He has been advised by all manner of accountants and economists over the past five years or more of the need to look very seriously at selling off a number of loss-making state entities, including the country’s lone television broadcaster, the Caribbean Broadcasting Corporation (CBC), and its primary garbage collector, the Sanitation Service Authority (SSA).
However, Minister of Finance Chris Sinckler today threw all the privatization talk on a rubbish heap for disposal — even if temporarily — as he sounded yet another warning to Barbadians that they could one day be made to pay for a number of the “free” services currently afforded them by the state.
“The question is if we want to have these things – free school meals, free public health, free education at point of delivery, highly subsidized transport, if we want to have those things, as a society we have to be prepared to pay for them,” he told reporters on the sidelines of the third Sub-Regional Caribbean Public Procurement Conference at the Lloyd Erskine Sandiford Centre.
“I believe we should have them. I believe we are not to the stage of development yet where we can shell these things off on people and ask them to pay for them. They simply do not have the capacity to do it in that way at point of delivery. If that is the case we have to take the responsibility as a society and say there are certain things we are going to provide for the public and therefore the public collectively, through the taxes they pay or fees they pay, are going to have to subsidize and pay for it,” Sinckler said.
His comments come against the backdrop of a recent call by senior Barbadian economist Carlos Forte for Government to shed some of the “statutory” dead weight that is contributing to the current economic drag.
In this regard, Forte, who is currently attached in the Ministry of Finance in Ontario, Canada, made particular reference to CBC, which he described as “a drain on the public purse”.
“I think CBC is a fine candidate for privatization in the sense that it is clear that the private sector has the interest and would do a better job in delivering the product,” said Forte, a former employee of both the Central Bank and the Ministry of Finance here, who also worked previously in offshore banking. He had also suggested during an interview with Barbados TODAY back in December, that as Government sought to create much needed fiscal space for itself, the delivery of media and other such services might best be left to the market, while Government focuses its attention on regulation and the necessary legislative framework “to ensure minimum domestic content and the like”.
However, Sinckler totally disagrees.
He told reporters today that if anything, divestment of CBC would reduce Government fiscal space, instead of increasing it.
“CBC has large accumulated debts on its books. If I privatize CBC I cannot get a quarter of what it is indebted for. So it means that the debt that CBC is now servicing on its own comes onto central Government’s books for the Government to pay,” Sinckler argued.
The issue of privatization was also a major campaign topic for the Opposition Barbados Labour Party (BLP) back in 2013, with former BLP leader Owen Arthur strongly suggesting to Government as recently as last week when he addressed the Barbados Chamber of Commerce and Industry that some hard decisions still had to be taken with the view to reducing the $1.2 billion it currently pays out in terms of subsidies to state entities. This, as the former prime minister warned that country was headed down “an economic and financial cul-de-sac” out of which it would be almost impossible to reverse.
A similar appeal had been issued by this island’s professional accountants who have been consistently calling for four years now for Government to divest some of its assets.
“Whether we are talking Transport Board, we are talking health care services, we are talking CBC, whatever it is, Government has the ability to say, ‘Look, we no longer need to be involved in funding and providing this service on our own, we can form a partnership, an alliance, we can divest and give persons the opportunity to do so’,” former President of the Institute of Chartered Accountants of Barbados David Simpson is on record as stating back in 2012.
“There are . . . solutions and options . . . available to any Government and I think that is where we need to be looking at because . . .the more things Government takes on and takes the responsibility for providing, the larger the operational bill is for Government, and the larger that bill becomes, somebody needs to fund it and I think it is clear who has to fund it — it is funded through taxation.
“I think at the end of the day what the focus has to be on is what value do we want these institutions to provide to the economy and to the citizens and at what cost are we willing to do this,” Simpson added back then.
However, while cautioning that a private sector solution was not always the better management solution, Sinckler went on to downplay recent suggestions that SSA was going the route of divestiture.
In fact, the Minister of Finance warned that even if such were to be done, Government would still have to pay a heap of subsidies to any private entity that takes over its garbage disposal operations.
Therefore, he said, the important question that must be answered is, who is going to pay for the collection of garbage if the SSA is privatized?
“The person who is buying it as a private sector entity is not going to pay for it. They are going to want to have it paid for. Now they are either going to come back to Government to subsidize the payment for the collection of the same garbage that the Government is collecting right now or the public is going to have to pay for the garbage. So the issue is not who is managing, the issue is who is paying,” argued Sinckler.
In recent weeks there has been renewed talk of privatizing some of the services offered by the state-run SSA, including divestment of the mechanical workshop, which has been plagued in recent months with broken down trucks that have rendered the state agency incapable of adequately meeting the island’s waste disposal requirements.
A worrying pile up of waste across the island has also led to at least one private sector entity –– the Anderson Cherry led Jose y Jose –– offering its equipment to Government for rental to assist with garbage collection, even as Cherry joined with Opposition Barbados Labour Party Senator Wilfred Abrahams in alleging the 15 new compactor garbage trucks had recently been imported into the island as part of plans to divest aspects of the SSA’s business.
However, when pressed to state whether he thought private sector would do a more effective job than the SSA in collecting the island’s waste, Sinckler said: “I am not convinced about that.
“I believe those efficiencies are marginal. If you look at the volume of waste that we produce in Barbados and the process of waste management in terms of the waste management stream from beginning to end, there are certain structural costs associated with that that you will never get rid of, I don’t care who is managing it,” he said.
He also highlighted the operations of the School Meals Department, saying that state-run agency could not be privatized given the high subsidy being provided by Government.
“If you privatize the School Meals Department as some people have suggested, who is going to pay for the school meal services? Who is going to provide lunches at $1 a week for the thousands of students in Barbados? Who in the private sector is going to do that? They are going to come right back to the Government of Barbados and ask for a subsidy to provide it. So it is just changing the management. It is not dealing with the issue,” Sinckler insisted.
However, still leaving the window open for privatization in the future, the Minister of Finance made it clear that Government would still continue to work with private sector entities “where necessary to improve services or certain aspects of services”.
That, he said, had to be done in a “heads-up, transparent and clear organized manner”.
“Not that we get up one day because a few people in the private sector want to have their hands on this or their hands on that we start privatizing things left, right and centre. That is just not how this business works. So I am not romanticizing myself about any of that. I have a very open-eyed approach to this,” the Minister of Finance assured.
Privatization aside, Sinckler said the Freundel Stuart administration continued to examine all areas of its operations in an effort to close the deficit.
“The first issue is of efficiency. How can people do things better, get value for money, get savings or reduce the amount that they are paying out? The second area is in restructuring. How do you restructure Government so that it is less costly, so you can do more things and achieve more things without having to expand Government every time that you want to do so? Those are the critical areas,” said Sinckler.