The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Cabinet minister yesterday said he only found out the Government wanted to appoint him to the committee that will determine Freeport’s future when it was announced in the House of Assembly.

James Smith, an ex-minister of state for finance, said first heard of the Government’s intentions to appoint him when it was announced during the mid-year Budget debate on Monday night by Dr Michael Darville, minister for Grand Bahama.

The Government wants Mr Smith to join Sir Baltron Bethel, the Prime Minister’s senior policy adviser, and another former Cabinet minister, Dr Marcus Bethel, in leading consultation and negotiations over Freeport’s key expiring investment incentives, which sunset on August 4 this year,

They will be joined by the Government’s consultants, McKinsey & Co, who have already prepared a draft report on the way forward for Freeport that will likely guide the approach to both the expiring real property tax and Business Licence exemptions, plus the city’s longer-term development.

However, the failure to formally notify Mr Smith of his pending appointment prior to Dr Darville’s public comments hardly smacks of administrative competence on the Christie administration’s behalf. Especially since August 4 is less than six months.

Tribune Business had contacted Mr Smith yesterday to discover how he, and the committee, would likely approach the discussions on Freeport’s future, but he quickly explained that he was unable to say much.

“I’ll have to wait until I’m approached and see what they’ve got in mind,” he told this newspaper. “Like everyone else, I have to adopt a wait and see approach.

“Right now, I only know what you know. I’ll have to get a better feel for what’s being considered.”

Tribune Business, though, had revealed the likely appointment of Mr Smith and his fellow committee members during a January 28, 2015, interview with Prime Minister Perry Christie.

Mr Christie said then: “We have a very dynamic situation existing in Grand Bahama, particularly heightened by the death of Sir Jack Hayward, where the Government under the Hawksbill Creek Agreement is required to make a decision on Business License and real property tax [exemptions].

“We have retained a firm called McKinsey, and we are joining with them a number of outstanding persons to go to Grand Bahama to begin discussions with stakeholders on what position the Government should take with respect to real property tax and Business Licenses.”

Referring again to McKinsey, Mr Christie added: “We have invested very heavily in a top firm to advise us. They have asked us to have a couple of Bahamians, people like James Smith, Sir Baltron Bethel and Marcus Bethel, join them in leading the discussions in Grand Bahama.

“There is no doubt that we are going to move very quickly. The Government of the Bahamas is now obliged to have discussions with the survivors of Sir Jack Hayward and the St George interest to determine the future of Freeport.

“We have some significant investments that we are in the process of dealing with and trying to put in place, so therefore it is important that major decisions are made with respect to Freeport as quickly as we possibly can.”

Mr Smith, drawing on his previous experience as the Bahamas’ ambassador for trade, said one potential issue was how Freeport’s status as a free-trade zone, governed by a quasi-governmental authority in the shape of the Grand Bahama Port Authority (GBPA), would fit into the liberalised, rules-based trading regimes that the Bahamas is joining.

With accession to full World Trade Organisation (WTO) membership high on the Government’s agenda, Mr Smith said there were questions over whether goods produced and exported from Freeport would be subject to the same treatment as those manufactured elsewhere in the Bahamas.

Many in Freeport’s private sector have urged the Government to make a quick decision on the expiring incentives to bolster business and investor confidence.

Many have called for the real property tax and Business Licence fee ‘breaks’ to be extended until the Hawksbill Creek Agreement’s expiration in 2054, provided the city continues to contribute net tax benefits to the Government.

Kevin Seymour, the Grand Bahama Chamber of Commerce’s president, has said it would be “disastrous” if the Government chose to levy real property tax on Port licensees post-August 2015, warning it would be “another nail in Freeport’s coffin”.

He added that the city, and 3,500 Grand Bahama Port Authority (GBPA) licensees, did “not have the luxury of time” in waiting for the Government to make a decision on Freeport’s expiring investment incentives.

With potential investors said to be ‘waiting on the sidelines’ until the matter was resolved, Mr Seymour said Freeport and its private sector could ill-afford to wait on the Government’s consultants to provide recommendations on the way forward.

Describing 2015 as a “watershed year” for Freeport and Grand Bahama, the Chamber chief said it was vital for the Government to work with the island’s various stakeholders to turn its economy around, warning: “Failure is not an option.”