Abolition of Annual Vehicle Licences

A more fundamental reform concerns the payment of annual licences for vehicles. Mr Speaker, over the years there has been a significant shortfall in revenue because a substantial number of vehicle owners did not pay their annual vehicle licences. Consider the following statistics. In 1995, of the 31,031 vehicles registered, an estimated 13,400 or 43.1 per cent paid licences. In 1996, the number of vehicles on the register fell to 24,857, presumably because of more efficient record keeping. Of that number, licences were paid for 14,452 vehicles or 58.1 per cent. In 1997, the number of registered vehicles increased to 27,697 and licences were paid for only 15,637, that is, 56.4 per cent. What it means is this: Vehicle owners who pay their licenses are subsidizing those who do not. Peter continues to pay for Paul. That cannot be fair.

Honourable members will no doubt agree that this level of delinquency and non-observance of the law is unacceptable and therefore should not be allowed to continue. What is required is a more efficient or if your prefer, more optimal approach that ensures vehicle owners pay their fair share.

There is however, another more compelling obligation. In 1995, the UWP Government borrowed US$9 million from Caisse Francaise to finance the construction of the two tunnels. Under the terms of the Agreement, the Government of St Lucia agreed to introduce a "toll for heavy vehicles on the Castries/Cul-de-Sac Road and "a land tax on sales of land in the Cul-de-Sac area and along the new road". The service obligation of this debt is EC$2.286 million annually over a 10-year period. In accordance with the agreement with Caisse Francaise, the UWP Cabinet, in 1997, approved increases in vehicle licences but lacked the courage to implement them. In other words, because of the obligation incurred by the former UWP administration, it is necessary to increase vehicle licence fees to take care of the debt payment arising out of the construction of the tunnels.

Mr Speaker, it is our view that collecting road and vehicle user fees via petroleum tax is a more efficient and more equitable mechanism. Effective 15^th May, 1998, vehicle licences will be abolished and replaced by a consumption tax :

(a) on gasoline, both leaded and unleaded and

(b) on gas oil – more commonly referred to as diesel.

This measure will allow Government to meet the debt service obligation referred to earlier, and to collect the true revenue levels, which the existing licensing regime should have achieved.

Mr Speaker, I am anxious to be understood. Let me repeat the proposal. Effective 15^th May 1998, owners of vehicles will no longer have to pay annual licence fees on their vehicles. Instead, all will pay an increase in gas prices in exchange for the money paid annually for licences.

A crude implementation of this fiscal measure would mean that a consumption tax of $0.45 cents per gallon would be necessary. In effect, Mr Speaker, the per-gallon price of gasoline (both leaded and unleaded) and diesel should each increase by $0.45. Happily, this will not be so. As a direct result of the change in the consumption tax structure announced earlier, the immediate price increase will only be 22.76 cents per gallon. The point Mr Speaker, is this: The falling world price benefit is being passed on to the consumer.

Mr Speaker, Honourable Members, lest the extent of the increase be exaggerated, let us examine the implication of the proposed changes for individual consumers. The average vehicle owner who consumes approximately 33 gallons of unleaded gas or spends $200 monthly, would now spend an additional $13.85 monthly without having to pay for an annual license. The consumer would have spent $177.05 for the year. In comparison, this vehicle owner would have paid a license fee of $150 under the current rates, or $240 as approved by the previous administration for subsequent application. I submit Mr Speaker that the consumer is far better off than if he was expected to pay the higher license fee.

 Mr Speaker, consequent on the proposed changes, and effective 15^th May, 1998, the price of gas at the pump will be $6.33 for leaded gas and $6.73 for unleaded gas. Diesel would now cost $6.23 per gallon. Let us now compare our prices to those of other Caricom states.

It must be emphasized, Mr Speaker, Honourable Members, that save for Trinidad and Tobago, all other Caricom countries pay vehicle licences. In the case of St Lucia, we join Trinidad and Tobago in abolishing this regime.

Mr Speaker, I know that our mini-bus drivers will be concerned about these measures. I therefore propose to meet the Minibus Association to share with them, our assessment of the impact of these measures.

The abolition of annual vehicle licences will compel amendments to the Motor Vehicle and Road Traffic Act, particularly those sections dealing with the licensing of vehicles. The requirements for inspection of vehicles will be strengthened for purposes of enforcing insurance requirements. All vehicles will be required to carry stickers prominently displaying their insured status. Insurance companies will be required by law to submit on a weekly basis to the Transport Division, the list of vehicles insured by them. In addition to the registration of new vehicles, all transfers of ownership must be registered with the Transport Board.

In addition to the above, Government proposes further changes to the miscellaneous tariffs in Part II of the First Schedule to the Motor Vehicles and Road Traffic Act:

1. To increase:

(a) Learners Permits from $50 to $75

2. (b)Registration of new Motor Vehicles or Trailers from
3. $30 to $100

1. Visitors Driving Permit from $30 to $54 (US$20)

1. And to introduce:

A special licence of $300 for Tandem Axle vehicles exceeding three tons.

( b) A new charge of $100 will be introduced for the transfer of ownership of vehicles. A Transfer of Ownership Certificate would be issued to facilitate the issuance of an Insurance Certificate. Notwithstanding the abolition of annual vehicle licences, it will be necessary for the Traffic Department to have updated records of vehicle ownership. The initial registration fees for new vehicles will be maintained and enforced at existing rates to facilitate record keeping and transport and road planning activities.

Hotel Accommodation Tax – New Arrangements for All Inclusive Hotels

The recent developments in the hotel sector, particularly with respect to investments in new hotel plant, indicate that there has been a shift in the types of accommodation offered. There are now ten hotel properties in St Lucia providing an all-inclusive form of accommodation. These properties represent 65 per cent of the total available beds.

A significant portion of hotel operations in St Lucia enjoys some form of fiscal incentive. The principle source of government revenue from the operations of hotels in St Lucia is the Hotel Accommodation Tax which is levied on the hotel guest. The legislation enacted to control the collection of this tax was formulated on the assumption that the method of accounting for revenue by the hotels would be based on the European Plan. That is, the hotel would, through its accounting system, identify separately, room and food and beverage charges paid by the guest, as well as other incidentals. Since then, Mr Speaker, with the introduction of all-inclusives, the method of accounting has changed, and is based on the principle that one charge covers all services enjoyed by the guest during his or her stay in St Lucia. In a sense, the Government is at the mercy of all-inclusives because the charge for the room component can be readily manipulated. This makes the current Hotel Accommodation Act difficult to manage, as there is uncertainty as to whether the correct amount of revenue is being collected

I therefore, propose, Mr Speaker, to invite this House to change the current legislation to introduce a head tax on guests who stay at all-inclusives. The amount of the charge will be calculated on the number of nights an individual stays on the property. The amount to be remitted to Government will be the greater of the proposed Head Tax or 8 per cent of the charges as presently calculated. The Head Tax will be charged at the rate of US$10 per overseas guest per night of stay. It is expected that this measure will yield an extra $8m in Hotel Accommodation Tax. In order for the hotels to amend their current advertised rates, I propose that this measure be implemented effective 1^st June 1998.

Additionally, we recognize the efforts that the hotels make to advertise their product and the country. A successful hotel marketing campaign is also a plus for St. Lucia. Most of the marketing campaigns involve inviting tour operators and travel agents to sample the product. The accommodation for these persons is usually provided on a complimentary basis. I therefore propose to amend the Hotel

Accommodation Tax Act to exempt the imposition of the tax on complimentary rooms that are used exclusively for promotional campaigns.

Policy on Medical Equipment

Mr Speaker, the Government welcomes the investment by the private sector in medical care and modern equipment, particularly those that reflect advances in technology. From time to time, applications are made to Government for removal of duty and consumption tax. Given the state of our health care facilities, Government is anxious to help. However, Government cannot continue to suffer losses of revenue. To mitigate against future loss, I wish to advise that Government is willing to allow the private sector to import medical equipment without liability for duty and consumption tax.

An amount equivalent to the revenue forgone by Government as a result of such waivers, will be credited to Government in the accounts of the beneficiary institution. That credit will then be drawn down to meet the cost of health services provided by the institution to indigent patients who are referred to the private institution by the Ministry of Health.

Removal of Duty and Consumption Tax on Security Equipment

Mr Speaker, the Government has heard the pleas of the private sector for support in combating theft in business places. As part of our campaign to eradicate crime in this country, I propose to this House, the removal of duties and consumption tax on surveillance and security equipment imported by companies over a period of one year for use in their businesses. This concession is to encourage the business community to install security equipment at their premises. It is time that our business community understands that they must invest in their own security. They cannot rely exclusively on the police force.

Amendment to Liquor Legislation

Mr Speaker, another area that has been targeted for reform is the collection of Liquor Licence fees. Presently, the Customs and Excise Department is responsible for the collection of Liquor Licence fees under the provisions of the Liquor Licence Act, No. 18 of 1969.

For the fiscal year 1997/98, it was estimated that $950,000.00 would be derived from Liquor Licence fees. However, a major shortfall was experienced. Only $536,000.00 or 56 per cent of the estimated amount was collected.

The Customs Department does not have the resources to visit all the liquor premises or establishments that are scattered island-wide. These establishments continue to grow year after year. Many operate without the prescribed licences.

Except for hotels which pay half-yearly fees ranging from $375 to $6,000, depending on the number of rooms, Liquor Licence fees are relatively low and one would have expected a greater level of compliance. This is not the case. While Government has no intention to increase the fees at this time, it is proposed, for the efficient collection of the fees, to amend the existing legislation to allow Village Councils to assume responsibility for collecting Liquor Licence fees. As an incentive, serious consideration will be given to permitting councils to utilize a percentage of the fees collected for the improvement of the communities they govern.

Telephone Levy

Mr Speaker, in the Contract of Faith, the St Lucia Labour Party promised the electorate that it would "Abolish Tax on local telephone calls." It did not specify the date on which it would do so. The Government is satisfied that the economy will be in better shape by the end of this fiscal year. Consequently, I am pleased to advise that the 5 per cent levy on local telephone calls will be abolished on 31^st March 1999, that is, in the next eleven months.

Mr Speaker, Honourable Members, I turn to measures which impact on the Ministry of Commerce, Industry and Consumer Affairs.

Removal of Price Controls on Vehicles

The first measure concerns motor vehicles. Price controls are needed in markets where there is a danger of excess demand or limited supply. In the case of the vehicle market many years ago, it was the view that the limited number of vehicle dealers needed to be regulated in order to protect the consumer from collusion and excessive pricing. Today, that situation clearly no longer exists.

Quite the contrary, we have seen a rapid increase in the number of vehicle dealers, and the price effects of healthy competition. There are virtually no barriers to entering or exiting the sector. This, and the relative ease of individual importation of new and used vehicles from a variety of sources, has completely liberalized the vehicle market. More so, these conditions are not expected to change in the medium term. The existence of price controls is therefore largely ineffective and represents an unnecessary layer of bureaucracy that we can ill afford.

Consistent therefore, with Government’s policy of withdrawing from sectors where intervention is no longer necessary, it has been decided to remove indefinitely, all price controls on imported vehicles, whether new or used. However, the Government will strengthen the regime governing used car dealers to ensure protection of consumers.

Mr Speaker, for some time now, St Lucia’s local rum producers have complained about the disadvantageous position in which they have been placed. Their situation requires redress. A new classification of rum in bottles of a strength of 46 per cent by volume but not exceeding 65 per cent by volume will be introduced. This category of rum will attract a consumption tax of $3.50 per litre.

