The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Grand Bahama Port Authority (GBPA) in-house attorney yesterday urged the Government to renew Freeport’s expiring tax incentives immediately, arguing: “Let’s get the island back to work.”

Carey Leonard, in an article published in today’s Tribune Business (see page B5), says there is “no reason” why negotiations over the Hawksbill Creek Agreement and GBPA’s ownership should delay renewal of the city’s expiring tax breaks.

He told this newspaper that there were already ample provisions within the Hawksbill Creek Agreement, such as Clause 3(8), that enabled the expiring real property, capital gains and income tax exemptions to be renewed straight away.

The Government is proposing to extend those incentives for another three months to May 4, 2016, in its bid to use their fate as leverage to compel a GBPA sale and the return of Freeport’s regulatory and quasi-governmental powers to Nassau.

Mr Leonard, though, argued that “certainty” to encourage job-creating investment was what Freeport’s moribund economy needs most, rather than ‘hard-bargaining’ over longer-term objectives - some of which may not be achievable.

Referring to the Government’s goals for Freeport, as recommended by its review committee, Mr Leonard said: “We can continue to have that discussion and have those matters resolved in a proper, timely fashion, and at a proper pace.

“There’s no need to put urgency on that. The main thing is: Are we going to extend those incentives, then have negotiations?”

He further told Tribune Business: “At the moment, Freeport’s economy is really suffering, and businesses will not put money in unless they have certainty.

“More urgent than the negotiations is putting Bahamians back to work, and improving the economy and revenue for the Government.

Mr Leonard, now an attorney with the Callenders & Co law firm, added that an expanding Freeport economy would drive increased revenues for the Public Treasury - one of the Christie administration’s key targets in the current process.

“Looking at the Hawksbill Creek Agreement, there are ways to deal with these problems without holding up the extension any more,” he added.

“Let’s get Grand Bahama back to work. Companies are currently not expanding, and we need jobs now. If the Government approves the extension immediately, I’m sure businesses will make announcements and will create employment.

“That’s good for the man on the street, and everybody benefits. I hope we can do it. Let’s get everything moving, and deal with these issues as they arise,” Mr Leonard continued.

“There’s plenty of provisions in the agreement for them [the Government] to do it. They can extend it for 15, 20 years, so let’s get on with it .

“I don’t see that there’s any reason to hold up the extension. Let’s put Bahamians back to work and get Freeport going.”

He added that if the GBPA had breached its developmental obligations, the Hawksbill Creek Agreement also provided a mechanism, via Clause 3(6), for it to pay “mutually agreed damages” that could be determined by arbitration hearings.

Some observers might argue that the Government is almost seeking to ‘reinvent the wheel’ and circumvent the Hawksbill Creek Agreement via its plans for Freeport as-announced.

Mr Leonard, meanwhile, described the McKinsey report’s conclusions on Freeport’s contribution to the Public Treasury as “meaningless” because it combined the Government’s revenues/expenditure from the Port area with the rest of Grand Bahama.

Arguing that the two sets of figures should have been separated, Mr Leonard said the McKinsey report appeared to focus on revenue enhancements and negotiating strategies, rather than ways to grow Freeport’s economy.

“A lot of the figures are inaccurate,” he added of the consultants’ report to the Government. “As Fred [Smith] said, they’ve mixed apples and oranges. The numbers don’t match up, and you get meaningless results.”

Mr Leonard said, though, that while “much more work” was required, the McKinsey report represented “a nice start” and something that could be build upon.

But, while “not trashing it”, the attorney said the report also failed to account for the impact the Bahamas becoming a full World Trade Organisation (WTO) member will have on the Port area.

Rules-based trading regimes and agreements often have specific requirements when it comes to free trade zones, such as the Port area, and Mr Leonard said: “We’re about to join the WTO, and none of that is in there.

“That really hasn’t been dealt with to the extent it should have been.”

Mr Leonard said full WTO membership would “have a substantial impact in a positive way”, as it would “benefit the manufacturing side of the Bahamas”.

He told Tribune Business that one Freeport firm, who he declined to name, had won a bid to supply Mexico with product.

However, when Mexico realised the Bahamas was not a WTO member, it imposed a higher duty rate on these products and the company lost the contract - and with it, plans to double the size of its business.

Mr Leonard said the Prime Minister’s decision to publish the Hawksbill Creek Agreement Review Committee’s recommendations was beneficial to all, as they set out the Government’s objectives and provide a starting point for negotiation and consultation.

“It’s a shopping list,” he added. “Some objectives may be achieved and some may not be. Why should we hold up the Hawksbill Creek Agreement incentives for that?”