Trinidad and Tobago's Federation of Independent Trade Unions (FITUN) Says No to Privatisation

Trinidad and Tobago's Federation of Independent Trade Unions (FITUN) Says No to Privatisation

25th November 2011

In our Proposals for the National Budget 2011/2012, the Federation of Independent Trade Unions and NGOs (FITUN) articulated a clear policy position on the state sector. Under the heading “State Owned Companies as Agents of Resource Mobilization”, FITUN stated:

“State owned and operated entities are sources of revenue generation and therefore need to be operated in an efficient manner so as to ensure that said entities are net revenue earners. This revenue can then be utilised for the implementation of policies and projects geared towards economic development. Given this, FITUN opposes the privatisation of key and strategic state enterprises. Government must resist the temptation to consider selling state companies to finance debt, as this would be a one off source of income, whereas maintaining state ownership would mean that these revenue earning organizations could continuously and consistently contribute to the state coffers, once operated efficiently. Additionally, such a move would promote an inequitable distribution of wealth.

However, one area of savings would be the winding up of a number of these special purpose companies and the reincorporation of these functions into the public service as the financing of these entities is quite costly, and there is a great tendency for them to become ‘run away horses’, draining resources from the economy but making no significant net contribution to the public coffers such as has been the case with UDeCOTT, EMBDC, and eTECK for example.”

These positions were further elaborated upon in a meeting between FITUN and the Minister of Finance. The Minister and his team indicated in that meeting that divestment was being considered. FITUN for its part restated that, in our view, an initial divestment would be a clear signal that the government’s policy position was to privatise and that once started there was no telling where the process of privatisation would end. FITUN therefore saw any move to divest state enterprises and especially strategic enterprises as being inimical to the national interest.

In his Budget Speech, the Minister identified that there would be some divestment of state ownership and specified that there would be a limited sale of shares of the First Citizens Bank on the local stock exchange. FITUN sees First Citizens as being a strategic enterprise. It is one of just two nationally owned banks, Republic Bank being the other. It is vital that we have significant control over financial institutions if we are to be able to harness domestic savings and channel them to investment that leads to national development.

FITUN is extremely concerned that the plans to divest First Citizens will result in the loss of national ownership, with dire consequences for our national development objectives. Indeed, the plans to divest may even be effected in such a manner that foreign ownership together with ownership by local big business, take precedence over the ordinary citizen. This would be a travesty and a complete capitulation to the neo-liberal policies championed by the institutions of the Washington Consensus (the International Monetary Fund, World Bank and IDB). These policies demand privatisation and the distribution of wealth to big business interest. FITUN has always opposed these policies and we do so again.

It is to be recalled that FITUN led the campaign against the sale of RBTT to the Royal Bank of Canada. That sale was to satisfy the narrow interests of some corporate firms. Indeed, one significant shareholder sold its RBC shares as soon as they were received. The loss of regional ownership of RBTT means that of the six large banks in the Caribbean only two Republic and First Citizens are now locally owned – the Canadian controlled Royal Bank, Bank of Nova Scotia and Bank of Commerce being the principal owners of RBC, Scotia Bank, and First Caribbean respectively.

FITUN is therefore consistent in its position: strategic locally/regionally owned assets - whether by state or private capital or a combination of both – ought to remain in local/regional hands. We advise the government to review its policy with respect to divestment. As we stated in our Budget proposals, there are savings to be had if some of the special purpose companies are closed and the public service re-professionalised with permanent public officers delivering quality services to the citizens. The answer is not to sell out our strategic assets.

Federation of Independent Trade Unions and NGOs

David Abdulah