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WEDNESDAY, APRIL 22, 2020
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Govt in ‘conundrum’ on rental assistance NIB ‘pumps DR NICOLA VIRGIL-ROLLE
$67m’ into local economy
By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net THE National Insurance Board (NIB) “pumped $67m” into the economy during March, its director said yesterday, adding that it is having “good success” in progressing 2,000 stalled benefit claims. Dr Nicola Virgil-Rolle, speaking during a Zoom conference with the media, said the social security scheme had contributed significantly to keeping Bahamian families and the economy afloat during the COVID-19 pandemic via a mixture of benefits and $46m in pension payouts. She added that some 18,000 unemployment benefit claims, totalling some $8.7m, had been paid out over the past four weeks as NIB continued to chip away at the 2,000 claims that stalled because their former employers failed to provide the necessary insurable wage information on their C10 filings. That delays NIB calculating the amount of unemployment benefit a worker is due, but Dr Virgil-Rolle said: “In terms of the applications we have had good success with contacting employers, who have been willing to come in and supply the information - sometimes months of information - quickly as soon as they recognise the challenge it causes in calculating the insurable wage. “So whereas they would have submitted the B80 forms for their former employees, they did not realise how important having the actual C10 forms, which give us enough information to calculate the insurable wage, were.” She added: “We have had good success, and we have gotten through quite a bit of those. Of course, we have been insisting with the more recent ones that they be sent in electronically rather than in paper forms that come into us that we have to manually key in, which takes us more time. “I can say without having exact figures before me we have had some good success there in order to process them and get those coming into us. Our inspectors have been tremendous in going after companies to send in what was required, so I think that was a fruitful exercise doing that.” Stressing the importance of compliance, Dr Virgil-Rolle said: “This [the COVID-19 pandemic] has really brought home the importance of compliance, not just from a legalistic point of view, but because in times like these if you are compliant and you have done all that you need to do, and if you remain compliant and pay on time, you will be much more easily processed. “I think that we have also seen the importance of formalisation, in some of the new programmes we have. Having that business license and being
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By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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HE government is facing “a real conundrum” in devising an effective rental assistance initiative because it would require the banks to “freeze” landlord loans, the deputy prime minister has admitted. K Peter Turnquest, responding to questions after a Zoom presentation to Old Fort Rotary Club members, said the involvement of three different parties in the tenancy chain represented “a huge challenge” in coming up with a relief programme that works. He added that a further difficulty facing the Minnis administration was the continued uncertainty over “where the bottom is” in the COVID-19 pandemic, and how much the provision of
• Banks must ‘freeze’ landlord mortgages to work • ‘Huge challenge’ on cost and when ‘bottom’ hit • DPM: GB cruise projects ‘still on but delayed’
K PETER TURNQUEST rental assistance to tenants will ultimately cost given that the government’s financial resources are already being strained to the limit with an $800m deficit now projected for this fiscal year.
Mr Turnquest confirmed that the government has appointed a committee to study, and recommend, how a rental assistance initiative can be implemented, but admitted “this is a huge challenge” given that individual, family and business tenants are all struggling to make due rental payments to their landlords amid the economic lockdown imposed to fight the virus. “The challenge for us in intervening in this is that we don’t know where the bottom is, and how many people require assistance,” the deputy prime minister added. “We have to look at it from both sides. “The landlord typically
has a mortgage on the property that depends on rental income to service it. If you say to the landlord that you have to give a 30-day or three-month moratorium on rental payments, you have to back that up with the bank giving him a similar moratorium.” Mr Turnquest added that the various COVID-19 customer assistance initiatives implemented by Bahamasbased commercial banks all involved loan deferrals that merely delayed the payment of due principal and interest payments until a later date when the pandemic has passed.
BAHAMIAN contractors yesterday conceded that re-opening the construction sector involves “a big risk” and “cannot be business as usual”, but argued: “Living with COVID-19 is the new reality.” Leonard Sands, the Bahamian Contractors Association’s (BCA) immediate past president, told Tribune Business this nation “cannot continue indefinitely with the country being locked down” as this was akin “to allowing the patient to live longer, but eventually they die”. Acknowledging that “not everyone shares” his view, Mr Sands said it appeared The Bahamas will have little choice but to balance re-opening the economy with the necessary health and safety measures and their enforcement otherwise “the entire country” will be
This newspaper understands that a group of Bahamian contractors, independent of the BCA, and individual operators have already written to the Minnis administration arguing that the restrictions imposed on the sector - especially in New Providence - as a result of the COVID-19 lockdown should be relaxed to allow the industry to resume work with the necessary safety protocols in place. The government on Sunday gave the go-ahead for Family Island construction to resume, and permitted the hardware stores supplying them to re-open from Monday to Friday between 7am and 5pm. However, the industry
‘Desperation’ sparks $20m loan rethink By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
remains locked down in the capital for the moment. Mr Pratt said the BCA was working with occupational health and safety specialists, including one of its board members who runs a sanitation and cleaning company, to develop training courses and standard health protocols to ensure contractors can both re-open and combat COVID-19’s threat. Arguing that most in the industry have already embraced a safety culture due to the nature of their work, Mr Pratt added that COVID-19 would require the sector to go further by ensuring work sites were clean; temperatures were checked before workers
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• Admit re-opening carries a ‘big risk’ • But lockdown ‘can’t stay indefinitely’ • Sector can be ‘shielded’ from threat forced into the unsustainable situation of living off the government. Michael Pratt, the BCA’s current president, yesterday confirmed the industry body is currently canvassing the views of members to develop a position that will be presented to the government on how the industry can re-open. “We have a myriad of opinions,” he told Tribune Business. “While some contractors feel we should get back to business, others are saying we should be extremely careful as we don’t want an outbreak to harm the industry. We’re already short of workers, and don’t want to further damage the industry by putting them out front and not being fully prepared.”
