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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR vAlign=top><TD height=54><H4>Cost overruns versus social and economic infrastructure</H4>
By Wilberne Persaud, Financial Gleaner Columnist</TD><TD height=54><DIV align=center>
</DIV></TD></TR></TBODY></TABLE>
A friend versed in the arts but not economics and treasury bills remarked to me: "I didn't realise I knew anybody who had $40 million."
Revelation came in discussing bank accommodations and credit with her friends. I responded: "Inflation makes so many J-dollar millionaires, that's about half million U.S. dollars, a Miami four bedroom house or small New York apartment; or at a stretch, two Barbican three bedroom gated-community townhouses." But, of course, that is still a whole heap of money.
When ordinary humans hear big sums of money mentioned we have difficulty grasping the reality. Numbers roll off the tongue but meaning is like Blue Mountain mist without its beauty.
Recent news headlines splash US$43 million. Yes, the cost overrun for that perhaps now infamous south coast hotel that our tax dollars and Urban Development Corporation achieved. Calculate. Multiply that number by 67. We get two billion, eight hundred and eighty-one million (J$2,881,000,000).
Ordinary people can't 'penetrate' that number, it's too big. But imagine Victoria Jubilee with one mother per bed, hospital wards reopened, or the kindergarten and infant schools that money could have built, equipped and staffed. Then the number becomes real.
Twenty superbly trained school heads at $2 million per year - only $40 million. Computers, cable internet access - perhaps another $40 million. Together less than 3.0 per cent of this money. Follow my drift? There would still be a lot more money to spend usefully.
We must abandon the theatrics of Gordon House performances, profiling, photo opportunities etc., and deal with real alternatives to these abominable instances of unauthorised use of public funds.
In protest, should you not hold back on paying your motor vehicle, investment broker, or rum-bar license fee, or income tax? No, you can't. Well, you can. But unlike those who spent so much of your money, with no authorisation, you will face consequences.
These may range from your licence being taken away, your business closed, fines that are multiples of your unpaid fees or god forbid your person dumped in a jail to which hell is a preferred alternative.
No recourse, no consequences. This is the perennial problem of government 'ownership' in Jamaica. No private business, no real estate developer, internet service provider, patty shop operator can afford to have a manager who spends money without authority, overrunning budget. It simply cannot be done. Not for long anyway.
HELL TO PAY
Banks will query the overdraft or just bounce the cheque. The owner looks at the numbers often - perhaps in bed at night wondering if he/she will lose both shirt and undergarment or make a profit. And once it is unearthed, there will be hell to pay. Should the overspending manager have assets, they will be stripped to recover. Of course, firing is automatic.
Think about it. When last, if ever have we seen a news item: 'ABC Private Developers Limited overspent $40 million'? Cost overruns are oh too common. But who pays? Of course, you did have a contract to purchase that townhouse. In the contract there was a clause governing escalation. It was built in. The private developer has no bottomless money pit or rather, funding source, to cover unauthorised overruns.
This concentrates the mind and relieves us of super exorbitant cost overruns or over-design. Financiers of private projects, owners, control and access the books.
Taxpay
By Wilberne Persaud, Financial Gleaner Columnist</TD><TD height=54><DIV align=center>
</DIV></TD></TR></TBODY></TABLE>A friend versed in the arts but not economics and treasury bills remarked to me: "I didn't realise I knew anybody who had $40 million."
Revelation came in discussing bank accommodations and credit with her friends. I responded: "Inflation makes so many J-dollar millionaires, that's about half million U.S. dollars, a Miami four bedroom house or small New York apartment; or at a stretch, two Barbican three bedroom gated-community townhouses." But, of course, that is still a whole heap of money.
When ordinary humans hear big sums of money mentioned we have difficulty grasping the reality. Numbers roll off the tongue but meaning is like Blue Mountain mist without its beauty.
Recent news headlines splash US$43 million. Yes, the cost overrun for that perhaps now infamous south coast hotel that our tax dollars and Urban Development Corporation achieved. Calculate. Multiply that number by 67. We get two billion, eight hundred and eighty-one million (J$2,881,000,000).
Ordinary people can't 'penetrate' that number, it's too big. But imagine Victoria Jubilee with one mother per bed, hospital wards reopened, or the kindergarten and infant schools that money could have built, equipped and staffed. Then the number becomes real.
Twenty superbly trained school heads at $2 million per year - only $40 million. Computers, cable internet access - perhaps another $40 million. Together less than 3.0 per cent of this money. Follow my drift? There would still be a lot more money to spend usefully.
We must abandon the theatrics of Gordon House performances, profiling, photo opportunities etc., and deal with real alternatives to these abominable instances of unauthorised use of public funds.
In protest, should you not hold back on paying your motor vehicle, investment broker, or rum-bar license fee, or income tax? No, you can't. Well, you can. But unlike those who spent so much of your money, with no authorisation, you will face consequences.
These may range from your licence being taken away, your business closed, fines that are multiples of your unpaid fees or god forbid your person dumped in a jail to which hell is a preferred alternative.
No recourse, no consequences. This is the perennial problem of government 'ownership' in Jamaica. No private business, no real estate developer, internet service provider, patty shop operator can afford to have a manager who spends money without authority, overrunning budget. It simply cannot be done. Not for long anyway.
HELL TO PAY
Banks will query the overdraft or just bounce the cheque. The owner looks at the numbers often - perhaps in bed at night wondering if he/she will lose both shirt and undergarment or make a profit. And once it is unearthed, there will be hell to pay. Should the overspending manager have assets, they will be stripped to recover. Of course, firing is automatic.
Think about it. When last, if ever have we seen a news item: 'ABC Private Developers Limited overspent $40 million'? Cost overruns are oh too common. But who pays? Of course, you did have a contract to purchase that townhouse. In the contract there was a clause governing escalation. It was built in. The private developer has no bottomless money pit or rather, funding source, to cover unauthorised overruns.
This concentrates the mind and relieves us of super exorbitant cost overruns or over-design. Financiers of private projects, owners, control and access the books.
Taxpay