Do You Feel Sorry for the JUTC

On Wednesday August 20, the Minister of Transport and Works announced that bus fares will be increased for all passenger categories. This was done, he admitted to Nationwide News, without any prior consultation of any affected stakeholders.

There are so many angles to this one. We can look at how all of a sudden power to increase fares is concentrated in the political directorate without any requirement for consultation. We can also look at the justification the JUTC provided for the fare increase and the formula they use to come up with the magic number. I am tackling the latter.

Read this article on why the JUTC says they need an increase. Then let us discuss it.

Exhibit A

Roper said the economic cost of approximately $110 for each commuter, without concession, does not include meeting operational costs such as purchasing of spare parts and buses. He explained that this is why another $10 has been tagged on to bring the total to $120.

The JUTC chairman said if the provision of spare parts and maintenance of the buses were taken into consideration, it would cost the JUTC management an estimated $560 per ride to keep the units on the road.

“When the operational costs are deducted, we can live with $110 and put the $10 down as replacement costs at last year’s fuel cost,” said Roper.

The economic cost of a bus ride, per passenger is allegedly J$110 but does not include spare parts. Adding J$10 to the above stated number takes care of allocations for spare parts and buying buses. However, in the same breath, if you take into account spare parts and maintenance, each bus ride per passenger would cost J$560. However, they can live with making 21% of the actual economic costs.

This kind of nonsense accounting is why Jamaicans must reject the fare increase. The JUTC clearly needs the auditor general to return to help them identify the true cost of transporting passengers throughout the KMTR. We have no assurance that next year they won’t try to increase fares again with a view to getting closer to that estimated $560 economic cost. We see a lot on the revenue side, but we have not seen any action on the cost reduction side. They have not yet made a case to us- and why should they- no consultation required.

Exhibit B

Roper revealed that the JUTC is expected to save $412 million a year with the introduction of a cashless system on September 1, 2014

He suggested that when the JUTC converts fully from cash to cashless, it would exclude bank charges; security and courier services, as well as leakages and cashiers that would no longer be need to be employed.

“We are looking at all of these efficiencies, including encouraging the elderly, who are being subsidised, to travel during off-peak hours, between 10 a.m. and 2 p.m. when we carry a substantially reduced passenger load,” said Roper.

JUTC is banking on a change in culture to realize savings of 34m per month. I have worked in telecoms for the past decade and know first hand that Jamaicans prefer prepaid. Not only do we love prepaid, but we are most likely to top–up the minimum amount. Therefore, until Digicel introduced $108 cards people would generally top-up with $100. LIME experienced a massive surge in usage when they introduced $100 and $50 data plans. So many people do not have bank accounts or credit cards- because cash is king. You can’t defend a bank tax on one hand saying the most vulnerable do not have bank accounts, but try to force them to adopt a middle-class pseudo post-paid lifestyle.

Do you remember JUTC’s big push to take over all the profitable routes? Do we have a report from the company on the change in revenues since that action was taken? (Spoiler Alert: No)

People do not take the bus because they like the ride, they are using it as a means to an end. Therefore, encouraging seniors (for whom you have tripled doubled the fare) to travel from 10a to 2p AND use a Smarter Card makes NO sense.

 

In closing I want to share thoughts expressed by the National Consumer League which at it’s core outlines why a seemingly annualized increase in bus fares is not justifiable. Bear in mind that Civil Servants are under wage freezes (called wage restraint) and the dollar still has more sliding to do according to the IMF Christine Lagarde.

It is time to demand greater transparency. Demand that the JUTC cuts costs and gets creative. Demand that the government offers us something for something- not simply a free 20% increase which by their own admission is not enough to break even.

Isn’t this where we draw the line?

Transparency Local – Goat Islands Edition

Yesterday I posted what should have been a mass media bombshell.

