Articles - Economic Overview Presented at SLPYO Retreat

Most, if not all of us are cognizant that we are operating amidst the backdrop of the most financially depressing period since the Great Depression of the 1930s. The effects were first felt by the industrialized world but shortly precipitated to our developing sphere before we even knew it.

As a small open economy we are susceptible to the economic conditions prevailing around the world. This predicament is further exacerbated when the hardships are centered on our primary markets of the US & UK.

The global financial meltdown has therefore created an environment that forces policy makers to act. Our leaders will not and cannot proffer all the solutions or fix all problems but policies must be formulated to safeguard the most vulnerable while creating an environment enabling to economic activity. The St Lucia Labour Party does not believe the present UWP government has taken the time and attention necessary to plan for this situation, as for example the SLP did in developing the STEP programme that accommodated for the vulnerable on a basis which did not discriminate.

The country is now characterized by high unemployment which SLP inherited at a rate of 22% in 1997 and reduced to 15.3%  by the first quarter is 2006, low levels of economic activity that peaked in 2005 with a 5.45% growth in GDP, depleting purchasing power coupled with decay in our social and moral fabric.

Under the prevailing conditions efficiency, prudence and equity should become the focal tenants of governance; however our leaders have not followed this path. There has been insufficient attention paid to control our debt situation. Secondly, there has been insufficient control by the Ministry of Finance’s departmental expenditure, for example, the Ministry of Tourism has championed the cause for excessive wastage by expending millions on the FCCA and CHA conferences with little to no return. Early in their term, without adequate research or due diligence, they  hired an exorbitantly priced tourism consultant who soon fled for a higher bidder, spend millions changing our legendary slogan of ‘St. Lucia Simply Beautiful’ to ‘Saint Lucia’ while little has been done to develop the core of our marketing mix, the product.

Their actions speak of leaders operating seemingly oblivious to the crisis facing the average person. We have been subjected to the government’s indiscriminate purchase of the derelict Daher building at Bois d’Orange to the tune of $34 million with an additional $50 million required for completion; burdened with exorbitant rental costs highlighted by the combined $214 000 paid monthly to the proprietors of Baywalk Mall; robbing their original tenants, the NIC of much needed rental income. Amidst all of this, the government is subjecting us to a proposed Airport redevelopment that will places us beyond dangerous debt levels that are already beyond prudential limits.

A Labour administration will continue the policy of seeking to ensure that benefits accrue to the widest cross-section of citizens as is possible. In the face of a situation where there has been no new investment in the tourism industry, the SLP is committed to developing the tourism product in a diversified manner as we attempted in preparation for Cricket World Cup when we sought to provide incentives for St Lucians interested in small hotels and related tourism activities.

We shall start an active programme of inducing additional investment through sound and sensible fiscal policies – giving new kinds of incentives to draw investors at a time of scarce international capital; including government part-investment with foreign entrepreneurs. We shall seek to ensure conditions for labour in the hotel industry – in particular women – are conducive to early childhood welfare; and to encourage the growth and sustainability of the industry to provide for further employment of persons involved in the hospitality sector while we safeguard our culture and national heritage for the enjoyment of future generations.

In 2006 the UWP promised the revitalization of the agricultural industry. The advent of the World Trade Agreement (WTO) left small islands like St. Lucia who were previous beneficiaries of preferential treatment hard pressed to compete on global markets against competitors such as those in Southern and Central America that have vastly larger farms; benefiting from economies of scale, a more technologically advanced farmer susceptible to change and more efficient farming techniques.

The growth rate of the agricultural sector, which in 2006 was 9.77% has declined to a meager 1.84% in 2010. The fate of the banana industry lies in the balance, while government has taken no substantial initiatives for influencing a reorientation of WIBDECO-WINFRESH that is linked to new levels of productivity in exportable agricultural commodities.

The SLP remains committed to a vibrant agricultural sector where farmers are economically self sufficient, adaptive to change and safeguarded from diseases and other Acts of God.

