OUTLINE OF SPEECH
BY
AUDLEY SHAW, M.P.

OPPOSITION SPOKESMAN ON FINANCE
& PUBLIC SERVICE

AT FORUM
BY THE YOUNG ECONOMISTS ASSOCIATION
OF THE U.W.I.

THURSDAY, FEBRUARY 13, 2003

 

1. BACKGROUND
MISSED TARGETS AND THE COST OF MEETING OTHERS

- N.I.R. BUILD-UP – BORROWED MONEY, NOT EARNED MONEY

- EXCHANGE RATE STABILITY – TREMORS DUE TO FALLING CONFIDENCE I.E. STANDARD & POORS ETC.

- C.P.I. – IMPORTED LOW INFLATION/PRODUCERS INFLATION IS TWICE AS HIGH

- INTEREST RATES – 40-50% WILL CAUSE A NEW ROUND OF FINANCIAL AND BUSINESS SECTOR COLLAPSE.

- DEBT TO G.D.P. RATIO – GOING IN WRONG DIRECTION

- G.D.P. – FLAT

- FISCAL DEFICIT – TWICE THE TARGET OF 4.4% OF G.D.P.

2. MINISTERIAL IRRESPONSIBILITY
DESPITE HIS DENIALS IN PARLIAMENT TO MY CLAIM OF MINISTERIAL DECEPTION, THE MINISTER HAS NOW PUBLICLY ADMITTED THAT HE MADE PUBLIC SPENDING DECISIONS PRIOR TO THE ELECTIONS WHICH WERE “FINANCIALLY UNSOUND”

• $10 BILLION PUBLIC SECTOR PAY PACKAGE, INSTEAD OF THE $2.0 BILLION SET ASIDE IN THE BUDGET

• MAJOR PUBLIC SECTOR PROJECTS, MANY OF WHICH WERE BEING FINANCED UNDER THE DEFERRED FINANCING PROGRAMME I.E. ON THE BOULEVARD, (QUALITY WORK WAS COMPROMISED).

“SO COMRADES, NOW THAT WE REACH, WE HAVE TO CORRECT IT”, STATED THE FINANCE MINISTER AT A CONSTITUENCY CONFERENCE.

WHAT EXACTLY DOES THIS MEAN? AND CAN WE HEAR THESE DETAILS BEFORE THE NEXT ELECTIONS FACING US – THE PARISH COUNCIL ELECTIONS! BECAUSE, DO NOT FOOL YOURSELVES THE PLAN IS FOR THE DECEPTION TO CONTINUE AS THE DETAILS OF THE CRISIS PLAN WILL NOT COME UNTIL THE MIDDLE OF APRIL, AFTER THE PARISH COUNCIL ELECTIONS.

1. DOES IT NOT MEAN A HORRENDOUS TAX PACKAGE THAT IS UNPRECEDENTED IN OUR HISTORY?

2. WILL IT NOT MEAN MORE OF THE SOCIALIST-TYPE ATTACKS ON CERTAIN CATEGORIES OF PEOPLE ON THE PRETEXT THAT THEY HAVE MONEY? HIS ATTACKS ON THE J.E.F. AND THE “BIG MAN” IN HIS SPEECH LAST SUNDAY ARE EXAMPLES.

3. DOES IT MEAN MORE GESTAPO-LIKE SEARCHES OF ATTORNEYS’ OFFICES, AS WAS CARRIED OUT A FEW WEEKS AGO?

4. DOES IT MEAN A CONTINUATION OF A HIGH INTEREST RATE POLICY THAT WILL SURELY TRIGGER ANOTHER ROUND OF COLLAPSE OF THE FINANCIAL AND PRODUCTIVE SECTORS OF THE ECONOMY AS IN THE MID-1990S?

ON THE BASIS OF THE SMUG ADMISSION OF THE MINISTER WHO HAS EXHIBITED THE HIGHEST LEVELS OF IRRESPONSIBILITY IN MANAGING THE FINANCIAL AFFAIRS OF THE COUNTRY, I NOW REPEAT THE CALL I MADE IN PARLIAMENT THAT THE MINISTER OF FINANCE SHOULD RESIGN. HE HAS LOST ALL CREDIBILITY AND MORAL AUTHORITY ON WHICH TO CONTINUE AS FINANCE MINISTER.

NOT ONLY SHOULD HE RESIGN, BUT HE SHOULD APOLOGISE TO THE PEOPLE OF JAMAICA. FAILURE TO DO BOTH WILL CAUSE ME TO MOVE A MOTION OF CENSURE IN PARLIAMENT AGAINST THE MINISTER FOR MISLEADING THE PARLIAMENT AND THE PEOPLE OF JAMAICA.

3. DEBATE ON THE ECONOMIC MODEL
JLP’S MOTION IN PARLIAMENT

PNP: LOW INFLATION, HIGH INTEREST RATE, JOB LOSSES, NO GROWTH

JLP: LOW INFLATION, HIGH PRIVATE INVESTMENT AND JOB CREATION, HIGH GROWTH.

