BUDGET DEBATE 2006/2007

PRESENTATION BY

AUDLEY SHAW, M.P.

OPPOSITION SPOKESMAN ON FINANCE & THE PUBLIC SERVICE
TUESDAY, MAY 2, 2006

“A TIME TO CHOOSE”
ORDER OF SPEECH
IN MY PRESENTATION THIS AFTERNOON I WILL:

- FIRST, EXAMINE THE PAST. IT IS IMPORTANT THAT WE

UNDERSTAND THE 13 YEARS OF DR. DAVIES’ AND THE 17
YEARS OF THE PNP GOVERNMENT’S MISMANAGEMENT OF THE
ECONOMY.

- SECOND, REALISTICALLY ASSESS THE CHOICES OF THE

PRESENT. AND HIGHLIGHT THE FUNDAMENTAL DIFFERENCES
BETWEEN THE PEOPLE’S NATIONAL PARTY AND THE JAMAICA
LABOUR PARTY.

- THIRD, OUTLAY SOME ASPECTS OF A JLP ECONOMIC

STRATEGY FOR THE FUTURE.

1. STATE OF THE NATION

MR. SPEAKER, WHAT IS THE BACKGROUND AGAINST WHICH WE ARE

TODAY ENGAGED IN THIS BUDGET DEBATE, QUITE APART FROM THE
PROUD DECLARATION OF THE FINANCE MINISTER, REMINDING US OF
HIS THIRTEEN YEARS IN THAT ROLE?

THE MINISTER’S PRIDE IN HIS YEARS OF SERVICE MAKES IT NECESSARY

FOR US TO LOOK CAREFULLY AT THE RESULTS OF HIS STEWARDSHIP –
INDEED, HIS LEGACY MUST BE SUBJECT TO RIGOROUS SCRUTINY.

BUT BEFORE I DO SO, WHERE ARE WE AS A NATION TODAY, 44 YEARS

SINCE INDEPENDENCE AND AFTER 17 YEARS OF THE REIGN OF THE
PEOPLE’S NATIONAL PARTY GOVERNMENT?
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 THIS YEAR, AN ESTIMATED 70% OR 7 OUT OF 10 CHILDREN

WILL LEAVE HIGH SCHOOL WITHOUT PASSING AT LEAST
ONE SUBJECT IN C.X.C. EXAMINATIONS.

 WHILE THE PRICES OF BASIC FOODS CONTINUE TO RISE,

TRADERS ARE REPORTING A 10-15 PERCENT FALL OFF IN
BUSINESS OVER LAST YEAR DUE TO REDUCED
PURCHASING POWER AMONG THE PEOPLE, WHOSE
DISPOSABLE INCOME IS RAVAGED BY WAGE FREEZE.
HIGHER FUEL PRICES, ESCALATING ELECTRICITY COSTS,
AND UNAVAILABILITY OF CEMENT.

INFLATION ON BASIC FOOD ITEMS

ITEM PRICE I YEAR AGO CURRENTPRICE % INCREASE

2005 2006
RICE $14.63 PER LB. $17.32 18.37%
FLOUR 14.00 PER LB. 15.77 12.66%
SUGAR 20.20 PER LB. 26.50 31.19%
CORNMEAL 21.94 PER LB. 29.32 33.63%
MILK POWDER (LASCO) 42.40 PER PK. 42.40 0.00%
CONDENSED MILK (BETTY) 62.50 PER TIN 70.70 13.12%
MARGARINE 57.72 PER LB. 75.00 29.94%
CHIFFON MARGARINE 69.90 PER PK 78.70 12.59%
GRACE MACKEREL (DUTTY GAL) 25.00 PER TIN 29.70 18.80%
COOKING OIL 110.00 PER LITRE 137.00 24.55%
BREAD (2 LBS.) 42.50 PER LB 48.50 14.12%
SALTFISH 149.00 PER LB. 187.00 25.50%
WATER CRACKERS (SML) 28.10 PER PK. 35.00 24.56%
SPECIAL CREAM CRACKERS 21.40 PER PK. 22.00 2.80%
RED PEAS 86.50 PER LB. 86.50 0.00%
SARDINES 36.00 PER TIN 45.00 25.00%
MACARONI 60.30 PER PK. 61.00 1.16%
BAKED BEANS 51.10 PER TIN 53.70 5.09%
EGGS 114.00 PER DOZ. 107.00 -6.14%
SALT 10.50 PER LB. 10.50 0.00%
CHICKEN 75.00 PER LB. 84.00 12.00%
TOTAL $1,359.79 14.23%

 THE PRODUCTIVE SECTORS OF THE ECONOMY CONTINUE

TO RECORD DECLINES, WITH A 1.0% DECLINE IN
MANUFACTURING AND A 7.0% DECLINE IN AGRICULTURE.

 AS WE SPEAK, AND BY MY MOST CONSERVATIVE ESTIMATE,

TAKING INTO ACCOUNT THE OFFICIAL UNEMPLOYMENT
FIGURES AND THOSE WHO HAVE GIVEN UP HOPE LOOKING
FOR A JOB, SOME 450,000 JAMAICANS – HALE AND HEARTY
– OF WORKING AGE, ARE NOW WITHOUT WORK.
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 AND WHILE THIS IS HAPPENING, WE ARE RAPIDLY LOSING

OUR WORK ETHIC LOOKING INSTEAD TO REMITTANCES
AND BARRELS FROM THE EFFORT OF OTHERS, OR A LOTTO
TICKET WITH A DREAM TO “STEP UP IN A LIFE”, THE
REFRAIN AMONG OUR IDLE YOUTH IS “WHA YU CAAN DO
FI MI BOSS?”, “ LET OFF SOMETHIN’ NUH?”,
“NUTTEN NAW GWAAN.”

 NOT SURPRISINGLY, CRIME BECOMES THE SUBSTITUTE TO

THE PRODUCTIVE DEPLOYMENT OF OUR WORKFORCE
MAKING JAMAICA NOW THE MURDER CAPITAL OF THE
WORLD, WHERE HUMAN BEINGS ARE BUTCHERED DAILY,
THE EXTORTIONISTS REIGN SUPREME, AND THE SO-CALLED
COMMUNITY PROTECTORS SEND FOR OUR LITTLE GIRLS TO
RAPE AND ROB THEM OF THEIR INNOCENCE – AND EXCEPT
FOR A FEW VOICES OF OUTRAGE, WHERE IS THE STATE
AND ITS RESOURCES IN ENSURING THAT EVERY JAMAICAN
FROM EVERY WALK OF LIFE SHOULD BE ENTITLED TO THE
RIGHT TO PURSUE LIFE, LIBERTY AND HAPPINESS?

 AND WHILE OUR CITIZENS OF MODEST INCOME CANNOT

AFFORD SURGERY AND MEDICATION, UNDER THE RULE OF
THIS GOVERNMENT AND THIS FINANCE MINISTER, THE
SHAMELESS AND WASTEFUL EXTRAVAGANCE CONTINUES
APACE, WHERE EXPENSIVE OFFICIAL VEHICLES ARE
REJECTED BECAUSE IT’S THE WRONG COLOUR AND
OTHERS HAVE EXTRA ACCESSORIES COSTING $4.0
MILLION, PUSHING THE PRICE OF AN OFFICIAL DUTY FREE
VEHICLE TO $12.0 MILLION.

2. THE LEGACY OF THE FINANCE MINISTER

THE STATE OF THE NATION JUST DESCRIBED BY ME MR. SPEAKER, IS

MOST CERTAINLY A PART OF THE LEGACY OF THIS FINANCE MINISTER
AND HIS GOVERNMENT, BUT LET US LOOK AT SOME OF THE NUMBERS,
ESPECIALLY THE ONES THE MINISTER SHOWS NO APPETITE TO DICUSS
DURING HIS PRESENTATIONS.
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2.1 G.D.P. – 13 YEARS OF NO GROWTH

YEAR 199 199 199 199 199 199 199 200 200 200 200 200 200

3 4 5 6 7 8 9 0 1 2 3 4 5
REAL
ANNUAL
GDP
GROWT
H% 1.4 1.0 0.7 -1.3 -1.7 -0.3 0.9 0.7 1.5 1.1 2.3 0.9 1.4
AVERAG 0.
E GDP
- - - - - - - - - - - - - 6
CUMULA
- 8.
TIVE
GDP - - - - - - - - - - - - - 6

THE CUMMULATIVE GROWTH FOR THE ENTIRE 13 YEARS

OF THE TENURE OF THE FINANCE MINISTER IS 8.6%
WHICH IS ROUGHLY THE SAME AMOUNT THAT THE
JAMAICAN ECONOMY GREW BY IN 1987 – IN ONE SINGLE
YEAR UNDER THE JAMAICA LABOUR PARTY GOVERNMENT.

2.2 PER CAPITA INCOME

ONE MAY CONSIDER VARIOUS INDICES IN EXAMINING A

COUNTRY’S HUMAN DEVELOPMENT, BUT ONE COMMONLY USED
INDEX IS PER CAPITA INCOME AS ILLUSTRATED IN THE CHART
BELOW.

PER CAPITA INCOME (USD)

SOURCE: CARIBBEAN DEVELOPMENT BANK

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 BARBADOS’ PER CAPITA INCOME IS WELL AHEAD AND AT

US$10,325 IN 2004 WAS OVER THREE TIMES LARGER THAN
JAMAICA’S US$3,331

 AT US$9,502 TRINIDAD AND TOBAGO LAGS BEHIND

BARBADOS BUT IT IS CLEAR THAT THE GROWTH TRENDS
ARE ABOUT THE SAME. IN FACT, TRINIDAD ADDED
US$5,277 TO ITS INCOME PER PERSON BETWEEN 1995
AND 2004

 WHILE SOME OTHER COUNTRIES IN THE REGION ALSO

SHOW UP JAMAICA. BAHAMAS US$17,550, GUADELOUPE
US$13,968, AND EVEN VOLCANO-RAVAGED MONTSERRAT
US$8,754

 AND PER CAPITA INCOME FOR JAMAICA HAS REMAINED

ALMOST STATIC SINCE 1997, REINFORCING THE URGENCY
OF CREDIBLE POLICY MEASURES TO ENHANCE NATIONAL
PRODUCTIVITY LEVELS, AND TO GIVE JAMAICANS A
CHANCE TO GET INTO PRODUCTIVE ENDEAVOURS.

2.3 TREASURY BILL RATES

TREASURY BILL RATES 1995-2005 (MAY) %

SOURCE: CARIBBEAN DEVELOPMENT BANK

THIS IS ANOTHER ILLUSTRATION OF HOW THE MANAGEMENT OF THE

JAMAICAN ECONOMY HAS IMPACTED NEGATIVELY ON THE CAPACITY OF
THE PRODUCTIVE SECTOR TO PERFORM AND GROW.
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IN ITS DESIRE TO MOP UP LIQUIDITY THE GOVERNMENT HAS USED

TREASURY BILL RATES TO SET THE PACE FOR MARKET RATES TO MOVE
TO ASTRONOMICAL LEVELS, THUS EFFECTIVELY RETARDING INDUSTRY,
AS MANUFACTURERS CANNOT MEET THE HIGH COST. THE AVAILABLE
STATISTICS SHOW THAT IN THE FIVE YEARS TO 2005 TREASURY BILL
RATES IN BARBADOS AND TRINIDAD AND TOBAGO AVERAGED
BETWEEN 2.2% AND 4.9% RESPECTIVELY (SEE CHART) IN JAMAICA, THE
COMPARABLE RATE WAS 16.5%. AT SUCH STAGGERING RATES IT IS
DIFFICULT TO SEE HOW OUR MANUFACTURERS AND PRODUCERS
COULD COMPETE.

