June 02, 2010
I commend the Rt. Honourable Prime Minister and his team for their leadership and competence in finalizing the budget.
I especially single out
- The Prime Minister for continuing to engage every corner of The Bahamas as he seeks solutions to the challenges before us. I have never heard of a man having so many people and being so available. Contrary to the view expressed publicly. I know that he always seeks a solution which does not divide our society.
- And the Minster of State for Finance for his strong belief in Bahamian entrepreneurial talent and his continued tangible support of their cause.
The very difficult economic situation faced by our country and indeed the world is real and painful. While, it has been a fascinating discussion in global economic history, there is no question that the fallout from the global credit crisis has been a real and painful experience for the world’s citizens. The Bahamian people have not been spared.
The year in review cannot adequately be put in context without reviewing this term in office. We met a lot of projects approved and a number of promises and commitments made. The seeds of our discontent were planted deep and were beginning to spring. In Eleuthera, there were several projects approved…Royal Island, the French Leave, Urgo Hotel, Half Sound, and Windermere Island. In New Providence, New South Ocean; and in Grand Bahama, Ginn…these projects together promised in excess of $9 billion of investments that in most instances have yet to materialize.
Our early, measured response to the crisis enabled us to weather the most difficult years Our Country has experienced since the Great Depression. We must now prepare for the future.
In the words of the Prime Minister, “while the recovery may be modest, we can maximize the gains from that recovery through sacrifice, service and social reform. The sacrifice we make today will put us in a better position tomorrow.
“Service excellence will allow us to increase our competitive edge and gain accelerated benefits.
“Social reform will enable us to change our behaviour as a society and to improve our quality of life and our attractiveness as a place to visit and in which to conduct business and live.”
Service excellence and social reform are absolutely critical to our eventual success.
When The Bahamas gained its reputation for friendliness and service, before we became a vibrant, year-round tourist destination, we were serving each other. Visitors to our shores observed Bahamian people in the marketplace and on Prince George Wharf selling handicraft made by them, crabs caught by them, farm produce grown by them, and seafood fished by them in boats built by them; and interacting in the convivial atmosphere of a free and loving people. We served each other. We cannot serve tourists until we learn to serve ourselves again. This requires an investment by this society in its most important resource – our people. When we began to distinguish between service to the tourists and service to self, we began to lose our edge.
American and European Central Banks and agencies have taken ownership of over 3 trillion dollars of government debts and toxic assets from their financial, insurance and manufacturing companies and have made commitments beyond 11 trillion dollars which may still be called upon.
These intervention measures have been referred to, among other things, as relief programs and stimulus packages but the bottom line is that governments around the world have sought to fight off financial catastrophe.
Even now as committees are formed in America and Europe, to analyze the causes for the credit meltdown, negative events stemming from it are still occurring in real time.
- Just last week, three more banks failed in America moving the total number of financial institution failures in that country to 78, for the year 2010 and the total number of failures since 2008, in the United States, to 229.
- In early May, European Member countries committed, in conjunction with the International Monetary Fund, some 750 Billion Euros to help support the Euro Currency and prevent Greece from defaulting on its debts. Last week, Standard & Poor’s downgraded Spain’s national debt rating and concerns remain about Ireland, Portugal and other European countries.
I mention these points to underscore that everyone in the world is under tremendous pressure to ensure economic survival: individuals, trade organizations, companies and the world’s governments.
The problems facing most governments in 2008 and 2009 were those of absolute survival. The problems of 2010 and 2011 are going to surround issues of sustainability and the proper execution of the plans put in place to promote recovery.
Governments around the world have realized that it is not sustainable to borrow at such a pace, for such a long period of time and have began to plan how to return to sustainable budget frameworks, without affecting their recoveries. Economists refer to these deep budget cuts as austerity measures.
Mr. Speaker, the contraction of the global economy has been significant, but perhaps the most detrimental impact of the crisis on the Bahamas has been the shear length of the recession.
The Bahamian economy, as we all know, is consumption based. The bottom line: when consumers, both Bahamian consumers and tourists, who visit our shores, have less disposable income; they consume less and as a result the Bahamian economy suffers.
