1. Based on the 2017/18 budget for Trinidad and Tobago prepared by the minister of finance, what are the impact the budgetary allocations would have on both the public and private sectors of trinidad and tobago? pls search for the 2017/18 Trinidad and Tobago budget statement on google to enable you answer this question. also take your time to answer this in other to give proper detailed answers. since i cant provide link for the third party web source, pls try to look it up yourself. i provided some details about the budget to help

The Global Economy:

At the time of the Budget presentation in late 2016, the outlook was for a strong pick-up in global economic activity in 2017, after a marked slowdown in 2015- 2016. While a turnaround has materialized, it appears to be much slower than envisaged. The latest projections are for global real GDP growth of around 3.5 percent in 2017 and 3.6 percent in 2018, up from an average of 3.2 percent in 2016; but a far cry from the pre-crisis levels, particularly for the advanced economies and the commodity-producing developing nations. Real GDP growth in the United States has been revised downwards to 2.1 percent in 2017, primarily reflecting the assumption that fiscal policy will be less expansionary that previously anticipated. Expected economic growth in the United Kingdom has also been revised downwards due to policy uncertainties following the last general elections. In contrast, the cyclical rebound appears to be strong in the euro-area countries as a result of reduced concerns about the negative impact of Brexit and greater political stability in the region. Commodity exporting economies, most of which were plunged into adjustment mode to offset the sharp decline in commodity prices, are expected to slowly exit their recessions because of the steady rise in commodity prices. The recovery, however, is likely to be slower for oilproducing economies as oil prices are expected to make a much slower rebound. Inflation in the advanced economies remains generally subdued at or below the notional 2.0 percent target. This level of price stability, notwithstanding relatively-easy monetary policy, has been attributed to the existence of significant spare capacity, the high level of private indebtedness which is contributing to cautious private sector borrowing and muted wages pressures. It is in this global context of weak or modest economic growth in many countries that we must find our way.

Changing the Paradigm:

Madam Speaker, in many ways we are a typical, small, resource-based developing country. However, many external analysts see us as an exceptionally successful energy-based developing economy, which has used its oil and gas resources to significantly increase the living standards of our relatively small population - and the facts bear this out. According to the World Bank Human Development Index, we have a High Level of Human Development when measured by conventional indicators such as per capita income, now at US$17,000 in Trinidad and Tobago, educational attainment and life expectancy. Our economy can boast of strong economic fundamentals: low inflation, low unemployment, comfortable external reserves and a relatively low external debt burden. We have fairly well-developed infrastructure and we have utilized our energy resources to create a world-class petro-chemical sector. Madam Speaker, many economists believe in the existence of what is called the Dutch Disease in Trinidad and Tobago, that is to say, a paradoxical situation where seemingly good news, such as the discovery of large oil reserves, turns out in the long run to have a negative impact on a countrys broader economy. This is reflected in the local private sectors investment in non-tradables such as retail outlets and finished goods, rather than in manufacturing and export. It also manifests itself in the decline in agriculture and the dependence on imports, including imported food. Other indicators of the old paradigm are: the failure to develop an efficient tax administration, which was overlooked in the past because we could depend on sizable energy taxes; a proliferation of poorly targeted subsidies: on fuel, which are currently being addressed, but as well, on electricity, water, transportation, education and housing.

a highly staffed public sector, in terms of numbers, coexisting with staff shortages in key departments; inefficient capital expenditure management, characterized by inordinate delays and cost overruns in project execution, often overlooked in the past, since funding was not an issue; a tendency for wage increases to outpace productivity; and outdated institutions such as our procurement system. Madam Speaker, you may recall that as a result of an oil shock in the 1980s the then NAR Government chose to address the problem of reduced revenue by downsizing the public sector and cutting public sector salaries and allowances, thus requiring the population to reduce their real incomes. The present situation is quite similar but our approach will be not be the same. This PNM Administration has already started to address the weaknesses in our economy as well as to create the new paradigm which is a precondition for the restoration of economic stability and long term growth. Madam Speaker, the population has pulled through difficult times before and we will do it again. As the calypsonian Black Stalin told us in 1988, almost 30 years ago, We Can Make It If We Try.