THE EVEN HIGHER TREASURY BILLS RATES BETWEEN 1992 AND 1996
WHICH LED TO COMMERCIAL BANKING RATES AVERAGING 53.0% IN
THE 1990s, AND WHICH LED TO THE FINANCIAL SECTOR COLLAPSE
LEADING TO A BILL OF $130 BILLION AND THE FIRE SALE OF MANY
HOMEGROWN JAMAICAN BUSINESSES. (ISLAND LIFE, MUTUAL LIFE,
CEMENT COMPANY, BANKS, AND EVEN THE VERY LIFE OF JAMAICA
(LOJ).

2.4 AVERAGE EXCHANGE RATE

AVERAGE EXCHANGE RATE

SOURCE: CARIBBEAN DEVELOPMENT BANK

IN LOOKING AT CHANGES IN EXCHANGE RATES AGAINST THE US$ IN

THE TEN YEARS TO 2005 ACROSS THREE CARIBBEAN COMMON
MARKET SISTER ECONOMIES – JAMAICA, BARBADOS AND TRINIDAD
AND TOBAGO.

WHAT IS OF NOTE HERE IS THAT WHILE THE CURRENCY OF BARBADOS

HAS REMAINED “FIXED” AT B$2.0 TO US$, AND THE TRINIDAD AND
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TOBAGO DOLLAR HAS BEEN RELATIVELY STABLE AT BETWEEN T/T$6.0

TO $6.3 TO THE US$. JAMAICA BY CONTRAST, HAS SEEN ITS
CURRENCY FALL AGAINST THE US DOLLAR FROM J$35.5 IN 1995 TO
$64.5 AT THE END OF 2005, A DECLINE OF 81.6 PERCENT. THE
SITUATION IS EVEN MORE STARTLING WHEN WE COMPARE THE
CHANGE FROM 1989 WHEN THE EXCHANGE RATE WAS J$5.75 TO THE
US DOLLAR TO THE OUT-TURN LAST YEAR. IN JAMAICA’S CASE THERE
HAS BEEN A MOST PRECIPITOUS FALL OF SOME 1021 PERCENT
COMPARED WITH 46.5 PERCENT FALL IN THE VALUE OF THE TRINIDAD
AND TOBAGO CURRENCY.

THIS MARKED DIFFERENCE BETWEEN THE THREE COUNTRIES CAN BE

ATTRIBUTED TO JAMAICA’S EXTRA-ORDINARILY POOR ECONOMIC
MANAGEMENT WHICH HAS EFFECTIVELY UNDERMINED THE COUNTRY’S
PRODUCTIVE CAPACITY AND BY EXTENSION THE STRENGTHENING OF
THE LOCAL CURRENCY. THIS IS REFLECTED IN A WORSENING TRADE
DEFICIT AS JAMAICA’S COMPETITIVE POSITION HAS GROWN
PROGRESSIVELY WORSE.

2.5 INFLATION (CHANGE IN CPI) %

INFLATION (CHANGE IN CPI) %

SOURCE: CARIBBEAN DEVELOPMENT BANK

IN TRACKING INFLATION IN THE THREE SISTER CARICOM COUNTRIES,

THE INFLATION BURDEN HAS BEEN MOST SEVERE FOR JAMAICANS,
RISING TO PEAK AT 81 PERCENT IN 1991, AND LATER, FALLING TO 26.4
PERCENT IN 1996. IN CONTRAST, BARBADOS WHICH RECORDED
LITTLE OR NO INFLATION IN 1998, AND TRINIDAD AND TOBAGO, HAVE
BEEN SUCCESSFUL IN CONTAINING INCREASES IN THE GENERAL LEVEL
OF PRICES TO LOW-SINGLE DIGIT.
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AT THE END OF LAST YEAR JAMAICA’S INFLATION RATE WAS GALLOPING

AT A RATE 10 TIMES THAT OF BARBADOS AND 4 TIMES THAT OF
TRINIDAD AND TOBAGO.

2.6 SUMMARY

 WE HAVE REVIEWED SOME ECONOMIC INDICATORS,

REFLECTING A DISTINCT STAGNATION IN JAMAICA’S
ECONOMY OVER THE LAST 10 YEARS COMPARED WITH
OUR CARICOM PARTNERS, BARBADOS AND TRINIDAD AND
TOBAGO.

 WITH THE CONTRACTION IN MANUFACTURING, THE SECTOR

IS EFFECTIVELY USING A MERE FRACTION OF ITS
INDUSTRIAL CAPACITY, REFLECTED ALSO IN THE ADVERSE
BALANCE IN THE COUNTRY’S EXTERNAL TRADE ACCOUNT.
DATA PUBLISHED BY THE PLANNING INSTITUTE OF
JAMAICA SHOW THAT BY THE END OF 2005
JAMAICA’S WORRYING TRADE DEFICIT HAD
DEEPENED BY US$685 MILLION, OR 27.2 PERCENT,
TO US$3,208 MILLION. THIS, AS IMPORTS HAVE GROWN
ALMOST 2.5 TIMES FASTER THAN EXPORTS, ADDING TO
UNCERTAINTIES SURROUNDING ECONOMIC PERFORMANCE
AND STABILITY.

MR. SPEAKER, THIS IS A PART OF THE 13-YEAR LEGACY OF THE

MINISTER OF FINANCE AND PLANNING. I WONDER IF THIS WAS
THE “REALITY CHECK” TO WHICH HE REFERRED ON THURSDAY?

BUT THE GREATEST LEGACY OF ALL FOR WHICH HE WILL BE

LONG REMEMBERED IS THE LEGACY OF DEBT.

3. THE DEBT PROBLEM

MR. SPEAKER, OVER THE PERIOD SINCE I HAVE BEEN THE OPPOSITION
SPOKESMAN ON FINANCE, I HAVE BEEN QUITE CONSISTENT IN
BRINGING TO THE ATTENTION OF THIS HONOURABLE HOUSE, AND TO
THE COUNTRY, THE INCREASING PROBLEMS AND THE RISKS WHICH
THE FAST GROWING COST OF THE RAPIDLY EXPANDING PUBLIC DEBT,
IMPOSE UPON THE ALREADY OVER-BURDENED TAXPAYERS, THE
ECONOMY AND INDEED EVERY MAN, WOMAN AND CHILD.
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THE RAPIDLY EXPANDING PUBLIC DEBT, WHICH IS FAST APPROACHING

THE TRILLION DOLLAR MARK, IS NOW A TIGHTENING NOOSE AROUND
OUR NECKS. THIS DEBT IS ALSO A TIGHTENING NOOSE AROUND THE
OPERATIONS OF EVERY BUSINESS, WHETHER LARGE, MEDIUM, SMALL
OR MICRO, AND THOSE YET TO GET OFF THE GROUND.

MR. SPEAKER, WHEN THE JAMAICA LABOUR PARTY DEMITTED OFFICE IN

1989, THE SIZE OF THE PUBLIC DEBT (INCLUDING GOVT. GUARANTEED
DEBTS) WAS J$31.3 BILLION. OF THAT AMOUNT, THE EXTERNAL DEBT
WAS US$4.0 BILLION OR J$22 BILLION, AND THE DOMESTIC DEBT WAS
J$9.3 BILLION. THE COUNTRY’S EXTERNAL DEBT WAS STRUCTURED
AROUND MEDIUM AND LONG-TERM RELATIVELY INEXPENSIVE LOANS,
AND WITH INSTITUTIONAL ARRANGEMENTS FOR SOME FLEXIBILITY IN
THE MANAGEMENT OF THE ECONOMY IN TIMES OF SEVERE EXTERNAL
SHOCKS, SUCH AS FROM ADVERSE CHANGES IN THE MAJOR EXPORT
EARNING SECTORS, ESCALATING OIL PRICES AND NATURAL DISASTERS.

THE JAMAICAN ECONOMY WAS PLACED ON A SOUND PATH OF

ECONOMIC AND EXPORT GROWTH, IN ORDER TO EARN AND SERVICE
ITS DEBT OBLIGATIONS AND BUILD BACK FOREIGN RESERVES, WHICH
WERE FULLY DEPLETED IN THE DECADE OF THE 1970s.

MR. SPEAKER, AFTER BEING IN GOVERNMENT FOR SEVENTEEN YEARS,

AND PURSUING AN ECONOMIC MODEL, WHICH SOME PERSONS NOW
CLAIM TO BE INSEPARABLE FROM ITS CONCEPTUALIZER, AFTER 1990,
THE JAMAICAN ECONOMY HAS NOT MANAGED TO GROW BY EVEN THE
2.9 PERCENT RECORDED IN THE HURRICANE “GILBERT” YEAR OF 1988.

THE DAVIES’ ECONOMIC MODEL HAS FAILED TO DELIVER NEITHER REAL

GROWTH IN WEALTH CREATION NOR THE ECONOMIC DEVELOPMENT OF
THE COUNTRY AND IMPROVED WELL-BEING OF THE PEOPLE.
HOWEVER, THE ECONOMIC MODEL HAS PRODUCED SOME
UNDESIREABLE RESULTS; AND WE CAN NOTE SOME OF THEM:

3.1 BANK OF JAMAICA LOSSES FROM MOPPING UP

LIQUIDITY

THERE WAS 230% EXPANSION IN THE MONEY SUPPLY BETWEEN

1991 AND 1995 WHICH RESULTED IN A HIGH INTEREST RATE
POLICY TO AGGRESSIVELY “MOP-UP” THE EXCESS LIQUIDITY. SO,
THE PRE-OCCUPATION OF MONETARY POLICY BECAME THE
MOPPING UP OF LIQUIDITY, AT ANY COST. IN THIS YEAR’S
BUDGET ALONE, $8.0 BILLION OR 2.2% OF THE
EXPENDITURE BUDGET IS TO COVER THE BANK OF
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JAMAICA LOSSES UP TO FINANCIAL YEAR 2004/05 FOR ITS

LIQUIDITY, AND FOR MOPPING UP ACTIVITIES.

MR. SPEAKER, THESE MASSIVE LOSSES AT THE BANK OF JAMAICA,

AND WHICH ARE BEING BORNE BY THE ALREADY OVER-
BURDENED TAXPAYERS, REPRESENT A SMALL FRACTION OF THE
MASSIVE TRANSFER OF WEALTH FROM THE POOR TO THE RICH. A
CONDITION THAT HAS PERSISTED OVER THE 17 YEARS OF THE
P.N.P. GOVERNMENT.

3.2 THE FAST GROWING DEBT SERVICING BURDEN

THE PUBLIC DEBT IS NOW AT $847 BILLION, AND WITH

ESTIMATED NEW BORROWINGS OF $136 BILLION FOR THIS
BUDGET, THE TOTAL DEBT WILL BE CLOSE TO THE TRILLION
DOLLAR MARK, BY THE END OF THIS FISCAL YEAR. BY THE END
OF THIS FISCAL YEAR, THE DEBT WILL BE 32 TIMES THE SIZE IT
WAS IN 1989. AND WHAT DO WE HAVE TO SHOW FOR THIS
MASSIVE DEBT?

JAMAICA’S PRESENT REAL G.D.P. PER CAPITA IS JUST ABOUT THE

SAME LEVEL IT WAS IN 1971, MAINLY BECAUSE OF THE
MISMANAGEMENT OF THE ECONOMY BY THE P.N.P. GOVERNMENT.

THE $92.4 BILLION THAT IS IN THE BUDGET FOR INTEREST

PAYMENT THIS YEAR, IS ALMOST THREE TIMES THE SIZE OF THE
TOTAL PUBLIC DEBT IN 1989.