At first, in 2007 and 2008, The Bahamas was directly affected by a significant drop in Foreign Direct Investment, due to the global recession, a key economic pillar which we depend on for economic growth. With high unemployment and lower disposable income available to them, the number of tourist arrivals has been impacted, along with their average spends, while they are here visiting us in the Bahamas.
Our own banking system, while not plagued with any bank collapses, is wrestling with hundreds of millions of dollars in non-performing consumer and commercial loans.
Our hotels and tourist related businesses have grappled with reduced revenue and have had to: in some cases, lay employees off, or even close for extended periods of time, in order to make ends meet during this difficult time.
In preparing my contribution to this debate, I reviewed past contributions made during our Government’s term in office – contributions I have made and some of the contributions made by others on both sides of the floor – in an effort to somehow put the difficult decisions that we have had to take in this 2010/2011 budget into context.
Our FNM Government took office in the spring of 2007, facing what I have referred to in previous discussions in this place as a new normal for the economy. While none of us could have anticipated the broad reach of the financial crisis both in terms of size and timeline I do believe that our Governments early, measured response enabled us to weather some of the most difficult years since the Great Depression.
We have implemented stimulus programmes that take account of our financial realities, and we have adopted a measured approach to attracting private sector investment to create jobs and economic activity, and insulate Bahamians from the worst of the global economic decline.
I will repeat, in part, what I previously said about our response.
- The Prime Minister informed Parliament and the Nation of the impending economic slowdown and provided regular updates since.
- The Government increased social service remittances to a wider category of affected persons ($14 mil)
- The Government Provided a $4mil relief to disconnected BEC customers
- Expanded temporary jobs in the public sector through a parks and street cleaning programme to stimulate economic activity ($6mil)
- The Government did not lay off any public sector employees (~$15Mil)
- The Government hired a number of additional public sector employees (Customs, Immigration, Police, Treasury, Post Office) ~$5mil
- The Government provided direct cash support to Isle of Capri casino ~$4mil
- The Government provided relief to Emerald Bay (BEC) ~$5mil
- The Government expanded the public sector infrastructure programme in Eleuthera, Abaco, New Providence, Andros, ~$60mil
- The Government approved and implemented the IDB and GOB funded New Providence Road Improvement Project. $130 mil
- The Government legislated generous tax relief to the private sector ~$10mil (Tourism Development Act, Downtown Revitalisation Act
- The Government reduced the down payment on home mortgages and raised the ceiling to $250,000 and reduced mortgage insurance to ½% from 2%
- The Government approved the Harbour Dredging Contract to complement the Downtown Revitalization Act and Tourism Development Act to redevelop downtown and over-the-hill.
- The Government passed the Unemployment Assistance Act and caused NIB to fund it with $20 mil.
- And much more.
As we look to the future and debate this budget; we must also take this as an opportunity to ensure that during this downturn, we re-ignite the potential of the Bahamian people, so that we will be in a position to energetically respond to opportunities when they arise in the future.
We focus on these principle lessons learned from other countries:
The share of national wealth consumed by the state must be reduced to accommodate the expansion of productive activities in the private sector; and fiscal discipline must be maintained despite our economic challenges.
The stimulus initiatives were executed as part of our FNM Government’s 2009/2010 budget. During this period we sought to provide relief and assistance to those in need, during the most difficult time of the crisis. As countries around the world search for answers amid the tumultuous uncertainty, I think it is fair to say that in my opinion, The Bahamas has distinguished itself as among the best governed countries in the world.
In order for us to continue to hold ourselves in this high esteem we must continue to govern responsibly.
On coming to office for the first time in 1992, the FNM sought to draw on the best of the past to build a foundation for sustainable growth in the future. The early 1990s was another recessionary period for The Bahamas, compounded by mismanaged public finances and a critical lack of investor confidence owing to the country’s tarnished image. Tremendous efforts were required to rehabilitate our crippled economy, and a disheartened population cried out for innovative and decisive leadership. The Prime Minister is right to note his history. He has had to do this before. During its first terms over the course of 10 years, the FNM Government demonstrated
- a culture of openness in government;
- fiscal prudence;
- accountability in public finances;
- the ability to attract foreign and domestic private investment; and
- A determination to reduce state ownership in the economy.
We have demonstrated over the past three years, the same quality of focused, steady leadership.
