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Leadership, governance and the reform agenda
Sunday, April 21, 2013
Now that minister of finance and planning Dr Peter Phillips has told the country how the Government will finance the 2013-2014 budgeted expenditure of $520.9 billion, the news cycle will shift focus from the political future of Richard Azan to considerations of whether the revenue measures are credible and the economic reforms and growth agenda are doable.
Consistent with his earlier signals Dr Phillips told Parliament Thursday, "There are no new taxes." The budget will be fully funded by revenues of $407.2 billion, loans of $103.3 billion, and $10.4 billion in draw downs of cash balances.
Finance Minister Dr Peter Phillips making his presentation to the budget debate in Parliament last Thursday. Seated is his son Mikael.
1/1 
Considering that the minister had announced a new $16 billion tax package in February as one of the "prior actions" the Government had to take to qualify for a loan agreement with the International Monetary Fund (IMF), the "no new taxes" was only a manner of speaking as businesses and consumers have been absorbing most of the new taxes since April 1.
More interesting was the minister's announcement that $360.5 billion of the revenues would come from taxes.
This, he said, was 12.7 per cent more than the actual revenue collected in the 2012/2013 fiscal year. Immediately, the pundits were weighing in as to whether the target will be achieved in an environment of economic contraction as part of the IMF requirement to bring revenues and expenditure closer in line,
Dr Phillips acknowledged that the targets are challenging but appeared confident that greater effort by the authorities to collect taxes due and payable would improve compliance.
Over the longer haul, though, contraction is unsustainable and the minister talked a lot about the need to grow the economy. That's the very opposite of what Jamaica has achieved over the past 40 years.
A World Bank report titled, Jamaica Country Economic Memorandum: Unlocking Growth released May 2011, documented our woeful underachievement since Independence as our ranking in terms of average real GDP growth continuously deteriorated over the period.
The report compared Jamaica with its closest 19 peers in per capita GDP between 1970 and 2008 and concluded: "Jamaica's real per capita GDP growth was 13 per cent, and its rank within this group of 20 countries fell from seventh to 18th. This growth was the lowest in the entire group."
As expected, there were no big announcements of investments or projects: The minister repeated Government hopes of transforming the port of Kingston into a global logistics hub; reducing energy costs; expanding the ICT sector; reducing the food import bill by growing more of what we eat; adding value to the tourism product.
Dr Phillips rightly recognised the importance of the small business sector, promising that the Development Bank of Jamaica will substantially increase lending and other business development support to this sector. It's a good step, but we wait for the details in the actual implementation.
The finance minister repeated plans to reform the public sector to make it less costly and more efficient in service delivery and make it easier for people to start and operate business; reform the tax system to meet the revenue demands of the budget, ensure greater equity and simplicity and increase compliance.
In dubbing his presentation, Restoring Hope, Expanding Opportunity Dr Phillips was frankly recognising that 'hope' for many Jamaicans. Opportunity is also is "a scare, scarce commodity", to quote Buju Banton.
That is especially true for the young who bear the brunt of unemployment, the consequences of an underperforming education system and a deteriorating system of family and societal values. It is also from this cohort that we find most of the perpetrators and victims of violent crime.
Having heard repeated expressions of hope from all our leaders over the years, some of us may be pardoned for being sceptical that we may be on the verge of something different.
For me, the hope will come not so much from the details of the medium-term reform programme with the IMF, though I fully support the national effort to "stay the course" and implement them as the minister pleaded. I believe it will have to come from doing things differently if we expect to get results that reverse the trajectory of the past 40 years.
Dr Phillips is right that the "tight budget will test our capacities as a people". The IMF agreement "will impose stringent demands on us: to meet the performance targets and the structural benchmarks. All of this will require national effort and new approaches."
Good governance is not just a politically correct phrase
Enter Richard Azan, minister of state in the Ministry of Works and member of parliament for North West Clarendon.
By his own admission, Mr Azan used authority that he does not legally possess to direct a private contractor to build and rent several small shops at the Spaldings Market on lands owned by the Clarendon Parish Council. His constituency office, apparently with his full knowledge, acted as the rent-collection agency. The parish council was ignorant of the deal.