Likewise, it is proposed to increase the consumption tax of $5 per liquid gallon of bottled brandy of a strength not exceeding 46 per cent by volume. However, if the CIF value of this brandy exceeds $75 per liquid gallon, the existing rate of $25 per liquid gallon will apply.

Mr Speaker, Honourable Members, it has been established that smoking is dangerous to our health. Cigarette smoking is harmful, not only to those who smoke but also those who are compelled to inhale the smoke from those who engage in the habit. Whether passively or otherwise, I want to discourage the habit, even among my parliamentary colleagues. Therefore, I propose an increase in consumption tax of 10 per cent for cigarettes containing tobacco and 5 per cent increase in the consumption tax on cigars, cheroots and cigarillos.

Mr Speaker, Honourable Members, I am about to approach the delicate issue of direct taxation. One way to do so is to ask a relative simple question: What kind of taxation system should St Lucia adopt in order to guarantee its people a better life?

St Lucia should have a tax system that encourages economic growth and prosperity; one that is equitable in the burdens it places upon taxpayers who have different abilities to pay; and one that is simple and transparent to taxpayers. Our present tax system in St Lucia falls short in all these respects. It dates from a time when our economy was based on export agriculture, and the easiest way to collect revenue was to levy duties on imported goods. The tax system therefore needs to be modernized to meet St Lucia’s needs, in a world where our economic growth will be increasingly generated from within our own economy; where tourism and other service industries have grown beyond expectations; where sustained investment in better infrastructure and public services is needed; and where we are committed to reduce taxes on internationally traded goods in accordance with CARICOM and WTO trends.

In the course of this financial year, Government will present new legislation to redesign the system of direct and indirect taxation. It is proposed that the new measures will take effect in the 1999/2000 fiscal year. My objective is to alert the country to the likelihood of these changes before new legislation is presented to this Honourable House.

The proposals for reform of our tax system in the financial year 1999/2000 will have four main themes:

First, I shall propose to the Honourable Members, that St Lucia’s major taxes should capture – as they do not now capture – income being earned in growing areas of the economy, but at the same time they should be well-structured, so that they do not (as they sometimes do) discourage economic development.

Second, under the current law, some taxpayers bear a disproportionate share of the tax burden, while others pay virtually nothing: to put this right, I propose to broaden our tax base and rationalize many of our tax incentives.

Third, many parts of our tax code are unnecessarily complex. I propose to simplify the system and remove anomalies, so that it is easier for taxpayers to comply with the law.

Fourth, I shall also propose progressive improvements in the tax administration, so that St Lucians have the quality of public services they deserve.

The Government intends to accomplish these goals, by redesigning Import Tariffs, Domestic Taxes on Goods and Services, Excise Taxes and Income Tax. Mr Speaker, let me take each in turn.

In the near future St Lucia must implement the third and fourth phases of the Common External Tariff as agreed with our Caricom neighbours. International experience has shown that developing countries have accelerated economic growth by adopting outward-oriented trade policies, including the removal of trade barriers and excessive tariffs. I would not propose that we reduce this protection so fast that our producers do not have the opportunity to adapt to a more competitive environment. However, postponing this adjustment delays the benefit we will gain from greater competition. Consumers will benefit by receiving higher quality goods and services at lower prices, and as a consequence, domestic industries will grow, creating jobs and employment for St Lucians. Just the same, these tariff reductions have already exposed the budget to strains because of St. Lucia’s high dependence on revenues from international trade taxes.

Domestic Taxes On Goods and Services

To offset the loss in revenues from reducing import tariffs, we must at the same time improve the domestic taxation of goods and services. A consumption tax should be viewed as a tax on final domestic consumption (even though a significant fraction of it is collected as customs duties when goods enter the economy). In order to raise large amounts of revenues in the least distortionary manner, the tax should cover expenditures as comprehensively and uniformly as possible. Our current consumption tax regime does not meet these criteria. It applies mainly to imports and only to the manufacturing stage on domestic goods. It therefore burdens some parts of the economy unfairly, encouraging tax evasion and pressures for special treatment. I am proposing that we adopt over time, a comprehensive and broad-based tax on goods and services, which uses only a few standard tax rates rather than the highly dispersed scale we now apply under the consumption tax. To prevent an increase in the burden of the tax on lower income households, I intend to ensure that education, medical care, food and housing receive special treatment under the tax. I will also ensure that the burden of taxation on the productive sectors is not so high as to discourage continuing growth.

Excises

Excises supplement a broad-based consumption tax in a system of taxation, and should be confined to a narrow range of products that can yield substantial revenues. With a broader-based consumption tax, I intend to ensure that alcohol, tobacco, and petroleum products continue to face relatively higher taxes, but these taxes would be levied in the form of excises rather than consumption taxes.

Income Tax

Unquestionably, St Lucia’s income tax regime needs to be rebalanced in some important respects. Present arrangements exempt from tax too wide a swathe of current profits for too little benefit to St Lucia’s economy.

These are some of the changes St Lucians can expect in the next financial year. I repeat, the legislative measures to give legal effect to these changes will be presented to this Honourable House in the course of this parliamentary session, in time for the next fiscal year. The presentation of the proposed measures will be preceded by dialogue with our social partners.

TAX MEASURES FOR 1998/1999 FISCAL YEAR

For this fiscal year, this administration proposes five policy measures:

(1) The establishment of a Property Tax Unit.

1. (2)Extension of granting of Capital Allowances.
2. A Student Loan Interest Allowance.
3. Tax Deductions for Premiums paid to Individual Retirement Plans.
4. The Abolition of the Tax Exit Certificate.

Permit me, Mr Speaker, with your usual kindness and generosity, to explain these measures, seriatim.

Establishment of Property Tax Unit

The first policy measure for this fiscal year concerns land and property taxation. In the Contract of Faith, the party that now forms this Government indicated that it would "Increase recoveries from property taxes and from property enhancements brought about by public sector investments."

Land and real property taxation has the potential to be a more significant source of revenue in St Lucia. Most property owners have benefited from increases in property value that have taken place in St Lucia in recent decades. As a means to fund public services, property taxation is a useful addition to the array of other taxes because public services are capitalized into the value of the property and the tax is a way to capture back some of those benefits to help pay for public services. The active property market in St Lucia should make it possible to value property in an objective and professional way with the help of trained assessors. I intend, however, to ensure that any increase in tax does not excessively burden home owners and will build safeguards into the tax for older homeowners who might have difficulty paying higher property taxes out of current income.

Mr Speaker, the rationalization of the management of Property Tax is of critical importance to this. Presently, the assessment and collection of property taxes is managed by 11 agencies, i.e. the village, town and city councils, and the Inland Revenue Department. With the growth in construction activity and the lack of emphasis on adequate training, the collection and assessment of property taxes have become very inefficient. In some cases collection has become virtually non-existent.

We, therefore, propose to establish a central agency to manage the islandwide collection of Property Tax. This proposed agency will be established as a separate section of the Inland Revenue Department from 1^st January 1999. In addition to managing the collection of Property Tax, the section will manage the valuation needs of the Government of St Lucia. This latter function is now being undertaken by the valuation arm of the Survey Section of the Ministry of Finance and Planning.

Mr Speaker, serious consideration is also being given to the introduction of a new basis of valuation with a view to determining an appropriate system. In this regard we intend to have discussions with valuation experts to assist us in formulating a sound basis of valuation. Honourable Members, therefore, will be invited to consent to new legislation to give effect to these proposals in the course of this financial year.

As part of a coherent programme of reform, I am proposing a new depreciation provision for new investment in hotel and other commercial buildings, similar to the provisions for industrial buildings. I am proposing to replace the present detailed provisions for asset by asset depreciation by a much simpler "pooling scheme" for depreciation. And I am proposing to respond to representations that I have received, for allowing relief for losses within a group of companies resident in St Lucia.

Mr Speaker, this approach is consistent with our commitment to develop a tax regime that is as broad as possible, and simple to administer.

To keep administration simple, and to avoid large numbers of "borderline" difficulties, there will, under the proposed new "pooling approach" be a small number of rates of capital allowance applied on the reducing balance basis, to three very broad categories of capital assets namely:

Class I: A special allowance of 40 per cent for a minority of short-life assets, such as computers.

Class II: A reasonably generous annual allowance of 20 per cent for other plant and machinery.

Class III: A lower rate of 5 per cent for buildings used for the purposes of a qualifying business as defined in the Income Tax Act.

The existing provision in the Income Tax Act with respect to the 20 per cent initial allowance will be retained.

The structure of reducing balance depreciation within the pool will work as follows. In Year 1:

1. All expenditure on a given category of assets in a given year (for example plant and machinery) is added together to form a "pool";
2. The proceeds of any sales of assets in that category are added together, and deducted from that pool;
3. The annual capital allowance is calculated as a percentage of the net additions to the pool;
4. The initial allowance is calculated as 20 per cent of the gross capital expenditure on assets in that category;
5. The written-down value will therefore be calculated by deducting the sum of the annual allowance and the initial allowance from the net additions to the pool.

In Year 2 and subsequent years, capital expenditure incurred in Year 2, is added to the written-down value inherited from the pool at the end of Year 1. The process then continues in the manner described earlier regarding proceeds of sales and so on.

To ensure a smooth transition to the new "pooling" arrangement, all existing assets will be brought into the pool at their written-down values from the start of the new system. The main attraction of the "pooling" approach is that the taxpayer no longer needs to keep, and the Inland Revenue Department no longer needs to monitor separate records for tax purposes for each individual asset, and calculate the annual depreciation on each asset individually.

In addition, Mr Speaker, Capital Cost Allowances will now be granted on new investments in commercial buildings. The commercial buildings for which this concession will be granted are buildings that are purchased, constructed, reconstructed, altered or adapted for commercial purposes, including use as offices or warehouses or for any trade, but not including a building let out as a dwelling house, or buildings approved as tourism projects under the Tourism Incentives Act.

Mr Speaker, we recognize that the developing St Lucia economy has resulted in a number of persons who have ventured into their own businesses. As a result, there is a growing group of self-employed persons. These individuals, along with a growing group of young professionals, do not often make contingency plans for their later years.

We are concerned Mr Speaker, that if no incentives are given for those persons to save now, in their later years there will be significant pressure placed on the public purse, by way of the provision of social services. While we think that Government must give some level of support, we feel that the extent of the support can be mitigated by the build up of savings specifically geared to providing a nest egg for the future.

As a result, we have decided to allow a tax deduction up to a specified level for premiums paid to approved individual retirement plans sold by the insurance industry. The amount of the premium deducted will be based on the level of reported earnings of the individual. These plans will provide for monthly pension payments on attaining a specified retirement age. There will be stringent penalties applied for early withdrawal. The plans will also provide for lump sum investments and will offer packages for defined categories of beneficiaries.

Mr Speaker, please forgive me for another reference to the Contract of Faith. I am sure, Mr Speaker, that you will want to applaud a Minister of Finance who seeks to implement a programme approved by the electorate.

It was stated in the Contract of Faith that a Labour Government would "Introduce a tax allowance for interest payments under the Student Loan Scheme, and interest rebate for those providing their services to St Lucia."

This Government is determined to assist those persons who help themselves by meeting the cost of higher studies overseas.

A critical factor determining investment in human resources is the cost of access to institutions of higher learning abroad.

