BUDGET RESPONSE 2015/2016

A ‘CAN-DO’ COMMITMENT TO ECONOMIC REVIVAL

July 27th, 2015

Madame Speaker, colleague Parliamentarians, fellow citizens of Dominica, on behalf of the leadership and members of the United Workers Party TEAM Dominica – the Parliamentary Opposition of Dominica - I rise in response to the 2015 Budget Statement of the Dominica Labour Party Government delivered by the Minister of Finance Hon. Roosevelt Skerrit on July 24th, 2015.

In their individual responses, the other nine members of our Parliamentary team who serve in our 10 member alternative Cabinet, will address matters specific to their portfolios as follows:

Name / Designation
1 / Hon. Lennox Linton (MP) / Finance, Foreign Affairs, Diaspora Affairs, Public Service, Social Security & National Security
2 / Hon. Joseph Isaac (MP) / Tourism, Aviation, Ports, Urban Revitalization & Cultural Industries
3 / Hon. Joshua Francis (MP) / Legal Affairs, Immigration, Labour & Kalinago Affairs
4 / Hon. Danny Lugay (MP) / Health, Wellness & Sports
5 / Hon. Ezekiel Bazil (MP) / Agriculture, Lands, Forestry & Marine Resources
6 / Hon. Hector John (MP) / Education, Human Resource Development, Information & ICT
7 / Sen. Dr. Thomson Fontaine / Economic Planning & Development, Employment, Trade, Enterprise Development
8 / Sen. Isaac Baptiste / Housing, Physical Planning, Energy & The Environment
9 / Sen. Monell Williams / Community Development, Social Transformation & Youth Empowerment
10 / Sen. Felix Thomas / Communications & Works, Public Utilities, Water & Mineral Resources

What a difference a year makes? Last year during the budget debate, my brother Dr Irving Pascal and I were savaged in this honorable house by the Prime Minister because he did not like our righteous stance and our just, truthful representations for God and country. In this year’s budget session, Dr Pascal is commended by the Speaker for supplying the flowers that beautify this august chamber and I have the privilege to stand for the people of Dominica in response to the 2015 budget statement of the Prime Minister.

Keeping it real, the parliamentary opposition responds in sacredness of national duty to the cluelessness of an oversized, CANNOT DO administration proud of consistently achieving the worst economic management performance results in the Eastern Caribbean Currency Union for fifteen straight years

In contrast, our mission is to develop and grow a model green economy that rewards enterprise, puts our people to work for decent wages, gives a fair chance to all and secures our place in the global trade of goods and services. This mission emerges from the global positioning strategy prescription of our national anthem:

Isle of beauty, isle of splendour,

Isle to all so sweet and fair,

All must surely gaze in wonder

At thy gifts so rich and rare

Rivers, valleys, hills and mountains,

All these gifts we do extol

Healthy land, so like all fountains,

Giving cheer that warms the soul

Dominica, God hath blest thee

With a clime benign and bright,

Pastures green and flowers of beauty

Filling all with pure delight,

And a people strong and healthy,

Full of godly reverent fear

May we ever seek to praise Thee

For these gifts so rich and rare.

The leveraging of these gifts so rich and rare for global economic success should be a governance labour of love especially for a labour party that came into government 16 years ago pledging that all shall eat. Instead, the nation has been burdened with the CANNOT DO expertise of a ruling party tightly focused on inflicting public pain for personal gain.

Things are bad and getting worse… but in this cruel tale of two countries the boasts of how well government is doing makes it crystal clear that the country the government talks about is quite different from the one in which the people struggle and catch hell. As the struggle continues, as the hell fires of socio economic deterioration burn, people are losing hope, intimidated by their government into the belief that this is the best we can do… we cannot do anything to rise from this mess of governance failures

In response to the 2015/2016 budget proposals, we keep it very real. Dominica can do much better. Indeed, Dominica can become the best.

The Prime Minister wants this “to be the start of a period in our development where the interest of the country is paramount, where there can be bi-partisan support for measures deemed to be in the best interest of Dominica”.

