The following is an economic policy statement by the Leader of the Opposition Philip Davis on behalf of the Progressive Liberal Party:
On Plans Of The Government Which Will Reduce Domestic Demand
For Immediate Release
14 April 2020
Tonight I am ending this day with yet another exemption under the Emergency Powers issued by the Government which is adding to public confusion. I am also troubled by the news that the Anglican Church is to lay off of staff at their schools. I have not heard from the Prime Minister directly so I again make known our position that the Government must not allow the country to slip into a depression; nor should the Government appear to be making things up as they go.
What is required is a steady hand and proper consultation with all stakeholders before enacting these emergency powers.
On the economic front, I am constrained to point out to the Government the value in the lessons of history. I wish in this statement to lay the foundation for my annual pre budget statement which I make just before the Government presents its annual budget.
History teaches us that in 1929 when there was the stock market crash in the United States of America, the authorities in that country decided not to increase domestic spending and thus domestic demand for goods and services but instead chose to cut back on government expenditures which led from a recession to a depression.
The great economist John Maynard Keynes argued (and this has been the classic response to recession after his intervention) that in order to get out of or avoid a recession, the Government must use its authority to increase demand, which includes the power of deficit spending to ensure that the country does not slip into a depression.
The Progressive Liberal Party has from the start of this special period of the fight against Covid 19 argued that we need to have balance in our policies. We have said we are at war with the virus, not with our people. We have argued that you need to ensure that there is cash in the pockets of our citizens and for our businesses, not less. We need to ensure that we do not make the problem of fighting the virus worse by so shutting down the economy that financial ruin, hunger and depression are the result. We end up have a successful operation but the patient dies.
I am asking the Government today to use the best tools of both fiscal and monetary policy to deal with this matter. In fact there is something that the Central Bank might do today which would give the Government some headroom for the next three or so months without having to borrow any new money.
I have learned today that the Government is proposing matters which in fact might severely reduce domestic spending and demand. There is a proposal to force cuts in all Ministries including possibly the salaries of public servants.
The Government allowed the courts to shut down which meant that no commercial litigation is possible. In addition, the Government closed the departments responsible for payment of VAT on conveyances, the registration of legal deeds and documents including conveyances. Law firms cannot operate their businesses and this has resulted in part with the eight largest law firms in the country collectively laying off their ancillary staff and imposing cuts on their lawyers of 25 per cent.
This is unfortunately a choice which was forced on my partners as well but I am still seeking to make the general point.
The result of that was to shut down all commerce in the legal sector. They have now reversed course on this and are allowing some of these agencies to reopen.
I am most concerned about the announcement today that the Anglican Church is laying off its staff including staff in the school system. The Government could have intervened to avoid cuts in teachers of church and independent schools employment and salaries by giving all private schools an additional subvention and provide them free and unlimited access to the Government’s digital learning platform for the duration of this emergency.
As a result of the Covid 19 emergency and the Government’s proposed actions, we may be looking at the worst exam results in the history of our country for both public, church and independent schools.
I am stating this as plainly as I possibly can. This is simply not a case of an accountant trying to straighten the balance sheet of a private company. The FNM administration and Dr. Hubert Minnis should know that this is a country we are running, with real lives and real people and families. Indeed, you see that all countries around the world are acting despite the continuing fight against the virus to get their economies going again.
There is in my view a real risk of social disorder and we should not think that we can use our uniformed forces to contain it. I am saying this as calmly as I can.
The Progressive Liberal Party stands ready to assist the nation wherever we can.