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Opposition spokesman on finance Julian Robinson yesterday urged the Government to be bold and beef up the proposed 2021/22 budget by one per cent of the country's gross domestic product (GDP), or $21.5 billion.
"The Jamaican economy will grow faster if there is greater spend," Robinson suggested as he responded to Finance Minister Dr Nigel Clarke's opening contribution to the 2021/22 budget debate on Tuesday.
Clarke did not make a growth prediction in his contribution on Tuesday; however, he noted that the county's main economic oversight body, the Planning Institute of Jamaica, has projected that the local economy will contract by approximately 12 per cent by the end of the current fiscal year, March 31, 2021.
But Robinson insisted that the 2021/22 budget was seeking, "ambitiously", to achieve real GDP growth of 5.2 per cent in the new fiscal year. He said that while there will be growth because the country's economic base has fallen so much over the past year the economy would only grow fast enough if the Government increases its domestic spend, as the growth will not be externally driven.
He suggested that if the Government adds another one per cent of GDP in expenditure to the fiscal 2021/22 budget of $831 billion, which amounts to approximately $21.5 billion, it would make growth easier.
Robinson said that the added funds could be accumulated by reducing the country's primary surplus balance from the current projection of 6.1 per cent to 5.1 per cent, although this could require a further relaxation of the fiscal rules.
"But if there is ever a time to do this, it is now, given the economic impact that COVID-19 has had. Now is the time to be bold. It makes more sense to invest in our people now and reap the benefits," he appealed to the Government.
He said that the lessons that are coming out from "country experiences with economic crises" is that, in order to grow, governments have to spend more.
"Economic growth expands our revenue base which allows us to contribute more from growth towards our financing needs," he argued.
Robinson listed the areas to which the $25.1 billion would be allocated as follows:
• Support to individuals and households - $5 billion, with a special allocation for female-headed households;
• Support to micro and small businesses - $5 billion;
• Support to farmers - $3 billion, with more buy-back programmes and implementation of small-scale irrigation systems;
• Broadband roll-out - $3.2 billion;
• Digital literacy training - $1 billion;
• Renewable energy/energy efficiency programme for households - $2.3 billion;
• Incentive pay to health-care workers - $1 billion; and
• Expanding hospital bed access for COVID-19 patients - $1 billion.
However, Robinson said he recognised that overcoming the crisis was not a task that the Government can do alone.
"This is not a job that private sector can do alone, either. While vaccines promise some hope, there is no magic bullet that can wish away the deadly effects of the novel coronavirus. The road to recovery requires the collective will of all Jamaicans," he stated.
"For the sake of every Jamaican, we need to act now. We need to support more individual efforts... We need to support our businesses, to keep their shutters open and save jobs. Let us roll out our islandwide broadband programme without delay and build houses that the majority of Jamaicans can afford," he said.
Robinson also drew attenton to increases in the prices of basic foods since 2016 and pointed to a recent United Nations International Children's Emergency Fund and Caribbean Policy Research Institute study showing that 45 per cent of households have had to cut back on food because they cannot afford it.
"Most households coped with food shortages by eating smaller meals or eating fewer meals per day. It doesn't help our situation that since 2016 the cost of basic food items has skyrocketed. The cost of salt fish, cooking oil, chicken back, and rice, for instance, have all increased over 100 per cent. Food poverty has exacerbated," Robinson said.
He also said what was even more ominous was that there is an expectation that food prices will increase further in the coming weeks, based on pronouncements from the president of the Jamaica Manufacturers and Exporters Association.
The estimates being debated total $850.8 billion, including $272 billion in public debt payments and $239 billion for wages and salaries in the public sector, as well as $54 billion in capital expenditures.
However, it comes in the wake of a $74-billion loss in government gross revenues primarily due to the effect of the novel coronavirus pandemic on tourism.
The debate resumes next Tuesday at Gordon House, with Opposition Leader Mark Golding, and continues next Wednesday with Prime Minister Andrew Holness, before closing next Thursday with Dr Clarke's response.