Deputy Prime Minister K Peter Turnquest.
By KHRISNA VIRGIL
Deputy Chief Reporter
kvirgil@tribunemedia.net
DEPUTY Prime Minister Peter Turnquest said the government will consider turning state-owned enterprises (SOEs) or quasi-government corporations over to the private sector as a means to retire debt because the subsidies provided to them are exorbitant.
The 2017/2018 Budget includes $429m in funding for 25 SOEs - $79m more than last year, the Minister of Finance said on Wednesday. He described the increase as “clearly unsustainable”.
“We will also seek to reduce these subsidies to an irreducible minimum and apply a very rigid test on future requests for financial subsidies to ensure that more money is available to finance the operations of the government,” Mr Turnquest said during his presentation of the 2017/2018 Budget in the House of Assembly.
“This budget includes funding in the amount of $429 million for 25 SOEs, quasi-government corporations. This is $79 million more than last year, primarily because of the introduction of National Health Insurance. As this is clearly unsustainable, this administration will develop concrete action plans to transform these enterprises either into viable, efficient and self-sufficient entities."
Some of the more prominent SOEs in the country include Bahamasair Holdings Ltd, Bank of The Bahamas, Bahamas Power and Light Ltd, Water and Sewerage Corporation, the Broadcasting Corporation of The Bahamas (ZNS), Nassau Flight Services and the Hotel Corporation of The Bahamas.
The Minnis administration projects borrowing more than $722m to cover inherited outstanding bills along with the costs associated with running the country. He said the government came to this conclusion after discovering the current fiscal year is “far bleaker” than anyone could have imagined as the Christie administration left “the cupboard bare”.
The Deputy Prime Minister explained that $400m is needed to satisfy expenditure for the past year, while $322,462,707 will be borrowed for the 2017-2018 Budget, amounting to a whopping $722,462,707.
Describing the new administration’s position as “difficult” because it has to grapple with an “historically high burden” of government debt, Mr Turnquest said to continue on this track is “destructive”.
Therefore, he said the government will have to run a ship that is fiscally prudent with an agenda of change aimed at eliminating the deficit to return the debt level to more sustainable levels.
Comments
DonAnthony 7 years, 6 months ago
Please for the sake of this country, for our children and grandchildren who we have selfishly saddled with debt, privatize everything possible. Even if the FNM by a miracle turns around these loss making corps, the next govt can come in and undo all the good that was done, in a heartbeat. They only way to prevent this is to privatize, that means bahamasair, BOB, BPL, ZNS etc. Even if we have to take a loss on the sale, it is better than never ending deficits caused by these corps. We need radical surgery to remove these cancers forever.
TalRussell 7 years, 6 months ago
Comrade DonAnthony, please don't underestimate ZNS's importance to the nation. ZNS is not the problem.... It just requires removing the politics. On 2017 General Election night - ZNS was only only election coverage available to be enjoyed by thousands islanders.
ZNS must remain the islanders radio and television broadcaster!
MassExodus 7 years, 6 months ago
Why does it need to be subsidized by the government is the question Tal. NB12 also provided coverage fyi...
Porcupine 7 years, 6 months ago
The one thing privatizing will do for sure is to put hefty profits into the new owners hands and raise prices for the rest of us. Did you notice a great improvement in your phone and internet service once Batelco was given to a certain politician's family member? I didn't. If you can show me a more efficient and well run business than the non-privatized US Postal Service, fine, I'll buy into your argument. However, what this suggests to me is that you want to fix an underlying problem by handing your companies over to the profiteers. May there are some other problems that we don't feel comfortable discussing. What you say?
regrolli 7 years, 6 months ago
So refreshing to hear some sense coming out of MoF. Why would any rational thinking citizen want to be vested in a losing entity? As citizens we are shareholders in SOEs and are liable for their gains and their loses. They are all losing: dump them as quick as possible. Let experienced private entities motivated to make money take over. Keep it up KPT!
Alex_Charles 7 years, 6 months ago
I don't agree with Bahamas air's privatization. It would be nice though if it wasn't a politcal tool used to hire geriatric cronies and other incompetent overpaid buffoons and jackasses. Downsize staff and tighten the bloody operation.
Tarzan 7 years, 6 months ago
This is a request for a fairy tale. No government anywhere, anytime, downsizes staff and tightens operations. Privatization is the only way to induce efficiencies into such enterprises.
