|Pemberton sees benefit in separation of HSF |
By Vernon Khelawan Thursday, May 18 2017
Commenting on the mid-year review read in Parliament by Minister of Finance Colm Imbert last week, finance expert and executive director of the recently launched charity Trinity Domus Communities, Gerry Pemberton, looked at in a different context.
He said, “We must see everything through the wide lens of inter-generational equity.” He pointed out there were three crucial matters, all promises, which can bring us joy out of the review: 1) The Heritage and Stabilisation Fund (HSF) to be segregated into two distinctly different funds; one for Stabilisation and the other for Heritage; 2) World Bank review of public expenditure; and 3) The new Insurance Bill, which is likely to be finalised next month.
Pemberton said, “A Heritage Fund will provide for major investments, which create new and additional capacity to produce beneficial, modern, goods and services making the fullest use of advanced technology, our finest young minds and our human talent.” He said this was the only viable formula for “diversification of the economy”.
“The longer we wait to put aside enough billions into a separate Heritage Fund, the longer we will wander in the desert seeking a new promised land. That transformational journey will take 25 to 40 years. Why have we not started?” He explained his theory by giving three reasons for his forecast. “First, most people who will benefit, either do not now have a vote or don’t have a vote as yet.
Secondly, most people who can successfully manage and work in this transformation are not yet 40 years old and thirdly, the people who have the selfless vision, the unselfish passion and the strong faith which drives outstanding human achievement, have not yet stood up to keep their arms uplifted as Moses did. Like Moses, they will never see the promised land so they must be people with selfless vision, unselfish passion and strong faith. Where are they?” Pemberton’s second point relates to the efficiency, equity and the impact of public spending. “We would all be as happy as we used to be long ago simply by making education spending better; making health spending better and improving social protection spending.” “We can do much of that... with the less money we will have,” he added. “This can be real. That is how the world works today.
And that is why the World Bank was asked to conduct a review of public expenditure in Trinidad and Tobago. That is why we must all take an interest to ensure it gets done.” About the new Insurance Act, Pemberton said.
“Collectively, insurance companies control a substantial share of investments in listed companies and large holdings of real estate.
We worry about the banks - the commercial banks, the Central Bank, the non-banks - but it is the insurance industry that most directly affects our welfare and indirectly the welfare of the country through its powerful, low-key role in the financial system.” Various governments through the years have been working on the full implementation of the Insurance Bill. It was laid in Parliament in 2016 and referred to a Joint Select Committee (JSC) in February this year for further deliberations and discussions with stakeholders in the insurance industry.
That committee has met five times and presented two interim reports to date. It is expected the JSC will complete deliberations by next month. But the reality is that the Bill will not become law this year, unless the government makes it happen.
Pemberton addressed the rate of inflation, which Minister Imbert’s review claimed was low. The minister had said in his statement, “This containment of inflation (in 2016) is a deliberate strategy of the government, designed to cushion the effect on the most vulnerable of the reduced national income and it has worked so far,” something for which Pemberton said we should be grateful.
“But that was last year,” he said, “What were the figures up to January 2017 and what is the trending going forward? We need to know so we can economise long before we stand in front of the cashier trying to pay for groceries. Whatever the oil and gas prices, inflation of only four percent per year can dramatically change your life in six years.
What matters to families with young, old and not so old people is how much cash remains after paying expenses.” Pemberton said, “The only way to avoid that is for the country to increase productivity, to avoid waste, to eliminate bad spending and make the best use of what they have. This is what they do when they are economising.”