BUDGET DEBATE 2013/2014 PRESENTATION
THE QUEST FOR GROWTH & ECONOMIC PROSPERITY: PRESCRIPTIONS ON STRATEGIC POSITIONING & LEVERAGING NATIONAL RESOURCES
BY
EDMUND BARTLETT CD MP OPPOSITION SPOKESMAN ON TOURISM & TRAVEL SERVICES DEVELOPMENT
WEDNESDAY 24th APRIL, 2013
GORDON HOUSE
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Budget Debate 2013/4
Edmund Bartlett CD, MP
CONTENTS
1.
ACKNOWLEDGEMENTS / INTRODUCTORY REMARKS
2.
PUTTING THE BUDGET INTO CONTEXT
3.
CREATIVITY & DYNAMISM
4.
PRESCRIPTIONS ON WHAT THE BUDGET SHOULD BE DOING
5.
THE TOURISM INDUSTRY – A CRITICAL SECTOR AMONGST THE GROWTH LEVERS IN OUR ECONOMY 5.1
Defining Jamaica’s Tourism
5.2
The Provisions made in the budget for Tourism
5.3
Tourism Enhancement Fund
5.4
Cruise
HOW TOURISM SHOULD BE FITTING INTO THE OVERALL GROWTH AGENDA
6.
6.1
Marketing
6.2
Building Markets
6.3
Securing Airlift 6.3.1 Airlift Concerns: The Case of Caribbean Airlines (CAL)
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6.4
Product Development 6.4.1
The Harmonization Project
6.4.2
Casino Gaming & the Casino Gaming Commission
6.4.3
The Montego Bay Convention Centre
6.4.4
Room Stock
6.4.5
New Attractions
6.4.6
Human Resource Development
6.4.7
Time Share
7.
THE NEXUS BETWEEN THE TOURISM SECTOR & OTHER SECTORS OF THE ECONOMY
8.
THE IMPACT OF THE DETERIORATING MACRO-ECONOMY
9.
CONCLUDING REMARKS
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Budget Debate 2013/4
Edmund Bartlett CD, MP
THE QUEST FOR GROWTH & ECONOMIC PROSPERITY: PRESCRIPTIONS ON STRATEGIC POSITIONING & LEVERAGING NATIONAL RESOURCES
ACKNOWLEDGEMENTS / INTRODUCTORY REMARKS
1.
Mr. Speaker, it is with a sense of duty and purpose that I rise to make my contribution to the Budget Debate for the Financial Year 2013/2014. I begin by thanking Almighty God, without whom, my response to the call to national service and nation-building would not have been possible. His continued inspiration and guidance keeps me fortified as I confront the challenges of our times, embrace a vision for the future and grasp the opportunities that are within reach. Mr. Speaker, I owe a tremendous debt of gratitude to my family. Their unwavering support is beyond measure. To my dear wife Carmen, I say thanks. Thanks for the gestures of love, the acts of kindness, the reassuring embrace, and the words of encouragement you provide. To my children, I say thanks as well. Thanks for your warmth, understanding, and compassion. Let me also use this opportunity to register my sincere appreciation for the continued love and support I receive from my personal staff and friends. Mr. Speaker, I am ever mindful of the distinct privilege afforded me, to occupy a place in this august chamber – representing the resilient, thoughtful, industrious, and dedicated men and women of East Central St. James. I wish to thank them for their abiding love and support.
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By returning me to serve yet again as Member of Parliament, they have not only signalled their endorsement of my stewardship over the years, but have registered their approval of the plans and programmes I proposed and developed with their input. I have every confidence that with a common understanding, unity of purpose and shared interests, we will continue mounting hurdles, unlocking potential, developing the constituency, and most importantly, enhancing their quality of life. I wish to commend the Leader of the Opposition for the inspiring and steadyhanded leadership he continues to provide. I truly appreciate the confidence he reposes in me and must use this opportunity to publicly thank him for having appointed me to the Council of Spokespersons, where I shadow the critical portfolio area – Tourism & Travel Services Development, in addition to chairing the Public Administration & Appropriations Committee (PAAC), a most important, though recent, oversight feature of our parliamentary arrangements and democratic system of governance. Mr. Speaker, this belongs to you. I wish to congratulate you for having achieved the milestone twenty years of service to this Honourable House. I am sure that the people of your constituency are equally proud of your achievement. Welcome to the Club! Indeed Mr. Speaker in your tenure as Speaker of the house, you have conducted yourself in an exemplary manner which has inured to the seamless running of the Parliament. To my colleagues, on both sides of this noble House, I say thanks. Thanks for the friendship we enjoy, the guidance you provide and the words of encouragement you impart. The amity continues to serve me well, and for that I am most grateful.