Alex_Charles 7 years, 6 months ago
sigh, if the choice is only between privatization and continuing Perrynomics.... I'd have to choose privatization. Even if this administration somehow fulfilled my "fairy tale", the next administration will just reverse everything and call it a day
birdiestrachan 7 years, 6 months ago
The FNM party just about gave away BTC. Perhaps they have some persons in mind who they want to give stuff to, Their Papa did say some men wanted to buy BOB. And who is in the airline Business? Bahamas air for them.
banker 7 years, 6 months ago
Hilarious. Crisco Butt gave away the country to the Chinese and you are worried about some government agency that impoverish the people? When did you suffer your stroke?
Jetflt 7 years, 6 months ago
Seriously?!?! How would you propose to achieve what you just described without privatizing Bahamasair and running it like a businesss?? Running gov't organizations like businesses, which includes objectives that require being efficient, productive, customer focused (novel concept in thenBahamas) and accountable for results has historically been totally foreign to we Bahamians.
PRIVATIZE BAHAMASAIR and run it the way an airline should be run, like a private enterprise, not a repository for votes!
killemwitdakno 7 years, 6 months ago
Tell the full truth, that this is WTO requirement and they've screwed over developing countries requesting such.
Look it up people. They consider subsidies unfair competition.
OldFort2012 7 years, 6 months ago
The citizens of the Bahamas might all say they are in favor of privatisation, but they cannot even begin to understand the consequences or the reality of the situation. First, many of those corporations are simply worthless. Bahamasair has no captive market, is open to fierce competition and is simply NOT a going concern as it stands now. BOB is bankrupt. It is being held on life support because otherwise all the depositors would lose 100% of their money. BPL requires such huge investment that no private sector company is prepared to take such risks for such a tiny market and small future reward. ZNS is a public service. It has zero commercial value as it can never produce a profit. If you placed them on the market today, none of these businesses would attract a single bid. The only way you would get a bid is to guarantee subsidies for a protracted future. Then the private sector would come in, cut costs to the bone (IE: fire 60% of the workers) and try to turn a profit by spending less than the subsidy. This is the best that can be expected. The idea that the government can "retire debt" by selling them is so ridiculous that it defies belief that those words can come out of the mouth of anyone who has maths O level.
DEDDIE 7 years, 6 months ago
I do have 'O' level Maths and I find it amazing that you don't understand that the current situation involving these entities are unsustainable.If you want to ran these entities as a branch of Social Services there is a more efficient way to do so. I can pay the employees of these entities directly while they sit home and still will not ran a deficit of 429m. Example ; 429M divided by 10,000 employees is $42900.Those entities combine don't have 10,000 employees nor are their average salary $42,900. O Level Maths
OldFort2012 7 years, 6 months ago
LOL. Everything you say is true. But how are you going to "retire debt" by privatising them? My point is that you will not get a single bid for them. Are you disputing that? There is a world of difference between claiming that you can sell something, get money for it and pay down debt and closing something down and firing the employees. Anyone can do that.
Porcupine 7 years, 6 months ago
While everyone seems to be clamoring for "privatization" I feel this is entirely misunderstood. Let me explain. A corporation is a corporation, no matter who owns it. If it is run efficiently by good management and good employees, and has a solid customer base it will be profitable, or at least break even, if that is the goal. There is no reason that any corporation in The Bahamas has to take a loss except for poor management. Why don't we recognize this and hire good managers, as you or I would do as concerned business owners. It doesn't matter if these managers come from the US, Haiti, or outer space. Make them accountable. However, we must give these managers the ability to make decisions, most importantly to hire and fire. If we do not allow the managers this freedom, they cannot do their job. They cannot "fix" the inefficiencies. I worked in the US for most of my life, as an owner and as a manager. At most, 10% of typical Bahamians could have worked for me. Why? Because I did not tolerate lateness, slackness, bad attitudes, theft, or any other bad habit that would have caused my business to suffer. Period. By privatizing any organization, All business costs associated with running that business must be covered, and then, a hefty profit must be put on top of that to justify the risk of taking over that company. Do we understand this? Privatization is no silver bullet to a society. It only means higher user fees for all people. For the reasons I just explained. So long as we have a culture of criminality in our society, everyone here will continue to pay for it. Sorry, but true.
TalRussell 7 years, 6 months ago
Comrades! Haven't we not traveled down this all red eyes focused on the privatisation of subsidised state bodies - with the selloff of the cherry tree picked of them all which was sold for pennies on the dollars - despite it's well know reputation as the government's money cash cow. The selling price was so below BTC's actual market value, that it left the public treasury nearing penniless.
Can anyone forget how the [open bidding] process for BTC - was not conducted?
Or, how the "3rd" Red Shirts Regime's Leader - had to strong arm his cabinet colleagues and MP's to force the vote needed to sell BTC - through on the floor of the People's Honourable House of Assembly.