3.3 AN EMERGING DEBT AMORTIZATION CRISIS

IN THIS EXPENDITURE BUDGET, DEBT AMORTIZATION IS PUT AT

 $117.58 BILLION, DOWN FROM THE REVISED

$139.78 BILLION LAST YEAR;

 A REDUCTION OF 15.9% FOR THE EXTERNAL DEBT,

AMORTIZATION PAYMENTS HAVE BEEN REDUCED
FROM $31.18 BILLION LAST YEAR TO $16.58 BILLION
THIS YEAR;

 A REDUCTION OF 46.8%. IN THE CASE OF THE

DOMESTIC DEBT, THE REDUCTION IS MARGINALLY,
DOWN FROM $108.6 BILLION LAST YEAR TO $101.0
BILLION THIS YEAR.
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TOTAL DEBT OBLIGATIONS AS A PERCENTAGE OF THE TOTAL

BUDGET THIS YEAR IS 59.0% DOWN FROM 65.0% LAST YEAR.
ON THE FACE OF IT, THIS MIGHT SUGGEST THAT THE STRATEGY
OF LENGTHENING THE TENOR OF THE DEBT IS REAPING
SUCCESS, AND SO MORE BUDGET RESOURCES WILL NOW BE
AVAILABLE TO FINANCE CRITICAL NON-DEBT AREAS OF
EXPENDITURE, SUCH AS EDUCATION, SECURITY AND HEALTH.
BUT, A DEEPER ANALYSIS REVEALS A DIFFERENT PICTURE.

LOANS ON THE INTERNATIONAL CAPITAL MARKETS BY G.O.J.

ANNUAL
INTERES TOTAL
INTERES T INTEREST
DEBT INSTRUMENT T RATE CHARGE CHARGES MATURITY DATE
1. US$225M 12.5% J$1.9B J$1.9B 2007 IN 1 YEAR
2. US$50M 9.5% J$315M J$.630M 2008 IN 2 YEARS
3. US$50M 9.0% J$298M J$.596M 2008 IN 2 YEARS
4. 4. EURO 10.5% J$1.64B J$4.8B 2009 IN 3 YEARS
200/US$250M
5. US$400M 11.75% J$3.1B J$15.5B 2011 IN 5 YEARS
6. EURO 11.0% J$1.7B J$10.2B 2012 IN 6 YEARS
200/US$250M
7. EURO 10.5% J$1.2B J$9.6B 2014 IN 8 YEARS
150/US$190M
8. US$300M 9.0% J$1.8B J$16.2B 2015 IN 9 YEARS
9. US$425M 10.625% J$2.992B J$32.5 2017 IN 11 YEARS
10. US250M 11625% J$1.9B J$30.4B 2022 IN 16 YEARS
11. US$250M 9.25% J$1.53B J$28.5B 2025 IN 19 YEARS
12. US$250M 8.5% J$1.4B J$42.0B 2036 IN 30 YEARS

US$2.890 (J$187.8B) 11.0% J$19.775 J$192.826

B B

AN ANALYSIS OF THE AMORTIZATION SCHEDULE OF THE PUBLIC

DEBT INDICATES THAT 51% OR $435.54 BILLION FALLS DUE FOR
PAYMENT WITHIN FIVE YEARS. ANOTHER 24% OR $205.0 BILLION
WILL FALL DUE FOR PAYMENT WITHIN 5 TO 10 YEARS, AND THE
OTHER 25% WILL FALL DUE FOR PAYMENT IN OVER 10 YEARS.
APPROXIMATELY 57% OF THESE AMORTIZATION TRANCHES
RELATE TO THE EXTERNAL DEBT AND TO WHICH SEVERAL
BILLION DOLLARS OF DEVALUATION CHARGES WOULD BE
ADDED, UNDER THE PREVAILING FLOATING FOREIGN EXCHANGE
RATE MECHANISM.
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3.4 WHY SO HIGH?

EARLIER THIS YEAR, THE MINISTER OF FINANCE RAISED

US$250 MILLION WITH A 30-YEAR BOND AT A COUPON RATE OF
8.5% ON THE INTERNATIONAL CAPITAL MARKET TO PRE-FUND
THE GOVERNMENT’S 2006/07 EXTERNAL BORROWING
PROGRAMME.

BUT IS NOT THIS VERY EXPENSIVE LONG-TERM MONEY? I THINK

SO. AND DOES THIS REALLY REFLECT ANY MEANINGFUL SHIFT IN
THE GOVERNMENT’S HIGH INTEREST RATE STRATEGY? I THINK
NOT!

IN JUNE 1998 THE MINISTER OF FINANCE RAISED US$250

MILLION IN A BOND ISSUE AT AN INTEREST RATE OF 10.875%
WITH A 7-YEAR MATURITY, DATED FOR JUNE 10, 2005. ON THE
SURFACE, IT WOULD APPEAR THAT THE 30-YEAR BOND AT AN
INTEREST RATE OF 8.5% IS A MUCH BETTER DEAL THAN THE 7-
YEAR BOND AT 10.875%.

BUT LOOKING BEYOND THE SURFACE, IT IS RECOGNISED THAT IT

IS MORE COSTLY TO THE ECONOMY AND HAS LOCKED THE
ECONOMY INTO A HIGH INTEREST RATE MODE FOR THE LONG
TERM.

THE ACCUMULATED INTEREST COSTS ON THE 30-YEAR BOND

WILL BE JUST OVER 3 1/3 MORE THAN THE ACCUMULATED
INTEREST COSTS ON THE 7-YEAR BOND.

MR. SPEAKER, THE LATEST 30-YEAR BOND AT 8.5% IS CLEARLY

NOT IN THE BEST INTEREST OF THE COUNTRY. THE MINISTER OF
FINANCE MUST SEEK CHEAPER SOURCES OF LONG-TERM
FINANCING FROM MULTI-LATERAL AND BILATERAL SOURCES, AND
USE IT TO REPLACE THIS HIGH COST LONG-TERM BOND, WHICH
IS FURTHER TIGHTENING THE DEBT NOOSE AROUND THE
ECONOMY.

3.5 OPPORTUNITIES FOR EMERGING MARKETS

RECENTLY MEXICO’S GOVERNMENT HAD RAISED THE FOREIGN

MONEY IT NEEDED FOR 2006 AND 2007 AS CHEAPLY AS THE U.S.
WOULD AT A SPREAD OF LITTLE MORE THAN A PERCENTAGE
POINT. SPREADS ON J.P. MORGAN’S INDEX OF EMERGING
MARKET BONDS FELL WELL BELOW 2.3 PERCENTAGE POINTS,
THE LOWEST ON RECORD. ACCORDING TO GOLDMAN SACHS,
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COUNTRIES SUCH AS BRAZIL WERE BORROWING AT MARGINS

NOT SEEN SINCE BRITAIN WAS THE WORLD’S BANKER AND GOLD
ITS STANDARD OF VALUE.

WHY WERE SPREADS SO LOW? THE COMMON ANSWER IS

GLOBAL LIQUIDITY, THE WORLD HAS GOT RICHER, EXCEPT
JAMAICA. THE GOVERNMENT HAS ISSUED BONDS AT MIND-
BOGGLING RETURNS TO FOREIGN INVESTORS LARGELY BECAUSE
PUBLIC CONFIDENCE IN ITS MANAGEMENT OF THE ECONOMY
REMAINS ON THE DOWNSIDE. IN OTHER WORDS, THE
GOVERNMENT BORROWS AT RATES IN THE HIGH DOUBLE DIGIT
(13%) COMPARED, FOR EXAMPLE, WITH OUR CARICOM PARTNER,
BARBADOS, THAT NOW BORROWS AT 4 PERCENT.

MR. SPEAKER, ITS MASSIVE DEBT BURDEN ACCOMPANIED

BY A HIGH INTEREST RATE POLICY THAT HAS MILITATED
AGAINST MEANINGFUL INVESTMENT IN THE PRODUCTIVE
SECTOR WILL BE THE LASTING LEGACY OF THIS FINANCE
MINISTER.

4. PUBLIC BODIES – A TALE OF NEGLECT OF DUTY

MR. SPEAKER, THE MANAGEMENT OF PUBLIC BODIES UNDER THIS

GOVERNMENT AND THIS FINANCE MINISTER, LEAVES MUCH TO BE
DESIRED.

MR. SPEAKER, OF THE 12 PUBLIC BODIES REPORTED ON, AT LEAST 75%

OF THEM ARE MAKING LOSSES AND SOME WE ARE NOT ABLE TO
COMMENT ON, SUCH AS THE JAMAICA URBAN TRANSIT COMPANY, FOR
WHICH NO ACCOUNTS HAVE BEEN PRESENTED.

4.1 THE SUGAR COMPANY OF JAMAICA AND ITS AFFILIATES

HAVE ACCUMULATED LOSSES OF J$12 BILLION.

IN MINISTRY PAPER 21/05 THE MINISTER STATES THAT THE

SUGAR COMPANY WAS PROJECTED TO MAKE A LOSS OF
$112 MILLION FOR 2004/2005. MR. SPEAKER, WOULD YOU
BELIEVE THAT ACTUAL LOSS FOR 2004/2005 IS $1 BILLION
AS REPORTED IN THIS YEAR’S MINISTRY PAPER.
A GLARING EXAMPLE OF THIS NEGLECT OF DUTY IS
THE INTEREST CHARGES INCURRED BY THE SC.J.
ACCORDING TO THIS YEAR’S MINISTRY PAPER INTEREST
CHARGES FOR 2004/2005 INTEREST COST WAS $381.32
MILLION, 40% OF TOTAL LOSSES. FOR 2005/2006 THE
INTEREST COST WAS PROJECTED AT $485 MILLION WITH A
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NET LOSS OF $400 MILLION. BUT HEAR THIS MR. SPEAKER,

THE ACTUAL INTEREST CHARGE FOR 2005/2006 WAS $800
MILLION AND, MORE ALARMING, I UNDERSTAND THAT AT
LEAST 65%, THAT IS, $520 MILLION OF THE
INTEREST CHARGE IS DUE TO OVERDRAFT AND
EXCESS OVERDRAFT CHARGES, WHICH RUN INTO
INTEREST RATES FAR IN EXCESS OF 25 PERCENT.

MR. SPEAKER, THIS IS UNBELIEVABLE

MISMANAGEMENT, THIS MINISTER NEEDS TO INFORM
THIS PARLIAMENT AS TO WHY A COMPANY THAT IS
“INSOLVENT” IS PAYING $520 MILLION IN
OVERDRAFT AND EXCESS OVERDRAFT INTEREST
CHARGES, WHICH ALL HAVE NOW BEEN CONVERTED
INTO A LONG-TERM LOAN. WHY WASN’T THE LOAN
ESTABLISHED BEFORE AND DID THE OVERDRAFT
FACILITY RECEIVE THE APPROVAL OF THE S.C.J., THE
GOVERNOR OF THE B.O.J., AND THE MINISTER OF
FINANCE? THIS IS GROSS DERELICTION OF DUTY
AND IS A FISCALLY RECKLESS APPROACH TO PUBLIC
AFFAIRS.

IN ADDITION, THERE ARE LIABILITIES OF $3.8 BILLION,

LIABILITIES DUE FOR PAYMENT WITHIN THE NEXT 12
MONTHS, AND REAL CURRENT ASSETS OF $327 MILLION,
HOW WILL THESE SHORT-TERM DEBTS BE FINANCED, ARE
WE GOING TO CONTINUE TO OPERATE AN OVERDRAFT
ACCOUNT AND AT WHAT PRICE TO THE PROFIT OF THE
BANKS AND CERTAINLY NOT THE SMALL CANE FARMERS OR
THE SUGAR WORKERS.

