Speeches

 

PATHWAY TO GROWTH

THE JLP’S POINT OF VIEW

PRESENTATION BY

 

AUDLEY SHAW, M.P.

 

JLP DEPUTY LEADER & OPPOSITION SPOKESMAN ON FINANCE

 

AT THE ANNUAL P.S.O.J. ECONOMIC SEMINAR

JAMAICA CONFERENCE CENTRE, KINGSTON

TUESDAY, MAY 21, 2002

 

 

THE PROBLEM

  • JAMAICA’S HIGH COST OF MONEY AND HEAVY DEBT BURDEN HAVE STIFLED GROWTH, EMPLOYMENT AND FOREIGN EXCHANGE EARNINGS.

 

    • JAMAICA’S STOCK OF DEBT, WHICH STOOD AT $30 BILLION IN 1989, REACHED $170 BILLION BY 1994 AND HAS VIRTUALLY TRIPPLED UNDER THE PRESENT FINANCE MINISTER TO $495 BILLION (2002).

 

    • LENDING RATES 50% DECADE OF 1990s

(quote from Dennis Joslin)

HIGH INTEREST WAS CAUSED BY GOVERNMENT’S POLICY FAILURES INCLUDING PREMATURE LIBERALISATION, MOPPING UP OF LIQUIDITY WITH HIGH GOVERNMENT BENCH MARK RATES.

 

    • LED TO COLLAPSE OF PRODUCTIVE AND FINANCIAL SECTORS

 

    • 50,000 JOBS LOST IN MANUFACTURING AND 36,000 JOBS LOST IN THE APPAREL SECTOR.

 

    • ECONOMY HAS NOT GROWN OVER THE PAST DECADE, HAD NEGATIVE GROWTH FOR FOUR YEARS AND NOW ONLY MARGINAL JOBLESS GROWTH THAT EXPORTS ONLY PROFITS, NOT GOODS – US$200M LESS EXPORTED TODAY THAN IN 1995.

 

    • WE ARE IN A PERSISTENT STATE OF UNDER-UTILIZATION OF OUR CRITICAL ASSETS, WITH JAMAICA NOW HAVING A VAST AMOUNT OF EMPTY FACTORIES, IDLE LANDS AND IDLE HANDS, THE BASIC PRESCRIPTION FOR INCREASED CRIME AND VIOLENCE, AND THE VIBRANT GROWTH IN THE NARCO TRADE.

 

OUR UNEMPLOYMENT FIGURES MASK THIS PHENOMENON AS IT FAILS TO CAPTURE

 

  • UNDER-EMPLOYMENT

 

  • THOSE FED-UP AND HAS STOPPED LOOKING

FOR WORK.

 

 

  • EXCESSIVE BUREAUCRACY
  • AT PRESENT, THERE ARE TOO MANY AGENCIES INVOLVED IN THE INVESTMENT PROCESS WITHOUT ADEQUATE COORDINATION. THESE AGENCIES EACH ACT WITH THE “EMPIRE BUILDING SYNDROME” AND END UP WITH MORE RATHER THAN LESS RED TAPE. AMONG THE COSEQUENCES OF THIS IS THAT IT IS MUCH EASIER TO IMPORT THAN IT IS TO EXPORT.

 

THE COMPANIES INVOLVED INCLUDE JAMPRO, NIBJ, UDC, FACTORIES CORPORATION OF JAMAICA, ETC., AS WELL AS THE MAIN MINISTRIES INVOLVED IN THE APPROVAL OF INCENTIVES UNDER THE VARIOUS STATUTES.

 

  • HUMAN RESOURCE LIMITATIONS

DESPITE THE EXISTENCE OF THE H.E.A.R.T. TRAINING PROGRAMME ALONG WITH OTHER REMEDIAL EFFORTS, THE FORMAL EDUCATION SYSTEM HAS SERIOUS SYSTEMIC PROBLEMS RESULTING IN UNEVEN DISTRIBUTION OF RESOURCES AND LOW OUTPUT LEVELS IN THE MASS PUBLIC SCHOOL SYSTEM.

