The right direction for Trinidad and Tobago – Part 5

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The TTWhistleblower continues a series of policy proposals which amount to an alternative budget for 2018 and beyond to forward a strategic direction for Trinidad and Tobago, for the good of all people of this country.

In Part 1, we explored the broad issues affecting Trinidad and Tobago and the course that must be set so that the right policies can drive growth, economic expansion, a better quality of life and sustainability. In Part 2 we looked at economic recovery, the Energy Sector, reform of the Public Service and expenditure audits and Public Sector Investment.

In Part 3, we examined confidence, revenue, growth and investment, and fiscal measures and in Part 4, we looked at crime and criminal activity, the justice system, economy and the property tax.

Today in Part 5, we look at the Health Sector, Social Services, Small Business, Education and Pensions Reform.

HEALTH SECTOR

In the Health Sector, we spend at least $5 billion annually on a sector that is declining as quickly as allocations are increasing. A great deal of this decline is down to waste largely as a result of many manual systems still being used for inventory of medical supplies and medications.

Decline is also down to staff shortages, malfunctioning equipment, and poor after-care services.

As it stands, the Government is directly involved in the management and operations of the Health Care System and that includes the provision and maintenance of infrastructure.

Infrastructure must be enhanced to meet global benchmarks for safety and comfort and this should be pursued through public private partnerships, aggressively negotiated and formulated, rather it being spoken about as some unattainable ideal.

The operations of the sector, however, can benefit for a level of managed privatization.

Let’s be clear – the Government must not privatize the Health Care system, where everyone suddenly has exorbitant costs.

Rather the Government might consider engaging a health service provider that can structure a management and operations portfolio that equates to just below the cost carried by Government.

So let’s say ACME Health Inc can take over health sector management, ensuring all levels of services, record keeping, primary and tertiary care and staffing are delivered at a flat rate cost. The Government pays ACME which then introduces private sector benchmarked standards to delivering the same services currently overseen by the State.

The Government, through the Ministry of Health, will assume a strong regulator role, to ensure that contract commitments are being kept, standards are being upheld, and needed health services are being delivered efficiently and effectively.

By eliminating the bureaucracy, the slow and lethargic public sector processes and bringing health closer to those who need it, costs will be cut, efficiencies improved, and the Government strengthens its role as regulator, rather than participant in the economy.

While this may be something some suspect could increase short term allocations, greater efficiency and benchmarks in the health sector, and a healthier more cared for population carries an economic cost that must also be measured.

SOCIAL SERVICES

In Social Services, one might not agree with high and increasing levels of welfare spending, but one disagrees even more with simply cutting spending and leaving low income families exposed to hardship.

Policies that have a clear objective of reducing the welfare population may mean a short-term increase in spending to fully appreciate:

·         Exactly who and where the poor in our country are?

·         What are the social, family and community factors at play?

·         What are the basic skills that can be developed?

·         What training programmes can we develop through Tech/Voc and Tertiary institutions?

·         What are the future skills for a diversified economy and how many of these families can we provide with these skills?

Being able to answer those questions mean that you focus on families, improving communities, increasing skills and introducing skills that a diversified economy will need. It effectively means that you put people to work not by force, but by giving them the opportunities to develop their skills to become contributing citizens in current and new economic sectors.

If we aim to take 10,000 families (an average of about 25,000 to 30,000 people) annually off the welfare system, we have a spending shift to training; sectoral development; community enhancement; education improvement and eventually, a large chunk of spending will be saved.

When we talk about borrowing for capital spending, this is one example. If we are to borrow to maintain social spending for the reasons just underlined, it is a matter of capital creation, and not simply recurrent spending that earns neither Government nor citizen anything.

It is not an immediate thing and economic challenges must not mean the most vulnerable suffer the brunt of adjustment. It is not for a Government to complain every day about not having money; the Government must find the money to create the shift in spending from welfare to training and sectoral development.

Within a three-year period, the Social Service system will be scaled to being strongly protective of the vulnerable who are differently abled; who have mental conditions that prevent them from working, and those who have physical injuries and simply cannot work anymore, and of course to those who have given their lives to their country and are now retired.

EDUCATION

The Education system as we know it is focused on forcing every child into school, ensuring they have a place. Yes, we agree with universal primary and secondary education.

But that agreement is based on the true application of education to all children, meaning that focus must not simply be on their academic development, but also their extra-curricular development.

The education system is not geared to identify children who may not be academically strong, but may have skills in other sporting, arts, cultural or technical areas.

An education that can both academically educate as well as develop the latent skills in children is what a true education system MUST be.

In this way, every child should a place, and every child should also feel comfortable in that space in the education system. All children must feel like achievers; that they are using their skills to develop to higher levels of which they can be proud and confident.

Think of how many children this country has frustrated by conventional education when their needs were greater, and a little more attention could have guided their skills development in other areas.

Where are those children now? Frustrated by a system that was not empathetic to their specific needs!

The signal here is that Education, under the broad umbrella of Knowledge, can actually become one of the sectors driving a new, robust and resilient economy.

And the same kind of strategy must be applied to the Secondary School system. A child who is culturally or technically adept must not be made to feel as if he failed because of an academics based secondary school system.

That system must provide avenues for young men and women in secondary school to enhance their latent skills, even as they earn a comfortable level of academic knowledge.

Tertiary Education also needs a great deal more attention than it is getting now. Offerings for first-degree programmes are focused on the conventional, and has no attachment whatsoever to a programme or strategy for economic diversification.

