We enter this year’s Budget Debate in the midst of the most challenging global economy in our nation’s history. The world is experiencing a severe economic contraction not seen since the great depression over 75 years ago. All over the world: economies are slowing, businesses are closing and jobs are vanishing. Under this weight, some of the oldest and largest companies in the world have buckled. In this climate, economies many times larger and richer than Jamaica have collapsed.
The fundamental starting point for this debate must be to accept the full extent of our problems. Let there be no doubt, we recognize and are realistic about the economic headwinds we face. Our problems cannot be blamed on external events alone. While some of the most immediate issues may have been triggered by external events, our fundamental economic problems were not caused by external events. The core structural deficiencies in our economy have existed for decades and are homegrown. It has been said, “you only find out who is swimming naked when the tide goes out.”
In the same way, the global crisis has revealed large imbalances that were allowed to persist and remain unaddressed for too long. A high debt burden, an inefficient and inequitable tax system, a broken energy infrastructure and a culture of corruption are not new and were all made-in-Jamaica by Jamaicans. We cannot afford to sit on our hands and wait for an external recovery, the solution to this crisis must come from Jamaicans and must be made-in-Jamaica. The Government, Opposition, private sector and civil society have the opportunity to address stubborn, long-lasting economic imbalances once and for all. If ever there was doubt that these problems demand urgent and sweeping reform, those doubts are gone. If ever there was a question that inaction and indecision have consequences, we now know the answer. If ever there was a time to put aside selfish partisan political differences for the greater good of Jamaica, surely that time is now.
We believe that we must use this crisis to come together and address our long standing and fundamental economic problems.
Navigating our way through these challenging times will require tough decisions and shared sacrifice. In this regard, I would like to thank the hardworking and loyal public sector workers for the wisdom and patriotism they have displayed in playing their part. The entire nation thanks them for their sacrifice. Later, I will be announcing measures that will make up in part for the wage freeze.
Also, earlier this month, the Prime Minister announced that he would be voluntarily cutting his salary and asked that we in this Honourable House follow his lead. Today I reiterate his call that all parliamentarians act to reduce their salaries by 10%. The proceeds of salary cuts from government members ($8.0M) will go to assist our infirmaries island wide.
We believe this is an unprecedented and critical demonstration to all Jamaicans that we in this Honourable House are united and prepared to lead by example. We cannot ask for cuts unless we are prepared to accept cuts. We cannot ask for sacrifice unless we are prepared to sacrifice. Sacrifices must be shared.
We have limited tools at our disposal to tackle the many problems that we face. In the last decade, Jamaica was left behind as the rest of the world boomed. Now, with the world economy at a standstill, we find ourselves with limited resources to counteract the downturn. When we should have been growing and producing surpluses, we borrowed. Now, we find ourselves with scarce resources and a massive debt burden.
It is no secret that the debt burden overwhelms our budget and leaves us little room to manoeuvre. I’ve spent much of my time in politics thinking and speaking about the debt and have stood in this Honourable House on several occasions and denounced it as the: “albatross around our necks.” We continue to believe that the debt is a major binding constraint to growth and development in Jamaica. But let it be clear, we cannot and will never waiver in our commitment to fulfill all our debt obligations.
We have a plan in place to combat the current problems we face and build a solid foundation for growth and development. During this difficult time, our first priority must be to maintain stability throughout our financial system. To that end, earlier this year we took action and provided liquidity to the financial sector. While other countries in the region have experienced acute shocks, our financial system remains stable. Second, we must reduce the pain of our debt burden by securing low-cost financing. In recent months we took action and have secured unprecedented multilateral support from a variety of sources. We must use this as an opportunity to address the long standing structural problems in our economy and renew our commitment to the core pillars of our economic policy. We must rebuild the foundation of our economy to make it competitive and provide the opportunity for a better life for our citizens:
1) Debt management 2) Tax reform 3) Bureaucracy, corruption and waste 4) Investment promotion 5) Energy
Mr. Speaker, this is not a time for recrimination, recrudescence nor undue remonstration about past policy errors. Whether those who governed before us were wrong on some issues, is no longer the central issue. Neither is it a time for baseless criticisms and obstructionism in the face of these new and unprecedented challenges.
We are where we are. Understanding how we got here, while important as it avoids repetition of past mistakes, must take second place to charting a new course out of our national predicament.
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