The cost implications for persons opting to study locally at institutions such as the Sir Arthur Lewis Community College, cannot be ignored, as some of those persons are expected to fund their own tuition through student loans. On completion of the first two years, students are later expected to pursue studies abroad in an effort to complete their programmes. They too must endure on their return, the financial burden associated with prior study.

In light of changing economic circumstances, these limitations are further highlighted by the increasing unavailability of assistance from the traditional funding institutions. Fewer scholarships are available. Moreover, Government does not have the capacity to offer loans. Consequently, more students must resort to loans through the St Lucia Development Bank and Commercial Banks. The Government wishes to help.

In light of our goal to support tertiary education, we propose to allow an annual deduction of $3,000 for interest paid on loans taken to finance tertiary education, provided that the taxpayer’s service is available to St Lucia.

Mr Speaker, one of the irritations that we face from time to time is the requirement to obtain an Exit Certificate from the Inland Revenue Department before travelling overseas. This certificate is not a true revenue measure. It is a control measure. It exists to identify those who do not meet their tax obligations, particularly those who do not submit their annual returns. It is also a reminder to those with tax liabilities to settle with the Comptroller of Inland Revenue. But, Mr Speaker, this cannot be fair to the grandmother in Montete, the unemployed youth in Micoud, the fisherman in Canaries, the unemployed mother in Castries. In any event, they are not effectively in the tax net.

Effective 1^st May 1998, St Lucians and permanent residents will not be required to obtain Exit Certificates. However, those persons who are employed by virtue of a work permit will be required to obtain the Exit Certificate before travel overseas. The new tax legislation proposed for the 1999/2000 fiscal year will contain sufficient inducement to guide those who do not wish to render onto Caesar those things that belong to Caesar, to do so!

Tax Administration

As part of our efforts to improve the quality of public management, we also intend to improve the functioning of the Inland Revenue and Customs and Excise Departments. I am proposing to consolidate enforcement powers for the various taxes into a single code to enhance transparency for taxpayers. I also want to increase cooperation between the Inland Revenue and Customs Departments, through joint audit and other enforcement activities, which will ensure that all taxpayers pay what is due. My Government also intends to tackle the persistent problem of tax arrears by strengthening interest and penalty provisions. We will focus our efforts on our largest taxpayers; and by making full use of sanctions under the law, including the ultimate sanction of bankruptcy or liquidation, if necessary, to establish that no one, even the powerful, is above the law. 

Mr Speaker, a budget is not just about figures. It is also about the institutional structures that impact on revenue generating measures. I propose, in this section of the presentation, to focus on certain institutional reforms.

Mr Speaker, we have decided to introduce an incentive scheme for specified public officers. All public officers, that is, those who fall within the traditional category defined as the civil service, will in principle, be eligible for a monetary bonus in December and July of each year, starting in December, 1998.

The incentive scheme will be based on three criteria:

1. the achievement of revenue collection targets set by the Minister of Finance after discussion with the relevant heads of departments;
2. achievement of expenditure control limits; and
3. satisfactory performance appraisals of the members of staff falling within the respective departments.

This is how the scheme will work:

Ministries with revenue generating capacities will be set revenue targets for the financial year. Once the Ministries satisfy their targets, a percentage of the excess revenue would be available to the employees of that ministry and the wider public service. Secondly, all Ministries must remain within the expenditure sums approved by Parliament. These are maximum amounts and must not be exceeded. Once those targets have been satisfied at the Departmental level, the bonus would be paid to all the public officers of that department, provided that they have scored an average of 141 or more points (out of a possible total of 161) in their performance appraisals over the two quarters covered by the incentive, i.e., each half year. This threshold is the same used for assessing persons for promotion and the granting of increments. I believe it would be useful, Mr Speaker, if I explain the emphasis on expenditure controls.

In the new budget format, expenditure is broken down by Ministry, Programme and Activity. It is at the Activity Level that expenditure must be controlled. Likewise, accountability must be given practical effect. All officers work within the ambit of some particular activity and are both individually and collectively responsible for ensuring that their Activity Budgets are not exceeded. I repeat, ALL the officers within a particular Activity must share the collective responsibility for the efficient delivery of the output of that activity, including expenditure discipline. Therefore, no one within an Activity that has exceeded its budget will qualify for the incentive, even though that person might have a score higher than 141. Both conditions of high individual productivity and collective discipline must be satisfied.

Consistent with the financial rules and fiscal practice, over-expenditure on an Activity will be measured by the extent of commitments against expenditure items, not actual money spent. A basic assumption is that the expenditure sums under the various Activities are maximum amounts and expenditure commitments, and will not exceed budgeted amounts.

Activity expenditure will only be allowed to exceed budgeted amounts if approved by the Minister of Finance, Cabinet or this Honourable House, or if it is the subject of virements, re-allocations or other transfers of funds approved by the appropriate senior officer within the financial rules. In such cases, exceeding budgeted amounts for specific activities will not disqualify public officers from being eligible for incentives.

Excess revenue from revenue collecting Departments that exceed their targets will be divided as follows:

9. 30 per cent of the excess revenue will be distributed equally

among the qualifying staff of the relevant department.

10. 40 per cent will be placed in an incentive pool for distribution to the rest of the civil service who qualify for the incentive.
11. The balance will remain in the Consolidated Fund.

Incentives will be paid in December for the period of the same fiscal year, April to September, and in respect of the period October to March of the same fiscal year, the payment will be made in July of the following fiscal year.

The amounts to be paid will be determined by the Ministry of Finance and Planning in time for payment in December and July of each year. All ministries and departments will be required to submit the relevant information on qualifying persons by 31^st October and 31^st May of each year.

A special committee comprising senior representatives of the Ministries of the Public Service and Finance and Planning, and of the appropriate Public Sector Unions, will be set up to oversee the smooth running of this initiative and to make recommendations to the Minister of Finance, who will in turn approve the payments to successful officers.

The incentive scheme will be implemented on an experimental basis for one year in the first instance. During that time, we will probably have to fine-tune it to ensure that equity and fairness prevail, and that the objectives of greater efficiency and productivity are achieved.

Management of Government Vehicles

Mr Speaker, over the past few years, budget statements have alluded to the wastage in the public service with particular reference to the abuse of Government vehicles. An attempt was made to stem the abuses through the affixation of the prefix SLG on the number plates of vehicles owned by Government. Nonetheless, the abuse continued unabated and Government is still left to deal with the problem.

The Administration, in pursuit of efficiency, effectiveness and economy, will once and for all, deal with the problem of vehicle abuse decisively.

In the first half of the fiscal year 1998/99, a private company, solely owned by the Government initially, would be incorporated to own, manage and rent the majority of vehicles now owned by the Government. All Government vehicles would be vested in this company, except for those engaged in emergency services and others designated for specific use.

The company would then provide vehicle rental services to the public sector. Government Ministries and Departments would be required to meet transportation requirements by renting from the company, and will account for expenditure on rental expenses under the reformed programme budgeting.

In addition to the potential reduction in the abuse of Government vehicles and the resultant decrease in operating costs, much economy can be realized with the ownership and management of the majority of Government vehicles as a single pool. Further, the replacement of vehicles would no longer be a capital cost of the Government, but an expense of the company.

The establishment of a rental company serving the transportation needs of Government presents the opportunity for the reduction in the aggregate number of vehicles currently owned, while at the same time, improving on service delivered.

Mr Speaker, let me by way of illustration provide you with a picture of what currently obtains. In one Government Ministry, there exists a fleet of 56 vehicles, together with 139 officers who are in receipt of travelling allowances paid to them for the maintenance of a personal vehicle to perform their duties. It therefore means that a total of 195 public officers have daily access to a vehicle for the performance of their duties for the entire duration of the workday. The technical officers in this Ministry do not exceed 200, so almost each technical officer can be twinned to a vehicle, paid for by the Government, one way or another.

The new approach to the management of Government vehicles has the potential of saving Government $3 m per annum, through reduction of waste and abuse, reduction in the duplication of services now provided, reduction in maintenance costs, and lower contribution in the rental value for vehicle replacement.

Mr Speaker, the public officers would be challenged to improve their skills at scheduling their transportation needs in fulfillment of their work programmes as the status quo of one officer assigned to a particular vehicle would no longer be the case.

I have no doubt they will rise to the challenge of the changing market place.

Strengthening of the Accountant General’s Department

There is need in the Public Service for deliberate policy and action to alter organizational structure, processes and behaviour in order to improve administrative capacity for efficient and effective performance. The Accountant General’s Department which falls within the heart of the government financial system is not exempt from those fundamental changes that are required. In fact, the need for change within this department, as with other government departments, is amplified by clarion calls by the public for greater efficiency and effectiveness as well as improved quality of service.

Under the Finance (Administration) Act, the Accountant General, as the Government’s Chief Accounting Officer, is required to perform a supervisory function with respect to the collection, expenditure and accounting for public funds. However, the Accountant General’s ability to effectively discharge this vital responsibility has been constrained by an inappropriate and inadequate organizational structure within the Treasury. In the meantime, several Ministries and Departments continue to ignore the Financial Regulations even after they have been modernized and the appropriate training provided. The reports of the Director of Audit make repeated reference to lapses in basic control procedures that are not effectively tackled from one year to the next.

Accordingly, this budget makes provision for a new initiative to facilitate the restructuring of the Accountant General’s Department. The most significant element of this restructuring exercise is the inclusion of a number of posts of auditors to strengthen the field audit capabilities of the Treasury. These auditors would be concerned with every aspect of financial administration, and would assist line Ministries to establish appropriate accounting systems, ensure those systems are properly maintained and carry out both routine and surprise audits and investigations.

The restructuring of the Treasury also provides for the implementation of a customer service programme to enhance the quality of service to the general public. Customer Service Personnel will be responsible for co-ordinating all customer service activities, including developing and maintaining proper systems to handle all enquiries, complaints and suggestions from the public and other Government Departments.

One of the many challenges confronting governments at this juncture is the need to constantly modernize governmental institutions and procedures. This is necessary to ensure that public administration becomes responsive to change, is flexible and remains capable of efficiently delivering its various services to the public. In response to this challenge, my Government has identified two areas of activity for modernization in this financial year. These are the regimes for the registration of companies and of intellectual property.

On 1^st January 1997 a new Companies Act came into force replacing the companies provisions which formed part of the old Commercial Code. This Honourable House should note that the Commercial Code predated 1957, and save for periodic amendments designed to deal with specific matters, it retained its original thrust and structure.

However, throughout the years since the enactment of the Code, business organizations have undergone tremendous transformation. The days of the small shop, owned and operated by a family, have largely been superceded by much larger business enterprises built upon complex shareholding, financial and management structures.

The new Act is meant to facilitate the development of the modern business enterprise in an efficient and flexible manner. Important new provisions are included regarding inter alia, the management of companies, financial disclosure, and the protection of creditors and investors. Additionally, the Act imposes new and more expansive duties on the Registrar of Companies and the registry staff, including broader powers to investigate companies.

In the area of intellectual property, St Lucia began the process of modernizing its regime in 1995 with the passage of the Copyright Act 1995. The Act came into effect in October 1996. This measure provided St Lucia with one of the most modern legislative instruments in the region for the protection of the rights of musicians, writers, performers, painters, architects, photographers and other owners of intellectual property. Notwithstanding its modernity, the Attorney General has quite recently solicited the support of the World Intellectual Property Organization (WIPO) to review the Act and to recommend any amendments necessary to ensure its compatibility with our relevant international obligations.