Economic Data:

Madam Speaker, one of the shortcomings of our system is the absence of reliable economic data. To address this, the United Nations Statistics Division (UNSD) has recommended that the base year for the production of GDP data at constant prices should be updated in five year cycles or, at a maximum, in 10 year cycles. The use of cycles greater than ten years, as has been the custom in Trinidad and Tobago, distorts the input/output ratios and price structures and increases the margin of error of GDP estimates. The current series for GDP at constant prices had a base year of 2000, more than 17 years ago. In that intervening period the structure of the Trinidad and Tobago economy changed drastically. After discussions with the IMFs regional institute CARTAC, the Central Statistical Office (CSO) decided to update its methodology and shift its base year to 2012, consistent with the recommended 5-year cycle. The rebased series is represented in the 2017 Review of the Economy. Madam Speaker, based on preliminary data for the first six months of the year, the CSO forecasts that real GDP could show a decline of 2.3 percent in 2017. However, this projection is preliminary and may not be giving sufficient weight to the turnaround in the energy sector in the second half of this year. Partial data does, in fact, show that oil and gas output in the first six months of the year was around 5 percent lower than in the corresponding period of 2016. There was also a marked slowdown in activity in the petroleum services sector. In the non-energy sector, there is evidence of a slowdown in construction activity, led by a general reduction in Government spending and in manufacturing and distribution activities due to foreign exchange and productivity challenges. On the other hand, there has been an increase in oil and gas output in the second half of the year. The Juniper project has started production, the rate of which is likely to be ramped up in the coming months. Also, there has been some pick-up in the implementation of the public sector investment programme towards the end of the fiscal year. More importantly however, with other gas projects coming on stream in 2018 - 2019 and, given recent gas discoveries by bpTT, it is now safe to say that the rebound in oil and gas production over the medium-term will be stronger than originally anticipated. Madam Speaker, the Central Bank has reported that domestic inflation continues to be under control, which is one of the key priorities for this Government. Core inflation is now down to 1.7 percent year on year, with food inflation measuring just 0.5 percent year on year. Further, based on the CSOs data, the unemployment rate at the end of 2016 was only 3.6 percent. These are comforting figures. Madam Speaker, as is to be expected, the persistent difficulties being faced by the energy sector are reflected in a reduction in foreign exchange availability. Purchases from the market by authorized dealers have fallen from US$4.9 billion in 2015 to US$4.3 billion in 2016. Through August 2017, purchases have amounted to only US$2.9 billion. To help meet the excess demand, the Central Bank interventions in the foreign exchange market doubled to US$2.6 billion in 2015 but declined to US$1.8 billion in 2016. Up to the end of August 2017, the Central Bank had sold US$1.3 billion to the authorized dealers, so once again in this calendar year, the injection of foreign exchange by the Central Bank may be in the order of US$1.8 billion. As they have done in past periods of foreign exchange difficulties, the banks have continued to give preference to manufacturing and trade in their allocation of foreign exchange.