We will therefore increase our use of modern, scientific and technological methods to ensure farmers are more informed and equipped to fight plagues such as the Giant African Snail and black sagatoga that have resulted in significant losses over the years. We will return to our previous focus on the development of feeder roads in order to improve the efficiency in transporting produce; provide structural support to improve both the product and marketing of our locally grown crops and protect our farmers from predatory behavior. We will ensure extension officers are sufficiently trained to sensitize farmers of the more modern and efficient agricultural techniques; we will work with the SLDB to ensure the bank is sufficiently capitalized to provide loans to budding entrepreneurs; we will provide a renewed thrust.

The SLP government does not believe our infrastructure requires a quick fix. Upon entry into office, the administration will conduct an extensive and thorough needs assessment of the country’s infrastructure. We will not resort to haphazard ‘ti canals’ supervised by unqualified personnel but would seek to prioritize the nation’s structural requirements and then negotiate ways and means of providing for and undertaking the requisite work expeditiously to ensure we are safeguarded from the harsh effects of another Tomas, and related natural disasters.

To enhance the environment and create short term employment, the SLP will in its first 100 days in office embark upon a national clean up program. This stimulus package is aimed at reducing the nation’s vulnerability to illnesses such as dengue and leptospirosis while improving the national product; creating an aesthetically pleasing environment to locals and visitors alike as the employment injects additional income to the circular flow which has become depleted and increasingly worsened by the poor policy decisions over the past several years.

During this major activity, individual communities will not be overlooked. While the Central Government carves the infrastructural future of the nation, parliamentarians, regardless of political party affiliation will be allocated resources to undertake small community projects and provide short term employment relief to residents as a temporary cushion as wait for the materialization of our sound macroeconomic policies.

As young people, we are all concerned with our future. This uncertainty is threatened by the present predicament that has revealed a staggering 17 500 persons are unemployed. The SLP is aware an economy will not be able to absorb all the inflows into the labour force, however careful consideration has been made towards creating job opportunities both within and outside our geographical boundaries.

Our young people need to be skilled. The SLP is committed to making improvements in our education system which began with Universal Secondary Education and will move towards the Millennium Development Goal of at least one University graduate in every household.

In 2010, the ECCB reported an 8 point stabilization plan that stated member countries require an 8% growth in GDP to recover from recession. Only a technologically skilled population can help us to reach such an achievement.

Furthermore, it is interesting to note that in a recent CARICOM Commission on Youth Development certain revelations were made;

• A reduction in crime can increase GDP by 4.5%
• A reduction in youth employment to adult employment can increase in GDP by 2.5%.
• A reduction in the high school dropout can increase GDP by 1%
• An increase in tertiary enrolment by 30% you can increase GDP by 4%.

This results in a cumulative total of 12%; 4% higher than the recovery threshold.

In order to increase employment within our borders, the SLP has put forward a variety incentives geared towards reducing unemployment. Tax breaks will be offered to new businesses employing at least 6 persons who earn at least $24 000 per annum; the government will ensure the SLDB is sufficiently capitalized to offer startup capital to young innovators and reduce corporate tax in order to facilitate expansion.

The SLP will additionally seek opportunities for St. Lucians abroad. We will seek to exploit the cruise and hospitality sectors, source markets to absorb the excess nurses & teachers, provide training to make locals occupationally mobile as well as invest in the new and emerging industries. How will these opportunities benefit us you may ask? They will redound to the country in the form of remittances.

Remittances are a vital source of income to many of the world’s economies, including regional sisters: Haiti, Jamaica and Guyana. They seek to augment family’s regular income, increase banks’ liquidity through increased savings, spur entrepreneurship through increased disposable income as well as aid in reducing the social ills associated with unemployment and desperation. .

In concluding, let me state that the party is aware that times are hard but with the management and skill of the Labour party, rest assure that better days are coming!