Even though I am off-island at this moment — I am aware that the Chief Minister will be delivering his Budget Address this week and will therefore render any comments that I would wish to make, in this issue of The Anguillian, “old news”. There have been rumours about new taxes measures; increased taxation; and other expenditure controls – but I will wait to hear the facts from the Minister of Finance, himself on Budget Day. As a former Minister of Finance leading fifteen budget exercises, I am fully aware of the process that culminates in that final presentation. The hard work of the technical staff beginning in August and usually completed by December; the many meetings of the various line ministries competing for the funding of their programs for the ensuing year; the retreats by the Ministry of Finance to establish a work plan and a central focus for the Budget; the approval process in Executive Council with all the Ministers and Permanent Secretaries; the final presentations in the House of Assembly; and the assent by the Secretary of State. Public consultations on new tax measures soon became a part of that process as well — though definitely not to the extent desirable.
However, during my entire period as Minister of Finance, I have not experienced the kind of drama that now attends the process. Even if there were issues with the budget they never reached the level of national upheaval or acrimony between the British Government and ourselves — and we took full responsibility for all the budgetary measures that we put in place whether they were in the form of expenditure controls, taxation or borrowing. In fact, I chose as a theme for my 2000 Budget Address: “Paying our own way!” The following year, in commenting on the many challenges facing us coming out of that recession and the impact of the 9/11 tragedy, I made similar comments under the theme “Facing our Challenges with Solutions from Within” — highlighting the importance of adopting a national approach to these issues rather than sitting back and waiting for assistance from elsewhere. I said in my 2001 Budget Address: –
“There is an old adage that “the lord helps those that help themselves”. Solutions from within! The British Government has been our support in a number of areas both in terms of technical and financial assistance. Some say they are not doing enough —- they should do more! The question we should be asking ourselves is: “Whatarewedoing?”
Let me take this opportunity, Mr. Speaker, to thank all Anguillians for responding positively to the challenge of last year’s theme of “paying their own way”. I must now exhort you all to be a part of the process of finding solutions to the challenges which face us. These budgetary projections, plans and programmes can only be realized if we take it as a national responsibility to be a part of that process. If we are not a part of the solution we are a part of the problem.”
I think it important to bring up these points because at no time during my tenure as Minister of Finance, or the period preceding that — whether I was in Government, or Opposition — did I ever hear a Minister of Finance and indeed an entire Government claim that the British Government gave them any direction as to what tax measures to implement. They may have made suggestions given the supporting role they have provided in audit, budgeting and debt management – but it was always the Government of the day that decided what taxes should be imposed. A good example of how the past Government dealt with such differences of opinion on revenue, expenditures and borrowing is in the response made by the Ministry of Finance in 2004 when a group of “financial experts,” retained by the FCO, made a number of recommendations on what the Government of Anguilla should do. This short statement from the GoA’s response sums it up as follows: –
“In terms of the strategy which George-Hoole Report (G-H Report) has recommended for 2002-2004, the GOA is of the view that this is oriented too much towards the “shock therapy” approach to fiscal adjustment with little regard for the long-term social and economic consequences which it might engender. Consequently, in responding to the G-H report, the GOA has sought to provide: (a) a more detailed context for understanding the budgetary performance over the period 1995-2001 by highlighting both external and internal developments; and (b) a detailed strategy for achieving fiscal stabilization over the period 2002-2004 which is more “gradual” in its approach, more sensitive to the human consequences of the economic adjustment process, and is cognizant of the need to continue to invest in critical areas of health, education and physical infrastructure to establish the conditions for sustained and long-term economic growth and development.”
