March 17, 2009 marked the 50th anniversary of the sudden death in 1959 of Noel Nethersole, the first minister of finance in Norman Manley's administration. He died a month before he was to deliver the April budget, a task that Manley, the minister of agriculture, took up. Jamaica is also entering the 56th year when its budget was first prepared when the ministerial system came into being in 1953. That budget was delivered by Donald Sangster.

Both men were the dominant figures in Jamaica's financial management between 1953, when Sangster succeeded Sir Harold Allan who had died in office, and after Nethersole succeeded Sangster when the People's National Party (PNP) replaced the Jamaica Labour Party (JLP) in 1955, until his own death in 1959. As Jamaica enters its current budget period in April it finds itself trying to read the uncertain world economic situation and find ways to cope. Jamaica's economy was doing quite well in the 1950s, and by the end of Nethersole's tenure it was one of the leading developing economies in the world. But the post-war world economy was only just taking shape and it was not easy reading it back then and planning development accordingly.

Donald Sangster became the Commonwealth Caribbean's first minister of finance in 1953. He placed the ministry on its modern footing. He delivered his budget in June outlining its new purpose as being to review the economic state of the country, review the economic policy of the Government, and indicate its financial needs and methods of revenue. The Ministry of Finance, he said, would have responsibility for the technical administration of finance, planning for development, and providing periodical reviews of internal and external economic conditions. Its business would be conducted with probity, dignity and efficiency to win the respect and confidence of the outside world.

CHALLENGES TO BUDGETING

In 1955, Noel Nethersole became minister of finance and introduced his first budget in March. He brought new investments to Jamaica by accessing Jamaica's savings held by Britain in a reserve fund and negotiating loans from the United States. A national planning unit was established and discussions began immediately about creating a central bank. Under Nethersole and Manley, a nascent Cabinet system began to emerge. The Economic and Finance Committees of the Executive Council came to function under the Chief Minister (Manley) with representatives from the Ministry of Finance and other ministries that were central to making economic decisions, particularly about investments and productivity. A more active government began to emerge.

A number of challenges to budgeting faced them. Unfortunately, election budgeting was already around from 1944. There was a spending category called Public Works Extraordinaire which appeared to be for patronage spending. In 1951, Norman Manley complained that of spending totalling £350,000, 84 per cent or £294,500 had been spent in JLP constituencies on 'public works'. A paltry £49,000 had been spent in PNP constituencies. In Clarendon, for example, PNP constituencies received only £8,000 out of £95,000 spent, and in his own constituency the spending had favoured the JLP by 3:1.

The PNP now claims that the JLP spent $300 million-$500 million in West Portland in the weeks leading up to the March by-election. We will see if those constituencies that favour the JLP, especially where other by-elections might be held, continue to get the benefit of our very tight budget. In 1955, Florizel Glasspole commented that public expenditure had at times been influenced by political expediency rather than how much the project would contribute to the country. That remains true today.

It was Donald Sangster who had the opportunity on August 8, 1951, to move the motion that the House, "reaffirms its full acceptance of the aim of West Indian Federation and accepts this as a basis for achieving Dominion status", both long-standing PNP objectives. Federation was a strategy for economic development because, as Sangster said, although territories would be forgoing 75 per cent of customs duties, with all the land space, the manpower and other resources, the region would be able to establish more and more industries.

That logic still applies. No territory can rely on credit, affordable imports and production systems on their own. Jamaica's bauxite, the region's tourism and agriculture, for example, are all at a low point. We must use economic regionalism more productively.

In 1951, Nethersole complained that Jamaica was precariously dependent on imports of food and capital goods. Jamaica's touted industrialisation was proving to be a dependent industrialisation. Wills Isaacs noted that the country was importing 'salt thing' instead of developing a fishing industry. It was importing £80,000 of furniture to the detriment of the local industry. Some £600,000-£750,000 was being spent to import cars while they could be assembled here. We were importing 420,000 pounds of flour instead of establishing a flour mill. Our economy is now so heavily dependent that stimulus packages only stimulate imports. We should be establishing new industries rather than resurrecting industries that reinforce import and energy dependence.

Nethersole also believed that the old British imperial bias of trade was harmful and that the Jamaican and West Indian economies should realign themselves to the North American economy. New shipping, trade preferences and business connections would be needed. By this logic we should now be deepening connections with the North American diaspora and the broader Americas and Caribbean states to further diversify our economy.

Almost two decades before we realigned our currency to the US dollar, Nethersole was arguing for this. Now, world currencies are changing positions of strength again and we need to strategise our trading with strong currency areas. Donald Sangster was not convinced. He still found comfort in the British system of preferences and felt we could not get the same with the Americans. Events have proven that British preferences (for sugar and bananas, for example) have not been sustained and Caribbean Basin preferences were, in fact, obtained with the US.

LOCAL GOVERNMENT UNDERMINED

Nethersole complained in 1956 that since 1937 land valuation had been delayed for all kinds of suspicious reasons, robbing governments of new property taxes. This had undermined local government. It also increased dependence on imports. Some 36 per cent of revenue came from customs duties while less than two per cent of the population paid income tax. Fewer than 600 companies accounted for one-fifth of company taxes. This pattern of tax avoidance remains. For example, the head of the fashion and apparel cluster said last week that 80 per cent of fashion designers and other persons in the industry pay no tax. In an economy that is not growing government must find ways to get our non-compliant society to pay its taxes.

Today, we still need to consider election spending, economic integration, dependency, world currencies, and revenue collection in our debates. And, we can do this with civility. Bustamante had this to say of Nethersole in 1955: "I appreciate the gentlemanly manner and the orderly manner in which the Minister of Finance conducted the debate. The Minister of Finance conducts himself in a nice, quiet, dignified fashion. Nothing I could say in praise of the conduct of the Minister of Finance would be enough to convey to the public how we appreciate him on this side."

We hope all debaters will conduct themselves in this manner in the 2009 debate. Robert Buddan lectures in the Department of Government, UWI, Mona campus. Email: Robert.Buddan@uwimona.edu.jm or columns@gleanerjm.com.