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2.0
PUTTING THE BUDGET INTO CONTEXT
Mr. Speaker, at this time each year, successive administrations are faced with the extremely difficult challenge of crafting a Budget that adequately reflects the priorities of the Government and provides hope to critical sectors of the economy. The difficulties associated with presenting the budget this time around, have increased tremendously. These difficulties have resulted from the Government’s own delays, dithering and missed deadlines – which were all self-inflicted wounds. Mr. Speaker, all the key macroeconomic indicators are headed in the wrong direction. The IMF Agreement which we were promised in as few as 2 weeks is yet to be finalized – this after some 68 weeks. And if that were not bad enough, the forecast for the economy leaves much to be desired. The projections for this quarter and the financial year as a whole are bleak, with the IMF projecting 0.5% growth. Mr. Speaker, the Budget fails miserably in bringing to bear, the kind of dynamism and creativity required in times like these, and will do little to move us forward. Make no mistake, fiscal consolidation is necessary. Fiscal prudence is required. Our public debt profile must be addressed and our expenditure must be recalibrated. However, these decisions must be undertaken within the context of meaningful reforms that provide space for growth. The growth we seek will not come by chance. It will only come as a consequence of Government action that is calculated, strategic, well-timed, and well-sequenced. Absent this, we would simply be pandering to the mundane, banal and unimaginative. Mr. Speaker, to merely speak of growth and to fail to take the concrete steps required to mobilize the agents of growth, amounts to nothing more than wishful thinking. Sadly Mr. Speaker, this is precisely what the Government is doing – wishful thinking. 6
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3.0
CREATIVITY & DYNAMISM
Mr. Speaker, in recent memory we have had to agree to work within smaller, more restrictive budgets. In light of this we must approach the budget process with creativity and dynamism, developing measures to ensure that the resources of the state are used most effectively to serve both the needs for paying our bills and moving the country forward. This budget betrays hope. There is nothing in this budget that suggests that fiscal policy is being used as a tool to engineer growth. In fact, what we are seeing in this budget is: Strangulation instead of Stimulation; Austerity with no hope for Prosperity; Unkindness instead of Commiseration; and an Imbalance in not only the Books, but also in People’s lives. The Budget ought to be the most important instrument in achieving the growth we desire. It should be no less than a blueprint, an organic framework, a roadmap even, delineating the policies and programmes that underpin the growth strategy. Beyond that, it should signal the Government’s intentions, highlight the sectors that will play a lead role in achieving growth, and most importantly, give an unequivocal sense as to where we are going, and how we are going to get there. The Budget should paint a picture – a picture that is cogent and lucid; a picture that inspires hope and demonstrates that prosperity is in view. Stakeholders at home and abroad should be able to make sense of this picture. Now, the question is Mr. Speaker: Is the budget achieving this?
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4.0
PRESCRIPTIONS ON WHAT THE BUDGET SHOULD BE DOING
Mr. Speaker, the Finance Minister has gone to great lengths to emphasize the need to contain public expenditure, reduce the size of the national debt, return the state apparatus to a focus on the core functions of government and preserve the social safety net. But while he is quite right in setting out these imperatives, he has not gone far enough. What he has failed to do is to make a credible and compelling argument as to how this Budget will restore stability to the economy and secure the growth we need so urgently. What he has failed to do, is to show us in any coherent and purposeful way, how the approach adopted by this Budget will inure to the benefit of the productive sector and other critical engines of growth and unlock their potential. In effect, Mr. Speaker, the Government has framed a Budget that makes it impossible for us to ride & whistle, at the same time. Mr. Speaker, we are of the view that a well-crafted budget is one that is: i) fair, ii) equitable, iii) reflective of burden moderation, iv) consistent with the principles of burden sharing, v) supportive of economic activities that drive growth, and vi) encourages everyone to play by the rules, particularly in respect of tax compliance. Mr. Speaker, as we see it, this Budget will do very little for the growth agenda. It will only inhibit our most viable prospects for growing our economy and paying down our public debt.
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5.0
THE TOURISM INDUSTRY – A CRITICAL SECTOR AMONGST THE GROWTH LEVERS IN OUR ECONOMY
Mr. Speaker, the Finance Minister, in opening the Budget Debate last Thursday, identified the tourism sector as one the lynchpins in the growth agenda. We are in agreement with him, but are of the view that the talk should be followed by concrete actions in the immediate term that will yield growth. When one considers Tourism in Jamaica, the uniqueness and potency of our product readily comes to mind. But it is also true that our product is very much like the proverbial sleeping giant. A sleeping giant not because much has not been done; a sleeping giant not because there has been a paucity of prescription; a sleeping giant because there is so much more to be done, so much further to go, if we are to unlock our enormous potential and maximize the many opportunities that present themselves in the market place. It is incumbent on us, Government and Opposition alike, to collaborate among tourism partners. Carriers and Hoteliers alike, owners of capital and the suppliers of labour alike, small and large businesses all to work together to unleash the grandeur that is associated with the Jamaican people and the attractions our beautiful island boasts. This is the key, Mr Speaker.