Sectors such as Maritime, Financial Services, Services, Technology, Knowledge, Tourism are sectors that can energise a floundering economy by creating new pillars that does not exclude the energy sector, but partners with it.

Tertiary education must include technical exchanges so that we can capitalize on our century of oil exploration and production expertise.

It must include aviation and aeronautical training; software and hardware development; strategic management for Tourism and Services and other skills specific areas that will be required to drive a diversified economy.

Let’s say we were to consider going into aviation in a big way, in the manufacture of aviation parts, or in the servicing of aircraft, or in the construction of air and sea craft, do we have a group of young men and women ready to be trained to fill the skills needs in this new sector?

Do we have the programmes? Do we have the Government interest sufficient to create confidence that if young men and women train in these areas, that there will be lucrative opportunities in the near future?

Similarly, have we harnessed the knowledge and century of experience we have in energy to be able to build a robust plant and hardware manufacturing and service sector? The answer is no!

More than 100 years in the energy business means that we should be best friends with every country that is trying to expand its sectors in the upstream, midstream and downstream sectors.

Guyana and Trinidad and Tobago should already be formidable partners in the development of their own economies, as well as the regional economic bloc, to provide resilience and leadership to rest of the regional and global economy.

We should have a programme of development, backed with the local skills, ready to market to other economies in a manner that shares knowledge through direct economic benefit to the Trinidad and Tobago economy.

SMALL BUSINESS

Small businesses have suffered tremendous broadsides by ad-hoc and unclear fiscal policies.

We must have a clear picture of not only the number of closures we have had in the past two years, but also the impact on employment and the precise reasons businesses felt they could no longer cope with an increasingly challenging economic environment.

Look to any economy in the world that is growing and strong, and you will find a robust small business sector.

The decline in small business is usually one of the strongest signals of rapid economic decline.

This means that apart from companies like NEDCO, Government policy must be geared to encouraging entrepreneurship in an environment that tangibly supports innovation and new ideas.

Government policy must ensure that small businesses do not profit simply from the protection of the State, but profit because they can compete with the best, anywhere by modernizing their operations, developing customer service, service delivery, after care and marketing skills.

This will become critically important as we move to expand the markets and corporate space for the Manufacturing and Services sectors. Small businesses must begin seeing themselves as more than just small family concerns, but as entities that can stretch their hands across borders, develop trading relationships and pursue growth and expansion.

Here, in addition to Government Policy, what is required is the aggressive pursuit of diversification oriented trading relationships, strong employment creation, import and export decongestion through more streamlined and competitive levy and tax levels.

PENSION REFORM

Pension Reform is a critical area that requires attention right now if we are to avoid a crisis in the years to come.

Reforms to the system of Pensions and Retirement benefits in this country are vital both to the economy, and to the population particularly those nearing the retirement age.

People are living longer, but are also suffering more acutely with lifestyle and chronic medical conditions.

Eventually the economy will have to bear a significant part of the cost of servicing the health and retirement benefit needs of the elderly – that is not a favour to anyone, we owe it to people who have worked their entire lives for the benefit of the Trinidad and Tobago current and future economy.

In addition to Health Sector reforms explored earlier in this Part 5 of this series, it is clear that Pensions reform may require a much more efficient operation at the level of management through the National Insurance Board (NIB).

There may be process and operational inefficiencies at play that are creating costs that can instead be channeled into portfolio investments.

This is why the National Insurance Board should be part of the Ministry audit mentioned earlier, to find inefficiencies, correct system and processes malfunctions, and modernize operational and strategic management.

We may benefit from looking at the investment management side of the Heritage and Stabilisation Fund (HSF), to find a way to ensure that the cash holdings of the national insurance system is not just sitting in accounts waiting to be paid out, but built into carefully managed investment portfolios to generate incomes that will help service growing future needs.

Some level of reform to pension and health contributions may also be required.

Reforms should not increases in the cost of contributions; it should mean streamlining the system by allowing persons to continue working past retirement, and creating a system of pre-retirement where, either before or beyond the age of 65, persons are required to mentor and coach younger employees to pass on institutional knowledge, keep them in active employment and add greater value to institutional progress and success.

It is also time to take a stronger long-term approach to reforming the Pension system by ‘bonusing’ persons who are 35 years old and over, who have subscribed to at least one retirement investment service for at least two years.

The bonus comes by tax-credits on an annual basis – persons who are avidly investing in their retirements should receive an annual refund equivalent of 1% or 1.5% of their annual taxes.

For example, if someone working for $19,000 per month pays an average of $3000 per month in income tax, but they are subscribed for a long-term retirement investment, their annual refund will be $540 based on 1.5% tax refund. Refunds can be built into the following years monthly tax take (saving of $45 per month).

Total cost to Government will be $162M annually based on an average of 300,000 persons. When this is matched to capping the State’s pension payments, the medium term saving will be achieved – spend today to save tomorrow. The medium term plan will be to limit pensions to persons who retired at a certain level of income – for example if someone retired on a monthly income of $20,000 or more, having invested in retirement, they will qualify for State Pensions at a minimal level based on an equation dictated by Fiscal Policy.

This is a substantial policy shift, but based on the previous proposals, this will take place in an environment of decreasing levels of Government spending through the cultivation of private sector space for the business community by the year 2025.

Decreased Government spending will provide a stronger hand in servicing and restructuring current debts, and structuring future borrowing arrangements in line with the kinds of returns Government wants to see in its capital expenditure programmes.

We do not have to be one of the many who are heading towards a Pensions crisis; we can become one of the few who tackled issues head on and avoided it altogether.

Read: Part 1part 2part 3,and part 4 of this serie.

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