THE NEED TO SHORE UP THE BUDGET
Going forward it is not sustainable for the Government to continue to borrow money to fund these stimulus programs in perpetuity. Your FNM Government has made some difficult decisions in order to pursue the goal of a balanced budget so as to guarantee our nation’s financial future.
With several options before us we made the decision to balance a reduction in Government expenditure, with specific tax increases targeted to grow Government Revenue. As your Government strives to balance the budget and reduce the cost burden of carrying its national debt the funds currently being allocated to debt repayment will become available to fund other essential services. Currently, we spend 15 cents of every dollar your treasury earns servicing debt obligations this amounts to several hundreds of millions of dollars a year and needs to be addressed - now.
In the words of our leader, “While we must necessarily be watchful of the pace of recovery externally, we are mindful that there are steps that we can take to promote our own economic wellbeing as well as optimize the gains from improving external conditions. To this end, you will note in this Budget provisions being made for the following:
- “An aggressive Foreign Direct Investment promotion thrust, with some $1 million for this purpose. We expect to mount investment promotion missions, in partnership with the private sector, to key world cities, putting our case to investors to participate in profitable ventures in The Bahamas.”
As I will detail shortly, we have already started this process, in earnest. Our leader went on to say
- “A new Small and Medium Size Business Development Framework to encourage the growth of such businesses, recognizing their contributions to job creation and the sustained development of our economy. This new framework provides for some $10 million, representing the consolidation of subsidies to BAIC, the Venture Capital Fund, Bahamas Development Bank and an additional $1 million. The additional $1 million will advance the implementation of the new SME support framework and further efforts to explore the development of Bahamian entrepreneurship in the Boutique Resort Business. It will also assist efforts to create linkages between the tourism sector and local industries. The aim here is to encourage the expansion of Bahamian production and increase foreign earnings retention.”
The point I made earlier about the extent of The Prime Ministers listening is best illustrated here and in the vehicle tax. His fundamental belief that every citizen must share in the tax burden is equally balanced with a strong sense of equity and fairness.
One common drawback of post colonial governments, despite many positives, is the tendency of citizens to look to their governments to solve all their problems and address an increasingly wider array of needs.
Consequently, an ever-present challenge for those leading administrations is the balance of legitimate expectations with practical limitations including those of fiscal prudence. The Bahamas, like all small countries, faces this dilemma to a significant degree and are particularly frustrated by it being an archipelago and having the responsibility to provide services across many islands.
However, as I will seek to demonstrate, we are also uniquely positioned to manage the logistical and financial issues in front of us and to build The Bahamas we all want and plan for our children.
The Bahamas has options; however, the Water & Sewerage Corporation, the Bahamas Electricity Corporation, Bahamasair, ZNS, BAIC, and the BDB consistently consume the precious limited financial resources your Government has available to it while nurturing a culture that presumes never-ending bailouts.
Excluding BEC and the Water & Sewerage Corporation, the allocation for the Ministry of the Environment and its agencies, are approximately $45 M. Almost 50% of my Ministry’s budget allocation goes to propping up state-owned monopolies.
In the coming year, we intend to tackle BEC and the WSC to continue on the path of sustainability.
Bahamas National Trust
The Bahamas National Trust will receive an allocation of $750,000. This statutory organization is responsible for the management of The Protected Areas system of The Bahamas. It has forged a unique relationship with the Friends of The Environment of Abaco, BREEF, and The Nature Conservancy. The BNT completed an extensive boardwalk at Harold and Wilsons Pond, Bonefish Pond and the Primeval Forest making excellent use of the $300,000 dollars it was allocated in last year’s fiscal budget as part of the stimulus. The successful execution of this initiative is very important, because these boardwalks give Bahamians greater access to the beautiful resources the organization is mandated to protect.
Bahamas National Trust and The Nature Conservancy
Together, with its partners, the BNT is responsible for implementing the Caribbean Challenge, and making the stewardship of the environment a high profile agenda item for all Bahamians.
The current film Oceans, produced by Disney, is a wonderful indication of the depth of integration The Nature Conservancy has achieved in our country. These two organizations were largely responsible for the early response of the scientific expedition to Cay Sal to benchmark environmental conditions in advance of the likely effects of the Deepwater Horizon Oil Spill on The Bahamas and are to be congratulated for their efforts. More on this later...
