Transcript NHT and IMF: PowerPoint presentation at UTECH : 7 March 2013

The NHT and
the IMF Package
• TAKING $45BN FROM THE NHT...
ILLEGAL AND IMMORAL?
• THE IMF PACKAGE...
IS IT FAIR?
CAN IT WORK?
ALTERNATIVES?
DISCUSSION MEETING AT UTECH: 7 MARCH 2013
Dedicated to the late Frank Gordon
1
Raiding the NHT
• The government, with the encouragement of the
IMF, has abandoned all principle. Taking $45bn of
our communal NHT contributions for purposes
other than housing is illegal as well as immoral.
• The 50% who contribute, but who do not
currently qualify, need homes and deserve homes
just as much as those in government and on the
NHT Board.
2
Build more low cost houses
• . If there is a surplus then spend it on homes
for that 50%.
• It would create pride of ownership, civic
engagement, better families, backyard
farming, construction jobs, demand for local
raw materials, less crime – an almost perfect
project.
3
90,000 starter homes..
• The NHT admits that there is a need for at
least 400,000 new housing solutions
• So why not spend that $45bn on one-room
block-and-steel starter homes at $ ½ m each,
on free land (the people’s land)? It would yield
90,000 low-cost housing solutions that would
benefit as many as 300,000 people.
4
Home as a birth-right?
• The struggle over land has been fundamental
to many liberation movements across the
world.
• In the twenty-first century, given the riches
that abound, a house and a little land should
be a fundamental human right, a birth-right.
5
’Crown land’ + NHT
= Homes
• And it can be a reality in Jamaica if we can
wrest control of the abundance of crown land,
our land, from those who would only use it, or
keep it, for their own advantage.
• Put together with the NHT monies, which are
not a gift but our contributions, there can be
that house and land for all – indeed a home.
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PETITION
• Please sign the paper petition, or the on-line
petition at: http://www.change.org/enGB/petitions/government-of-jamaica-withdrawtheir-proposal-to-take-j-45bn-from-the-nht-topay-debt
• Demand that the government use our NHT
contributions for the purpose specified in the
NHT Act, that is providing housing solutions for us
all, not for paying debt.
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NHT Act (1)
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NHT Act (2)
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Statement by NHT Chairman
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NHT Financial Statement
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If not your NHT monies,
then what?
We are told the IMF monies are (and were!) to plug the hole in the budget
and to deal with our massive trade imbalance
• But there are other sources of finance such as:
– Unpaid taxes / graduated tax rates
– Cutting out Favour Waivers
– A culture of caring / sharing through taxation
• Spending can be reduced by:
– Cutting out privileges at the top
– Stopping white elephant projects
– Eliminating corruption
• Trade can be better balanced by:
– Eliminating un-necessary imports
– Become more competitive and exporting more
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But there is a
LARGER picture...
• The proposed misuse of the NHT funds is only one part of an IMF
package that is oppressive, unjust and self-defeating.
– Oppressive to those already struggling to make ends meet... (PATH)
handouts are demeaning
– Unjust because most of us did not benefit from or create the debt.
Debt payments transfer money from the poor to the more privileged
– Self-defeating because slow, or no, growth will mean more debt in
the future
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Oppressive and Unjust
• The hardships faced by ordinary people, the 99% across the
world, are getting worse, just as they are in Jamaica. There
are less jobs, less income, less services, less opportunity,
less hope - in fact less of everything except hardship.
• In October 2011 the IMF said Jamaica's poverty rate was
43% of the population, that's 1.2 million people living on
less than J$212 per day. And yet the Jamaican government
claims only 16% are in poverty, defined as those living on
less than J$257 per day! No wonder very few believe the
real unemployment rate is only 12% as we are told.
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Not much left for the people...
15
Self-defeating –
Austerity doesn’t work
Economic growth is needed instead
In any case, austerity doesn’t work. It has, by the IMF’s own admission,
caused three times the damage (contraction) to the Greek economy
than was predicted. Are we to really believe in a medicine that has
failed consistently over the past thirty years?
