ROADTOWN Tortola BVI, July 7th 2013 -- While I will like to be among the first to thank the Premier for coming before the people of the territory and admitting the woes of our economy, I must be honest and let him know that I am terribly disappointed that he has failed to include a single initiative on how the government plans to get us out of the mess we are in.
What is even more ironic about the Premier's address, is that according to his Director of Communications the speech "was delayed by a few weeks as a result of him attending an open consultation with UK Prime Minister Mr. David Cameron on June 15 ahead of the G8 Summit where they discussed matters relating to financial services," but he has not made a single mention of that meeting and whether he has committed the territory in anyway.
One would have expected, that given the importance of this vital industry to our economy, and since it is a part of the reason our economy is under-performing, together with the fact that the very meeting with the Prime Minister was about matters that are supposed to adversely impact the way we do business in the industry, the Premier would have reported on the outcome.
We need to know if the Premier signed anything while in London, what did he sign, and what does it mean to the future of our Financial Services. Will companies now have to disclose fully their ownerships, including beneficial ownership as the UK Prime Minister and Leader of the Opposition advocates? What's going on Premier?
According to the Premier: "The Virgin Islands, not unlike the rest of the world, is facing a number of challenges. These challenges are not new but bear their origins well before this Government took office". The Premier waited late to admit this fundamental truth, for if you review his party's campaign rhetoric you will realize that the position then held, was that the problems were not global, but were peculiar to the BVI. I want to welcome him to reality, but that's only if I was so naive to think he didn't know this all along.
For the Premier to say, "there was very little inward investment during the past four years", is to ignore the construction works at Scrub Island; and Oil Nut Bay, including its affiliate Mega Yacht Facility in North Sound. Mention should also be made of the $45 million dollars foreign investment in water production and sewage facilities, $25 million of which was done in the first 12 months of his administration. And our VIP government did leave him an inheritance cushion of $15.7 million from CDB for infrastructure enhancements which he seems unable to execute. I find the Premier's play with words to be a bit self-serving.
Strangely enough, when the Premier says, "the point I am making, my people, is that we have costly demands on shrinking resources", is exactly what I have been saying to him since October last year, and more recently on July 2nd, when I told him the economy was failing,- a claim he continued to refute publicly,- until now he has finally admitted I was right.
And in the same statement for him to further state, "and so, we have to look carefully at where we are financially and what decisions must be made if we are to continue to provide the services that are incumbent on government and expected by the populace", laves me bewildered, and wonders where he has been for the 19 months since taking office.
Frankly I am worried as to his capabilities in leading us out of this crisis, and so should you the people of this territory. To hear the Premier say, "the reality is that the BVI is facing tough times not unlike what have been felt in much of the global economy," one gets the impression that this is something new, when in fact the global economy started going south in 2008 which was literally months after the VIP administration took office in 2007.
But we handled it with a much higher degree of success, which is evident by the many company closures; company downsizing; employee layoffs and bank foreclosures, since his NDP administration took office in 2011.
It also confirms my point that the Premier is waiting for a miracle when he continues his statement by saying, "how we fare ultimately will depend on our ability to make the tough but necessary decisions and stay the course which, my Government believes, will lead to a brighter future for all the people of the Territory".
This is where strong leadership is expected, and action to be taken to correct the situation, but we are not seeing that from the Premier. He expects things to fix themselves, but it is not going to happen. So that is why I have been calling upon him to do something.
When I heard the Premier uttered these words, "be assured that there is a certain level of diplomacy and political savvy that is required, to be heard, respected, and trusted in this global industry", I was reminded of the period 2003 to 2007 when his NDP administration coined a phrase, "responsible at home, and respected abroad", and you all know what happened to them in 2007. My point here is that fancy phrases will only get you but so far for so long.
What our Premier needs to understand is that we need to be treated as grown-ups and be told what is going on, what it is he is doing in given circumstances. But he is not telling us, so we are left to rely on the media and rumors for information.