5.1
Defining Jamaica’s Tourism
Tourism has been one of the mainstays of the Jamaican economy, particularly in recent decades. Our primary offerings – sun, sand, sea, food, attractions and entertainment, are intricately woven into the fabric of our society across Jamaica. So robust is the sector that it has won considerable acclaim as the life-blood of the economy and is regarded as the largest source of foreign exchange inflows, comparable only to remittances. We will all recall the ravages wrought by the global recession, which saw a downturn in several critical sectors, while the tourism sector held its own.
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We recall Mr. Speaker, the shortfall in revenue arising from the fallout in the bauxite/alumina sector. This sector was approximately 25% of the National Budget and some 10% of GDP by 2009. The cataclysmic shortfall presented considerable fiscal challenges to the administration of which I was a part. It was the tourism industry that helped us to weather the storm and save the day.
TOURISM'S ENORMOUS CONTRIBUTIONS TOURISM AGRICULTURE MINING & QUARRYING CONSTRUCTION MANUFACTURING Total Arrivals Total Foreign Exchange Earnings (US$ Millions)
2007
2008
2009
2010
2011
2012
7.3% 4.6% 3.7% 7.2% 7.6%
7.1% 4.9% 1.6% 6.9% 8.0%
7.3% 5.6% 0.8% 6.3% 8.1%
7.1% 5.8% 1.1% 6.2% 7.7%
5.4% 6.6% 2.4% 6.3% 7.9%
5.5% 6.8% 2.2% 7.1% 7.2%
2,880,289
2,859,534
2,753,446
2,831,297
3,077,233
3,306,168
1,910.0
1,975.5
1,925.4
2,001.2
2,008.4
2,046.5
As there are many wonderful destinations around the world, the intensity of the competition for visitors across the globe is fierce. Jamaica must remain on the cutting-edge of the industry and work to carve out its niche amongst the many players, competing for their share of the pie. The question is Mr. Speaker: Is this budget taking us any closer toward to this objective?
5.2
The Provisions made in the budget for Tourism
Mr. Speaker, for the financial year 2012/2013, the Ministry of Tourism & Entertainment has been allotted some J$1.531 Billion from the Consolidated Fund, with appropriations in aid amounting to J$1.954 Billion.
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In 2013/2014 Mr. Speaker, the approved estimates allotted to the Ministry is in the order of J$1.541 Billion, representing an increase of approximately 1% over last year in nominal terms. Mr. Speaker, let us now examine what that expenditure yielded by way of actual performance. I find it strange Mr. Speaker, that the Minister is allocating virtually the same nominal amounts -- which in real terms are about 10% less when you factor in the impact of inflation and the sliding dollar -- and amazingly the Minister expects to achieve 6% growth in arrivals and 4.3% increase in earnings. This becomes even more ridiculous Mr. Speaker when you examine the performance of the first three months of this year. Minister you will recall that in Standing Finance Committee, I raised the matter of the growth projections with you, and asked if you would not want to revise those numbers especially as Jamaica has not seen 6% growth in many years. Minister here is another chance for you to reconsider. 5.3
Stopover Arrivals
Mr. Speaker for the period January to December last year stopover arrivals were as follows:
USA:
1,257,669 arrivals
Canada:
403,200 arrivals
UP by 6.46%
Europe:
222,428 arrivals
DOWN by 12.1%
UP by 2.6%
UK 145,231 arrivals DOWN 16.3% Italy 9,672 arrivals DOWN by 17.36% Germany 20,236 arrivals UP by 1.5%
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Caribbean 64,984 arrivals DOWN by 1.96%
Latin America 25,037 arrivals UP by 50.9%
Budget Debate 2013/4
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But Mr. Speaker the tale of the winter season just concluded tells a story of massive downturn in the three key markets of the US, Canada and the UK, show an overall a 5% reduction in arrivals.
5.4
Cruise
Mr. Speaker, cruise represents enormous potential for growth in earnings as well as cruise visitor conversion. The country welcomed 1,344,166 cruise passengers, and earned US$102.9 Million. These data represent growth in 2012 over last year. But Mr. Speaker, these results are down 5.5% this winter, a startling indication that this year's cruise like stop over arrivals are trending in the wrong direction. This Mr. Speaker is against the background of unprecedented investment in the Port of Falmouth in the amount of J$150 Million by the GOJ along with a similar amount by RCCL.
