GAWU’s President Remarks in the 2010 Budget Debate

Cde Speaker, I rise to support this 2010 Budget, the 18th Budget of the PPP-C Administration since its historic victory at the polls on October 05, 1992 following the restoration of free, fair and transparent general and regional elections in our dear land. The budget which is presented under the theme:- “Consolidate, Transform, Sustain” reaffirms the administration’s overarching objectives of safeguarding our economy and our country, assuring continued economic growth, social development and further improvement in the lives of all Guyanese by implementing changes that would allow our country to be transformed into a truly modern and prosperous nation for which all Guyanese aspire. It is on these bases that the 2010 Budget was crafted. Since taking the reins of Government in 1992, the PPP-C Government has been unwavering in its pursuit of developing this nation and enhancing citizens’ standard of living. Numerous projects and programmes have been executed over the past eighteen (18) years and today, Cde Speaker, we can proudly say that our citizens enjoy a vast improvement in their quality of life as compared to two (2) decades ago. Indeed, the Government continues to be guided by the PPP-C election manifestos of 1992, 1997, 2001 and 2006 and to fulfill those manifestos’ commitments to ensure progress in our country.

Cde Speaker, we are not a Nation which can be considered anywhere close to the developed countries or even to rival some developing countries which are well endowed with many usable resources. In the case of our potential petroleum resources which are said to be located just off the Corentyne Coast, the Government ought to hasten the process to determine the commercial potential of this valuable and important resource and based on the findings then its exploitation should commence without delay.

Cde Speaker, so far, with careful and sensible use of our resources we have moved forward as a nation. The fact is, unlike many other countries and despite the negative consequences of the Global Economic situation, the economy of our country is steadily improving, confirming that the decisions taken and implemented by the PPP-C Administration are not only bearing fruits, but are in the best interest of our citizens across the country.

Cde Speaker, since the PPP-C took office in 1992, the annual expenditure of our Budget has been constantly increasing. The current budgeted expenditure of $142.8B represents an increase of 10.7% over last year’s budget which will bring much more needed financial resources to many vital sectors of our country’s economy. This expenditure will contribute to the further modernization of Guyana and ultimately redound in the enhancement of our citizens’ welfare. Cde Speaker, the growth in the economy last year provides a yardstick by which we can measure our gains and successes. Last year, despite the global economic turmoil, our economy grew by 2.3% while the economies in many countries in the Caribbean and further afield stagnated or recorded negative growth. I have pointed out in previous budget debates, that a low single digit growth is not enough. Ideally our country ought to grow close to, or at double digits, bearing in mind the legacy of the poor state of the economy twenty (20) years ago. With the gains, from an even better functioning economy reaching the people at the bottom, we would be able to improve the livelihoods of the ordinary working people and reduce poverty which is regarded to be still high at thirty six (36) per cent in spite of a drastic reduction from seventy five (75) per cent recorded in the 1989 Household Income and Expenditure Survey.

Social Sectors

Cde Speaker, this year’s budget theme “Consolidate, Transform, Sustain” is appropriately chosen. This budget will undoubtedly contribute to further strengthen and transform the economy. All stakeholders should not fail to make their contributions. All Guyanese for the good of themselves and for the betterment of the younger and future generations have a responsibility to work together with the government of the day in order to improve on our gains and transform our country’s economy for the benefit of all Guyanese, now and in the future.

Cde Speaker, one way to determine the impact of the budget on the ordinary people is to look at the budgetary allocations to the social sectors of our country. I now wish to reflect on this year’s Budget commitment in the areas of education, health, water and housing and poverty alleviation. In this year Health is allocated G$13.388B, Education G$20.825B, Water and Housing G$5.833B and Poverty Alleviation G$14.246B all told consuming G$54.148 or a remarkable 37.918% of this year’s G$142.8B budget. Never in the history of our nation has such a large proportion of the Budget been dedicated to the social sectors. Come on Opposition give the Government kudos for its people oriented commitment. Such expenditures are far higher than the insignificant and miserable allocations in the years of the past regime and are significant indicators of the Government’s commitment to the people. These expenditures serve to consolidate the people-oriented policies of the PPP-C Government. Indeed they reflect our resolve to better the lives and general well being of our people.

Cde Speaker, indeed billions of dollars have been spent in the housing sector between 1992 and 2009, thus allowing for thousands of Guyanese to become home owners. I wish to repeat some important facts I alluded to in a previous budget debate, the 2002 Census Report observed and I quote “the capability to construct homes is an indicator of a rise in living standard”. Further, the Guyana Poverty Reduction Strategy Paper: 2008-2012 states that “Guyana continues to make substantial progress in owner-occupied houses especially within the category of the poor,” it goes on to say, that “more than three-quarters of the poor had their own dwellings in 2006 with adequate rooms for occupants and bathrooms.” The paper posits, that “the development of accelerated housing schemes with infrastructure subsidized by government and lower and affordable interest rates from New Building Society and other financial institutions may have contributed to this outcome.”

