[ARANGUEZ, 6 October 2020] — We can all agree that these are not normal times. Even as the world continues to grapple with the challenges of the ongoing COVID-19 pandemic, Trinidad and Tobago is significantly and particularly constrained by a slowing energy market worldwide. This perfect storm of external shock factors has been devastating to the revenue generation and economic activity of T&T.
It is in this context, that the Employers’ Consultative Association of Trinidad and Tobago (ECA) acknowledges the Government’s attempt to present a seemingly-reasoned and comprehensive budget to the citizens of T&T. In a real sense, this budget – which comes at a watershed moment – appears to be not only setting the pace for the next year, but will also set the foundation on which our recovery and rebuilding over the medium to long term will be based.
The following provides a quick overview of our initial reactions to yesterday’s budget presentation.
What we Liked
- Heavy focus on ICT and digital technologies, especially the digitalisation of Government services and proposed incentives for investments in technology start-ups, technology solutions and job creation in this sector
- Increased focus on improving the ease of doing business. If efficiently executed, this initiative will invariably contribute to boosting domestic commerce, reducing business informality, and attracting foreign investment
- Liberalisation of the national fuel market. While there is an inherent risk of increases in prices during periods of high energy prices, the opposite will also apply during periods of low energy prices. Additionally, this approach will bring much needed relief to Government expenditure via a removal of this subsidy and will allow dealers to set their own margins. Hopefully, this process will be closely monitored – especially in its early stages – to reduce the risk of price gouging and ensure that this move is one that will redound the benefit of the consumer through competition.
- YTEPP retraining programme for unemployed, retrenched and displaced workers. This is a move in the right direction to develop our human capital, facilitate skills development for re-entry into the labour market and mitigate the looming increase in unemployment levels.
- Increase in the Personal Income Tax Allowance. This adjustment is a much needed and welcomed measure that will directly benefit low income earners, especially given the difficulties faced so far in 2020 due to the COVID-19 pandemic.
- Increased investment and focus on agriculture. In addition to the possible creation of employment opportunities, we are optimistic that this will also contribute to easing the strain that exists on our already low foreign exchange earnings. We certainly do encourage more dialogue in this area between all stakeholders – agriculturists, farmers, grocers, restauranteurs and consumers – to truly secure the intended benefits to citizens and our country’s food security.
What are Our Concerns
- The $8B budget deficit. While we accept that COVID-19 has resulted in some unforeseen and unusual impacts to Government expenditure in 2020, we are concerned that the overall budget deficit has been moving in the wrong direction over the past three (3) budget presentations – going from $4.052 billion in 2018-19, to $5.287 billion in 2019-20 and now to $8.209 billion in the 2020-21 budget presentation.
- Unfortunately, modernisation of our Labour Legislation seems to have once again been placed on the back burner. While we expect that this item will be urgently addressed by the new Minister of Labour, we must caution that the ongoing delay in updating the legislation is perpetuating inefficiencies and inequalities within the labour market, and affecting the cost of doing businesses
- In addition to Labour Legislation, our social dialogue and labour administration institutions continue to languish due to a lack of resources. The Industrial Court requires additional resources to increase its capacity to effectively perform its duties. Institutions like the National Tripartite Advisory Council (NTAC) and National Productivity Council (NPC) require urgent review with a focus on addressing national, social and economic issues as well as granting additional powers and financing for implementation and oversight of agreed initiatives.
What is Missing
- While mention was made of improving the efficiency of the VAT refunds system, there was no update on the intended strategy for paying the long outstanding refunds and other significant debts still owed to many businesses. Moreover, there continues to be a paucity of measures designed to impact the cash flow and liquidity of businesses, especially SMEs, who during this difficult period desperately require cash flows for recovery now, if they are to remain viable beyond 2020.
- The Minister did not make mention of outstanding wage negotiations or the intended strategy for settling them, some of which are almost a decade behind. In addition to the hiring freeze articulated, a wage freeze, at least in the short to medium term, may be unavoidable given the attendant challenges and financial constraints faced by the country and by extension, the Government.
- While the Minister spoke extensively of improving ICT technologies in the education sector, there continues to be a fundamental disconnect between our education curriculum, the skills that employers and the future of business require and development objectives of the Government. We believe that the private sector can certainly contribute to the creation of synergies in determining the links between education, training and the world of work now, and for the future, so inclusive stakeholder dialogue must be urgently undertaken.
- No specific focus was enunciated about the 2030 Sustainable Development Goals particularly those focused on the environment and climate change, which we must prepare for, especially in the areas of building codes, land use and pollution. If we are serious about supporting the 2030 Agenda, the language of the SDGs must be overtly intertwined in our national plans and development strategies
We expect that much more detail will be made available in the coming weeks as the budget debate ensues and supporting documents are released. The ECA will outline a more detailed review of the Minister’s budget package following an assessment of the proposed fiscal measures.
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