On August 5 the Jamaica Government (secretly, my best guess) signed an agreement with China Harbour effectively handing over Goat Islands. Only Government media house JIS was invited to the event. JIS (accidentally) released the story, which Jamaica Observer published online. Then, before the middle of the day the Observer story vanished. I dug up the story and reposted it.

 

The reason this should have been a bomb is because it alleges that our Government sold a natural resource without telling us, their employers, the terms. Furthermore, they promised not to sell Goat Island until a series of consultations took place. If you can’t recall the steps, this is what Omar Davies said in Parliament on February 25, 2014:

 

11. There are a number of issues which will need to be addressed prior to signing a
Binding and Definitive Framework Agreement. These include the following:

  • Land Issues – Acquisition of lands currently owned by the UDC and The
    Ministry of Agriculture (Agro-Invest and Innswood Estates)
  • Taxes and Incentives – Taking into account the imminent repeal of the Freezone
    Act in 2015 and pending decisions regarding the treatment of Commercial
    Economic Zones
  • Citizenship – review applicable laws, policy and procedure in light of possible
    request for citizenship from investors within the Project area.
  • Coal – fired electricity generating plant: Given the high cost of electricity in
    Jamaica, CHEC proposes to establish its own coal-fired generating plant to
    provide lower cost electricity for the project.

It was a long speech but sections 11 and 12 were particularly contentious. Somehow, these issues were worked out, without the rest of us knowing and now the agreement has been signed. The Chinese will be building their own COAL fired power-plant. I encourage you to read the entire speech at the link posted above.

 

Since I tweeted the cached story a few things have occurred. JLP’s Andrew Wheatley posed some questions to the Minister of Transport and Works about the issue. He, like the rest of us, sought clarification on what actually took place on August 5 at Jamaica House.

 

Dr. Omar Davies had an interview with Cliff Hughes on Nationwide Radio where he was asked about the issue. You can listen to it from timestamp 15:39 to 19:57.

 

Then this is what the Minister of Information posted. It isn’t a retraction but a clarification.

Somehow this does not seem very…transparent. The truth seems to be very economically utilized. Here are some follow-up questions I would love to have answered:

  • When the story was published and then pulled JIS contacted the media major media houses asking them to yank the story – with no replacement story or retraction. What was the reason JIS gave for asking the media houses to pull down the story.
  • Why did it take a full news day before any kind of clarification was given?
  • Was the non-binding agreement signed in China? Was it signed there with the PM and the CHEC principals present? Why would it need to be signed again?
  • Explain to us how CHEC would use a non-binding agreement as a marketing tool for potential investors, without any kind of assurance that the project will proceed.
  • Produce the documents signed by the CHEC principals at Jamaica House on August 5, 2014 for public scrutiny.
  • Declare who is conducting the Environmental Impact Assessment and whether they have any ties to the government. If they do, then we need an independent EIA to be conducted.
  • If this was so innocuous, why was the media first excluded, then asked to pull the story, then asked to contend with conflicting accounts of what happened? Why not invite the media to the event and state up front what is taking place.

The story we are being given does not add up. It is time to do the math and find the truth.

China Harbour to begin work at Portland Bight

Source: Jamaica Observer

Minister of Transport, Works, Dr Omar Davies (second right) looks on as President and Chief Executive Officer (CEO) of the Port Authority of Jamaica, Professor Gordon Shirley (left), and General Manager of China Harbour Engineering Company (CHEC), Zhongdong Tang, exchange signed copies of a Memorandum of Understanding (MoU) for the Portland Bight development project. The signing took place during a ceremony held at the Office of the Prime Minister on Tuesday (August 5). At second left is Chairman of CHEC, Wehe Mo. (Photo:JIS)

Text:

 

KINGSTON, Jamaica — Phase One of the Portland Bight development project will now get underway following the signing of the final Framework Agreement between the Jamaican Government and China Harbour Engineering Company (CHEC).

The document was signed during a ceremony held at the Office of the Prime Minister on Tuesday (August 5).