The 2002 Census Report also stated that between 1998 to September 2002, up to 29,175 households or 16 per cent of the total households in the country completed their dwellings, an achievement greater than any other similar period in the history of the country. Since the commencement of PPP/Civic innovative Housing Drive in 1993 about 83,000 house lots have been allotted to our people who are proud owners of their own homes. The housing policy of this Government undoubtedly seems to have fulfilled or perhaps surpassed expectations of a past dream – the dream to feed, house and clothe the nation.

Turning to education, Cde Speaker, it is said that education improves people’s ability to shape their lives — strengthening their functioning in society and contributing to their welfare directly. Investing in education is, therefore, crucial for economic growth and poverty reduction and it is on this basis, Cde Speaker, that G$20.825B has been allocated towards the sector. The massive investment in this sector, Cde Speaker, has allowed for a number of schools to be built and rehabilitated while considerable resources have been directed towards the provision of textbooks and teacher training. As a result Cde Speaker the 2002 Census Report stated that the attainment of over 90 per cent enrollment in the primary and secondary school-age population, realizes Millennium Development Goal Number Two: Universal Primary Education.

Water provision has also commanded significant attention since the PPP-C Administration came into office in October, 1992 with significant resources being directed towards modernizing and rehabilitating the sector over the last 18 years. This year, G$2.7B has been allocated in the budget in order to ensure greater access to safe drinking water. In a previous debate I made reference to the Guyana Poverty Reduction Strategy Paper: 2008-2012 which said that, I quote, “the large investments in the water sector over the last 5 years have contributed to the provision of safe water throughout the 10 Regions of Guyana.” In this regard, allow me to emphasize the words of the Guyana Poverty Reduction Strategy Paper 2008-2012 which states the “significant progress made especially in hinterland and rural coastal communities has resulted in about sixty three (63) per cent of the poor having access to potable water.”

Cde Speaker, these investments in water have undoubtedly redounded to the benefit of our people with 75 per cent of households in Guyana having access to safe drinking water as against 50 per cent in 1991 according to the 2002 Census Report. Further, the Census Report states “the decline in access to water through public stand pipe has declined percentage wise from 10.6 per cent in 1991 to 3.3 per cent in 2002 and in absolute terms from 16,321 households in 1991 to 5,949 in 2002.” Cde Speaker, the reports, the facts and the figures speak for themselves and point to the massive improvement of people’s welfare. Though the progress made in the last 18 years is remarkable, we readily concede, there is must more to be done.

As a result of these timely investments by the Administration, Cde Speaker, our people undoubtedly have benefitted from a much improved quality of life and standard of living. This is a far cry from where we were in 1992 when our economy was devastated, our infrastructure in severe disrepair and our people confronted with tremendous sufferings.

Although there is still more to be done, it is rather remarkable that in 18 years, the PPP-C Administration has taken 39 per cent of our population out of poverty. The programmes in this 2010 Budget would further serve to reduce the level of poverty in our country. A country like ours, with an abundance of resources must ensure that poverty is eradicated or brought down to an insignificant proportion by the end of this decade. This is the vision of the PPP-C Administration.

Sugar Industry

Comrade Speaker, our more than three hundred and fifty-two (352) year old Sugar Industry remains the cornerstone of our country. It is the lynchpin of our economy and is appropriately highlighted in this year’s Budget. The history of the sugar industry reflects the history of our country and is making no small contribution in shaping the sociological, technological, economic and political life of our society. It was this industry that caused thousands of slaves and indentured labourers to be brought to our country and their descendants becoming its economic lifeline. It is our patrimony, Cde Speaker.

To this day, Cde Speaker, the industry is the largest employer in Guyana with just over 18,000 workers. Additionally, there are some 1,500 cane farmers who produce approximately eight per cent of the country’s sugar production. All told, Cde Speaker, it has been estimated that the industry directly impacts on about 125,000 persons, whether as Guysuco’s employees, private cane growers, suppliers or service providers, as well as their respective dependents. In short, Cde Speaker, about 17 per cent of our population depends on this vital industry for their survival. This underlines the central importance and significance of the sugar industry to the economy and society of Guyana as a whole.

