Budget Debate 2013

Hits: 3527 | Published Date: 04 Apr, 2013

| Speech delivered at: 43rd Sitting- Tenth Parliament

| Speech Delivered by : Hon. Komal Chand, MP

Mr. Chand: Cde Speaker, I rise to support the 2013 National Budget, the Budget of the majority party, so ably presented by the Minister of Finance. Several of the measures outlined in this the second Budget, since the November, 2011 Regional and National elections, I welcome as they would certainly impact on the well-being of Guyana’s working people.
I, moreover, hold the view that the Budget must be assessed from the perspective of continuity as well as against the backdrop of continuing economic crisis at the international level and our own domestic circumstances. These measures in the Budget, I am particularly drawn to, represent, I believe, a purposeful effort by the People’s Progressive Party/Civic Government to give attention and bring much needed relief to the working sectors, the vulnerable and the poor in our country.
It is my intention to focus on a few measures of the Budget and one or two other related issues within the timeframe I am allotted. My colleagues are undoubtedly reflecting on the varied and numerous measures contained in the Budget and which would need greater attention.
Our Social Sectors
It is heartening that the expenditure in the social sectors remains significant. This testifies to the Government’s commitment to ensure that a sizeable proportion of the Budget is devoted to meet the needs of the people, especially the ordinary Guyanese. Thus, from the budgetary allocations, it is discerned that allocations towards education, health, old age and disability benefits, water and housing, and poverty have attracted approximately 32 per cent of the Budget or G$66.2 billion of the G$208.8 billion Budget.
This represents a per-capita allocation of $83,134, accepting that our population is 796,300 persons. 32% to the Social Sector is about four times or 400% more than the aggregate budgetary allocations to these sectors when compared to 20 years ago.
However, as recognised in the Budget Speech, it is necessary to ensure that properly managed systems are always in place in order to realise the full benefits of the social sector expenditures and to ensure those benefits reach easily to the people and in an efficient manner.
Emphasis on education, the extended reach of health services, the expansion of potable water, the continuation of various housing Projects, the improvement of the physical infrastructure in various communities, plans for more projects in Amerindian and hinterland communities, and increases in pensions, are all indicative of the critical and indispensible role of the State, in respect to human resources development, the economic well-being of our population and, generally, the country’s progress. Sometimes, there is a tendency to downplay or pay scant attention to the State’s role in the socio-economic development of a country. And when one considers, additionally, that the State continues to be the largest employer in Guyana today, then I feel constrained to advocate that the State must have a growing and not a diminishing role in our economy.
I hold the view too, that the State needs support and encouragement to carry out the multifaceted tasks effectively and more efficiently. That support can be derived from the genuine, democratic organisations, namely, the trade unions, the farmers’ organisations, women and youth bodies, and professional groups whose members are, in truth, stakeholders as well as beneficiaries of the various tasks the State engages in. Involvement of democratic organisations will, moreover, serve to ensure, whilst enhancing, the state’s role in safeguarding and promoting the interests of the poor and powerless, of our womenfolk, youth and senior citizens.
I am disturbed by my colleague Cde. Neendkumar to announce that Guyana just won the cricket match at the Providence Stadium.
Let me continue. Diversion from a pro-working people’s orientation onto a path leading to another direction is fraught with unspeakable dangers. Just look at the painful experiences in several of the countries in Europe and in North America today. Not so long ago, those were the very countries that were held up as economic success stories of a neo-liberal model of development urged upon developing countries worldwide. Failure to recognise those realities and learn the consequent lessons will only be to our detriment and those countries that have been induced or pressured to tread that path.
The Minister of Finance reminds us that we have completed another year in which growth of the economy was experienced. Given the political challenges of last year, this was indeed a remarkable feat; 2013 promises to be another year of economic growth. Clearly, stagnation and decline in our economic performances belong to a bygone era. Today, our steps are taking us onward and we are looking forward to an increasingly better future.
The Guyana Millennium Report 2011 speaks eloquently to the progress we have made as a country. As Guyanese, we should all take pride in these achievements indentified therein. The report is testimony that we are set on a course to the realisation and complete fulfillment of the Millennium Development Goals. Our gains show what we in Guyana are capable of. They call to mind how much more can be attained with a political will, by placing our unshakeable confidence in the working people and through our united efforts.
A distinguishing feature of Budget 2013, in my opinion, is the Minister’s effort to be innovative. My attention has been drawn, for instance, to a measure that would positively impact the housing sector. To quote the Finance Minister’s words:
“I now wish to announce that, with effect from year of income 2013, first time home owners who are holders of mortgage loans of up to $30 million granted to them by commercial banks or the building society will be permitted to deduct the interest they pay on such mortgages from their taxable income for the purposes of personal income tax”.
