“It is not the responsibility of government to hold the hands of the productive sector. That is what got us into trouble with the UHS…The productive sector must stand on their own feet, and whenever they enter into obligations they must be prepared and capable enough to manage their affairs properly. Government always supports, but government is not in partnership with the productive sector, because the productive sector does not share their products or profits with anybody. They keep it all to themselves. And they don’t even leave it in the country; they export it. So, the productive sector is provided with support but it is not government’s obligation. Government’s obligation is to make sure that the road is built; to make sure that the stadiums are built; to make sure that schools are built; to make sure that the hospitals are built. That’s the obligation of government…make sure that the judiciary functions; the police; the army, that’s government’s role. Government has no business in dealing with private-sector matters.”—Hon. Wilfred Elrington (March 23, 2018).
For the most part, there are many who take the view that Belizean politics is somehow free of ideological positions. Instead, there are some who suggest that both established political parties are largely centrist in their economic views, doing only what is necessary to keep them in power. This vantage point is likely held because the administrations surely do not overtly brand themselves as being committed to any one school of thought. However, whether or not there is a formal ideology at work, the message in the opening quote of this article is quite telling.
If one would peruse the exposition of the Honorable Elrington, we find his (and maybe his Party’s) philosophy on what it is believed the role of government ought to be; and, by extension, what it is not. He is right that government is responsible for the development of infrastructure and of institutions such as health facilities and schools, and so on. However, at what point did it no longer become a part of the duty of government to ensure that the “backbone of the economy” is healthy? If that is not the responsibility of government, then why does every Prime Minister report on the state of the economy in his budget presentations? Why does administration track employment levels and GDP growth or contraction? Who does the Honorable Member believe provide the means for the employment to increase or the economy to grow? Where does the Honorable Member believe the tax revenues to rightfully build the schools, the roads, and the hospitals come from? Where does the Member believe the revenue to pay the salaries of every public officer, including the army, and members of the judiciary come from?
The government’s total revenue and grants for the upcoming Fiscal Year 2018/19 is estimated to be $1.18 billion. Of that total amount, Tax Revenue is 1.02 billion, which makes up roughly 86.4 percent of the Total Revenue and Grants. Of the total tax revenues, those stemming from “Income and Profits” and International Trade and Transactions (approximately $447 million) make up about 44 percent.
Last year, when the government needed an additional $83.2 million in revenue, it sought to raise $25.8 million (31 percent of that amount) by increasing taxes on international trade and transactions, and another $43.4 million (52 percent) from taxes on goods and services. Who does the government believe those measures impacted? Did we not see, for example, a direct attribution of the higher excise to the decline in beer and soda production in 2017?
Interestingly, the government did not meet its revenue target for FY 2017/18. Why is that? The answer given by the Prime Minister and Minister of Finance is quite simple: The economy did not grow as was expected. Could it be, then, that the monies to carry out government’s functions are dependent on the health of the economy? Could it also, therefore, suggest that the health of the private sector is somewhat important, if the government hopes to have the funds to rightfully build the schools, the hospitals, and the roads?
The government needs foreign exchange, for example, to pay its external obligations. And, thankfully, the Government, on its own, makes all the foreign exchange. Is that the case? Then we do not need the merchandise exports, right? There is probably need to remind what proportion of those export earnings come from the productive sector.
Now, to be fair, the Member was rebutting previous comments made by one of his Parliamentary counterparts. It is possible to offer some sense for the need for a balance to be struck. On that score, he is right. We do not want to see a repeat of the Universal Health Services debacle—which is not a part of the “productive sector”, and leads one to believe that he was referring to the “private sector” in its entirety. If the point being made by the Minister was that government should never again unconditionally guarantee private-sector obligations, then we are certainly in agreement.
However, if these comments are a reflection of the thinking of Cabinet as it pertains to the private sector, then the lack of urgency to implement measures to stimulate economic growth is certainly starting to make sense. If the thinking is indeed a type of “Government versus the Private Sector”, as opposed to the understanding of the symbiotic nature of the relationship between the two, then it will be an interesting feat to see how government intends to reduce unemployment, pay off its debts, achieve that two percent primary surplus, and execute all of its functions.
It is the hope that there is some sort of misunderstanding or misinterpretation at work here, or possibly this is only an individual member’s vantage point as opposed to the being the collective sentiment of Cabinet. In this column, we have applauded the institutionalization of the Economic Development Council (EDC) and its secretariat. The EDC was created to facilitate the collaboration and dialogue between government and private sector. That is why the EDC’s Secretariat is referred to as the Department of Public-Private Sector Dialogue, and is correctly housed in the Office of the Prime Minister, because it was understood that public-private sector partnerships are pivotal to inclusive growth.
The private sector has not been asking for “hand holding”, per se, even though in many developed and other developing countries this is exactly what is done. What the Belizean private sector has been simply asking for is the “room to grow”. That is, that the government stop increasing taxes on the compliant businesses, while ignoring the evaders. It has also asked that there be less costly bureaucratic delays to processes that could be digitized and simplified; and that there be less corruption that empirical works have shown to be negatively correlated with economic growth.