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Was Omar confused? Part 2
By Keith Collister Business Observer writer
Wednesday, April 23, 2008
Last week Friday, the first part of this article ended by suggesting that Jamaica's society needed to decide if it was going to demand budget accountability from its elected representatives. In particular, the society would need to decide if their government should put the demands of the short term above long term objectives.
The practice of deferred financing is a good example of putting the needs of the short term above long term objectives. It was designed to make it appear as though Jamaica was meeting our short term fiscal targets, and spend more on current programmes, by essentially borrowing from the future at higher interest rates. A new Government determined to end this and other similar practices forever may, however, find itself having to make some uncomfortable choices on current expenditure.
The Prime Minister's speech yesterday makes it very timely to look at the cost of financing the constituency development fund (CDF). On the one hand, Dr Davies appeared to believe during the election campaign that it was a bad, even unaffordable idea.
However, the CDF as proposed appears to be quite similar to the National Community Development Fund (NCDP), which was funded by a US$15 million loan from the International Bank for Reconstruction and Development (IBRD) with counterpart funding from the Government of Jamaica (GoJ) to the tune of US$15.1 million. This loan agreement was signed by the IBRD and the Government of Jamaica on October 31, 2002 and became effective January 29, 2003 with a Closing Date of December 31, 2007, and has subsequently been extended to June 30, 2008.
This project aimed to provide social and community development infrastructure in order to improve the standard of living among the poor.
Social infrastructure sub projects included the rehabilitation, expansion or construction of schools, health centres, day care centres, homes for children, the elderly and the disabled, community centres, sports and recreational facilities and community-based water supply systems.
Economic infrastructure sub projects including the rehabilitation of urban access and feeder roads as well as the rehabilitation or construction of community-based agro-processing facilities.
Shahine Robinson, junior minister in the Office of the Prime Minister with responsibility for the Constituency Development Fund, notes that MPs will have "to engage their community and come up with projects that the community wants."
The likely range of projects of the new CDF, and the approach, appears remarkably similar to the previous community development fund. The main difference in the new fund appears to be a greater emphasis on the role of the MP, as well as the clear intention to deal with the equitable distribution of resources between the political parties. It is not really clear why one would be happy to borrow money for a community development fund but not support a constituency development fund, something that Dr Davies should be able to easily explain.
Dr Davies mentions in his speech concerning the CDF that the Minister of Transport and Works had revealed that some of the money for roads this year would be coming out of the constituency development fund.
His budget speech comment "And we thought these funds were going to be additional" had been previously answered by now Minister Shaw, during their debate over six months ago, during the election campaign. As it is unlikely that Dr Davies has forgotten, he must be referring to his understanding before that debate.
The question remains, however, as to whether he now truly believes the CDF to be a good idea. Later on in the same speech, Dr Davies congratulates the Prime Minister "on a commonsense initiative which basically combines the various different programmes which have the input of Members of Parliament but provide a greater budget".
His difficulty in deciding a position on the CDF appears to be at least partially driven by an attempt to prove that, amongst other things, it was by not meeting their promise to have a CDF of 2.5 per cent of GDP that Minister Shaw had managed to avoid "an additional $25 billion in taxes to meet his expenditure requirements". However, in the first instance, there is no evidence that this was a promise, unlike those for education and health, that had to be undertaken in the first year of office. Indeed, it is not clear that there are any other specific "promises" that the JLP committed to doing in their first year of office.
Much more important than the issue of meeting promises, which in any case without exception must always be dependent on the financial circumstances created by the local and international economy, is the policy issue of whether the society should embrace the CDF as a good idea. If the purpose of the CDF is to drive social partnership at the community level, championed by the MP, to meet neglected community needs in a fiscally responsible, corruption free and non partisan fashion, then it may be a good short to medium term solution to the governance issues involved in providing benefits to our communities. Longer term, the reform of local government may be a preferred solution, but the debate over that potential long term solution has not even got underway, at least in the mind of the public.
There are a number of other issues of national importance raised in Dr Davies' speech involving seemingly contradictory positions,
including how interest rates are really determined, the role of development banks and the associated issue of our relationship with the multilaterals. Even the critical issue of implementing real tax reform requires the society to decide the critical philosophical issue of under what circumstances lower tax rates can increase tax revenues.
There are also a number of areas mentioned briefly by Dr Davies that require some further explanation, including particularly the history of the response to the growth of informal investment schemes. All this will however require a further article.
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Cho Lazie, man? Sometimes mi wanda iffen yuh waan wi fio read yuh post dem? jus bruk dem hup...hit nuh affi innah paragraphs...jus bruk dem hup mek dem he-sy fi read? Duh mi a beg yuh?
