A well-known QC has slammed the Government’s Freeport incentive legislation for “giving a free lunch” to those who can most afford it - Hutchison Whampoa and the Grand Bahama Port Authority’s (GBPA) two family shareholders.
Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that the recent amendments to the Grand Bahama (Port Area) Investment Incentives Act 2016 would produce “little financial impact”.
The changes, which extend the time that GBPA licensees have to apply for the continuation of incentives (tax breaks) from six to 10 months post-May 4, 2016, were touted by the Christie administration as a much-needed stimulus for Freeport’s economy after Hurricane Matthew.
However, by automatically giving the GBPA and Hutchison Whampoa’s interests a 20-year extension of the same expired incentives, Mr Smith argued that the Government had again let both entities ‘off the hook’ when it came to their development obligations.
The Christie administration has also moved to amend the legislation by including all Hutchison Whampoa’s subsidiaries among those receiving an automatic 20-year extension, something that Mr Smith branded as “puerile and ineffective tinkering” in regard to Freeport’s economy.
“It displays a fundamental failure to appreciate how uninspired that provision is,” he told Tribune Business of the application extension for all other GBPA licensees, “because there are so few people and investors that would be able to apply.
“The major players [the Hayward and St George families, and Hutchison] have been given a free lunch, when they are the ones who can most afford to pay for it.
“They don’t pay real property taxes, they don’t pay Business Licence fees, they don’t pay Stamp Duty on big internal transfers. They collect airport and harbour fees, and service charges,” Mr Smith added.
“This is like the sound of one hand clapping. The Grand Bahama (Port Area) Investment Incentives Act 2016, and recent extension of the time by which people can apply, is a sleight of hand. It all sounds good, but has little financial impact.”
Mr Smith argued that the GBPA and Hutchison Whampoa had failed to fix key infrastructure deficiencies in Freeport that existed before Hurricane Matthew’s devastation.
“One of the big challenges we face is that if you don’t land before 5.30pm, you have no runway lights and the airport is closed,” he told Tribune Business.
“That severely restricts both domestic and international travel. Customs and Immigration are closed after that time. Even before Hurricane Matthew, I had lamented the lack of a radar at Grand Bahama International Airport.
“This is a big issue out of Hurricane Matthew. We can’t be the magic city, the industrial capital of the Bahamas, and not even have a radar at the airport tower. This lies squarely at the feet of Hutchison and the GBPA,” Mr Smith added.
“One of the big issues is that the infrastructure of Freeport has continued to deteriorate over time, and the development companies, the GBPA and DevCo (Grand Bahama Development Company), have leveraged the valuable land and other assets they have to borrow money without putting in the necessary infrastructure for future growth.”
As an example, Mr Smith said the domestic and non-US international travellers at Grand Bahama International Airport were still being housed in the temporary hangar accommodation created in the aftermath of Hurricanes Frances and Jeanne in 2004.
And he warned that the latest “killer for Freeport” is likely to be the $200 million private port in east Grand Bahama that will be developed by Carnival Cruise Lines.
The Government has just given its approval to the agreement with Carnival for the project, and Mr Smith warned the port’s creation - and diversion of thousands of passengers annually to east Grand Bahama - would cause “a catastrophic decline in business for Freeport licensees”.
“The big problem Freeport faces is that the service charges and license fees not getting any bigger,” Mr Smith told Tribune Business. “The financial pot in Freeport is getting smaller and smaller.
“The damage resulting from Frances, Jeanne and Matthew to Freeport’s infrastructure means that the Port Group of Companies does not have the financial wherewithal to effect repairs.
“Freeport is locked into this cycle of less and less resources to sustain itself, let alone promote itself and develop itself for the future. When a catastrophe of Matthew’s size hits Freeport, it not only jolts our economy; it brings it to the precipice of collapse.”
Meanwhile, environmental activists and the Government appear to be on a new collision course over the proposed $200 million Carnival cruise port. Both Save the Bays, for which Mr Smith is legal director, and the Waterkeepers Alliance issued statements against the project for fear it will harm “one of the most fragile and important ecological wonders of the Bahamas”.
They, like Mr Smith, are calling for the project to be sent back to Freeport.
“We welcome Carnival Cruise Lines and recognise the importance of the cruise industry to the overall economy of the Bahamas,” said Joe Darville, chairman of Save The Bays.
“Our fear is that the very beauty that Carnival’s passengers and other visitors find in Grand Bahama could easily be destroyed if the port is built in that area. It is one of the most fragile and important ecological wonders of the Bahamas.”
Waterkeepers Bahamas’ executive director, Rashema Ingraham, said East End is a microcosm of all that makes the environment of the Bahamas “the amazing treasure” it is.
“Driving past the Casuarina Bridge and the new Jack Hayward Bridge into East End, a whole world opens up,” she said.
“There is nowhere else in the Bahamas quite like it; even the light is different. But it is very fragile and much of it is quite shallow or marshland. The campus of the College of the Bahamas (University of The Bahamas as of November 10) is on marshland.”