THE CURRENT pandemic and curious management of the economy over the past five years unequivocally testify to the bold need to do things differently over the next five years. Having put “new wine in old bottles” with the intent that things would be done differently and more progressively, it begs the question: is doing the same thing repeatedly but expecting different results sensible?
In the previous term there were repeated calls, both by businesses and economists, for certain initiatives to be pursued to better manage the economy, but all seem to have fallen on deaf ears. A new term has begun but the same people have been retained to manage the economy going forward. Is it reasonable therefore to expect new and different thinking from incumbents?
Realistically, none would expect a balanced budget, despite utterances to the contrary in this period of the pandemic where economies, both locally and globally, have been struggling to stay afloat. Covid19 has been devastating regarding lives, livelihoods and the economy, yet it has provided a ray of sunshine to these same entities.
Focusing on the imperatives of the budget, the Government should desist from seeking to balance it at this time, if it is in fact its intention, and instead focus on economic management. The several sectors of the society that it has asked for proposals would most probably seek their own interests but also provide some suggestions for generating revenue.
The Government, in light of shrinking revenues, particularly from energy resources, must refocus its efforts on increasing revenues while more efficiently managing expenditure. True, subsidies and transfers may account for almost half of the Government’s budget but reducing these arithmetically is definitely not the answer otherwise the status quo will simply continue.
There are more than 50 state enterprises. How many of these are profitable? How many are being managed efficiently? Wouldn’t reducing the high number of these companies and making the others run efficiently result in a decrease in subsidies and transfers? Why continue to ask nationals to support inefficiency and more and higher taxes?
The pandemic has presented a golden opportunity for the Government to reassess its previous modus operandi and create a new normal where businesses will now operate with lesser numbers of staff, where new ways of working will become more prominent and where technology will be utilised more frequently throughout the workplace.
Increased focus on telecommuting, teleconferencing, video conferencing and online education will positively impact transport and real estate. This reduced need for transportation and office space will impact very positively on real estate by both government and businesses.
For decades now the Government has been talking about ease of doing business yet TT ranks about 105th out of 160 countries. Although being the largest employer, how much real effort has been placed on government operations in almost all spheres that require interaction with the public?
Holding one’s breath for energy prices to rebound will be the death, not stagnation, of the economy. More than enough time has passed to stop paying lip service to diversification. Undoubtedly, diversification is a key pillar in revenue generation and foreign exchange management.
The Government must take the bull by its horns and focus on moving the economy from its current negative to a positive growth position rather than continue to focus on tax and more tax. Admittedly, taxation is important but the population, as well as businesses, will continue to pay taxes, a few being value-added, road, health surcharge, income, corporation and environmental. All these with no commensurate benefit to citizens and businesses. So much talk about collection but what has been done? Will the Revenue Authority address this after less than 50 per cent of properties have been registered?
Reducing expenditure on nice-to-have projects while seriously focusing and improving revenues through better tax collection, creating additional revenue streams, greater utilisation of technology, diversification, attention to ease of doing business and examining the value-add of state enterprises will enhance the Government’s management of the economy.
Government budgeting requires actively listening to new ideas of revenue-generation and innovation and not on “balancing the budget” now or cutting expenditure arithmetically. Will the Government seek to preserve egos or do the right thing for TT? It’s time for resetting the budget!