Fact check: Funds, plans and police stations

I wish to deal with four issues arising on the campaign trail this year.

Heritage and Stabilisation Fund (HSF)

The PNM manifesto has highlighted the HSF balance of US$3.2 billion as being one of their major achievements despite the global economic turmoil. However, if you check other official documents, there appears to have been an unexplained lack of deposits for five of the last six quarters. This suggests that the HSF is not as high as it could have been, and raises questions about the approval of the deposit on 01 May 2010.

According to the HSF Act No. 6 2007 where petroleum revenues collected in each quarter of any fiscal year exceed the estimated petroleum revenues for that quarter by more than ten percent (10%), the US dollar equivalent of the excess revenue shall be withdrawn from the Consolidated Fund and deposited to the HSF. If the collected revenues exceed the estimated revenues for that quarter ten percent (10%) or less, the Finance Minister may direct that all or part of the excess revenue deposited to the HSF.

Thus, the deposits are automatically triggered if the oil revenue excess is over 10% and discretionary triggered if the revenue excess is between zero and 10%. Nothing is deposited if the quarterly revenues are below the budgeted estimates.

Central Bank T&T reports suggest that West Texas Intermediate (WTI) spot pricing is used as T&T's oil price reference, and the fiscal year for T&T begins in Oct each year. Thus, quarters run from Oct-Dec, Jan-Mar, Apr-Jun and Jul-Sep.

According to the fiscal 2009 Budget Statement, the Finance Minister's estimated oil price for fiscal year 2008 was US$50. According to the fiscal 2010 Budget Statement, the budget for fiscal year 2009 was initially predicated on an oil price of US$70, and then reduced soon after to US$55 for Quarter 1, then again to US$45 for Quarters 2-4; the estimated oil price for fiscal year 2010 is US$55.

Revenue earned is a function of the oil price and the quantity produced. According to the HSF Annual Report for year ending Sep 2009 (page 18): "... 2009 was a difficult period as oil prices slumped over concerns about a global recession. The national budget was predicated on an oil price of $70 per barrel and over the fiscal year it averaged $57.26 (West Texas Intermediate). On this basis revenue collections were lower than forecasted. Given this revenue shortfall there were no deposits to the Fund."

However, the HSF Act states that deposits are made on a quarterly basis. So what were the average quarterly WTI prices for Jul 2008 to Mar 2010, and how do they compare to the estimated oil prices quoted by the Finance Minister in the past two Budget Statements?

According to WTI spot price data available online, average oil prices were:

• Jul-Sep 2008: US$ 118.05 (vs estimate of US$50; automatic deposit expected)
• Oct-Dec 2008: US$58.35, (vs US$55; discretionary deposit possible)
• Jan-Mar 2009: US$42.91 (vs US$45; no deposit expected)
• Apr-Jun 2009: US$59.44 (vs US$45; automatic deposit expected)
• Jul-Sep 2009: US$68.20 (vs US$45; automatic deposit expected).

Similarly, in fiscal 2010, the average WTI oil prices were:

• Oct-Dec 2009: US$76.06 (vs budget estimate of US$55; automatic deposit expected)
• Jan-Mar 2010: US$78.64 (vs US$55; automatic deposit expected).

Deposits would be calculated at the end of each quarter and made in the subsequent quarter. Unless there was a drastic drop in actual oil production compared to estimates, one would've expected deposits in the following quarters:

• Oct-Dec 2008 (automatic)
• Jan-Mar 2009 (discretionary)
• Jul-Sep 2009 (automatic)
• Oct-Dec 2009 (automatic)
• Jan-Mar 2010 (automatic)
• Apr-Jun 2010 (automatic - done on 01 May 2010).

The quarterly HSF investment report for Oct-Dec 2009 says that no deposit was made in that quarter. A search of the newspaper and Ministry of Finance websites also showed no deposits were made between Jan-Mar 2010.

Thus, no deposits were made between Oct 2008 and Mar 2010 inclusive.

The Finance Minister, Mrs Karen Nunez-Tesheira, approved a deposit of US$650 million into the HSF on 01 May 2010. This deposit would have been based on revenues generated in the previous quarter, which is Jan-Mar 2010.