By Keith Collister Business Observer writer
Wednesday, April 23, 2008
Last week Friday, the first part of this article ended by suggesting that Jamaica's society needed to decide if it was going to demand budget accountability from its elected representatives. In particular, the society would need to decide if their government should put the demands of the short term above long term objectives.
The practice of deferred financing is a good example of putting the needs of the short term above long term objectives. It was designed to make it appear as though Jamaica was meeting our short term fiscal targets, and spend more on current programmes, by essentially borrowing from the future at higher interest rates. A new Government determined to end this and other similar practices forever may, however, find itself having to make some uncomfortable choices on current expenditure.
The Prime Minister's speech yesterday makes it very timely to look at the cost of financing the constituency development fund (CDF). On the one hand, Dr Davies appeared to believe during the election campaign that it was a bad, even unaffordable idea.
However, the CDF as proposed appears to be quite similar to the National Community Development Fund (NCDP), which was funded by a US$15 million loan from the International Bank for Reconstruction and Development (IBRD) with counterpart funding from the Government of Jamaica (GoJ) to the tune of US$15.1 million. This loan agreement was signed by the IBRD and the Government of Jamaica on October 31, 2002 and became effective January 29, 2003 with a Closing Date of December 31, 2007, and has subsequently been extended to June 30, 2008.
This project aimed to provide social and community development infrastructure in order to improve the standard of living among the poor.
Social infrastructure sub projects included the rehabilitation, expansion or construction of schools, health centres, day care centres, homes for children, the elderly and the disabled, community centres, sports and recreational facilities and community-based water supply systems.
Economic infrastructure sub projects including the rehabilitation of urban access and feeder roads as well as the rehabilitation or construction of community-based agro-processing facilities.
Shahine Robinson, junior minister in the Office of the Prime Minister with responsibility for the Constituency Development Fund, notes that MPs will have "to engage their community and come up with projects that the community wants."
The likely range of projects of the new CDF, and the approach, appears remarkably similar to the previous community development fund. The main difference in the new fund appears to be a greater emphasis on the role of the MP, as well as the clear intention to deal with the equitable distribution of resources between the political parties. It is not really clear why one would be happy to borrow money for a community development fund but not support a constituency development fund, something that Dr Davies should be able to easily explain.
Dr Davies mentions in his speech concerning the CDF that the Minister of Transport and Works had revealed that some of the money for roads this year would be coming out of the constituency development fund.
His budget speech comment "And we thought these funds were going to be additional" had been previously answered by now Minister Shaw, during their debate over six months ago, during the election campaign. As it is unlikely that Dr Davies has forgotten, he must be referring to his understanding before that debate.
The question remains, however, as to whether he now truly believes the CDF to be a good idea. Later on in the same speech, Dr Davies congratulates the Prime Minister "on a commonsense initiative which basically combines the various different programmes which have the input of Members of Parliament but provide a greater budget".
His difficulty in deciding a position on the CDF appears to be at least partially driven by an attempt to prove that, amongst other things, it was by not meeting their promise to have a CDF of 2.5 per cent of GDP that Minister Shaw had managed to avoid "an additional $25 billion in taxes to meet his expenditure requirements". However, in the first instance, there is no evidence that this was a promise, unlike those for education and health, that had to be undertaken in the first year of office. Indeed, it is not clear that there are any other specific "promises" that the JLP committed to doing in their first year of office.
Much more important than the issue of meeting promises, which in any case without exception must always be dependent on the financial circumstances created by the local and international economy, is the policy issue of whether the society should embrace the CDF as a good idea. If the purpose of the CDF is to drive social partnership at the community level, championed by the MP, to meet neglected community needs in a fiscally responsible, corruption free and non partisan fashion, then it may be a good short to medium term solution to the governance issues involved in providing benefits to our communities. Longer term, the reform of local government may be a preferred solution, but the debate over that potential long term solution has not even got underway, at least in the mind of the public.
There are a number of other issues of national importance raised in Dr Davies' speech involving seemingly contradictory positions,
including how interest rates are really determined, the role of development banks and the associated issue of our relationship with the multilaterals. Even the critical issue of implementing real tax reform requires the society to decide the critical philosophical issue of under what circumstances lower tax rates can increase tax revenues.
There are also a number of areas mentioned briefly by Dr Davies that require some further explanation, including particularly the history of the response to the growth of informal investment schemes. All this will however require a further article.
----------
Cho Lazie, man? Sometimes mi wanda iffen yuh waan wi fio read yuh post dem? jus bruk dem hup...hit nuh affi innah paragraphs...jus bruk dem hup mek dem he-sy fi read? Duh mi a beg yuh?
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