The need for local government financing in Jamaica
The International Monetary Fund (IMF) has been a key player in driving global economic development over the last 30 years with a slate of reform initiatives it has spearheaded in member countries. The IMF, like many other key international partners, has recognised the undeniable linkages between economic development and politics — despite many universities locally treating them incompatibly.
Yes, they are two distinct disciplines, but both interdependent for societal structure and sustenance.
On the matter of the role of local government, the IMF noted a remarkable ingredient in the proverbial soup of economic prosperity in the 21st century when it noted China’s exceptional performance in 2017:
“Local governments play a critical role in executing fiscal policies in China; aside from providing basic public services, they undertook sizeable public investment that has contributed to remarkable growth… [providing] much of the large-scale fiscal stimulus since the global financial crisis… [and] along with public infrastructure investment, have also contributed to the real estate boom through land development.”
In Jamaica we can only dream of such a review for our own municipal authorities, as such a reality would be fantastic, but yet still remains a fantasy and the question is why? Well, the answer may be simply that local government in Jamaica needs to be empowered financially, as was the case in China, in order to sustain its dominance in the economy.
As I continue to advocate, no political body is better poised to effect the kind of impact on real development than each respective parish local authority, as they are ideally positioned to be engines of true community development. However, institutional financing continues to hamper the efforts of the island’s local authorities that have had to resort to low-revenue licences and fees to support the massive regulatory mandate and budgetary objectives.
Since 2015 the conversation has graduated beyond officially recognising the precedence of municipal corporations which was done through the Jamaican Constitution (Amendment) (Local Government) Act in July of that year. The debate must now venture into building consensus on the latent powers within the Act to fully outfit these key institutions with the dedicated source of funding to properly execute the Herculean tasks demanded by the citizenry. Parochial road repair, commercial and residential building inspection, housing regulation, community parks and markets management, are just a snippet of the comprehensive roles that a single authority must handle throughout much of the polity, representing the combined duties of multiple agencies and ministries play throughout central government.
The Local Government (Financing and Financial Management) Act 2016 was a major statement of intent by our lawmakers signalling political will; however, that will needs to be translated to action and that is where the issues exist. During the 2016/2017 financial years, local government averaged a mere 12.5 per cent of total government expenditure — this despite the massive demand on corporation resources and response islandwide. The disparity is even more alarming given that a large chunk of central government tax revenue is accrued through the corporation’s tax obligations, fees, penalties, and trade licences. These include development approval applications, barbers’ and hairdressers’ licences, motor vehicle licence fees, trading permits, market and cemetery fees, charges for transportation centres, car parks and permit parking, and fines for breaches of parking regulations. There are however other sources of financing that have just not been engaged through which the country would greatly advance corporations’ capacity to deliver; for example, the power to raise loans separately from central government under specific conditions, but this remit has so far never been exercised. We think about public private partnerships (PPP) that are very popular among government ministries, agencies and departments (MDAS), but these have so far been limited to non-existent among municipal authorities.
You may ask why am I so pressed about local government financing to enhance the overall capacity and effectiveness of government performance? A quick look at Jamaica’s present landscape provides the answer. Of the14 parishes in island, 10 are made of largely rural type, non-urban development, that is, more than 60 per cent of all parishes, with 90 per cent of Hanover and 80 per cent of St Elizabeth, respectively, considered mostly rural, small towns and agrarian-based economies. It’s interesting to note that, even in St James, where tourism and foreign exchange earnings thrive, not just for parish residents, but especially the country, there remains a largely 44 per cent rural population. These statistics are not merely interesting, but alarming, given the fact that all local authorities are also saddled with urban and corporate planning functions.
But ability without resource is just potential, and potential without support is wasted. Perhaps we have not yet figured out how to make it work, but we don’t need to reinvent the wheel where lessons can be learnt from others doing it with much success.
Our current relationship with the Chinese presents a great opportunity to draw lessons from their model, as so celebrated by the IMF — another great friend of the Jamaican policy space. Let’s get it done. We have the engine for development; let’s not keep the vehicle parked when it can be driven for sustainable growth.
Omar Francis is former vice-president of G2K and Jamaica Labour Party councillor-caretaker for the Point hill Division in St Catherine West Central.
Parochial road repair, commercial and residential building inspection, housing regulation, community parks and markets management, are just a snippet of the comprehensive roles that a single authority must handle throughout much of the polity, representing the combined duties of multiple agencies and ministries play throughout central government