Debating the economy

Robert Buddan - POLITICS OF OUR TIME

The parliamentary debate on the economy has come late. Omar Davies called for a debate on debt management in 2002 when he was minister of finance. We mocked it, saying it proved he needed help. In August 2009 he called for a 'full debate' again when it became clear that our April budget targets were being missed badly. The Opposition, as a whole, also called for Parliament to reconvene from recess that same August and a 'full account to Parliament' of the International Monetary Fund (IMF) agreement being negotiated given. Both calls were ignored. The prime minister eventually told us that Parliament would have debated or at least be informed about the Letter of Intent (LOI) with the IMF in early January before it was sent off. Parliament wasn't told. On January 5, the Opposition called for Parliament to get back to work to debate the economy.

It was only this past week, for just one day, January 26 to be exact, and after the LOI had already been submitted, that the Opposition had a chance to respond to it and speak about the economy in general. That LOI had been suspiciously and unreasonably tabled the day the Opposition was originally to have debated it the week before. The media took the cynical line that the Opposition didn't debate it because it wasn't ready to govern. We still refuse to be serious about debating the economy.

There had been nothing to fear. The Opposition repeated this week that it did not wish to undermine the IMF agreement but questions needed to be asked, advise given, a better way to do some things could be found, the vulnerable needed protection, more equity was needed in the debt swap, more transparency was needed in the way Government managed the economy and reporting to Parliament was an act of accountability to which Government must submit.

Still, only one sitting was devoted to the unprecedented and precipitous developments in our economy. Eleven Members of Parliament were crammed into a long and tiring session running into late night. And, Opposition speakers were often heckled. This is not how parliamentary democracy works. It is not how debates are conducted. It is a sign that we are neither serious about parliament nor our economy. We are only serious about what Omar Davies calls 'points scoring'.

LETTER OF INTENT

The Government's LOI revealed nothing that was not anticipated and does not justify the secrecy surrounding it and the delay in publicly presenting it. The one exception is the debt-management strategy. But a debt-swap strategy had been talked about between the financial sector and Government, including the previous administration, for some time now. The Opposition kept the sensitive parts in confidence because its own experience had made it aware of the need to. In fact, the matter came up at a People's National Party (PNP) forum on the economy in July 2009. Keith Duncan of Jamaica Money Market Brokers raised the idea, though not details. Omar Davies and Mark Golding, who knew what it might have implied in detail, were cautious about how it was discussed publicly because international credit agencies had warned that they would downgrade Jamaica to default should the debt swap take place.

The Government did undertake the debt swap and the credit agencies did downgrade us to default status. But it was not Opposition bashing that ultimately made the default occur. It was the Government's debt swap that did.

All other aspects of the LOI could have been brought to Parliament. We already knew Air Jamaica might have to be divested. We knew the sugar factories were being sold. We knew Petrojam was as well. We knew about the public-sector salary freeze. We had already been taxed in December. The price increases were expected.

The Government has not only defaulted on its payments. It has defaulted on the people's trust and it will not be able to swap that debt with the people for votes as easily as it has cajoled the banks into compliantly accepting its debt for nothing evident. In July, Prime Minister Golding told the Private Sector Organisation of Jamaica (PSOJ) that, "Jamaica has never defaulted on its debt. There is absolutely no chance that Jamaica will ever default on its debt". Standard and Poor's said it now has. It has technically defaulted by a debt swap that admits that government cannot honour its interest payments. Peter Bunting of the Opposition called it akin to 'corporate bankruptcy'. In October 2009, I had written that the Government of Jamaica (GOJ) was heading for default. By November, the GOJ began printing money and by December the market had lost confidence in lending Government money, hence its default.

The Government has defaulted on trust in the Parliamentary process as well, the process by which we ask questions and give advice to make sure government protects the value of our money, reports to us openly and transparently about our savings and investments, accounts for mistakes, deceit and negligence arising from policies and targets that lack credibility or otherwise missed, and makes sure we are all rewarded and punished by some system of equity and in proportion to our fault, and our strengths and weaknesses in society. This has mow cost savers and investors billions in the debt swap.

The Government did not want to debate the economy in parliament because it did not want to be criticised. The Opposition did criticise and the prime minister conceded to the thrust of the criticism. But the Opposition also asked many questions yet to be answered and gave advice yet to be taken. Portia Simpson Miller asked if big investors and small investors were getting the same treatment. Peter Bunting asked about protection for pensioners. Both asked who could be sued for violating contracts with savers and investors.

CONSULTATION

The GOJ adopted a Consultation Code of Practice for the Public Sector in 2005. It was a part of Ministry Paper No.56/02, the Government's policy on public sector reform. It was, if you wish, the Government's 'letter of intent' with the Jamaican people. The intention was to develop minimum standards for 'ensuring that people are placed at the centre of decision-making'. The code is being violated. The very public sector has suffered wage and salary freeze, and will suffer lay-offs without being consulted. Nor could it consult with the clients of government services to tell them what services will be discontinued or contracted because it did not know what was in the Letter of Intent.

It seems that the 'letters of intent' we make with our own people count for far less than those we make with other people, like the IMF. The Consultation Code says that, 'collaboration within government and with the wider society will allow the nation as a whole to combine competencies, resources and capabilities in tackling our many development challenges'. How can we go forward with a backward approach to governance that does not trust people enough to take them into the confidence of the governors? The lack of consultation with JPS over the electricity tax will lead to a significant revenue shortfall. It has caused the ministries of finance and of energy to contradict each other. Lack of consultation undermines governance and the economy.

Robert Buddan lectures in the Department of Government, UWI, Mona. Email: Robert.Buddan@uwimona.edu.jm or columns@gleanerjm.com.

Keith Duncan and Mark Golding