Budget with a vision for the future
Thursday, July 19 2012
THE 2013 Budget will have vision of the future which the last two budgets delivered by the People’s Partnership (PP) Government in 2010 and 2011 seemed to be unclear about.
This was the view expressed by Finance and Economy Minister Larry Howai during an interview at his office at the Eric Williams Financial Complex in Port-of-Spain last
Howai hinted the 2013 Budget, which must be passed in both Houses of Parliament by October 31, will focus heavily on the non-energy sector of the economy in a way in which no previous budget has been done. However this does not mean that traditional areas such as national security, education, health, housing and infrastructure will receive less funding in the Budget.
Acknowledging that implementation of the initiatives identified in the Government’s previous two budgets has been a major challenge, Howai said he is taking on board longstanding views from the private sector that an element of longer term planning be incorporated into the 2013 Budget and execution of the Budget’s initiatives is a high priority for him. Also during the interview, Howai said managing the economy had some similarities to his former job as chief executive officer of the First Citizens Group and he was fully aware of the population’s expectations for him to kickstart the economy.
So what are the differences between managing a bank and managing the economy? “There are many differences. Some similarities also. I find certainly getting things done in the bank a lot faster than it takes in the public service,” Howai said. “You have more flexibility in terms of rules than you would have in the public service. Those are some areas that immediately stand out in your mind as you try to make various decisions about various issues,” he explained.
However, Howai noted: “Of course, a lot of the skill sets that you need to run any complex organisation would be applicable in a situation like this because communication skills are important. Leadership skills, the ability to strategise, the ability to identify opportunities and how to take advantage of them. So there are many qualities that one would require in managing a bank that would apply here.”
Does he feel pressure to deliver as Finance Minister? “Yes. The expectations certainly do put pressure on you because I’m always conscious of the fact that there are these expectations. So it does weigh on your mind as you go about doing what you have to do,” Howai stated. Despite being new to government and not being a seasoned politician as compared to other members of the PP, Howai believe it would be good for all of his ministerial colleagues to learn to embrace pressure in some form or fashion as they performed their duties. “All ministers should feel that they are under pressure to perform,” Howai stated.
He said one thing which made his transition from the private sector to being a government minister has been “the reception” he received since he received his ministerial appointment on June 25. “The reception has been helpful in terms of me being able to articulate the positions that I need to communicate to everyone. it gives you a little more confidence in that people will listen. at least give you a hearing as a start,” Howai said. Howai welcomed Prime Minister Kamla Persad-Bissessar’s decision to appoint Trade, Industry and Investment Minister Vasant Bharath as a Minister in the Ministry of Finance and Couva South MP Rudy Indarsingh as a
Minister of State in the Finance Ministry.
Stating Bharath will take charge of the State Enterprises sector which has a total of 154 companies, Howai said: “That’s a big portfolio and we have to start considering how we go about dealing with the challenges that entire portfolio poses to us” Stressing that Government remains committed to pursuing public sector-private sector partnerships, Howai said Government is looking into “which are the ones that we would seek private participation in.” “First Citizens is one that we have been speaking about an IPO for some time. I’d like to accelerate that process,” he said.
“Perhaps in terms of how we go about the process of the involvement of private sector participation, I would like to do it by process of consultation with stakeholders, starting as soon as possible,” Howai said. Identifying the Vehicle Maintenance Company of TT (VMCOTT)as one of the state companies Government is considering seeking some private sector participation in, Howai said: “I need to start looking at what is the best model for seeking that participation. i would like certainly at this stage, if I could venture a thought on it, I would like to see whether we could partner with a local company.”
Saying he would like to see VMCOTT “actually expand its reach,” Howai said: “All the banks have branches everywhere. I think there are so many cars in Trinidad with people looking for maintenance services and so on.” Howai suggested that another company could partner with VMCOTT “with a view to setting up maintenance centres in TT and make the company (VMCOTT) much more profitable, make its reach much greater and allow it to provide services to a broader range rather than just the Government alone.”