4.2 THE ACCUMULATED LOSS OF AIR JAMAICA IS US$1 BILLION

OR J$65 BILLION. LIABILITIES STAND AT US$642 MILLION
OR J$43 BILLION. MR. SPEAKER, THE COMPANY’S CURRENT
LIABILITIES, THAT IS LIABILITIES WHICH HAVE TO BE PAID
WITHIN A YEAR IS US$220 MILLION OR J$14 BILLION,
WHICH REPRESENTS 4% OF THIS YEAR’S TOTAL BUDGET
OR 8% OF THE RECURRENT BUDGET. THE THREE LARGEST
COMPONENTS OF THE CURRENT LIABILITY ARE:

UNSECURED BANK OVERDRAFT – J$1.5

TRADE CREDITORS – J8.5 BILLION
AIR TRAFFIC FEES – J$4 BILLION

TO COMPOUND MATTERS THE CURRENT LIABILITIES DO

NOT INCLUDE LOAN REPAYMENTS OF US$340 MILLION AND
 15

LEASE OBLIGATIONS OF US$64 MILLION, AND THE ONLY

ASSETS AVAILABLE TO PAY THE CURRENT LIABILITY IS
US$43M OR J$2.8B.

THE MINISTER NEEDS TO ADVISE US HOW WILL AIR

JAMAICA FUND THE J$11 BILLION OF NET CURRENT
LIABILITIES.

4.3 NATIONAL WATER COMMISSION FOR THE LAST TWO

YEARS THE COMMISSION HAS ACCUMULATED LOSSES OF
J$2 BILLION AND IS PROJECTED TO MAKE A LOSS OF J$1.3
BILLION FOR 2005/2006. IN ADDITION THE COMMISSION IS
PROJECTED TO SPEND J$1BILLION ON CAPITAL PROJECTS.
MINISTER, ARE THERE ANY BUDGETARY IMPLICATIONS
HERE?

4.4 THE NATIONAL HOUSING TRUST.

4.4.1 IN LOOKING AT THE ACCOUNTS OF THE NHT THE

INDEPENDENT AUDITORS, DELOITTE, EXPRESSED A
SERIOUS CONCERN ABOUT THE UNDERLYING
SECURITIES FOR INVESTMENTS MADE BY THE N.H.T.
OF APPROXIMATELY J$3.5B. THAT IS, THE AUDITORS
ARE OF THE OPINION THAT THE N.H.T. HAS MADE
LOANS/INVESTMENTS FOR WHICH THE SECURITIES
ARE QUESTIONABLE?

4.4.2 I ALSO NOTICE THE NHT HAS ENTERED INTO JOINT

VENTURES WITH SELECTED DEVELOPERS AND THAT
ADVANCES TO THESE DEVELOPERS ARE CURRENTLY
J$986 MILLION OF WHICH $345M IS CONSIDERED
UNCOLLECTIBLE. IS THE MINISTER PREPARED TO SAY
WHICH DEVELOPMENT(S) AND WHO ARE THE
DEVELOPER(S) WHICH THIS J$345M RELATES TO?
AND WHY ARE THESE SUMS UNCOLLECTIBLE?

4.4.3 IN RESPECT OF THE HARMONISATION LIMITED AT

HARMONY COVE, IS THE J$685 MILLION SPENT BY
NHT ON THIS PROJECT ONLY RELATING TO LAND OR
DOES IT INCLUDE FEES, AND IF YES, WHAT ARE
THESE FEES FOR? MINISTER, I HAVE BEEN RECEIVING
MANY COMPLIANTS AS TO HOW THIS PROJECT IS
 16

PROCEEDING AND THIS SIDE OF THE HOUSE WILL BE

VERY VIGILANT ON THIS IMPORTANT MATTER IN THE
NEAR FUTURE. THESE CONCERNS INCLUDE THE
LACK OF TRANSPARENCY ON THE TERMS OF THE
AGREEMENT AND THE QUALIFICATIONS OF THE JOINT
VENTURE PARTNER.

4.5 STUDENT LOAN BUREAU. FIRSTLY, I ACKNOWLEDGE THE

REDUCTION OF INTEREST RATES ON STUDENT LOANS BY
THE S.L.B. HOWEVER, 12% INTEREST RATE TO STUDENTS
IS STILL TOO HIGH. MR. SPEAKER, A WELL-RUN BUSINESS
STRUGGLES TO SURVIVE AT AN INTEREST RATE OF 12%
HOW DO WE EXPECT OUR STUDENTS TO SURVIVE? IN
FACT, EACH YEAR WE HAVE THOUSANDS OF STUDENTS
LEAVING THE UNIVERSITIES WHO ARE UNABLE TO FIND
SUITABLE JOBS AND MEET THEIR OBLIGATIONS. NO
WONDER OUR TERTIARY GRADUATES ARE MIGRATING IN
SUCH NUMBERS.

I MUST ALSO STATE MY TOTAL DIS-SATISFACTION WITH THE

LEVEL OF SERVICE PROVIDED TO THE STUDENTS, IN
PARTICULAR, THE INCONVENIENCE THAT THE STUDENTS
FACE WHEN APPLYING FOR A LOAN SUCH AS OVER-
NIGHTING IN PARKING LOTS JUST TO SECURE A NUMBER
FOR AN INTERVIEW. THIS IS TOTALLY UNACCEPTABLE.

IN REVIEWING THE MINISTRY PAPER I NOTICE AN

ALLOCATION FOR J$360M TO BUILD A NEW OFFICE. I
WANT TO REGISTER MY OBJECTION TO THIS PLAN.
WE HAVE TOO MUCH EMPTY BUILDINGS
DOWNTOWN, KINGSTON, TO BE SPENDING J$360M
ON A NEW OFFICE. WE HAVE TOO MANY POOR KIDS
NOT ABLE TO GET HIGHER EDUCATION BECAUSE OF A
LACK OF FUNDING, TOO MANY INDEBTED STUDENTS
LEAVING THE UNIVERSITIES, DEBTS WHICH THESE
STUDENTS WILL NOT BE ABLE TO PAY GIVEN THE
LACK OF ECONOMIC OPPORTUNITY, AND YET WE ARE
PREPARED TO SPEND J$360M ON BUILDING AN
OFFICE. WHERE ARE OUR PRIORITIES? I
RECOMMEND THAT WE SCRAP THIS LATEST
MONUMENT TO EXTRAVAGANCE AND REDUCE THE
INTEREST RATE TO STUDENTS TO SINGLE DIGIT. (-9%
OR LESS).
 17

4.6 PENSION FUNDS

4.6.1 THE GOVERNMENT TALKS ABOUT PENSION REFORMS

TO PROTECT THE INTEREST OF PENSIONERS.

I CHALLENGE THEIR OWN MANAGEMENT OF PENSION

FUNDS AND FIND THEM WANTING.

MY UNDERSTANDING IS THAT GOVERNMENT

CURRENTLY OWES PENSIONERS ALMOST $2 BILLION
IN WITHHOLDING TAX FOR ALMOST A YEAR.

THE ACTUAL LOSS TO PENSIONERS AT INTEREST

RATES COULD BE AS HIGH AS $260 MILLION PER
YEAR, BASED ON LOST INTEREST INCOME.

THIS, MR. SPEAKER, IS IN BREACH OF THE NEW

PENSION REGULATIONS WHERE PENSIONERS’ FUNDS
ARE NOT TO BE LEFT IDLE. SO, MR. SPEAKER, NOT
ONLY IS THE GOVERNMENT DEPRIVING POOR
PENSIONERS OF THEIR MONIES FOR THEIR
RETIREMENT YEARS, THEY ARE IN BREACH OF THE
REGULATIONS.

4.6.2 MR. SPEAKER IN RESPECT OF THE PENSION REFORM

WHERE THE FSC WILL BECOME THE REGULATOR OF
THE INDUSTRY, WE ON THIS SIDE CANNOT
DISAGREE WITH REGULATION TO PROTECT THE
PENSIONERS BUT WE CERTAINLY DO NOT AGREE
WITH OVER REGULATION WHICH DEFEATS THE
PURPOSE AND THE INTENT OF THE REGULATION IN
THE FIRST PLACE.

I NOTICE THAT THE REGULATORS EXPECT TO EARN

INCOME OF J$125 MILLION FROM FEES TO BE
CHARGED TO THE PENSION INDUSTRY.

IN THIS PROPOSED SCALE OF FEES IT IS CLEAR THAT

THE F.S.C. WILL BE BUILDING UP CONSIDERABLE
ANNUAL SURPLUSES OF $90 MILLION AT THE
EXPENSE OF THE PENSION INDUSTRY AND THE POOR
PENSIONERS.

5. EXPENDITURE UNDERSTATED/REVENUE OVERSTATED

 18

THE EXPENDITURE BUDGET

THE MINISTER OF FINANCE SUPPORTED BY THE CABINET OF JAMAICA,
CONTINUES TO TELL THE COUNTRY ONLY A PART OF THE TRUE STORY
CONCERNING THE EXPENDITURE BUDGET.

THE EXPENDITURE BUDGET IS UNDERSTATED, THE FULL EXTENT OF

WHICH IS DEPENDENT ON THE FINAL OUTCOMES OF SUCH BIG TICKET
EXPENDITURE ITEMS AS THE M.O.U., AIR JAMAICA AND THE SUGAR
COMPANY OF JAMAICA, AND OTHER PUBLIC BODIES.

THE M.O.U. HAS A 2-YEAR $11 BILLION GAP BETWEEN THE UNIONS’
REQUEST AND THE GOVERNMENT’S OFFER. IN THIS FISCAL YEAR THE
GAP IS $4.0 BILLION.

IN RELATION TO BOTH AIR JAMAICA AND THE SUGAR COMPANY OF

JAMAICA, SEVERAL BILLIONS OF DOLLARS IN FINANCING ARE NEEDED.
THE QUESTION IS WHETHER THE MINISTER INTENDS TO BRING
PORTIONS OF THESE OBLIGATIONS INTO THE BUDGET OR HE INTENDS
TO RECKLESSLY ALLOW THE ENTITIES TO INCUR RAPACIOUS
OVERDRAFT CHARGES WITHOUT THE GUARANTEE OF PARLIAMENT?

EQUALLY, THE OBVIOUS INTENTION OF THE GOVERNMENT TO SPEND

SOME $18 BILLION IN PETROCARIBE FUNDS BENEATH THE CLOSE
SCRUTINY OF PARLIAMENT IS ITSELF INDICATIVE OF THE LENGTH TO
WHICH THE GOVERNMENT WILL GO TO CORRUPT THE BUDGETARY
PROCESS.

THE MINISTER’S PROMISE OF NO NEW TAXES IS ALSO TO BE TAKEN

WITH A GRAIN OF SALT. HE SAID THE SAME THING ON APRIL 18, 2002.
(“READ MY LIPS, NO NEW TAXES”). AFTER THE GENERAL
ELECTIONS THAT YEAR IT WAS REVEALED THAT A $8.2 BILLION
PAYMENT WAS MADE TO PUBLIC SECTOR WORKERS WITHOUT THE
KNOWLEDGE OR APPROVAL OF PARLIAMENT. THE MINISTER ALSO
ADMITTED THEN THAT HE HAD TO TAKE ON BOARD TO THE BUDGET
OBLIGATIONS FOR THE S.C.J. AND THE N.W.C., OF SEVERAL BILLION
DOLLARS, AS WELL AS $4.0 BILLION IN ADDITIONAL INTEREST
CHARGES.

WHAT FOLLOWED WAS A RECORD TAX PACKAGE OF $14.5 BILLION IN

ORDER FOR THE MINISTER TO “CORRECT IT”.

THE MINISTER HAS A DUTY AND AN OBLIGATION TO BRING THE REAL

PICTURE OF EXPENDITURE AND REVENUE TO PARLIAMENT SO THEY
CAN BE PROPERLY DEBATED.
 19

MR. SPEAKER, TODAY JAMAICA STANDS AT AN ECONOMIC CROSS-

ROADS.