The project seeks to establish a transshipment hub in the Portland Bight, and works in this initial phase will include the development of an industrial park and infrastructure for the operation of the hub.

Minister of Transport, Works and Housing, Dr Omar Davies, who was among the signatories, expressed appreciation to CHEC for its confidence in the future of Jamaica, noting that there are other destinations in which the company could have chosen to invest.

“I believe that this is a significant day in the social and economic development of Jamaica,” said Davis.

Chairman of CHEC, Wehe Mo, said the signing was not only a significant development in the progress of the project “but also a meaningful milestone of further strengthening the partnership between the Jamaican Government and our company”.

“We are proud that we could help create strength and prosperity for Jamaica and its people through our abundant engineering experience and outstanding technical skill sets,” he said.

Under the first phase, the industrial park will carry out the operations associated with storage, assembling and packaging of goods in light industries; heavy industry manufacturing; information technology; and skills training.

The infrastructure to be developed include: bridges and roads within the project area; pipelines and water storage facilities; sewer lines and sewer treatment facilities; electricity transmission lines and electricity generation facilities; cable transmission lines; and similar services and facilities contemplated for the project.

Other areas include dredging and land reclamation activities to create the port, and suitable access channel to the port facility; construction and development of a container terminal with modern fittings, technology and services; and the construction and development of berths of sufficient width, length and depth to accommodate Super Post Panamax vessels.

There will also be the construction of a coal-fired electricity generation plant for the supply of electricity to the facilities comprising the project.

The project, which is being implemented by the Port Authority of Jamaica, forms part of Government’s proposed Global Logistics Hub Initiative, and is expected to create 2,000 jobs during the construction phase, and 10,000 jobs when the project is fully implemented.

It aims to take advantage of the anticipated increase in trade activities as a result of the expansion of the Panama Canal, scheduled for completion by 2015.

Ideas for a Better Jamaica (IBJ)

I tend to be a bit of an activist sometimes. Though my family and close friends know how I vote (and I do vote, everyone should) I tend to stay relatively neutral in public. I applaud when the government does (not just says) something right, I applaud when the Opposition asks the questions I am not ‘big enough’ to ask and hit everyone on the knuckles when they get careless. However, it is only too obvious that once you declare for the “wrong side” everything you say is met with smug dismissal. Political victimization is a real challenge and unfortunately our democracy does not appear to be mature enough for truly open discourse.

 

I want to share my thoughts on citizenship and what I think being Jamaican should mean. The hope is that we can begin to think, in a non-partisan way, of what our rights and entitlements are. When you declare that you are a Jamaican it should mean more than being born here. It should mean that there is a basic quality of life that you can access, beyond which your hard, smart and honest work will allow you to be better than basic. I call this series “Ideas for a Better Jamaica”.

 

I aim to share ideas on citizenship as it relates to the following:

  • Transportation
  • Housing
  • Health Care
  • Crime and Justice
  • Education
  • Economy
  • Local Government
  • Energy

 

In our current political climate it is easy to forget that our government serves at our behest. However, if we are not clear on what our rights are, or what their job description entails, it is easy fall into the trap of accepting whatever they tell us. It is important to be sceptical. Feel free to share in my scepticism as we explore ideas on what good governance could look like.

Mainstream Media

Finally- a word on the work of the ‘guardians of our democracy’. Our traditional media has failed us. They can no longer be trusted to speak truth to power. They are too cozy with the political and business elite, too willing to lull the masses into acceptance of our current reality.

We are ranked 17 in Press Freedom but 83 in Corruption Perception. This is an indictment on the Press and they should feel some sense of shame. How can they feel proud of enjoying freedom to find the truth while clearly turning a blind eye to that truth?

The media has a moral responsibility to help us to understand the facts. When the two political parties present different views of our economic reality, the media should be able to tell us which is right. I can single out Nationwide News as being ahead of the curve when it comes to giving us the closest version of journalistic integrity.

