ALLEN CHASTANET IN­HER­I­TANCE!

The Star (St. Lucia) - - FRONT PAGE - By Spe­cial STAR Correspondent

Prime Min­is­ter and Min­is­ter for Fi­nance Allen Chastanet on Tues­day lis­tened in­tently as House op­po­si­tion MPs com­mented on a mo­tion to au­tho­rise the rais­ing of $120 mil­lion through the is­sue of sav­ings bonds at a max­i­mum rate of seven per­cent. Not un­ex­pect­edly, the en­su­ing de­bate veered off in sev­eral directions, rem­i­nis­cent of the weeks be­fore the elec­tions that had re­sulted in an 11-6 de­feat for the St. Lu­cia Labour Party.

Ear­lier there had been a small demon­stra­tion out­side the House, re­port­edly com­pris­ing in­di­vid­u­als from for­mer prime min­is­ter Kenny An­thony’s con­stituency op­posed to the pro­posed DSH “Pearl of the Caribbean” de­vel­op­ment. No sur­prise that the project oc­cu­pied op­po­si­tion MPs for most of Tues­day morn­ing. As for the Vieux Fort South rep­re­sen­ta­tive, not un­til mid-morn­ing did he take his seat among his op­po­si­tion col­leagues. As had been the case at an ear­lier House ses­sion, he failed to show up fol­low­ing the lunch break.

A meet­ing that most ex­pected to con­clude be­fore lunch ac­tu­ally swal­lowed up sev­eral hours, thanks to op­po­si­tion crit­i­cism of ev­ery word from the gov­ern­ment side, of­ten non se­quiturs. In his turn, the prime min­is­ter said: “I am go­ing to at­tempt to ad­dress some of the con­cerns and some of the is­sues brought up on the other side. I think the mem­ber for Cas­tries East put it very well when he sug­gested we are rais­ing the level of taxes as bud­geted and then cry­ing that the econ­omy is not do­ing well fol­low­ing our al­le­ga­tions at elec­tion time that the econ­omy was be­ing mis­man­aged. The fact that the econ­omy was be­ing mis­man­aged is ev­i­dent. The fact that he does not un­der­stand says a lot about why his party lost the elec­tion. Not only were the macro ac­counts go­ing wrong in this coun­try, the amount of debt and the fi­nanc­ing of that debt in five years went from $100 mil­lion to $180 mil­lion.”

The prime min­is­ter de­fended his gov­ern­ment’s pro­posed es­tab­lish­ment of a sink­ing fund fol­low­ing the rein­tro­duc­tion of an air­port charge. In the process he ques­tioned the Leader of the Op­po­si­tion’s sense of busi­ness. “That he could come to this House and sug­gest a sink fund should be used to fi­nance so­cial pro­grammes be­cause it is cheaper for the gov­ern­ment,” said the prime min­is­ter, “is tan­ta­mount to telling the peo­ple to spend their sav­ings. The pur­pose of hav­ing a sink fund is to show you are build­ing wealth in your coun­try and that, come a dark day, you won’t have go cap in hand beg­ging in case of emer­gency.”

The prime min­is­ter of­fered an illustration: “When we had the sit­u­a­tion with hur­ri­cane Matthew,” he re­called, “there was prior no­tice of a storm within days. It meant we did not have the funds to de­silt the rivers and that peo­ple’s as­sets would con­se­quently have re­mained ex­posed. When you have a sink fund and no al­ter­na­tive, you can tem­po­rar­ily take from it to pay for some­thing.”

The prime min­is­ter cited the most re­cent CDB re­port on Saint Lu­cia’s econ­omy: “Notwith­stand­ing the im­prove­ment in re­cent fis­cal per­for­mance, pub­lic fi­nances are still on an un­sus­tain­able path. An ini­tial as­sess­ment of the fis­cal sit­u­a­tion shows there is tremen­dous scope for im­prove­ment.”

As for Value Added Tax and the num­ber of ex­empt items and “the bas­ket of goods” that the op­po­si­tion con­tin­ued to cel­e­brate, the PM noted it had cost the coun­try greatly and un­der­mined the VAT sys­tem. “We are here cel­e­brat­ing the fact that we have the great­est num­ber of non-VAT-ed items,” he said. “But that’s not some­thing to cel­e­brate. Any econ­o­mist will tell you that you can­not use VAT to dis­trib­ute wealth. You can­not use VAT to di­rect monies to your so­cial pro­grammes be­cause what it does is dis­tort the tax.”