Many of us have called for Mr Azan's separation from his ministerial duties. He should be separated because he breached the Government's procurement rules affirmed by successive Cabinets to prevent arbitrary rule by the political executive or the civil service bureaucracy and close a door to corruption.
The Office of the Contractor General (OCG) was established "to monitor and to investigate the award and termination of Government contracts, licences and permits to ensure that same have been carried out, inter alia, in compliance with the relevant procurement procedures". The OCG is probing the issue.
Mr Azan has declined to resign, arguing in a radio interview that his action was based on a desire to do good and he got no financial gain from the transaction. "I made a mistake for building the shops because I should have allowed the people to demonstrate" for them.
Many residents of Spaldings are reported as being bewildered that their well-loved MP is being pilloried by sections of the media, civil society and the political opposition for taking the initiative to meet a public need.
And the Cabinet offered two reasons for retaining the minister: Mr Azan, though not sticking to "procedure", was innocent until proven guilty, and further, his actions were unrelated to his duties as minister.
On the first point, the Cabinet is relying on a standard of proof applicable to criminal proceedings. It does not apply because what's at issue here is breach of procurement guidelines and accountability.
If a minister is allowed to arbitrarily ignore the rules for a desired result what would prevent him/her from doing it for an undesirable result?
If the lawmakers are not seen to be law-abiding, then on what basis would they insist that the rest of the citizenry obey the laws?
The case of Joseph Hibbert destroys the second premise. He was chief technical director in the Ministry of Works when he was allegedly bribed by the British bridge-building firm Mabey and Johnson which pleaded guilty in UK courts to bribing foreign officials in return for contracts.
By affirming Mr Azan in place, pending receipt of the report of the OCG, Mrs Simpson Miller and her Cabinet have failed to give concrete expression to the accountability and anti-corruption standards espoused by her swearing-in a year ago.
They have made it harder to unite the country around the national effort and new approaches that Minister Phillips has prayed in aid of the economic reform agenda. kcr@cwjamaica.com
Read more: http://www.jamaicaobserver.com/colum...#ixzz2R9ewBsB4
Claude Robinson
Sunday, April 21, 2013
Now that minister of finance and planning Dr Peter Phillips has told the country how the Government will finance the 2013-2014 budgeted expenditure of $520.9 billion, the news cycle will shift focus from the political future of Richard Azan to considerations of whether the revenue measures are credible and the economic reforms and growth agenda are doable.
Consistent with his earlier signals Dr Phillips told Parliament Thursday, "There are no new taxes." The budget will be fully funded by revenues of $407.2 billion, loans of $103.3 billion, and $10.4 billion in draw downs of cash balances.
Finance Minister Dr Peter Phillips making his presentation to the budget debate in Parliament last Thursday. Seated is his son Mikael. 1/1 Considering that the minister had announced a new $16 billion tax package in February as one of the "prior actions" the Government had to take to qualify for a loan agreement with the International Monetary Fund (IMF), the "no new taxes" was only a manner of speaking as businesses and consumers have been absorbing most of the new taxes since April 1.
More interesting was the minister's announcement that $360.5 billion of the revenues would come from taxes.
This, he said, was 12.7 per cent more than the actual revenue collected in the 2012/2013 fiscal year. Immediately, the pundits were weighing in as to whether the target will be achieved in an environment of economic contraction as part of the IMF requirement to bring revenues and expenditure closer in line,
Dr Phillips acknowledged that the targets are challenging but appeared confident that greater effort by the authorities to collect taxes due and payable would improve compliance.
Over the longer haul, though, contraction is unsustainable and the minister talked a lot about the need to grow the economy. That's the very opposite of what Jamaica has achieved over the past 40 years.
A World Bank report titled, Jamaica Country Economic Memorandum: Unlocking Growth released May 2011, documented our woeful underachievement since Independence as our ranking in terms of average real GDP growth continuously deteriorated over the period.
The report compared Jamaica with its closest 19 peers in per capita GDP between 1970 and 2008 and concluded: "Jamaica's real per capita GDP growth was 13 per cent, and its rank within this group of 20 countries fell from seventh to 18th. This growth was the lowest in the entire group."