Consider this news item. Local Government Minister Noel Arscott, deflecting criticisms of the Jamaica Fire Brigade, says the previous government had not procured a single fire truck during its term. Nationwide posted a strong refutation from the previous Mayor of Kingston. However, it is framed as “his word against mine”. Someone is telling the truth and the other person is lying. They both CANNOT be right. The liar must be exposed and then silenced.

Sometimes there are flashes of brilliance, but these flashes are with under-funded media entities and occur too infrequently. It is hard to be a journalist (not to be confused with news carrier) and hope to survive through advertising and endorsement. He who pays the piper calls the tune. Consequently in addition to this series I will occasionally highlight a news article from our print media and do a critique.

 

Local Government elections are due next year, and the year immediately afterwards should be Central Government elections. It is time to write the job descriptions of our Members of Parliament, Parish Councillors, Ministers of Government and our Media Practitioners. We are their ultimate customer/employer.

IMF or IPF

I have to applaud the government on their recent achievements. I call them achievements because, well, if you had a set of objectives and you got them- then you achieved, right? It doesn’t matter here and now whether they were the right goals to achieve.

This Government was swept into power during a Standby Arrangement (SBA) with the IMF, a stable exchange rate, low inflation and interest rates and modest economic growth that was similar to that achieved in the US. They idled for about a year, allowing that deal to expire. They then pursued an Extended Fund Facility (EFF) to give them a fresh four years. Well played! The gamble they made is that in Jamaica we are only concerned with the short term. Therefore, the ~40bn tax package would soon be forgotten when a fresh and more current reality/crisis emerges. Well played again!

There are many sides to this story- all of which I will eventually ventilate- but I want to spend some time talking about the difference between a Standby Arrangement and an Extended Fund Facility. They are not the same.

Standby Arrangement

In 2009 the Jamaica Government (JLP) sought assistance from the IMF for Balance of Payment support. They wanted a SBA for U$1.2bn that would help plug a hole in the economy and allow for time to establish a platform for sustainable growth. This article brings back some fond memories of how Jamaican politicians can sometimes make tough but correct decisions.

How the SBA works is that the IMF makes funds available to us, based on the targets we agree to, ( to ensure they can get repaid) and then we are free to do what we feel is best. If we end up not wanting all the money- we don’t have to take it. However, if we want it, we just have to keep passing the economic tests and ‘unlocking’ more funds- kinda like a video game. The beauty of this, is that the IMF can’t tell us what to do. They can say to us- please ensure that you achieve stability in your exchange rate- then Jamaica does what it feels is best to achieve that.

Now, there were some points of diversion in the agreement. The facility was meant to last two years (2010 to 2012) and have an unlocking process along the way. Jamaica and the IMF agreed that to meet the next economic hurdle to unlock more funds a few things had to be in place:

  1. Tax Reform
  2. Pension Reform (so the Government stops carrying that bill forward- like a defined contribution plan)
  3. Public Sector Reform (reduce the size of the public sector and define a formula that will be used to determine the rate of wage increase based on the performance of the economy)

There was always energy reform- but the government had the LNG project in train- so that wasn’t a major show stopper.

The government was able to access U$800m from the total loan amount but did not implement the remaining three reforms that would have made the final U$400m available. Why not? This, this and this. You would be surprised at how destabilizing an activity of that magnitude is to a small country like ours. The now Government would have lambasted the then Opposition for being Enemies of the State in their attempt to derail the government.

The last I’ll say about the SBA is that it seemed to have been the right path for Jamaica. All the economic indicators from the 2011-12 financial year show that we were making great strides. We were not over though- we needed to solve those other elements, get the remaining U$400 and then start achieving Vision 2030.

Extended Fund Facility

Unfortunately, today’s blog is too long, but I would be doing a disservice if I didn’t talk about the EFF. I only recently realized the grand scheme of the Government. It makes me wonder if I live in the same country that did the gas riots- because this is something to protest about.

