Assembly members respond to budget speech | 20 February 2021
Leaders in the National Assembly and other members yesterday responded to the proposed R11 billion budget to cover the services and expenditure of the republic for the year, presented to the assembly for approval by Minister for Finance, Economic Planning and Trade Naadir Hassan on Tuesday, February 16.
The Appropriation Bill, 2021, under consideration by the assembly, amounts to eleven billion, thirteen million, six hundred and forty eight thousand two hundred and ninety six rupees (R11,013,648,296), almost R2 billion more than the original budget of R9.2 billion budgeted for the calendar year 2020 which was in April revised to R10,447,151,547 (ten billion, four hundred and forty seven million, one hundred and fifty-one thousand, five hundred and forty- seven rupees).
Leader of the opposition (LOTO) in the National Assembly Sebastien Pillay proposed that the newly elected administration is failing to adequately manage the Covid-19 pandemic, at a substantial cost to the state, and that governmentʼs emphasis on vaccination as the most viable tool towards reopening up the economy and revitalising the tourism industry is unjustified, marred with contradictions, and lacks a clear sense of direction for the future.
“It is worrying when a government does not want to face the reality. Rather than find the best ways to prepare our country to overcome the situation, reopen our tourism industry, consider our graduates and professionals, our small to medium enterprises (SMEs), support our brothers and sisters in need, this government, backed by large business interests is placing a target on Seychelloisʼ backs, on the working class, graduates, professionals, our SMEs, groups that are most hit by Covid-19. The focus of your government should have been how to stop the propagation of the pandemic, and not punishing those who most need the governmentʼs help,” Hon. Pillay stated.
Questioning the strategies of the newly elected administration to cut back on expenditure and state-administered programmes such as the Financial Assistance for Job Retention (FA4JR) scheme, the Unemployment Relief Scheme (URS) and plans to reduce dependency on welfare and social assistance, Hon. Pillay asserted that government should have instead of remaining rigid on the plan to cut back expenses, considered that the economy will be slow to bounce back, and that government assistance is necessary for the first few months of the year, especially considering the fact that the pandemic is still causing uncertainty the world over and it is therefore not likely that tourists and visitors will be flocking back to Seychellesʼ shores in the near future.
“The budget address also represents certain contradictions, on the basis of information presented. I am troubled when government is telling this assembly that revenue projections of R8.2 billion, of which R6.1 billion is revenue generated from taxes. The question is whether the projection is realistic. The majority of businesses did not perform well in 2020, when have they submitted their return? We know the 2020 forecast is based on the performance of 2019, and this has reduced by 14.8 percent in 2019, but you are telling us that we are predicting only 7.7 percent loss in revenue in 2021,” Hon. Pillay said.
“For the first two months of the year, there are no revenues and as you yourself said, the pot is empty. This doesnʼt make sense, because actually, revenues from income tax will also reduce. When you cut back on FA4JR which was helping the private sector to pay income tax, this is what will happen. Additionally, there will also be reductions in business tax with these measures. You cannot lead our nation on ‘maybesʼ. The uncertainty means that revenue is not guaranteed. Are you sure that you will get the R2.1 billion from VAT? Once FA4JR is phased out, disposable income of most people will also reduce. The R1.8 billion on excise tax, can this be materialised? R254 million as Customs duty is also on a ‘maybeʼ basis , and we all know what will happen to income tax,” he said, asserting that the budget does not reflect social justice.
According to Hon. Pillay, one of the biggest contradictions in the Appropriation Bill, 2021, relates to revenues, as well as capital expenditures for which R1.9 billion has been allocated. He proposed that some capital projects be frozen as was the case in 2008 with the economic recession, in consideration that the debt to GDP ratio is set to hit an all time high of 108 percent this year, from 50 percent to 99.4 percent in 2020. With regard to the airport and ports, which Minister Hassan on Tuesday referred to as “the lungs of our country”, Hon. Pillay called out to the administration to “not separate the lungs from the body or the body will die”.
In concluding his response, Hon. Pillay also questioned the logic behind preparing the Appropriation Bill, 2021 with all departments and agencies, and President Wavel Ramkalawanʼs subsequent decision to restructure certain departments thereby bypassing the National Assembly, adding that there is a lack of synergy in the administration and budget.
He also proposed that the budget failed to take into consideration the youths and young professionals, in failing to address this subgroup in the budget address.
He further inquired of the significant increase in the allocation to the defense forces, one of the points which was hotly contested by Linyon Democratic Seselwa (LDS) prior to assuming office.
“Our preoccupation today, tomorrow, the day after, and the next six months, is to protect this nation, protect their health, protect their plate of food, protect their lives,” he said.
Hon. Bernard Georges, leader of government business, on his part expressed satisfaction that the budget address successfully carves out a positive direction towards a future full of hope and opportunities for each citizen.
From the outset, he remarked the necessity for sacrifices on the part of government and individual citizens during the short and medium term as the country navigates the economic downturn brought on by the pandemic, echoing the message Minister Hassan conveyed to the population during Tuesdayʼs address to “wake up, leave our comfort zones and think outside the box”, so as to emerge from the dark clouds and succeed in a macro-economic transformation.
