’ are also moving in this direction.
Fast tracking of this initiative is essential and timely and efficient implementation an imperative.
It is worthwhile to note that Jamaica has recently introduced legislation designed to encourage international corporations to establish their head offices in Jamaica, so as to generate a host of economic benefits, including new jobs, demand for housing, office space etc.
In announcing this initiative the Minister of Finance noted that, “We are not giving up anything (by exempting certain incomes from tax) that we now have, rather it is seeking to attract additional economic activities to the country and expand the pool of tax over time generally”.
T&T would do well to emulate this philosophy in our drive to enhance our competitiveness and make T&T the preferred location for foreign investment in those niche areas, in which we have a natural advantage.
‘What can we conclude?’
That, there is no magic formula at hand, nor one recipe that will deliver a re-structured and re-vitalised T&T sustainable economy of the future.
There are however a few other notable conclusions that are not open to challenge:-
We have failed and continue to fail our children and future generations in not adhering to the national watch words of ‘Discipline, Tolerance and Production’;
The current T&T economic direction is unsustainable;
T&T has lost its competitive edge as regards foreign direct investment in the energy sector and more needs to be done to reverse this trend;
The dependency on the Energy Sector remains;
Economic diversification is now ever more critical;
A long term development plan (like “The 2020 Vision”) is an essential ingredient to guide and deliver diversification;
GORTT’s spending pattern must be geared towards re-shaping of the economy and not on recurrent expenditures and on projects that cannot be sustained. We require ‘no more cathedrals in the desert’;
The level of subsidies and transfers must be reduced and re-directed to address, directly, the socio-economic needs and NOT the general population;
An objective of the Plan ought to be to establish security in all primary areas of the economy within a specified period, to include:-
- Energy Security (focus on Alternative Energy Solutions while we can afford to do so);
- Food Security (focus on specific agricultural produce that can feed the nation and reduce our dependency on imports); and
- Water Security (focus on securing long term sources and reliable delivery systems)
Failure to reverse the current trends will have most severe implications in the future including economic hardship and social unrest;
The success or otherwise of the 2012/13 budget measures will be revealed in time but time is not on our side. Past performance does not give one the confidence that we can deliver value for the budgeted spend of billions of dollars planned for 2012/13.
The very Special Purpose Companies that were created and which are intended to expedite these national programs have, in the main, not delivered, are mired in controversy at Board and operating levels and appear to represent nothing more than another ‘honey comb of riches to be milked by all and sundry’.
In concluding it is fully acknowledged that the long term economic solutions remain a most challenging and illusive equation.
However, there is close at hand a much less daunting and easily attainable goal, within easy reach of every one of us, AND which WILL make a difference.
This is the re-commitment and adherence to our Nation’s watch words: Discipline, Tolerance and Production.
If we only embrace those words within our families, within our schools, within our businesses, within our political landscape we will re-shape this Country and in so doing the economy AND the future of our children and the generations to come will be preserved.
In so doing we will also certainly demonstrate to the world that ‘God is indeed a Trinbagonian’.
The alternative is unthinkable and the words of the late Dr Eric Williams could not have been more phophetic:-
“We must produce in order to enjoy.
Wealth does not drop from the sky for any individual or any nation
You in your schools have, like the nation in general, only two alternatives.
You learn to live together in peace or you fight it out and destroy one another.
The second alternative makes no sense and is sheer barbarism.
The first alternative is civilised and is simple common sense”.
Our choice is clear!!