Published Thursday 18th October, 2007
In a recent article,
we reflected that, despite widespread modernizing aspirations, our
behaviour seems incompatible with the attitudes required by modern
In fact, in terms of
how development issues are handled, we seem to have changed little from
colonial times. The guiding assumption during the colonial period was
that there was little point in discussing proposals with ‘the natives’
since they might not understand and in any case it was all for the
development of the empire anyway. Given the prevailing attitudes, you
have to wonder how far we have come.
What we need to strive
for is an understanding of what is the appropriate process for our
planning our important places. The recent columns in this series have
highlighted the perils of relying on an approach which ignores financial
and economic planning. The point is that our low level of financial
literacy can blind us to considerable errors and oversights in our
What are the
indications of this low level of financial literacy? Some key points
Feasibility Tests - What logical process could have
ratified the financial viability of the wave of office schemes being
built in our capital? Was such a comprehensive approach taken by the
promoter/s of these schemes? More to the point and for those who might
feel that we are over-emphasizing the office development issues, we can
consider the proposed commuter rail proposals. It seems that the
Minister of Works and Transportation is willing to proceed without
feeling obliged to release the results of the feasibility analysis.
That approach demotes financial concerns to the bottom of the page. It
is met with little popular outrage and is a direct example of money
being the problem. Would this approach be accepted in the private
sector? It may shock some readers, but the answer to that question is
not necessarily in the negative. The deficit in terms of financial
literacy is a national consequence of the overabundance of monies.
Surely someone in the State must have details of what we are going to be
‘saving’ when the new buildings are occupied – I wonder how much it
works out per sq. ft? The silence on the financial rationale for these
office schemes is eloquent.
Depletion of Capital – An ongoing cry is for more
pro-active maintenance of public properties and there is no doubt that
some urgent action is needed. The accustomed cycle is one of new
buildings/facilities being opened with much fanfare, followed by a
decline into leaky roofs, unpainted walls, broken windows and so on.
This is then followed by high-profile announcements of renovation or
replacement of those deteriorated properties. We seem unable or
unwilling to do the boring, but necessary, work of maintaining our
public facilities. We need to become aware that it costs much more to
do major renovations or replacements - in economic terms that is a
continuing depletion of our society’s capital stock. That is one of the
more serious concerns with respect to this new wave of construction of
State buildings in our capital – What plans are there for the proper
maintenance of these? If we are failing to maintain our stock of basic
buildings, how are we going to overcome that challenge with these new,
first-class buildings? There is a real case to be made for emphasizing
that aspect of the current development wave since it can represent
opportunities for new businesses and employment.
Public Goods and Betterment – There is another
species of development which can provide public goods – i.e. a facility,
provided or preserved at public expense, which adds to public welfare.
Examples of Public Goods would include the Queen’s Park Savannah, the
Brian Lara Promenade and the Priority Bus Route. If we accept the
principle that owners should be compensated for loss of property in the
case of acquisition by the State, what about those whose properties
increase in value as a result of public goods? Should they pay
increased taxes? If not, why not?
The Tax Base – As we started to say above, the tax
base is seldom mentioned here as a point in the property development
discussion. Our property taxes are abysmally low and this will be fully
explored in later columns. The practice in other more developed places
is to locate development proposals in a tax context with scheme
promoters contrasting present levels of property taxes with those which
would be earned upon completion. We need to start considering those
The limits of legality – We need to recognise that
legality and clean audits are only necessary conditions. They are not,
as we are often led to believe, sufficient.
It is possible to do a
great deal which is legal and ‘above board’ but which nonetheless makes
no economic or financial sense. As the late, great Grandmaster used to
say – ironically enough, about another frustrating, moneywasting public
project – ‘More money dan sense!’ As we shall soon see.
Next, we discuss
the physical planning of our capital.
Afra Raymond is a
Director of Raymond & Pierre Limited. Feedback can be sent to