THE GOVERNMENT VOTED AGAINST THE MOTION, BUT SINCE THEN, THE PNP-AFFILIATE “THE PATRIOTS” HAVE COME OUT AND SAID: “THE MODEL NEEDS TO BE CHANGED”.

THE ECONOMIC MODEL NEEDED

1) A GOVERNMENT THAT INSTILLS CONFIDENCE

GIVE PEOPLE ASSURANCE OF FISCAL DISCIPLINE WHICH ASSURES:

- AN INDEPENDENT CENTRAL BANK

- FULL BACKING OF CURRENCY IN CIRCULATION WITH FOREIGN EXCHANGE RESERVES.

AND TODAY I PUT ON THE TABLE FOR DISCUSSION WHETHER WE SHOULD NOT CONSIDER A CONSTITUTIONAL AMENDMENT REQUIRING A BALANCED BUDGET – I.E. OUTLAWING FISCAL DEFICITS OR PLACING LIMITS ON THE EXTENT AND DURATION OF DEFICITS, SO THAT NO FUTURE FINANCE MINISTER COULD BRAG ABOUT BEING FISCALLY INDISCIPLINED BECAUSE OF IMMINENT ELECTIONS.

2) CREATIVE STRATEGIES TO RAISE LOW COST CAPITAL AND REDUCE INTEREST RATES AT COMMERCIAL BANKS

ONCE CONFIDENCE IS INSTILLED IN THE INVESTMENT COMMUNITY, THE NEXT LOGICAL STEP MUST BE TO USE CREATIVE STRATEGIES TO RAISE FUNDS AT CONSIDERABLY LOWER COST THAT WILL RESULT IN:

- LOWER PUBLIC DEBT CHARGES ON THE BUDGET
- LOW INTEREST RATES AT COMMERCIAL BANKS

SOURCES INCLUDE:

• NON-TRADITIONAL SOURCES LIKE JAPAN AND OTHER ASIAN TERRITORIES, THE MIDDLE EAST AND EUROPE.

• RETAIL BONDS AMONG JAMAICANS OVERSEAS

• PLACING PUBLIC SECTOR ENTERPRISES ON THE LOCAL STOCK MARKET TO RAISE CAPITAL, ENCOURAGE PUBLIC OWNERSHIP AND FURTHER STIMULATE OUR LOCAL CAPITAL MARKET.

3) ATTRACT SUBSTANTIAL NEW LEVELS OF INVESTMENT IN THE PRODUCTIVE SECTOR

ONCE CONFIDENCE IS INSTILLED AND MACRO-ECONOMIC STABILITY IS FURTHER ENHANCED, BY ATTRACTING LOWER COST FUNDS THAT REDUCE PUBLIC DEBT CHARGES AND LOWER LENDING RATES, THE GOVERNMENT MUST TAKE STEPS TO ATTRACT LARGE-SCALE INVESTMENTS BOTH IN TERMS OF MEGA PORJECTS, AS WELL AS MANY SMALL ENTERPRISES.

- WHY MEGA PROJECTS?
CRITICAL MASS I.E. 10,000 ADDITIONAL HOTEL ROOMS, COMBINED WITH MORE PROMOTION CAN YIELD ECONOMIES OF SCALE THAT

- CREATE LARGE-SCALE EMPLOYMENT IN CONSTRUCTION AND TOURISM

- PROPEL FOREIGN EXCHANGE EARNINGS

- PROVIDE CRITICAL LINIKAGES TO AGRICULTURE AND SUPPORT SERVICES

I.E. SUGAR INDUSTRY – IF TECHNOLOGY AND EFFICIENCY ARE BROUGHT TO THE SUGAR INDUSTRY, LAND USAGE CAN BE RATIONALIZED, FREEING UP SOME ACREAGE FOR OTHER NON-TRADITIONAL AND HIGH PROFIT TYPES OF ENDEAVOURS.

IN THE 1980S, NEW INDUSTRIES WERE SPAWNED IN FISH FARMING, ORCHARD CROPS AND THE REVIVAL OF THE BANANA INDUSTRY FROM SIMILAR INITIATIVES.

JAMAICA HAS TO MOVE AGGRESSIVELY FROM POLICIES OF POVERTY ALLEVIATION TO WEALTH CREATION.

THE UNIVERSITY COMMUNITY CAN ASSIST IN THIS PROCESS EVEN FURTHER WITH APPLIED RESEARCH AND OBJECTIVE ANALYSIS OF THE ISSUES THAT FACE US, INCLUDING UNDERTAKING A DEFINITIVE STUDY OF THE PRECISE CAUSES OF THE FINANCIAL SECTOR COLLAPSE OF THE 1990s.

 

AUDLEY SHAW, M.P.
OPPOSITION SPOKESMAN ON FINANCE & PUBLIC SERVICE

FEBRUARY 13, 2003