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5.5
Tourism Enhancement Fund
Mr. Speaker, the objectives of the Tourism Enhancement are clear. The TEF exists to: -
Generate growth based on sustainable market position Foster community based development Encourage better management of environmental resources Support the building of an inclusive industry Enhance the visitor’s experience
In 2012 Mr, Speaker, according to the schedule of expenditure sent to me by the Ministry, TEF spent J$3.2 Billion on national and local projects. This Mr. Speaker is the largest budget TEF has had in its history! Let’s examine the details of this expenditure.
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6.0
HOW TOURISM SHOULD BE FITTING INTO THE OVERALL GROWTH AGENDA
Mr. Speaker, the Finance Minister also spoke, on Thursday last, of the need to secure growth and respond to external pressures by constantly enhancing the competitiveness of our product. If the Government is really serious about this, it needs to determine what the key priorities and lucrative prospects are. Having settled on these, it must move swiftly in applying adequate resources to those areas, in a bid to secure desired outcomes. Mr. Speaker, I suggest to this Honourable House that there are strategies that can be implemented in Tourism to achieve growth in the sector. 6.1
Marketing
It is widely accepted that robust, strategic and well-calibrated marketing activities are the centre piece of Jamaica’s tourism product. Mr. Speaker, the product we boast today was not built overnight. The marketing prowess with which our brand has come to be associated is impressive. The kind of ingenuity and energy that have underpinned and characterized the promotion of destination Jamaica, certainly under my watch as Minister, is first rate and ranks amongst the best in the world. Brand image and destination awareness that take years to build, consolidate and expand, Mr. Speaker, can be destroyed in an instant. While considerable effort and painstaking work is required in taking a destination, over time, to a point of prominence, very little effort is required to reverse these gains. The evidence indicated that the pride of place we enjoy must never be taken for granted. We need to fix this Mr. Speaker. No effort should be spared in strengthening our marketing thrust, reinvigorating our indomitable spirit and securing the kind of marketing network that will: a) stimulate interest in our destination, b) project a positive image throughout source markets, c) forge new partnerships with key industry players and service providers, d) secure increases in arrivals, e) encourage additional spend by our visitors, and f) promote increases in the average length of stay. 14
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6.2
Building Markets
We need to recognize that marketing is impatient of time. We need to be mindful of the fact that we lose an opportunity when we miss a moment – that opportunity may never come back. We cannot afford to let opportunities pass us by. We cannot afford to drop the ball. We need to get our act together and do so quickly. It is clear that we are trending in the wrong direction. We need to get back into Canada, the United States, the United Kingdom and Germany, and do the required work to restore growth. Tourism at this time requires focused leadership. It requires a Board that is visionary, strategic and anchored by leadership that is not distracted, so full attention can be given to the enormous restoration work that must be done. Mr. Speaker, going after new markets is critical to enabling growth. We support this. However, the overall thrust however will not yield the desired outcomes, if existing markets are being made to fall apart. Make no mistake, Mr. Speaker investments in new markets require large capital outlay and purposeful action. The effort to continue the market building activities started by the previous administration, must continue Mr. Speaker with even more energy, and likewise in other markets like Italy, France and the Caribbean as these provide critical demographics to which our destination is responsive. Again, I say Mr. Speaker, the Government must develop the capacity to ride & whistle at the same time. 6.3
Securing Airlift
Mr. Speaker, in many respects, airlift is the life blood of the tourism industry. This is especially true for small island states like Jamaica. A destination is only as good as the airlift it manages to secure. Mr. Speaker, this Honourable House will recall that under my watch as Minister we:
Secured airlift from South America
Secured airlift from France
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Edmund Bartlett CD, MP
Increased airlift out of Canada and the United States in an unprecedented way
Restored airlift out of Italy
Initiated arrangements for airlift out of Russia and Continental Europe
Strengthened partnerships with airlines and tour operators to create that critical triumvirate which underpins airlift security to the destination.
Indeed, Mr. Speaker, Jamaica became the most connected destination in the Caribbean. Unfortunately, this enormous strength in airlift security is being threatened. In the case of Canada, our fastest growing market, nearly 50,000 seats were lost last winter, thus reversing the positive growth trends in that market. The growth potential of new markets especially out of South America, depend heavily on significant investment in airlift arrangements with large airlines with multiple gateway connections. I note Mr. Speaker that we have good relations with COPA, but the 737 aircraft and the Enbre Air they use are small and are not capable to give us the volume we need to make an impression in the market. The JTB must move quickly to make connections with GOL and LanTam which are large and important carriers in the South American market. In the case of GOL they have eleven flights per week into the Dominica Republic. In 2010 we began discussions with GOL and Minister I think the time is right to restart these discussions as it will now be much easier to tie Dominican Republic to Jamaica. The truth is Mr. Speaker, we can never get the South American market until we have Brazil, and GOL is the gateway. Mr. Speaker, our ability to penetrate the new markets in Europe, Asia and Latin America is contingent upon improving the infrastructure at the Montego Bay Airport. We understand that about US$50 Million is needed.
