People's Budget or the IMF's?

Ian Boyne, Contributor

Audley Shaw, in his budget reply on Tuesday, sharp rhetorician and 'ray-ray' lyricist that he is, could have a field day with his populist message of people's suffering and their lives going to hell with this International Monetary Fund (IMF) austerity programme.

In fact, he started right after Finance Minister Peter Phillips made his Budget presentation last Thursday, saying Phillips had failed to address the people's suffering. He lashed out with polemical relish on the tax on financial transactions, comparing the Government, in his inimitable style, to a robber outside an ATM. But the Government is a more adept robber: It robs you out of sight.

Politically, if Audley has a choice between satisfying the intellectual tastes of columnists like me and appealing to the mass of the people who are definitely suffering and hurting, it makes better sense to ignore me and others calling for hard, cold, rational analysis. Forget about whether there is really any viable alternative to the broad economic framework the Government is pursuing. Forget about whether if we elect the Jamaica Labour Party (JLP) tomorrow, it would be able to suddenly convince the IMF to abandon its own dogmas and adopt an expansionary, stimulus programme with stronger social-protection programmes. Forget about whether a JLP Government would be able to tell the IMF to go to hell and craft a viable alternative economic programme to make the poor suffer less.

Forget about the fact that populist policies and the refusal to face the music and to take the hard decisions have been partly responsible for our being in a situation where our debt-to-GDP was nearly 150 per cent.

Peter Phillips' Budget presentation was anything but exciting or stimulating. A lot of it was rehashed, repackaged information. But a Budget presentation is not carnival. It's not supposed to be about passion or emotion. It is about hard, cold, analytical assessment.

Let's take the new taxes. Of course, all taxes are to be regretted. It is most regrettable that $6.7 billion in new taxes have to be imposed. But if we are not to borrow more to further sink us in debt, or if we are not to cut even deeper into social services, how would we finance the Budget deficit? Apart from speaking glibly about "cutting corruption and waste" (you need to identify that $6.7 billion in such), where are the taxes going to come from?

We know when the rich are taxed, they pass it on to ordinary people. So I know the financial institutions will not absorb the taxes. But it is far more defensible for the Government to impose taxes on assets, bank transactions, insurance companies, and certainly on alcohol than to do so on items that poor people use unavoidably every day. Of all the things which could be taxed, the Government has, in my view, chosen the least oppressive areas. The Government must be commended for its sensitivity to the poor.

Stirring up people's emotions

You can't eat your cake and have it. It's one thing for politicians like Mr Shaw to pursue their political agenda of stirring up people's emotions, playing to the gallery and 'licking shot' at the Government in these hard times. But media must analyse dispassionately, impartially and objectively.

I have warned about the dangers of neo-liberalism more than any other columnist. I have repeatedly pointed to the inadequacies of this programme the Government has been pursuing, stating that the strategies are necessary but not sufficient. Economic fundamentals are not enough. But economic common sense dictates that one acknowledges that these policies, though not sufficient, are demanded as a precursor to growth.

Besides, the international capital markets are wary of us. What we need is a serious economic debate during this Budget presentation — one that respects the intelligence of the Jamaican people and does not seek to exploit pockets of ignorance. Don't try to fool up the people with phantom solutions and pie-in-the-sky remedies.

It is an objective good that we are balancing the Budget; that we have achieved a primary surplus; that we are reducing our balance of payments deficit; and that we have inflation under double-digit figures. It is an objective good that we have healthy net international reserves and that growth has returned to the economy. The macroeconomic variables which are trending in the right direction as a result of the economic discipline that has been causing the suffering. The pain is necessary for any gain.

We are taking the bitter medicine that Andrew Holness talked about. It is here. But this is precisely what Audley is bawling about and which he is likely to make a stink about on Tuesday. This will play well on the street. If Audley 'tek it to Peter and Portia' on Tuesday, many on the street will shout, "Pram! Pram!' It is not exciting to engage in hard, cold analysis about economics. Much more exciting to talk about 'this wicked, uncaring Government' - which the People's National Party used to talk about when it was in Opposition. Audley would be doing nothing on Tuesday that his opponents on the other side did not do when they were in Opposition. It's the same old game.

Phillips put it well in his Budget presentation last Thursday: "Our situation was compounded by those who found it politically convenient to propagate the view that the proven laws of economic development did not apply to Jamaica. Whereas other countries had to work their way to prosperity, Jamaica could borrow its way to prosperity." He then referred to "this dubious doctrine of Jamaican economic exceptionalism". Of course, he was disingenuous in referring to the 2008-2011 period when the global economic crisis would have significantly contributed to the JLP's need for extensive borrowing. His general point is valid, however, just that it has been both PNP and JLP politicians who have held that view - in fact, more so on his side than the JLP's. And Peter knows this.

Venture-capital fund

Perhaps the most hopeful thing out of the Phillips presentation was the projected establishment of a venture-capital fund by year end. This is very important to the growth agenda. Even Sagicor President Richard Byles, a firm believer in the market, admitted last week that "it needs more than the magical hand of the market to drive growth". The State can't be on the sidelines if growth is to take place. The economic fundamentals must take priority now, but measures such as beefing up resources of the Development Bank of Jamaica and establishing this venture fund are the right moves to spur growth outside of the logistics hub, agro parks and big tourism.

Phillips made a point of showing the strong social-protection spending the Government is still maintaining despite its austerity programme. Thanks not just to his Government, but to the IMF, which has become a little more socially sensitive and is talking about inclusive growth and insisting on a minimum threshold for social spending.

We want a meaningful, substantial contribution from the opposition finance spokesman, identifying clear areas of waste in Government and making concrete suggestions as to what could be done without jeopardising the economic fundamentals. Yes, we know you have to play to the gallery and provide some catchy clips for broadcast. But in the midst of all the theatrics, give us some substance in your reply.

Ian Boyne is a veteran journalist. Email feedback to columns@gleanerjm.com and ianboyne1@yahoo.com.