For the last five years governments of Barbados have been trapped like a rabbit in oncoming headlights as to what to do about the cascading economic crisis that has descended on the island and the simmering social breakdown that no one wants to talk about. Many prefer to close their eyes and pretend that global problems beyond local control are the reasons, so all they have to do is sit back and wait and things will magically change.
However, no where has there been a substantive strategic plan, no strategy to rebalance public sector spending, no plan for growth, apart from the rhetoric, and nothing at all to deal with the threat to social order. Nowhere in the many speeches and rebuttals of his critics has finance minister Chris Sinckler talked about the much-needed fiscal discipline, reducing public sector borrowing or spending. He has mentioned growth, but it is all smoke and mirrors, rhetoric without any follow through action.
Here I want to outline some simple policy actions or announcements the DLP government should have taken within the first 100 days of coming to power, and, to my mind, the mistakes it has made. The nearest the government has come to publishing an expressed policy was its “Barbados Short and Medium Term Action Plan” of December 2008. Lots have happened in the last four years, and, apart from the occasional reference to it, that document has not been updated.
The greatest social problem facing Barbados is that of social stability; everything else is secondary to this, and the most important part of this is youth unemployment. Government should have moved within days – in fact, the first 48 hours – to announce its intentions on a comprehensive youth policy, ranging from jobs creation, to education, to reducing the age of majority. In 1963, nearly fifty years ago, the Barrow Administration reduced the age of majority from twenty-one to eighteen – years before the UK and most other developed nations. It is hard to imagine that nearly fifty years later the quality of our public education is such that there should be resistance to reducing the age of majority a further two years to sixteen. This would not only empower young people, giving them a sense of taking part in our youthful democracy, to reinvigorate our public conversation and policy-making.
The priority, however, should be to get those school-leavers who are not going on to further or higher education in jobs or training as soon as they leave fulltime education. There should be a multi-pronged approach: turning all entry-level public sector jobs in to job-shares, on the principle that it is better to have a part-time job than to sit at street corners with the risk to descending in to delinquency that that entails.
The second approach would be to get as many as possible in to apprenticeships by offering incentives to employers to take on trainees for a wide range of skills and crafts and for the full duration to completion of that training. One other policy area the government should give serious consideration to is a form of voluntary national service for 16-24 year olds, for which volunteers would be rewarded, either by getting an advantage when they apply for public sector jobs, or having all or part of their university fees paid for by the state. (This implies that the funding of the UWI would move from its current funding to one where students would be responsible for their own fees, tuition and residential). All this will be part of a wide-ranging reform of the educational system, including a gradual increase in the percentage of GDP spent on education.
The next area that is badly in need of urgent reform is the criminal and civil justice systems. A comprehensive computerisation of the public sector, including the Registry and courts, would not only improve the quality of justice, but the overall administration of justice in Barbados. One innovation that is urgently needed is a small claims court, a Judge Judy tribunal, with legal powers to oversee rows between relatives, neighbours, private loans, employees/employers, consumer issued, in other words small matters that not clog up the main courts. Decisions should be binding, only litigants in person should be allowed, so as to keep out costly and pretentious attorneys, and cases should be based on the facts without the admission of case law.
And, there is a need to hire part-time judges from the army of senior lawyers in private practice, use temporary buildings as courts, such as the old court buildings, to reduce the massive pile up of cases which go back years.
Short Term(First Year):
A government in an economic tight spot should act urgently, not only to restore confidence in the population, but to send a message that it is not business as usual. Of course, since the major problem is economic – although as has been pointed out, social stability is equally as import – government should have acted immediately on coming to power to rebalance public spending. It should have frozen public sector pay as an alternative of cutting pay. In stead it gave the public sector a pay rise.
A pay freeze would have had the same effect as a wage cut over a period of time as inflation would have reduced purchasing parity. One reform that should have been implemented within the first hours of the new government was to disband the Defence Force, saving over $30m a year, re-form the volunteer Regiment to provide our internal security needs and RSC obligations, and transfer all the staff, with the exception of officers and a few non—commissioned officers, to the police and Coastguard. This should be accompanied by a shift in security policy from internal policing to a wall of steel round the border, with a better equipped Coastguard, a Special Task forced equivalent to the marines (or Navy Seals), and at the same time make Customs the lead organisation in the fight against drug and gun smuggling. Along with this should go the creation of national traffic police force, removing traffic duties and a national detective agency (without powers of arrest), leaving policing to a well-funded team of uniformed officers.
Rebalancing the Economy:
The need for an urgent rebalancing of the current account deficit as the basis for a wider fiscal discipline is clear. There is also a necessary need to re-educate the public (and some senior financial regulators and academic economists) about the purpose of foreign currency reserves and how these relate to economic shocks, pandemics and volatility and risk.
In simple terms, warehousing Bds$1.3bn in the expectation that some externality may occur, similar to the millennium bomb, which will wipe out Barbados is like believing in Nostradamus. It is this ritual obsession with foreign earnings that led former prime minister Erskine Sandiford to sell locally produced sugar to the then European Economic Community, while Barbadians had to import what appeared to be unhygienic sugar from Guatemala.
What is needed within the central bank and the higher levels of the ministry of finance is an expertise in currency trading and the futures markets and, on the part of the government, a sound food security policy.
But then again, a good food security policy must be integrated in to a land use policy and at present we still have acres of good agricultural land being sold for house building. This is criminal.
Another immediate national need, certainly over the lifetime of this parliament, is a locally-owned retail bank. The money government has pumped in to the white elephant of Four Seasons, or underwritten loans, its investments in LIAT and the Trinidad-owned BNB, should have been poured in to a Post Office Bank for the simple business and economic reason that for financialisation to work there must be credit. And there will not be any economic growth without financialisation. And, as we know, the Trinidad, Canadian and Bermudan-owned banks have no business interest in Barbados other than warehousing savings and selective lending. A retail bank, offering basic services such as savings, residential mortgages, credit cards and protection products could become the vehicle for funding small and medium enterprises, the drivers of any economic growth. With eighteen post offices distributed all around the country, a Post Office Bank – rolled out over an extended period – would be enormous attractive to households and businesses in Barbados.
(Part two next week)