CPP statement on 2011 budget

Introduction

Over the past few weeks, colleague Shadow Cabinet Members have had the opportunity to present to Ghanaians how a CPP Administration will govern this country in the areas of Finance and Economic Planning; Justice, Social Welfare, Environment, Lands and Forestry; Women and Children and Political Affairs and Interior. We have also shared with the public our expectations of what our national budgets should be, to engender economic growth and transformation for the benefit of all citizens.

Today, I am pleased to present together with our National Chairman & Leader and other Shadow Cabinet Members the key points from the CPP’s review of the Mills Administration’s 2011 budget and our position on other national matters that have arisen in the areas of oil revenue management, police administration among others.

2011 BUDGET

It is obvious after listening to the NDCs Minister for Finance & Economic Planning that the more things appear different the more they remain the same at close viewing. The 2011 budget appears to offer growth but then imposes conditions that may prevent real growth that improves the standard of living of the majority of Ghanaians. Even more important, the budget failed to deliver measures to change the fundamental structure of the Ghanaian economy which is really the main impediment on the road to mass prosperity.

When the President Mills-led NDC Administration took office in January 2009, it announced to the whole world that it did not like the 7.3 GDP growth recorded in 2008 because it had brought about fiscal challenges. So it wanted to bring about macro-economic stability. As a result, the Mills Administration set a 2009 GDP growth target of 5.9%.

The actual GDP growth turned out to be about 4.1% significantly below the target set. Even though the 2009 GDP target of 5.9% was not met, the NDC Minister of Finance & Economic Planning in presenting the 2010 budget presented a growth target of 6.5% in 2010. This target we were told by the Minister of Finance & Economic Planning last week will be missed with an actual of about 5.9%.

Macro-economic indicators captured within the last six months of the year indicate that the Ghanaian economy is doing what it was designed to achieve in 2010– stability, lower than desired growth, less than required spending by government in order to lower inflation.

I will now address a few important matters from the 2011 budget:

1. Medium Term Development Framework: The CPP several weeks ago made the important point that it was necessary to know what blueprint or road map the Mills Administration was using as one was not evident. Some of our critics said we were being petty and that the NDC had a manifesto it was following and so did not need any other road map. Now we have been vindicated.

The Finance Minister admitted when presenting the budget that “…the Ghana Shared Growth Development Agenda (GSGDA 2010 – 2013) has been completed and will be presented to this august House before the end of this year”! So such a framework is necessary after all but why from 2010 when it has only now been completed and not even presented to Parliament yet? What has been guiding the NDC Administration in 2009 and 2010?

2. GDP Growth: The Chairman of the CPP a week ago in presenting our Party’s expectations for the 2011 budget called for a GDP growth target of over 10%. So we are pleased that the target set in the budget is 12.3%. The concern is where is this growth coming from and what measures have been proposed to ensure this high growth happens on a broad front other than through a reliance on oil and gas?

It appears that the service sector has become the biggest one which the Finance Minister defines as mostly tourism, wholesaling and financial activities. If tourism is a big area, then why is the NDC proposing removing tax incentives from hospitality facilities? (At the same time, foreign hospitality projects have been granted tax reliefs!).

3 Impact of Oil & Gas Revenues: It is clear that oil and gas revenue is not going to be the solution to all of our problems as had been crowed about particularly as the Mills Administration appeared to want to use this source for everything – housing (STX), NHIS, roads etc. In 2011 GHC584 million is expected from oil and gas compared to more than GHC10,000 million from other sources. The Mills Administration must be clearer on whether this revenue is just coming to fill a hole in the budget or it has been earmarked for specific investment in building a petrochemicals industry, etc. (i.e. investing in our future?).

4. Tax Increases: As the NDC’s Finance & Economic Planning Minister stated, it is clear the country faces big revenue challenges as over the past two years, it has missed its revenue targets. But the Mills Administration cannot on the one hand talk about stimulating the economy and then on the other slap on more taxes!

All over the world, economies looking for growth and stimulus reduce taxes and find ways for government to support local industries. Personal tax obligations have gone up, petroleum taxes through the TOR levy, National Reconstruction Levy and others have remained in place.

No real, concrete measures other than an announcement to go after professional service providers have been provided to broaden the tax base. For example no aggressive plans were announced to implement the National Identification System aggressively and use it to reach more people. We must not buy the propaganda that our tax rate in Ghana is the lowest in Africa! This is quite disingenuous as the Mills Administration is using the re-based GDP to sell this point.

The money in the Ghanaian pockets has not increased through re-basing so why use this to increase taxes? If our GDP has increased by 60%, then the Mills Administration must find 60% more tax revenues wherever these additional goods and services have been hiding from the same overburdened companies and individuals.

We need fundamental changes that enables government to identify people generally and register businesses (plumbers, tailors, masons, lawyers, etc), houses etc to bring their activities into the formal sector – to provide services to and to collect tax revenues from them.

5.Biggest Initiatives: The biggest initiatives announced in the 2011 budget have to do with the planned implementation of the STX Korea housing deal and the $13 billion Chinese loan. But at the same time the Minister himself confirmed that as a country, we have been quite notorious about the slow disbursement of loans and grants due to the inadequacy of counterpart funds, poor project designs, etc. Our question is, “What specific measures are being introduced to make sure that these initiatives see light of day in 2011?” Why raise expectations this way?

We also did not hear clear, single-purpose determination to use the government’s purchasing power to support domestic industries to grow, create more jobs and prosper. This key initiative is something that the CPP will do given the opportunity to manage the Ghanaian economy.

