BUDGET STATEMENT 2008
INTRODUCTION
Mr. Speaker, this sixth Budget of this
People’s National Movement administration is
I am pleased to have the opportunity to
present to this Honourable House and
indeed to the national community, a
comprehensive account of our stewardship over
the past five years, outlining our many
successes and the challenges that we have
faced.
Mr. Speaker, as we intend to be in
Government for the next five years, I also
propose to couch the Budget for fiscal
year 2008 in the context of a longer term plan,
which in essence represents yet another
phase in our journey towards Vision 2020.
It is against this background that the
theme of this year’s Budget Presentation is
“Vision 2020: Determined to Reach our
Goal”.
Honourable Members, the completion of the
documents laid in this Honourable
House today could not have been possible
without the commitment, enthusiasm and
the hard work and sacrifice of the many
public officers, especially those in the
Ministry of Finance, who have worked long
and tirelessly on preparing these
documents.
I want to let them know that their
efforts are greatly appreciated. I would also like to
thank my Cabinet colleagues, and all the
individuals and organizations who have
contributed to the process which resulted
in the preparation of these documents.
Mr. Speaker, in order to put our record
of performance into its proper perspective we
must remind our citizens of the
Government’s vision for
the strategy that will get us there.
OUR VISION
Mr. Speaker, when this PNM administration
assumed office in 2001, we began work
on the transformation of this country
into a developed nation in the shortest possible
time but certainly by the year 2020.
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The driving force behind this
transformation is our enduring passion and desire to
bring sustained prosperity and the
requisite higher quality of life to every individual,
family and community across the country.
The vision that emerged – VISION 2020 --
was founded on five developmental
pillars: Developing Innovative People;
Nurturing a Caring Society; Enabling
Competitive Business; Investing in Sound
Infrastructure and the Environment; and
Promoting Effective Government.
Vision 2020 acknowledges that
unprecedented opportunity and challenge.
It recognizes, however, that economic
prosperity does not depend solely on
physical endowments or proximity to markets.
Rather, it is based on the full awareness
that in today’s global environment, the most
successful countries are those that have
succeeded in harnessing and nurturing the
creativity, ingenuity and inventiveness
of their people, something to which we aspire.
In that sense Mr. Speaker, ours is more
than an economic vision. In particular, it
incorporates the nurturing of a caring
society; it envisages that the foundation of our
society is based on the creation of
strong families with high moral and ethical values;
that all our citizens have access to
adequate and affordable housing and first class
health care that enable them to live
healthy lifestyles; and that we put in place new
systems to support the most vulnerable in
our society.
Over the last six years we have worked
hard in pursuit of this vision and we have
had many notable successes. I would now
like to share with you some of our major
accomplishments.
PERFORMANCE OVER THE PERIOD 2002-2007
Mr. Speaker, over the period 2002-2006,
our economy grew at a high rate and real
GDP of 9.7 percent per year, a growth
performance which ranks among the highest
in the world. This rapid rate of growth
led to a doubling of the economy over the past
six years from $55 billion in 2001 to
$114.5 billion in 2006 and an increase in per
capita income from US$7,100 in 2002 to
US$14,790 in 2006.
And while the energy sector was the main
driver of the economic expansion, the
non-energy sector surpassed expectations,
increasing at an average annual rate of
6 percent over the period.
As a result of the boom in economic
activity, an average of approximately 14,400
new jobs were created annually, resulting
in a reduction in the unemployment rate
from 11.7 percent in 2001 to 5 percent at
the end of 2006, the lowest in our nation’s
history. Mr. Speaker, this has resulted
in labor shortages in several sectors and
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private sector industries now satisfy
some of their requirements by importing labor
supported by Government’s new immigration
policy.
Mr. Speaker, anyone who needs a job today
can find one, a situation totally different
to six short years ago. It is therefore
no wonder then that the official data shows a
halving of the poverty rate from 35
percent in 1990 to 16.7 percent by 2006.
Several other macro-economic indicators,
point to solid macro-economic
management.
Mr. Speaker,
Foreign Direct Investment, amounting to
close to US$6 billion over the past five
years. We have maintained overall fiscal
surpluses and in so doing we have
reduced both our public and external
debt.
Public debt has been lowered from over 60
percent of GDP to 28 percent of GDP
currently, while external debt which was
17 percent of GDP in 2001 is now at 5
percent of GDP.