6. THE TIME HAS COME FOR US TO CHOOSE

THERE IS A REAL DIFFERENCE BETWEEN THE OPPOSITION AND

THE GOVERNMENT ON THE QUESTION OF HOW JAMAICA’S
ECONOMY SHOULD BE MANAGED, AND THIS DIFFERENCE IS
GROWING. AS THIS GOVERNMENT HAS SHOWN, YEARS OF
MISTAKES TAKE DECADES TO SOLVE. THE CHOICE THE
JAMAICAN PEOPLE MAKE NOW ABOUT WHICH ECONOMIC PATH
TO PURSUE WILL DETERMINE JAMAICA’S ECONOMIC FORTUNES
FOR THE NEXT DECADE AND BEYOND.

FIRST, WE CAN CHOOSE, TO CONTINUE TO “MUDDLE THROUGH.”

JAMAICA CAN SIMPLY CONTINUE ITS CURRENT POLICIES AND HOPE
AGAINST HOPE THAT SOMEHOW THINGS WILL CHANGE. THE
DEFINITION OF INSANITY IS TO REPEAT THE SAME THING OVER AND
OVER AND DREAM OF A DIFFERENT OUTCOME. THIS IS A POLICY OF ALL
PAIN AND NO GAIN. THIS IS DR. DAVIES’ AND THE PNP’S STRATEGY.

SECOND, JAMAICA CAN CHOOSE TO MAKE A WILD AND INCORRECT

SHIFT IN POLICY. IT COULD ABANDON WHAT LITTLE PRUDENT MACRO-
ECONOMIC POLICY IT HAS, SQUANDER THE TOUGH SACRIFICES THE
JAMAICAN PEOPLE HAVE BEEN ASKED TO MAKE AND EMBARK ON A
POPULIST CAMPAIGN. THIS APPROACH IS NOT NEW, IT HAS BEEN TRIED
AND IT HAS FAILED. IT IS RECKLESS, IT IS SIMPLISTIC, IT IS DECEPTIVE
AND IRRESPONSIBLE. THIS IS A POLICY OF LESS PAIN NOW, MORE PAIN
LATER AND NO GAIN AT ALL. THIS IS THE POLICY OF OTHERS IN THE
GOVERNMENT – A POLICY APPROPRIATELY NAMED – THE CRASH
PROGRAMME.

WHILE THE GOVERNMENT CANNOT EVEN DECIDE AMONG THEMSELVES

WHAT POLICY IT PLANS TO ADOPT, LET IT BE CLEAR THAT THE PEOPLE
OF JAMAICA MUST CHOOSE TO REJECT BOTH PLANS. JAMAICA NEEDS A
NEW, CREATIVE, AGGRESSIVE AND COMPREHENSIVE STRATEGY THAT
DELIVERS REAL ECONOMIC DEVELOPMENT. THIS MR. SPEAKER IS THE
STRATEGY I WILL DELIVER TODAY.

MACRO-ECONOMIC STABLIZATION AND GOING FOR GROWTH

FOR THE PURPOSES OF MY PRESENTATION, I WILL FOCUS ON THE

POLICIES THAT ARE NEEDED TO SPUR BROAD-BASED INVESTMENT,
GROWTH AND ECONOMIC DEVELOPMENT. THIS ALTERNATIVE
 20

ECONOMIC STRATEGY WHICH HAS THREE COMPONENTS: (1) PRUDENT

AND CREDIBLE MACRO-ECONOMIC POLICIES, (2) NEW AND CREATIVE
DEBT REDUCTION STRATEGIES AND (3) AN AGGRESSIVE AND EXPORT-
ORIENTED INDUSTRIAL POLICY.

6.1 A COMMITMENT TO PRUDENT AND CREDIBLE

MACRO-ECONOMIC POLICIES

THE FIRST COMPONENT OF OUR STRATEGY IS TO

SUCCESSFULLY PURSUE PRUDENT MACRO-ECONOMIC
MANAGEMENT. WITH LEVELS OF DEBT THAT STAND AT 131%
OF G.D.P. AND 60 PERCENT OF OUR BUDGET DEDICATED TO
INTEREST AND AMORTIZATION PAYMENTS, ANY PLAN TO REVIVE
OUR ECONOMY MUST BEGIN BY ATTACKING THIS MASSIVE
BARRIER TO SUCCESS. LET IT BE VERY CLEAR: WE DID NOT
CREATE THIS PROBLEM, BUT WE CANNOT AFFORD TO IGNORE IT.

PLANS BY THE GOVERNMENT TO EMBARK ON A MASSIVE SOCIAL

SPENDING CAMPAIGN ARE NOT SUSTAINABLE AND ONLY KICK
THIS PROBLEM FURTHER DOWN THE ROAD. THE JAMAICAN
PEOPLE DESERVE THE DIGNITY OF MORE THAN JUST A HAND
OUT; THEY DESERVE A STRATEGY THAT PROVIDES A REAL WAY
OUT. A STRATEGY THAT IS ROOTED IN THE OPPORTUNITY
TO LEARN HOW TO FISH FOR ONESELF, NOT TO GET A
FISH.

IN OUR STRATEGY, PRUDENT FISCAL MANAGEMENT IS CRITICAL.

DR. DAVIES CLAIMS TO HAVE A SIMILAR VIEW, BUT THE PEOPLE
OF JAMAICA SHOULD NOT CONFUSE INTENTIONS WITH RESULTS.
WE HAVE HAD 13 YEARS OF GOOD INTENTIONS AND NO
SIGNIFICANT ECONOMIC DEVELOPMENT – NO RESULTS. WE
NEED LOOK NO FURTHER THAN DR. DAVIES OWN PROMISE TO
BALANCE THE BUDGET BY THIS FISCAL YEAR. EVEN WITH THE
IMMENSE SACRIFICES THE JAMAICAN PEOPLE HAVE BEEN ASKED
TO MAKE – HIGHER TAXES, LOWER WAGES, FEWER SOCIAL
SERVICES – THE BUDGET DEFICIT STILL STANDS AT 3% OF G.D.P.

MR. SPEAKER, THESE MACRO-ECONOMIC POLICY FAILURES HAVE

NOT BEEN THE RESULT OF NATURAL DISASTERS, THEY HAVE
BEEN THE RESULT OF HUMAN DISASTERS. THE HUMAN
DISASTERS THAT CONSTRUCT AND CONTINUE TO IMPLEMENT
FAILED ECONOMIC POLICY, HUMAN DISASTERS THAT
SHAMELESSLY RUN WITH IT WHEN AN ELECTION IS ON THE
HORIZON, HUMAN DISASTERS THAT CONSISTENTLY OVER-RUN
THE COST OF CAPITAL PROJECTS.
 21

JAMAICA HAS CONSISTENTLY FAILED TO MEET ITS FISCAL

TARGETS – BUT THE PROBLEM IS NOT THE TARGETS, THE
PROBLEM IS A TEAM THAT HAS FAILED TO IMPLEMENT
THEM. WE DO NOT THEREFORE BELIEVE THAT A POLICY
OF FISCAL DISCIPLINE SHOULD BE ABANDONED, WE
BELIEVE THAT JAMAICA MUST ABANDON A GOVERNMENT
THAT IS TOO UNCOMMITTED TO GOOD GOVERNANCE AND
TOO INCOMPETENT TO IMPLEMENT ALL THE CRITICAL
MACRO-ECONOMIC VARIABLES.

6.2 FIXED EXCHANGE RATE

PROPOSALS TO FIX THE EXCHANGE RATE WILL NOT FIX
THE PROBLEM. WHILE WE AGREE THAT THIS ISSUE
REQUIRES GREATER STUDY AS WE FULLY RECOGNIZE ITS
MERITS, WE BELIEVE THAT SUCH A POLICY COULD BE
INAPPROPRIATE FOR JAMAICA AT THIS TIME.

FIXING THE NOMINAL EXCHANGE RATE COULD LEAD TO

SIGNIFICANT LOSSES OF INTERNATIONAL RESERVES AND
DECREASED INTERNATIONAL COMPETITIVENESS. EVEN WORSE,
IT COULD RISK INTERNATIONAL CONFIDENCE IN OUR ECONOMY
AND MAKE JAMAICA VULNERABLE TO SPECULATIVE ATTACKS.

DESPITE SOME INVESTMENT TAKING PLACE, THE JAMAICAN

ECONOMY IS STILL IN A FRAGILE AND GROWTHLESS MODE, WITH
TOO HEAVY A RELIANCE ON DEBT TO TAKE ANY UNNECESSARY
RISKS AT THIS TIME.

DESPITE THESE NEGATIVES MR. SPEAKER, THERE ARE MANY

SUCCESS STORIES WITH RESPECT TO THE FIXED EXCHANGE
RATE SYSTEM INCLUDING CHINA, THE EASTERN CARIBBEAN, AND
MANY LATIN AMERICAN COUNTRIES, MANY OF WHOM RECENTLY
FIXED THEIR EXCHANGE RATES. SO WE NEED TO DISCUSS THE
MATTER FURTHER BEFORE COMING TO EARLY CONCLUSIVE
POSITIONS. (ARGENTINA IS LIKELY TO GROW BY 7% IN 2006,
THIRD ONLY TO CHINA AND INDIA, SO OUR ANALYSIS CANNOT
ONLY BE LIMITED TO ARGENTINA.)

6.3 NEW DEBT REDUCTION SOLUTIONS

 22

LAST WEEK, DR. DAVIES TABLED HIS ANNUAL “DEBT

MANAGEMENT STRATEGY” PAPER. THIS DOCUMENT, WRITTEN
MORE FOR THE BENEFIT OF CREDITORS THAN FOR THE
JAMAICAN PEOPLE, CONTAINS NOT ONE SINGLE NEW IDEA ON
HOW TO CONFRONT THE SINGLE GREATEST THREAT TO OUR
ECONOMY.

WHILE WE BELIEVE VERY STRONGLY IN THE PRINCIPLE OF

PRUDENT FISCAL POLICY, WE ALSO BELIEVE NEW AND CREATIVE
SOLUTIONS EXIST. LET ME SHARE JUST THREE EXAMPLES WITH
YOU:

6.3.1 THE RECENTLY SIGNED PETROCARIBE AGREEMENT

PROVIDES JAMAICA WITH THE ABILITY TO FINANCE A
PORTION OF ITS PETROLEUM NEEDS AT
PREFERENTIAL INTEREST RATES. THE PROCEEDS OF
THIS ARRANGEMENT WHICH WILL YIELD SOME $18
BILLION BY THE END OF THIS FINANCIAL YEAR,
SHOULD BE INVESTED OR USED TO ATTACK THE
MOST SERIOUS PROBLEM – TO RETIRE EXPENSIVE
DEBT, THE RESULT WOULD BE A SIGNIFICANT
DECREASE IN THE DEBT STOCK AND A FURTHER
DECREASE IN THE AMOUNT OF REVENUE DEDICATED
TO DEBT SERVICE.

WE ESTIMATE THAT IN JUST THREE YEARS THIS

POLICY ALONE COULD LOWER DEBT TO G.D.P. RATIO
BY 8% AND INTEREST EXPENSE BY 3% OF REVENUE.
WHATEVER THE NATURE OF THE STRUCTURE THAT IS
USED,

IT IS CLEAR THAT ANY GOVERNMENT SERIOUS

ABOUT DEBT REDUCTION SHOULD USE
PETROCARIBE AS A DEBT REDUCTION TOOL
AND NOT AS A SOCIAL SPENDING SLUSH FUND
– OR ANOTHER CRASH PROGRAMME BY ANY
OTHER NAME.