Jamaica’s lack of growth: GDP per capita
Borrowing more to get out of debt?? It didn’t work following the 2010
IMF package, as we all know. So now we are saddled with $1.75
trillion in public debt, and growing every day
16
Better pain for gain...
than for nothing
A radical alternative package would not be pain-less. It might well cause more
pain in the short-term than kicking the can down the road. But even
mainstream commentators have doubts about the IMF package which
aims to increase the primary surplus to 7.5% of GDP, bringing down the
debt from 140% of GDP to 95% by 2020.
On ‘Direct’ with Garfield Burford on 6 March, Dr. Damion King (Head of
Economics at UWI) said the current IMF package, even if fully
implemented, would not reduce the debt level significantly, leaving the
economy vulnerable. He thinks it will take much longer, even if not
derailed by circumstances (hurricanes, global recession) beyond our
control. Thus he argues that debt reduction should not be the prime target
but creating a sustainable economic base.
Dr. Christopher Tufton, head of CAPRi, emphasised the need for growth if we
are to ever get out of debt. But he says the IMF package likely means no
growth and thus it can’t, and won’t work. It is too constricting.
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An alternative...
1) Put a moratorium on debt servicing, including foreign debt
2) Undertake a forensic audit of the debt as Ecuador did successfully
3) Repudiate the large amount of debt which is odious / illegitimate
especially the FINSAC part for which the IMF must take responsibility
4) Stop the cutbacks which only make matters worse, shrinking rather than
growing the economy.
5) Stop borrowing - we can survive without the IMF - the government collects
more in taxes than is spent on serving the Jamaican people (the primary
surplus). We can also cut out wasteful and corrupt spending.
6) Collect taxes from those same wealthy individuals and businesses who
currently avoid paying.
7) Re-visit our relationship with the WTO - our economy is much too open to
unfair competition. We must eliminate un-necessary imports.
8) Increase productivity and competitiveness - generating growth / creating
jobs / improving livelihoods...
18
The fiscal budget...
more is collected in taxes
than is spent on the people
19
2011-12 Budget – J$m
20
2011-12 Budget – J$m
21
Government Finances - % of GDP
2006-2011
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Can we survive
without the IMF?
There are three basic economic (and social) problems:
1.
2.
3.
Balancing the fiscal budget (more-or-less)
Balancing foreign trade (or at least the current account)
Increasing productivity and competitiveness / generating
growth / creating jobs / improving livelihoods
The IMF package really only addresses the first problem, and possibly
ineffectively.
If the alternative of a debt moratorium were adopted, the fiscal budget
would not be a problem. It would also allow resources for increased
productivity and hence greater exports. But imports would also
need to be controlled to deal with the trade imbalance
23
Trade Balance
Exports & Imports as a % of GDP
24
The foreign account 2011 : US$m
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The foreign account
2006 - 2011
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Productivity and Growth
Beyond the financial and trade gaps, the underlying challenge is
to increase productivity and competitiveness, generating
growth, creating jobs, improving livelihoods...
The IMF package undermines both growth and productivity,
directly and indirectly, in the short and long term:
• Cutting jobs (and therefore tax intake)
• Reducing demand – through less jobs / real wage cuts leading to business failures / loss of more jobs etc
• Cutting spending on education / training / infrastructure
which are needed to increase productivity
27
Not much here to enhance
Productivity and Growth
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Interest v Capital Expenditures
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Infrastructure Spending
by Public Bodies
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Global Competiveness Index 2011-12
Jamaica at Stage 2
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Pillars of Competiveness
3 stages
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Doing Business in Jamaica
90 out of 185 countries
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Corruption Perceptions Index 2012
83 out of 176 countries
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Better pain for gain...
than for nothing
Ecuador has tried a different path, with some success and
is now on a firm growth path. Little Belize has renegotiated its foreign debt. Cuba survived a 50% drop
in GDP after the collapse of the USSR.