Fiscal Outturn: 2017

Madam Speaker, the 2017 Budget assumed an oil price of US$48.00 per barrel and a netback gas price of US$2.25 per MMBtu. In line with the adjustment path set out in the medium term consolidation plan, the 2017 Budget targeted an overall deficit of $6.0 billion, the equivalent of 3.9 percent of the GDP estimate at the time. The actual outturn in 2017 for oil and gas prices was US$48.03 for oil and a netback price of US$2.00 for gas. Total revenue was budgeted to increase by about $2.5 billion to $47.4 billion, largely reflecting an increase in proceeds from the sale of assets. Core revenues were budgeted to remain at $33 billion, as an expected increase in tax collections from the energy sector was to be roughly offset by lower profit transfers from state enterprises. Total expenditure was budgeted to increase by just $0.5 billion to $53.5 billion. Current expenditure was budgeted to remain unchanged at around $48.4 billion notwithstanding the inclusion of $1.8 billion to cover the remainder of arrears to public servants and a further $1.8 billion to reduce outstanding arrears to contractors. The Budget also provided for a small increase of about $0.5 billion in capital expenditure over the 2016 estimates. Preliminary data indicate that we will fall short of our 2017 revenue target. This is largely because of delays in the receipt of certain one-off revenue flows, which we can call debt recovery, in particular the delay in recovering the $15 billion plus of taxpayers money still owed by CL Financial. As is now public knowledge, the delay in monetizing CLFs assets was caused by lack of co-operation on the part of the CL Financial shareholders and an attempted hostile takeover on the part of the company. This attempted takeover led to an application to the Court to wind up the company, which became necessary to save and preserve taxpayers assets. And now that the liquidators have been appointed by the Court, it will be far easier in 2018 to recover the billions of tax payers dollars lent, to a private company, CLF. A further revenue shortfall was caused by delays in the collection of property tax as a result of legal proceedings initiated by persons associated with the UNC Opposition. These proceedings had to be heard by the Court of Appeal before the Government was given the go ahead with the collection of the tax. An aspect of that court matter is still to be determined by the Court, but the Government can now proceed to value properties and populate the property valuation rolls, which is an essential prerequisite to the collection of property tax. The expected receipts from the gambling and gaming sector were also not realized. The new gambling legislation, which seeks to regulate gambling and ensure that Government receives its fair share of revenue from this sector requires a special majority, and as such, it is making its way through a Joint Select Committee (JSC) of Parliament. Considerable progress has already been made in the JSC; however, all stakeholders who made submissions on the proposed Gambling Bill have been interviewed by the Committee, leaving just the clauseby- clause examination to be undertaken. Once the requisite amendments are made to the legislation, and the Opposition supports the required 3/5 majority, the new Gambling and Gaming Commission can be implemented. Total Revenue in 2017 was thus roughly $10 billion lower than envisaged largely because of the shortfall in the above mentioned areas. On the other hand, due to prudent financial management, Total Expenditure was $3 billion lower than expected. On this basis, the overall deficit turned out to be $12.6 billion, almost twice the budgeted level. It is noteworthy that the entire increase in the deficit is explained by the non-receipt of the extraordinary revenues from CLF/Clico (debt recovery), due to legal challenges. Now that the legal issues have been largely resolved, in excess of $10 billion from CLF/Clico would be available for future financing, including the 2018 Budget.

Revenue:

Madam Speaker, an analysis of the 2017 revenue outturn indicates that the increase in oil prices beyond the US$50.00 per barrel threshold for three months early in fiscal 2017 triggered the payment of Supplemental Petroleum Tax (SPT). Since early 2016, oil prices have fluctuated just below the US$50 threshold so that little, if any, Supplemental Petroleum Tax (SPT) was payable. Preliminary data also suggest that there were nominal shortfalls in the collection of value-added taxes reflecting declining consumer demand and pervasive tax evasion. Reduced foreign exchange availability also affected revenue collections from taxes on alcohol and cigarettes, while a pronounced shift in demand for hybrid vehicles that are tax-exempt resulted in lower motor vehicle tax collections. Poor revenue administration continues to impact the collection of taxes. The 2017 Budget had also envisaged one-off revenues from asset sales through public offerings of shares of First Citizens and the Trinidad and Tobago National Gas Limited.

Expenditure:

Madam Speaker, preliminary data indicate that total expenditure in 2017 was in the order of $50.5 billion, some $3 billion below budget. The implementation of the Public Sector Investment Programme is now more disciplined in order to avoid the wastage that occurred in previous years. Unfortunately, this new orderly approach has resulted in delays in getting some of our larger projects off the ground. We were also able to complete the planning and advance the procurement process in respect of some of the larger projects. This is important since it means that we can hit the ground running in the next fiscal year.