Bahamas Maritime Authority
The Bahamas is a proud island nation steeped in the history and traditions of the sea. Today, through the BMA, The Bahamas is a major hub for the shipping industry. Through the BMA, its influence ranges from its own port, cruise ship, dry dock and container industries, to its centres of excellence in shipping law and insurance. The BMA is at the heart of The Bahamas’ international image as a global financial centre and is one of the world’s premier and most respected flag administrations. The Bahamas is home to a vibrant and growing maritime custom which includes essential support industries such as major transit and ship repair.
The BMA’s influence spreads across the world, from the major shipping and ship-building nations to the International Maritime Organization, where The Bahamas is both one of the largest financial contributors and also one of the major influences in the development of global shipping policies.
The Bahamas is the flag of choice for many of the world’s finest fleets, which is why we are firmly established among the world’s largest registers. There are many reasons why The Bahamas is a flag of choice, but chief among them are:
- Our flag is respected for its quality.
- The fleet is young, and the BMA actively discourages old vessels.
- The fleet has one of the world’s finest records for port state inspections, and as a result, ship owners can be confident that their fleet will not be excessively targeted by inspectors.
- The BMA is a powerful voice in world shipping and the development of policy and legislation.
With ships from more than 58 nations, The Bahamas’ register has strength in its global presence. The BMA can grow the Bahamian economy and broaden our base.
- 1. Yacht registry
We aim to attract the top end of the market in whatever field we enter. For the first time in six years, the BMA will be an exhibitor at the Posidonia Shipping Conference in Greece. The exhibition is co-sponsored by the BFSB, the Ministry of Tourism and the BMA. The recent adoption of the Bahamas Yacht Code will enhance the BMA’s ability to extend its registration of yachts.
- 2. Marina Policy
The BMA recently approved a proposal to develop a master plan for a network of marinas in The Bahamas. The Bahamas is well-known as one of the premier yachting and cruising destinations in the world. However, more than half of the potential yachting and cruising areas in the country are almost completely isolated and rarely visited by yachts and pleasure craft. The reason is twofold: partly because of long sea distances, but the mainly the lack of safe harbours and marinas. With no locations to purchase fuel, spend the night and to buy food a number of large islands are facing dwindling populations and losing out on tourism and related prosperity. Developing marinas must be balanced with protecting the environment because we do not want to damage this very remoteness and clarity and beauty of the water that attracts yachts and cruising boats in the first place.
The solution to this problem is to create a string of environmentally sensitive marinas and safe harbours to serve this market. The Bahamas’ reputation as a boating destination comes from a number of factors: its proximity to Florida, the clear blue waters, and the unspoiled nature of its beaches and many islands. This has attracted yachtsmen for over a century and the increase in the number of boats visiting the country has seen exponential growth over the past few decades.
To put this opportunity into perspective on can look at the change in the number of registered “Pleasure” vessels in the state of Florida over time.
In 1993, there were
- 41,000 vessels registered in the range of 26 to under 40 feet;
- 7,129 registered in the range of 40 feet to under 65; and
- 334 vessels registered over 65 feet.
In 2009, these numbers jumped to:
- 78,823 vessels registered in the range of 26 to under 40 feet;
- 13,015 registered in the range of 40 feet to under 65; and
- 817 vessels registered over 65 feet.
- 3. Training of Seafarers
The adoption of the yacht code, the development of a comprehensive national marina policy and the aggressive pursuit of this market will create significant opportunities for Bahamians as seafarers, guides; and downstream opportunities in marina management.
The Bahamas Maritime Authority is also taking advantage of the fact that Greek ship-owners control over 19% of the world’s shipping fleets, with over 700 shipping companies, controlling some 4,300 ships. We are currently seeking to expand our presence in Greece. The Authority’s plans are also well underway toward opening an office in Hong Kong.
