LALIT member Ram Seegobin gave a talk on the Budget to the delegates of the Federation of Civil Service and Other unions in their Coromandel Hall on Thursday 26 March. Other speakers on the panel were Reza Uteem for the MMM, the economist, Pramode Juddoo, and an accountant Mr. Barossa. Some 80 union delegates attended.
Ram Seegobin’s speech, which we have reconstructed from his notes, began by saying he would not look at the Budget Speech item-by-item, or Ministry-by-Ministry, or sector-by-sector. In any case, he said, after three days, most of us present already know what is in the Speech. So, what he will do, he said, is to share with delegates two different ways of analyzing a Budget Speech, then give the LALIT analysis.
He said there is the “mikro trotwar” method, when people see the Budget as a series of mini, even micro, measures; what it says about cigarette and rum taxes; removing 10 cent levy on SMS’s, increasing the personal allowances for income tax. They see the Budget as the sum total of all these “measures”. They don’t realize, or don’t see, that that the Budget is an announcement of a political strategy for economic development. They don’t see that it reveals the economic orientation of the Government, in this case, importantly, a new Government.
So, the way to look at a Budget is to capture, from the Budget Speech, everything it gives away about the Government’s economic strategy. In particular, we are looking for two inter-related things: what is the Government’s strategy for dealing with existing economic and social problems, and how does it intend to orient future economic development for more production and jobs, and for a better distribution of wealth.
The main existing problems are employment (or more accurately unemployment and under-employment), the increasing gap between rich and poor, and the housing crisis. Plus, of course, the fact that the Sugar Industry, which hogs almost all arable land, is in ICU.
The Government figures admit to 7-8% unemployment. But their definition of someone not in employment is someone who had less than ONE hour’s work the previous whole week. And this one hour’s work could be paid for in cash or in kind. And we all know the degree of casualization of work, and how jobs are increasingly on contract, and for very small, fragile employers. The only job creation the budget puts figures to is 1,400 in the health services and 600 in the police service. The Budget announces the creation of 8 “Smart cities” with private investment to be some Rs120 billion), mainly around sugar estates. This will involve 7,000 arpents of land, no doubt agricultural land, going under concrete. We have no idea what sort of local demand there is for such housing. What we do know is that sugar estate land will no doubt be converted from agricultural to residential, and parcelled off. So the only initiative from Government in this hair-brained scheme will be to issue conversion and “morcellement” permits. As for the supposed “employment rich” “smart cities” creating jobs, well after the end of the construction phase, what jobs will remain? Just domestic employment, as is the case in IRS projects.
Then there is the Port, which is announced to be expanding to cover the GRNW to Baie du Tombeau area; while this development will create some employment, it is rather strange that the Minister of Finance does not clearly enunciate what has happened to the 99-year leases given to Jin Fei and NeoTown in this precise area.
As for the Rs10 billion set aside to promote PME’s, we must remember that “PME” is not an economic sector. We also need to remember that 80% of these enterprises go bankrupt in the first four hears. Any employment they create is ephemereal and only serves to mask unemployment.
Gap Between Rich and Poor
The way Government announces that it will deal with the widening gap between rich and poor is to fight poverty. Poverty is then defined as 38 “pockets”, which are listed in an Appendix to the Budget, as if poverty in Mauritius could be localised into 38 geographical areas. Then what the Government proposes is to hand over these pockets of poverty to the Private Sector. Through a system of “parrainage”, a private company will take care of a whole area, and its short, medium and long-term future. It looks very much as if these “pockets of poverty” will become the new “dankan” of the Sugar Estates.
In addition, the CSR (Corporate Social Responsibility) program (2% of all profit) will be totally under the direct control of private companies. They will decide which NGO to fund, and what kind of project to promote. We know that already private sector companies are setting up their own NGO’s, recruiting the very people, who will benefit of CSR money in terms of salary for “social work”. The Budget then encourages rich people to hand over their pensions to the CSR and benefit from an Income Tax allowance. Income tax remains at the low 15%, however grotesque someone’s income is.
All in all, the State is abdicated all its responsibility for reducing poverty to the Private Sector, while doing nothing to reduce inequality.
The housing crisis gets worse and worse, and it is continually masked by the way statistics on housing are kept. If you do not pay rent, Government considers you a “home owner” without a housing problem. Thus 9 out of 10 Mauritians are home-owners, therefore none of this 90% have any housing problem. In fact, many of those not paying rent are living without any real tenancy rights on a property that has fallen into an impossible inheritance imbroglio – with 3, 4, 5 or more whole families crowded on to a tiny property that is in the name of some long dead father or grandfather. The Budget makes the pale proposal of building 1,000 low-cost houses, while the NEF will build 700, while admitting that there is demand for 25,000 amongst those earning less than Rs10,000 per month, and another 11,000 of those earning more than this, who are in distress.
What’s Missing from the Budget
The biggest howler in terms of what is not mentioned in the budget is about land and agriculture. There is no mention of the terrible crisis in the sugar industry, except to mention a one-off subsidy to planters, small, medium as well as large sugar estates. There is no analysis of why there should be a Government “pay-out” of a subsidy to the private sector when its industry is not “profitable”. There is not even analysis of what is happening to the price of sugar. And no analysis as to why planters are abandoning their land, while in fact up to 10,000 Hectares has been abandoned. No mention either of the fate of the ethanol project. So, while the sugar industry is literally in ICU, the Budget does not come up with any project for agricultural diversification. No mention of food production. No mention of food security.
Although the Sugar Industry (or the Cane Industry as it is now called) is no longer a major source of stable employment, it nevertheless hogs nearly all of available agricultural land.
Privatization lurking in the shadows?
The Budget sets up a Legacy Fund, which is designed to receive funds from privatizing State property. But there is no mention of what will be privatized. However, in the Appendix, we note that there is legislation planned so as to allow selling of State Land.
When a previous Labour Government created a “Privatisation Fund” to receive the proceeds of the selling off of 40% of Mauritius Telecom, LALIT challenged that as detrimental to democratic budgetary control over government finances. The same objection would apply to the “Legacy Fund”.
Globally, the Budget Speech is disappointing. It has no backbone. It has no philosophy for the economy.