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Budget debate over; now for the hard part


Tue, Jan 17. 2012

The Budget exercise is over and the country is now absorbing the latest set of fiscal measures being instituted by the government. In particular, there will be much scrutiny on how measures, such as the new property taxes, the excise taxes, the level of increases in water and garbage collection rates and the adjustments in VAT (value-added taxes) will affect the population.{{more}}

Regrettably, the public discussion on the airwaves has not done much either to foster a better understanding of the 2012 Budget. The demagoguery and politicking have left many still uncertain as to the impact of the Budget in concrete terms. It must be a source of national concern that many people do not listen to the Budget debate, or, if they do, take their interpretation from political orientation. That leaves room for the demagogues and persons who peddle misinformation.

This has been a difficult Budget to string together. The challenging circumstances at the global and regional levels, plus the dependency of small developing countries like ours on external factors, place us almost in the proverbial ‘between a rock and hard place’ situation. Should the focus be on “holding strain” until the international climate improves? What level of austerity can be instituted without imposing too much hardship on the bulk of the population and stunting economic growth?

These issues bring up the fundamental matter of economic strategy. If one is to go by the analysis of the Opposition, global circumstances notwithstanding, the blame for our sluggish economy lies with the management (or mismanagement as they would say) of the economy by the Unity Labour Party government. On the other hand, the government is of the view that it has performed remarkably well, especially in maintaining the safety nets for the poor and most vulnerable. The question of the relationship with the International Monetary Fund (IMF) and whether our country adheres to its recommendations was a major debating point. Regrettably, the Opposition neither advanced an alternative economic strategy, nor made clear its own position on the IMF recommendations.

The Opposition has also highlighted the “successive years of negative growth” as a worrying sign, especially compared with other countries in the region. Their concern is justified, but the impact of two natural disasters in quick succession, crop infestation and the massive Argyle international airport project, for which considerable resources were and are being demanded, cannot be overlooked.

Partisan considerations aside, it is now time for us as a people to come to grips with the realities of our troubling situation and begin the hard work which is required of us all. Complaining about the tough economic times will not help us. Countries, much better endowed economically than ours, are going through the “hard times” too. Sacrifice, initiative and creativity are needed responses.

Hard decisions are necessary, but such is the nature of our politics that, as the Opposition Leader himself has charged, there is the danger of ducking them. The pension reform is the specific issue out of which the charge was made. Would it not be better for us all, if on such matters, there could be broad cross-party consensus and support, without compromising the integrity of either party?