EFF has a longer duration than SBA and works similar to what Jamaica had in the 1990s under Michael Manley and PJ Patterson. This is where the IMF not only lends us the money but dictates how we spend it. This is called “Structural Reform” and is not a feature of SBA.

Therefore, when Min of Fin, Agent Peter Phillips said that he has no choice but to triple tax Jamaicans and raid the NHT- I now believe him. He has negotiated us into a deal that gives us few options for self-determination.

Watch the DVD Life+Debt if you want a quick review of the Structural Reforms of the 1990s. (Disclaimer: In the video below you will see a note about SBA in 1977- that isn’t the deal Manley put us in during the 1990s.)

Crying over Spilled Milk

Q. Did we have to reach this path?

A. No

Q. How could this have been avoided?

A. Implement Tax Reform, Pension Reform and Public Sector Reform in early 2012 and receive the U$400m draw down to maintain the positive effects of the programme that led to growth in 2011-12. (In some circles the shorter answer would have been to give the JLP a 2nd term.)

Q. Do we have other choices?

A. Not really. After this extensive delay we are now in a crisis. However, the reforms are still necessary- and perhaps even more so.

The rub? The PNP continues to demonstrate their expertise at negotiating borrowing agreements for Jamaica. Let us learn from history.

Six Months of Ownership

During the Parliamentary debate on the modification of the NHT Act to turn it into a tax Audley Shaw pointed out something pretty significant to me. I apparently live in low-income housing! I used to think I was so middle class- but, apparently, I am at best in the lower-middle class. This makes sense, especially since the global recession from 2008 to 2010 and our current Government’s inaction has served to wipe out the middle class.

What makes me feel a bit uneasy about that designation is that, given my education, income and other prospects- if I am lower-middle class then what is lower class? Would people with a first degree in Jamaica be lower class? It hurts my pride a little. However, the consolation is that if I married someone at my education and income level we would absolutely be living in a middle-class home.

Only one person told me that I would be broke up to three months after moving out on my own. Boy was he right! I don’t know how to prepare you for this. It is going to be six months of crawling on the floor come April- wow.

I had built some strong reserves through YNAB but I had to wipe it all out and make a fresh start. I thought I had calculated my monthly expenses perfectly- but I never saw the effect of the incidentals. Incidentals like when I have to fire my helper who washes/irons/cleans twice a month and buy a washing machine. How about the massive incidental of buying/installing a pump and water tank because of the discovery that water is not always available on my floor. The rest of my life didn’t stand still- I still had a car loan, still had to renew my insurance, license, registration. I still had to buy four (4) brand new tyres to pass the fitness test. I still have to buy food and keep the lights on.

The good news is that I think I am going to get out of this hole in about a month. I keep recording my activities in YNAB mainly to maintain awareness- but I won’t be in a position to use it to plan my life until about April/May. What I’ve rediscovered is that the credit card is a gift and a curse. If you are like me in a crisis you live on a maxed credit card. Perhaps you do the dance between statement date and due date. The only part of the dance that I don’t do is that I don’t allow them to charge me interest. The benefit of living alone without children (and I suspect being a man? No?) is that I can ‘tough it out’. However, my big plan is to again (second time since I’ve had this card) lower my credit limit- this time to a third of my income after mortgage. This ensures that even if my card is maxed, my exposure is only a third of my disposable income. I can hardly wait to get back on track.

When I lived with my parents I was balling out of control. Now, well… Far less balling and more silent bawling. However, I’m happy that I’ve been able to keep things together and now, finally, there is light at the end of the tunnel.

OYL: The NSWMA

One Year Later at the National Solid Waste Management Authority

I gave this speech recently at a Toastmasters meeting at CIPS Communicators Toastmasters Club. Unfortunately, it was for Speech #5, so while people enjoyed it I didn’t gesticulate enough. Hope you like it- without the need to see my hands waving.

