Introduction, proximate origin
Some bizarre motives have been attributed to me for naming the suggested UBI mechanism for eradicating persistent poverty in Guyana the Buxton Proposal. For the record, although my academic life [as teacher, researcher, author] has indisputably contributed to the formulation of an oil-for-cash transfers to households Proposal; its immediate origins lay elsewhere, in pure serendipity. I have been contributing to this Sunday series on Guyana’s emerging oil and gas industry since 2016. And, starting in January 2019 I drafted a Petroleum Road Map, which expounds, more fully, on several themes in the Proposal.
Based on these writings I was invited by the Buxton First of August Movement (FAM), to make a Presentation for Emancipation Day 2018. That Presentation is the immediate reason for its name; the Buxton Proposal. A year later, I elaborated on the original FAM Presentation at a WPA follow-up Symposium held at Critchlow Labour College on September 23, 2019.
These presentations provoked much dis-information, mis-information and downright public mischief in the social and print media over my motives in so doing. WPA responded and prepared an info pack, intended for popular education on the country’s coming oil wealth.
This issue apart, today’s column shifts focus to highlight the main constituent features of the Buxton Proposal. Previous experience suggests, this is the sequence to follow, when presenting the Buxton Proposal to a non-specialist audience.
Constituent Features
I indicate below constituent features of the Proposal; listed 1] serially in no order of significance 2] interdependent, operating synergistically with all others. The latter means each feature reinforces the impact of the others, thereby resulting in their combined effect being greater than the simple sum of the effects of their individual constituent features!
The 10 features
By choice, I begin with a narrow definition of the Buxton Proposal. It is essentially a call for direct, regular (annual), predictable, and time-bound payments, to be provided to all Guyanese households (HHs) from the country’s oil revenues subject to the provisions that follow. Thus, the transfer is provided directly by the Government of Guyana, G0G, out of oil revenues as specified below. Regularity and predictability are similarly specified below. Time-bound is specified by the daily rate of oil production or DROP (of barrels of oil equivalent (boe)).
Cash Transfers, CTs, provided through the GoG from oil wealth to citizens are both implicitly and explicitly conditional transfers. This is so because they are designed a) to support HHs’ accumulation of human, financial and productive assets and b) to protect HHs from low and fluctuating incomes/consumption. Lack of such “support” together with “low/fluctuating incomes/consumption” are two major drivers of income poverty in Guyana.
Under current law, all such GoG transfers to HHs constitute income received by these HHs. These transfers must be reported to the Guyana Revenue Authority, GRA; leading to the outcome therefore, of bringing all income-receiving HHs from the Proposal into the national tax system. This is the first conditionality of CT’s
And, since CTs are not expected to be paid in cash (notes); [this would be exceedingly cumbersome] banks, other financial and commercial entities are expected to make such transfers/credits at the direction and instruction of the GoG. These several means of payment create a second conditionality. That is, all income-receiving HHs, must become part of Guyana’s formal financial system, which requires an e-identity.
And, thirdly, since CTs go to all HHs, these are, definitionally, race/ethnic neutral, making it perhaps, the most important conditionality, in avoiding racial/ethnic contention.
Combining 3 and 4 creates conditions favouring establishing a needed digitalizing of Guyanese society.
The above require that CTs are coordinated with other social protection poverty interventions, which is facilitated by greater digitization of all social protection mechanisms.
Originally, the Buxton Proposal targeted CT’s, at their peak, as an annual payment of US$5,000 (1.05 mln G$) for each HH. The Buxton Proposal kicks in fully, at its peak target level, when, and only when, the daily rate of production of crude oil, DROP, is at full ramp-up. Full ramp-up according to my Petroleum Metrics (Part 5), requires a DROP of between 1.5 to 2.5 million barrels of oil equivalent, mboed. However, CTs can commence when the Government determines and pro-rates to the full ramp-up DROP, target. Thus, a DROP of 500,000 boed would yield 0.33 of the target levels of US$5,000 (1.05 mln G$).
With approximately 210,000 HHs, the estimated annual cost at full ramp-up is US$1.05 bln. To ensure affordability, the total annual budget for the Buxton Proposal is subject to the additional binding constraint or cap of a maximum of 10 percent of Government Take.
Of further note, as we shall indicate, the Petroleum metrics as revealed by Rystad Energy and Wood Mackenzie (the two leading petroleum research firms) are currently projecting an estimated DROP for Guyana of 0.8 million boed in their models for post-2025. These models however, only consider projected DROP from Exxon and partners in the offshore Stabroek Block. The two firms ignore all other oil blocks and suppliers! To quote:
“The total estimated government income from Stabroek Block alone is 120 billion US dollars in real terms.”
The petroleum metrics related to the Buxton Proposal constitutes Part 5 of this document. I utterly reject those naysayers; many of who, are on the written record, for calculating how Guyana will not ever earn 300 mln USD per annum from petroleum sales!
Conclusion
Next week I continue with Part 5 of this task; re-visiting the Buxton Proposal
