Weekly Column

“I am not an economist” – Hon. David Thompson

The Barbados Labour Party is happy that the Prime Minister has taken our Leader’s advice to reduce the cost of diesel to at least some of the productive sectors by re-introducing the subsidy on diesel. We do not believe however that he has gone far enough and in fact he is still a day late and a dollar short.

It is regrettable that it took him six weeks to correct the error that was evident to all Bajans on what is now widely referred to as Black Monday. It was obvious that such a steep rise in diesel prices would have an immediate impact on the cost of living and bring hardship to the productive sectors.

It is a point that we made repeatedly over the course of the last six weeks, and we welcome the fact that he has finally made time between his overseas trips to adjust the price and that some sort of economic reasoning has finally prevailed.

We said from the beginning that the Prime Minister and Senator Boyce had options in regulating petroleum prices and diesel in particular. The Prime Minister can lament and whine as much as he likes about not knowing this and not knowing that, but he is the one that went up and down the length of this country during the elections and said that he was ready.

Tough economic times call for decisive action, not dithering or a wait and see attitude. He has caused unnecessary hardship and a spike in the cost of living that will not be easy to reverse. We all know that once prices go up, they rarely come back down, unless there is a dramatic decline in demand. Of course in the interim the Government has raked in a tax windfall at the pump. So either the Prime Minister did not understand the extent to which the removal of the subsidy would impact the economy, or he just did not care.

We are still concerned that he has not seen it fit to include taxi drivers, freighters or the construction industry. Moreover he has not said how or where PSV operators will be able to fill up on the subsidized diesel. We warned the Prime Minister six weeks ago, as we do now that this is a clumsy mechanism for supporting the productive sectors - the transport system in particular - and could well be fraught with abuses. The service station dealers have now echoed our concern. The devil is always in the detail and we await the details from the Prime Minister, before commenting further, but it shows just how inept this Administration really is. They have put the cart before the horse.

The Prime Minister also removed the price controls from whole chicken with the stated objective that the market would determine prices. Given that a single processor is responsible for supplying a sizeable share of the market from contract growing through to marketing the final product it is a risky move. His solution to mitigating this risk is to allow the BADMC to import 10% of national consumption in an effort to ensure that the poorest among us are protected. Again this sounds good in principle, but how and where will the BADMC market their imports? Will they limit purchases? Will they decide who can buy their chicken? We fear that this is another system that if not carefully managed will be open to all kinds of abuses and the people for whom it is intended will not be the beneficiaries. Once again a policy with no implementation plan.

We hope the Prime Minister’s aversion to planning will not take us from Black Monday to the Black Market.