Our financial system remains robust and
resilient and has emerged as the leader in
the region; with oil and gas prices
remaining buoyant for most of the period we have
been able to maintain stability in the
exchange rate and increase our foreign
exchange reserves to approximately US$6.5
billion, excluding the Heritage and
Stabilisation Fund.
Mr. Speaker, we recognise that we must
plan for future uncertainties and therefore
we have formalized the Heritage and
Stabilization Fund in law.
We have, and in the five year period have
put aside substantial savings for our
children’s future such that at end of
August this year the Fund will be $10.9 billion,
compared with $1.015 billion when we took
office in 2001.
However, Honourable Members our
achievements are demonstrated not only in the
macro-economic indicators but in the
improvement in the quality of our citizens’
lives. Let me provide some examples:
Tax Relief
When we assumed office, Corporation Tax
was 35 percent while Individual Tax
ranged from 28 percent to 35 percent.
Today we have unified Corporation and
Individual Taxes at a flat rate of 25 percent
and raised the level of personal
allowances from $25,000 to $60,000. Mr. Speaker,
this latter measure removed an additional
300,000 individuals from the tax net.
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Education
Mr. Speaker over the past five years, one
of our most successful interventions has
been in the area of education.
We are in an advanced stage of developing
and implementing a world class system
of seamless education, stretching from Early
Childhood Care and Education (ECCE)
through to tertiary level; and it is all
free of charge.
Our early childhood education programme
is now on full steam; so far seven early
childhood centres have been completed and
it is expected that by the end of
December 2007 twenty three of these high
quality centres will be operational.
At the tertiary level, the crowning
achievement of this Government, Mr. Speaker,
was the establishment of the
Since then, UTT has been expanded to
incorporate several affiliated tertiary and
post-secondary institutions.
Currently UTT’s mandate is inter alia to
help address the country’s need for
scientists, technicians and researchers
while the affiliated institutions are to provide
tertiary training in areas such as
nursing, health sciences, foreign languages and the
performing and creative arts.
Mr. Speaker, we introduced free tertiary
education at the undergraduate level in
2005. This is applicable not only to UWI
and UTT and its affiliates, but to all
accredited private institutions in
eligible for up to 50 percent of tuition
costs as well as for concessionary loans under
the Higher Education Loan Programme
(HELP).
As a result of the increased availability
and greater government financial support,
enrollment in post-secondary and tertiary
institutions increased from 15,000 in 2001
to over 45,000 at present.
Mr. Speaker, our program for the
computerization of all primary schools is in full
train. So far, 340 schools are at
different stages of completion.
We have de-shifted 13 junior secondary
schools and converted them to full day
secondary schools. Concomitantly we have
converted all senior secondary schools
to 7-year secondary schools. The up-shot
of this Mr. Speaker, is that an additional
11,050 secondary schools students now
enjoy full-day schooling.
We have paid careful attention to the
provision of special education. In this fiscal
year `alone, the Government upgraded the
physical facilities of 9 public special
schools. We have also agreed to the
payment of school fees for students of 6
registered private special schools.
Over the six-year period, the Government
has spent approximately $615 million on
the construction of schools, 42 have been
completed, including 7 Early Childhood
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Care and Education (ECCE) centres and
about 30, including 16 ECCE centres, are
in progress.
In the six-year period, the Government
also undertook some 1,000 school repair
projects at a cost of $380 million.
Housing
Mr. Speaker, this Honourable House would
recall that, for many years, access to
quality affordable housing was identified
as a priority issue for national development.
The Government has responded with great
urgency and with innovative approaches
to meet this critical need.
In the past six years, the Government has
constructed 26,000 single and multi-family
housing units on
Today an individual earning $1,440 per
month can access a mortgage loan with 100
percent financing for 25 years at a 2
percent interest rate. This was not available
just six short years ago.
In government-housing programmes persons
50 years and over can now get a
long term mortgage since the liability could be transferred
to their estate in the
event of their death.
For individuals who are financially
unable to service a mortgage, there is a rent-toown
programme, in which, over time, part of the rental
payments could be applied
as a deposit towards the purchase of the
property.
Grant/subsidy programmes are also available to qualified
homeowners to help
meet the cost of repairs.
Mr. Speaker, we also regularized several
squatting settlements and our squatter
relocation programme is well underway in
Sangre Grande and
major goal of the Government is to
eliminate the incidence of squatting completely.
Health
Mr. Speaker, in Health we have made
significant strides towards the building of a
client-centered system, with a focus on
primary health care.