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6.3.1 Airlift Concerns: The Case of Caribbean Airlines (CAL) Mr. Speaker, we have noted with interest the reduction of arrivals out of Caribbean markets, as well as a reduction in the activities of Caribbean Airline Limited (CAL) out of the United States. Mr. Speaker, CAL is therefore a significant part of Jamaica's and the Caribbean's airlift security, and so we are concerned by recent announcements that there is significant reduction in flights from North America and the Caribbean. In 2012 CAL accounted for nearly 50% of arrivals at NMIA and 10% of arrivals at MBJ. The decision to pull down these flights will result in unemployment of many Jamaicans and significant loss of income at NMIA, and great inconvenience to the Diaspora and ICI's. We must recall Mr. Speaker that Jamaica and CAL are partners. We own 16% of this company and so have a voice. We note Mr. Speaker, that a new board will soon be constituted. We hope that this signals that it is not too late to salvage things and retrieve that which we once enjoyed. I would therefore suggest that the responsible Minister engage his counterpart in Trinidad and Tobago to work out a suitable agreement to shore up our air security.
6.4
Product Development
Mr. Speaker, product development is the key to growth in the tourism sector. Our industry must be anchored by a product that is fit for the purpose, matches and exceeds market expectations, and effectively responds to the psychographic and demographic profile of actual visitors and potential visitors alike. The product I speak of, Mr. Speaker comprises rooms, attractions, all the ecological and geo-physical resources with which we are endowed, as well as entertainment, art, craft and elements of the built and aesthetic cultures. The product invites and entices the market, and the market in turn, responds to the product. It is for this reason Mr. Speaker, that the product must be fashionable
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and relevant. If it is to resonate in the market place and remain on the cutting edge, there must be constant upgrading. Mr. Speaker, Brand Jamaica is strong. However, Brand Jamaica is not alone in the marketplace. We must find more and better ways to differentiate ourselves and so attract new clients. One of the ways of doing this is by improving our product – the type and variety of the rooms, attractions and infrastructure, and also by improving the quality of our human resources.
6.4.1 The Harmonization Project Mr. Speaker, the Harmonization Project is a development that has seriously tested our patience. It is now eleven years since the project was launched. Certainly the Parliamentary Opposition are frustrated and agitated. Mr. Speaker, as far back as 2003 Harmonization Limited was set up and promised to develop a world-class, high-end, luxury resort with gaming as the centre piece of the experience, to be called Harmony Cove, and located in Trelawny. To date the Government has made a capital investment of approximately J$3.5 Billion; on the operating side we are losing between J$55 Million and $65 Million per year. Minister what are we paying for? Mr Speaker, as the Parliament already knows under the joint venture members agreement, that was signed in 2006 between the Government of Jamaica and Tavistock, if the project is terminated as a result of actions of the Government, or if the company is liquidated for any reason, then the Tavistock will have to be compensated for the value of its investment, which I understand is between US$32 and US$50 Million. So this means Mr. Speaker that the Government of Jamaica must take all reasonable actions to ensure that the project is successful, or face the challenges of compromising the Government's own budgetary process.
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6.4.2 Casino Gaming & the Casino Gaming Commission Mr. Speaker, based on the Finance Minister’s update, we note with interest that the two initial pieces of the Casino Regulations are finally gazetted. One gives the Minister authority to issue Integrated Developer Approval and the second to approves Casino licenses. This is after the previous Government took the bold decision in 2010 to implement the Casino Gaming Act after many years of procrastination if not the lack of political will to make game hanging leadership decisions. Mr. Speaker, the Minister advises us that there are at least six expressions in establishing Integrated Resort Developments. And I note with interest that the Minister expects to grant orders by early next year. How is this possible when the full regulations are not yet established? These regulations are necessary for the applicant to know about the environment in which he will be operating. For example, the operator will need to know the criteria for fit and proper, the operation of the gaming floor, and most importantly how the local populace will interface with Casinos. 6.4.3 The Montego Bay Convention Centre The Montego Bay Convention Centre is unquestionably one of the most valuable additions to our tourism product in recent times. Its potential as a catalyst for growth, not just in relation to the tourism sector itself but the wider economy, is enormous. The challenge Mr. Speaker, is for us to come up with the right mix of policy, management, marketing, funding and strategic partnership that will buttress the Convention Centre and leverage its potential. It is true, that convention centres globally, rarely make a profit in the short-run. However, their catalytic role in driving business and income generating activities throughout the economy is well established. Mr. Speaker, our Convention Centre in its present configuration cannot be expected to generate the level of spin-off that the economy requires, nor does the 19
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constellation of homogenous tourism rooms within its immediate radius makes it attractive to convention groups. We must take the initiative to create the additional 50,000 sq. ft. of exhibition space that is required to attract large and valuable clients on the one hand, as well as invest in the requisite inventory of rooms along the Elegant Corridor, if we are to successfully turn around the fortunes of the Convention Centre. Mr. Speaker, it cannot be that we are spending J$300 Million of taxpayers’ money on the management of the Convention Centre, and not backing that with the vibrant kind of marketing that is required to secure value for money and ultimately, profitability. 6.4.4.