Questions:

• Given that actual quarterly WTI oil prices exceeded the quarterly estimates stated in the fiscal 2009 and 2010 budgets (except for one quarter), why were no HSF deposits made in the six quarters spanning the period from Oct 2008 to Mar 2010?
• Mrs Nunez-Teshiera, in an interview on 26 Aug 2009, said that she had no plan to make any HSF deposits in fiscal 2010 since she expected that the "surpluses won't be achieved." So how was it possible for a deposit to be approved on 01 May 2010, especially if none was made in the first or second quarters of fiscal 2010?
• If the deposits are meant to be done annually, as the HSF Annual Report seems to imply, then why was a deposit approved in the middle of fiscal 2010?
• Since the fiscal 2010 Budget is a deficit budget - which means that money will have to be borrowed to fill in the income shortfall - does this mean that the deposit on 01 May 2010 was funded by borrowed cash?

Sick Children's Fund

Health Minister Jerry Narace said recently that Cabinet has approved a $250 million fund to help sick children and adults meet the costs of emergency overseas medical expenses. This was announced after the People's Partnership manifesto was released, which contains their proposal to setup a $100 million fund for the same purpose. Together with the timing of the announcement, other evidence suggests this is an election gimmick.

Mr Narace's announcement comes ten months after he first indicated that his government was considering such a fund. The government faced periodic condemnation for the lack of help in urgent medical cases that could not be treated in T&T.

For example, in the case of Hannah Lendor, a child requiring urgent overseas liver transplant surgery, the government faced stinging criticism for offering only $100,000 (to be given only after the family raised the remainder of the $1.3 million total). This was particularly insulting after we learnt that the wife of the Sports Minister Gary Hunt received over $300,000 for overseas surgery; the same Gary Hunt who allowed a $2 million legacy flag to be installed.

Questions:

• This Cabinet-approved $250 million fund was not included in the fiscal 2010 budget statement delivered in Sep 2009. Where is that money coming from?
• If the fund was being considered since July 2009, and the intention was to launch it in fiscal 2010, why wasn't included in the fiscal 2010 Budget Statement?
• If the funds aren't in the fiscal 2010 budget, when will the fund actually be started?

Vision 2020 - plans and implementation

The PNM claims it has concrete plans all the way to the year 2020. They do. However, the government has failed to implement several items from this plan, implemented other items that were never planned and failed to update the plan as expected.

The PNM conducted a very commendable consultative exercise during the 2002-2007 term involving over 600 experts, marketed as Vision 2020. The intention was to produce a national strategic plan resulting in T&T becoming a developed country by 2020. The effort produced a Draft National Strategic Plan that was laid in Parliament in 2006 and covers the 15-year period from 2006-2010 inclusive. This strategic plan is supposed to be supported by detailed operational plans that were intended to cover rolling three or four year periods.

The only operational plan in existence covers the period 2007-2010 inclusive. Further, the document does not appear to have been updated since first drafted as it still contains the Foreword written by ex-Planning Minister Camille Robinson-Regis, who was replaced following the 2007 general elections and has clearly out-dated data for projects that have not been started (but whose estimated completion dates were in the past).

Questions:

• Has this plan been reviewed since the new Planning Minister took office in 2007?
• Where is the rolling plan covering 2010-2012?
• If the plans haven't been updated, what has the PNM been using to base its decisions?
• The operational plan mentions the hosting of the summit of the Americas in 2009. It does not include the Commonwealth Heads of Government Meeting (CHOGM) - why?
• The operational plan does not mention the new $180 million Prime Minister's residence, yet this was built - why?
• The operational plan mentions that the President's House would be restored, with the project commencing in 2007 and ending in 2010. It was not, and the roof has started to collapse - why?

The operational plan makes good reading – if only to discover other examples of promises that are yet to be realised. I highlight one below.

New St Joseph Police Station

National Security Minister Martin Joseph turned the sod to start construction of the new St Joseph Police Station on 17 May 2010. In denying that it was any special coincidence related to the general elections on 24 May 2010, Min. Joseph said: "All of these plans have been in the making for the longest while and as a result are now becoming a reality."

Questions:

• According to the Capital Programme outlined in Section 6 of the Vision 2020 Operational Plan 2007-2010 plan (page 58), the St Joseph Police Station was supposed to have been started in 2007 and completed in 2008. Why is the construction starting three years later than planned?
• Further, the St Joseph Police Station is not mentioned in the fiscal 2010 Budget Statement. Where is the money coming from?
• Since the money was not included in the fiscal 2010 Budget, when will the actual construction begin?
• Is this another case like the new Pt Fortin Hospital, which has been promised in every Budget Statement since 2003 but is yet to be tendered?
• When added to the handover to the Police Service of 60 vehicles used in the CHOGM in the middle of the election period, despite the CHOGM having ended since 29 Nov 2009, isn't this sod-turning exercise another election gimmick?