Looking relaxed in a blue open neck shirt, jacket and trousers, the prime minister of Barbados sat down for a live press conference with three members of the broadcast media last Monday night. The setting was “living room” rather than “meeting table”, except that while most Bajan homes have a three-piece suite in their front room, for some reason CBC can only afford a two-piece.

Hence the three journalists sat rose-between-two-thorns-style, looking a bit uncomfortable, not because of each other, but due to the lack of sofa space.

But, despite the uneasiness communicated by the journalistic emplacement, the atmosphere was, perhaps as it was intended to be, more “fireside chat” than open-hearth grilling, and it was good to hear the prime minister promise that this was only the first of quarterly meetings of the same kind in which he would endeavour to bring the country up-to-date with his government’s plans and progress.

So I applaud the PM for sitting down with members of the press and having a conversation. He did not launch into soliloquies, as his predecessor almost always did, and he took implied criticisms in some of the questions with a welcome air of democratic give-and-take.  

It seems to me that David Thompson having been fully exposed to the harsh realities of the financial situation the country is facing, has decided to take the medicine. Hence the move to allow the full “automatic pass-through” of petroleum prices, although this policy will certainly increase inflation and, as we’ve already seen, lead to demands for higher wages in almost every wage negotiation in the coming year or two.

How hard was the consumer’s pocketbook hit? Let’s do the percentages quickly, for the record:

Gas (Unleaded): From $2.15 to $2.67 per litre: Up 24.2%
Diesel fuel: From $1.46 to $2.57 per litre: Up 76%
Kerosene: From $1.37 to $1.51: Up 10.2%
LPG 100 lb: From $144.75 to $188.15: Up 30%

However, the IMF, in its annual consultation with Barbados, has been calling for the pass-through to take full effect:

“The mission also encouraged the authorities to increase the prices charged by major public enterprises, some of which have not been raised for several years....In particular, oil price increases would have to be fully passed on to consumers.”  (Staff Report for the 2007 Article IV Consultation, page 11)

In a note at the bottom of the page the report states that: “The January 2006 increase in domestic fuel prices implied almost a full pass-through of international oil price increases. However, the further increase in international prices since then has only partially been passed on.”

And last September, while acknowledging that even the partial “pass-through” had helped increase inflation, the IMF continued its call for Barbados to rein in its overall debt by exercising other options that would also raise, not lower, the cost of living:
“Fiscal consolidation is needed to bolster international reserves and reduce public debt. Announced policies are unlikely to achieve the government’s debt objective....The government has a range of options to achieve such savings, including reining in future projects, improving tax administration, raising VAT rates and reducing tax exemptions, and adjusting selected utility tariffs.”  (Staff Report for the 2007 Article IV Consultation, page 14)

Although he has not yet spoken about raising the VAT, the prime minister said last Monday (and on previous occasions) that his administration was now moving toward rebates which would target specific needy cases, like the poor, or small business, or farmers, rather than taking the VAT off that much wider basket of goods as promised during the elections. He has also given me the impression that he will remove the VAT on some food items during the Budget speech, but really only so it cannot be said that the Dems did not live up to their manifesto promises, but they will be following more the letter of the manifesto than its spirit.

Clearly, Mr. Thompson’s thinking on the state of public finances, the current account deficit, the external deficit, and the overall foreign reserves position has evolved in the short time since he took office. With so few options to pursue in delivering on the triple priority assigned to lowering the cost of living, the government is looking for others to blame, and it has seized on the private sector, which it is now openly accusing of price-gouging.

What has come home to the new administration, I think, is that it now sees that it can’t build the sort of bridges to the citizenry which it wants to do without spending money. That focus on more social programmes to uplift the country and give Barbados back to its people was the main reason the Dems’ alternative gained momentum during the election campaign, to my mind, and the idea that somehow the cost of living would be lowered as well was seen to be a natural adjunct to the central platform.

If the Dems can succeed in rolling out better, more efficient, more caring, more socially-empowering programmes to the people of Barbados, the cost of living will fall indirectly, as the quality of life will rise. But in the first 100 days, all the prime minister can point out is plans which are afoot, studies which are underway and things which we can expect to take place, because changing the focus of the government from encouraging rapacious profiteering for the mighty rich in return for crumbs from the table for the rest of us, as practiced by the former administration, will not occur overnight. Or even in one year. Maybe some of it will start to be seen in a couple of years, but we are not going to just press the Easy Button and get back to the kindler, gentler nation we believe we once were.

The only way to find out if there is price-gouging is to set benchmarks for prices, based on reasonable mark-ups on a variety of test items, which should not be too hard since the AYSCUDA system is said to place it all at one’s fingertips. Then the regulatory agencies will have to be given more teeth and set to work. Last week in the UK, over 100 companies were named for conspiring to fix the price of contracts for government projects, following a four-year investigation. That is the sort of serious investigatory work we need in this island.
Right now we are allowing corporations to get bigger and more powerful without having the balance of tougher regulation built in to police them. When that legislation is passed and properly enforced, the prime minister might be able to see some reduction in the cost of living, as any price-gougers, price-fixers, or other anti-consumer practitioners are brought to heel. But that could be a few years away.

But only then will we as consumers feel confident that we are indeed betting value for our hard-earned money. Both the private sector and the unions should join in the effort, as they did in the early years of the social partnership, to stand up for all consumers and not only those consumers who happen to be their members.

Maybe then we will appreciate better the immeasurable contributions being made to our country by people like Roosevelt King, Hallam Hope and Malcolm Gibbs-Taitt, among others, who have long believed that consumers in Barbados are more often than not shafted, and have done their utmost to create awareness of that fact.