Cde Speaker, the industry’s performance since the great flood in 2005 has not been encouraging. The poor production over the last two years has certainly been disappointing. In 2008 and 2009 the industry produced only 226,267 tonnes and 233,735 of sugar, tonnes in comparison to an average of 319,587 tonnes between 2002 and 2004. However, the industry’s weak performance in recent years cannot and should not be separated from Booker-Tate’s dubious management of the sugar industry in the latter years of their contract. Booker-Tate which took much credit for improving the industry’s production from 129,920 tonnes in 1990 to 325,317 tonnes in 2004, in the same manner, Cde Speaker, is equally accountable and guilty for the decline of the industry over the last few years. Booker-Tate during its earlier years was better equipped to manage the industry as could have been seen by the quality of work from its experts in the requisite areas of the field and factory operations. However, co-inciding with its change of ownership from a British to a South African entity, the capabilities of its experts seemed to be wanting.

Cde Speaker, last year, we also saw the full implementation of the thirty-six (36) per cent price cut of sugar exported to the European Union (EU) with effect from October 01, 2009. As a result, the average export price for sugar declined by 13% according to the Honourable Minister of Finance in his presentation. Undoubtedly, the mere 13 per cent decline as against the expected price decline is attributable to the appreciation of the Euro vis-à-vis the US dollar.

Cde Speaker, also on October 1st, last year, the thirty-four (34) year old Sugar Protocol which provided preferential access for our sugar into the EU ceased to exist. Although the protocol ceased to exist, the EU sugar regime entered a Transitional Phase until October, 2015, at which time the arrangements made under the respective Economic Partnership Agreements (EPAs) will govern the trading of sugar.

Notwithstanding the challenges which confront the industry, Cde Speaker, our industry, unlike those in the Caribbean, has a bright future and excellent prospects. According to Guysuco’s Turnaround Plan submitted last April, the industry is expected to produce approximately 420,000 tonnes by 2013 and between 440,000 to 450,000 tonnes by 2018. By February, next year, the Enmore Packaging Plant will be commissioned. It will eventually produce 40,000 tonnes of packaged sugar and ramping up to 60,000 tonnes by 2013 and 80,000 tonnes by 2018.

Additionally, the cultivation at Blairmont Estate is to be expanded by 849 hectares (2,100 acres) and there will be a commensurate expansion of that Estate’s factory capability to process the additional canes. Cde Speaker, by the end of next year, with the current mobilization of adequate field machinery, both the estate and farmers land expansion would be completed. In other words, by 2012, the new factory’s cane demand of 1.2M tonnes will be satisfied, therefore, allowing for the production of 110,000 tonnes sugar at Skeldon.

The Honourable Member, Cde Winston Murray made some unfortunate and I believe, inaccurate comments, with respect to the sugar industry. He alluded that the Government has taken over significant debts from Guysuco. Is that so? Has he been misguided? Will the Honourable Member, since he made reference to it in his address, provide the evidence.

He stated that the industry is being significantly subsidized by the Guyanese taxpayers. Is there any truth in this wild assertion or, is it just wild? Could the Honourable Member provide the House with figures to substantiate the size of the subsidy if there is any? Surely he could not be referring to the over G$1B subsidy provided by Guysuco to the local consumers of sugar. Cde Speaker, approximately 24,000 tonnes of sugar is consumed annually in Guyana at G$68,828 per tonne. This is G$47,004 below the present EU price of G$115,832 per tonne. In other words, as a result of the lower local price, Guysuco suffers a loss of G$1,128,096,000 in revenue annually.

Cde Murray also pointed out, that the current cost to produce a pound of sugar is US28 cents. He explained that this number was provided by the Minister of Agriculture. I am sure that the Honourable Member is quite aware that the recent cost of production is based on the extremely poor performance of the industry. If the industry were to produce sugar at US28 cents per pound perpetually when it is receiving only US22 cents per pound from the EU for its quota of 190,000 tonnes then the industry would be forced, at this very moment, to close its entire operation. In fact since the crop commenced on week ending February 05, 2010 the industry has produced 23,768 tonnes sugar as at, today, February 19, 2010, using an average of 10.5 tonnes of cane per tonne sugar. Such a positive ratio would indicate a far lower cost of production than US28 cents per pound. The true cost of production could only be sensibly determined, taking the production and cost incurred in production when the industry is once again able to produce according to its current capacity. At the end of this year when the industry will surely produce not less than 280,000 tonnes sugar, it will be shown that the cost of production will be much lower than US28 cents per pound.

Cde Murray in his address stated “the Guysuco Turnaround Plan makes it very clear that the future viability of the sugar industry is dependent on the accelerating of mechanization and the plan calls for 44% mechanization by 2014, in consequence, the number of estate labourers to be employed is expected to decrease from 18,500 in 2008 to around 12,600 by 2015, in 2010 the number is expected to be reduced by 4,000 as compared to 2008.” Cde Speaker, there is no way on earth that the Corporation would be able to continue business as usual in the sugar industry with 4,000 less workers by 31st December, this year, much less with the production of over 400,000 tonnes sugar by 2013. The Corporation, I believe, is addressing its concern about greater labour shortage in the future. At the moment the labour force is gradually contracting as a result of attrition. This is indeed a challenge to the industry noting that widespread mechanized cane harvesting has severe limitations as was seen from the experiments in the 80’s. Our coast being below sea level, the structure of soil and the heavy cost of mechanization would pose severe challenges in attaining 44% mechanization especially in the area of cane harvesting. The maintenance of reasonable wage levels in the industry in order to be competitive with other employers must also be uppermost in the mind of the Corporation should the industry hope to increase its production to above 400,000 tonnes annually.