6.3.2 BUT PETROCARIBE IS JUST ONE OPTION. WITHIN THE

REVENUE THE GOVERNMENT COLLECTS EACH YEAR
ARE FLOWS DENOMINATED OR LINKED TO FOREIGN
CURRENCY. LIKE THE PETROCARIBE AGREEMENT,
THESE FLOWS ARE AN UNUSED DEBT FIGHTING
TOOL. IF SEPARATED AND SECURITIZED, BONDS
BACKED BY THESE FLOWS WOULD RECEIVE INTEREST
RATES SIGNIFICANTLY BELOW JAMAICA’S
 23

EUROBONDS. THE PROCEEDS OF THESE BONDS

COULD THEN BE USED TO REPAY MORE EXPENSIVE
DEBT AND LOWER THE ANNUAL INTEREST BURDEN.
A SIMILAR STRUCTURE HAS BEEN SUCCESSFULLY
IMPLEMENTED IN MEXICO, VENEZUELA AND RUSSIA
AND COULD BE IMPLEMENTED IN JAMAICA.

6.3.3 THE THIRD EXAMPLE IS TO BORROW A BLOCK

OF FUNDS FROM A CONSORTIUM OF MULTILATERAL
INSTITUTIONS (IDB, WORLD BANK AND CDB) I.E.
US$1.0 BILLION AND USE THIS LOW INTEREST COST
FUNDS TO REPLACE EXPENSIVE INSTRUMENTS AS
THEY MATURE, THUS REDUCING THE DEMAND FOR
HIGH COST INSTRUMENTS WITH THE INTERNATIONAL
CAPITAL MARKETS.

THESE COMBINED INITIATIVES WILL CAUSE A

REDUCTION IN INTEREST COST ON THE BUDGET,
REDUCE COMMERCIAL INTEREST RATES AND
REDIRECT PRIVATE SECTOR INVESTMENTS INTO THE
GOODS AND SERVICES PRODUCING SECTORS OF THE
ECONOMY. THIS IN TURN WILL CAUSE OUR
FACTORIES TO REOPEN, OUR FIELDS TO BE PLANTED,
OUR EXPORTS TO GROW AND OUR PEOPLE TO BE
GAINFULLY EMPLOYED.

6.4 AN AGGRESSIVE EXPORT-ORIENTED INDUSTRIAL

POLICY

MR. SPEAKER, ANY ECONOMIC STRATEGY NEED TO MOVE

BEYOND MERELY MANAGING DEBT AND LAY OUT A SPECIFIC
PLAN ON HOW TO GENERATE GROWTH. AS USUAL, THERE WAS
NO SUCH PLAN IN DR. DAVIES’ PRESENTATION.

OVER THE LAST 17 YEARS, JAMAICA’S MAIN EXPORTS HAVE

REMAINED THE SAME AS TOTAL EXPORTS HAVE DECLINED AS A
SHARE OF G.D.P. THE TECHNOLOGICAL INTENSITY OF OUR
EXPORTS HAS BEEN ALLOWED TO DECLINE, WHILE OUR
NEIGHBOURS IN THE CARIBBEAN AND CENTRAL AMERICA HAVE
SUCCESSFULLY TRANSITIONED TO HIGHER VALUE ADDED
PRODUCTS.

JAMAICA MUST BE SEEN AS A BUSINESS, SO IT SHOULD NOT BE

HOLDING ON TO A DECLINING MARKET SHARE IN AN
INCREASINGLY COMPETITIVE MARKET. IT WOULD HAVE FAILED TO
 24

DIVERSIFY ITS PRODUCTS, EVEN AS ITS COMPETITORS MOVED

INTO MORE SPECIALIZED GOODS AND SERVICES. IT WOULD BE
UNPROFITABLE AND OVERLEVERAGED. IT WOULD BE PAYING ITS
EMPLOYEES LESS IN WAGES AND GIVING THEM LESS IN BENEFITS
AND IT WOULD BE LOSING ITS EMPLOYEES TO THE COMPETITION.

JAMAICA NEEDS A NEW BUSINESS PLAN. THIS BUSINESS

PLAN MUST BE EXPORT-ORIENTED, AIMED AT
DIVERSIFYING THE ECONOMY AND FOCUSED ON
DEVELOPING SERVICE SECTORS IN WHICH JAMAICA IS
GLOBALLY COMPETITIVE. SUCH A POLICY MUST BE
AGGRESSIVE, FIRM CENTRIC AND MANAGED DIRECTLY AT
THE VERY HIGHEST LEVELS OF GOVERNMENT BY A CEO
PRIME MINSTER AND A CFO FINANCE MINISTER.

THIS IS A STRATEGY THAT HAS BEEN SUCCESSFULLY

IMPLEMENTED NOT ONLY IN SINGAPORE AND IRELAND, BUT IN
OUR OWN REGION BY COSTA RICA. BY MAKING INVESTMENTS IN
NEW, FAST-GROWING SECTORS A NATIONAL PRIORITY. THESE
COUNTRIES HAVE OVERCOME OBSTACLES NO GREATER THAN
THOSE OF JAMAICA. THE RESULT HAS BEEN HIGHER ECONOMIC
GROWTH, LOWER UNEMPLOYMENT AND HIGHER WAGES.

MANY SUCH OPPORTUNITIES EXIST IN JAMAICA TODAY. AGRI-

BUSINESS, LIGHT MANUFACTURING, HEALTH TOURISM,
RETIREMENT VILLAGES, AND BUSINESS PROCESS OUTSOURCING,
ARE JUST SOME EXAMPLES. ANY INDUSTRIAL POLICY MUST TAKE
ADVANTAGE OF THESE FAVOURABLE GLOBAL TRENDS. ALL THESE
SECTORS ARE EXAMPLES OF ACTIVITIES IN WHICH JAMAICA
POSSESSES A COMPETITIVE ADVANTAGE.

6.5 BUSINESS PROCESSING OUTSOURCING

LET US LOOK AT BUSINESS PROCESSING OUTSOURCING. THE
WEST INDIES ARE THE ONLY ENGLISH-SPEAKING, LOW WAGE,
LITERATE LABOUR MARKET IN THE WESTERN HEMISPHERE. WE
ARE PERFECTLY SITUATED TO BE THE OFF-SHORE AND
OUTSOURCING MECCA FOR NORTH AMERICA. CALL CENTERS ARE
JUST AN EXAMPLE OF THE POTENTIAL THAT EXISTS; JAMAICA
COULD BE PROCESSING UNITED STATES INCOME TAX RETURNS,
DRAFTING BRITISH LEGAL DOCUMENTS AND BE ENGAGED IN
OTHER HIGHER VALUE BUSINESSES.
 25

WE ESTIMATE THAT IF JAMAICA CAPTURED JUST 1% OF THE

GLOBAL MARKET SHARE IN THESE BUSINESSES BY 2010, IT
WOULD GENERATE 50,000 JOBS DIRECTLY, ANOTHER 120,000 OF
JOBS INDIRECTLY AND CREATE A DOMESTIC INDUSTRY WITH
US$1.5 BILLION IN ANNUAL SALES.

6.6 A REVIVAL PLAN FOR AGRICULTURE – THINK

GLOBALLY BUT ACT LOCALLY

THE JLP BELIEVES THAT AN IMPORTANT PART OF OUR ECONOMIC

SALVATION, MUST BE THE REVIVAL OF AGRICULTURE AND AGRO-
INDUSTRY WITHIN THE GLOBALISED ECONOMY. NOT ONLY WILL
WE PURSUE THE REVIVAL AND DIVERSIFICATION OF THE SUGAR
CANE INDUSTRY – WITH OR WITHOUT INTERNATIONAL
PARTNERSHIP – WE INTEND TO AGGRESSIVELY PROMOTE
DIVERSIFICATION INTO A RANGE OF OTHER CROPS, INCLUDING
LONG-TERM TREE CROPS ON LARGE ACREAGES OF ARABLE LAND
THAT NOW LAY IDLE.

EQUALLY, WE WILL PUT IN PLACE A SUPPORT PROGRAMME FOR

SMALL FARMERS THAT ALLOWS THEM ACCESS TO AFFORDABLE
CREDIT AT SINGLE DIGIT INTEREST RATES. THE PROVISION OF
SUBSIDIZED INPUTS SUCH AS FERTILIZERS AND INSECTICIDES
MUST ALSO BE A PART OF THE PLAN. THE PRESENT CROP
INCENTIVE PROGRAMME OF THE MINISTRY OF AGRICULTURE IS
GROSSLY INADEQUATE AND HIGHLY DISCRIMINATORY. OUR HARD
WORKING SMALL FARMERS DESERVE A BREAK.

6.6.1. A CLEAR STRATEGY IS NEEDED FOR RURAL

DEVELOPMENT
SPECIAL INITIATIVES ARE URGENTLY NEEDED TO ASSIST
SMALL FARMERS IN RURAL COMMUNITIES ISLANDWIDE TO
BE MORE PRODUCTIVE.

IN ADDITION TO AVAILABLE CREDIT AT LOW INTEREST RATE

AND SUBSIDIZED INPUTS, SPECIAL FINANCING MUST BE
MADE AVAILABLE THROUGH THE DEVELOPMENT BANK OF
JAMAICA TO PROVIDE THE SEED CAPITAL FOR NEW
INITIATIVES SUCH AS GREENHOUSE AND TISSUE CULTURE
TECHNOLOGY THAT CAN YIELD GREATER PRODUCTIVITY
AND WEALTH FOR OUR RURAL FOLK.

THE PROJECT BEING UNDERTAKEN BY THE CHRISTIANA

POTATO GROWERS CO-OPERATIVE IN NORTH EAST
 26

MANCHESTER SHOW THE DRAMATIC RESULTS OF

GREENHOUSE TECHNOLOGY IN WHICH TOMATOES AND
SWEET PEPPERS HAVE BEEN BEARING IN ABUNDANCE FOR
THE PAST 8 MONTHS, ON THE SAME PLANTS. THIS
COMPARES WITH A PLANT LIFE OF ONLY 2 OR 3 MONTHS
USING CONVENTIONAL METHODS.

THE GOVERNMENT’S CONSTANT REFUSAL TO ASSIST OUR

FARMERS ON THE PREMISE THAT THE W.T.O. WILL NOT ALLOW
SUBSIDIES IS TOTALLY UNTRUE AND SHOWS THE GOVERNMENT’S
LACK OF CONCERN FOR THE BACK BONE OF OUR COUNTRY, THE
FARMERS AND RURAL COMMUNITIES. I QUOTE FROM THE
INTERNATIONAL CHARTERED ACCOUNTANT MAGAZINE:

“….FIGURES PRODUCED BY THE O.E.C.D.

SUGGESTS THAT THE DEVELOPED WORLD
SPENDS AROUND US$1 BILLION EACH DAY ON
SUPPORT OF ITS AGRICULTURAL
COMMUNITIES… THE E.U.’S COMMISSIONER
FOR TRADE RESPONDED BY SAYING THAT
THERE ARE LEGITIMATE REASONS FOR ANY
COUNTRY TO SUPPORT ITS AGRICULTURE IN
ORDER TO ACHIEVE SECURITY, SAFETY, AND
THE QUALITY OF FOOD WHICH IS PRODUCED…
THIS FIGURE OF US$1B EMBRACES HIGHER
PRICES PAID BY CONSUMERS AND THE COST OF
TARIFF PROTECTION”–

6.7 INDUSTRY AND COMMERCE

WITH MORE THAN 50% OF THE WORK FORCE BEING NON-

PRODUCTIVE – WE NEED INCENTIVES FOR THE PRIVATE SECTOR.
HERE ARE SOME SUGGESTIONS:

1. REMOVE G.C.T. CUSTOMS DUTIES AND USER FEES ON

CAPITAL GOODS AND RAW MATERIALS

2. ESTABLISH ENTERPRISE DEVELOPMENT ZONES. MR

SPEAKER, OUR INNER CITIES ARE A PROBLEM WE
MUST FIND WAYS OF RESCUING OUR FELLOW
JAMAICANS FROM A LIFE OF MISERY IN THESE
COMMUNITIES. AND SO, I RECOMMEND THAT WE
ESTABLISH ENTERPRISE DEVELOPMENT ZONES IN
THESE AREAS WHERE THESE ZONES WILL HAVE
SPECIFIC TAX INCENTIVES ON PROFITS, IMPORTS,
 27

TRAINING, AND COMMUNITY ACTIVITIES. TARGET

AREAS FOR PERMANENT JOB CREATION SHOULD
INCLUDE KINGSTON, SPANISH TOWN, MAY PEN,
MONTEGO BAY AND ST. ANN’S BAY.