The center-piece of our strategy is the
Chronic Disease Assistance Program (CDAP)
through which citizens are provided
medical drugs free of charge to treat several
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common ailments, including diabetes, hypertension,
cardiac disease, depression,
arthritis, glaucoma, asthma and enlarged
prostate.
Mr. Speaker, on a regular basis 300,000
of our citizens are benefiting from the
programme, which is being administered
through 250 pharmacies located
throughout the country.
We have significantly reduced the waiting
lists for most surgeries and have
succeeded in reducing deaths caused by
HIV/AIDS by about one-half.
We have built and refurbished several
primary health care facilities and have
installed new technology and equipment
throughout the health system.
Mr. Speaker, when this administration
entered office there was a significant backlog
and long waiting times for elective
surgeries in the public sector. There were some
15,000 persons waiting for surgeries, in
some instances for as much as 10 years.
To date, we have completed over 12,000
surgical procedures achieving a significant
reduction in the various waiting lists.
This represents 12,000 persons whose lives
have been dramatically improved.
We have increased the number of cardiac
by-pass surgeries, from 10 procedures
every month to 20 procedures per month.
The entire public health sector is now
doing 30,000 surgical procedures annually.
That is more than 15, 000 more than when
we came into office.
Training
Mr. Speaker, reflecting our strong
conviction that a highly-skilled labor force is the
key to our economic transformation and to
the provision of high-quality sustainable
jobs, my Government has allocated
significant resources to training. Consequently,
there is now greater access to technical
and vocational education than ever before.
Over 6,000 persons have benefited from
the Help Youth Prepare for Employment
Programme (HYPE); close to 31,000 in the
Youth Training and Employment
Partnership Programme (YTEPP); over
37,000 in on-the-job training; over 7,000 in
the Youth Apprenticeship Programme in
Agriculture (YAPA) and almost 12,000 in
the Multi-skills Sector training
programme (MUST). Some 6,000 individuals,
including 80 prison inmates, have
benefited from retraining programmes.
The Laventille Technology and Continuing
Education Centre, established in
November 2004, has graduated over 3,000
persons with marketable skills. A similar
center in Pleasantville which will
service San Fernando and surrounding areas is to
be opened shortly.
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Centers are also earmarked for Chaguanas,
Point Fortin, Mayaro and Diego Martin.
Income Support and Social Protection
In 2002, Mr. Speaker, the minimum old age
pension, now called the Senior Citizens
Grant was $800 per month.
Today, the minimum Senior Citizens’ grant
is $1,350. In addition, senior citizens
have access to free medical care and
drugs, free bus passes and housing
assistance.
A Food Debit Card has been introduced to
help our needy citizens cope with the
world-wide phenomenon of high food
prices.
This arrangement provides a grant of
$300, $400 or $500 for relevant vulnerable
families of 3, 4 or 5 and over persons.
Mr. Speaker, in 2001, the National
Minimum Wage was $7.00 per hour. This was
increased to $8.00 per hour as at January
16th, 2003. On March 31st, 2005 this
rate
was again increased to $9.00 per hour. I
will say more about the minimum wage
later.
National Security
Mr. Speaker, we have taken significant
steps to strengthen our capacity to address
our worrisome crime and security
situation on a sustainable basis.
There have been early successes but the
full impact of our comprehensive
methodical approach will be seen over
time.
In this context the Government has:
· Introduced legislation to improve the
management of the Police Service and
law enforcement generally;
· enhanced detection and forensic
capabilities;
· provided greater mobility and modern
communication facilities;
· established constant radar surveillance
of our entire coast line. This will
considerably strengthen our hand in
dealing with the illegal drug trade which
produces the majority of violent crime in
this country;
· upgraded and constructed 65 police
stations;
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· provided the opportunity for involvement
of the citizenry in the battle against
crime through the 555 Anticrime
Initiative;
· reorganized the Anti-Kidnapping Unit;
· established the Special Anti-Crime Unit
of Trinidad and Tobago (SAUTT),
which involved the recruitment of
officers from the United Kingdom; and
· established an Aerial Surveillance
System.
Infrastructure
Mr. Speaker, in infrastructure we doubled
the fleet of the Public Transport Service
Corporation, wound up the loss making
BWIA West Indies Airways and introduced a
streamlined Caribbean Airlines on more
viable routes.