That era Mr. Prime Minister began with a United Workers Party TEAM Dominica commitment to stand not for a red, blue or green Dominica but for the greatest good of the Commonwealth of Dominica. In fact in keeping it very real, we have welcomed government’s initiatives to address specific national issues as much as we have urged government to make use of our ideas and suggestions especially those dealing with economic growth and job creation.
The spirit of bi-partisanship is already bearing fruit. After severely criticizing as an unrealistic pie in the sky, the United Workers Party TEAM Dominica plan to grow the economy by 5 – 7 percent per year and thereby create 5000 new jobs in three years, the Prime Minister is now enjoying a change of heart and mind.

He tells us in this year’s budget presentation Government’s economic growth target is 5 – 7 percent and he has already counted over 1,000 jobs that could be created in this budget year alone. After years of dissing agriculture in favour of tourism and services; and after thumbing his nose at the UWP TEAM Dominica commitment to revive agriculture as a key engine of growth he now tells us that his government’s plan is to “maintain agriculture as a leading contributor to economic growth”. He has embraced the tax reduction approach to increasing the competitiveness of Dominica’s tourism product. He is increasing the budget for destination marketing. And he has accepted the recommendation to introduce time share legislation

All of these proposals were put forward in our 2014 budget statement at the Arawak House of Culture last year. It was savaged as a side show. It was put down as foolishness… a waste of time. One year later that same 2014 budget statement at the Arawak is the source of useful growth measures for the government. In the cause of national development, we welcome the adoption of these measures by a ruling party whose agents and hired guns continue to fire away at us as Dominicans with nothing to offer. For the avoidance of doubt our hands are “on deck and to the plough”. We have reported for duty.

We nonetheless lament the enduring obsession with the same old failed policies of exclusion, secrecy and petty political partisanship that have made a complete mockery of the parliamentary oversight responsibility for preparation of the national budget and the management of public finances.

The Prime Minister says and we believe “Development… is about participation, mutual respect, love of country and hard work. It is not about participation of some. It is about the involvement of all”.

I take it Sir that especially in this honourable house you only say what you mean and mean what you say… So I will only ask, where then is the provision for the involvement of the parliamentary opposition at stages in the budget preparation cycle where it can meaningfully contribute to the annual revenue and expenditure planning exercise?

Once again this year we have a budget that lacks credibility because it is not the product of an effectively anchored, bi-partisan parliamentary mechanism to decide on and fund the growth and development priorities of Dominica. Once again, parliament is being asked to adopt the rubber stamp mode dictated by the executive, for the consideration and approval of a budget that is not designed to (and therefore cannot) serve as a tool to deliver the fundamentals of the national agenda.

Typically, a national budget shows how government will prioritize and achieve its annual and multi-annual objectives. It’s not just about financing new and existing programmes… it is also about implementing fiscal policy, and thereby impacting the economy as a whole. It is the budget that must provide guidance for bringing plans and aspirations into reality.

The budget is supposed to be a contract between government and the people, showing how resources are raised and allocated for the delivery of public services. Accordingly, the budget must be clear, transparent and credible in order to command trust, and to serve as platform for accountability.

Dominica therefore needs a budget formulation process that:

  • Presents budget outlook and budget strategy papers for better public understanding of the fiscal strategy driving the revenue and expenditure allocations
  • Issues Medium Term Expenditure Framework guidelines
  • Uses Sector Working Groups and Ministerial Public Expenditure reviews to bring together input from ministers, parliamentarians, public officials, the private sector, civil society organizations and private citizens
  • Engages a Finance Committee of Parliament, the Budget Office and Sector Hearings to consider these contributions and transform them into action-oriented proposals for the betterment of Dominica.
  • Engages an Estimates or Finance Committee of Parliament to review and approve the Estimates of Revenue and Expenditure
  • Promotes trust among citizens that government, is listening to and acting on their concerns, has a plan for achieving worthwhile objectives, and will use the available resources effectively, efficiently and in a sustainable manner.