Room Stock
Mr. Speaker Jamaica needs significant investment in our room stock. At present we have about 30,000 rooms, of which more than 20,000 are marketable. This means that approximately 30% of our room stock are in need of upgrading or should be transited out of the sector. I think Mr. Speaker that it is timely that an audit of our inventory of rooms is undertaken. This process should involve the Tourism Enhancement Fund, the financial sector and NIBJ to create a pool of funds to enable particularly our small and medium sized properties to upgrade and refurbish their properties. 6.4.5.
New Attractions
Mr. Speaker, one of the responsibilities of the government is to facilitate the increase in the number and quality of attractions. On my watch there was a proposal to develop three Artisan Villages. This proposal to develop these marquis attractions met with support from the Port Authority of Jamaica, that allocated land at the Port of Falmouth for this enterprise. There has been no mention of this initiative in the Ministry’s budget. And so I ask: Where are we in relation to these Artisan Villages?
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6.4.6.
Human Resources Development
Central to the growth strategy Mr. Speaker is a well trained, efficient and highly educated work force. We are reminded that 75,000 persons are employed directly in the sector and many others are employed indirectly. The problem Mr. Speaker is that more than 50% of these workers are without any certification. The proposal to create Hospitality School was made with a view create training and career options for Jamaicans and people in the Region. We engaged the University of Technology to collaborate on this project, for which an MOU exists in the Ministry. I have asked the Minister what steps have been taken to move this initiative forward as we have seen no mention of it in the Budget, either from the Ministry of the TEF. Mr. Speaker, I also notice that the Tourism Service Excellence Programme developed to encourage high touch service was significantly scaled down last year and is absent from the Budget this year. Finally, Mr. Speaker, we must do more to support the workers in the tourism industry. We must help to ensure that they are secure in their golden years. During my time as Minister Mr. Speaker, we were far advanced in the development of a plan, supported by both employers and employees, to make provisions for pensions.
6.4.7 Time Share Mr. Speaker, Jamaica has an opportunity to benefit from a new type of tourism investment. I speak specifically of time shares. In order to benefit from this type of investment Mr. Speaker, new legislation would be required. The technical team at the Ministry of Tourism has been examining the potential of time shares for some time now. It is imperative that we complete this legislation and unlock the potential in this industry worth US$8 Billion in the US alone and multi-billions more globally.
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7.0
THE NEXUS BETWEEN THE TOURISM SECTOR & OTHER SECTORS OF THE ECONOMY
We move Mr. Speaker, to a discussion of tourism sector’s catalytic role in expanding the economy. This cannot be overemphasized. In fact, central to the discussion on the interaction between the tourism sector and other segments of the economy, is the enormous contribution tourism is making on the demand side. This, Mr. Speaker, is what we refer to as the tourism value chain. Our agriculture, agro-processing, manufacturing and construction sectors, just to name a few, are critical elements in the tourism value chain. Mr. Speaker, there are tremendous opportunities for economic growth fuelled by tourism demand. Failure to address the supply side constraints that currently inhibit the productive sector, is to court disaster. Mr. Speaker, I offer you data from the World Economic Forum which lists 14 groups of goods and services in the tourism value chain needed to provide the visitor with a memorable vacation.
The Tourism Value Chain
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Mr. Speaker, as the illustration the tourism value chain is the conduit that connects the various links, driving production across sectors and creating synergies that redound to our benefit. Mr. Speaker: •
When agricultural produce is moved from the farm gate to the hotels, that’s linkage
•
When locally processed foods are brought in as part of the offerings to guests hotels and various attractions, that’s linkage
•
When bed linen, furniture and other fixtures and fittings manufactured here in Jamaica are absorbed by the tourism sector, that’s linkage
•
When investors come in and construct hotels, and when existing operators refurbish or expand their facilities, that’s linkage
•
When the craft vendor at Fern Gully, the pan-chicken man at Faith’s Pen and the Fish Vendor at Whitehouse in Westmoreland, sell their commodities to our visitor, that’s linkage.