This mortgage interest relief initiative is a big surprise to many, I am sure. And what a relief it would bring to those qualified home owners and future home owners. Our citizenry is being encouraged and are given yet another incentive to fulfill their dream of having their own homes.
When assessed alongside the other budgetary measures aimed at bringing relief to the vulnerable, then one can conclude that these would greatly assist in our on-going fight against poverty in our country.
Although there is still more to be done, it is rather remarkable that the past two decades, the PPP/C Administration has removed a significant proportion of our population from dire poverty. The programmes and actions outlined in this year’s Budget would be a further step in that direction. A country like ours, with an abundance of key natural resources must ensure that exploitation of those resources redound to the interests of our people and significantly contribute to the country’s development. With such resources at our disposal, the goal to eradicate poverty or bringing it down to an insignificant proportion by the end of this decade is certainly “realiasable”. I welcome the measures that the administration is focusing on. At the same time, I believe that we need to redouble our efforts to drastically reduce further the 36.1% of those living in moderate and extreme poverty that has been recorded in the 2011 Guyana Millennium Development Goal Report.
Turning to the sugar industry let us not fail to underline the importance of the industry which has more than three and a half centuries of history, which is making a major contribution to the economic life of our country, and which is linked to almost every citizen of our land. The industry, we must remember, is our patrimony. It is our sugar industry which, let us reflect, is linked to several of our national milestones which we are proud of and which we celebrate.
As in colonial days, and forty-seven years after independence, the sugar industry keeps serving our country in a multi-faceted way. Allow me, Cde. Speaker, to identify some of the pertinent data that shows its importance to our country:
• It employs, at peak periods during the year, as many as 18,000 persons.
• Many of the seven factories facilitate the canes grown by about 1,500 farmers.
• It is estimated that about 120,000 Guyanese whether as employees, cane farmers, suppliers of materials, service providers and their dependents benefit tangibly from the industry.
• As a net foreign exchange earner, the industry accounts for a significant proportion of our country’s annual foreign exchange.
• A significant proportion of the industry’s approximate multi-billion dollar revenue is circulated locally thus enhancing all businesses.
• The industry’s expansive drainage network throughout the sugar belt facilitates the drainage of many surrounding villages. A pertinent question is what would be the state of the drainage system in certain areas on the coast without the sugar industry?
• The yearly training of skilled graduates from the Port Mourant School benefits not only the industry but many enterprises and others.
• Our internationally famous Demerara Rum, will be history without our sugar industry
The plight of the industry after the beginning of its recovery in 1991 to the period 2002 – 2004 when its average annual production was 319,587 tonnes of sugar, became manifest from 2005. In that year, production dipped to 246,089 tonnes sugar, rather than being sustained between 275,000 and 300,000 tonnes. The new Skeldon Factory and the significant expansion of the estate’s cultivation and the farmers’ cultivations should have seen sugar production nearing 400,000 tonnes, a production level which the Guyana Sugar Corporation (GuySuCo) has set itself, but, unfortunately, is yet not within reach.
Last year’s poor sugar production of 218,064 tonnes hopefully will not be the pattern and be repeated this year. With focus and pursuit of certain corrective remedies the Minister’s stated 240,000 tonnes target as announced in the Budget is not “unrealizable”. However, all is not gloomy for the industry, a bright future awaits. The price for our exported sugar is encouraging and stands today at about US18 cents per pound in the world market and the prognosis is that the price will hold or even reach higher levels in the period ahead.
Cde. Speaker, permit me to examine the production performance of the industry in five-year intervals over the last twenty-five years:
• In the period 1988 to 1992 average production was 173,294 tonnes.
• In the period 1993 to 1997 the average production 264,549 tonnes.
• In the period 1998 to 2002 the average production was 292,834 tonnes.
• In the period 2003 to 2007 the average yearly production was 279,963 tonnes of sugar.
• In the year 2008 to 2012 it was down to 227,077 tonnes of sugar
Certainly, in view of such performances, one can justifiably conclude that the industry has the potential to recover once again to its high production point as it did from 1991. In fact, its challenges today are not as daunting as it was in the period 1988 to 1992. Thus, it is gladdening to learn of the Government’s commitment to once again make the industry one which will regain its pride of place in our country’s economic life. Workers from this industry, I am sure, will heartily welcome the investments the industry will receive expectedly. The resources are there to turnaround the beleaguered industry. The target is to get the work done and to do it in a short span of time.
It is the agronomic aspect of the industry that has been fundamentally responsible for the depressed sugar production and not, as some pointed out, the six old sugar factories which, I can say, are adequately maintained. The new Skeldon factory, the seventh, was not helpful to higher production since it was commissioned in 2008. But we are told that it has been put almost right after a number of remedial works have been done in several areas. I am pleased to learn that during the first week of the factory’s operations in the crop on week-ending March 30, 2013 the factory performed favourably. Indeed, over a longer period of operation, a proper conclusion will then be possible to draw and to determine whether the factory is performing in accordance with its design and expectations. But the signs are positive.
