|The Business of Government
Published Thursday April 24th, 2011
Once again, I am using this edition of
Property Matters to consider the ever-controversial State Enterprises,
against the wider question of the role of the State. This is no small
area for examination and I start by using what seems to be the favourite
quote of Trade and Industry Minister, Stephen Cadiz, "Government has
no business running business".
Given the politics practiced here, it
should be no surprise that all our political parties give emphasis to
the important role of the private sector in the economy and society and
The line of reasoning goes like this The
State is only here to facilitate and clear the way for Private
Enterprise. The State does not intend to stand in the way of or compete
with Private Enterprise Those are not actual quotes, but they are
just a paraphrasing of the sentiments expressed by various politicians
over the years, whatever the party in power.
But the actual scale of the States
involvement in the economy is in stark contrast to the political
speeches. It is my view that the State is in direct competition with
the Private Sector in significant areas of the economy. The large
numbers of State Enterprises are inescapable examples of that.
We have to remember that it wasn't always
so. A major part of the physical development in this country took place
via the Ministries and without the involvement of any State
Enterprises. For instance, all the Primary Schools, Government
Secondary, Junior and Senior Secondary Schools were built by the
Ministry of Education. All the Health Centres were built by the
Ministry of Health and the Highways etc - up to the recently-opened
extension to the Diego Martin Highway - were all built by Works &
Our State apparatus is huge, expensive
Growing up in the 1960s and 1970s, I can
only remember a few State Enterprises BWIA, TTEC, WASA, TELCO, Caroni,
NP, NHA, PLIPDECO and maybe TRINTOC. That sector grew hugely since
that time. so today, for a country of about 1.4M people, we have 26
Government Bodies and 58
State Enterprises. To me, those are staggering numbers. There is
more on that in the sidebar.
Clearly the tendency is for that sector
to grow, I cannot remember the last time the State disposed of any of
their companies. That seems to be given serious consideration only when
there is an absolute crisis of the sort which confronted the NAR
government in the late-1980s downturn.
In terms of expense, just consider that
the 2011 Budget has an anticipated capital expenditure for the State
Enterprises of $6.725Bn. That figure is only for projects and so it
excludes the salaries, rents and normal running expenses of those
In this article, I am going to start
asking about the State Enterprises which are in the
Construction/Property field. Those are, in descending order
UDeCOTT Urban Development Corporation of T&T
HDC Housing Development Corporation of T&T
MTS National Maintenance, Training & Security Company Limited
NIDCO National Infrastructure Development Company
EFCL Education Facilities Company Limited
RuDeCoTT Rural Development Company of T&T
East POS DV Co East POS Development Company
Some people would
include National Insurance Property Development Company (NIPDEC) near
the top of that list, but that is not a State-owned company, although
many times one would be forgiven for thinking so.
Given the serious allegations of
corruption at UDeCOTT leading to the Uff Commission and the continued
public concerns on the State Enterprise sector, we are entitled to ask
some searching questions.
There has been tremendous growth in the
size of the State since independence. Some doubts arise when one tries
to consider why we now have so many of these State Enterprises. Even
more sobering than the purpose for their existence, are the questions of
what has been the real performance of these State Enterprises.
When one considers that the State
Enterprises listed are required to engage consultants and enter
contracts for those construction works, the question has to be - What
value do they add to the process of State procurement?
In the case of both UDeCOTT and the HDC,
these State Enterprises are operating without accounts for several years
and therefore in breach of the elementary rules of governance.
UDeCOTT's last accounts were at the end of 2006 and NHA/HDC has had none
since 2002 (I am informed that HDC recently filed its 2006 accounts).
In neither case have the Directors of those companies been sanctioned in
Two of the hugest State Enterprises
operating as rogues in a manner which is impermissible by Private Sector
norms. Even Lawrence Duprey's CL Financial group had to publish its
accounts within a year.
We have a large, subsidized State
Enterprise sector, all paid for by taxing the very people against whom
they are competing. That is advantage with a V.
We need to ask how compatible is this
arrangement with our National Development?
I am saying that it is hardly possible to
blame this administration for the errors and excesses of the last one,
but the honeymoon is running out fast. Some say it is already done.
The point is that there is now an
opportunity to engage in some reflection as to the purpose and
performance of these huge State Enterprises.
In relation to the property and
construction sector, there is also a recently-announced and large-scale
national planning exercise taking place in two parts. That is also a
good reason to pause to review the character and pace of the States
activity, particularly in the construction sector.
At the strategic level, there is no
clarity as to the purpose of these State Enterprises.
At the level of performance, there is
little evidence of value-added, far less value for money.
At the level of Corporate Governance and
the transparent management of taxpayers' dollars, there is extremely
poor performance with no apparent intention to penalise the wrongdoers.
This sector of the State is in need of
urgent, public and thorough examination.
Afra Raymond is President of the Joint
Consultative Council for the Construction Industry (JCC) and Managing
Director of Raymond & Pierre Limited.