Saturday, February 24, 2018

Stalling the economy by non-payment of debt

More than two years after taking office, the Rowley ­administration still cannot say exactly how much money the Government owes to private construction companies. While the construction industry insists its members are owed an estimated $4 billion, Prime Minister Dr Keith Rowley disputes the figure as inflated, without offering any figure of his own.

This, after the Government has spent over two years challenging the industry’s figure while conducting an unending series of verification audits as a condition of debt settlement on a case-by-case basis.

The impact on the ­industry has been brutal, as construction companies ran low on cash and maxed out their borrowing capacity, leading to the inevitable layoffs and, in some cases, shutdowns.

For almost half its term in office, the Government has shown little appreciation for the economic impact of its failure to fast-track the verification of contractors’ claims. A government that was more cognisant of the trickle-down impact of failing to pay its bills would have prioritised the process.

Instead, it has dragged its feet while accusing contractors of inflated and fraudulent invoicing. While this may very well be so in some cases, there was simply no excuse for the blanket refusal to pay over such an extended period of time.

Now, in an apparent rush to get the economy ­moving, the prime minister is moving to re-establish the ­Ministerial Committee for the Construction Industry with himself as chairman. The committee will have representation from various ministries as well as the Joint Consultative Council (JCC), the umbrella body for construction industry ­interests.

Even as he announced the committee last week, Dr Rowley once again disputed the industry’s $4 billion debt claim while trotting out his accusations of “rape of the taxpayers’ trust” through over-charging and general abuse of State funds in contracts issued by the predecessor government.

While the wastage committed by the Persad-Bissessar administration has been well-documented, it is inexcusable for the Rowley administration to be still in the dark about the extent of its debt to contractors.

Having failed to resolve the matter after 28 months in office, it remains to be seen what difference will now be made by the establishment of the ­Ministerial Committee.

While the drop in oil and gas prices is the main reason why the economy is stalled, the Government has exacerbated the situation by its lethargy in settling its bills to contractors and by adopting what can described as a punitive attitude against the entire industry for the practices of a few bad apples.

Now, as it approaches the mid-point of its term in office, the Government is rushing to kick-start the economy through a series of construction initiatives, including housing and the highway project between Manzanilla and Toco.

Whether these will provide the economic stimulus needed to overcome the stasis that has already set in is to be seen. One productive move would be for the Government to prioritise the debts owed to contractors and settle them within the shortest ­possible time.