“The Minister is asking us to seize this opportunity that Covid-19 has brought about to rebuild and rebuild better. Put aside bad practices, and search for opportunities, and kick off with renewed energy. But in order to do this, the Minister is proposing a series of measures which are so obvious, that we ask ourselves why others did not see. This is in two volumes; reduce costs and relaunch the economy, to start collecting revenues,” he said.
Throughout his address, Hon. Georges outlined the various measures Minister Hassan proposed to reduce expenses and relaunch the economy, by restructuring and reconstruction of the domestic economy, towards sustainability and progress.
Elaborating further, Hon. Georges applauded Minister Hassanʼs vision to boost the fisheries industry so as to generate more revenues from the sector, valorising the agricultural sector so as to become self-sustaining and less reliant on imports, all the while creating more employment opportunities for the local labour force.
He went on to praise other small but impactful initiatives proposed by Minister Hassan such as engaging more citizens in family-friendly businesses and entrepreneurship, in the labour market and sectors generally dominated by expatriates, and a public service that functions on meritocracy.
Similarly, Hon Michel Roucou of Mont Fleuri and Hon Phillip Arrissol of Anse Boileau, both members of LDS, expressed support for the budget. Fellow elect for Anse Etoile Georges Romain shared his perspective that the budget reflects the difficulties of today, but is nonetheless a budget which inspires hope as it is geared towards financial stability, and propositions as to how to repay off debts sustainably, as well as to bring about a transformation in the public sector and monetary policy, to create wealth for the country.
Hon. Rocky Uranie, United Seychelles (US) elect for Inner Islands, said the budget was a total disappointment, and that it is regrettable that the most needy are now being stepped upon by government, who he said is seeing from a capitalist standpoint, and demonstrating preferential treatment towards business organisations than the general population.
“The budget is on maybe, as it is based on assumptions. Minister Hassan said we are expecting financing through grants and donations. But what happens if this doesnʼt fall through? What is it we are seeing? Businessmen are getting tax reductions and he will take home more millions, while the poor who are already only receiving a little slice, will be cut by half. This government is taking all money away from ordinary citizensʼ pockets, contrary to what they said they would do,” he said, also proposing to the assembly various scenarios that those in need, the ordinary citizens who are face job losses, possible redundancies in the near future, and rising cost of living.
Under the Speakership of deputy Speaker Gervais Henrie, the assembly continued on through the afternoon, with Hon. Audrey Vidot, US member for Roche Caiman taking to the floor first. As with the leader of the opposition and Hon. Uranie, she too said she was disappointed with the budget address which shows a lack of responsibility, inspiring despair rather than hope, and fails to deliver on the promises on which the LDS government was elected.
“We on this side of the table are concerned with certain reforms being proposed by the new administration, among which is the decision to transfer the Agency for Drug Prevention and Rehabilitation (APDAR) under the Ministry of Health, which is already working under immense pressure with the Covid-19 pandemic,” Hon. Vidot said.
LDS MNA representing Au Cap Kelly Samynadin on her end said the budget is for the first-time in recent decades well thought out, and aims to propel economic growth, restore financial stability and restructure towards a leaner and more cost-effective administration.
Contrary to other MNAs who expressed the view that the budget does not touch youths, Hon. Samynadin alluded to Minister Hassanʼs declaration during the budget presentation, of the construction of a youth centre for youths with disciplinary and behavioural problems, at a sum of R44.6 million to be financed by the United Arab Emirates (UAE), a much needed facility, she said.
“One of the things that I have observed, is that many of our youths are not able to maintain long-term employment. Some seek a job in certain sectors, known as transit points, while they seek permanent employment. To ensure that youths maintain employment in the long-term, government is keeping the R5 million Youth Employment Scheme, under which youths aged between 15 and 25 years old will be reimbursed 40 percent of their salaries, when they leave their first employment. I see this as a really good initiative, as it will help youths to stay consistent in their employment, and to also maintain a professional career,” Hon. Samynadin pointed out, also calling out to youths to actively engage in the labour market and towards rebuilding the economy.
The strategic focus of the Ministry of Fisheries to reinforce national fish processing capacities to address the oversupply of fish on the local market, as a result of shipping disruptions and the standstill in the tourism industry, is also a good initiative to further strengthen the fisheries industry as an economic pillar, and generate additional foreign exchange revenues.
Hon. Rosie Bistoquet, Hon. Clifford Andre, elected member for Anse Aux Pins and Hon. Waven William, elected member representing Grand Anse Mahé, echoed similar sentiments, resonating the same message preached by President Ramkalawan and Minister Hassan in calling citizens to rally, to work hard towards the betterment of the country and to join government in making sacrifices in the short-term, for long-term yield.
Long-standing US member Churchill Gill, member for Baie St Anne Praslin, was no different to other US MNAs in saying that the budget is marred by decisions that fail to provide any solutions to the fast declining economic, financial and social situation.
“In the 2021 budget, there is no allocation geared towards directly assisting any groups within the population. Do we realise that if there is no improvement in tourism arrivals as from March 2021, the majority of self-employed employees, small and medium businesses, will be in trouble.[...]. The situation is critical, it is serious. Do not let our businesses die and then search for ways to resuscitate them,” Hon. Gill pleaded.
The full response of the two leaders in the Assembly are published on pages 8 to 11.