Jun 2010 Financial News

Dookeran: $3,000 pension in new budget

Jun 21, 2010

In his first budget, Finance Minister Winston Dookeran hopes to deliver on the People’s Partnership manifesto pledge to give a $3,000 pension to all old age pensioners.

Speaking to the Sunday Express, Dookeran conceded that there might have been an expectation that this increase would have been applied across the board to all pensioners, including NIS pensioners who currently receive $2,000 a month. All pensions had been harmonised at $2,000 a month. But in April of this year the PNM increased old-age pensions to $2,500. The People’s Partnership made an election promise to carry this even higher to $3,000.

Said Dookeran: ’There is a medium to long term proposal for a universal harmonised pension plan. And within the context of this plan, there was a specific provision in the People’s Partnership manifesto to increase pensions to $3,000 (for old age pensioners). We would have liked to do this universally but that might take some time. So we would do it in stages. We intend to move in that direction (of a universal harmonised pension), but I don’t think we can afford to do that in this budget’. ...unless the figures turn up otherwise and it is affordable,’ he said.

He said the National Insurance Board and the Ministry of Finance were working out the cost of the proposal. But, he said, the first requirement of the Ministry was fiscal consolidation. He added that once the proposal could fit into this fiscal consolidation plan, the pledge would be honoured.

He also explained that the first goal is to have this $3,000 pension for persons over 65 years. The People’s Partnership had initially promised to carry down the pensionable age to 60 years. But this would not be possible right now, Dookeran said.

Would the implementation of this promise aggravate the deficit situation? ’Clearly. It would cost us some money,’ he said, adding that it would require a change in priorities in expenditure. All ’strategic expenditure...any expenditure that goes beyond the norm’, in Ministries and State Enterprises have already been curtailed, he said.

Noting that there were two years of deficit, Dookeran said there would be a further two years of deficit budgeting. ’We have to take some ’austerity measures’ to put the thing back in order. He said while the situation was one of ’deep concern’, there was no cause for panic. He said what worried him though was that there was a lot of expenditure to still be accounted for, ’like creditors who have done work for State enterprises’.

On the pledge to rescind the property tax, he said: ’The commitment we made was that we would not tax homeowners; that was part of our mandate and we are committed to meeting it’.

Was there any chance of any group paying the new property tax rates, he was asked. ’We are committed to honouring the mandate of not applying the tax to homeowners. We didn’t want to add any further burden on the homeowner. Homeowners, I say. That is the group that the promise applied to,’ he stressed. Asked whether businesses may therefore have to pay the new property rates, Dookeran said he was not prepared to ’go so far’.

On the issue of CL Financial, Dookeran was very critical of the last Government’s handling of the debacle. The Government took a systemic risk and made it into an economy-wide risk,’ he said. ’They should have delineated the risk in CIB and in the Statutory Fund and deal with them... Instead they took over the whole thing...and innumerable problems have been added,’ he said. ’It is a case where policy mistakes have cost us dearly... And we have to find ways to stop the bleeding that is already taking place,’ he said. He has appointed a three-man team comprising Steve Bedeshi, Wendell Mottley and Colin Soo Ping-Chow established to look into the CLICO matter.

On the story published exclusively in last Sunday Express which stated that CLICO Directors had increased their directorship fees from US$5,000 a quarter to US $12,000 a quarter, Dookeran said: ’It is wrong and unethical to take an ailing company that is growing in indebtedness and raise fees’. ’I have asked for this (information) to be verified and I am still waiting on the Governor of the Central Bank to give me an assessment of it,’ he said.

Asked whether this Government would be prepared to give the same guarantee to Hindu Credit Union depositors that the last government gave to CL depositors and CLICO policyholders, Dookeran said systemic risk or not, the public interest requires Government to protect depositors. ’To the extent that we can do so, given our financial capacity. (we would),’ he said.

Stressing that he did not want to commit himself to anything, he said he believed that the Deposit Insurance Corporation should not be restricted (as it currently is) to protect deposits only in the banking sector, but should also offer protection to deposits in credit unions. ’I am searching for the solution somewhere there. I don’t know what may come out of it,’ he said, adding that legislative changes may be required. But, he urged people to be cognisant of the fact that it might take time to get the right kind of solutions since this Government had only taken office three weeks ago.


Source:
Ria Taitt Political Editor
Trinidad Express
Sunday June 20th 2010

http://www.trinidadexpress.com/index.pl/nart?id=161701965&weba=NWSNews