No more socialism

 

The more you listen to the PNCR press conferences, the more it becomes clear how fortunate we are that party is not in the seat of government.

With each passing day, the absurdities are compounded and the party, which likes to boast about its intellectual prowess, is certainly keeping that particular talent hidden.

Twelve years out of power and always a palpable opposition over that period, the PNCR is certainly not offering credible alternatives to the government.

The level of debate at its press conferences leaves much to be desired and obviously begs to ask whether that party will even have a chance in the 2011 polls, because certainly there is no chance at all of it convincing even some of its traditional supporters to vote for it come 2006.

Take for example the party's suggestion that the government takes a portion of the windfall it is making from increased fuel taxes to help reduce electricity tariffs.

It is obvious that the PNCR is bereft of ideas and its absence from parliament has left it clueless when it comes to the government's international agreements and obligations.

First of all, the PNCR as an opposition party has an advantage, in that it can put the government on the defensive when it comes to energy policy.

This column has previously pointed to many shortcomings and called for the portfolio for energy and mining to be removed from the Prime Minister. So far we have not heard anything about the hydro falls project that was mooted some time ago; the windmill energy project seems to have blown away and according to one talk show, the Moca Moca Hydro unit in the Rupununi is virtually abandoned.

To compound things, the opposition has a credibility crisis when it comes to commenting on the electricity sector. The opposition cannot make criticisms concerning alternative energy uses because this is the party when it was in power that invented blackouts in Guyana .

This is the party that did not invest in additional generation and which failed abysmally, as the present government has, to move towards alternative and renewable sources of energy, which can be cheaper and more reliable.

The PNCR in short does not have the moral authority to criticise anyone about electricity given the mess they left the sector in when they demitted office.

What was really awful was to hear the PNCR propose that the government should take part of the windfall it has been earning from the fuel tax and put it towards reducing electricity tariffs.

This shows clearly that the PNCR is still living in its socialist past and is under the illusion that State services can be subsidised, when and as the government pleases. It also fails to understand that the government cannot make transfers from the treasury to state corporations as it used to in the past.

The government is not supposed to transfer funds to public corporations. I am not sure whether in the case of the GPL there has been any breach of this obligation this year.

The IMF/ World Bank agreement does not permit these transfers. But how will the PNCR know this when it has not be regularly participating in the work of parliament and is therefore more than a bit rusty when it comes to the management of the economy?

Secondly, what consumers need is not an artificial tariff propped up by tax funds. What consumers need is a tariff based on high levels of efficiency.

This can only be achieved if the GPL rationalises its labour costs, source cheaper fuel as the local fishing industry is trying to do, reduce its dependence on fossil fuels and try to procure cheaper sources of renewable energy, and more importantly reduce the horrific line losses that plague the grid.

The PNCR's proposal for a subsidised service is therefore a non-starter. But it has made a useful point about the windfall that the government makes from the fuel tax.

One however expected that the PNCR would have demonstrated just how much the government is profiting from the fuel tax.

It is felt in many circles that the government, despite reducing fuel taxes as world fuel prices rise, still today makes more per gallon of fuel than it did when prices were below the $28 per barrel mark.

This column is making the point that the present adventure the government is undertaking with the fuel tax is fraught with dangers.

The government will contract a high dependence on the fuel revenues based on steep world market prices.

When these prices collapse, as they are bound to, the government will find that it would be unable to sustain a number of the social services that it is doing now that the fuel tax is high.

The better solution for the government is to set the fuel tax based on a benchmark world price. This means that regardless of how the price moves, consumers will pay one price per gallon of fuel.

The government would therefore only see its fuel taxes increase through increased sales, rather than through the artificial movement of prices. This approach would also ensure that the government does not suffer when prices fall. Everyone wins with this approach.

This is the sort of suggestion I expect to come out of the PNCR, not that awful plan to have funds transferred to an inefficient GPL. That is socialist thinking and Guyana does not need socialism at this time.