COMMENTARY BY BRADLEY B. ROBERTS
FORMER CABINET MINISTER AND MP
3RD JUNE 2018
There is a phenomenon in politics called the tipping point. Pollsters like Public Domain advised that in their experience, when the proverbial rot has set in against a government typically between 18 and 24 months after a general election, it is almost impossible for the government to reverse the general mood of the electorate.
In no particular order, major issues that built up to the tipping point were a lie about the stolen VAT money; a walk back on the Spy Bill; the fraud and secrecy surrounding the Oban oil deal and the lies and general hypocrisy about the completion and opening of the Baha Mar resort.
Bahamians were unhappy with the Prime Minister calling them corrupt in the international arena instead of promoting The Bahamas and the resourcefulness of its people. The objective record clearly shows that The Bahamas is the least corrupt nation in the Caribbean.
Another major tipping point issue was the insensitivity and arrogance of Education Minister the Hon. Jeffrey Lloyd in telling the media that he was pleased to fire several hundred persons from his ministry. This was exacerbated by the mass firings or separation or thousands of workers in the public service. The last salvo was the cancellation of the empowerment program and the firing of several hundred workers in the Public Private Sector Partnership program (PPP).
We observe in the budget heads that emoluments have increased by several hundred millions in the upcoming budget. Why is that? The FNM was busy firing thousands over the last year because they say the public service is bloated. Do they plan to engage in mass hiring to reverse the politically sour mood of the people?
The borrowing of $2.3 billion in one year with no clear explanation on how the monies were spent was very unsettling and disturbing to many Bahamians. Compounding the confusion are the tens of millions in purported savings from the downsizing exercise and the hike in VAT to 12%. There were tax exemptions and waivers offered in the current budget but the tax increases are projected to net the government an additional $400 million in tax revenue, neutralizing all these tax exemptions. Bahamians are asking what the government is doing with all of this money and rightly so.
To date, the only explanation the FNM government could muster in their defence was that it’s the PLP fault. I kid you not.
We say NO LIE LASTS FOREVER!
The Prime Minister recently blamed the threat of Bahamian currency devaluation for his government’s decision to raise the VAT rate from 7.5% to 12% a whopping increase of 60%. Bahamians assume that a Prime Minister knows the difference between fiscal and monetary policy. Currency devaluation, a monetary policy is presided over by the Central Bank. Raising taxes to fund government operations is a fiscal policy issue.
Prime Minister Minnis said the following on the 31st May 2018: “I do not believe we can tax or borrow our way out of debt. They call me a hypocrite for increasing Vat to 12%. If we did not we would be devalued within a year.”
Firstly, the Prime Minister is duly advised that the Bahamian dollar is pegged against the US dollar and is not a floating currency. Secondly, The Bahamas has a service driven economy where 90% of our goods and services are imported and paid for in US dollars. Thirdly, the sovereign currency devaluation becomes a threat when a country defaults on its foreign currency debt obligations to foreign financial institutions and investors.
Additionally, when the country’s foreign reserves are inadequate to pay foreign vendors for commodities such as oil and other essential goods and services such as food, the country is under threat of currency devaluation. These are strictly monetary and credit issues.
The Finance Minister literally bragged about the Central Bank having 23 weeks of foreign reserves or some $1.6 billion according to the Central Bank. Further, The Bahamas Government has never defaulted on its full faith and credit to its international creditors and in its latest report.
Since the Prime Minister contradicted his Deputy Prime Minister and official Central Bank reports, he must explain to the Bahamian people the source of his information. Engaging in obtuse and fallacious alarmist rhetoric to defend the indefensible is unbecoming of a Prime Minister and quite frankly it’s a national embarrassment as the country’s various news wires are read internationally.
This alarmist rhetoric is reminiscent of ill-advised commentary the Prime Minister engaged in while representing The Bahamas in Lima, Peru and in London; he called Bahamas a corrupt nation when there was no empirical data to support such a claim. The Bahamas is listed as the least corrupt country in the Caribbean region. The Prime Minister is asked to cease and desist with this kind of nonsensical, shoot from the hip rhetoric and govern this country.
Currency devaluation has nothing to do with raising funds to repay a debt by whatever means. The Prime Minister raised the VAT rate to 12% to pay off the $2.3 billion he borrowed in one year and he must not willfully deceive an entire nation on his poor and terrible fiscal policies.
I go further. Now that VAT has been hiked to 12%, this increased tax burden could and no doubt will negatively impact the economy’s ability to earn foreign currency as it is a disincentive to foreign direct investment and will serve to diminish our competitive edge in tourism. These are some of the real consequences of that ill-advised policy Dr. Minnis ought to be gravely concerned about.
One only needed to see the frosty reception the people of Grand Bahama gave to Peter Turnquest at the Labour Day parade in Freeport 1st June. Much of the crowd left after Senator Mitchell spoke, ignoring the Deputy Prime Minister and MP for East Grand Bahama.
If Grand Bahama is FNM country, then Bahamians could imagine the mood of Bahamians in Nassau and the other family islands – many of whom benefitted from the empowerment program.
Given one policy blunder after the other by this government, it is no wonder that much of the political currency has been squandered in one short year. Some are now arguing that the FNM’s time is up as they have reached the political tipping point of no return.