What the Ministry of Finance and the Government of Anguilla did was make the case as to why the recommendations made by the FCO consultants could not work. But the Ministry did not stop there. It went on to make specific proposals as to how it would achieve the revenue and expenditure targets required. In other words, the past GoA did not say these are British recommendations and we have to impose them; neither did they argue that these are British proposals and we refuse to implement them — rather they said we understand what objectives you want to achieve and they are reasonable — but this is how we will do it. Our way fits the context of the economy, people and environment we are dealing with! That is what a responsible Government does! Not to say as the Chief Minister is alleged to have said to Anguillians in Slough: “If the British Government come to mere talking about Budget I will lead Anguillians with sticks and stones against them!”
I would like to go further and make the point that I was also a Minister of Government in 1981 when Anguilla used to receive “budgetary aid” from the U.K. Yet even during that period the Executive Council, which at the time included a Financial Secretary (Mr. Franklin B. Connor, OBE), did not accept any and every proposal from the British Development Division in reference to budgetary matters. I can remember long, hard battles fought over such issues when we were actually begging for financial assistance to meet our revenue estimates — but these battles never made the public media. They were negotiated in an atmosphere of mutual respect.
I recall just after this Government ascended to Office, I returned from a period of rest and relaxation, after the grueling election campaign, and I was greeted at the Airport by some of my supporters. The Anguillian took the occasion to ask me a number of specific questions about the situation that was developing between the new Government and the British and I think that my response may be instructive. Here is a transcript of that part of the interview in March 2010: –
“The Anguillian: Mr. Banks as you know the Chief Minister and a small delegation left for London to have discussions with the FCO about Financial Matters. Any comments?
Banks: I believe that the new Government should find out for themselves what the British position is. We made that same visit last June and I believe that the outcome then will be no different from the outcome now. There is no need for the present Government to play the blame game with the past Government. What they have inherited with regards the financial situation is exactly what we told them. They simply need now to step up to the plate and do what needs to be done to get the economy going.
The simple truth is that because of the global recession the revenue side of the budget has not been performing. The only way we can pull out of this will be by increasing economic activity. This will require spending either from the private or the public sector. It was our challenge over the last eighteen months to get the British Government to support borrowing for public sector projects; try to revitalize failed projects; or energize existing ones.
Our Government was fortunate to have put aside some $39 million in fixed deposits as well as an additional $23 million that we spent in anticipation of EDF 9 funds, which was also our money. So in fact we had amassed actual reserves of $62 million dollars. This money was a part of “our bridge” to meet the revenue shortfall but it was not infinite as savings never are. The “bridge” now is getting longer. The longer the “bridge” becomes the more challenging will be our efforts.
In my estimation the UK Government has adopted the ill-informed view that our plight has come from the inadequacy of our tax regime. Nothing is further from the truth. During the period of our prosperity we not only met our capital and recurrent requirements but also amassed reserves with the same tax regime. So the cause is really slow economic activity and our vulnerability to external shocks. While the global recession is not of our making it is an issue we must deal with collectively. I support the present Government in its efforts to get things moving — but I do not support their strategies. There will be no good news from the UK. Any news from the European Union will not be for immediate or even short-term support. Their bureaucracy is legendary.
So what is the solution in my humble opinion? The election is over. The government seems intent on looking for “the boogie man”. They will not find one. Our Government has not done anything that we are ashamed of. Nor do we have any fear of anything untoward being exposed. This is the time for healing. You are now the Government. It is your job to bring everyone together to meet these challenges. You must bring the developers on Board not by fear and coercion but by “suasion” as partners. You must not look for apologies but solutions. The solutions are here at home. There will have to be sacrifices — but there will also have to be incentives. Forget the criticisms you leveled at us — you will have no choice but to use many of those same strategies. Just off the top of my head, Mr. Hodge, that’s my advice.”
That was more than two and a half years ago but my advice to the Government has not changed. And I would hope that the Chief Minister and his colleagues would take charge of the budget process thereby demonstrating that they can manage the situation without “passing the buck”. Indeed, many persons are beginning to seriously question whether they are competent to handle the affairs of state. All I am hoping is that this year, and moving forward, the Chief Minister will understand that he can’t use the same tired excuses any longer. According to a friend of mine: “Don’t try dat!!!”
