THURSDAY night’s debate between Finance Minister Audley Shaw and Opposition spokesperson on Finance Dr Peter Phillips was essentially a tie, tilting one way or the other depending on your preference for debating skill vs content.

Shaw started out by highlighting the IMF managing director Christine Lagarde’s ongoing concerns about the global economy, that the poverty rate had averaged 18.5% under the PNP, and emphasized Jamaica’s recent macro-economic stability as a result of the debt exchange, including a stable exchange rate and falling inflation. He argued that they had managed the domestic crisis left by the PNP, and the global crisis that followed in 2008, relatively well.

Phillips countered with the need to return the economy to growth (it has only grown for the first nine months of this year under the JLP), which he stated was still five per cent below its pre-recession GDP, that poverty had risen sharply from just under 10 per cent in 2007, and that the global crisis was only part of the reason for our poor economic performance over the past four years.

When asked about the proposed “bitter medicine” to be expected in the New Year, Shaw correctly argued that Jamaica was already experiencing austerity, but that greater equity in the tax system was required, for example, the need to deal with tax evasion. Responding to the question of whether Jamaica needed to cut 10,000 jobs to meet IMF targets, Shaw argued that a better way was to grow the economy, and cited the imminent start of the community renewal plans in the PIOJ’s “Growth Inducement Strategy” as an exciting new growth initiative.

Phillips, while agreeing with the need for tax, public sector and pension reform, described the failure to take advantage of the breathing space provided by the Jamaica Debt Exchange to implement these reforms as a “squandered opportunity”. In criticising the JLP’s efforts at public sector reform, he cited particularly “the lack of respect for workers”.

He outlined the PNP manifesto plans, which notably included privatisation, which he termed packaging under- performing public entities for sale. He suggested that one can’t cut 10,000 jobs from the public sector as over 60 per cent of the public sector workforce are in health, security or education.

Shaw countered that there was no fundamental dispute on the need for tax, pension and public sector reform, but that progress on these difficult “structural” benchmarks had held up the reviews by the IMF. He suggested, however, that in the case of tax reform, they had a few Parliamentary submissions to receive in the New Year before the preparation of a White Paper, noting that sometimes these “complex matters” can’t go at the pace demanded by the IMF. However, Phillips disputed the view that there were no “sticking points” with the IMF, suggesting it was a “botched agreement”, in that it was pro-cyclical, and had contracted demand even further as the economy was falling.

Shaw argued that he would like to see a doubling of the PAYE threshold, perhaps to $900,000. Phillips agreed on the need to raise the PAYE threshold in time for the next budget, as the PAYE bears an unfair share of the burden.

Phillips described it as an essential plank of the PNP’s energy strategy to introduce more competition in electricity distribution, and that the state needs to get out of the business of determining our energy choices. Shaw had previously noted that 360 megawatts of LNG fuelled generating capacity had just been approved, and that his government were targeting renewable energy sources like solar and garbage to energy. He reminded his audience of the PNP’s energy choices re high cost gas turbines in the 1990s, and the more recent sale of JPS to Mirant that had treated it as what he termed a “cash cow”. Phillips observed that the PNP planned to remove GCT from electricity bills, to be financed by part of the proceeds from a revenue positive tax reform.

Phillips described the emergency employment programme, known as JEEP, as being designed to increase aggregate demand and encourage social stability. It was to be financed largely by re-allocating one quarter of the JDIP funding. Shaw noted that the JDIP contract was for roads and bridges, not the gullies and drainage proposed for what he termed the “crash programme called JEEP”, and was in any case already being reviewed. In a further response, Phillips described JEEP as a programme that would not last “in perpetuity”, and referring to the JDIP contract, advised there would be no attempt to “abrogate anything”. Shaw observed that in desperation to meet the need for explanation of the JEEP in the PNP manifesto (where it occupies four paragraphs), the PNP had turned to the JDIP to fund it.