3. THE PREVIOUS LEADER OF THE JAMAICA LABOUR

PARTY, THE MOST HONOURABLE EDWARD SEAGA
HAS PROPOSED A FREE PORT ON THE PALISADOES
PENINSULA THAT WOULD COMBINE LIGHT
MANUFACTURING WITH CRUISE SHIPPING AND
SHOPPING. I THINK IT IS FULL TIME WE GIVE PROPER
CONSIDERATION TO THIS PROPOSAL.

4. SMALL BUSINESS/COTTAGE INDUSTRIES – THE

$1.0 BILLION FUND FOR SMALL BUSINESSES SHOULD
BE DIRECTED TO THE PRODUCTION OF GOODS AND
SERVICES AND AIMED AT RELEASING THE
ENTREPRENEURIAL ENERGIES OF JAMAICANS.

FOR JAMAICA TO SEIZE THESE TREMENDOUS

OPPORTUNITIES, IT NEEDS A PRIME MINISTER AND A
MINISTER OF FINANCE THAT BELIEVE INVESTMENT
PROMOTION IS A TOP NATIONAL PRIORITY AND ARE
WILLING TO BE PERSONALLY AND ACTIVELY ENGAGED IN
AGGRESSIVELY SELLING BRAND JAMAICA.

6.8 TAXATION

MR. SPEAKER, GIVEN THE GLOBAL ENVIRONMENT WE NOW LIVE

IN AND OUR HIGH DEPENDENCY ON FOSSIL FUEL WE DO NOT
HAVE MANY LEVERS AVAILABLE FOR US TO MAKE JAMAICA
COMPETITIVE. THOSE THAT ARE UNDER OUR CONTROL WE MUST
UTILIZE THEM EFFECTIVELY TO ENSURE THAT WE CREATE A
COMPETITIVE JAMAICA. ONE SUCH TOOL AVAILABLE IS TAXATION,
THAT IS, OUR TAX SYSTEM.

FOR TOO LONG WE HAVE CONTINUED WITH A MYOPIC VIEW OF A

TAX SYSTEM FOCUSING ONLY ON SHORT-TERM GAINS AND
IGNORING THE LONG TERM POSSIBILITIES. WE HAD WONDERFUL
OPPORTUNITIES IN THE PAST TO ADJUST OUR TAX SYSTEM, SUCH
AS, THE MOU AND THE BUOYANCY ON THE CAPITAL MARKETS.

WE DO NOT SUPPORT THE PIECEMEAL APPROACH THAT THE

MINISTER IS TAKING IN RESPECT OF THE RECOMMENDATIONS OF
THE MATALON REPORT. SO FAR, HE HAS INCREASED G.C.T.
 28

AND THE TAX THRESHOLD AS RECOMMENDED BY THE REPORT

BUT THE OTHER ASPECTS OF THE REPORT HAVE BEEN TOTALLY
IGNORED. WE ARE INTERESTED IN THE FOLLOWING MATTERS:-

i. REMOVAL OF STAMP DUTY – NO DOUBT THE MINISTER

IS AWARE OF THE IMPACT THIS WILL HAVE ON
TRADING OF FINANCIAL INSTRUMENTS AND THE
CREATION OF SECONDARY MORTGAGE MARKETS.

ii. REDUCTION OF TRANSFER TAX

iii. THE ELIMINATION OF DOUBLE TAXATION ON NON-

LISTED COMPANIES

iv. REDUCTION OF PAYROLL TAXES. THE REPORT STATED

THAT JAMAICAN WORKERS ARE TAXED 10% MORE
THAN OTHER COUNTRIES.

v. CARRY FORWARD LOSSES.

vi. THE CREATION OF INCENTIVES FOR ENERGY, HIGHER

EDUCATION FOR P.A.Y.E. WORKERS, AND TAX
ALLOWANCES FOR FIRST TIME P.A.Y.E. HOME OWNERS.

MINISTER, WE ARE FULLY PREPARED TO DISCUSS THESE TAX

MATTERS AMONGST OTHERS DURING THIS FINANCIAL YEAR, SO I
IMPLORE YOU TO START TO THE DEBATE WITH URGENCY.

6.9 NEW ENERGY POLICY NEEDED

APART FROM THE HIGH COST OF DEBT SERVICING AND THE

CONSEQUENT HIGH COST OF COMMERCIAL BANK CREDIT, THE
SECOND MAJOR PROBLEM THAT MILITATES AGAINST THE
POCKETBOOKS OF THE JAMAICAN PEOPLE AS WELL AS
IMPACTING ON THE COMPETITIVENESS OF THE JAMAICAN
ECONOMY, IS THE GOVERNMENT’S FAILURE AFTER 17 YEARS, TO
IMPLEMENT A COST SAVING, ENERGY EFFICIENCY AND
CONSERVATION POLICY.

MR. SPEAKER, THE GOVERNMENT HAS FAILED TO DEAL WITH THE

COST OF ELECTRICITY PRODUCTION ALTHOUGH THEY REMAIN
SHAREHOLDERS IN J.P.S.Co. BUT HAVE ALLOWED THE USE OF
FUEL GUZZLING TURBINES WITHOUT MAKING ANY EFFORT TO
PROTECT THE POCKETS OF CONSUMERS.
 29

THEY HAVE ALSO FAILED TO MOVE AGGRESSIVELY WITH

ETHANOL FOR TRANSPORTATION AND BIOGAS FOR ELECTRICITY
GENERATION.

MR. SPEAKER, THEY HAVE FAILED TO EVEN LOOK TO THE

HEAVENS BECAUSE SOLAR ENERGY IS BEING IGNORED – ENERGY
HAS A MAJOR IMPACT ON THE ECONOMY – IN TERMS OF THE
FACTORS OF PRODUCTION, HOUSEHOLD USAGE, AND ITS
OVERALL IMPACT ON THE INFLATION RATE.

6.9.1 J.P.S.CO.

THE DIVESTMENT OF THE JAMAICA PUBLIC SERVICE

COMPANY LIMITED WAS SUPPOSED TO YIELD GREATER
EFFICIENCY AND COST SAVINGS TO CONSUMERS, BUT THE
TERMS OF THE J.P.S.CO. LICENCE, COMBINED WITH THE
INAPPROPRIATE-EXPENSIVE-TO-OPERATE TECHNOLOGY
BEING USED BY THE JPSCO, WEIGH HEAVILY AGAINST OUR
LIGHT BILLS WHICH NOW RESEMBLE OR EXCEED OUR
MORTGAGE PAYMENT OBLIGATIONS.

THE GOVERNMENT AFTER ITSELF PURSUING

INAPPROPRIATE ELECTRICITY GENERATION POLICIES SINCE
1989, ALSO FAILED TO REQUIRE RADICAL CHANGE TO BE
IMPLEMENTED BY MIRANT.

AND NOW, THE GOVERNMENT, IN ITS LATEST ATTACK OF

YOUTHFUL EXHUBERANCE, INSTEAD OF USING ITS 20
PERCENT OWNERSHIP IN J.P.S.CO. AS A LEVERAGE FOR
DEMANDING THE RIGHT INVESTMENT MIX IN NEW
TECHNOLOGY, PROPOSES TO SELL ITS REMAINING SHARES
IN SUCH A VITAL COMPANY, LEAVING THE JPSCO, TO
PLUNDER THE POCKETS OF JAMAICANS EVEN AS THE O.U.R.
LOOKS ON IN A STATE OF ABSOLUTE IMPOTENCE.

GIVEN THE IMPORTANCE OF ENERGY TO JAMAICA’S

SURVIVAL, AND TAKING INTO ACCOUNT RISING OIL
PRICES, THE JLP WILL BE OBLIGED TO CARRY OUT A
REVIEW OF THE DIVESTMENT OF THE J.P.S.CO. TO
MIRANT, WITH A VIEW TO SEEING HOW GREATER
EFFICIENCIES CAN BE ACHIEVED.
 30

THE JLP WILL BE PRESENTING A COMPREHENSIVE ENERGY

POLICY THAT TAKES INTO ACCOUNT OUR UNIQUE
POTENTIAL WITHIN THE CONTEXT OF AVAILABLE
TECHNOLOGY.

6.10 TRANSPARENCY AND ACCOUNTABILITY

MR. SPEAKER, EVERY YEAR I SPEAK ABOUT THE MASSIVE

CORRUPTION THAT TAKES PLACE IN GOVERNMENT AND EVERY
YEAR THE RESPONSE HAS BEEN THE SAME, SILENCE. SILENCE
FROM THE MEDIA, SILENCE FROM THE CHURCH, SILENCE FROM
THE GOVERNMENT MEMBERS OF PARLIAMENT, SILENCE FROM
BUSINESS COMMUNITIES. IT IS AS IF WE ARE IMMUNE TO THE
CORRUPTION, AT TIMES IT BAFFLES ME.

THIS SILENCE HAS LED TO A NEW LEVEL OF ARROGANCE AMONG

SENIOR GOVERNMENT SERVANTS WHO FEEL THAT THEY CAN DO
ANYTHING AND GET AWAY WITH IT BECAUSE “IT’S THE
RUNNINGS”. IT IS AN ACT OF GROSS DISRESPECT TO THE
PEOPLE OF JAMAICA.

IT IS IN THIS CONTEXT THAT I WISH TO REPEAT THE CALL OF THE

OPPOSITION TO IMMEDIATELY APPOINT AN APPROPRIATION
COMMITTEE OF THE HOUSE UNDER THE CHAIRMANSHIP OF AN
OPPOSITION MEMBER.

THE LEADER OF THE OPPOSITION HAS ALSO TABLED CRITICAL

LEGISLATION IN PARLIAMENT AIMED AT STEMMING THE
CORRUPTION IN THE AWARD OF CONTRACTS. WE URGE QUICK
PASSAGE OF THIS LEGISLATION.

CONCLUSION
MR. SPEAKER, TODAY JAMAICA FACES REAL ECONOMIC CHOICES. AS I
HAVE SHOWN, THERE IS A DIFFERENCE BETWEEN THE GOVERNMENT
AND THE OPPOSITION ON HOW THE JAMAICAN ECONOMY SHOULD BE
MANAGED AND THIS DIFFERENCE APPEARS TO BE GROWING:

THE GOVERNMENT IS DIVIDED INTERNALLY ON THE QUESTION OF

ECONOMIC POLICY AND HAS NO CLEAR PLAN TO GENERATE GROWTH;
THE OPPOSITION HAS A CLEAR AND COMPREHENSIVE ECONOMIC
STRATEGY WHICH WE HAVE PUT FORWARD HERE TODAY.
 31

THE GOVERNMENT IS DIVIDED BETWEEN PARTIALLY IMPLEMENTING

HALF-HEARTED FISCAL MEASURES AND MOVING TOWARDS A POPULIST
APPROACH, THE OPPOSITION IS SOLIDLY COMMITTED TO THE
SUCCESSFUL IMPLEMENTATION OF MACRO-ECONOMIC PRUDENCE.

THE GOVERNMENT HAS A LONG TRACK RECORD OF MISSED TARGETS

AND IS LOSING CREDIBILITY AS A RESULT; THE OPPOSITION HAS NO
SUCH LEGACY AND HAS STRONG CREDIBILITY WITH THE DOMESTIC
PRIVATE SECTOR AND INTERNATIONAL COMMUNITY.

