(Trinidad Express) Three days after he presented it in Parliament, Finance Minister Larry Howai’s national budget continues to receive blows.
Howai and his 2012/2013 fiscal package to guide the country forward have come under attack from several quarters—among them economists, business people, an energy expert and the Opposition.
On Tuesday night, economist and People’s National Movement senator Dr Lester Henry criticised the size of the fiscal measures, saying the record TT$58.4 billion budget—Howai’s first and the Government’s second biggest—was a package that came “from the same people who were crying squandermania” by the previous PNM government in the lead-up to the 2010 general election.
Henry was speaking at a post-budget forum hosted by the San Juan Business Association at Maritime Plaza, Barataria.
“To continue in this way (of spending) even with fiscal space, but given the declining economy, it is worrying,” he said.
He said the minister’s announcement that budget deficits will continue until 2016—a year after general elections—suggested the Government’s philosophy was “we just going to spend and make sure we look good”.
The 2012/2013 budget deficit is TT$7.6 billion.
The second “disturbing thing” about Howai’s budget was that there was no reference to last year’s fiscal programme.
Henry said he felt that someone “may have whispered in the minister’s ear about austerity measures”, which was why there was a lack of them, except for the increase on premium gasoline from TT$4 per litre to TT$5.75, which took effect on Tuesday.
He suggested next year’s budget might be in the vicinity of TT$60 billion to TT$61 billion, adding that the feel-good highlights in the budget like the removal of Value Added Tax on food items were a “reaction to Section 34 besides throwing (fired justice minister Herbert) Volney to the crowd”.
Section 34 was the clause of the Administration of Justice Act 2011, which was proclaimed early and later repealed after it was determined that United National Congress financiers Ishwar Galbaransingh and Steve Ferguson and several others could use it to walk free from fraud charges stemming out of the Piarco International Airport construction project.
Henry said what was equally disturbing was that Howai said 1.2 per cent economic growth had been achieved and the unemployment rate was down to 4.9 per cent.
He said the jobless figure was “dubious” and from last year, and was not current or realistic data.
Republic Bank economist Dr Ronald Ramkissoon recalled during the forum that the country’s budget in 1956 was only TT$100 million and while there were “correct” things in Monday’s package—such as the plan to re-introduce land and building taxes and the streamlining of tax collection—there were also concerns.
These included reform measures in the context of a “welfare state we have been developing”, he said.
Later, when one businessman complained of a perpetual labour shortage in San Juan, Ramkissoon commented that youth unemployment might be as high as 12 per cent and labour force data did not account for people who were not looking for jobs.
He hinted that some of them might be occupied with criminality, saying: “I suspect there are some in this group who are disturbing us at night.”
Former trade minister and minister in the ministry of finance Mariano Browne, another guest speaker at the forum, said Howai’s budget had issues of “credibility”.
He questioned where the US$3 billion a year in energy investments was coming from, adding that the biggest flaw in the budget was that it was a package without a plan.
“We are not demonstrating that we know what we want to do or where we are going,” he said.
Yesterday the criticism continued for Howai’s budget, this time from president of the Energy Chamber Roger Packer.
While he commended Howai for changes in the Supplemental Petroleum Tax, which would help the oil industry, he cautioned against what the budget document suggested would be unprecedented levels of energy investment (US$3 billion a year) over the next three years.
Speaking at the Energy Chamber’s annual general meeting luncheon at the Hyatt Regency (Trinidad) hotel in Port of Spain, Packer recalled that the previous record level of investment was US$954 million in 1997, according to Central Bank data.
“As a country, we have encountered some significant difficulties in actually landing many of the anticipated investments, especially in the downstream energy sector. A number of projects have failed to get off the drawing board or have been significantly delayed,” Packer said.
Howai defended his position of US$3 billion a year in investments yesterday, in response to a question from the Express.
He maintained that the country was seeing an uptick in energy exploration activity, adding that 19 wells were expected to be drilled soon and “we expect to see these things impacting” on the economy.
Earlier he said the country had just emerged from three years of negative economic growth and projected growth this year was 1.2 per cent and estimated to keep growing at 2.5 per cent a year over the next three years.
