Thinking through policy

Fri, Oct 21st 2016, 11:12 AM

There is much discussion in the public sphere as to how The Bahamas will fund hurricane recovery. Last year Hurricane Joaquin caused $100 million worth of damage to our southern islands. Hurricane Matthew caused more damage this year because it hit the larger population centers of New Providence and Grand Bahama, along with Andros and the Berry Islands. The cost of this damage could be $500 million or more. Assessments are still being made.

There is consensus from right-thinking Bahamians that the government can't continue to fund these recoveries in an ad hoc manner through dipping into the public purse. There is not enough money there to pay for damage from these storms every year or so, if they hit that frequently, and to pay for ongoing national responsibilities.

Prime Minister Perry Christie has made several comments regarding the creation of a hurricane fund and/or a bond issue to seemingly help pay for Matthew's damage. It has been difficult understanding exactly what he means to do. We agree that a permanent funding model is needed for disaster relief. But we would caution the prime minister to think through his idea. His comment about creating a new tax, after his vague declaration about bonds, has caused more confusion, and some anger, than it has helped.

"We have to give serious consideration to a more effective way of financing the loss that the country has experienced because we're also paying now for Hurricane Joaquin and it may well be that we have to give consideration to a selective approach to raising money by taxing some item that would be of minimal impact on people," Christie said to reporters on Tuesday while touring Adelaide.

"But it's a matter we have to look at because it's an enormous challenge to the country. We've been faced with downgrading. This is not an easy situation. We thought the way was clear with Baha Mar. But now we have Hurricane Matthew."

Christie must remember that his government implemented the largest tax increase in modern Bahamian history via value-added tax (VAT) in January 2015. The economy is in recession and unemployment has been in the mid-double digits since the fall of 2008. While Bahamians will support him creating a new hurricane recovery model, they will not support a new tax.

When the Progressive Liberal Party (PLP) wanted to fund Bahamas Junkanoo Carnival, it found tens of millions of dollars to do so. If that much money is lying around from existing revenue streams for a national party, then money should be easily found annually to put aside for hurricane recovery without a new tax.

We remember the hundreds of thousands that went to the South African gaming consultants in the run-up to the legalization of web shops. We have lost track of the hundreds of thousands, if not millions at this stage, paid to various foreign consultants on National Health Insurance. Bahamians want the waste cut and money invested in our development, our future.

Christie should sit with the Ministry of Finance and bring in Bahamian private sector partners to help him come up with the funding model. As mentioned, it should draw upon existing revenue streams and not add an additional burden to struggling Bahamians. As minister of finance it is up to Christie to inform those who are set to benefit from wasteful spending that that money will now go toward a properly administered hurricane recovery mechanism.

If Christie can get this right he would leave an important and meaningful legacy initiative. This is a time for thoughtful intervention.

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