Many, if not all, elections are fought by comparing the economic record of the incumbent with the promises of the contenders. Elections are also about messaging; identifying the key issues and addressing the remedial action considered, zip lines included.
Leaving medical care after his illness a few weeks ago, the Prime Minister played the sympathy card asking Tobago for a gift, implying that he wanted a resounding win in the Tobago elections which also coincided with the anniversary of the PNM’s founding.
Tobago has responded, though not in the manner anticipated or hoped for. What does this mean for Tobago? How does one reconcile the success of the PNM in Tobago during the August 2020 national elections with Monday’s political disaster? Will the issue of autonomy and the performance of the Tobago economy become more important?
National statistics prepared by the Central Statistical Office (CSO) do not disaggregate the economic numbers by geographic region. The Tobago House of Assembly’s (THA), Economic Management and Research Unit is tasked with producing the Tobago Social and Economic Statistical Digest which ought to publish estimates of economic activity in Tobago. The THA website, however, did not have any reports for analysis. The absence of reliable estimates of economic performance would make the task of economic management a difficult proposition, more so if one is attempting to achieve sustainability.
GDP estimates for Tobago were given by the Finance Secretary Joel Jack when presenting the THA 2021 budget statement. He estimated Tobago’s 2019 GDP in constant prices at $1.77 billion, with government spending accounting for 44 per cent, financial services 26 per cent, tourism 13 per cent, with transport and storage accounting for another 6 per cent. Therefore, Tobago’s economic activities are service oriented and revolve around tourism, fishing, and government spending, the latter being the largest component of expenditure in Tobago.
T&T’s GDP at constant prices for 2019 is estimated at $154.1 billion which makes Tobago’s share approximately 1.1 per cent. If the government expenditure were excluded, this declines to .06 per cent.
The budgetary allocation for Tobago in the 2021 national budget is $2.1 billion. This allocation is 4.3 per cent of the national budget consistent with the recommendations of the Dispute Resolution Commission (DRC). The allocation does not include another $754.5 million allocated for expenditure in Tobago by various government ministries and statutory authorities in keeping with their legal obligations under 1996 THA Act 40 giving a total expenditure of $2.9 billion. It is not clear if this includes the air and sea bridge subsidies.
But government is not a business. It depends on taxes generated by private sector economic activity. This makes tourism and the distributive sectors the main economic activity in Tobago. Tourism is still a fledgling industry and needs to be developed. Hence the emphasis on a new airport, a functioning sea bridge and a Tobago hotel school and its own tourism development company. The scale of operations does not allow these institutions to be viable.
How big is Tobago tourism and what does it need to be viable? Booking.com’s website said that there were 185 hotels in Tobago. This is an overestimation and probably includes villas, guest houses, bedsits as well as hotels. Those knowledgeable with Tobago’s operations warrant that there are 1,000 marketable hotel rooms in Tobago, rooms that meet the necessary quality. Trinidad has approximately 1,600 rooms of merchantable quality. This explains why the government had to lease two cruise ships to act as conference hotels in running 2009 international conferences as neither Trinidad nor Tobago could host four thousand guests simultaneously.
Even if the airport is successfully completed and attracts more air traffic to Tobago, where would visitors stay?
Additional hotel rooms are required. Estimates suggest that 5,000 rooms are the minimum number of rooms required to make this sector viable. In short, the tourism sector as it currently configured is not viable. This in part explains the anxiety to land an anchor tenant like Hilton or Sandals. Indeed, given the shortage of rooms, it would need some more brand names. What will attract them?
But this is just the beginning. Tourists do not only want to go to the beach and swim. They travel to have fun, sightsee, fish, enjoy the cultural ambiance and the food. Therefore, many more attractions must be developed to cater to these tastes. Building an inclusive hotel like Sandal’s helps, but not everyone is coming for an all-inclusive holiday.
Population size is another matter. The population of Tobago is approximately 61,000 people accounting for 4.3 per cent of the total T&T population of 1.39 million. The THA employs approximately 62 per cent of available labour making it the largest employer thereby crowding out the private sector. Most Tobagonians have two jobs if not three jobs; the THA or government job, whilst doing some other business on the side.
Some critics, notably Drs Vanus and Winford James, argue that calculating Tobago GDP is incomplete unless it includes income from the from the nearby hydrocarbon deposits which are in “Tobago Waters”. Indeed, in a series of newspaper articles Winford argued a case for “Tobago Waters” which sought to establish that income from these fields should accrue (“taxed”) to the THA thereby expanding its earning potential at the expense of the T&T central government.
Under existing T&T law this argument has no merit. However, since the central governments budgetary allocation of 4.3 per cent of the national budget which equates Tobago’s relative population size, it could be argued that the DRC’s approach was equitable.
To achieve sustainability, the number of hotel beds must be expanded substantially. The same goes to the ancillary services and related entertainment products required to make the sector attractive and the agricultural food inputs. Economic growth and development is predicated on a complex mix of skills and economic activities without which growth will remain illusory. COVID-19 has highlighted the vulnerability of tourism. Neither has the THA considered more aggressive approaches adopted by other tourist destinations. A different approach is required.