Promotion and marketing of the Register is important. In this regard, the BMA is participating in POSIDONIA, one of the largest, most important International Shipping Exhibitions in the world which commences tomorrow. Posidonia, held in Greece, is attended by representatives of the shipping industry including: ship-owners, ship designers, engine manufacturers, port directors, marine electronics and telecommunications technologists, shipping agents – personnel from a wide spectrum of the industry – an excellent marketing opportunity for our flag. The Attorney General will lead the Bahamian Team to Greece and promote our New Arbitration Act, Yacht Code, Weddings at Sea and the synergy between wealth management, investment , shipping insurance and tourism in The Bahamas.
Bahamas Electricity Corporation
I now turn to BEC which has undergone extensive changes in the past year. The Corporation has hosted six Town Meetings in pursuit of a tariff review and has benefited from an extensive, thorough evaluation of its technical and regulatory environment by the German firm Fichtner as a result of a grant from IDB. Additionally, the Government approved Canadian utility EMERA to undertake a sixty-day technical, financial, power-supply, and human resource analysis. EMERA will produce a business plan for BEC and its early analysis has already revealed opportunities for significant gains by reducing system losses, managing the supply chain properly, fuel hedging strategies, and a rationalization of electricity supply. EMERA will also provide focused integration of renewables in BEC’s electrical supply. We do not require the same model for all 27 power plants in The Bahamas. There will be significant opportunities for individual Bahamians and businesses to participate profitably in energy supply for The Bahamas. I confidently expect to see a windmill at Clifton Pier, a water-to-energy facility demonstrated at New Providence and a wave energy technology deployed.
Water and Sewerage Corporation
The WSC is scheduled to receive $18M in grants. The IDB-funded Castilia study on the WSC has identified several key areas for improvement. As a direct result, nonrevenue water, which accounts for over fifty percent losses of supply, will be the main area of focus. The Corporation will also, in this fiscal period, improve the water supply in Tarpum Bay and Rock Sound, Eleuthera.
Department of Environmental Health Services
The DEHS was the main focus of a significant part of the Government’s effort to assist Bahamians and clean the island of New Providence. We have expanded our beautification programme by planting trees in open spaces and we have removed casuarinas trees from along the West Bay Street, route – particularly in the area of Saunders Beach.
With respect to Saunders Beach, much ado was made about the seasonal erosion of that beach. All sorts of dire predictions were made. Despite the same conditions occurring on and all beaches along the northern coast of New Providence and Paradise Island and throughout The Bahamas. Saunders Beach was singled out earlier this year. I single it out here, for its singular, natural restoration!
Mr Speaker I was foolishly accused of trucking sand to this beach, destroying turtle nesting grounds.
These pictures of that very same beach were taken yesterday…
The Department of Environmental Health has been one of the primary focuses of the government’s continued commitment to assist Bahamians affected by the global economic downturn.
I cannot tell you, nor Members, exactly how many home mortgages we have preserved, school fees we have paid, lives we have restored, or hope we have rekindled and kept alive. I can say, however, that as a result of the government’s unbending commitment:
- Since July 2008, we have employed 805 labourers.
- Since July 2008, we have issued 130 bulk waste contracts, employing an estimated 260 additional persons.
- Since July 2008, we have issued 155 small maintenance contracts, employing approximately 300 additional persons.
- Since July 2008, we have issued 95 trucking contracts employing an additional 190 persons.
The nation will recall one of the worst fires in decades at the landfill and our successful efforts to suppress it. As a result of the fire and the continuing threat to the public health, we have determined that the landfill needs permanent, competent management. This site is the only available site on the island of New Providence and was selected and intended to last for fifty years. At its current rate, it will not last ten. With proper management, the life of the landfill can be extended, fires permanently managed, and downstream pollution eliminated while producing a waste stream that could eventually be converted to 20mW of power.
Negotiations will be concluded for management of the landfill and in six months arrangements will be concluded for the privatized collection of commercial and residential waste. The long-term goal for the landfill is the conversion of that facility to waste-to-energy technology – reducing the ever-growing garbage problem on New Providence with significant additional benefits including recycling, composting, carbon reduction and decreasing our over-reliance on costly and unhealthy landfills.
Department of Physical Planning
I spoke extensively on Town Planning in my contribution last year. I am pleased to say that the Planning and Subdivisions Act was passed by both Houses of Parliament and will take effect on the 1st of July for New Providence. We were authorized to hire ten (10) temporary employees to produce an inventory of approved subdivisions and a first order land use plan for New Providence. Consequent to this, a land use plan for the island of New Providence has been produced based on an extensive review of subdivisions, interviews with stakeholders and field investigations.