THE GOVERNMENT IS BANKRUPT OF NEW IDEAS, THE OPPOSITION HAS

PUT FORWARD TODAY THREE NEW AND CREATIVE SOLUTIONS TO
LOWER OUR DEBT BURDEN, AS THE NECESSARY PRECONDITION TO
SPURRING INVESTMENT AND GROWTH.

THE GOVERNMENT BELIEVES THAT IF YOU GET THE MACRO-

ECONOMIC SITUATION RIGHT YOU CAN SIT BACK AND WAIT FOR
GROWTH, THE OPPOSITION BELIEVES THAT AN AGGRESSIVE,
EXPORT-ORIENTED INDUSTRIAL POLICY SHOULD BE A NATIONAL
PRIORITY AND SHOULD BE THE NATURAL PARTNER TO MACRO-
ECONOMIC STABILIZATION IN ORDER TO MOVE FROM
BORROWING OUR WAY TOWARDS POVERTY ALLEVIATION TO
EARNING OUR WAY TO WEALTH-CREATION.

MR. SPEAKER, THESE ARE JUST SOME OF THE FUNDAMENTAL POLICY

DIFFERENCES THAT EXIST. BUT LET IT BE CLEAR, BY FAR THE LARGEST
DIFFERENCE BETWEEN THE GOVERNMENT AND THE OPPOSITION IS
THE DIFFERENCE IN OUR ABILITY TO SUCCESSFULLY IMPLEMENT
WHATEVER POLICY WE CHOOSE.

7. HOW TO CREATE WEALTH THROUGH A PRODUCTION

CULTURE

MR. SPEAKER, I WISH TO LEAVE AN ISSUE BEFORE THIS PARLIAMENT

AND THE COUNTRY FOR CONSIDERATION AND DEBATE AS WE
 32

CONTEMPLATE OUR FUTURE. THIS IS, THE URGENT NEED FOR A

PRODUCTION CULTURE IN JAMAICA.

AT PRESENT OUR CAPITAL IS NOT BEING DEPLOYED IN A PRODUCTIVE

WAY THAT CAN LEAD TO GENERATING INVESTMENT AND GROWTH IN
JOB CREATING TECHNOLOGY-DRIVEN AND FOREIGN EXCHANGE
EARNING ENDEAVOURS.

THE N.I.R. IS BUILT UP ON BORROWED MONEY, RUNNING UP LOSSES AT

THE BANK OF JAMAICA AT TAXPAYERS EXPENSE.

FUNDS BORROWED ON THE LOCAL AND INTERNATIONAL CAPITAL

MARKETS ARE BEING USED PRINCIPALLY TO SERVICE OTHER DEBT
INSTRUMENTS AND RECURRENT EXPENDITURE.

NONE OF THESE INITIATIVES EITHER INDIVIDUALLY OR COMBINED

REPRESENT A SUFFICIENT CONDITION FOR THE CREATION OF WEALTH
ON A SIGNIFICANT SCALE AND THIS IS SO BECAUSE FUNDS BORROWED
AT HIGH INTEREST RATES THAT CROWD OUT PRODUCTIVE
INVESTMENTS, MERELY CONTINUE THE TRANSFER OF WEALTH FROM
THE POOR TO THE RICH.

AND FUNDS GARNERED FROM REMITTANCES HAVE A DOWNSIDE, AS IT

PROVIDES SOME RELIEF TO THE POPULATION, BUT IT DISCOURAGES
INDIVIDUAL EFFORTS AT IMPROVING PRODUCTIVITY HERE AT HOME.
TOO MANY JAMAICANS ARE LIVING MARGINALLY FROM THE SURPLUSES
OF THE PRODUCTIVE OUTPUT OF JAMAICANS OVERSEAS.

ANNUALLY, THE INTER-AMERICAN DEVELOPMENT BANK (I.D.B.) IN ITS

REPORT, HAS COMMENTED ON THE IMPORTANT ROLE OF REMITTANCES
TO COUNTRIES, NOTING THE GROWING DEPENDENCE ON THIS SOURCE
OF INFLOWS. THE BANK HAS WARNED THAT THIS IS “NON-
SUSTAINABLE” AS A PROLONGED DOWNTURN IN THE U.S. ECONOMY,
FOR EXAMPLE, COULD HIT HARDEST LATIN AMERICAN AND CARIBBEAN
WORKERS IN TERMS OF UNEMPLOYMENT, BECAUSE MANY ARE IN THE
SERVICE SECTOR, PENDING U.S. IMMIGRATION LEGISLATION FURTHER
COMPLICATES THIS ISSUE.

ON TWO COUNTS, THE DEPLOYMENT OF OUR LABOUR FORCE

AND IN OUR USE OF CAPITAL, THE GOVERNMENT IS NOT
EMPLOYING WEALTH-CREATING POLICIES.

ADAM SMITH, WRITING 230 YEARS AGO, PUT IT BEST WHEN HE WROTE
“AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF
NATIONS.”
 33

ON THE PRODUCTIVE USE OF LABOUR, ADAM SMITH SAID:

“THE ANNUAL LABOUR OF EVERY NATION IS THE

FUND WHICH ORIGINALLY SUPPLIES IT WITH ALL THE
NECESSARIES AND CONVENIENCES OF LIFE WHICH IT
ANNUALLY CONSUMES”.

HE FURTHER SAID THAT THE PROPORTION BETWEEN WHAT IS

PRODUCED AND WHAT IS CONSUMED, MUST BE REGULATED BY TWO
DIFFERENT CIRCUMSTANCES.

“FIRST, BY THE SKILL, DEXTERITY AND JUDGMENT

WITH WHICH ITS LABOUR IS GENERALLY APPLIED;
AND SECONDLY, BY THE PROPORTION BETWEEN THE
NUMBER OF THOSE WHO ARE EMPLOYED IN USEFUL
LABOUR, AND THAT OF THOSE WHO ARE NOT SO
EMPLOYED.”

“WHATEVER THE SOIL, CLIMATE, OR EXTENT OF

TERRITORY OF ANY NATION, THE ABUNDANCE OR
SCANTINESS OF ITS ANNUAL SUPPLY, MUST DEPEND
UPON THESE TWO CIRCUMSTANCES”.

AND ON THE PRODUCTIVE USE OF CAPITAL, ADAM SMITH WROTE:

“IT IS NOT BY AUGMENTING THE CAPITAL OF THE

COUNTRY, BUT BY RENDERING A GREATER PART OF
THAT CAPITAL ACTIVE AND PRODUCTIVE THAN
WOULD OTHERWISE BE SO, THAT THE MOST
JUDICIOUS OPERATIONS OF BANKING CAN INCREASE
THE INDUSTRY OF THE COUNTRY.”

ON BOTH THE COUNTS OF THE PRODUCTIVE USE OF LABOUR AND THE

PRODUCTIVE USE OF CAPITAL ADVANCED BY ADAM SMITH, JAMAICA
HAS BEEN FOUND WANTING, AND, OUR PEOPLE IN CONSEQUENCE
SUFFER ON THE VINE OF MEDIOCRITY WHILE OUR CAPACITY FOR THE
PURSUIT OF EXCELLENCE IS COMPROMISED.

FOR JAMAICA TO EMBARK ON A PATH OF WEALTH CREATION WE MUST

COMMIT OUR LABOUR AND CAPITAL TO A PRODUCTION CULTURE.

I INVITE THE MINISTER OF FINANCE, THE GOVERNMENT AND ALL

JAMAICANS TO ENTER INTO THIS DEBATE ON HOW TO ACHIEVE A
PRODUCTION CULTURE.
 34

8. IT IS TIME FOR A BETTER LIFE

MR. SPEAKER, WITH THE PROGRESSIVE CORRUPTION OF OUR

INSTITUTIONS, WITH ITS TENTACLES SPREADING FAR AND
WIDE, THERE IS NOW A CLEAR AND PRESENT THREAT TO
JAMAICA’S DEMOCRACY.

TIME IS NOT ON OUR SIDE. OUR PEOPLE ARE STRUGGLING,

HUNGRY, BEWILDERED, AND IMPATIENT, AND THIS CAN LEAD TO
AN OUTBURST AMONG THE POPULATION. IT IS TIME TO
CHOOSE A CLEAR PATH TO A BETTER LIFE, A LIFE OF PEACE,
GENTILITY AND PROSPERITY.
UNSECURRED
1. IT IS A TIME TO CHOOSE TO ENSURE THAT EVERY CHILD
IN JAMAICA IS NURTURED AND PROTECTED AND GETS THE
OPPORTUNITY FOR A GOOD EDUCATION AS A MATTER OF
RIGHT AND NOT A MATTER OF PRIVILEGE, SO THEY CAN
LIVE A BETTER LIFE.

2. IT IS A TIME TO CHOOSE SO THAT ONE-THIRD OF OUR

ADULT POPULATION CAN HAVE THE OPPORTUNITY TO GET
A DECENT JOB SO THEY CAN PROVIDE FOR THEIR FAMILIES
AND LIVE A BETTER LIFE.

3. IT IS A TIME TO CHOOSE SO THAT OUR CITIZENS WILL

HAVE THE OPPORTUNITY TO LIVE IN PEACE AND SAFETY BY
PUTTING IN PLACE THE RESOURCES FOR THE SECURITY
FORCES TO BE ABLE TO DO THEIR WORK, SO OUR
CITIZENS CAN LIVE A BETTER LIFE.

4. IT IS A TIME TO CHOOSE SO THAT OUR PEOPLE HAVE

THE OPPORTUNITY TO BE MORE PRODUCTIVE BY LIFTING
UP STANDARDS OF GOVERNANCE AND PUBLIC SECTOR
SERVICE DELIVERY SO THAT WE THE PEOPLE CAN LIVE A
BETTER LIFE.

5. IT IS A TIME TO CHOOSE SO THAT WE THE PEOPLE CAN

GET THE OPPORTUNITY TO BENEFIT FROM THE WEALTH OF
THE NATION BY CUTTING OUT CORRUPTION IN THE AWARD
OF CONTRACTS, CUTTING OUT WASTE AND
EXTRAVAGANCE, AND USING THE SAVINGS TO FUND BASIC
SERVICES SO WE CAN ALL LIVE A BETTER LIFE.

6. MR. SPEAKER, IT IS A TIME TO CHOOSE BETWEEN TWO

CLEAR ALTERNATIVES. THE PRESENT PATH THAT HAS
RESULTED IN UNEMPLOYMENT, A DECLINE IN FAMILY LIFE
 35

AND AN ALARMING DECLINE IN STANDARDS, AND

PERSISTENT POVERTY; OR A JLP-LED PATH THAT WILL
TRANSFORM JAMAICA BY PUTTING THE OPPORTUNITY INTO
THE HANDS OF EVERY JAMAICAN TO BE ABLE TO LIVE A
BETTER LIFE.

THE CHOICES WE MAKE ARE NOT JUST ABOUT OUR POLITICAL

ARRANGEMENTS, THEY ARE MORE IMPORTANTLY ABOUT THE KIND OF
NATION THAT WE WANT TO BUILD AND PRESERVE FOR FUTURE
GENERATIONS.

MR. SPEAKER, I CLOSE BY QUOTING ONE VERSE OF A SONG FROM A

HYMN BOOK PRESENTED TO ME BY MY MOTHER BEFORE SHE DIED:

“LORD JESUS TEACH ME HOW TO CHOOSE – A THOUSAND

CHOICES BAR MY WAY. I SEE IN EACH A DESTINY, SO HELP
ME WISELY CHOOSE I PRAY.”

THANK YOU, MAY GOD BLESS YOU ALL AND MAY GOD BLESS JAMAICA !

AUDLEY SHAW, M.P.

OPPOSITION SPOKESMAN ON FINANCE
AND THE PUBLIC SERVICE

TUESDAY, MAY 2, 2006