 

AS A RESULT, WHEN THIS IS COMBINED WITH THE DECLINE IN THE SOCIAL AND ECONOMIC LIFE OF THE COUNTRY, SOME SCHOOLS ARE GRADUATING IN EXCESS OF 50% ILLITERATES – A FRIGHTENING THOUGHT WHEN ALREADY 68% OF YOUNG PEOPLE AGED 18-24 AT PRESENT HAVE NO ACADEMIC QUALIFICATION.

 

  • LACK OF PRUDENT MANAGEMENT OF SCARCE RESOURCES

 

AND IF ALL OF THE ABOVE IS NOT BAD ENOUGH, IT IS CAPPED BY AN UNPRECEDENTED LEVEL OF GOVERNMENTAL MISMANAGEMENT WHICH IN MANY INSTANCES AMOUNT TO GROSS DERELICTION OF DUTY.

 

THE INTECH FUND, THE NHDC SCANDAL, THE MISMANAGEMENT OF THE NWC, THE AIRPORTS RADAR LANDING EQUIPMENT SYSTEM AND THE JUTC ARE MERE EXAMPLES OF A LITANY OF FAILURES.

 

IN ALL OF THIS, THERE IS NO ACCEPTANCE OF RESPONSIBILITY AND CHIEF AMONG THEM IS, THE ABJECT FAILURE OF THE FINANCE MINISTER TO PROTECT THE REVENUE OF THE COUNTRY BY ENSURING THE PROPER MONITORING OF AGENCIES, AND TO TAKE THE NECESSARY PRE-EMPTIVE STEPS WHERE NEEDED – A UNIQUE POWER CONFERRED ON HIM BY THE CONSTITUTION OF THE COUNTRY.

 

THE SOLUTION

ANY DISCUSSION OF SOLUTIONS MUST BE PRECEDED BY AN OVERARCHING VISION THAT PUTS OUR MISSION INTO CONTEXT AND MAKES OUR MANDATE CLEAR.

 

OUR VISION

OUR VISION IS TO CREATE A SOCIETY IN WHICH OUR PEOPLE ARE WELL TRAINED TO MEET THE CHALLENGES OF THIS NEW CENTURY, ARE GAINFULLY EMPLOYED, HAVE A DECENT STANDARD OF LIVING, AND ENJOY PEACE AND PROSPERITY IN A CLEAN, SAFE AND HEALTHY ENVIRONMENT.

 

WE MUST RESOLVE TO WORK TOGETHER WITH A SINGLEMINDEDNESS OF PURPOSE TO RESCUE OUR FUTURE BY PROVIDING PRODUCTIVE OPPORTUNITIES FOR EVERY JAMAICAN, WHERE ALL OF US CAN SHARE FAIRLY IN THE NATIONAL DIVIDEND FROM AN EXPANDING ECONOMY.

 

 

A FRAMEWORK FOR WEALTH CREATION

 

JAMAICA NEEDS CONSENSUS ON ONE IMPORTANT THING. WE MUST PROVIDE OPPORTUNITIES FOR OUR ENTREPRENEURS AND OUR CITIZENS TO CREATE WEALTH IN A SUBSTANTIAL WAY. THIS IS THE ONLY SURE WAY TO ALLEVIATE POVERTY IN THE LONG RUN.

 

  • HUMAN RESOURCE DEVELOPMENT

THE FIRST ELEMENT IN ESTABLISHING A CREDIBLE PATHWAY FOR GROWTH, HINGES ON A PLAN TO MAXIMISE THE DEVELOPMENT OF OUR HUMAN RESOURCES, SO THAT OUR LABOUR FORCE CAN COMPETE IN AN INCREASINGLY COMPETITIVE AND KNOWLEDGE-BASED GLOBAL ECONOMY.

 

   EDUCATION BOND

THE JLP HAS PUT FORWARD SPECIFIC PLANS TO CHANNEL AT LEAST 50 PERCENT MORE RESOURCES INTO THE EDUCATIONAL PLANT BY FLOATING EDUCATION BONDS IN ORDER TO -

 

  • IMPROVE THE QUALITY OF EARLY CHILDHOOD EDUCATION

 

  • SIGNIFICANTLY STRENGTHEN THE PRIMARY SCHOOL SYSTEM

 

  • ABOLISH COST-SHARING AT THE HIGH SCHOOL LEVEL

 

  • ENSURE THAT ALL SCHOOLS ARE PROPERLY EQUIPPED WITH THE APPROPRIATE TOOLS INCLUDING COMPUTERS, ETC.