Once parliament approves the budget, allocations should be effectively implemented by the ministries and agencies of government to secure the intended development benefits. Revenue collection and spending as authorized in the budget must be subjected to proper oversight throughout the year by the Public Accounts Committee, the Audit Department, the Budget Office and line ministries as appropriate.

We must break with the tradition of pigeon-holing the Public Accounts Committee into a primary concern with audited reports on government finances and empower it to embrace the discipline of oversight in real time. Let’s keep it real. In any event reports from the Director of Audit are backlogged three to four years, which condemns the PAC to oversight of history while live revenue and expenditure performance goes unchecked.

We cannot continue the practice of silence on the implementation of budget allocations after approval by Parliament. There must be periodic budget performance reviews that allow parliament to note the trend of overall collection and spending and prepares Cabinet to reassess budget alignment with fiscal objectives and development priorities. This will mean budget execution reports, including in-year and audited year-end reports designed to yield useful improvement messages on performance and value-for-money.

In democracies around the world, the parliamentary budget oversight focus is on “Budgetary governance” - the processes, laws, structures and institutions to ensure that the budgeting system effectively meets these requirements. Here in Dominica, after 15 years of same old, same old… it is time for integrated budget formulation systems and monitoring procedures that are coherent and consistent across all levels of governance in the public interest

Background

  1. Over the past 15 years the Dominican economy has suffered from a chronic lack of economic policy leadership resulting in low and declining growth, rising unemployment, and increasing poverty. In the last 5 years, the Dominican economy grew at an average of less than one percent per year, well below the 5 - 7 percent required to generate sustained employment and to reduce the incidence of poverty. Ironically the Dominica in which Labour Party ministers and their friends are doing extremely well is the same Dominica in which the people are catching hell.
  2. Characteristically, in today’s Dominica we find: no jobs; low paying jobs; working poor people; no more savings; the unpaid monthly bills are piling up; land, houses, vehicles and appliances are being repossessed; the days on hungry bellies continues to increase; no money for school fees and school books and school clothes; in many cases no options left but to sacrifice dignity as a beggar at the mercy of a government minister.
  3. The economy is in shambles and we are witnessing the consequent social ills particularly among the youth where unemployment is the most acute. This also translates to a growing segment of the population requiring government assistance and the provision of a ‘social safety net’. Government’s main revenue efforts continue to be focused on the VAT, which was introduced in 2006 and in the last fiscal year accounted for 35 percent of total revenues. This shows a modest decline over the 2009 level, which is a further indication of an economy in decline. At the same time, grant funds are falling well short of the targets putting further pressure on government revenues.
  4. The Minister of Finance has developed the habit of blaming Dominica’s poor economic performance results in the last 5 years under his watch on the “global financial crisis”. And he persists with his obsession in the absence of evidence that the nature of Dominica’s connection to global markets justifies any such assignment of blame. Of interest, the IMF 2012 Article 4 Consultation Report tells a completely different story:
    “The structure of Dominica’s economy renders it less sensitive to spillovers from the world business cycle. The small scale of the tourism industry and the preponderance of stay-over visitors from Caribbean countries make it less vulnerable to the business cycle fluctuations in key tourism markets, as only a third of stay over visitors are from United States, United Kingdom, or Canada – the smallest share in the ECCU. Moreover, a large share of the stay over tourists from the U.S. is accounted for by students at the offshore medical schools, whose decisions to travel to Dominica are less likely to be influenced by economic developments than pleasure tourism. In the agriculture industry, output is mainly influenced by domestic factors such as weather and crop conditions.

“Because of the nature of Dominica’s international linkages, local developments tend to influence economic performance relatively more than regional or global ones. In particular, growth in Dominica shows only little correlation with that of advanced economies, significantly less than other ECCU countries that show a tight relationship during most of the past two decades… Most of the growth in Dominica, is explained by country-specific factors rather than direct impact of global or regional developments… However, growth in the other ECCU countries has a much closer relation to advanced economies...”