In the field of industrial property, our regime is still based on Title X of the Commercial Code, entitled Patents, Designs and TradeMarks. Unlike the case of the Companies Law, no new legislative measures have been implemented to bring our law in this regard up to date. In the meantime, St Lucia has become party to the Paris Convention for the Protection of Industrial Property, and is also bound by the TRIPS provisions under the GATT/WTO Agreement.

In order to satisfy our obligations under these two agreements, far reaching amendments must be made to the existing legislation on industrial property as well as to the administrative procedures within our trademarks and patents office. Furthermore, as a member of the WTO, St Lucia is bound to satisfy, by the year 2000, the minimum standards stipulated under TRIPS. We are also obligated to have enacted, domestic legislation relating to the protection of Layout Designs of Integrated Circuits, Geographical Indications and Plant Varieties.

In order to satisfy its obligations under the Agreements of which I have spoken and, as well, to ensure that the modernization of the law is not frustrated by archaic and unresponsive administrative arrangements, the Government intends to establish a separate Registry of Companies and Intellectual Property. A sum of EC$350,000 has been allocated in the Capital Estimates for this activity. This new registry will be provided with adequate support staff and modern office equipment to permit the speedy processing of applications, oppositions, and other requests by the public. The old Ministry of Education building on Laborie Street will be renovated to house the new registry. The floor plan for the organization of the office space has been completed and the costing of that plan has been determined. The Government expects that the notices inviting tenders for the construction of the work will go out shortly and work will commence as soon as possible thereafter. It is the Government’s firm intention that the physical accommodation and office facilities for this Registry should be in place by October of this year.

But meaningful administrative change is not achieved simply by creating new offices. Central to the Government’s plans for the reconfiguration of the companies and intellectual property landscape is the creation of a cadre of highly trained professionals who will be responsible for managing the system. To this end, the Attorney General has held discussions with senior officials of the World Intellectual Property Organization on a package of training for the new Registrar and her staff.

Already agreement has been reached on two training activities to be held at WIPO headquarters in Geneva and one further activity to be held in the region. Additionally, discussions are proceeding on the possibility of the new Registrar and relevant staff of the Registry doing short attachments at some of the more developed company and intellectual property registries in the region.

Government is convinced that the measures I have just proposed will contribute immensely to the process of improving government services to the public and facilitate a more dynamic development in these two areas.

Expansion Of Duty Free Regime

Mr Speaker, as we face the future, we must maximize the returns on investment, particularly in the tourism sector. This Government is convinced that we can increase income derived from a carefully managed expansion in the duty free regime currently in place.

Already, this island enjoys one of the lowest rates of inflation in the Eastern Caribbean. If we can expand, diversify and transform our duty free facilities to become fiercely competitive, there is no reason why St Lucia cannot become the leading shopping destination in the Eastern Caribbean, not only for our visitors but also for our neighbours.

Our small hotel sector may be persuaded or induced to market in other islands "weekend packages" purely for the purposes of shopping. After visiting several duty free shopping facilities in other islands, I am convinced that we can compete not only with them, but also with the cruise ships that visit us.

Pursuant to the Tourist (Duty Free Shopping System) Act, No 23 of 1986, Government will liberalize the duty free shopping regime. This policy shift also means that it will allow approved duty free shopping facilities to be established in the city centre and other developing tourism ports.

During the discussions with officials of the Ministry of Finance and Planning in preparation for the 1998/99 Budget, I learned to my horror only two of the many government owned buildings were insured. Indeed, a great deal of government property in general was not insured.

This is a matter of grave concern, given the natural disasters to which this region is prone. The unfortunate situation of Montserrrat is a case in point. For many years, past administrations have simply ignored the obvious need to insure government property.

I have instructed the Ministry of Finance to begin the necessary groundwork for the insurance of government buildings in the first instance starting with the physical identification of the buildings, their location, size and estimated value. Some work in that regard seems to have been done in recent years, but there was no follow-up. It is yet another example of malignant neglect by the UWP administration.

In addition, this initiative will be completed by discussions with our OECS and Caricom partners to further explore the possibility to collaborating on a joint Disaster Mitigation and Reinsurance Programme. Discussions are ongoing and we are presently examining the possibility of having one or more multi-lateral funding agencies involved.

During a review of the accommodation requirements of Government, it was brought to our attention that Government spends approximately $6.5 million per year on rental of buildings and other property. Notwithstanding the provision of additional physical infrastructure over the past decade, some ministries remain crowded and overwhelmed. If Government is spending $6.5 million annually, then surely, the basis exists for Government to finance the construction of a complex to service its needs. Therefore, Mr Speaker, in the course of this financial year, Government will be organizing a Design Competition among local architects to design a new Administrative Complex for the Government of St Lucia. This time we must make sure that the design captures the soul, the being and the aspirations of our people.

CAPITAL EXPENDITURE

Mr Speaker, Honourable Members, I will now introduce the projects which have been approved for Capital Expenditure. I propose to approach Capital Expenditure by reviewing the projects under the individual ministries.

Mr Speaker, earlier I made the point that we must maximize the potential of our country in every sphere. In that connection, I am particularly pleased by a proposal which I received from Her Excellency, the Governor General, to develop the heritage potential of Government House, at a cost of EC$80,000. This is a fine example. I propose to allocate some $20,000 from local revenue to encourage this initiative. The balance of $60,000 will subsequently be funded by a grant.

Ministry of Legal Affairs, Home Affairs and Labour

Mr Speaker, in the Supplementary Budget Proposals presented to parliament, I indicated to Honourable Members, that I would present "a comprehensive refurbishment and construction programme in April, 1998" in respect of our police stations. I am now in a position to do so.

Police Force

In July 1997, the Government of St Lucia requested the National Insurance Property Development Company (NIPDEC), to undertake, together with representatives of the Police Force and the Ministry of Planning, a comprehensive examination of the police stations in the island. As expected, the team reported that some police stations were unfit for habitation. Others needed urgent upgrading and enhancement.

The Report recommended that:

Five new police stations be designed and constructed at Marchand, Vieux Fort, Dennery, Micoud and La Caye. In the case of La Caye, it has been agreed that the new station should be relocated. In order to protect the honour and dignity of this presentation, I shall ignore the historical significance of that recommendation.

The report further recommended that:

A refurbishment programme be implemented in respect of the police stations at Anse-la-Raye, Canaries, Laborie, Choiseul, Marigot and La Clery. Refurbishment works are already underway in Gros Islet and Soufriere.

It was estimated that the construction of the new police stations would cost EC$12,642,140 broken down as follows:

Police Stations Cost (EC$)

(a) Marchand 1,628,615.00

(b) Vieux Fort 6,106,450.00

(c) Dennery 1,690,025.00

(d) Micoud 1,717,050.00

(e) La Caye 1,500,000.00

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TOTAL $12,642,140.00

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The refurbishment programme was estimated as follows:

Police Stations Cost of Refurbishment

(a) Anse-la-Raye $500,282.00

(b) Canaries $363,903.00

(c) Laborie $437,360.00

(d) Choiseul $414,148.00

(e) Marigot $173,600.00

(f) La Clery $150,000.00

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TOTAL $2,039,293.00

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By all accounts, the above programme would call for a formidable outlay of capital expenditure that the Government cannot bear at this time. Given that factor, it was decided to proceed as follows:

1. Government would accept a proposal from NIPDEC to construct the five new police stations under a Build-Own-Lease-Transfer (BOLT) mechanism.
2. Government would bear the cost of refurbishing the other police stations. This programme has already commenced with the refurbishment of the Gros Islet and Soufriere Police Stations.

The BOLT mechanism will operate in this fashion:

NIPDEC will finance 100 per cent of the construction cost of the police stations that are to be leased to the Government of St Lucia. It is envisaged that NIPDEC would form a Special Purpose Vehicle to act as lessor of the properties.

NIPDEC/Special Purpose Vehicle would lease the parcels of land on which the buildings would be sited for a specified percentage of the term of the loan and would also enter into a Development Agreement that would grant authorization to build and operate the Properties on terms and conditions to be agreed. Upon completion, NIPDEC would lease the Facilities to the Government of St Lucia on agreed terms and conditions.

The construction of the Facilities would be funded by loans made to NIPDEC/Special Purpose Vehicle and interest would apply on the financed amount on a Floating Rate basis.

It is proposed that the loan term will consist of (i) an initial term (construction term) and (ii) lease payment term (at least quarterly). At the end of the Lease term, the Government of St Lucia would have the option to purchase each of the properties at a price to be agreed by all stakeholders. The price will include the lease payments made over time.

In order to meet some of the costs involved, Government will, on completion of the new police stations, offer for sale the properties presently occupied.

Mr Speaker, discerning members would note that these items of capital expenditure are not included in the Capital Estimates. The explanation is simple. The expenditure will be incurred by a private entity and as such, does not fall within the public sector.

For all practical purposes, one is tempted to describe this financial year as the "Year of the Disciplined Services". In the course of this year, Government will meet the recurrent expenditure of some 150 newly trained police officers. In addition to this, $791,600.00 has been budgeted in the Capital Estimates for the purchase of 24 motor cycles. A further sum of EC$1.3 million has been budgeted for the purchase of 21 motor vehicles. This is in addition to two new vehicles made available in the past two months.

We note that for the first time in seven years the Police Service has been able to observe its traditional Police Week. We see this as a sign of an improving institutional climate within the Force which augers well for its relationship with the wider community. Government has further noted recent improvements in the functioning and public image of the police and is proud to continue its unstinting support of our security forces in the service of our country.

What of the Fire Services? Unquestionably, our fire services require an increase in personnel and new fire fighting equipment. However, Government cannot do everything in one year. The priorities are truly competitive. Notwithstanding, we must make choices after careful evaluation of our priorities. All will agree that strengthening our security is the most pressing need at this time. I hope I can comfort our Fire Service, by announcing that:

1. Government proposes to construct two new fire stations this financial year, one in Gros Islet and the other in Vieux Fort.
2. Government will respond to the need to recruit additional fire service officers in the next financial year.

The two new fire stations will cost approximately $3 million. The projected duration for the construction of these facilities is 14 months. They would be constructed by NIPDEC under the Build-Own-Lease-Transfer (BOLT) mechanism described earlier. It should be noted that it is proposed to resite the fire station presently located at Hewanorra International Airport.

Land Acquisition

As a result of the fairly extensive capital programme undertaken by the former Government over the last eight years, a substantial amount of property was acquired from private landowners. Unfortunately, the budgetary provisions made over that period have been wholly inadequate in comparison to the need for compensation to these landowners. Existing records disclose that there is a backlog of unsettled land payment claims, which are estimated to cost, at a minimum, EC $ 15.5 million.

The inheritance of this liability by the present Government is severely constraining its ability to pursue the economic and social investment programme that is central to the fulfilment of its policy agenda. So as not to unduly stifle some of the new, exciting and vital initiatives of this Government over the medium term (in the areas of the environment, housing, roads and school construction in particular) Government proposes to institute a land exchange policy targeted, as a priority, towards new areas of land to be acquired.

However, wherever feasible, land exchange offers will also be made to property owners whose lands have already been acquired for public purposes. It will be ensured that these exchanges do not place affected persons at any financial disadvantage in respect of the market value of their acquired properties. In instances where lands of at least equivalent value cannot be identified in acceptable locations, a combination of land exchange and part cash payments will be applied.

