Progressive Liberal Party (PLP) Deputy Leader and Shadow Minister of Finance Chester Cooper said yesterday it is clear the Minnis administration does not have a well thought out strategic plan for how it will address the impact of Hurricane Dorian on The Bahamas.
“We are certain that the government does not have a plan. I think they enjoy new announcements. Every week the prime minister announces something new. This week in Parliament we’re going to debate a bill to form another authority. So, another authority on top of all the bureaucracy,” Cooper said in an interview with Guardian Business.
“People are falling over each other, very little is getting done. I visited Grand Bahama last week, debris is still piled very high. People are still complaining that they’re not seeing enough progress.”
Cooper questioned the difficulty in the government implementing a start date for the value-added tax (VAT) free zones designated for storm-impacted areas, which he said is crucial to restoring commerce on those islands and restarting their economic engines.
The prime minister announced Grand Bahama and Abaco as VAT-free zones last week for one year, but did not indicate a start date.
“Whether the one year is adequate remains to be seen. The important thing is to get commerce going, firstly; get the VAT-free zones implemented because they don’t know when they are going to do it. Notwithstanding my advice several weeks ago, they still don’t know when it’s coming into play,” he said.
“So, get it into play, reassess it in another year, get the same concessions for Ragged Island, VAT-free in Ragged Island, concessions for fishermen to buy boats to benefit from the small business fund. If there are 60 people there it can’t be that much more expensive, so why exclude them from any hurricane relief effort?”
The Exumas and Ragged Island member of Parliament called it a baffling and perverse logic to exclude his constituency, which suffered devastation during Hurricane Irma in 2017.
“The government has to do a better job in terms of listening to advice from the opposition. Several weeks ago, I said in the House of Assembly that the government should create VAT-free zones for Grand Bahama, Abaco and Ragged Island. They announced that they are going to do it for Grand Bahama and Abaco, but they still can’t say when, but they haven’t announced it for Ragged Island,” Cooper said.
“It’s baffling that even though they say they haven’t forgotten Ragged Island, the people see otherwise. So, in effect, what we have is a government two years in who has done very little and the fixes on Ragged Island are very simple. We see trailers going into Abaco and Grand Bahama. Well, Ragged Island needs a trailer for its school and clinic and government building. It’s a fairly simple fix, yet government does very little. So, if they haven’t forgotten, they are either being very heartless, or negligent, or incompetent with respect to responding to Ragged Island.”
As for the economy on the whole, Cooper said the government is laser focused on reducing the deficit instead of growing the economy during its term thus far, which has placed the entire country in a fragile state because of Dorian.
“We’ve always said that the government was misguided with its laser focus on managing the deficit. They spent too much time on the deficit, not enough time on economic growth. They eventually got some unemployment numbers moving in the right direction, too little too late. Revenues didn’t improve significantly, notwithstanding the boom in the tourism industry,” he said.
“So again, we were right in terms of where the focus of the government should be and that is on economic growth. Yet we continue to talk about the deficit. We continue to manage the deficit to the detriment of the country.”
Days before Hurricane Dorian slammed northern Bahamas, the government said it had achieved the lowest fiscal deficit in ten years, ending at $222.4 million or 1.7 percent of gross domestic product (GDP).
However, now the government has estimated that the debt from the initial drawdown of $25 million from the Inter-American Development Bank’s (IDB) $100 million contingent line of credit for natural disasters, along with other planned borrowings in the first quarter, resulted in a net increase in the government’s debt of $64.3 million.
Cooper said it was a bad strategy for the government to suppress capital expenditure as stringently as it has over the past three years.
“Capital expenditures continue to be suppressed notwithstanding the needs in the economy. We want the minister of finance to talk about VAT refunds and how much of that is still due to the business community. We want the minister to talk about vendor payments and whether there are arrears; we still have vendors complaining. So, we suppress expenditures and we rave about meeting the deficit while the economy suffers. I think it’s a bad strategy,” he said.
“The minister raves about accountability and fiscal prudence, yet we have no provision in the fiscal responsibility act for the eventuality of there being natural disasters like hurricanes. Well, we live in a hurricane zone and the minister has finally come to terms with the fact that hurricanes have consequences. I recall in Parliament when the leader of the opposition spoke about how Hurricane Matthew impacted the numbers and the previous deficits and they laughed about it, they thought it was amusing, but now they finally concede that as a result of hurricanes there are increases in expenditures and reductions in revenues.”
The solution, according to Cooper, is a well thought out contingency plan.
“There are significant consequences of hurricanes and they happen so frequently and so severely that we have to see how we build in contingencies into our numbers moving forward. So, when we talk about the Fiscal Responsibility Act, we must ensure that we are looking at the big picture, keeping in mind what can go wrong, what the contingencies would be and the fact that these hurricanes have consequences,” he said.