At the face of it you can say that the Premier is at least forthcoming when he states that, "the main problems relate to a slow down or dip in revenue growth and an increase in infrastructural demands. Gross Domestic Product fell slightly from an estimated nine hundred and fifteen million dollars (US $915M) to an estimated nine hundred and nine million, dollars (US $909M) a reduction of a mere zero point seven percent (0.7%) from 2011 to 2012".
This is a rare admission of his own failings as commander in chief. However, what is more revealing is what he didn't say, and that is what happened the preceding year or years during the VIP administration. Could it be that the economy grew during that period, as opposed to contracting as it did during his tenure?
After 19 months in office, you can't help but feel a bit queasy to hear the Premier say, "my government has to find a way to inject the level of funding into the economy that will ensure that infrastructural needs and social infrastructure projects continue to be funded".
You have to wonder where has he been all this time, to not have figured this out even after being told by myself in the House of Assembly since October 2012 to do just that. To the untrained ear you must commend the Premier for what will seem like forward thinking when he said, "we are critically examining our various loan commitments with a view to consolidation and refinancing. With interest rates at the lowest they have been in decades, a consolidated loan would actually result in a lower combined payment and more room within the guidelines for additional borrowing.
This would allow us to pay for some of these critical infrastructural projects without increasing Government’s overall liability. We expect to have access to at least one hundred million dollars (US $100M) as a result of this exercise". However, to someone like myself who has been hearing this same talk since he took office 19 months ago, I know it is just words.
Now don't get me wrong in thinking that I see no merit in what the Premier is saying here. To the contrary, the idea is one I supported when they first hinted at it, and it is one I support now. But the reality is, it is easier said than done, because unlike the private sector, and particularly given the constraints by the United Kingdom (UK) vis-avis the Protocols, it is rather unlikely that this will ever get done.
To do this means, that some or all institutions currently lending us money will be dropped. I would like to see who is going to approach them with that proposal. Also, you will have to find a single lender willing to take on our debt. Moreover, will the UK approve this? The most obvious and logical option which would be the floating of bonds, has long since evaded us, due to our own shortcomings.
I had to scratch my head when the Premier said, "all around us, governments are reducing their civil service and also cutting their salaries. We have been able to avoid both of these things thus far out of a strong and deep commitment to our people". Has the Premier forgotten the 50% of their increments he failed to pay them in 2012?
Increments are earned but only paid the following year, so the increments the Premier withheld in 2012 were already earned by the civil servants in 2011. The right thing to do Mr. Premier is to pay each and every one of those civil servants their increment, with interest.
It is going to be difficult for the Premier to be successful in gaining the support he will need to get things back on track if he continues to shift blame as he is in statements like this, "the first contribution of one point one million dollars (US $1.1M) was made by my Government in 2004. However, previous spending without savings means that the level of reserves needed to meet this requirement falls short. As a result any loans that we need to take out to develop this Territory must be approved by the United Kingdom".
The Premier is giving the impression that the VIP administration is the cause of the breach to the Protocols, when in fact when we took office in 2007, the territory was already in breach. As far as the cash reserves of the territory are concerned, let me repeat something I have said on occasions before. The $1.1 million the Premier said he put in the reserve fund was there when he came back to office in 2011.
He has confirmed that we never touched it. Further, his administration went and issued a contract to Carimex for $65 million to do the new Peebles Hospital but only secured $30 million in loans from the Social Security Board, which left a deficit of $35 million.
They lost the government months after issuing the contract, leaving the responsibility to honor the loan to the incoming VIP government. We were without choice but to take the cash from the consolidated fund of the territory in order to honor government's commitment.
That's what responsible governments do, they honor their commitments. My people, here is the Premier's position when speaking of cash on hand, "I am pleased to say that by building these levels in excess of the minimum requirement, we will be able to borrow without having to seek external approval, thereby returning a higher level of decision making authority to you the people. I know that this is a level of independence that we all desire".
This is positive proof that our Premier is more interested in his own prestige, than he is in your well being. For while you are being laid off from your job because of a failing economy that he can exact some fiscal measures into, he rather do nothing by hoarding cash with a hope of gaining independence from having to ask the UK's permission to borrow, under a suppressive Protocol which he himself negotiated.