OIL REVENUE MANAGEMENT

The Ghana Parliament is presently considering the Petroleum Management Bill 2010. One of the provisions which the CPP considers very important is the provision that prohibits the use of Ghana’s oil revenue as security for borrowing of any type. We strongly urge Parliament to maintain this provision for the sake of prudence and not mortgage the future in any way. Also, we have serious reservations about using 50 to 70% of oil revenue to support the budget. This will make the impact of this revenue source be diluted and its use “hidden” as we may not know exactly what it is used to fund.

WESTERN REGION & OIL REVENUE

The CPP accepts the principle of oil revenue as a national asset. We maintain our Party’s longstanding belief in Ghana as a unitary state, where as one nation and one people all benefits are shared. We empathize with the Chiefs and people of the Western Region in their quest to seek redress for the lack of development due the region over the years.

But we must work to strengthen the ties that bind us as one people. When we act as one people with equity in the sharing of development then demands such as the 10% of oil revenue as demanded by the Western Region Chiefs will not arise. We believe that the people’s anxiety level has risen due to the failure of governments since 1966 to ensure even and consistent development throughout the country.

The Mills Administration must act with some urgency to bring significant development to the doorstep of every region and in this particular case, to the Western Region.

Consequently, we propose the development of a SOCIAL CONTRACT between the Government of Ghana and the Chiefs and people of the Western Region to address the real issues at stake and remove the demand for fixed percentage of oil revenue. This social contract will deliver a number of benefits including the following:

-Alternative livelihood for affected fishermen and others; -Environmental impact fund and action plan to mitigate the negative effects of any future degradation, spillage etc. -Social amenities such as schools, water and electricity facilities; -Infrastructure such as roads; and -Employment opportunities through the considered development of oil and gas related companies in the region.

This is not necessarily new in the history of our republic as from time to time, governments have put in place affirmative action to ensure social justice in our society.

POLICE DEVOLUTION

The Convention People’s Party CPP, has taken a serious view of the derogatory comments attributed to the Director of Police Public Relations, Mr. Kwesi Ofori, in response to the internal security policy vision presented by the CPP last Wednesday, at the ninth in the series of “How CPP Will Do It”, the party’s programme of offering alternative policy visions on key areas for good governance in Ghana.

The CPP’s proposed policy is to review the structure of the Ghana Police Service to ensure the responsibility of the Police Service to the community in the provision of security to life and property. It is to ensure that the Service is not subservience to the political leadership as the condition for their tenure and upward movement.

This seems to be lost on Mr. Kwesi Ofori. We find Mr. Ofori’s utterances very dangerous to the Police Service.

We believe that if the structure for ensuring the responsibility of the Service to the community in crime prevention and security is to devolve with greater responsibility, authority and adequate resources to the leadership of the community police, we would see an efficient and effective police service, with little of the avoidable security breaches we see today.

We have in good faith and in line with our proposed policy of devolution of governance to the local level, suggested to put in place Metropolitan, Municipal and District Police Commissioners who are accountable to the local communities and are empowered to deal with peculiar local needs.

In addition to the matter of devolution, the CPP views the segregation of police men and women in barracks as neo-colonialist idea and a continuation of what the colonial authority did prior to independence.

The modern idea is to have police personnel well remunerated and living WITHIN the local communities, with the people so that they can know and be responsive to needs rapidly with deep knowledge of facts on the ground. So the CPP will move police men and women away from barracks and find them suitable accommodation with the people they are to protect and serve.

SINGLE SPINE SALARY SCHEME

The Minister of Finance & Economic Planning in presenting the 2011 budget referred to the implementation of pay reform commonly referred to as the Single Spine Salary Structure as a significant fiscal challenge with arrears already totaling more than GHC1 billion.

According to the Minister, “…implementing the Single Spine Salary Structure would result in inadequate resources for funding of social intervention programmes on a sustainable basis.” This at least on the surface appears to be preparing the ground for slowing the pace of pay reform implementation. While we recognize the fiscal challenge to government, the CPP believes more will be gained by expediting the implementation of the pay reform in all its forms.

Therefore, we urge the Mills Administration to make all effort to find speed and courage to enable all government workers to enjoy the benefits of equal pay for work of equal value.

Many governments around the world use a single pay scale (or ‘spine’); or a limited number of such scales or spines. It is only in this way that a government (as employer), can ensure that employees doing like jobs receive like pay. It is important that we reduce salary and wage disparities between public sector institutions, while promoting productivity within the public service and the national economy as a whole. We stand with labour in asking government to implement reforms that bring modern technology, facilities and the right human resources to the public sector so that productivity gains can be made to match improvements in pay levels.

CPP Vision

Our CPP vision for Ghana in one generation remains: to be a high income country, in a society that is just, safe, caring, united and prosperous. To achieve this, will require SOCIAL TRANSFORMATION, one that turns Ghana into a society that is patriotic, disciplined, self reliant and one that pursues excellence. Our party is not in power today. It is our hope that soon Ghanaians will give us the opportunity to end the economic see-saw that the NDC and the NPP have imposed on our people during the Fourth Republic so far.

Our goal as a Party remains:

“…to establish in Ghana a strong and progressive society in which no one will have any anxiety about the basic means of life, about work, food and shelter; where poverty and illiteracy no longer exist and disease is brought under control; and where our educational facilities provide all the children with the best possibilities for the development of their potentialities.”

This can only happen when a CPP Administration is given the opportunity to manage the affairs of our dear nation, Ghana.

The CPP wishes to emphasize the important point that we have not heard anything through the 2011 budget that gives us the hope that the Mills-led NDC Administration is working to develop the strong and progressive society that the CPP envisions.

Thank You.