ORG chief brands new/raised taxes ‘futile’
• Urges: ‘Don’t wait for investors to come to you’
• Criticises former Gov’t on Dorian/COVID ‘misses’
By NEIL HARTNELL
Tribune Business Editor
The Davis administration’s actions will “be the decider as to whether this country sinks or swims” amid its ongoing COVID-related health, economic and fiscal crises, a governance reformer argued yesterday.
Robert Myers, the Organisation for Responsible Governance’s (ORG) principal, told Tribune Business that the “poor governance and bad management” of successive former administrations meant The Bahamas cannot afford to look beyond the present government to reverse course.
Arguing that new and/or increased taxes were “futile” in the post-COVID environment, he added that a laser-like focus on stimulating Bahamian and foreign direct investment (FDI) was “the only rising tide that stimulates all boats” and generates sufficient jobs, foreign currency inflows and government revenues to turn the economic and fiscal tide.
Warning that further deficit and national debt slippage will be “the death of us”, Mr Myers added that increased investment flows were the only option for The Bahamas’ small, narrow-based economy that is largely services-based and heavily reliant on tourism.
The ORG chief, while backing economic diversification into new industries over the medium to long-term, said this would not occur quickly enough to deliver the country from a national debt that is bigger than the economy’s size. He added that, “unless oil starts bubbling up out of Lake Cunningham”, the short-term focus has to be on reviving The Bahamas’ largest industry, tourism.
“This administration has most assuredly got their work cut out for them,” Mr Myers told Tribune Business. “This administration is literally going to be the decider for this country as to whether it sinks or swims because of all the poor governance and bad management of other successive administrations.
“The onus and responsibility is most assuredly going to fall squarely on the shoulders of this administration. For its people, it’s an absolute sink or swim moment in my opinion.” The Bahamas’ $10.356bn debt is currently 100.4 percent of gross domestic product (GDP), meaning the national debt is greater than the country’s post-COVID economic output, with a $951m deficit set to add further to those figures.
Reserving judgment on the new administration, given that it has been in office for less than two weeks, Mr Myers added: “Let’s wait and see if they can do what they say. The issue with the last administration was they came up short on what they said.
“Clearly, what the Bahamian people want is for their politicians to do what they say. That’s really what we heard pretty loudly and clearly at the general election. That’s what they’re about. If you don’t do what you say, you’re out. That’s how it’s supposed to be.”
Mr Myers said the recent Moody’s downgrade and 100 percent debt-to-GDP ratio came as little surprise, given that he had predicted the latter barrier would be breached by year-end 2021. “I said by the end of this year it would be 100 percent, and we didn’t even make the end of the year. The former administration clearly chose to sugarcoat that as best it could, but the reality is the reality,” he added.
The ORG chief also critcised what he branded as the inadequate post-Hurricane Dorian reconstruction assistance on Abaco and Grand Bahamas, as well as the failure to secure more COVID-19 vaccines earlier as well as extra healthcare resources to combat new virus variants and the latest surge in cases. He branded these as “real misses” on both counts.
To reverse course, and avoid the debt defaults and International Monetary Fund (IMF) adjustment plan that many pundits are gloomily forecasting for The Bahamas, Mr Myers said the new administration needed to adopt a pro-investment and private sector approach that was capable of raising annual GDP growth to presently unheard of levels at around 6-7 percent.
While achieving such explosive growth will likely be difficult given The Bahamas’ anemic track record, he added: “The focus has to be on GDP growth. It’s the only rising tide that floats all boats. Growth has to be earned by stimulating foreign and local investment because we only sell sun, sand, sea, fun and proximity to the US. We can talk about aragonite, salt and sand, but they’re not big enough.
“We are a service-driven economy. Until oil starts bubbling up out of Lake Cunningham, it’s sun, sea, sand and fun. That’s got to be the paramount focus, local and foreign direct investment that’s it. We have got to make ourselves regionally competitive and have got to get power prices down. Power costs, the ease and cost of doing business, and labour productivity are all factors in that. They all go hand in hand.”
Acknowledging that Chester Cooper, the deputy prime minister, would likely understand this given his background as BAF Financial’s principal and a former Chamber of Commerce president, Mr Myers argued that new and/or increased taxes were not the way to go in getting The Bahamas out of its economic and fiscal woes.
Asserting that they would only further strain already-struggling companies and households, he said: “Taxing people more at this point is futile. All you’re doing is increasing the cost of business and making us less regionally competitive...
“We provided a paper on getting projects shovel ready. The Government ought to be proactive, get ahead and look at spaces projects need based on the assets around them. Then get those projects shovel ready so foreign and local investors are not slowed by the Department of Environmental Planning and Protection and Ministry of Works. Those sites are already approved by those agencies.
“Don’t wait for investors to come to you; go to investors with shovel-ready projects. Don’t wait for them to come in the door. Go to them. Use business ambassadors to get people to look at The Bahamas, but we have got to have a plan and got to have a vision,” Mr Myers continued.
“Right now, if we don’t get the economy moving we will not have enough money to worry about social and environmental aspects of the National Development Plan. We’ve got to get people employed and productive, and then we have some hope.”
The Minnis administration had planned to reform the Bahamas Investment Authority (BIA) into Invest Bahamas, transforming it from a reactive to proactive investment promotion agency that would go out and seek investors in targeted sectors and niches - similar to what Mr Myers is calling for. The Progressive Liberal Party (PLP) had promised something similar in its election campaign manifesto.