It is expected that with the introduction of this policy, Government will be able to become current in its land acquisition payments within the next four years. In assessing the likely impact of the immediate introduction of this measure, Government has determined that an allocation of EC$5 million is adequate to cover critical land acquisition commitments in this financial year, as well as make part payments towards the arrears.

This Budget, Mr Speaker, will not be complete without a statement on housing. In the Supplementary Estimates, I indicated that the trajectory of Government policy will be two-fold:

1. Government will seek to provide incentives to the private sector to invest in housing for middle income households.
2. Meanwhile, Government will deploy its available resources to provide housing to low and lower-middle income earners.

The Housing and Urban Development Corporation has begun to put this policy into effect. For 1998, the Housing and Urban Development Corporation intends to provide 224 serviced lots and 140 houses to low and lower-middle income earners. The development will be concentrated in the north and south of the island, respectively. Seventy-two lots and houses will be available at the Derriere Morne Development, Vieux Fort. Subject to resolving issues of ownership, 152 serviced lots will be made available in the Beausejour Development, Gros Islet. Of that number, 68 lots will be sold as land/house packages.

Mr Speaker, this Government recognizes that St Lucians must be given access to land. In particular, where land is developed in specific areas, residents of communities must be given an opportunity to own a lot of land in their own communities. In the course of this parliamentary year, Government will be publishing policy proposals to resolve the problem of spontaneous settlements throughout the island, particularly in Vieux Fort. Our people must be given an opportunity to own land in their own country.

Ministry of Planning

Mr Speaker, year after year, budget after budget, some residents of the Mangue Community in Vieux Fort have been told that they would be relocated to facilitate the construction of a link road between New Dock Road and Clarke Street. During the election campaign, some plywood houses were hastily constructed, ostensibly to accommodate those persons whose houses would have to be removed to allow for the construction of the road. Few houses were removed; persons other than those targeted for relocation were placed in the plywood homes. The folly that men do in the name of elections.

The Government has decided to translate expectation into reality, restore hope where despair is rooted. Under the programme of Capital Expenditure, a sum of $500,000 has been allocated from local revenue to meet the cost of relocating those persons who would be affected by the construction of the new road. The proposals for relocation to the Southern Cantonement Area will be discussed with the residents in the next few weeks. Suffice it to say that the National Development Corporation has made land available for the relocation exercise.

Cul-de-Sac Development

Mr Speaker, from time to time I am counseled to ignore the past and concentrate on the future. Stop blaming actions of the former regime, I am told. How can one do this, Mr Speaker, when the financial past always haunts the future viability of investment. Consider for a moment, Honourable Members, the much advertised development in the Cul-de-Sac Valley.

In 1991, the then Minister for Finance, Planning and Development, declared in his Budget Address as follows:

"Mr Speaker, from the congestion in the city of Castries particularly at weekends, it is obvious that the city will become dysfunctional within a few years. It was therefore decided to relieve the pressure on the commercial area by developing a new commercial area at Cul-de-Sac, and for this purpose a Cul-de-Sac development company – a joint venture between Government and Geest Industries (Government 60%, Geest 40%) has been formed and a $10 million contract for land preparation has been awarded to a Saint Lucian Company. Work on this project has already commenced.

In this area a shopping mall will be constructed, and no new warehouses will be permitted within the city limits. A new and exciting proposal to connect this area with the city is now being examined, that is by the construction of a tunnel from Castries near Bananes Bay and exiting at Cul-de-Sac, avoiding the tortuous journey over the Morne and opening the whole of the western area from Cul-de-Sac through to Anse-la-Raye for the expansion of greater Castries. When this project is completed, Anse-la-Raye will be about the same distance from Castries as is Gros Islet and the isolation of the southwest will be no more. This project will do for the southwest what Rodney Bay Development did for the Gros Islet area – a complete commercial revolution."

The Honourable Minister did not disclose the source of the $10 million for this investment. Mr Speaker, it turns out that the $10 Million was borrowed from the National Insurance Scheme at 10 per cent per annum. No repayment date was specified. The other shareholder, Geest Plc, agreed "to make payment to NIS of the liabilities of the Borrower to NIS of an amount no greater than 20 per cent of the balance outstanding and due to NIS at the time of demand (on the Borrower." Mr Speaker, since 1991, not one cent has been paid back to NIS. As at 31^st March, 1998, the status of the loan is as follows:

PRINCIPAL $9,100,000.00

INTEREST 4,722,143.00

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Mr Speaker, how should we describe this – financial negligence, financial mis-management, or financial adventurism? Which is it, Mr Speaker?

It is now for this Government to find ways to resolve the outstanding liability to NIS. Forget the past indeed!

Mr Speaker, in August 1997, the Accounting firm, Price Waterhouse submitted a business plan for the area. Two options were offered:

"The first option assumes full development of the entire site within a period of three years, with an anchor tenant taking 25% of the available space. It is projected that sales will be completed within seven years. The second option assumes a more gradual development over a period of fifteen years.

The advanced development option will cost EC$87 million and will be financed through a combination of equity EC$10 million, long-term loans of EC$20 million and internally generated funds.

The gradual development option will cost a total of EC$101 million and will be financed through short-term financing for each stage totaling EC$8.5 million."

Before any of these options could be seriously pursued, it would be necessary to restructure the company’s equity to take account of the continuing liability to NIS and the shareholding held by Geest Plc.

Ministry of Foreign Affairs and International Trade

Mr Speaker, this new Labour Party Government has chartered a fresh course in the direction of our foreign policy. We have embarked on a very proactive foreign policy – a foreign policy not content with reacting to events, but one seized of the need to energetically pursue issues vital to St Lucia’s economic and social interests. The Ministry of Foreign Affairs and International Trade has been consequently involved in a programme of forging new relationships, of accessing non-traditional areas of economic and technical assistance for the country, and of tapping new sources of foreign investment. In order to fulfill these objectives, St Lucia needs not only to re-energize and restructure its existing overseas missions, but also to open new ones in areas where St Lucia had not hitherto ventured

It is for this reason that provision is made under the Capital Estimates for the establishment of a consulate in Miami. Mr Speaker, Miami has in recent times almost become the capital of the US for those interested in doing business in Central and South America, and the Caribbean, and as well as for persons from those areas who wish to attract US investment.

The Miami Conference on the Caribbean, which heads of Government of Caribbean countries annually attend, symbolizes the role which this city plays for Caribbean countries interested in forging relationships with American enterprises. For the Caribbean, it is the gateway to major cities in the southern United States. A St Lucian Consulate in Miami is necessary as part of our new foreign policy thrust, and so the Estimates provide for a modest office, but one of sufficient capacity to be able to function effectively.

Mr Speaker, in the Labour Party Manifesto for the last general election, the Party promised a policy that would be more sensitive to the needs of our nationals living in other countries. We promised special attention to the needs of returning nationals, and have adopted a returning nationals policy, administered by the Ministry of Foreign Affairs and International Trade. But those of our nationals, who perforce have to continue to try to earn a living in lands far and near, also need our protection and our support. It is sad Mr Speaker that nowhere is this more apparent than in our neighbouring sister isle – the French department of Martinique. Mr Speaker, the ties between our neighbors in Martinique and ourselves go back for centuries. The peoples of the two islands have, over all those years, virtually ignored the fact that history and politics have made us two separate countries – two separate nations and many of them consider themselves one people; so for decades and decades. Martiniquans have made homes in St Lucia, and St Lucians, homes in Martinique.

In recent times however, economic considerations have forced many more St Lucians to seek their fortunes in Martinique than vice versa. However, extremely rigid visa requirements and restrictions by the French authorities have led many more St Lucians to enter Martinique illegally than previously, resulting in a harsh attitude towards St Lucians by French authorities, an attitude which is inconsistent with our historical ties and with good neighbourliness. The scourge of the drug trade with its unsavoury connections between the two islands, and the traffic in stolen goods between the two countries, have not made the lot of St Lucians any easier with the French authorities. At the same time, illegal fishing by Martiniquan fishermen in St Lucia’s territorial sea has muddied the waters even more, as St Lucia has had to punish those caught, and French fishermen have reacted without reason to St Lucia’s legitimate stance. For example, a year and a half ago, Martiniquans attacked and severely damaged two St Lucian boats which were on peaceful legitimate business in Martiniquan ports and the owners are yet to receive adequate compensation despite continuous representation by the St Lucian Foreign Ministry.

The treatment being meted out to St Lucian nationals in Martinique therefore compels the Government of St Lucia to maintain a presence in that country so that St Lucians who are faced with difficulties can have recourse to the assistance of St Lucian Government authorities. In addition, Mr Speaker, and despite the hostility to which I have just referred, many St Lucians with the cooperation of the French authorities, are increasingly utilizing Martiniquan hospitals for medical care unobtainable in St Lucia. A St Lucia Government presence in Martinique would facilitate the setting up of the kind of arrangements essential for the proper care of persons arriving for medical treatment.

For these reasons, Mr Speaker, provision is made in the Capital Estimates for the establishment of a Consulate in the French Department of Martinique. It is our hope that this office – small though it may be – will provide comfort to our nationals, and demonstrate the seriousness and respect with which St Lucia wishes its nationals to be treated. While we are on the subject of the protection of nationals overseas, let me add Mr Speaker; this is also a consideration for the Consulate in Miami. There are many St Lucians in Florida and many transit Miami almost on a daily basis; a St Lucia Consulate there will be able to respond to the needs of these nationals.

Mr Speaker, the total Capital expenditure allocated to the Ministry of Commerce, Industry and Consumer Affairs is $4,410,604. The Ministry will focus on three major projects this financial year:

1. Small Enterprise Development
2. Institutional strengthening of SEDU and NRDF
3. The establishment of the Goods Distribution Free Zone

Unsung and unheralded, small business activities have for many years catered to essential community service needs. Such needs were usually neglected by larger operations as not being worth the effort.

In that regard, it has been left to the small and micro business sector to cater to critical and basic community needs. This it has had to do in an environment in which its contribution has previously failed to attract other than lip service recognition, through sheer ingenuity and the exercise of an innate resourcefulness. To date, there has been a virtual absence of developmental resources upon which the sector could draw. For example, there was:

1. no policy or co-ordinated programme for the development of the sector;
2. no legal instruments and institutional mechanisms through which the activities of the sector could be guided and its interests promoted;
3. no special financial instruments and loan arrangements on concessional interest and collateral requirement terms, addressed to the specific needs of the sector;
4. inadequate availability of information for guiding small sector investment into avenues related to an overall national development thrust;
5. little technical and managerial assistance directed towards the development of the sector.

While addressing the obstacles which have hitherto inhibited realization of the sector’s considerable potential as an important contributor to the economy, Government proposes to make the most of the vitality and inventiveness which already exists within the sector to promote its development.

Government views the imperative of structural change and economic diversification as opportunity to promote the development of small businesses and the expansion of their range of activities. It is also an opportunity to enable the sector to fulfill its expectations within the diversification process, become a generator and distributor of income, and a critical generator of employment.

Government, in consultation with small business operators, proposes to develop a fully integrated approach to the development of the small business sector. It aims to do this through appropriate legal instruments, institutional arrangements, incentives, training opportunities, technical assistance, and guidance in accessing affordable finance. Government wishes to see an expansion of the sector, and an improvement in its efficiency, as well as the quality of its output. Government is also hoping for the development of greater linkages between the small business sector and other economic sectors, and expects small business operations to pursue opportunities which are available beyond the limitations of the domestic market.

