More houses for the ordinary man
By Andre Bagoo Sunday, September 22 2013
INDEPENDENT Senator Dhanay-shar Mahabir on Friday night made a passionate plea for the State to take greater steps to ensure everyday citizens have access to houses, saying increased levels of home ownership would bolster the stability of our society.
In his contribution to the 2014 Budget debate in the Senate, the noted economist also called for money earned by the National Lotteries Control Board (NLCB) to be used to benefit the poor and queried spending levels on national security saying the Police Service needs to improve its detection rate.
The former Caribbean Development Bank economist also stated that current economic conditions are due in large measure to high spending levels in the single year of 2008, when the PNM was in power, stating this coincided with a large drop in revenues from which the country is yet to recover. He said the conditions were very similar to what occurred after the last oil boom in the late 1970s which then saw a protracted 11-year recovery period from 1983 to 1994.
At the same time, he said the current PP administration is in some measure responsible for the ballooning public debt level due to continued deficit budgets which, while justifiable, nonetheless pose risks to future generations of taxpayers.
The Independent Senator also urged the Government to consider amending the Heritiage and Stabilisation Fund Act to have a minimum of US$15 billion (TT$94.5 billion) in the fund, in this way guaranteeing to future generations annual interest income of about TT$5 billion which could be used on social programmes.
At the International Waterfront Centre, Wrightson Road, Port-of-Spain, Mahabir made a plea for the everyday citizen wanting to own a home.
“Property prices over the last decade have escalated to a level where a teacher, police officer or public servant simply cannot afford a home,” he said. “It is so bad, that the poorest people in our society have reconciled themselves that they have to squat. Our housing policy has to be remedied if we are to revive these dreams of home ownership.”
He continued, “We need to improve the housing stock so that the middle income person can make this dream or goal a priority. We need more and more people to earn property; to own a piece of the Republic. So that the poorer people and middle class people can think they can have a stake in our Republic. The bigger the property-owning class, the more stable the society.”
Mahabir said a model the Government could follow was the Sou-sou Lands housing project of the 1980s which saw lands in Trinidad and Tobago distributed under an innovative model of self-help. He said the country must aim to be innovative, not just for two days over Carnival, but for all 365 days of the year.
The Independent noted Finance Minister Larry Howai’s budget outlines a crackdown on gambling. But he called for reform of how the State’s own gaming enterprise, the National Lotteries Control Board, works. He said the bulk of NLCB revenues come from low-income purchasers of tickets. He said profits should benefit the poor.
“The Ministry of Finance runs one of the largest gambling shows in town,” he said.
“Let us ensure that gambling games are regulated and ensure all the profits accrue to the minister and let us ensure the profits which accrue from the poor people of this country will be earmarked for the poor people of this country.”
NLCB profits should be used to fund programmes of urban renewal, child care for single parent families, grants and aid programmes, he said. The NLCB, according to some reports, earned $1.7 billion on one year, but paid out $1.2 billion. Mahabir said he would like to know the figures.
The economist, who said he had been studying the economic figures over a period of years, also presented his views on the status of the economy. He said while growth had returned, the big question is whether it is sustainable and can be relied upon as a true indicator that problems in the economy triggered by the 2008 fallout have really subsided. He said the 2008 global economic crisis — triggered by the sub-prime mortgage crisis — was wrongly dismissed as having a short-term effect on the economy.
“When the crisis emerged in 2008, there was a view that we were immune from the global economic crisis,” Mahabir said. “Five years later, we see we were not immune. We need to understand why we made the error in assuming there would be a short-term recovery.” He said from 2001 to 2008 the budget grew exponentially. It was at $13 billion in 2001, grew to $18 billion in 2004 then in 2005 to $32 billion including supplemental appropriations. By 2008, he said, the projected figure was suddenly $52 billion. This was due to a boom.
“Between 2001 and 2008 we had almost quadrupled expenditures because of a projection of a new form of revenue because of the natural gas trains,” he said. “This significant increase in revenue resulted in a significant increase in spending. Government spending escalated. As Government spending rose, the demand for private sector goods also rose. We observed the traditional makings of a natural resource boom. This was very much like the natural resource boom of 1973 to 1982.” In 2008, he said, “there was a massive and significant decline in revenue. From $52 billion we were able to realise $37 billion.” The senator said though the Government of the day reduced expenditure from $52 billion to $45 billion, there was still a deficit.
“This was the first deficit and then we saw deficit after deficit because we found it difficult to adjust in the new element. At this time we are facing 5 years of deficit,” Mahabir said. “We did not plan for this. The last time around, in 1983, it took us 11 years to recover. After 2008, when I look at the signs, I can see that, structurally, we may be replicating the experience of 1983 to 1994. That is the reality.” He criticised the levels of public debt. Mahabir said in 2008, public debt (or how much the State borrows to pay for what it is doing) was around $40 billion. The level of the current debt stock is now $70 billion, he said. But he noted that if Clico/HCU is factored, it may actually be $90 billion.
“Deficit financing can assist our problems,” he said. “But that debt must be serviced. This growing number is now a cause for concern. The debt problem is one we will have to be continuously monitoring. It imposes an obligation on the future taxpayer.”
Of the Heritiage and Stabilisation Fund, Mahabir said, “Had we had US$15 billion in the fund at an interest rate of 5 per cent we would be able to earn TT$5 billion to finance a range of social services,” he said. In an apparent reference to former Finance Minister Karen Nunez-Tesheira, he said, “A former Minister of Finance said she did not think there was a need for a target. We need to have a target. Let us try to see if we can force the hand of the (new) Minister (Howai).”
Of the Police Service, he said, “Today the detection rate is 5 in 100. A total of 25 murders detected with 500 people being killed is something no police service can be proud of.” He called for an investigation into why the police service cannot detect crimes.
Of the billion-dollar expenditure levels at utilities like WASA, he said, “We are simply spending huge sums on a utility and I am not getting from the Government that they are asking for the utility to account. What cost-cutting measures can be introduced at these utilities? It is true that water is essential but the issue is should it cost so much?”