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Address arrears to contractors

Published: 
Wednesday, February 15, 2017
Contractors press conference- President of the Trinidad and Tobago Contractors' Association (TTCA) Mikey Joseph,  centre, share a joke with colleagues from,left,Glenn Mahabirsingh, director, Christopher Garcia, director, second   Ramlogan Roopnarinesingh, vice president, and Rodney Cowen, director after the TTCA's press conference yesterday at the boardroom of the Professional Centre Building, Fitzblackman Drive South, Woodbrook, Port-of-Spain

One of the axioms of 21st century life in the Caribbean, and elsewhere, is that people and companies are paid for the work they do for others.

The Caribbean is centuries past the period when slaves or indentured labourers were forced to work for their masters or landlords with little or no compensation beyond substandard food, ragged clothes and unimaginable living conditions.

The fact that contractors and other suppliers of services to the government must be paid for the work they have done makes yesterday’s assertion that contractors are owed $4 billion by the government quite shocking if not unbelievable.

President of the T&T Contractors Association, Mikey Joseph, who called a news conference to make the assertion yesterday, may not have helped his case much by the vagueness of his claims of indebtedness by state-owned enterprises to the contractors. It is unsatisfactory to tell journalists at a news conference that ‘If you listen to the Minister of Education, Anthony Garcia, he admitted that the Education Facilities Company Ltd owed $800 million.’

On the other hand, Mr Joseph must be applauded for bringing back to the frontburner of public affairs the issue of monies owed to contractors for work done in many cases over two years ago.

More than a year ago, Finance Minister Colm Imbert said that the current administration would only pay contractors following value-for-money audits that the government had commissioned into the construction work that had been done under the previous administration.

Up to a certain point, this is a reasonable argument, as the state must always be concerned that it is getting value for the money it spends. But the need for the audits as a condition precedent of payment to contractors becomes irrational and even perhaps illegal given the length of time that some of these processes have taken.

The Ministry of Finance, then, needs to make a public statement asserting that it is not using the value-for-money audit process as a ruse to delay payment to contractors. It should also be in the interest of the Ministry of Finance to determine exactly how much money the government and state-owned enterprises owe to local and foreign contractors, what percentage of that debt is being legitimately challenged by the auditing process and therefore what is the amount that should be disbursed as soon as possible for work that has been properly certified.

That some contractors are still owed monies for work done more than two years ago is certainly bad news for the contractors, some of whom must cut and contrive, beg and borrow in order to continue their businesses.

But billions of dollars owed to contractors is also bad news for T&T’s banking system, which may have extended credit to contractors on the expectation that the debt would be paid off once the government made good on its payments. This situation may also have left thousands of labourers out of pocket as contractors cannot pay their workers if they themselves have not been paid.

The length of time it has taken for the government to settle these payment issues also creates a serious problem for the government as the pool of companies willing to do work for the State becomes smaller and smaller the longer it takes for contractors to get paid. And obviously, any administration that develops a reputation for taking two years or more to pay contractors is going to have great difficulty in kickstarting its capital expenditure programme.

Worst of all is the negative impact that the payment problem may be having on domestic investment in the economy and in tax compliance.

The fact that contractors and other suppliers of services to the government must be paid for the work they have done makes yesterday’s assertion that contractors are owed $4 billion by the government quite shocking if not unbelievable.