MARK A TURNQUEST
GROWING “desperation” among his small business clients has prompted many of them into a rethink when it comes to applying for government assistance, a consultant has revealed. Mark A Turnquest, of Mark A Turnquest Consulting, told Tribune Business that zero income as a result of the COVID-19 lockdown had prompted several of his clients to overcome their initial reluctance and apply to the $20m Business Continuity Loan initiative. “I’ve found a lot of my clients who were initially reluctant are getting desperate and applying for the loan,” he revealed. “It’s desperation. The lack of money and the lack of sales. They’re trying to recover some of their expenses, and they’ve realised the benefits outweigh the costs of the five percent interest rate. “What the government’s giving on the loan, they realised they should take it and pay some fixed costs, because 90 percent of our clients’ rental payments are between $2,500 to $3,500 a month due to their size and location. A lot of them are in prime areas, and a lot of them are big stores with a great deal of inventory. “You’ll find a disproportionate number of people applying for the loan because businesses can’t create sales to they’re trying to cover their costs. They’ve realised they don’t have to start paying off the loan until after four months. If they receive the money in May they don’t have to repay until September, and hopefully they will be back in the game by then.” Mr Turnquest said his initial estimate that the Business Continuity Loan initiative would require at
Contractors: We have to live with COVID-19 By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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Union’s $150m alternative to civil service wages cut
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Government will be “shooting themselves in the foot” if they slash civil service salaries, a union chief has warned, arguing that three alternative measures can realise some $150m in savings. Kimsley Ferguson, the Bahamas Public Services Union’s (BPSU) president, told Tribune Business it would be “detrimental” to what remains of the Bahamian economy if the government were to seek across-the-board wage cuts for his roughly 20,000 members as they represent one of the few consumer spending sources left. While pledging that he would take the government “at its word” over its statements that no public service salary reduction is currently being considered, the Mr Ferguson added: “Where there’s smoke, there’s fire.” The BPSU, in a position paper seen by this newspaper, is arguing that the government should look to cut unnecessary spending from its budget as a first phase response to its fiscal
• BPSU chief: ‘Where there’s smoke, there’s fire’ • Salary slash for members ‘detrimental’ to economy • Taking government ‘at their word’ for now
KIMSLEY FERGUSON woes after revenue plummeted by 70 percent due to a combination of the tourism shutdown and national lockdown in response to the COVID-19 pandemic. The paper argues that the government could save some $60m if it “terminates the contracts for all consultants and special advisers” given that these are usually retirees or persons “paid outside of public service salary scales” whose roles could be performed by civil servants. The BPSU is also
suggesting that the government could save some $40m by “postponing subvention and marketing support payments” to major hotels and other private sector entities that have temporarily laidoff staff in response to the COVID-19 pandemic. It also suggested that the government could obtain $50m in much-needed extra funds by transferring surplus funds from bodies such as the Nassau Airport Development Company (NAD), the Bahamas Maritime Authority (BMA), Utilities Regulation and Competition Authority (URCA), Securities Commission and Insurance Commission back to the Public Treasury and Consolidated Fund. These three measures combined, the BPSU paper estimates, would give the government a combined $150m in much-needed fiscal headroom, although not all of the regulators and quasi-governmental entities
if references are thought to be so cash-rich. And tourism marketing efforts will have to quickly resume once the pandemic ends. Referencing previouslydenied claims that the government may seek to reduce civil service salaries to achieve a 20 percent spending reduction target, the union added: “Elements of the strategy disclosed to us by ministers appear short-sighted and ill-considered. “The classic response to a recession is for a government to increase deficit spending to offset the fall in aggregate demand, and the BPSU supports this approach. The proposed approach of the government to dramatically reduce spending - including remuneration to the public service workers - is not supported in modern economic theory and we fear this approach would create more hardship for the Bahamian worker.”
Both K Peter Turnquest, deputy prime minister, and Brensil Rolle, minister of national insurance and the public service, last week vehemently denied allegations by Philip Davis, the opposition leader, that the government is mulling civil service salaries as a means to cut spending in response to reduced revenues and ballooning deficits. While that may currently be the case, the $670m public service wage bill for 2019-2020 and $84m in budgeted allowances combine to make a total $754m, thereby making labour one of the government’s highest fixed-cost expenses. It still remains possible that it may be forced into seeking such cutbacks depending on how long the COVID-19 pandemic lasts and the speed with which the Bahamian economy recovers. Some observers will likely argue that the public sector should also share some of the private sector’s pain when it comes to the economic impact inflicted by the virus. Mr Ferguson, though, argued that there were “a
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