As expected, there were no big announcements of investments or projects: The minister repeated Government hopes of transforming the port of Kingston into a global logistics hub; reducing energy costs; expanding the ICT sector; reducing the food import bill by growing more of what we eat; adding value to the tourism product.
Dr Phillips rightly recognised the importance of the small business sector, promising that the Development Bank of Jamaica will substantially increase lending and other business development support to this sector. It's a good step, but we wait for the details in the actual implementation.
The finance minister repeated plans to reform the public sector to make it less costly and more efficient in service delivery and make it easier for people to start and operate business; reform the tax system to meet the revenue demands of the budget, ensure greater equity and simplicity and increase compliance.
In dubbing his presentation, Restoring Hope, Expanding Opportunity Dr Phillips was frankly recognising that 'hope' for many Jamaicans. Opportunity is also is "a scare, scarce commodity", to quote Buju Banton.
That is especially true for the young who bear the brunt of unemployment, the consequences of an underperforming education system and a deteriorating system of family and societal values. It is also from this cohort that we find most of the perpetrators and victims of violent crime.
Having heard repeated expressions of hope from all our leaders over the years, some of us may be pardoned for being sceptical that we may be on the verge of something different.
For me, the hope will come not so much from the details of the medium-term reform programme with the IMF, though I fully support the national effort to "stay the course" and implement them as the minister pleaded. I believe it will have to come from doing things differently if we expect to get results that reverse the trajectory of the past 40 years.
Dr Phillips is right that the "tight budget will test our capacities as a people". The IMF agreement "will impose stringent demands on us: to meet the performance targets and the structural benchmarks. All of this will require national effort and new approaches."
Good governance is not just a politically correct phrase
Enter Richard Azan, minister of state in the Ministry of Works and member of parliament for North West Clarendon.
By his own admission, Mr Azan used authority that he does not legally possess to direct a private contractor to build and rent several small shops at the Spaldings Market on lands owned by the Clarendon Parish Council. His constituency office, apparently with his full knowledge, acted as the rent-collection agency. The parish council was ignorant of the deal.
Many of us have called for Mr Azan's separation from his ministerial duties. He should be separated because he breached the Government's procurement rules affirmed by successive Cabinets to prevent arbitrary rule by the political executive or the civil service bureaucracy and close a door to corruption.
The Office of the Contractor General (OCG) was established "to monitor and to investigate the award and termination of Government contracts, licences and permits to ensure that same have been carried out, inter alia, in compliance with the relevant procurement procedures". The OCG is probing the issue.
Mr Azan has declined to resign, arguing in a radio interview that his action was based on a desire to do good and he got no financial gain from the transaction. "I made a mistake for building the shops because I should have allowed the people to demonstrate" for them.
Many residents of Spaldings are reported as being bewildered that their well-loved MP is being pilloried by sections of the media, civil society and the political opposition for taking the initiative to meet a public need.
And the Cabinet offered two reasons for retaining the minister: Mr Azan, though not sticking to "procedure", was innocent until proven guilty, and further, his actions were unrelated to his duties as minister.
On the first point, the Cabinet is relying on a standard of proof applicable to criminal proceedings. It does not apply because what's at issue here is breach of procurement guidelines and accountability.
If a minister is allowed to arbitrarily ignore the rules for a desired result what would prevent him/her from doing it for an undesirable result?
If the lawmakers are not seen to be law-abiding, then on what basis would they insist that the rest of the citizenry obey the laws?
The case of Joseph Hibbert destroys the second premise. He was chief technical director in the Ministry of Works when he was allegedly bribed by the British bridge-building firm Mabey and Johnson which pleaded guilty in UK courts to bribing foreign officials in return for contracts.
By affirming Mr Azan in place, pending receipt of the report of the OCG, Mrs Simpson Miller and her Cabinet have failed to give concrete expression to the accountability and anti-corruption standards espoused by her swearing-in a year ago.
They have made it harder to unite the country around the national effort and new approaches that Minister Phillips has prayed in aid of the economic reform agenda. kcr@cwjamaica.com
Read more: http://www.jamaicaobserver.com/colum...#ixzz2R9ewBsB4