We also implemented a most reliable
service on the Seabridge to Tobago which has
greatly facilitated and expanded travel
between the islands. Final consideration of
the Airbridge is not yet complete.
Mr. Speaker, we implemented the National
Highways Programme which in the last
six years rehabilitated approximately 110
kilometres of our road network and
commenced the upgrade and extension of
several of our major highways and main
roads.
Mr. Speaker, the Street Lighting
Programme, which started in September 2005, has
resulted in the illumination of 80
kilometres of main roads and highways. At the end
of July this year 111,320 Street Lamps
have been installed either as new
installations or as an upgrade of
existing facilities.
Mr. Speaker, a more comprehensive
breakdown of the performance of the
Government since assuming office is
presented in a document laid in this
Honourable House as part of the Budget
package entitled “Government at your
Service: Highlights of Achievements
2002-2007”.
Mr. Speaker did I hear someone say that “performance
beats old talk every time”?
ACCOUNTING FOR THE PETRO-DOLLAR
Mr. Speaker, as part of the accounting
for our stewardship, permit me to give a brief
summary of the Government’s revenue and
expenditure developments over the last
six years.
I will like, Mr. Speaker, to focus on how
we spent the resources entrusted to us. In
the process, I will also like to respond
to the many voices that accuse the
government of over-spending and of the
injudicious use of the taxpayers’ money.
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In the six year period ending this fiscal
year 2007, the Government collected
revenues amounting to $162.7 billion, of
which $69.7 billion was derived from the
energy sector and $93 billion came from
the rest of the economy.
The high level of energy tax collections
reflected buoyant oil and gas prices and the
Government’s successful efforts at oil
and gas tax reform, which increased the
country’s tax take from any windfall revenues
received by the companies.
Mr. Speaker, the revenue loss from the
non-energy tax reform measures was more
than offset by the revenue impact from
rapid economic growth and by major
improvements in tax administration. This
demonstrated Mr. Speaker, the
correctness of this bold policy
initiative.
Over the six year period recurrent
expenditure amounted to $125 billion of which the
main items were:
· Wages and salaries, including two rounds of salary
adjustments to bring the
salaries of civil servants more in line
with the private sector and to encourage
higher productivity, amounted to $29.2
billion;
· Goods and services like medicines, school books, computers,
materials and
supplies, amounted to $17.1 billion;
· Interest payments on local and foreign debt were $14.9
billion;
· Subsidies amounted to $6.1 billion. These covered
subsidies on petroleum
products to keep down the cost of
gasoline ($3.9 billion and the subsidization
of the sea and air bridge to Tobago ($1
billion);
· Transfers to educational institutions, including UWI, UTT, government
secondary schools, GATE, amounted to $5.3
billion;
· Transfers to households, including public officers pensions,
social security
grants, social assistance, disability
grants amounted to $15.5 billion;
· Current Transfers to State Enterprises
and Statutory Bodies, amounted $18.8
billion. The largest recipients were BWIA
and CARONI in respect of State
Enterprises, and WASA, Local Government
Bodies and Airport Authority in
respect of the Statutory Bodies;
· Current Transfers to the Tobago House of
Assembly amounted to $5 billion;
· The Unemployment Relief Program utilised
a total of $1.5 billion; and
· The Community-based Environmental Protection
and Enhancement
Programme (CEPEP) - $1 billion.
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On the Capital Account, the three major
expenditure items were transfers to the
Heritage and Stabilization Fund $9.5
billion, which in effect is an increase in savings,
the Public Sector Investment Programme
$12.9 billion and the Infrastructure
Development Fund $6.9 billion. There was
also an increase in Government’s
deposits at the Central Bank of $7
billion.
Honourable Members would recall that in
2005, in the face of bureaucratic
bottlenecks that hampered the
implementation of the public sector investment
programme, the Government established a
number of special purpose companies to
manage a number of public sector projects
to be executed by private contractors.
While there were initial delays in
operationalizing some of these companies, the new
modality has resulted in a significant
increase in the implementation rate of the
PSIP. The funding for the projects
implemented by the special purpose companies is
channeled through the Infrastructure Development
Fund (IDF).
Mr. Speaker, if you disaggregate our
spending you would see that out of total current
expenditure of approximately $125
billion, $17.5 billion, about 14.0 percent of our
revenues was spent on poverty alleviation
programmes, including URP.