Budget Financing and Public Debt:

Madam Speaker, the overall deficit of $12.6 billion was financed in the main through a drawdown of US$252 million or approximately TT$1.7 billion from the Heritage and Stabilization Fund (HSF), in March 2017 and from domestic and foreign borrowing. Our foreign borrowing consisted mainly of a US$300.0 million or TT$2.0 billion loan from the Corporacion Andina de Fomento (CAF), also called the Andean Development Bank, and loan drawdowns of $280 million from the Inter-American Development Bank (IDB). Domestic financing in 2017 amounted to $6.6 billion representing the proceeds from bond issues. As at September 30th 2017, net public sector debt outstanding totalled $93.7 billion, the equivalent of 62.6 percent of the revised GDP compared with $87.5 billion or 58.8 percent of GDP at the end of September 2016. External public sector debt as at September 30th 2017 amounted to a still comfortable 16.9 percent of GDP. We do not anticipate a large fiscal deficit in 2018, since our sale of assets programme and the recovery of money lent to CLF/Clico (debt recovery) will be far easier to execute in 2018 than in 2017. Madam Speaker, developments in the second half of 2017 confirm the assessment of the recently concluded IMF Article IV Consultation mission that the economy is on the cusp of a moderate recovery. To ensure and support this turnaround we need to redouble our efforts to reduce the large fiscal imbalance and to accelerate the structural reforms that are needed for economic diversification. The medium-term recovery will again be driven by the energy sector. However, the policies being put in place are expected to elicit a stronger response from the nonenergy export sector.

Estimates of Revenue and Expenditure: 2017-2018:

Madam Speaker, responsible fiscal management is central to our public policy agenda for achieving prosperity and improving the lives of our citizens. The fiscal consolidation process continues in this Budget, as we bring expenditures into better alignment with available revenues, yet at the same time ensuring that the capital expenditure programme is maintained to underpin the process for stimulating economic activity. For fiscal 2018, therefore: Total Revenue has been budgeted at $45.74 billion, up from $37.84 billion or $7.91 billion from the estimated outturn in 2017; Total Expenditure for fiscal 2018 has been budgeted at $50.5 billion, or roughly the same as in the fiscal 2017 outturn; but significantly lower than the peak expenditure of $62.8 billion achieved in 2014. This is a substantial reduction in expenditure from the unsustainable 2014 level of $12.3 billion or 24.3 percent; and the fiscal deficit for 2018 is estimated at $4.76 billion or 3.1 percent of Gross Domestic Product; this compared with a fiscal deficit of $12.643 billion or 8.4 percent of GDP in fiscal 2017. The budgeted revenue for 2018 is predicated on an oil price of US$52.00 and a gas price of $2.75 per MMBtu. It should be noted that our assumed oil price is below the International Monetary Fund forecast of $56.20 per barrel for 2018, and lower than the current oil price forecasts made by the World Bank, United States Energy Information Administration (USEIA) and International Energy Agency (IEA). Madam Speaker, based on these assumptions we are projecting: Total revenue $45.741 billion Oil revenue $ 6.412 billion Non-oil revenue $32.910 billion Capital revenue $ 6.419 billion Total expenditure net of capital Repayments and sinking fund contribution $50.501 billion Madam Speaker, we are continuing to build an inclusive society with major allocations of expenditure for 2018 on Security, Education and Health. Education and Training $7.2905 billion National Security $6.2371 billion Health $6.0278 billion Public Utilities $3.5454 billion Works and Transport $3.0912 billion Rural Development and Local Government $1.8494 billion Housing $1.0052 billion Agriculture $0.5446 billion Madam Speaker, as we move towards rebalancing our fiscal accounts and ensuring that our expenditure is brought in broad alignment with our revenue, while at the same time creating the necessary conditions for putting the economy on a path of sustainable growth and development, we are utilizing all available financing options for transitioning the economy. We are able to tap into the domestic capital market for an amount equivalent to $4.5 billion or 3 percent of GDP; yet there would remain a fiscal gap between planned expenditure and our core revenue of $37.3 billion which is generated from taxation, royalties and customs duties. Madam Speaker, with domestic financing of $4.5 billion, an additional fiscal shortage is therefore required to be financed. We will continue with our Sale of Assets Programme, including repayments relating to the CLF/ Clico rescue plan and withdrawals from the restructured HSF, inter alia, to generate an amount of approximately $7.5 billion or 4.4 percent of GDP. Accordingly, the following fiscal measures are proposed for 2018.