But don't be fooled by the Premier's claim about independence, for he had no problem begging permission from the UK to borrow the $15.7 million loan from the CDB which he voted against in the House of Assembly. It is independence to borrow money to do projects that you the people objects to he wants.
According to the Premier, "the development and subsequent signing of the Protocols for Effective Financial Management, was a significant step". Yes indeed Premier, a significant step back, for no one gives back to the British, and that is exactly what you did with those Protocols. One needs only look at your prior freedom to borrow from the Social Security Board which you have lost, and the now formula for calculating liquid assets. It's appalling what you have given back.
When speaking of the Protocols, it is disingenuous for the Premier to say, "Its application has played a prominent role in the progress we have made in financial management and in accountability to the people of the British Virgin Islands. To relax our position now such as is being called for by colleagues on the other side of the aisle would be irresponsible", in fact, all we have been asking him to do is apply the Protocols, which he hasn't.
We have been asking the Premier to cease his continuous and persistent acts in Violation of the said Protocols which he has signed with the UK Government on April 23rd 2012 to ensure good governance. There is the case where Government continues to forge ahead with major projects such as the Air Port Expansion; The Tortola Pier Park Project; and the Home for the Elderly, knowing full well they are violating Sect. 27 (c) of the Protocols which states: "In the event of any substantive non-compliance by the Government of the Virgin Islands in the respect of the Protocols and until the breach has been rectified, the Government of the Virgin Islands will obtain, on an annual basis, written approval from the Secretary of State before: c)Proceeding with any new project with a lifetime value of more than four percent (4%) of forecast recurrent revenue (that Is currently $11 million)".
All of these projects exceed this $11 million figure, which means the Government of the Virgin Islands is in breach, and they have neither sought nor received approval from the Secretary of State as required. Routinely and defiantly, his Government resorts to its old business as usual with its contract splitting as though the said Protocols do not exist. And particularly Sect. 11 (b) which states: "b) All projects must be subjected to a Tendering and procurement process that guarantees the highest levels of transparency and fairness practicable". In order to try and get around the Tendering and Procurement process government will break up major projects into series of Petty Contracts and Purchase Orders, but this still does not relieve them of their obligation under the Protocol, because it says all projects.
Case in point:
1) Road Town Parking Lot $359.081 a major project broken up into 9 Petty Contracts and 29 Purchase Orders.
2) Crafts Alive $1,408,667 a major project broken up into 21 Petty Contracts and 39 Purchase Orders.
3) Manse Road $683.783 a major project broken up into 13 Petty Contracts and 40 Purchase Orders.
4) Home for the Elderly at Spooners $1,061,497 a major project broken up into 19 Petty Contracts and 60 Purchase Orders.
Again, when the Premier make statements like this, "I also hear the cry of the local merchants: high shipping costs, high fuel prices, increasing cost of goods", you can't help but ask if he is just now hearing this, and immediately detect a serious case of disconnect with the realities on the ground.
He further notes that, "Government’s responsibility includes carefully looking at the issues. I will appoint a working party to assist me in that regard and report back". This revelation now convinces me that the Premier is not aware, that from time immemorial, shipping cost, from the US to the BVI has been double what it is to our neighboring USVI despite the relative small difference in distance, and that he doesn't know why. Now that he is appointing this party, I hope to see him fix that.
According to the Premier, "statistics indicate our employment rate has being in steady decline for some time now from 18,473 persons in 2010 to 18,238 persons in 2011 to the current 17,797 persons in 2012". The dip between 2010 and 2011 can be attributed to the closure of two major public works projects, namely the Peebles Hospital, and the Green Houses. But the statistics are much too fuzzy to work with.
The Premier should be able to tell accurately what portions of these jobs lost were works permit holders. Given that the Premier came into office at a time when he met the employment figures slipping, according to his own statistics at 1.3%, and subsequently under his watch now 2.4% which indicates a rapid decline of 100%, and he is only now as he puts it, "I have asked my Minister of Labor to look again at his work permit policies to determine the jobs that can now be done by BV Islanders, Belongers and Residents rather than constantly increasing the burden on the infrastructure (education, health, road, etc) by new awards of work permits". Strongly suggests that the Premier has not been paying attention to the economic plight of our people with the degree of seriousness expected from a leader.