[And, no - I didn't have make this up.]
baldbeardedbahamian 7 years, 6 months ago
yes you did make it up.
sheeprunner12 7 years, 6 months ago
The FNM administration needs to sit down and evaluate whether following the BTC model will actually benefit the overall economy of The Bahamas ......... Has the sale of BTC improved customer service, phone rates, job spin-offs etc to the population?????????? ........ What would be the effect of PPP/privatising BEC???? ........ ZNS???????......... BOB?????......... Bahamasair???????........ What purpose do Nassau Flight Services, Hotel Corporation, BDB, BMC, BAIC, etc serve, other than cushion politically-appointed jobs???? ....... They just need to be dissolved ............... Why keep subsidizing UB, BAMSI, BTVI or private schools??????? ..... Why own the Dump or continue to collect garbage by DEHS?????? ......... Why does the government need to own ambulances or fire trucks??????.......... Why does the government need to operate 150 public schools and hire 4000 police and 4000 teachers?????? ......... Why does the government need to own 30 airports or 50 island clinics?????? Why do the Out Islands not become autonomous municipalities responsible for retaining and managing at least 75% of their taxes????
The CENTRAL government must be trimmed by at least 30% of its spending, infrastructure and civil service over the next 5 years and provide private sector opportunities for these non-productive government departments or sectors
proudloudandfnm 7 years, 6 months ago
You can just close down Nassau Flight Services. Government should never have been involved in that in the first place. We have many agents in the Bahamas capable of taking over their services with very little notice...
proudloudandfnm 7 years, 6 months ago
And BOB has never been anything but a PLP cash machine. Get government out of that bank entirely. If not it will only ever cost us money....
proudloudandfnm 7 years, 6 months ago
And don't even get me started on ZNS. 40 years and they have learned NOTHING. ZNS is as amateurish today as it was the day it opened. Sound is crap. Picture is crap. There is literally no talent in that organisation...
proudloudandfnm 7 years, 6 months ago
Let local airlines take over B'airs local routes, downsize B'air by 50% and take it into new markets. Cold, dreary places where people would kill to be on a warm beach.
And please add Freeport to it's international services. Give us some flights from those new places...
DDK 7 years, 6 months ago
Interesting idea about the cold dreary places! Would, of course, involve longer range equipment at significant cost...........
TalRussell 7 years, 6 months ago
Comrades! “I’m not like totally angry at "KP," but he never says during the Five-years in opposition, or during the 2017 general election campaign - that within 20 days forming the "4th" Red Shirts Regime, that he would borrow $722 million [and still counting]..... leading me so quickly be experiencing hypertension. The $722 million is seriously affecting me health now and still I got no BahamaCARE.
DDK 7 years, 6 months ago
Sounds good in theory, but when the greedy corporations take over they will be as bad as the greedy government. Is there no possibility that Bahamians are capable of efficiently, effectively and honestly running our own corporations? A novel idea, but surely possible. Good governance starts at the top. Is our new Government saying they are not up to the challenge?
BahamaPundit 7 years, 6 months ago
It is time to free Free Port!!! Remove all restrictions to US and Canadian persons and companies moving there for comercial purposes. No work permits required. No duty. No BIA approvals. The Government would still make a killing from stamp tax, VAT and company incorporation fees. If this is done, Free Port real estate would pop overnight. In ten years, it could become another NYC with skyscrapers etc. Nassau residents would flock there due to its booming economy and Nassau would become less over populated. The US govwrnment would start investing in The Bahamas again. Only sector reserved strictly for Bahamians should be the commercial fishing sector. We would still have the rest of The Bahamas all to ourselves. We have no choice. We are bankrupt! Time to be innovative. Time to put The Bahamas on the map again. It is time to free Free Port or die a slow death of financial stagnation and ruin.
BahamaPundit 7 years, 6 months ago
On a side note. If the FNM think they can sell public corporations FINE. But if they theink they can sell public corporations BEFORE bringing into force The Freedom of Information Act, they should think again!!!! Not passing the FOIA before such huge transactions would be a betrayal of everything they campaigned about: transparency and anti-corruption. They MUST bring into force the FOIA to prevent the perception of corrupt side deals, finders fees and conflict of interest.
sheeprunner12 7 years, 6 months ago
Good observation ........... the sales should be transparent (unlike BaTelCo)
DEDDIE 7 years, 6 months ago
BahamaPundit, your thinking is Out of the Box and I like it but our politician nor the people is ready for it.
sheeprunner12 7 years, 6 months ago
BOL .......... you giving him too much credit ......... Many Bahamians share his views to reform this broken government, society and economy
truetruebahamian 7 years, 6 months ago
Hooray - sanity at last! Now a proud Red Shirt voter and new member of this party!
sheeprunner12 7 years, 6 months ago
DEPUTY Prime Minister Peter Turnquest said the government will consider turning state-owned enterprises (SOEs) or quasi-government corporations over to the private sector as a means to retire debt because the subsidies provided to them are exorbitant.
