(Published in Weekly no. 411, 30July - 05Aug 2020)
Things have suddenly changed. Economies everywhere are being profoundly shaped by the pandemic. At a time when extraordinary shifts in physical space, in business and living patterns are being revealed to us, it seems the right time to forge an independent direction, a path of our own. Those that have the capacity to radically alter their future thinking will gain immensely from the changed circumstances.
For those who expected a big bang, a complete overhaul of the system, breaking free from an outdated model of development for a whole new orbit of growth and development anchored in sustainability and inclusiveness, it was a huge deception. The few tinkering at the edges gave the impression that by enunciating the goal of self-sufficiency, the promotion of the Made in Mauritius label, some measure of progressivity in the tax system, a greener more inclusive Mauritius and social justice, the Minister of Finance was signalling a fundamental resetting of the government’s economic vision to meet the challenges posed by a Covid-stricken world where no one knows how long the pandemic will last and when life will return to normal.
But the ongoing debates on the Finance Bill 2020-21 show that the Budget fails to go beyond relief and firefighting measures and is unable to make the most of the chance to recalibrate the economy and reset its priorities. Many of the speakers from the opposition were revealing the vacuousness, amateurism and contradictions in Budget 2020-21. Following a backlash from the corporates, Government backpedalled on the 25% Solidarity Levy on the highest income earners. On the Partial Exemption Regime on interest income that was to be applicable to various categories of domestic companies, including insurance companies and leasing companies, it had to backtrack as it amounted to ring-fencing and was discriminatory. It was a harmful tax practice.
Such amateurism could have been quite damaging for the GBC sector. We can understand now why this regime is being blamed for the grave irresponsibility and serious incompetence in not ensuring that Mauritius conforms to the minimum standards on the effectiveness of its AML/CFT system. They also backtracked on the contribution to the Contribution Sociale Géneralisée (CSG) after the Actuarial Society of Mauritius announced that the CSG is unsuatainable and compared it to a ponzi-scheme. Now, it seems that the contribution will be decided “ in such manner, and at such times, as may be prescribed”. Is this a sign of panic ? Only time will say.
Some other speakers have highlighted that the mentions of a "new normal" in the environment sector- the transition to a cleaner, greener, sustainable, low emission and climate resilient country- are mere sound bites and catchy phrases to make headlines. When you scratch the surface of some of the biggest headline grabbers, and a few of the new sound bites, you finally realise that this government does not believe a iota in what it has announced. In the same budget they have detailed out measures that will continue with the “bétonage” of the country. At Para 50 of the budget, it is set forth that “upon approval of Landscope Mauritius Ltd, a small planter, having up to 10 acres of agricultural land will be allowed to convert up to 10 percent of his land for residential or commercial purpose”.
Green economy, they say -de belles paroles, que des paroles-while in the Annex to the Budget 2020-21, it is stipulated that the Environment and Land Use Appeal Tribunal Act (ELAT)is being amended to “specify clearly who can appeal against the decision of the Ministry of Environment, Solid Waste Management and Climate Change to issue, or not, an EIA License.” Following the outcry from some environmental NGOs, they have surreptitiously moved the amendment to the Local government Act in the Finance bill; this amendment will take away the fundamental right of citizens to contest development projects that represent a danger to our already weakened ecosystem.
Many of us who thought that we would be working towards bringing about major reforms where we reduce our dependence on other nations and at the same time restructure the economy on egalitarian lines with enough of a focused vision to develop a home-grown model of economic development, now realise that the “new normal” of self-reliance, sustainability and inclusiveness may remain just a slogan.
It will be a continuation of what we have been seeing over the past decade; economic policy making has mostly been mere tinkering at the edges rather than the series of big bang reforms and restructuring of the economy that we were expecting which would have helped to deliver different outcomes that are more sustainable and inclusive. Continuing with the present model and policies will only magnify returns for the rich, operating in an environment of regressive taxation and short-termism, whereas our society will become more unequal, offering diminishing opportunities for the young and our graduates and a growing sense of unfairness. The policies, that rely on the speculative and unproductive use of the our country’s strategic land assets by selling them to foreigners (which has accounted so far for around 80% of the FDI inflows during the past five years) and on high-net-worth individuals,(HNWIs) will surely generate wealth and some periods of reasonable growth but it will neither be sustainable nor inclusive in the long run.
Instead of new pillars that would have reinforced our economic resilience and security, we are building our future on quicksand and sowing the seeds for future recriminations by our progenies for putting in place policies that are promoting economic apartheid – a pervasive threat to our social and national cohesion. We need a decisive rupture from the present economic model and its policies. If we want to realise our potential for sustainable and inclusive growth, we will have to break past shibboleths and move away from the short-termism that has focused on some quick measures and picked the low-hanging fruits or rent-seeking activities. We will have to focus on doing things differently and aim to be a game-changer. There is frustration over the current status quo and people are restless for change. Mauritius stands on the cusp of great change. The more things change, the more they must not be allowed to remain the same.