2012 was a landmark year for the world economy. The world, led by America and Europe, was just beginning to pull itself up by it’s boot straps out of the global recession. Unemployment in the largest economy was trending down- having a positive ripple effect on tourism and remittances for our economy. Europe was applying the fiscal austerity required to grow- often to the ire of it’s citizens. The crises of 2008 seemed to be long behind us and the world was on the path back to pre-recession conditions.

Our little island not many days before 2012 elected a new old government. This government’s primary assignment was to continue with the stabilization of the economy, apply the bitter medicine of tax reform, pension reform and public sector wage reduction while creating a business friendly environment.

I want you to set your attention to a single important entity in our collective experience in 2012. It may offend your noses, it may even make your skin itch a bit. Lets take a look at one year later with the National Solid Waste Management Authority.

Prior to 2012 the NSWA was under the stewardship of Joan Gordon-Webley. While she is a politician with a consistent string of losses, both to veterans and novices, she seemed to have a firm understanding of how to dispose of garbage. This is convenient since that is perhaps more than 90% of the work citizens expect of the NSWMA. I remember fondly the fiasco brought up by the well-to-do that the garbage trucks smelled too bad, especially when driving past their fancy function. While stating the obvious (she is collecting garbage, after all- and spoiled milk and ice cream mixed with old chicken smells disgusting) Joan committed to cleaning the trucks more frequently so that their delicate noses will no longer be offended.
She was visible and seemed to be very effective. Street cleaners were out and about early in the morning, trucks came at regular intervals and for once in a long time the city felt clean. She lashed out with disgust at our nation’s litter bugs and agitated publicly for legislation to empower litter wardens to ticket the various offenders.

When Jamaica changed managers we saw an atypical sequence of events. First the new bosses went on a witch hunt to weed out Labourites. This process took three full months while they ensured that everyone left was singing the same slogan- People Power! They charged a man with fraud and ensured that the trash was publicly discarded. Never mind there was a fire in the Riverton dump again, a landfill run by the NSWMA, the nation’s business of keeping comrades employed was well under way.

By March we had a new leader- Jennifer Edwards- doing the nation’s dirty work. However, one month later we renamed Kingston Rat City. Calabar students energetically told their counterparts “Ah yah so mice” and the country was surprised that we were not collecting garbage regularly, creating the perfect conditions for a healthy rat population. Somehow, after all these years, the struggling garbage trucks finally broke down and there were not enough trucks to gather all the trash. While the NSWMA took the blame the KSAC took charge and dumped 200 million into making Kingston rodent free.

During the summer months JEEP was added to the government fleet and was at full throttle. Agencies pooled funds they were already going to spend, to do tasks they were already going to do- but happily labeled it according to the guidance of the political directorate. In honor of our fiftieth year of independence, and later to ring in the yuletide season scores of street painters were deployed to ensure that Jamaicans understood where the no-stopping zones were located. People were employed!

Hurricane Sandy huffed, and puffed and blew our trees down. During these extraordinary circumstances it took nearly three weeks for pre-Sandy garbage to be collected in the Corporate Area. To give them a little lenience this is the first storm to hit Jamaica in a very long time. Given the novelty of the situation no one would expect them to already have a disaster recovery or mitigation plan in place for these types of events.

Then came Christmas. The trucks broke down again. Garbage piled up in our homes, streets and places of business. Somehow, perhaps because of the IMF, or maybe because of JEEP, the NSWMA could not afford to collect our garbage. They tried first to give us the ‘party line’ that there was mechanical failure. However, when asked why not rent some trucks the truth was finally revealed. There was no money to hire the help needed to collect the city’s garbage- though there was just enough to hire thousands to paint between our lines.

A year later I can’t help but get excited about our leadership. We started with a witch hunt, went on to a fire, eased into rat infestation, we hired a lot of painters, were caught flat footed by a storm we saw coming a few hundred miles away and then couldn’t pick up the trash. Only time will tell what new adventure awaits us in 2013.

If 2012 is any example of how governance is done under this new administration then we are in a wild ride.