The Government of St Lucia, through the Ministry of Commerce, Industry and Consumer Affairs, is developing a policy framework that will set the parameters within which the development of the sector will be approached.

To facilitate the thrust in this sector, a Micro and Small Scale Business Enterprise Act will be presented to this Honourable House for its deliberation and enactment. The legislation, will perforce, define small and micro businesses and make provision for developmental support and financial relief in respect of enterprises eligible for such assistance.

Amendments to the Income Tax Ordinance which were recently passed, provide (in addition to the allowable deductions on capital expenditure), for a further investment allowance of 10 per cent on capital expenditure incurred in the provision of plant and machinery in the initial year of income and funded from the non local sources. The arrangement is particularly aimed at encouraging St Lucians living abroad to invest finance and expertise accumulated abroad in the development of the small business sector.

In terms of institutional support, the Small Enterprise Development Unit (SEDU) within the Ministry of commerce, Industry and Consumer Affairs, is being strengthened to enable it to better perform its core functions of co-ordinating the development of the sector, providing technical support and training opportunities for small business operators, undertaking feasibility assessments, providing consultancy and extension services, and facilitating access to project funding.

An amount of $255,000 has been allocated within the Budget to assist in meeting SEDU’s recurrent costs. In addition, under the Capital Expenditure Head of the Budget, an amount of $4,830,000 has been allocated for a Small Enterprise Development project funded through EU funds available to St Lucia through its STABEX allocation. Of this amount, $1.6 million will be expended during the current fiscal year. The components of the project include:

1. Entrepreneurial loan funds.
2. Employable skills training.
3. Entrepreneur and business development.
4. Establishment of an Accounting Center.

Institutional Strengthening of SEDU, And the National Research and Development Foundation (NRDF)

It is to be noted that Government provided an annual subvention of $100,000 to the NRDF to help finance its activities. Further, a substantial allocation from the Small Enterprise Development project is also earmarked for strengthening this institution and for providing it with loan funds for disbursement to target beneficiaries.

These project activities housed within SEDU and other agencies involved in small business development, are together intended to provide the impetus required for urging the sector on towards the realization of its potential.

In addition, SEDU, as a body charged with the co-ordination of the sector’s activities, will be required to lend support to other projects with built-in small enterprise objectives. This applies to the Rural Economic Diversification Incentives Project funded by STABEX, and the St Lucia Rural Enterprise Project, an IFAD/CDB funded project.

This package of initiatives reflects Government’s determination to spare no effort to deploy the resources necessary for ensuring the development of the micro and small business sector. In so doing, Government expects to create opportunities for St Lucians, and in particular, assist young St Lucians joining the job market, to find productive and rewarding outlets for their talents and capabilities.

Goods Distribution Free Zone

Mr Speaker, earlier in this presentation, I drew to the attention of this Honourable House, two capital projects, which are a direct result of our new foreign policy thrust. One of these projects is the Free Trade Zone to be constructed in Vieux Fort.

Mr Speaker, there has been considerable speculation about my failure to mention the so-called Chinese projects in the Supplementary Budget. This Minister of Finance does not believe in decorating the Capital estimates with projects that are not the subject of formal agreement. Moreover, why include an item of capital expenditure when it is known that no expenditure would be incurred in the financial year in question. I thought that such an approach made eminent sense. But other persons thought otherwise.

Last December, the Government of St Lucia, through the National Development Corporation, and the Government of China through the Jianjin Architects and Consulting Engineers, signed an agreement for the design of the office building and warehouses that will be in the Free Trade Zone. The Free Trade Zone will comprise an Administrative Building of 1,000 square meters and 11 warehouses with integrated office facilities. Construction of the Free Trade Zone will begin later this year, and will not involve the St Lucia Government in any major capital expenditure. This project holds exciting possibilities for St Lucia and for the south of the island in particular.

The Free Zone concept was given legal authority through the enactment of the Customs Free Zone Act of 1983. In part, the Act was intended to facilitate the establishment of enclave industries.

The marketing strategy involved the presentation of St Lucia as a low wage destination, advantageous for the location of assembly operations earmarked for the export of products to the Unites States markets under the provisions of the Caribbean Basin Initiative.

This initiative failed to live up to expectations and proved that the low wage premise of the project did not hold against the challenge of competition from sweat shop operations elsewhere. The erosion of advantages enjoyed by Caribbean Basin Initiative beneficiaries as a result of NAFTA, has served to compound the problem.

Developments in transport technology, present new opportunities for the significant investment in infrastructure at Port Vieux Fort to be made to deliver benefits which relate more closely to its cost, and which, if thoughtfully pursued, provide a better chance for sustainability than the previous approach.

The new approach involves the creation of a Goods Distribution Free Zone area which would function as a trans-shipment hub, facilitating the entry, free of inhibiting customs procedures, of containerized goods to be broken down and transshipped.

St Lucia’s geographical location is considered to be ideal for providing such a service targeted at neighboring states. Infrastructural development at Vieux Fort lends itself to this purpose.

It is intended that this development will:

1. Improve the containerized traffic throughput of the Vieux Fort Port, thereby contributing to the sustainability of its operations.
2. Create job opportunities within the south and in doing so; diffuse the concentration of job seekers in the north.
3. Generate business activities directly and ancillary to the operations of the Free Zone Area, such as banking services, freight forwarding services, etc.
4. Increase the passenger and freight throughput of the Hewanorra International Airport, improving the viability of its operations.

A new legislative framework more appropriate to the requirements of such a project is now in the process of being drafted, and will be placed before this House for consideration during this current session.

Mr. Speaker, I wish to turn now to an area of government responsibility that probably affects the largest constituency of citizens in this country and which is fundamental to our capacity to shape our future. In our reconfiguration of Ministries, my government brought together the portfolios of education, human resource development, youth & sports for a specific reason. In our vision, the matter of education in the 21^st Century is inseparable from the broader concern of human resource development, and the imperatives of youth development cannot be divorced from education and training.

Strategic Directions

The strategic priorities of my government in the sphere of education are to make the school the center of focus of the education system and to transform the Ministry from a command centre to a service centre. In so doing, Mr. Speaker we ensure that all of the education reform initiatives are rooted at the level at which they matter most and that any changes that are implemented impact most significantly at the level of the classroom. This is the only road to a learning society; it is the only way forward for education. Until and unless the education reform process begins to yield improvements in the teaching and learning outcomes, such changes are wasteful and misdirected. That is why Mr. Speaker, the new vision for education and human resource development that this administration has brought is a sharp differentiation from what occurred in the past. We have had educational development before; we have had significant expenditure on education by previous administrations before. But what we have never had before is the clarity of vision, the open and transparent approaches to policy definition and implementation that consistently involves major stakeholders (parents, Teachers Union, National Principals Association, denominational authorities) and an approach to management that is energetic and democratic. We have brought a quality of vision, leadership and direction that is participatory, inclusive and which is quality and performance-oriented.

Capital Initiatives in Education

Mr. Speaker, the capital initiatives of this government in the areas of education, human resource development, youth and sports total EC$30,845,687. Of that amount, $6,233,435 will come from local revenue, $9,325,630 will come from grant sources and $15,286,622 from loans (principally the World Bank-Caribbean Development Bank Basic Education Reform Project).

The provisions of this budget in the sphere of education allow for the speeding up of the Basic Education Reform Project – an initiative started under the previous regime but which got mired in political indecision and interference. This financial year will see the completion of work on the new Soufriere Comprehensive Secondary School (costing $8,100,473) and the new Piaye Secondary School (costing $5,060,661). The Government of St. Lucia contribution to this undertaking stands at EC$1,124,330 and $681,300 respectively. Commencement of work on the Anse Ger Secondary School – the subject of political maneuvering by the last administration – and on the Babonneau Secondary is expected in the financial year. The total estimated cost of the Anse Ger Secondary stands at $6,215,772 and for the Babonneau Secondary at $5,988,872.

Consistent with my Government’s pledge in our Contract of Faith to move expeditiously to universal secondary education, and in utilizing public funds in a manner that brings the greatest benefit, we starting to make provision for the expansion of some of our leading secondary schools. Commencing with St. Mary’s College, a provision of $500,000 has been made for this financial year towards the construction of a needed extension. Of course, certain conditionalities will be attached to the disbursement of this sum.

Existing bottlenecks in primary education provision will be incrementally addressed. For the past 15 years, parents of children attending schools in the Castries basin have suffered the inconvenience of the shift system in the Ave Maria and RC Boys Schools. We have proposed to the Caribbean Development Bank the construction of a new Primary School in the Castries basin to, once and for all, end this injustice to the children. A CDB Appraisal Mission has already visited and the indications are positive that funding will be received for this as well as for the expansion of the major Senior Primary Schools, to facilitate the introduction of technology education in their curricula.

Mr. Speaker the communities of the constituency of Vieux Fort North have been consistently neglected by previous administrations inspite of the dedicated representation made on their behalf by their long serving and humble servant, the Honourable member for Vieux Fort North. Today, one of the persistent requests of the Honourable gentleman will be granted – the construction of an Infant school in the community of Vigier to serve the cluster of communities in that area and to avert the disaster that he has so often feared of infants being swept away in the intersecting Vigier-Canelles river in their three to four mile trek to the

Desruisseaux school. A provision of $250,000 in the estimates will enable the people of the community to realize their dream through self-help.

Mr. Speaker, notwithstanding the need for austerity in this period, my government is committed to giving education and the condition of youth, pride of place in our national priorities. In testament of this we have allocated a substantial portion of the resources to be received from Stabex 95 to education. A total of $4,605,630 has been provided from this source for school repair and rehabilitation, furniture and fittings, and external works to schools. The School Feeding Programme, which was formerly funded by the World Food Programme (WFP), has now become the responsibility of the Government to maintain – WFP funding having ceased in December 1997. An allocation of $980,000 has been made from Stabex 95 to ensure continuity.

Youth

One of the fundamental objectives in the field of education is to impact on the general youth sector as a whole. We are seeking Mr. Speaker, as part of the general process of education reform to incorporate enrichment activities for youth in general so that that segment of our youth who are still in school will obtain – within the formative and learning environment of the school – the exposure to character building activities, to sports, to cultural activity that will ensure their emergence into the world of work as men and women of sound mind, body and character. The provision in this budget caters for continuing support to youth and sporting organizations ($252,000 and $245,000 respectively), and allocations of $123,000 for policy formulation in both areas. The Commonwealth Youth Programme has pledged to provide additional support to this policy formulation process and we expect that, given the participatory process that we have planned and the strong political will that underpins it, St. Lucia will be a model for the Commonwealth in that regard.

Mr Speaker, Honourable Members, for years, the sporting public of our country were promised a national stadium. Promises, promises, promises. Nothing materialized. This is about to change.

In February of this year, the Government of St Lucia through its Foreign Minister, and the Government of the People’s Republic of China through its resident Ambassador in St Lucia, signed an agreement for the construction of a national stadium in Vieux Fort. The Chinese Government will design the national stadium, for a seating capacity of 15,000 persons, comprising a standard football field and a 400-meter standard running track. The estimated total building area of the stadium is 8,000 square metres or 86,080 square feet. The Government of China will build 7,000 seats while the St Lucia Government will, in time, be responsible for the other 8,000 seats. The design phase of the national stadium will commence later this year.