Observing that both the domestic economy and the global economy are slow right now, Howai said: “Consumer spending has slowed a little bit and of course the private sector is not investing as much. If Government stops investing, then that stops the economy altogether. Government is going to have to bridge that gap. what I am thinking is that we can encourage the private sector to come along with us on specific projects,” he said.
With some private sector players not prepared to take all of the risk on a project, Howai said Government could partner with these players in order to get the project off the ground, provide some equity and at a later stage in the game, “selling back (to the private sector player).” “We’re now starting that process. there were eight or nine companies identified in the national budget last year,so we can probably put that at the top of the list,” he explained.
Turning to the 2013 Budget which will be his first major assignment as Finance Minister, Howai said: “I would like us to define a vision. The country needs to understand where we are going, what we expect the economic landscape to look like in the future. I would like us to articulate a
programme for us getting there.” Underscoring the need for longer term planning to be clearly spelt out in the budget and hinting this would be reflected in the 2013 Budget, Howai
said: “Therefore to some extent in the budget, we would not just want the budget just to be only about what we’re going to do next year. I mean the fiscal measures yes but we certainly would like to include a section of the Budget that would deal with what are some of the benchmarks that we would like to set, say over a three to five year period.”
Admitting that this was not done in previous budgets, Howai said this must be a priority in the 2013 Budget. “You might identify that let us sell company x but there are a number of legal and operational issues that need to be put in place and sometimes that process can take you 18 months. Simply announcing it in a budget, everybody has the expectations that it will be done within 12 months,” he explained. Howai continued: “Sometimes we create unrealistic
expectations in the population by the way that we communicate what we plan to do. What I would like to do is maybe expand that a little bit,so that people understand what
the time frames are, for delivery of certain projects and so on.”
Howai declared: “The other thing that I’d like to do is establish or to make execution a priority. In looking at what is happening within the various ministries, I think a big issue has been execution. how do you get new projects completed on time and within budget.
Those are some of the issues that we would need to make a high priority.”
To get execution done right, Howai said it was important to strike the right balance. “I think the most important thing there is communication as far as possible. We have to follow processes and therefore following those processes will slow down the overall execution timetable,” Howai stated. “If you are in the private sector, you can make your own decisions on certain things and you simply go right ahead. That is one of the great things about the private sector being an engine of growth. They can execute much faster than a government,” he explained.
“Striking the right balance means making sure that you have the processes in place but also that you have the authorisation levels. You manage that in such a way that the turnaround time could be enhanced,” Howai said. “A critical part of that is making sure that everyone in the chain understands the importance of getting the approvals out within the time frames that are
defined in the plan itself.That will be an ongoing challenge, I have to admit,” he added.
Noting the public sector has shown itself to be weak in this area, Howai said: “ I am confident that with the right kinds of management styles,the right organisational structure, we could achieve the objective that we have established.”
On the areas of priority in the upcoming Budget and the demands which different government ministers have been making to him for funding, Howai said: “What I have done is sort of defined, identified some phases of development and by identifying those phases of development. Infrastructure is a critical area of focus for us.” Identifying infrastructure as a main priority for Government which will be reflected in in the Budget, Howai said: “So therefore in looking at
projects, a big thing for me is looking at what are the infrastructure projects that are critical both in local govt and in works and infrastructure.”
Saying the initiatives in the Budget would be developed with the end in mind, Howai hinted the Budget will place a greater emphasis than ever before on economic diversification. “We have also said to diversify the economy, the main areas would be tourism, financial services, information communication technology (ICT) and downstream energy,” he explained
Howai also said other areas identified in the 2012 Budget as target areas for economic diversification will be included again in this year’s budget. Those areas are traditional energy; alternative and renewable energy; urban development; maritime economy; capital market development; creative industries and environments promoting business competitiveness.
“Those are some of the core areas that we will be looking at as we move into the future and therefore in terms of projects that kind of fit into that,” Howai stated. He added that appropriate expenditure will continue to go to traditional areas in the budget such as national security, health,
housing, education, agriculture and social welfare.