With a general election pending within the next eight months, both political parties are obligated to rollout a credible plan for restructuring government and resolving the fiscal crisis. Barbados is facing some serious financial challenges which are threatening its social fabric and economic foundation.
Some of the problems have been simmering for a decade while successive administrations have been sitting on their hands. With a budgeted fiscal deficit of 4.4 per cent of GDP, Tuesday’s revelation of a likely $68 million loss at the Transport Board, which will have to be funded by the people of Barbados, is very worrying indeed.
This news came against the background of a multimillion dollar NIS loan to the University of the West Indies for the purpose of plugging the financial hole created by a shortfall of funding from central government.
Education and health care are pillars of social and economic development.
Substantial post-Independence investments in primary to tertiary education have been instrumental in building Barbados’ human capital; the country’s prime resource. Universal access to health care has also been an essential ingredient of national development.
The rising costs of health care, the increased incidence of chronic and non communicable diseases, the expansion of educational opportunities and so forth have placed increasing pressure on the Government’s finances. Since 2009, the situation has become dire as the economy shrunk and Government revenue plummeted. Poorly managed statutory corporations like the Transport Board, the Barbados Water Authority and the Caribbean Broadcasting Corporation are either insolvent, bankrupt or on the brink. The result has been haemorrhaging public finances which threaten the sustainability of the essential services provided by these institutions. As the Government fiddles while Rome burns, public transportation, television broadcasting and water supply and distribution continue to deteriorate. The BWA fiasco, highlighted recently by the Auditor General, and the Transport Board’s consecutive multi-million dollars loses and inadequate service are cases in point.
With the exception of CBC, the public investments and public services identified earlier are economic and social imperatives. Education, health, reliable transportation and access to clean and affordable water are essential to national competitiveness, prosperity and social development.
The current state of affairs is untenable. The DLP and BLP must tell Barbadians how they propose to stop the rot and reverse the financial turmoil that is ensuing. Serious decisions need to be made, not tomorrow, yesterday! Dithering will not solve the problems and throwing good money behind paltry institutions and failing systems will not do it either. There is a word for doing the same thing over and over again and expecting different results…
What are the options? The introduction of a health and education levy, partial or total privatisation of select statutory corporations or an increase of user fees at the points of delivery are some of the revenue generating possibilities.
As it relates to the statutory corporations, regular financial reporting, corporate restructuring, operational rationalisation and competent management that is free of political interference are some of the known courses of action which can raise the quality of their services as well as improve their financial viability.
Another option would be to require university students to pay a portion of their tuition fees (maybe 10 per cent to 15 per cent of tuition costs). Loans could be provided by the state at concessionary interest rates with repayment due to commence when graduates begin their careers. There are financial and non-financial benefits associated with this type of approach.
As it relates to health care, there is a desperate need to improve the delivery and range of tertiary care. That cannot be achieved with the current financial arrangements. It may be time to have a policy shift that guarantees existing access to preventative and primary health care while incentivising health insurance coverage to pay for more expensive tertiary health care. Exceptions could be made to exempt legal residents below a predetermined level of income that is indexed for inflation. Alternatively, the Government could decide to bolster its commitment to free-at-delivery education and health care while substantially reducing or abandoning its provision of services such as public transport, sanitation, television and radio broadcasting, water purification and distribution, corporate welfare etc.
Personally, I am not in favour of some of the options outlined; and I certainly do not support an increase in taxation or borrowing from the NIS to prop up failing systems and institutions.
Of course, any combination of the foregoing options would also be better than the status quo. My suggestions are by no means exhaustive. Though I have my preferences, I am of the view that leadership has a responsibility to assess the problems, consider the risks and galvanise the public behind the course of action that is in the national interest. All options should be on the table. Do we have to be staring down the barrel of the IMF to act?
My message for the politicians is simple; the time for talk is over. Present your plans to the public and let us appraise them. Have a substantive election debate about the real issues and let us select the party to govern that is serious about taking this country forward.
It’s not just about reducing the fiscal deficit; it is about creating a platform for economic growth. It is about sustaining access to a world class education. It is about substantially improving health care. It is about creating a reliable, convenient, and affordable public transportation system which has island wide coverage — a worthy alternative to owning a car.
It is about good governance and prudent financial management. It is about local television broadcasting that fosters indigenous cultural development and catalyses the film and advertising industries. It is about progress. It is about development. It is about our future.
Carlos R. Forte is a Commonwealth Scholar and Barbadian economist with local and international experience. C.R.Forte@gmail.com