The Tribune

The Government will likely receive recommendations on Freeport’s short and long-term future within the next two weeks, the Opposition’s deputy leader yesterday calling for “quid pro quos” in return for extending the city’s tax breaks.

K P Turnquest told Tribune Business that he understood the Government-appointed committee, which has been consulting with Freeport stakeholders, will likely recommend that the investment incentives due to expire on August 4, 2015, be extended.

But, while backing their extension until 2054, when the Hawksbill Creek Agreement expires, Mr Turnquest said both the Government and Bahamian people needed to receive something in return.

He said this should involve obtaining commitments from the Grand Bahama Port Authority (GBPA) and Hutchison Whampoa that they will fulfill their development obligations to Freeport, via the attraction of new investment and build-out of required infrastructure.

“They’ve finished their consultations, having had four meetings last week, and have indicated they are going to have their recommendations to the Government in two weeks,” Mr Turnquest, the MP for east Grand Bahama, told Tribune Business.

“Based upon what I’m hearing, it appears they’re going to suggest the continuation of the incentives. By and large, considering their importance to Grand Bahama’s economy, and given that we’re in this recessionary period, I think they’re going to recommend extending it, based upon the feedback I’m getting.”

The expiring investment incentives, or tax breaks, include exemptions from real property tax, Business Licence fees and other taxes.

While backing their extension until the Hawksbill Creek Agreement’s expiration in 2054, Mr Turnquest said this should be made conditional on Freeport’s primary investors living up to their development responsibilities.

Disclosing that he made this recommendation to the committee himself, Mr Turnquest told Tribune Business: “I recommended they should be extended, but with some quid pro quos in return for the benefits of extending it.

“We have to get commitments from the Grand Bahama Port Authority (GBPA) and Hutchison Whampoa with respect to infrastructure development and attracting outside investment.”

A new hospital should be included in these obligations, Mr Turnquest said, adding that the GBPA and Hutchison Whampoa needed to invest more in Freeport themselves to encourage others to follow suit.

“There’s been no development in Grand Bahama and Freeport for a number of years,” the Opposition’s deputy leader told Tribune Business, “so you are getting to a situation where investors are saying: ‘If you’re not going to invest in the product, why should we?’

“We need to do some investment that demonstrates we have some confidence in this product, which says: ‘Come and join us’.”

The Government-appointed committee is headed by ex-Cabinet minister Dr Marcus Bethel, and also includes the Prime Minister’s senior policy adviser, Sir Baltron Bethel; ex-Central Bank governor, James Smith; Grand Bahama Chamber of Commerce president, Kevin Seymour, and one of his predecessors, Dr Doswell Coakley.

Dr Bethel has not responded to Tribune Business phone messages seeking comment, but the committee’s work - and the process governing how it has been undertaken - has already been called into question by two prominent Grand Bahama attorneys.

Fred Smith QC, the outspoken Callenders & Co partner, previously warned that he was preparing a Judicial Review challenge in a bid to stop the committee’s consultation efforts until the Government-commissioned report produced by McKinsey & Co is made available to the public.

“There continues to be a disrespect for the licensees of Freeport, four-fifths of whom are required to consent to any proposed amendments to the Hawksbill Creek Agreement,” Mr Smith told Tribune Business.

“We have a fundamental interest, and are entitled to have all available information so we can make an informed contribution.”

And Gregory Moss, the PLP MP for Marco City, told Tribune Business that the Government-appointed committee was merely being used to “lend credibility” to a decision already taken - namely to extend the expiring tax breaks until 2054.

He added that it would be “insane” to extend Freeport’s real property tax exemption until the Hawksbill Creek Agreement’s end, given that the major beneficiaries of such an extension would be foreign business interests who could most afford to pay - the GBPA’s owners, Hutchison Whampoa and Freeport’s major industrial concerns.

Mr Moss suggested the Government would be relinquishing at least $67 million in annual real property tax revenues should it extend the exemption.

And he told Tribune Business that it was “ludicrous” to entertain discussions of such an exemption when the Government had, via Value-Added Tax (VAT), imposed a tax that disproportionately impacted “the most vulnerable” elements in Bahamian society.

Tribune Business understands that the stakeholder interviews, too, have not been without their questions.

For instance, representatives of Harcourt Developments went to meet the committee armed with suggestions on Freeport’s way forward, only to find the main interest was its plans for the Royal Oasis and whether it intended to sell the property.