•
Mr. Speaker, last year the current Minister indicated in this Honourable House his support for this analysis and said, and I quote: “...the ‘Study of the Economic Impact of the Tourism Sector,” commissioned by former Minister of Tourism, Edmund Bartlett, that would provide this data, is to be evaluated and an action plan developed to advance the process...”. We look forward to hearing about the status of the study. We also note with interest that in the 2013/4 Budget for TEF, shows an allocation of J$10 Million for a Tourism Linkages Programme. This seems to be putting the
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Edmund Bartlett CD, MP
cart before the house, as it is the EIA that will inform the activities of the linkage programme. Mr. Speaker, though there is much more we need to know about demand from the tourism sector, you will be interested to know what STATIN already knows something about tourism demand. STATIN has been able to capture what they refer to as intermediate consumption. Their most recent statistics come from 2007. This is basically a measure of an industry’s purchases from other industries, and concerns primarily, the value of the goods and services that are used as inputs in the production process. We submit that these number have increased many time over. THE TOURISM INDUSTRY'S INTERMEDIATE CONSUMPTION Agriculture Mining & Quarrying Manufacturing Electricity & Water Supply Construction Wholesale & Retail Trade; Repairs Transport, Storage & Communication Finance & Insurance Services Real Estate, Renting & Business Activities Producers of Government Services Other Services
$ 6,000,000.00 $ 7,000,000.00 $ 326,000,000.00 $ 97,000,000.00 $ 123,000,000.00 $ 1,180,000.00 $ 794,000,000.00 $ 715,000,000.00 $ 243,000,000.00 $ 1,020,000.00 $ 1,346,000,000.00
Table 5 – Table illustrating intermediate consumption
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Budget Debate 2013/4
Edmund Bartlett CD, MP
Based on the illustration above, we see that over successive years, the tourism sector is consuming an ever increasing supply of goods and services from other sectors of the economy. The data makes clear that growth in the tourism sector is imperative, because it is the engine that spurs growth in the other critical sectors. Mr. Speaker, let us stop to think for a moment or two of: •
The tremendous boost this re-vitalized nexus will give to the engines of growth in our economy
•
The attendant increase in aggregate demand
•
The increased reliance on locally produced commodities
•
The reduced demand for foreign exchange as the demand for imports fall
•
The number of jobs and business opportunities that would be created
Mr. Speaker, I could go on and on. But I will resist. Mr. Speaker, I have a final thought on the tourism value chain. In addition to working assiduously to ensure that the value chain is activated, we urge the Minister to take steps to sensitize the banking sector to the opportunities available in the tourism sector. Bankers need to be encouraged to learn about the needs of the sector and to develop financial products to suit the sector. Others are doing this successfully. In the Dominican Republic, for example, banks have started to create departments with teams knowledgeable about tourism and able to forge strong business relationship with the investors and owners. Currently, one of these banks has a portfolio of more than US$625 Million in loans. Their Senior Executives even attend tourism marketing and promotions events like ITB BERLIN (Germany), FITUR (Madrid) and World Travel Market (London). They see the light. Mr. Speaker we must find a way to bring our financial service providers into the light.
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Budget Debate 2013/4
Edmund Bartlett CD, MP
Mr. Speaker, the Minister of Tourism must demonstrate an appreciation of these fundamentals and create the environment that facilitates the growth and development we all desire. Mr. Speaker, the Minister of Finance must re-examine his budget to exemplify an appreciation for these imperatives and create the fiscal environment that facilitates the growth and development we all desire. These obligations rest squarely on the Government. The Ministers must collaborate with partners to unlock the productive levers of our economy to secure growth and take action that will enhance the overall look and feel of our tourism product.
