#BTEditorial – Cutting the SOE cake

Amid the nods of approval to the left and rumblings of discontent and criticism on the right, regardless of where one sits on the Budget street debate, no one can deny that with the many challenges facing this nation, tough decisions will have to be made  to complete the mission transformation set out by Prime Minister and Finance Minister Mia Mottley on Tuesday.

A major talking point that has emerged is the future of the country’s 58 state-owned enterprises.

From the outset of the near four-hour package, the Prime Minister waded into the matter as she diffused speculation of widespread job cuts.

She made clear there is no massive set of layoffs coming in the public service but she also warned of adjustments ahead among commercial SOEs. This drew immediate attention but in the end the details were scarce.

This business of the reform of SOEs is a live issue that has bedevilled governments from time immemorial. No one can doubt that SOEs including the Barbados Water Authority, the Transport Board, the Caribbean Broadcasting Corporation, the Barbados Tourism Marketing Inc, the Barbados Agricultural Management Company, the National Petroleum Corporation have made and continue to make critical contributions to our society and national well-being.

But successive governments, believing that parastatal organisations must perform a public service and turn a profit at the same have come to deserved grief. Add to this are the prying fingers of ministers and politically appointed boards that have made many institutions into burdens on the public purse.

Then come knee-jerk promises to reform and right-size these agencies. Each administration has touted plans to achieve the “unattainable “goal but little progress has been made as political decision-making usurp business decisions, square pegs are inserted into round holes and many capable professionals are too often snubbed in favour of sycophantic overseers.

Still, the urgency to right the listing ships of state hangs like the proverbial Damoclean sword.

The Barbados economy, rising from a crippling coronavirus pandemic over the last two years, is currently into the Bert 2.0 [Barbados Economic Recovery and Transformation Programme], written with the International Monetary Fund looking over the finance minister’s shoulder, complaining about “transfers” to these statutory agencies.

On the obverse side of Bert 2.0’s growth coin is the reform of state enterprises.

Yet it was reasonable to expect significantly more details on the government’s reform agenda if the country is to get on the road to transformation.

Even while declaring there will be no massive job losses, no one employed in state enterprises can feel their job is safe after hearing a litany of fiscal woe and vague promises of assistance to the displaced.

What we got was a big but grey picture of financial losses to which we have unfortunately grown accustomed but can no longer afford.

Mottley told the country: “The year ending March 2022, when we had to pause, the commercial State Owned Enterprises in Barbados generated losses of $402 million before the government subsidies of $383 million. For the corresponding period in the previous year, the losses were at $470 million, before the government subsidies of $325 million. For the same period ending March 2022, the noncommercial State Owned Enterprises generated losses of $127 million before subsidies of $155 million, compared to losses of $152 million in the previous fiscal year. Government subsidies decreased moderately from $171 million to $155 million.”

The Finance Minister again underscored that the SOEs have to be overhauled to give Government and the public greater value for money.

Stressing that  “delivering clean water to every household, getting  Bajans around the country in a timely and safe manner, ensuring that every Bajan receives the health services and their garbage is collected routinely, are all dependent on us getting these SOEs right,” but she held back on giving specifics though assuring the Government “will do right by our people”.

Then came the velvet-covered hammer: soft but heavy, definite but vague.

“We are going to have to make some difficult decisions,” said the Prime Minister. “But in every instance, we are going to find ways to cushion people and to make sure that in most instances their packages are appropriate and there are opportunities for reengagement, where we can find that.”

She revealed that Government is in favour of giving Barbadians a stake in SOEs. But the Prime Minister can hardly expect to close the sale after telling the would-be buyer that a clunker puzzles gas but is worthy of new owners. Even a used car salesman has his limits of baseless gushing.

We accept that SOE reform is not a simple process. It must be well thought out to achieve objectives – whether on the balance sheet or on the scale of public service. But equally, Barbados cannot endure another administration’s failure to make tough decisions we know are inevitable. This Budget should have been that opportunity.

On too many occasions, we see the boot unlaced; now we must wait to hear it drop. Granted, Prime Minister told Parliament as it sent the Budget to the Senate on Thursday night that she cannot reveal details because negotiations are at a sensitive stage. But this has now only served to fill many with a sense of dread they all too recently experienced with the COVID-19 downturn.

The government needs to act with much more urgency on SOEs if Barbados is to achieve the economic growth it needs to cut wastage, create jobs and make the transformation to a world-class society. But it must make a tough decision of its own. Which must come first: market or mission? Profits or purpose? Politics or policy? Workers or partisans? It cannot have an SOE cake and have us eat it, too.