The cost of reform

Martin Henry, Contributor

"It is time to tell the people the truth, the whole truth and nothing but the truth," the leader of the Opposition declared in her Budget Debate presentation. Politicians have a strong predilection to be economical with the truth. Economy with the truth is not simply because politicians are more prone to be 'pathologically mendacious' than the general population.

The intense competition for power, and the debate format of political discourse, contribute mightily to politicians being economical with the truth without necessarily telling outright lies. Just ask the prime minister about the engagement of Manatt, Phelps & Phillips, and the leader of the Opposition about Trafigura. And both about the gang-like characteristics of the party they lead.

The prime minister opened his presentation in the Budget Debate by noting: "This debate has been conducted in the manner to which we have long been accustomed. One side seeks to showcase what has been achieved, the other side seeks to demonstrate how little, if any, has been achieved." And in the process, truth gets quite a bit of battering from domestic violence in the Jamaican family, to borrow Mrs Simpson Miller's metaphor.

Time to speak frankly

Golding went on to say: "I question whether the interests of the people are best served by this approach. I question whether this format, so often defined by point-scoring and finger-pointing, allows for the frank, dispassionate discussion that needs to take place about the condition of our country, where we are, where we want to go, and how we propose to get there." The answers in the negative are pretty obvious.

"Not that this debate has been acrimonious," he granted, "but how useful has it been in enabling the people to better understand the issues that confront us and how they are being dealt with? And if the people don't fully understand the issues, who are we to blame but ourselves?" But he didn't take up the suggestion to systematically address the recommendations of his counterpart leader on the Opposition side, which would have been an important leading-by-example gesture of responsiveness and goodwill.

Let me take up the prime minister on the format and purpose of the Budget Debate. Hopefully, the old pattern has run its last cycle this year. The PM alluded to doing things differently for the 50th anniversary of the nation's Independence. As I said in an earlier piece, "The Budget Debate is usually just that: proposition and opposition in a semantic fantasy which would make members of the Schools' Debating Society proud, but which has little real impact on the thing itself, the Budget."

For a meaningful development Budget with a higher score on the truth index, the people's representatives in the legislature must have a greater say in the process. And at least four people hold the key: the prime minister, the leader of the Opposition, the leader of Government business, and the leader of Opposition business, these last two being the traditional party whips. To improve the Budget process, ministers must report to Parliament towards the end of the financial year. The whip must be relaxed to allow MPs to depart from the party line and raise matters of concern to their constituents and for the good of the country as they see it, and to participate in cross-party caucuses which advocate particular interests.

More latitude needed

The Standing Finance Committee, which is the whole House of Representatives, must be given more time and latitude to dissect and respond to the propositional Budget of the minister of finance.

And any motion from the floor which can muster a majority vote must be accommodated in some fashion in the final Budget. To return to my favourite and well-used example: The leader of the Opposition placed on the table a recommendation for urban renewal. Easily, about a third of the members of Parliament, including herself and the other party leader, have constituencies filled with urban decay, and these are not only in the Corporate Area. Urban renewal would have an impact on job creation, poverty reduction, crime reduction, small businesses, degarrisonisation, and a host of other development objectives, and could easily be a big cross-party project within Budget. But I am not aware of a single urban-decay MP from the other side endorsing this eminently sensible proposition.

I want, on behalf of the truth-challenged political class, to spend the rest of this column telling some hard truths about the cost of the reform agenda which the Government has outlined and says it is committed to stick to. The minister of finance has committed to wiping out the Budget deficit and achieving a balanced Budget in the 2015-2016 fiscal year. The Budget deficit is the gap between expenditure and revenue income, a hole that, traditionally, has been plugged by borrowing. To achieve a balanced Budget, there can be no additional subsidies to the poor, for instance, to cushion rising food and fuel international costs. There can be no increase in the public-sector wage bill through salary increases or 'make-work' projects.

Indeed, there can be no net increase in overall expenditure. This year's Budget was virtually flat compared to last year's. This is going to mean more hardship on especially the poorest Jamaicans. But increased welfare-type expenditure is going to expand the Budget deficit, increase the debt burden, drive up inflation, and push down the value of the Jamaican dollar, all of which will hurt the poor most.

Further hardships

Crime seems to be trending downwards, murder is down 44 per cent, and everybody should be happy - until the analysis is done. The crime stats from both the police and the media are indicating that up to 80 per cent of murders are gang-related. Gangs control turf, drug dealing and gunrunning, extortion rackets, and all kinds of crime-for-profit enterprises. Hence the murders. With murders trending downwards, it means that gang activity is being disrupted and curtailed. And the police and Ministry of National Security are making exactly that claim. Hundreds of thousands of Jamaicans 'eat a food', directly or indirectly, from the crime-corruption industry which has been virtually normalised over the years and which has deep roots in the political culture.

The disruption of the crime-corruption industry is going to heap further hardships especially on certain categories of citizens who already will not be getting relief through more social spending.

And any serious programme of degarrisonisation will mean that people in those former political enclaves will have to start paying for their previously 'free' utilities, like the good people of Western Kingston, without having a stronger income base.

Government finally seems serious about tax reform. The minister of finance tabled a green paper on the matter while closing the Budget Debate last Wednesday, with one newspaper shouting the following day, 'Major tax breaks coming'. The prime minister had already made it abundantly clear in his presentation that tax reduction must be accompanied by waiver reduction. It is not the quarter-acre yam farmer in North East Manchester who gets waivers. It is usually importers with enough muscle to twist the arm of the minister of finance who gets them. But it is the poor who are going to feel the removal of waivers more. The higher costs of importing all kinds of finished goods and raw material in a highly import-dependent economy are going to be passed on to final consumers. And those with the least disposable income will feel the pinch most, and at a time when international prices for food and fuel are rising. By the same token, when more providers of goods and services are dragged into the income tax, profit tax and GCT nets, as the Government says it is determined to do, those taxes will be passed on to consumers as higher prices.

The minister of finance and prime minister are trumpeting stabilisation and the beginnings of growth; the Opposition says, "Dem lie", while campaigning for a reduction of the tax burden, especially on the poor, but increased expenditure, particularly in favour of the poor.

If the reform agenda is let go of, the poor are going to get shafted; if the reform agenda is pushed without relenting, the poor are going to get shafted. The only real question is, which shafting gives healing pain rather than chronic debilitation?

Painful reform is going to have political consequences, from the substantial risk of election defeat to the equally substantial risk of violence in the streets. Those risks, plus the lure of political power, have substantially assisted in deferring for a generation the deep and systemic necessity of reform.

Martin Henry is a communication specialist. Email feedback to columns@gleanerjm.com and medhen@gmail.com.