National Cricket Ground

In the course of this year we passed on the opportunity to host a one-day cricket international. We took this decision because of the costs involved and our assessment that this level of expenditure would best be invested in a more permanent facility that could serve as a home for local talent and a magnet for future regional and international events. It is with great pride that we announce the provision of an initial sum of $1 Million towards the commencement of construction of a National Cricket Ground. Work has already commenced on preliminary concept drawings and identification of a suitable low rainfall site. What is particularly significant about this capital initiative is that its financing is going to be provided by the National Lottery in keeping with the policy that the proceeds of the National Lottery should be reserved for the exclusive support of sports.

Pavilion – Vieux Fort

The town of Vieux Fort although named as the second capital of St. Lucia has up till now very little by way of economic or social infrastructure to justify that title. Today, it is incumbent on us to redress the long agony of neglect that the people of this population center have patiently endured. Consistent with our concern for the salvation of our youth, we have made an initial provision in this budget of $150,000 for the construction of a Pavilion for the Vieux Fort Playing Field. Sensitive to the limitations of this budget, I have undertaken as District Representative to challenge the business sector – who stand to benefit considerably from the unprecedented economic growth opportunities emerging in the South – to assist in providing this facility whose estimated total cost is $1.5 Million. As Honourable Kenneth John, the Parliamentary Secretary in the Ministry of Education, Human Resource Development, Youth & Sports once asserted to the private sector, "every dollar spent on sports is dollar invested in the prevention of crime; every dollar spent on the development of youth talent is a dollar invested in a better future and a more prosperous economy and society".

Victoria Hospital Rehabilitation

Mr Speaker, Victoria Hospital, by virtue of its larger number of in-patient and out-patient admissions, is the main health care institution on the island, providing a range of secondary referral services including Accident and Emergency Services, to the northern two-thirds of the country. This Government understands that St Lucians are dissatisfied with the quality of service provided by this hospital.

Mr Speaker, hospitals today are turning to guest-room type programmes to train and motivate physicians, nurses and other health care employees in hospitality services. Such programmes can only be successful when the facilities are conducive to both the providers and users of health services. With the exception of the new Obstetric and Gynaecology Block, this Government inherited a hospital in which the majority of the buildings are in a deplorable condition. Mr Speaker, this Government is committed to the total rehabilitation of this institution that has had such a significant impact on the lives of the majority of St Lucians.

Although the role of the hospital will be clarified in a forthcoming Health Sector Study, this Government recognizes the need to maintain and upgrade the hospital services by allocating the funds necessary to completely renovate that section of the Hospital, traditionally referred to as the "L" Block. Mr Speaker, $1.1 million has been allocated under local revenue for this purpose. The facility is being renovated to provide new wards and new operating theatres in the short term.

In the medium term however, it is the completion of Phase III of the Victoria Hospital rehabilitation works that will provide proper facilities for both the providers and users of health services. Government awaits the final report of the "fast track" feasibility study for this Phase, which is being funded by the EDF.

Mr Speaker, previous development proposals for Victoria Hospital were based on a demographic study which assumed that the two general hospitals, Victoria Hospital and St Jude, provide a pattern of service in the ratio of 3:1 respectively. That is to say that Victoria Hospital serves 75 per cent and St Jude, 25 per cent of the island’s population. However, the current pattern of admissions at the two general hospitals and the advent of the Tapion Hospital suggest that Victoria Hospital’s catchment population amounts to no more than 65 per cent of the total population in most of the medical specialties.

In the rehabilitation of the hospital, the strategy then is to plan for a 65 per cent level of service utilization. Another important strategy is to strengthen the hospital’s role in the provision of outpatient services to its own catchment population.

Based on services requirements and an appraisal of the site on which Victoria Hospital is located, the rehabilitation of the hospital has to meet the following objectives:

1. It has to provide facilities of a range and scale that will allow the hospital to provide modern, cost effective, health services both in the medium and long term.
2. It has to provide a spatial configuration that allows for efficient movement of patients, staff and supplies both within and between departments.
3. It should allow for a phased implementation of the programme of works if necessary, while the hospital continues its current services and operations.

The construction cost of Phase 3 of the Victoria Hospital rehabilitation is estimated at EC$31.2 million. This figure is exclusive of equipment and recurrent costs as well as fees for consultancy services.

Mr Speaker, this Government is cognizant of the need to provide new additional facilities at Victoria Hospital. We are equally concerned that in the intervening period while this phase of the project is being developed, appropriate improvements to the existing facilities are continued and that the public is afforded an uninterrupted high quality service.

Accident and Emergency Services

Mr Speaker, few patients who receive treatment at the Casualty Department compliment Victoria Hospital for the quality and efficiency of the service. The Ministry of Health estimates that the Casualty Department accounts for at least 50 percent of the complaints against Victoria Hospital.

The present Casualty Department of Victoria Hospital suffers from several problems including:

1. Lack of Proper Management

There is the absence of suitably qualified and experienced medical and nursing personnel to supervise the Department. This coupled with the absence of precise policies and procedures to guide the operations of the Department make management difficult.

(b) Lack of the Facilities, Equipment and Maintenance

This is exemplified by the absence of a portable x-ray machine in the Department which results in the "blind" management of some cases while some patients have to be transported for some distance in the open to access x-ray facilities.

(c) Insufficiency of Staff and Expertise

The medical staff of six doctors of the Casualty Department sees on average, during a 24-hour period, some 200 patients, 70 per cent of whom are non-emergencies. There are three shifts during this period, with one doctor on each shift. Every patient is seen by a Casualty doctor.

In addition to the heavy workload it is important to note that the numbers and the severity of the emergency cases are increasing, and there is very minimal revenue generation in the Casualty Department (in comparison to its expenditure).

In an attempt to allay the frustrations of the public as well as the personnel in the Accident and Emergency Department, the Ministry of Health will, this financial year, focus on the development of emergency services. To this end, provision has been made for a sum of $1,075,000 in the Capital Estimates, funded, in entirety, from local revenue. This initiative will be enhanced by a Technical Cooperation Agreement with the respected and well-known Howard University Hospital of the USA. The Agreement will involve:

1. The establishment of the presence of Emergency Medicine Doctors and Nurses from Howard University Hospital at Victoria Hospital.
2. The organization of a programme for the training in the management of emergency patients for hospital staff and

ambulance personnel.

3. The preparation of protocols, procedures and standards to guide the Accident and Emergency Services.

Attempts will also be made to improve the image and the level of public satisfaction with the Department. In this regard, the Ministry of health will encourage the Hospital to:

1. Establish a social desk within the Casualty Department to provide guidance and information to users in order to facilitate the proper utilization of the services.
2. Conduct a publicity campaign/programme for improving the Department’s image.

Ultimately, however, Government must establish a new Accident and Emergency Unit.

Care For Senior Citizens

Mr Speaker, 8,972 persons or 6 per cent of our population are above 64 years of age and 6,454 or 4 per cent are in the 55-64 age group. This implies that the number of senior citizens in our population will increase by 42 per cent within the next ten years. The aging of the population is an important issue and our statistics indicate that we must start planning for it, in earnest. The aging of the population spans many dimensions and as such, a multidimensional approach involving the health, finance, social sectors and partners, must be adopted.

During this fiscal year, Government will undertake a comprehensive review and assessment of issues relating to aging of the population, in order to develop adequate policy and programmes for our senior citizens. Particular attention will be given to the provision of residential care for senior citizens and other community based programmes including for example, community support services for senior citizens living at home, in the form of meals, home helps and ancillary health care.

Additionally, public awareness on "healthy aging" and preparation for pre-retirement will be heightened. It must be recognized that our lifestyles may also play an important role in modifying the process of aging and in determining the quality of life and well being in old age. Whereas Government recognizes its responsibilities with respect to the care of its senior citizens, I wish to encourage you, the citizens of this country, to view preparation for the later years as an individual responsibility.

Government wishes to state its intention to intimately involve the private sector, voluntary associations, social clubs, religious and community groups, youth groups and other social partners, in this undertaking. The care of senior citizens provides an excellent opportunity for Government, the private sector and other social partners to work together to meet social and economic development goals. This is an area that provides viable investment opportunities from both a service and infrastructure perspective.

Mr Speaker, you will agree that our senior citizens have laid the foundation for the future development of our country. Their contribution to society is manifested in the prosperity and well being of a significant proportion of the population. Yet, in the twilight of their days, they have been marginalized and cast aside as if they are a source of embarrassment. All of use will reach there, some sooner than others. We have to care for those who are responsible for us. There is no better way to say that we are a caring people, a caring society, than to take care of our elderly.

Mr Speaker, I wish to make specific mention of the Senior Citizens Home at Malgretoute. This institution bears testimony to the plight of the elderly in this country. Located in the general proximity of the Pitons, the physical conditions cannot be described as anything short of being distressing and deplorable. This situation did not develop over night, but is clearly the product of abject neglect over the past decades. To alleviate this situation Mr Speaker, as a short to medium term measure, Government recently approved $120,000 for priority works and major repairs this financial year. Under the guidance of a new Management Committee, it is envisaged that consideration will be given to the strengthening of the management of the Institution, to ensure adequate health and personal care of the elderly. Notwithstanding these efforts to improve conditions at the present facility, it is the intention of this Government to carefully explore the possibilities in the medium to long term, of establishing a new facility in a suitable and more accessible location, that affords greater community support and more family visits.

Mr Speaker, it is incumbent on all of us to support efforts geared towards the re-integration of the elderly into society. However, it is clear that Government neither has the capacity nor the resources to establish homes for our elderly. Government wishes to encourage private sector investment in this sector. Government, therefore, welcomes the establishment of joint ventures with the private sector for the care of the elderly. Under such an arrangement, Government will provide a subvention, donate land and duty free concessions as part of a programme of assistance. In return, the private sector entity will provide home care for the elderly. Government will also be responsible for formulating policy and establishing standards for their care.

Cornerstone House

Mr Speaker, the concerns of this Government also extend to those who are unable to find a pillow to rest their weary heads at night. In my Christmas message, I announced that Government had donated one of its unoccupied buildings to the charity group, Cornerstone House, for the use of those persons who spend the night under buildings in the city centre. Cornerstone Night Shelter is in the process of being renovated. The Government of the People’s Republic of China has donated $20,000 to purchase a vehicle to collect our "wanderers" at night. Government has decided to allocate a further $50,000 to meet the cost of establishing this night shelter.

Integrated Child Protection and Development Programme

In pursuit of national development, a significant number of our children are at social risk. We need to protect those children from abuse, neglect and abandonment as part of our social obligation. To this end, an integrated child protection and development programme will be initiated at a budgeted cost of $1.2 million. The project is to be funded by the Caribbean Development Bank. Pending the finalization of the Agreement with CDB, I have allocated a sum of $250,000 from STABEX resources to commence the project.

The programme encompasses an approach to development that combines prevention and intervention strategies as a means of addressing the plight of some of these children. The programme is part of a long-term strategic plan in human resource development as it provides an avenue where the specific needs of socially disadvantaged children will be addressed.

Child abuse, abandonment and neglect will be treated and managed at two levels. One level of management deals with institutional care and the other level deals with family or home based care.

Mr Speaker, to address the problem of child abuse, requires an integrated approach that combines prevention and intervention strategies. A preventative strategy will emphasize community outreach and public education. An intervention strategy will emphasize a combination of treatment of known cases of child abuse and the provision of temporary shelter, care and protection of children. The provision of temporary care and protection necessitates the establishment of a centre that would facilitate the strategy. Mr Speaker, this Government has approved an annual subvention of $50,000 to the Children’s home located at Ciceron.