The prime min­is­ter quoted the CDB as say­ing chal­lenges on the ex­pen­di­ture side high­light the need for greater strate­gic plan­ning to en­sure re­sources are put to the most pro­duc­tive use. As for the debt sit­u­a­tion, the CDB ob­served that Saint Lu­cia has “a high con­cen­tra­tion short term debt”.

“I am say­ing there has been an ap­petite for bonds,” the PM said. “But I am not happy that the ap­petite for bonds is at 7 %. Don’t be­lieve I am jump­ing around cel­e­brat­ing. How­ever, the fact is we have the abil­ity now of tak­ing $60 mil­lion and con­vert­ing those short-term in­stru­ments into bonds. That is to give some pre­dictabil­ity; some sta­bil­ity to the gov­ern­ment. You were turn­ing over half of your debt ev­ery year and the prob­lem was you saw noth­ing wrong with that.”

The prime min­is­ter also touched on some of what his gov­ern­ment had in­her­ited, un­der­scor­ing along the way that he was try­ing to work with a bud­get pre­pared by his pre­de­ces­sors, with gross in­ad­e­qua­cies.

“Since we took of­fice we have had over $63 mil­lion in re­quests from the min­istries for ad­di­tional fund­ing,” the PM said. “In the Min­istry of In­fra­struc­ture one mil­lion dol­lars is al­lo­cated for the main­te­nance of roads. And that, it seems, has been a prac­tice for a while. By all the as­sess­ments we need at least $30 mil­lion to main­tain our roads. If you want to know why our roads are in the con­di­tion they’re in, it’s be­cause they have not been prop­erly main­tained.

“I am sorry that Mr. Robert Lewis is not here. The al­lo­ca­tion for his for­mer Min­istry of Ed­u­ca­tion? One mil­lion dol­lars for the main­te­nance of our schools.”

Ad­di­tion­ally: “Four­teen-and-a-half mil­lion dol­lars spent on a jazz fes­ti­val but at the same time you re­duce the tourism bud­get to $35 mil­lion. Min­istry af­ter min­istry and statu­tory body af­ter statu­tory body . . . all they have is debt and a bud­get that does not come close to meet­ing their needs.”

The PM em­pha­sised the dif­fer­ence be­tween what he re­ferred to as ‘Labour Party pol­icy’ and that of his United Work­ers Party. “This side be­lieves we have been stran­gling the coun­try; not en­cour­ag­ing growth in the pri­vate sec­tor; tak­ing away the abil­ity of reg­u­lar ci­ti­zens to take care of them­selves. That is what the VAT has done; that is what gov­ern­ment ex­pen­di­ture has done. We be­lieve on this side in low­er­ing the level of tax­a­tion; we be­lieve if we put in­cen­tives in place to en­cour­age in­vest­ment in this coun­try we will see the econ­omy grow, and, in grow­ing the econ­omy, even though the rate of taxes goes down, there is the like­li­hood that you see an in­crease in the amount of tax rev­enue.”

The PM said the sink­ing fund is a safe­guard in the even­tu­al­ity the pre­dicted out­come is not re­alised. If all goes as planned, he said, the sink­ing fund monies can be used to re­pair schools, roads and al­low us to do the other things that must be done.

“When the CDB says we are on a path of un­sus­tain­abil­ity it means we have got­ten to a point where we can­not af­ford road re­pairs, far less build new roads. We have to make some dif­fi­cult de­ci­sions.”

He talked of an ur­gent need to make the Dial­y­sis Unit fully op­er­a­tional: “I went there re­cently on a visit. The room is ready; it has been ready for two years. The wa­ter treat­ment sys­tem is ready; the en­tire sys­tem is wired. What’s miss­ing were the dial­y­sis chairs. All it would take was a cheque of $3 mil­lion. Once that cheque was cut it would have taken four months for those chairs to be here and op­er­a­tional.” Di­rectly ad­dress­ing the Leader of the Op­po­si­tion, the PM said: “Don’t try to con­fuse the peo­ple. The room was ready; it could have been op­er­a­tional a long time ago.”

The prime min­is­ter also ad­dressed the Cit­i­zen­ship by In­vest­ment Pro­gramme and its re­la­tion­ship with the con­tro­ver­sial DSH project. He fur­ther re­ferred to a let­ter he had writ­ten crit­i­cis­ing his pre­de­ces­sors for plac­ing Ernest Hi­laire in charge of the CIP. All of that in our next is­sue.

Prime Min­is­ter Allen Chastanet ad­dressed the House ear­lier this week high­light­ing the mess his gov­ern­ment in­her­ited from the pre­vi­ous ad­min­is­tra­tion.

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