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Budget Debate 2013/4
Edmund Bartlett CD, MP
8.0
THE IMPACT OF THE DETERIORATING MACRO-ECONOMY
Mr. Speaker, it would be remiss of me to make a contribution to this budget debate without making a link between the overall state of the macro-economy and the state of affairs in the tourism sector. The truth is that the deteriorating macro-economy is having a debilitating impact on the growth levers in our national economy. Mr. Speaker, successive Business & Consumer surveys, certainly over the past few quarters, bear this out. The productive sector is in a wait and see mode. Businesses are in a holding pattern. Investors are ambivalent. They are sitting on the sidelines, contemplating their next move. This does not bode well for the economic growth that is so desperately needed. Leadership, faithful stewardship and efforts aimed at building confidence are urgently required across the sectors, especially in the tourism sector. Mr. Speaker, when arrivals plummet in the way they have, especially over the winter tourist season – a time of year when one should be recording its best numbers, there is negative macro-economic impact. We see: •
Reduced revenue for the Tourism Enhancement Fund
•
Declines in foreign exchange inflows derived from tourism activities
•
Reduced earnings for service providers like attractions, transport operators, craft vendors
•
Operations at hotels and attractions slow down, leading to reduced levels of employment, staff rotation and reduced income for workers
Mr. Speaker, I invite the House to examine the illustrations below; all of which paint demonstrates the relevance, prominence and importance of the tourism sector, especially as it relates to our balance of payments.
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Budget Debate 2013/4
Edmund Bartlett CD, MP
SUSUMMARY OF BALANCE OF PAYMENTS (IN US$ MILLIONS) 2007
2008
2009
2010
2011
2012
GOODS BALANCE Exports Imports
-3,841.3 2,362.6 6,203.9
-4,802.9 2,743.9 7,546.8
-3,087.9 1,387.7 4,475.6
-3,256.2 1,371.2 4,627.4
-4,257.6 1,664.8 5,922.4
-4,158.0 1,746.7 5,904.7
SERVICES BALANCE Transportation Travel (Tourism) Other Services
424.8 -540.4 1,611.9 -646.7
428.1 -644.7 1,707.7 -634.9
769.9 -441.2 1,709.0 -497.9
810.0 -429.7 1,808.8 -569.1
669.8 -576.1 1,853.6 -607.7
638.9 -752.5 1,881.2 -489.9
INCOME Compensation of Employees Investment Income
-661.6 64.8 -726.4
-568.3 83.7 -651.9
-667.9 67.6 -735.5
-494.6 89.1 -583.7
-518.4 36.5 -554.9
-433.5 65.6 -499.1
CURRENT TRANSFERS (REMITTANCES) General Government Other Sector
2,039.9
2,149.8
1,858.4
2,010.0
1,996.4
2,047.4
133.0 1,906.9
100.7 2,049.1
143.9 1,714.5
194.3 1,815.7
141.3 1,855.1
172.3 1,875.1
-35.5 0.7 -36.2
18.1 48.6 -30.5
20.7 45.3 -24.5
-22.1 4.2 -26.3
-9.1 29.0 -38.2
-26.2 5.9 -32.1
1. CURRENT ACCOUNT
2. CAPITAL ACCOUNT General Government Other Sectors
Balance of Payments 2007 - 2012
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Budget Debate 2013/4
Edmund Bartlett CD, MP
Foreign Exchange Flows into Jamaica 2007-2011
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Budget Debate 2013/4
Edmund Bartlett CD, MP
9.0
CONCLUDING REMARKS
Mr. Speaker, we have outlined the weaknesses of this budget as a driver of growth for the tourism sector and the economy as a whole. We have prescribed a raft of growth unlocking actions which the Government needs to consider and implement. Mr. Speaker, mention has been made during this debate, of restoring hope. Indeed, mention has been made of expanding opportunities. Now the question we must ask ourselves is: Will the Budget create hope and expand opportunities? The answer is NO. It does not bring hope or expanded opportunities to the craft vendor who is looking for increased business volume from a vibrant and competitive sector. It does not bring hope or expanded opportunities for the 18 year old school leaver who is seeking skills training and education opportunities in a bid to secure meaningful employment in the hospitality sector. It does not bring hope or expanded opportunities to the operators of attractions who depend on increased arrivals for increases in clientele It does not bring hope or expanded opportunities to the investor who is looking to make an investment in a stable and growing macro-economy. And this is why Mr. Speaker, the Government needs to urgently:
Get back into the market place and restore growth in arrivals Enhance the overall look and feel of our product Strengthen our airlift security Invest in the Hospitality School so we can have a world-class workforce Get Casino Gaming up and running Establish the Artisan Village Expedite the completion of the Economic Impact Assessment to inform the business community of the demand from the tourism sector Engage the banking community on devising solutions for financing investments in Tourism 30
Budget Debate 2013/4
Edmund Bartlett CD, MP
Mr. Speaker, economic growth is necessary to keep the promise – the promise enormously important to all of us; that each generation will have the opportunity to become more prosperous than the preceding one. We must create our own popular term and craft the basis to have the “Jamaica Dream” – a dream everyone embraces and aspires towards. Then and only then, we can truly and feelingly say the last line of our beloved National Anthem – Jamaica Land We Love. May God Bless you all, and may God Bless Jamaica.
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Budget Debate 2013/4
Edmund Bartlett CD, MP