The 2017/2018 Budget includes $429m in funding for 25 SOEs - $79m more than last year, the Minister of Finance said on Wednesday. He described the increase as “clearly unsustainable”.
Can we divest of the Big Five without seriously disrupting our economy???????
Can we create PPP with credible investors to remove at least another ten SOEs???
Can the other TEN be dissolved into existing government departments or just audited, closed and their existing assets sold to the private sector?????????
This strategy can be undertaken and the SOE challenge can be resolved within THREE years.
DaGoobs 7 years, 6 months ago
The divestment of state owned enterprises (SOEs) to private ownership cures one problem but also potentially creates others. The fascination for the new owners is profits and efficiency, often leading to costlier goods/services to cover profits and decreases in employees and benefits to employees to keep costs down. As one writer has noted above, poor management, poor business practices, lack of accountability and hiring of employees for political rather than business reasons has seriously hampered most if not all SOEs. Classic case in point is something as simple as the annual audit. All of these SOES are created by statute and require their governing legislation requires that each of them conduct (and publish) an annual audit. Last I checked, Water & Sewerage was about 5 years behind, ZNS/Broadcasting Corporation was about 8 years behind and had given up on some years, while other SOES say "where you put me"? The legislation governing the appointment of the board members of these SOEs and their management needs serious modernising. There is no need for any of them to have an Executive Chairperson; what expertise is this person bringing to the table that management does not already have available? And none of the board nor management are penalised for failures like not conducting annual audits although it is a breach of the governing legislation, much like the failure to submit annual public disclosure declarations. If we sell off these SOES we will need antitrust or fair trade legislation to protect consumers from unscrupulous companies. Whatever is done, the current subsidisation of many of these SOEs cannot continue without drastic changes in the way the Bahamas does business. Other areas in need of reconsideration are the way the salary increases of unionised employees (needs to be performance based rather than lump sum) and the pension system (defined benefits vs defined contribution).
ohdrap4 7 years, 6 months ago
there is something that baffles me. everyone is at bahamasair, bob, etc...
no one talks about water and sewage. they allegedly get the highest salaries of all corporations, the price of water is higher than electricity and they still run a deficit.
Why, why oes not anyone notice water and sewage?
Tarzan 7 years, 6 months ago
When will the lesson ever be learned. Having the government own and operate enterprises for the primary purpose of employing Bahamians is a terribly inefficient way to support the local population. Let private enterprise run enterprises. If necessary tax those enterprises to raise funds to distribute to the needy. That way at least the money goes to those who need it, not insider multi millionaires or persons scamming hundreds of thousands a year in illegal dipping. The government should privatize everything that is not an essential government service that can only be delivered by government. That means all but public education, police, defense, and infrastructure.
DDK 7 years, 6 months ago
Where would Health fit in?
baldbeardedbahamian 7 years, 6 months ago
ZNS IS PATHETIC AND SHOULD BE CLOSED. FORGET SELLING IT BECAUSE NO ONE IN THEIR MIND WOULD CONSIDER BUYING IT. LOOK AT THE QUALITY OF THE STAFF, LOOK AT THE ACCUMULATED PENSION OBLIGATION AND YOU MUST SEE THIS ONLY A VIABLE ENTITY IF SUBSIDIZED BY GOVERNMENT TO THE TUNE OF MANY MILLIONS OF DOLLARS EVERY YEAR. THE AMOUNT INCREASING AS MORE STAFF RETIRE. LONG WAVE BROADCASTING OF ZNS 1 IS ANOTHER JOKE. TOTALLY OUTDATED TECHNOLOGY WHICH IS IMPOSSIBLE TO PEPLACE AS IT IS NO LONGER MANUFACTURED. I HAVE TO WONDER IF THESE PEOPLE HAVE EVEN HEARD OF DAB (DIGITAL AUDIO BROADCASTING) WHICH IS NOW THE STANDARD IN ALL MODERN COUNTRIES?
sheeprunner12 7 years, 6 months ago
When it comes to salaries at these SOEs ....... they should get paid based on how much income they generate ........ Then the deficits may disappear if these corporations and agencies are not collecting their revenue ...... That should motivate these lazy, entitled workers
birdiestrachan 7 years, 6 months ago
Bahamapundit can not be serious A Bahamian Island should be turned over to Americans and Canadians and Bahamians should be on the outside looking in , just go fishing that is all Bahamians should have. that was the original plan for Freeport and under the FNM it may well go back to that. "its the people time " they say.
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