 

  • SIGNIFICANTLY STRENGTHEN THE PROFESSIONAL DEVELOPMENT OF THE CADRE OF TEACHERS.

 

 

  • A CREDIBLE DEBT MANAGEMENT PLAN

 

THE JLP HAS LAID OUT A DEBT MANAGEMENT PLAN THAT IS RADICALLY DIFFERENT FROM THE CONTINUED FAILED STRATEGIES OF THE PRESENT ADMINISTRATION. THE GOVERNMENT CONTINUES DOGGEDLY TO PRESCRIBE THE SAME SOLUTIONS TO THE SAME PROBLEMS, YET EXPECT DIFFERENT OUTCOMES – AN IMPOSSIBILITY.

 

THE JLP BELIEVES THAT MONEY CAN BE OBTAINED AND MUST BE OBTAINED AT SIGNIFICANTLY LOWER COST TO THE BUDGET AND ULTIMATELY, TO THE TAXPAYERS OF THIS COUNTRY.

 

IN SO DOING, THE COST OF MONEY FOR THE BUSINESS AND PRODUCTIVE SECTORS OF THE ECONOMY WILL COME DOWN IN LINE WITH THAT OF OUR TRADING PARTNERS.

 

ACCORDINGLY, THE JLP INTENDS TO INTRODUCE A CREATIVE MIX OF INITIATIVES, WHICH INCLUDE:

 

  • DEBT FORGIVENESS AND DEBT RE-SCHEDULING

 

  • ACCESSING LOW COST FUNDS FROM NON-TRADITIONAL SOURCES LIKE JAPAN.

 

  • FLOATING BOND ISSUES AMONG JAMAICANS OVERSEAS (A SLEEPING GIANT)

 

  • WIDENING THE RANGE OF MULTILATERALS FROM WHOM WE RAISE FUNDS.

 

  • PLACING SOME PUBLIC SECTOR COMPANIES ON THE STOCK MARKET AS A MEANS OF RAISING LOW COST CAPITAL WHILE OFFERING JAMAICANS AT HOME AND ABROAD AN OPPORTUNITY TO SHARE IN THE PROFITS OF THESE COMPANIES.

 

  • AGGRESSIVELY DEVELOP LOCAL CAPITA MARKET TO INCLUDE TRADING OF GOVERNMENT SECURITIES ON THE OPEN MARKET AS WELL AS PACKAGING FINSAC REAL ESTATE ASSETS FOR LISTING ON THE STOCK MARKET.

 

  • ESTABLISH A TEAM OF LOCAL AND INTERNATIONAL EXPERTS WHO ARE EXPERIENCED IN INTERNATIONAL FINANCE WHO WILL CONTINUALLY FIND INNOVATIVE WAYS OF ACCESSING FUNDS AT THE LOWEST POSSIBLE COST.

 

 

  • PRODUCTION OF GOODS AND SERVICES - GROWING THE ECONOMY

 

THE LEADER OF THE OPPOSITION, THE RT. HON. EDWARD SEAGA IN HIS RECENT BUDGET PRESENTATION OUTLINED IN SOME DETAIL THE STRATEGIES WHICH THE JLP INTENDS TO ADOPT TO IMPLEMENT THIS POLICY WHEN IT FORMS THE NEXT GOVERNMENT.

 

THE POLICY IS SIMPLE AND YET PROFOUNDLY IMPORTANT FOR THE FUTURE OF THE COUNTRY. WE SIMPLY MUST DEVISE STRATEGIES TO SIGNIFICANTLY INCREASE LEVELS OF CAPACITY UTILIZATION IN CRITICAL SECTORS LIKE TOURISM, AGRICULTURE (TECHNOLOGY AND EXTENSION SERVICES) AND MANUFACTURING, WHILE RESCUING THE POTENTIAL OF THE INFORMATION TECHNOLOGY SECTOR.

 

 

  • STREAMLINING INVESTMENT PROMOTION AND FACILITATION

 

   A DIAGNOSTIC AUDIT WILL BE DONE TO DETERMINE THE HINDRANCES TO THE SMOOTH IMPLEMENTATION OF BUSINESSES IN JAMAICA.