Cde Speaker, I wish to emphasize that the sugar industry ought not to be seen only from a bottom line, dollar position, but from a comprehensive, macro and holistic position of what it contributes to our nation. Just imagine if the Industry is to be done away with what will be its replacement to avoid the social consequences that will certainly attend its closure. The sugar industry remains an intrinsic component of the economy. Many developed and developing countries continue to maintain their vital agricultural industries through appropriate interventions and support. These interventions are not premised on solely narrow financial factors, but they also take into account economics generally and the social and national relevance of the industries. Cde Speaker, the wider Guyanese nation must also take note as sugar is still pivotal to the national economy and the social well being of our country.

Region #3

Cde Speaker, turning to Region #3, for which I am one of the Region’s Geographical Representatives. As both a Member of Parliament for Region #3 and a resident, I am pleased with the steady progress seen over the years. These significant improvements have touched the lives and welfare of the approximate population of 103,000 persons. Several roads, schools, bridges, health centres were either built or rehabilitated which several housing schemes have been established and on-going. Last year, regional expenditures amounted to G$214.5M or 98.6% of its G$217.6M capital budget and G$1.9B or 94.7% of its G$2.1B current allocation.

Worthy of note in the education sector last year was the extension of the Endeavour and the Commons Primary School at Canal #2 Polder, the rehabilitation of the Wales Community High School, Fort Island Primary School and the Clemwood Primary School in the Demerara River. Further, certain work was done at Canal #1 Nursery School, Vreed-en-Hoop Community High School, Leonora Primary School and Blake Primary School, East Bank Essequibo while access routes were improved at Goed Fortuin Primary, school Two Brothers Primary School, Canal #1 Polder and Blakenburg Primary School.

In the health sector is to be noted that there was the construction of three (3) health posts at Fort Island, Saxacalli and Upper Bonasika, as well as, the rehabilitation of the Leguan Hospital, the La Grange Health Outpost and the Den Amstel Health Centre. Additionally the Region’s health care capacity was enhanced with the purchase of an x-ray processor, an Electro Surgical Scapel and Operating Theater Lights.

Drainage and Irrigation was neither neglected with a koker being constructed at Northern Hogg Island and revetments constructed at Tuschen, Philadelphia and Henrietta while a quantity of drainage tubes were also acquired. Additional roads and streets were built at Vergenoegen, East Bank Essequibo, Noitgedacht to Ridge, Wakenaam, Stanleytown, West Bank Demerara, Fellowship and De Witts to Henrietta, Leguan.

Indeed, Cde Speaker, the list of improvements in the general welfare and standard of living of the Region’s population is long and I want to assure the House that this trend will continue year after year, as is the case in other parts of our country.

Income Tax/Tax Reform

Cde Speaker, what has become of the promised reform of the Income Tax Regime? In the 2003 budget presentation on March 28, 2003 the then Minister of Finance said:- “Mr. Speaker, while the Government was able to significantly increase revenue over the past 10 years, a glaring anomaly has been the small contribution made by the self-employed. We are cognizant of the efforts made by the Guyana Revenue Authority (GRA), including moral suasion but these have met with little success. Therefore, I wish to announce that this year, the Government will strengthen the Income Tax Laws to enable to enforce presumptive Assessments on professionals and other categories of self-employed persons”

It is unfair and discriminatory to have thousands of the self-employed, many of whom earn millions of dollars each year, paying a pittance in income taxes based on grossly understated earnings while all PAYE employees are subjected to a high level of taxation which is compulsorily deducted each week, fortnight or month. It is unfortunate too that the Income Tax threshold remains at $35,000 per month. The working class had expected a greater threshold, noting the severity of the various taxes which confront them. We look forward, at last, to the reform of the Income Tax regime and we hope it will be equitable.

Conclusion

By way of conclusion, Cde Speaker, I wish to congratulate the Honourable Minister of Finance, Dr Ashni Singh and the dedicated and hardworking staff of the Ministry for their excellent work in the formulation and presentation of this year’s budget. I am sure there continuing able management of the Ministry of Finance will assure our country greater success in the future.

I wish, therefore, Cde Speaker, to commend this 2010 Budget and urge all members of the House to support it so that we can get on with the task of consolidating, transforming and sustaining our gains while safeguarding our economy and country with all round growth and development for all Guyanese.

Thank You