Labour Turnout - given the importance of the industry, allow me to briefly refer to an issue that keeps popping up in recent times. This issue relates to the poor labour turnout in the sugar industry and its retarding effects on sugar production. Such an observation is not fully correct. As the industry mechanises, especially with respect to cane harvesting and the mechanical loading of canes, the need for yesteryear’s cane cutting labour force, which is unavailable in adequate numbers, is no longer of grave importance. With the cane cutting labour force at the disposal of GuySuCo, the Corporation managed to produce 72,316 tonnes sugar, an average production of approximately 9,039 tonnes sugar per week in favourable weather, over an eight-week period during last year’s second crop.
Nevertheless, I must observe that there is indeed competition for the available workers. Thus, GuySuCo’s wage rates must be more competitive to avoid a further threat from the other employers looking for workers from a common pool.
Recovery of the Industry - much has been said of the challenges facing the sugar industry but I remain confident that they can be overcome. The return to sustainability, however, must see action by the management in several areas.
Among these are: more attention in nurturing growing canes and the care of the fields; an evaluation of the skills and competence of those managerial staffers employed in the fields; full utilisation of the Enmore Packaging Plant, a value-added source which can increase the revenue of the industry; expanding the cultivable land in keeping with the requirement for planting canes at Skeldon. Those measures, I submit, as well as others will go a long way to achieve our desired objective, which, at this time, is the turnaround of the sugar industry.
I must comment as a Member of Parliament (MP) for Region No.3 about that Region. I wish to refer briefly to some developments in that Region. As elsewhere in Guyana, progress and development continues in that heavily-populated Region. Many roads, schools, bridges, and health centres have been rehabilitated or constructed. Several housing schemes, including the larger ones at Parafaite Harmony and Tuschen, are providing greater housing accommodation to people within and without the Region. The many and varied farming, fishing, construction, infrastructural and business activities have resulted in the steady qualitative improvement in the residents’ lives. Those activities have also had a transformative effect in the Region, and more and more its past ugly features are relegated to history. In pursuit of its developmental agenda in 2012, the regional authority expended $250.5 million on capital works and $2.79 billion on current expenditure which turned out to be a great boost for its ongoing progress.
Last year saw a great emphasis placed on the health sector resulting in the extension of the Wakenaam Hospital Laboratory, rehabilitation of the Sand Hills Health Post, construction of the Greenwich Park Health Post and the construction of a health centre at Parika. Significant attention was also paid to drainage and irrigation, and in the course of the year we saw the construction and repairs of some kokers, revetments at Sisters Village and Leguan, drainage structures at Leguan, Hague, and De Kendren.
This year, other projects are in the pipeline and on the drawing board. Without doubt, Region No.3 can be considered one in which the state’s initiatives and the residents enterprising spirit combine to make steady progress a continuing reality of our Region.
Income Tax Adjustment - Last year, workers across our country were delighted with the 25% adjustment of the Income Tax Threshold from $40,000 to $50,000 per month. This year, they will undoubtedly happily welcome the reduction of the personal income tax rate from 33⅓ percent to 30 percent. It is small, but hopefully, just a start. This reduction in the rate, in fact, represents a 3⅓ percent wage/salary increase of all those who are required to pay income taxes. We hope that in another year or two the Government will further lower the percentage significantly. In this respect, I wish to again urge a reform of the tax system to reflect a fair system which requires all to contribute. I see the benefit and fairness of a progressive tax system which should be put on the table for discussion.
At this time, I also wish to urge that the Minister of Finance sees that the Tax Reform Committee get down to business and within an acceptable period it should be mandated to pronounce on its recommendations.
National Minimum Wage - may I take the opportunity to say that the intention of the Government to announce a National Minimum Wage will be a laudable step and will, in all likelihood, be supported by our Guyanese working class. It is no secret that there are unscrupulous employers around and this can be one way to curtail the advantage they take on sections of the working class. I look forward for the early introduction of this measure.
In conclusion, I would not like to conclude my address without congratulating the Minister of Finance, Dr Ashni Singh, and his team and many others, for the long, dedicated and productive work they would have done in providing us the 2013 National Budget.
The Budget is interesting in many ways. Its weighted perspectives signal where we are going and, I believe, its perspectives will continue to be discussed beyond the Chamber of this Parliament. The Budget underscores the buoyancy of our economy and more importantly, recognises that there are the poor and exploited still in our society who require the state’s assistance and it sought to lend a caring hand.
As we go forward to trying circumstances, the Minister of Finance says in Budget 2013 that we need to face the challenges ahead together. I agree. Let us then forge the unity and struggle for a future of greater prosperity.
Thank You, Cde. Speaker. [Applause]