Mr Speaker, let me focus on the Ministry of Community Development, Culture, Cooperatives and Local Government,

Mr Speaker, the most important birthday in our island, is the anniversary birthday of our nation. On 22^nd February, all of us ought to pale into insignificance, as we embrace our island.

I am deeply troubled about our approach to the celebration of our nation’s birthday. For one thing, our independence observance is virtually confined to our school children. Our communities are detached, uninvolved. Our observance cannot qualify as national in character. We must change this.

Just as we have a National Carnival Development Committee, so too we must have a permanent National Independence Anniversary Committee (NIAC) to plan the observance of our nation’s birthday.

In order to build community consciousness and to foster community involvement in the observance of our independence anniversary, Government proposes to allocate a sum of $340,000 for the development of projects in celebration of our anniversary of independence. To ensure equitable distribution, each constituency will be allocated a sum of $20,000. This is a modest but important start. Of the several conditions, two may be mentioned today:

1. The project must be completed on or before 15^th February.
2. The project must impact on the quality of life of the community.

The projects will be judged during the period 15^th February to 22^nd February, and the winner of the "Best Independence Anniversary Project" will be announced on Independence Day. The winner will be entitled to a Cup donated by the Prime Minister and a grant to the amount made available under the scheme.

Mr Speaker, a new initiative appears in the Capital estimates under this Ministry. It is the establishment of Human Resource Development Centres.

Human Resource Development Centres

The concept of the provision of Human Resource Development Centres arises out of the need to address the issue of poverty, which manifests itself through high levels of social depravation and social despondency in the various communities identified. The concept is an extension to the programmes of the Ministry of Community Development, which involved the provision of community centres usually constructed with support from community groups.

Traditionally, community centres were established to address the dire need for space to house various community activities. They served as meeting places for various clubs and community organizations. The scope of services to be offered in Human Resource Development Centres extends beyond this myopic perspective, to embrace a variety of activities geared towards developing the overall human resource in the identified communities. This objective is met by accommodating a wide range of adult and youth skill training programmes, together with community health care and cultural programmes, which are in keeping with a more holistic thrust towards human resource development.

The following facilities will be provided in the centres:

1. Community Libraries
2. Auditoriums/Theatres
3. Administrative Offices
4. Pre-School Facilities

Human Resource Development Centres will be constructed in the following areas:

1. Entrepot
2. Belair
3. Vieux Fort

A combined population of approximately 25,737 persons will utilize these centres. The centres will be managed by leaders in the community and will be self-sustaining. In this regard, the managerial and entrepreneurial skill development of community members will be enhanced, and community ownership ensured.

At this juncture Mr Speaker, I must pay homage to one of our local construction companies, B & D. This company had its roots in Vieux Fort. It has offered to fund from its resources, the Human Resource Development Centre for Vieux fort in the amount of $700,000. This is a magnificent gesture, a fine example of philantrophy in the corporate world.

It is envisaged that with these centres, which are multi-purpose in both design and function, that a comprehensive approach will be undertaken to address the societal problems encountered in the target communities.

Mr Speaker, Honourable Members will note that an allocation of EC$868,500 has been made for the construction of new day care centres.

The objective of providing day care facilities is consistent with the thrust towards poverty reduction. Poverty in St Lucia has been characterized as being gender biased, weighing heavily against female-headed households. These females are capable of seeking economically viable employment opportunities, which would significantly add to the capability of the household to financially support itself. However, they are constrained by the lack of facilities to care for their young children and therefore are unable to seek gainful employment.

The provision of day care centres seeks to address this problem. These centres will therefore assist the cause of poverty reduction, as they would enable young mothers to enter the job market or to explore avenues for personal advancement through skills training which would enhance prospects for self-employment. In addition, they facilitate the overall development of young children by equipping them with the basic educational foundation for future academic achievement and social mobility.

In this financial year, centres will be constructed at:

1. Cul-de-Sac
2. Fond Assau
3. La Caye

These are areas that have been identified as being socially depressed with high levels of unemployment. These areas are also characterized as having a predominance of female-headed households. In addition, EC$50,000 is allocated to the repair and rehabilitation of the Day Care Facility in Fond St Jacques.

The provision of the facilities is envisaged to provide 12 jobs directly. Indirectly, single parents will be able to become active members in the labour force. Approximately 180 children will directly benefit from the provision of these centres.

Vendors Stalls In Thomazo

Mr Speaker, under the estimates of Capital Expenditure for the Ministry of Community Development, Culture, Local Government and Co-operatives, Honourable Members will note an allocation of $150,000 for vendor’s stalls in Thomazo. This item merits explanation.

Those of us, who travel the Castries to Vieux Fort route on a regular basis, will observe that there are growing lines of persons selling agricultural produce to eke out an existence. These individuals provide vegetables and fruit to many of us. They are attempting to develop self-sustaining livelihoods. The Government has decided to extend a helping hand by constructing vendors stalls to enable them to market their produce in a decent but safe environment.

Mr Speaker, it is well known that the Ministry of Communications, Works, Transport and Public Utilities is normally allocated the highest amount in the Capital Budget that is available. This financial year, the Ministry was allocated a total expenditure of $88,280,439. Of that amount, $63,190,759 is allocated to Capital Expenditure, while $25,089,680 is allocated for Recurrent Expenditure.

One of the most important projects to be financed is the construction of feeder roads to strengthen agricultural output.

This project is being implemented through the collaborative efforts of the Ministries of Agriculture and Communications and Works. Its aim is to upgrade the feeder and farm road infrastructure servicing core areas of agricultural production, inclusive of the main centres of banana production.

In the case of bananas, it has been estimated that bruising and other forms of mechanical damage to the green fruit during transportation, can contribute to as much as 15% of the deterioration in fruit quality between the farm and the marketplace. The improvement of farm access roads is likely to result, on average, in a reduction in this deterioration factor to about 5%. In the case of non-traditional export crops such as breadfruit and other tree crops, poor road access to holdings has also had an adverse impact on quality, marketing capability and earnings potential, thereby limiting the scope and effectiveness of the diversification effort.

The existing farm access road network includes farm and feeder roads, which have in many instances been cut by farmers themselves. Some of these roads require re-cutting, redesign and reconstruction in some instances. Access is often only possible with four-wheel drive vehicles. These adversities result in the under-utilisation of otherwise suitable agricultural lands, which are either in use or have the potential to be brought into production. The eventual opportunity cost for the economy as a whole is an increasing food import bill, coupled with stagnation in agricultural export earnings. The farming community is therefore caught in a vicious circle, since it cannot generate the level of surpluses required for reinvestment in the production infrastructure, which is so vital to its sustainability.

The feeder roads component of this project is being financed by the European Community under the STABEX 1994 programme at an estimated cost of EC$ 4.4 million. Actual construction of the approximately 14 miles of select feeder roads commenced in January, 1998 under Phase 1 of the project, in the following areas: 

ROADS COST NO. OF MILES

Theobald Estate Road 333,000 0.6

Aux Leon/Louvette 78,000 0.7

Chassin Cannelles 547,000 0.8

Chassin Toussaint 621,000 0.8

Roseau Basin 931,000 3.0

Grand Deglos 518,000 1.0

Va-Vot 107,000 1.5

Cacolie/Des Barras 541,000 1.0

Tet Chemin/Cai Park 173,000 0.8

Balembouche Road 532,000 3.5

                                     --------------------------

Total 4,381,000 13.7

==================================

In addition, under a farmer assistance scheme, farmers are provided with materials valued at over EC$ 1 million in total, to upgrade their farm roads, using direct labour. An estimated 35 miles of farm roads are expected to be upgraded using this method. To complement this effort, a community-based programme of ongoing road maintenance is being developed, with the guidance and support of the Ministry of Communications and Works. This element of community involvement during and after implementation is essential to the sustainability of the project.

The process of selection of roads for Phase 2 of this project is currently ongoing. An additional EC$3 million to EC$5 million is earmarked out of the STABEX 1994 transfer to finance that phase of the project.

Reconstruction and Rehabilitation of Secondary Roads

Mr Speaker, let me assure Honourable Members, that work will continue on the reconstruction and rehabilitation of secondary roads.

The roads below have been identified from a list of 20 roads targeted for rehabilitation and maintenance, based on their current state of disrepair. Prompt attention is required to prevent the total failure of these roads.

Secondary Roads Amount Allocated

(a) Hill 20 – Fond Assau $200,000

(b) Anse Ger/Desruisseaux $200,000

(c) Beausejour – Grace $250,000

(d) Sarrot/Vanard $300,000

                    (e) Marc $300,000

                     (f) Bocage/Ti Morne/Cacoa $250,000

------------

TOTAL $1,500,000 ========

The rehabilitation of these roads will take the form of construction and improvement of drainage infrastructure, road widening and strengthening and asphalt pavement surfacing.

It is expected that these upgrading works will extend the useful life of these roads by a further five years. Benefits to be derived from rehabilitation of these secondary roads include reduced running cost of vehicles, which would in turn decrease the cost of agricultural and commercial services.

Mr Speaker, there is a critical need to arrest the loss of road infrastructure in the suburban areas of the city of Castries through improved control and disposal of waste and storm waters. The areas selected are part of an on-going programme designed primarily to improve and maintain all roads in the wider Castries basin. In this financial year, I propose to allocate $1 million to rehabilitate suburban roads and drains. The allocation will be distributed as follows:

Suburban Roads Amount Allocated

(a) Bois Cachet $190,000

(b) Yorke Hill – Castries $200,000

(c) Bishop’s Gap Loop $210,000

(d) Pavee Road $100,000

(e) Hospital Road $300,000

                -------------

                   TOTAL $1,000,000

                                        ========

The programme of rehabilitation commenced in January 1997 and entails periodic maintenance of the scheduled roads, so as to increase their economic life.

Inner Relief Road

Mr Speaker, this financial year, the Government will also focus on the much-discussed Inner Relief Road.

This road is intended to direct and assist traffic through the city of Castries, facilitating easier and improved access between the northern and southern communities of the island. Implementation of the project is a condition of the loan agreement between the Government of St Lucia and Caisse Francaise de Developpement (CFD) and is linked with the construction of the Castries Cul-de-Sac Highway. The project involves:

1. the construction of a new Castries River Bridge, spanning 20 m;
2. the construction of a 3-lane carriageway road network from the Castries River Bridge to Jeremie Street, and from Jeremie Street to L’Anse Road; and
3. the upgrading of the Vigie Junction and relocation of services.

Benefits to be derived from the project include:

1. reduced travel times through the city of Castries;
2. improved parking and traffic management in the city centre;
3. reduction of traffic congestion and vehicle operating costs;
4. junction improvements at all major junctions and improved pedestrian safety.

The estimated cost of this project is $6.1 million. Of that sum, $1.05 million will be financed from a loan from Caisse Francaise De Development. The balance of $5.05 million will be sourced from the Consortium Loan. However, only $3 million will be required in this financial year.

Pending the design and construction of the proposed four-lane highway, the Government of St Lucia has approached CDB for a loan to strengthen and rehabilitate certain sections of the East Coast Road. These sections are as follows:

1. Cul-de-Sac to Ravine Poisson – 8.05 km

               2. Ravine Poisson/Barre D’Lisle/La Ressource Bridge