I take strong objection to Sir Roy’s imputation that local economists who have prescribed privatization as one ingredient of a policy mix to put Barbados on a sustainable platform for fiscal sanity and growth had “forgotten their roots and … will cut off public sector jobs without proper regard for the social mayhem that will result”.
I appreciate that there are times when the veteran trade union leader may feel compelled to spew narrow, shortsighted and emotive positions that masquerade as patriotism or nationalistic fervour, but last week his privatisation comments crossed the line.
The current privatisation debate is an important one. I am delighted that at this time, the country is having this discussion. It is of national import and ought to be speared the unproductive straw man arguments and shallow bravado.
Let’s deal with the substance and objectives, Sir Roy. There is absolutely no need to question our sense of history, purpose or vision of a more socially just and prosperous Barbados. We are in this thing together. Many of us have Barbados’ interests at heart and love our nation no less than you do. I will venture to say that as a young man I have a larger vested interest in the future of Barbados, it success and the well being of fellow Barbadians. Caricaturing privatisation as some insidious bogeyman is unproductive.
The status quo will not do. The country is facing a fiscal crisis, a weak economy and an inhospitable global environment. Our policy makers cannot influence the global environment but they can limit the structural impediments to national competitiveness. That starts with restructuring the organs of the State to ensure that they effectively cater to the needs of their customers and clients.
Sir Roy was also quoted as saying that “the workers are hearing threats of job losses at the [QEH] and at the Transport Board, both facing privatisation and depending on whom you choose to believe, either 6,000 or 10,000 in the public service, as we seek to free up the private sector to realize its potential and maximize profit”.
Really? I am not aware of any economist that recommended the privatisation of the QEH and economists differ on the idea of privatising the Transport Board. As a matter of fact, I am convinced that public transportation is better provided by the State. I do not support the privatisation of the Transport Board but I have advocated rationalisation of the transportation system and its restructuring. Moreover, it is my professional view that some level of subsidy will be required but the institution should be managed in a manner that ensures that operational costs are met.
The creation of a convenient and reliable public transportation system is an absolute necessity. It is nothing short of a travesty that in 2012 Barbados has a substandard transportation system that impedes national productivity while costing the taxpayers an estimated $70 million dollars a year.
The country simply can’t afford it. Tough decisions have to be made in order to move this nation forward. It’s not about sending home people; it’s about stopping the rot and building a foundation for the future. This loose talk about thousands of public sector layoffs is a distraction, an unfortunate attempt to shift the focus away from the most pertinent national challenges and solutions.
No economist in Barbados has advocated full cost recovery for primary health care at the point of delivery. Maybe it’s a figment of Sir Roy’s imagination. I certainly do not support it, but I will be honest enough with the public to say that if Barbados is to raise the quality and standard of publicly provided health care, particularly tertiary health care, duplication and waste must be curtailed and those who can afford it should be required to take advantage of health insurance to cover a portion of the costs of care or the cost of select diagnostic services and/or surgeries.
Health Minister Donville Inniss has provided stellar leadership by piloting his ministry through a number of waste management initiatives, resulting in a cost recovery of nearly $30 million dollars i.e. a partial solution. A similar approach to the provision of tertiary education is also relevant. We have a choice, try to preserve the status quo while our social infrastructure crumbles or make the decisions necessary to move this nation forward.
The Freundel Stuart Administration has stated its intention to sell minority interests of the air and sea ports. My understanding is that the State will retain controlling interests in those institutions. I believe that in that regard the Government’s stated policy is the best approach.
However, their opposition to the complete divestment of CBC is wrongheaded. My point is that the privatisation prescription and the type of privatisation pursued depend on the public policy objectives, the socio-economic context and the problems intended to be remedied.
I agree that divestment or privatization is a short-term solution to deficit reduction but there are many potential long-termed benefits of a more efficiently managed organisation that provides goods or services to the public.
Also, opportunities for broadening the indigenous share owning class and or generating short-term foreign capital will arise. The critical question is whether or not privatisation will improve the quality of goods and services. The answer is that, it depends. It depends on the circumstances and context, it depends on the nature of the services offered to the public and it depends of course, on the state of Government’s finances.
Sir Roy, I urge you to be more constructive in your comments. Desist from the posturing. The public deserves better as we strive to participate in an enlightening discussion of the way forward.
Some important features of economic development are wide dispersion of corporate ownership, wealth creation, and investment in and expansion into foreign markets as a basis for growth and profit repatriation. These attributes of a striving economy are often more attainable by privately owned companies than state-owned corporations.
In another section of the press it was reported that political scientist, Dr. Don Marshall suggested that Government and the National Insurance Scheme should try to take over the former state-owned Republic Bank (Barbados) Limited. That ship has sailed. It is time to get over it. Republic Bank has made it clear that the Barbados subsidiary is not for sale.
Is the goodly university lecturer recommending nationalisation? The NIS is a pension fund not a venture capitalist. There is no evidence to suggest that the institution would yield the NIS a higher return on its investment if the bank was acquired by the State. On the contrary, based on the remit that Marshall is recommending for a repatriated national bank, the return on investment is likely to decline.
That does not make any financial sense and cannot be seen as a decision that would be in the best interests of present or future beneficiaries of the NIS. Secondly, the government is not in a financial position to contemplate that pursuit, especially when there are a range of other areas yearning for the resources of the State.
By many privatisation success indicators, the sale of the Barbados National Bank was successful. The Government received a financial boon that was invested in building productive capacity, there were attendant foreign exchange inflows and there were no dramatic layoffs. Rather the privatised institution expanded its portfolio, gained market share and increased employment.
Furthermore the value of its shares significantly increased to the extent that the minority stake retained by the Government was worth more than the controlling stake which the government relinquished. Today, Barbados continues to benefit from the role the former BNB plays in the local economy.
Where Marshall and I can share common ground is that I strongly believe in the need for a publicly owned, well managed, apolitical development bank or development finance institution. Perhaps we can discuss the appropriate mandate of such an institution as well as the most feasible methodology for its creation.
Carlos R. Forte is a Commonwealth Scholar and Barbadian economist with local and international experience.