The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An ex-Grand Bahama Port Authority (GBPA) counsel says The Bahamas must within “the next five years” determine the direction that Freeport takes once the Hawksbill Creek Agreement expires in 2054.

Carey Leonard, calling on the Government, GBPA, private sector and all other stakeholders to engage in long-term planning, told Tribune Business that even though there are 32 years before Freeport’s founding treaty ends it was critical to give investors and business certainty now.

With many eyeing long-term returns, he argued that The Bahamas needed to define Freeport’s post-agreement future, develop any legislative and other reforms that are necessary, and pass/implement them within a 15-year period to give commerce more than a decade’s advance warning of what to expect come 2054.

“I think it’s important and we should be looking at having some form of idea on how we navigate, or where we want to go, within five years,” Mr Leonard told this newspaper. “I would have it where we set out the principal ideas of what we want to achieve in five years. The following five years, we should start writing up laws on how to implement that, and then pass the legislation for it over the next five years.

“It gives business 10 years or more to prepare for it, and anyone coming in can see where we’re going after 2054.” That date seems far-off, and the Government typically finds it difficult to plan for anything beyond a five-year election cycle, but in Freeport’s case Mr Leonard argued it was vital that The Bahamas get ahead of the curve and set-out the city’s long-term future given the potential it still holds as an economic driver.

“It is definitely time for them to think about that. Everyone needs to think about it,” he reiterated of 2054. “There’s got to be form of transitional process. I can understand the Government not wanting to have a government within a government, but by the same token there has to be a way it is set up.

“The advantage for Grand Bahama, the way the Hawksbill Creek Agreement is set up, is that it’s self-sustaining and that’s why it’s so valuable. It we could find a way of implementing that for Freeport, find ways to give it real local government powers, not under the Local Government Act, but having local government that can function......”

The Hawksbill Creek Agreement provides for the devolution of the GBPA’s regulatory and quasi-governmental powers to a local government authority, as is being suggested here by Mr Leonard, but it requires some 75 percent of GBPA licensees to vote in favour of such a move and that threshold has never come close to being attained.

Meanwhile Mr Leonard, now an attorney with Callenders & Co, told Tribune Business that if the Davis administration “prioritises” the repeal and replacement of the Grand Bahama (Port Area) Investment Incentives Act 2016 then it could “se meaningful results” via increased investment and job creation within a two-year period.

“If they deal with the Investment Incentives Bill quickly, they will see meaningful results within a couple of years,” he reiterated. “We need to see people on the ground spending money and employing Bahamians. I think that if they deal with that legislation now, they will reap the benefits. We’ll see more projects going, and the Public Treasury will see more revenues. It definitely should be a priority.

“My feeling on the Investment Incentives Act is that it needs to be totally revamped. I am extremely disappointed that the only people that get any form of certain relief from it are the GBPA and Hutchison Whampoa. The Government would be well-advised to revisit the legislation and come up with something for more viable that encourages investment rather than discourages investment. I’ve always referred to it as the Disincentives Act.

“With that Act in place, who the hell wants to invest here? It’s if, maybe, perhaps, how we feel today, and you don’t know how long the concessions are going to last for. The FNM did nothing quite frankly. The FNM was useless. They let Grand Bahama down terribly. They had ample time to redo the Act and did nothing about it. That, quite frankly, is disgraceful.”

Kevin Seymour, the ex-Grand Bahama Chamber of Commerce president, recently said the 2016 Act had been repealed but not replaced by the Minnis administration. Mr Leonard, though, argued that the reality is slightly different. He asserted that the legislation remains on the statute book, with the former Minnis administration instead having passed annual measures that stopped it coming into effect.

The Grand Bahama (Port Area) Investment Incentives Act 2016 was met with furious opposition and resistance from many in corporate Freeport when it became law. This was because it would have forced all the GBPA’s 3,500 licensees - bar the Port Authority, its Hutchison Whampoa partner and their combined business interests - to apply annually to the central government in Nassau for the renewal of key tax breaks.

Besides the uncertainty as to what businesses would receive, and to what extent, the former Christie administration sought to tie their grant/renewal to the amount of investment involved and companies avoiding job cuts by maintaining their existing workforces for five years. It also threatened to impose financial penalties on businesses who failed to live up to the promises they made in return for receiving the renewed tax breaks.

The 2016 Act was also seen as an attack on Freeport’s founding treaty, and an attempt to undermine the Hawksbill Creek Agreement, by forcing GBPA licensees to apply to Nassau for benefits and rights this already provided them. “It’s if, if and if, and maybe,” Mr Leonard argued of the Act. “If it was proper legislation, you would know that if you do this you will get that. 

“You know where you stand. That’s always been an advantage of the Hawksbill Creek Agreement until the last few years. You knew where you stood and how long you had it for. With the new legislation, you don’t know where you stand and how long you have it for. You’re not getting interested because there’s nothing to get interested in. That’s the advantage of the Hawksbill Creek Agreement. You had more certainty, and businesses like certainty.”

While investor interest has still been shown in Freeport, Mr Leonard also argued that the existing legislation “slams the door shut” on second home development because it potentially exposes such projects to the prospect of “double taxation” via government real property taxes and GBPA service charges.;

“The current government has a golden opportunity right now to fix Freeport, and it’s one-sixth of the population of the country,” he added. “It’s a very important part to fix, and the potential is phenomenal.....”