In the 1970s, there was a call for a New International
Economic Order, with Jamaica part of the G77 pushing
it. A new order is needed even more now to stop
finance capitalism feeding further off the carnage it
created, leading up to the crash in 2008.
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Debt bondage
The debt is deliberate because for the privileged it means easy
earnings. This applies both locally and on a global scale.
Others have become caught up in its web. The IMF
represents the interests of foreign holders of debt – it is
their debt collector.
The banks have become gambling houses. Gambling with your
money and the money which governments allow them to
invent, and then exploit. Banks now no longer lend much to
the productive sector. Feeding off the tax-payer through
compliant governments is much easier.
It might well be necessary to nationalise the banks – after
billions of dollars of public funds were pumped into the
banking system in the 1990s...
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Another way...
• There has to be another way. Finance should oil
the wheels of production, not feed off them. And
then people could improve their lives.
• The resources are still there... people, farms,
factories, equipment, know-how... the banking
system should help bring these together, not
strangle us in debt.
• The future is up to us. We can settle for less, or
strive for more.
37
An alternative...
1) Put a moratorium on debt servicing, including foreign debt
2) Undertake a forensic audit of the debt as Ecuador did successfully
3) Repudiate the large amount of debt which is odious / illegitimate
especially the FINSAC part for which the IMF must take responsibility
4) Stop the cutbacks which only make matters worse, shrinking rather than
growing the economy.
5) Stop borrowing - we can survive without the IMF - the government collects
more in taxes than is spent on serving the Jamaican people (the primary
surplus). We can also cut out wasteful and corrupt spending.
6) Collect taxes from those same wealthy individuals and businesses who
currently avoid paying.
7) Re-visit our relationship with the WTO - our economy is much too open to
unfair competition. We must eliminate un-necessary imports.
8) Increase productivity and competitiveness - generating growth / creating
jobs / improving livelihoods...
38
UTOPIAN?
Some would say that there is no alternative
(TINA). Others say the alternatives are utopian
(wishful thinking, pie-in-the sky, unrealistic).
Thankfully our national heroes did not feel
bound to think only ‘within the box’. Millions
across the world a demanding a better world.
About time we joined them?
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Wake up youth!
(George Davis – ex-student at UTECH – letter in the Gleaner - 6 March)
•
As young Jamaicans, we've done a massive disservice to the hard-toiling taxpayers who've
contributed to our education. Given such sacrifice, why then do we idle with the gifts we've
been given? Why do we spend so much time and energy cavorting or thinking of cavorting, as
our country crumbles around us?
•
We poison our minds with what we read. We know everything about dancehall, yet have no
interest in Government's plan to raise the primary surplus to 7.5 per cent of GDP up to the
year 2020 to pay debt. This debt, which we were told would improve education, health care,
national security and infrastructure... is destroying us
•
So many of us fervently supported Obama's two elections to the United States presidency,
arguing passionately and zealously about why he's the best choice for Americans. Yet we
duck any talk about politics in our own country, often waving the lazy argument that it's too
corrupt to warrant discussion. Shameful!
•
Wake up! Think about nation building. Think about how your effort and endeavour will help
this great nation re-establish itself as the gold standard in the Caribbean region.
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The late Frank Gordon
• Frank Gordon died this week at his home in
Harbour View. He was born on Love Lane, behind
Liberty Hall, the legacy of Marcus Garvey. Frank
was self-educated, a follower of Garvey and St.
William Grant. He spent his adult life keeping
their teachings alive.
• I only wish that those in government spent more
time rubbing shoulders with the likes of Frank to
remind themselves of the bigger picture, of what
the struggle (and sacrifice?) should really be
about.
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Thank you!!
Paul Ward
Campaign for Social & Economic Justice
542 7600 : [email protected]
www.csej-jamaica.org
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