I have read with interest Carey Leonard’s Article which appeared in the Tribune of the 11th and the Guardian of the 12th instant.
In his Article, Carey espoused the immediate extension by Government of the expiring Tax Concessions under the HCA in order “to create Bahamian jobs.”
While we all agree that the creation of jobs is the ultimate and immediate goal of any negotiations or consideration over the renewal of the Tax Exemptions, it must also be agreed that because of the ineptitude and/or gross mis-management by the Families and DevCo (Families and Hutchison) over the past 12 years, in particular, Freeport’s economy remains in crisis.
To use the Prime Minister’s expression concerning the malaise being suffered by Freeport and Grand Bahama:
“We face the reality that significant new development is not taking place in Freeport in the same manner as other Islands in The Bahamas that have neither the tax nor infrastructural advantage of Freeport. Unemployment is also higher in Freeport and Grand Bahama than in these other islands. We must therefore question why these conditions exist and set about to address them.”
It is incumbent therefore for the Government to consider, and it is considering, the way forward given the present moribund conditions of the investment climate in Freeport considering that the Tax Concessions have been in place this past 30 years in particular.
That this will take some further time considering the 12 proposals made by the Hawksbill Creek Agreement Review Committee is obvious.
Work of the Committee
I must say publicly and happily that I endorse the findings of the Committee and feel they have done excellent work and, in my opinion, their findings and recommendations accord with the opinion of the majority of the Grand Bahama public and, particularly, with the requirement for a change in the ownership and governance of the “Port Authority” going forward.
Carey and others seem to be developing an argument that the Tax Exemptions not being immediately renewed, and somehow an immediate resurgence of the Freeport Economy not happening, is the fault of the Government. I would point out that this present deplorable condition of the Freeport/Grand Bahama economy is NOT the fault of the Government and the Committee is quite right that there is a need for significant changes to take place before these Exemptions should be universally granted.
The Government and the Committee are on the right course.
The Status Quo
The failure of DevCo this past 16 years proves that Hutchison will not work with a partner (the Families) that they do not have any respect for – whether right or wrong. This is fine but Freeport, and Grand Bahama, and all Bahamians have suffered for this.
Thus, the present ownership and direction of DevCo cannot stand.
The Families have taken over $300M out of Freeport and The Bahamas since 1993 and have not re-invested in Freeport. Never had a plan!
The Families have proven, particularly since Lady Henrietta sold her Power Company shares in 2009/2010 and, in particular, since the economic crisis of 2008, that they will not themselves invest capital in the Port Area. The Government cannot leave us in their hands. Never had a plan!
A “bald” renewal of the Exemptions would leave the status quo in place. Why should these people be “rewarded” for their failure? The Government is NOT to blame for this failure.
Long Term Future and Stability of Freeport
I do agree with my good friend Carey’s argument and that of my very good friend, Fred Smith, that the integrity of the structure of the HCA should be maintained going forward and this seems to be the intent of Dr. Marcus’ Committee and the Government but I do not agree that the Tax Exemptions must be renewed in favour of the present governing body namely, the Families and DevCo (Hutchison) because they have shown no ability to utilize these Concessions for the benefit and growth of the Freeport Community – quite the contrary. I believe the Committee and the Government are quite correct that the leverage it holds now must be used to effect necessary changes in the ownership and governance of the GBPA, DevCo and Port Group and/or in the short term to cause the present ownership Group to re-invest to cause certain things to happen whilst maintaining the purpose, structure and administrative responsibilities of a properly constituted GBPA for the benefit of ALL BAHAMIANS.
Concessions to Industrial Sector
I do believe however that as the Prime Minister has said:
“It is the clear intention of the Government not to place those existing stakeholders in Freeport with major investments that are contributing significantly to the economy of Grand Bahama and will continue to do so, at a tax disadvantage. It is not the intention of the Government to do anything to harm the economy of Grand Bahama.”
I believe this applies directly to the Industrial Investors in and around the Harbour. It is interesting to note these Investors would not suffer any of the threatened taxes, even if they were outside the Port Area, as they would be “covered” by the Industries Encouragement Act and other Legislation (hotels are already exempted by the Hotel Encouragement Act).
There are 3 major Industrial Companies slated to begin major expansions in the next 60 – 90 days in or around the Industrial Sector and in Grand Bahama:-
- Container Port Phase V;
- Carnival Cruise Port (outside the Port Area).
(Aligned to this is the agreement on “Ports” to be granted by Hutchison so that the 3 Projects can proceed also within the same time-frame).
These 3 Projects, when started, can give Freeport and Grand Bahama “breathing” space to get the recommendations of the Committee put in place for the long term future and stability of Freeport and that of The Bahamas in general.
Accordingly, while I would agree that additional time may be needed to decide what to do about the Tourism/Real Estate/Developer Sector and what should have been its prime movers: “the Families”, DevCo and particularly Port Group Ltd., there is no reason an Extension could not be granted NOW to the Industrial Sector so these projects could proceed AND I do exhort the Government so to do.
I continue to believe that Freeport and Grand Bahama have a great future and can be the engine of growth for The Bahamas but it is necessary for the Port Authority Group of Companies to specifically include Port Group Ltd. as the asset holding company and DevCo to be owned and managed by a Developer with capital and marketing ability.
It is therefore critical that at this juncture we get the right thing done.
Terence Gape is a Counsel and Attorney who has practiced in Freeport for more than Forty (40) years. You can read his Call to Action pamphlet and his Speech “The Forgotten Island” at: http://calltoactionfreeport.com.”
Top aerial photo credit: Bahamas Photographer. Used by permission.