  1. So on the critical issue of growing the economy, creating jobs and expanding socio economic advancement opportunities for the people, how has Dominica performed under this DLP administration in comparison with its ECCU neighbors who unlike Dominica have been really feeling the effects of the global financial crisis?
  2. At the end of 2014, according to the Eastern Caribbean Central Bank, the GDP for Dominica, the total value of goods and services in the Dominica economy was EC$1.4 billion which makes Dominica the smallest economy in the big six territories of the OECS. In fifth position ahead of Dominica is St Vincent and the Grenadines with a GDP of EC$2.0 billion – six hundred million dollars more than Dominica. St Kitts occupies position number 4 with a GDP of EC$2.3 billion. Grenada with a GDP of EC$2.5 billion is in 3rd place behind Antigua in 2nd place with a GDP of EC$3.4 billion. St Lucia tops the group with a GDP of EC$3.8 billion.
    For the 15 year period 1999 to 2014, the average annual growth rate for the Dominica economy was the slowest in the 6 nation grouping at 3.87 percent.

COUNTRY / 1999 / 2014 / Growth$ / Growth% / AV
Antigua / 2.1B / 3.4B / 1.3B / 63% / 4.19%
Dominica / 0.9B / 1.4B / 0.5B / 58% / 3.87%
Grenada / 1.3B / 2.5B / 1.2B / 89% / 5.94%
St Kitts / 1.1B / 2.3B / 1.2B / 119% / 7.92%
St Lucia / 2.1B / 3.8B / 1.7B / 81% / 5.40%
St Vincent / 1.0B / 2.0B / 1.0B / 95% / 6.35%
  1. In terms of tourism, touted as the leading growth engine, when we come to the critical indicator of overall visitor spending in the six OECS tourist destinations finds Dominica is at the bottom of the group again with an average visitor spend of EC$170 million. In all of the other five territories, the average visitor spend is in excess of EC$200 million. You had Antigua and St Lucia >EC$780 million; Grenada > EC$334 million; St Kitts & Nevis > EC$250 million; and St Vincent &the Grenadines > EC$211 million.
  2. Since the Dominica Labour Party took office in 2000 the trade deficit, the difference between exports and imports has doubled to over half a billion EC dollars.
  3. Annual Foreign Direct Investment inflows to the OECS for 2001 - 2014 as reported by the UN Economic Commission for Latin America and the Caribbean (ECLAC) confirm the severe performance deficiencies of the largest Cabinet of Ministers in the grouping:
    OVERALL PER ANNUM
    Antigua & BarbudaUS$2.2 billionUS$160 million
    St LuciaUS$1.7 billionUS$122 million
    St KittsUS$1.6 billionUS$114 million
    St Vincent US$1.3 billionUS$ 94 million
    GrenadaUS$1.2 billionUS$ 83 million
    DominicaUS$0.4 billionUS$ 31 million
  4. The ECLAC FDI statistics also reveal that since 2000, Dominica is the only country in the big six of the ECCU grouping in which Foreign Direct Investment was less than EC$100 million per year. Every other country attracted in excess of EC$200 million per year on average over the period.
  1. Wages and salaries combined with debt interest payments have over the past five years accounted for more than [50] ‘percent of current spending. The capital expenditure program of the government has been focused largely on improving public road works to the exclusion of feeder roads. Consequently while Dominica has benefited from an improved road network, the agriculture sector has suffered because of a lack of focus on key infrastructure and the absence of related marketing arrangements.
  1. Growing government expenditures combined with stagnating revenue have led to increasing fiscal deficits and a growing debt burden, which if left unchecked can only result in further disruptions in the economy, lower growth and galloping poverty.
  1. So have been forced to grin and bear the worse economic decline in our nation’s history, where the local private sector is disappearing at an alarming rate, tax revenue continues to fall… even VAT, for years the revenue saviour of government has joined the band of underperforming taxes as the economy remains in the clutches of a leadership paralysis in which it has become impossible to correct the failed strategy of treating the revenue/expenditure performance of government as the economy of Dominica. In the circumstances, our best and brightest minds continue flee from financial persecution in their homeland only to have their talents harvested by our neighbours where they find refuge.