As well, these young people have undertaken an audit of subdivisions files dating back to 1925. To date, twelve hundred and twenty-five (1225) have been reviewed for New Providence, ninety-five (95) for Exuma, and so far, eighty-four (84) for Abaco. The remainder of the Family Islands subdivision files will undergo the same review. When completed we will have digital data on owner(s) and/or developer; subdivision design including acreage, number of lots, installed infrastructure, financing, and approval dates; and facilitate overall productivity. This information is vital to the production of subdivision maps for The Bahamas. When it is posted on the Government’s website, the general public will benefit from the ability to determine the status of subdivisions without having to contact the Subdivisions Office directly.
The Port Department is the agency which shares responsibility for the nation’s oil spill contingency. On Monday, we received technical support from the International Maritime Organization (IMO) (Read excerpt from early findings of Cay Sal Bank Expedition)
Department of Meteorology
The relevance of the Department of Meteorology became more heightened when the fatal tornado incident took place at the Container Port in Grand Bahama. The 2010 Hurricane Season has started and will provide another opportunity for the Department and its staff to renew their trust with the Bahamian public. The Departments role in forecasting and modelling is especially useful in watching the path of The Deep Horizon Oil Spill. The Department collaborates with The National Hurricane Centre and has expanded its contacts with NOAA.
- Mr. Speaker
The theme of this presentation is “Building the Bahamas”. We has committed to the Building of the Bahamas through:
- an improved safety net;
- promoting social and cultural enrichment and economic change;
- ensuring that we do not leave our children with the burden of a large Government debt load; and
- By creating opportunities for every citizen to have for themselves and their children ownership and responsibility in the broader economy of the Bahamas.
Many people might ask why we are building the infrastructure of roads, ports, airports, a new sport centre, a new straw market, and new communities in such a depressed economy.
We have a vision for The Bahamas to prepare the economy for rebound, to stimulate rebound and faith that the economy will rebound and, that our people will renew and that our society will continue to mature and progress.
Growth in the south and west of New Providence will continue and the resulting shift in population and business will accelerate towards this growth, similar to how in the last ten years, it accelerated towards Carmichael Road and Coral Harbour. Ten years ago, there was no Royal Bank of Canada, no Bank of The Bahamas, no John’s Shoe Store and no Checkers Café on Carmichael Road. There was no Budget in Coral Harbour.
Yet, the Government foresaw the growth in population and responded by building the Garvin Tynes School, the Flamingo Gardens Clinic, the Police Station, the Post Office and the Library, long before the banks and Checkers moved to the area.
In ten years, there will be an even greater need for schools, banks, restaurants, public parks, health care facilities and housing. Additional banks and businesses will spring up as a result of our vision and the development of planned infrastructure.
The public and private sectors share in the responsibility for managing and supporting this growth. A key example that I would like to highlight is the completely new town centre being constructed by the New Providence Development Company opposite the Airport Industrial Park and Turnberry.
With an estimated six thousand lots in the south-western part of the island, the population expansion is expected to be significantly greater than that of the eastern side of the island and it is important that this increase in population have access to vital services both public and private.
In addition to New Providence Development’s efforts, our Government envisions several new town centres emerging:
- one around the College of The Bahamas and the Queen Elizabeth Sports Centre, and
- One in the southern part of the island near Imperial Park and Sea breeze.
These will create significant business opportunities and will greatly complement our Government’s (both sides) stated objective to revitalize downtown. The urban core of the island will be at the centre of huge opportunities given its existing infrastructure of water, electricity, telephone, roads, and widespread private ownership.
The manifestation of Bahamian entrepreneurship and commercial opportunities in these communities must be nurtured, as we build the people we aspire to in The Bahamas we all want. Rather than fight change, let us, through informed enlightenment, aim to exploit and accommodate the benefit of change, by asking the basic question.
Which business model best serves my interest, capacity and needs?
In this Budget we have made provisions for you to accomplish the goal you set while we, together, grow the Bahamas we want.
News date : 06/02/2010 Category : Press Releases