GOVERNMENTAL REFORM
After giving us the state of employment for the years 2010 to 2011, and 2011 to 2012 earlier, this is what the Premier said, "We have created a Central Statistics Office which will focus singularly on managing and collating data, so that ministers and officials alike can have hard data by which to make better decisions..... In other words, I am making sure that when we speak about the economy in the future, we have the hard facts to
support our conclusions because I am making sure that the systems are put in place".
Really Mr. Premier! What have you been thinking about while campaigning for the government which you now have, and for the 19 months after having it? Wasn't the economy the number one thing on your mind? The Premier said, "We are completing the hospital". Kudos to him for that reassurance, for there is no greater commitment I have for my support anywhere in this territory than to see that hospital completed. But I wish the Premier had gone a little further by telling us if he has the funding to do it, and when he expects to have it completed.
When our Premier takes to the airwaves and makes statements like, "we will build the senior citizens retirement home to allow our elderly citizens to live out their final years in comfort and dignity. And we intend to complete this project utilizing available cash". I wonder if he realizes that people have long memories and that they are listening.
Just a few weeks ago in the House of Assembly I asked the Premier what was the Architect’s budgeted cost for this project, and he said they did not have the figures, but yet he can now say he will be financing it from available cash. And again in this same address, he also speaks of shrinking revenues, and government’s inability to fund large contracts. I wonder where this available cash is.
If at all true, when the Premier said that, "the Cruise Pier.... Although we have not yet arrived at the stage at which we receive final approvals from the United Kingdom government in respect to this project, they have indicated their satisfaction with the processes thus far, have agreed to the need to implement this project and expressed their satisfaction to the basic terms of engagement now being finalized", I welcome it.
Because it now means that the Premier will answer my questions on this project in the House of Assembly. Questions such as, what was the UK Government's response to Royal Caribbean's letter of January 17th 2013 expressing to the governments of the Virgin Islands and the United Kingdom their dissatisfaction with the entire bid and negotiation process which failed to conform to minimum standards that typically are present in a genuine government privatization tender? It now appears to me that he no longer thinks that it is not in the public's interest to know what's going on with this project.
Maybe he should have explained to the public if any moneys were sent to the Tortola Port Partners Limited as is alleged. In the Premier's words, "we will ensure that Prospect Reef hotel is upgraded or replaced to the standard of at least a four-star hotel". The purchase of this hotel was a $6 million dollar mistake in his administration of 2003 to 2007, and he is now trying to compound that mistake.
Government has no business in the hotel business, but I guess he is trying to compete with the local operators in the area. Bad idea in my view. Premier, if according to you as you said, "The upgrade of the Terrance B. Lettsome International Airport. I have indicated on previous occasions that this is the single most important infrastructural project in the BVI", could you please furnish us with the data to back this up?
The people of the territory would like to know the cost of this project, how you will be funding it, whether through loans or Public Private Partnership. Is there a feasibility study on its long term sustainability? These are just some of the questions that come to mind when speaking of this project.
Premier this statement, "our transportation infrastructure is also hampered because our ferry services continue to perform below an acceptable level to serve the needs of the traveling public", may be true, but is it accurate? If government really cares about our ferry services, you would get on with the proposed development for the West End Ferry Terminal. Premier you should inform us as to why it has been scrapped.
Every country in the world today including China has been experiencing either contraction, stagnation or a slowing of their economies, and each time their leader addresses the people it is to give hope of recovery through some form of solution. Some governments have to borrow from banks or other countries, some have to
implement stringent guidelines that end up bringing hardship on their citizens, and others with the way with all use fiscal measures to deal with their particular situation.
In the case of the Virgin Islands, I am aware of our limitations and realizes that the Premier options are limited as well, but unless and until he levels with the people and let us know what is really happening, instead of giving the impression that he has things under control he will continue to come under heavy criticism. One thing I can say, is taking the airwaves to say a lot of nothing like the Premier has done in this last address is unacceptable.
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