 

   THE INTENTION IS TO BREAK DOWN THE “EMPIREBUILDING” SYNDROME AND ENSURE RAPID FLOW OF INFORMATION TO FACILITATE SPEEDY PROJECT IMPLEMENTATION. THE MERGING OF SOME FUNCTIONS CANNOT BE RULED OUT BUT THE AUDIT WILL PROVIDE THE OBJECTIVE BASIS FOR THE RATIONALISATION OF OUR INSTITUTIONAL CAPACITY. WE SIMPLY MUST CUT THE RED TAPE.

 

   CRITICAL ATTENTION WILL ALSO BE PLACED ON SUPPORT SERVICES SUCH AS RESEARCH AND DEVELOPMENT, INVESTMENT PACKAGING AND EXPORT MERCHANDISING. A REVIEW OF THE COMPETITIVENESS OF OUR FISCAL INCENTIVES WILL ALSO BE CARRIED OUT.

 

  • TAX BURDEN STUDY

A BENCH MARK STUDY WILL BE CARRIED OUT TO DETERMINE THE EXTENT OF THE TAX BURDEN AND WHETHER IT SERIOUSLY MILITATES AGAINST INVESTMENT AND PRODUCTIVITY.

 

AND DESPITE THE SOLEMN PROMISES OF NO NEW TAXES WE WILL TODAY LEARN OF THE ACTUAL INCREASE IN PROPERTY TAXES WHICH WILL BE ANYWHERE BETWEEN 300-500% ON QUESTIONABLE LAND VALUATION.

 

THE INDICATIVE INFORMATION SUGGESTS THAT WHEN ALL FACTORS ARE CONSIDERED, JAMAICA’S TAX BURDEN AND TAXATION SYSTEM MUST BE REVIEWED AND FURTHER REFORMED TO MAKE IT MORE RESPONSIVE AS AN INSTRUMENT THAT ENCOURAGES RATHER THAN DISCOURAGES INCREMENTAL SAVINGS AND INVESTMENT.

 

  • PRUDENT AND ACCOUNTABLE MANAGEMENT

 

IN ALL OF THIS, SUCCESS AT GOVERNANCE CANNOT BE MAXIMISED UNLESS THERE IS PRUDENT MANAGEMENT OF TAXPAYERS RESOURCES.

 

IN THIS CONTEXT, THE MINISTER OF FINANCE MUST ACCEPT THAT HIS ROLE, AS DEFINED BY THE CONSTITUTION, PLACES ON HIM A SPECIAL DUTY TO PROTECT THE REVENUE OF THE COUNTRY FROM THE FOLLIES OF MISMANAGEMENT, CORRUPTION OR EXUBERANCE BY MINISTERS OR TECHNOCRATS.

 

IT IS SAID THAT: “WHATEVER THE MIND CAN CONCEIVE AND BELIEVE IT WILL ACHIEVE.”

 

TODAY WE ARE CHALLENGED, NOT TO RE-INVENT THE WHEEL, BUT TO JOIN THE REST OF THE CIVILISED AND FAST MOVING WORLD, BRING REAL ACCOUNTABLE FIRST WORLD MANAGEMENT TO OUR GOVERNANCE, FREE ENTERPRISE, UNLEASH A LANDSCAPE OF OPPORTUNITIES, GIVE THE PRIVATE SECTOR BREATHING ROOM WITH LOW COST MONEY SO THEY CAN FEEL CONFIDENT TO TAKE RISKS ONCE AGAIN, CUT THE RED TAPE AND LAY OUT A RED CARPET FOR INVESTORS.

 

JAMAICA IS LIKE A ROCKET THAT JUST WON’T TAKE OFF. LET US PROVIDE THE FRAMEWORK TO ALLOW THE ROCKET TO TAKE OFF. LET US PROVIDE THE FRAMEWORK FOR GROWTH. LET US FREE ENTERPRISE AND WATCH JAMAICA GROW AND BLOSSOM INTO PEACE AND PROSPERITY.

 

 

AUDLEY SHAW, M.P.

TUESDAY, MAY 21, 2002