Mr. Speaker, some of our friends on the
opposite side would want us to abandon
these programmes because they allege that
helping the downtrodden and disadvantaged
contributes to the creation of a
dependency syndrome. Mr. Speaker, we
approach this problem differently and
that is why nurturing a caring society is one of
our major developmental priorities. It’s
a love thing.
Our philosophy is that the able-bodied
will be required to work or prepare for work in
exchange for temporary income support.
However, outright support will be provided
to those among the poor that are
incapacitated, sick or to those unable to work such
as the elderly, the differently-abled and
the destitute.
Mr. Speaker, this is, in summary how the
revenues were spent – to meet our
statutory commitments; to provide
subsidies to keep costs of certain basic goods
and services down; to meet operating
deficits of some loss making public
enterprises and to finance
infrastructural investments, and a significant part was
saved in the Heritage and Stabilization
Fund (HSF).
Mr. Speaker, several commentators – some
well-meaning – have sought to chastise
the Government for its spending. Part of
the problem is that while they measure
government spending against theoretical
benchmarks and spurious indicators of
absorptive capacity, we tend to give
equal or greater weight to the impact of the
spending on people’s lives.
Mr. Speaker, for this Government, the
object of our expenditure programme is to
improve the quality of life of the citizens
of Trinidad and Tobago.
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Thus, for example, when we spend $650
million to electrify all areas of the country
through our street lighting programme it
is not that we like to engage in large areas
of expenditure, as some will say; nor is
it solely a question of electricity; it is that we
wish to provide a higher level of
security for our citizens so that they enjoy a better
quality of life.
When the Government embarks on the
construction of high rise buildings on the Port
of Spain Port, it is not that we see
development only in terms of large buildings, as
our detractors are wont to say, it is
that we are providing better office
accommodation for the public sector so
that public sector employees will work in
some of the best conditions that the country
can offer so as to encourage higher
levels of productivity.
This will, of course result in better
service to the public and a better quality of life for
those persons who receive the services.
Mr. Speaker, I cannot over-emphasize that
it is about people and about improving
their standard of living.
CHALLENGES
Honourable Members, I would like to
concede that we have faced some challenges
in the implementation of our programme.
Some of these challenges are the
inevitable result of our rapid rate of growth; we
have also had problems resulting from the
infrastructural bottlenecks from shortages
of skilled manpower, and include
managerial deficiencies.
But Mr. Speaker, we have been addressing
these problems with increasing degrees
of success.
For example, in the face of rapid growth
and declining spare capacity inflation rose
to 10 percent in October 2006. As a
result of tighter demand policies and supply-side
interventions the rate has been reduced
to 7.3 percent as at June 2007.
The target announced in the 2007 budget
was to reduce inflation to 7 percent by end
2007 and to 5 percent thereafter.
Mr. Speaker, crime has also posed a major
challenge, affecting the security of
families and the quality of life.
The Government has introduced a whole
range of measures to deal with the crime
upsurge and they are beginning to have
effect as indicated in the significant decline
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in the number of kidnappings for ransom
and a 22.2 percent fall in the number of
murders over last year’s figure.
However, Mr. Speaker, the level of crime
is still unacceptably high and the
Government is committed to intensify
efforts to eliminate this scourge from our
society.
Some of the other challenges that we are
currently addressing include the
transportation bottlenecks; expanding the
road network, port congestion; the
resuscitation of the domestic
agricultural sector; and the provision of water for all our
citizens.
Each of these areas will be addressed
when the plans for fiscal year 2008 and
beyond are outlined.
PURSUING OUR VISION WITH DETERMINATION
Mr. Speaker, our considerable
achievements over the past five years provide a solid
forum, from which we could accelerate our
march towards Vision 2020.
We are determined to learn from
experience; to persevere with the approaches that
have served us well and to find
innovative solutions to the bottlenecks and obstacles
that we have faced.
Mr. Speaker, as we intend to be in
government for many years to come our budget
for fiscal year 2008 is couched within a
medium term framework that represents the
second five year span on our longer term
journey. It is certainly not an election
budget as some of our critics anticipate.
No, Mr. Speaker, the welfare of the
citizens of Trinidad and Tobago is too important
to be left to the vagaries of electoral
politics.
Rather, the measures and policies that
are being proposed in the Budget are
consistent with and are all designed to
bring us closer to our Vision 2020 goal.
PRIORITIES FOR FISCAL YEAR 2008 AND
BEYOND
Mr. Speaker, the main priorities that we
have set ourselves for fiscal year 2008 are
to:
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