Tobago:

Madam Speaker, I now turn my attention to Tobago. Madam Speaker, the budgetary proposals of the Tobago House of Assembly (THA) for fiscal 2018 were submitted to the Ministry of Finance towards the end of June this year in conformity with the requirements of the THA Act. Over the last few weeks, the Ministry of Finance has been in extensive discussions with the THA regarding the Assemblys budgetary proposals. I wish to extend my sincere gratitude to the Chief Secretary and his team for their invaluable input in these discussions. Madam Speaker, Tobago has the potential to contribute significantly to the diversification of the national economy and to earn much needed foreign exchange. The development of the tourism sector in Tobago remains a critical priority for this Administration. Tobagos budgetary allocation will enhance its tourism product, boost its marketing thrust and finance the upgrading and expansion of its room stock. We will continue to work with the Tobago House of Assembly towards the development of a Sandals Resort in Tobago. The construction of this resort will simultaneously address three critical problems which have stymied the expansion of the tourism sector, namely, marketing, airlift and room stock. In addition, we will encourage the tourism stakeholders in Tobago to access the Tourism Business Development Fund. Madam Speaker, the development and revitalization of the agricultural sector in Tobago is of critical importance. The THA will expand its Agricultural Access Road Programme thereby creating further linkages between the agricultural sector and other sectors in Tobago, inclusive of tourism and health; adopt modern agricultural practices and technologies and enhance its focus on agro-processing to increase the value-added from this sub-sector. The THA will also accelerate its housing programme to address the existing mismatch between demand and supply for public housing. The Assembly will develop several estates, inclusive of Shirvan and Friendship and expand several grant programmes and initiatives to improve the existing quality of the housing stock. To support land ownership in Tobago, legislation will be brought to Parliament in the new fiscal year to address the longstanding issue of land titles affecting residents in Tobago. Madam Speaker, as Central Government, we recognize that many of our developmental initiatives for Tobago could be seriously compromised if existing inefficiencies in the air and sea bridge are not addressed in a sustainable manner. We remain committed to working with the Tobago House of Assembly and stakeholders in Tobago to find permanent solutions to the persistent problems experienced in inter-island travel. Our ultimate objective is to develop an efficient service which guarantees travel between the two islands in a safe, predictable and dignified manner. As it relates to the sea bridge, the Port Authority of Trinidad and Tobago has been mandated to find a resolution to the existing problems in the quickest possible time. Madam Speaker, I am delighted to report to the Honourable House that the draft legislation to grant self-government and a greater devolution of powers to Tobago is before Cabinet and in the upcoming fiscal year we will table the legislation before Parliament. Madam Speaker, the budgetary allocation to the Tobago House of Assembly for fiscal 2018 is $2.1936 billion, of which $1.86 billion will be for recurrent expenditure, $315.683 million for capital expenditure and $18 million for the unemployment relief programme. This allocation to the Assembly represents 4.34 percent of the national Budget.But Madam Speaker, that is not all, further, the THA has, of its own accord, obtained an international credit rating. Therefore, to supplement the 2018 allocation, we are presently in discussions with the THA with respect to giving approval to the Assembly to borrow money in 2018 to accelerate its development programme. In addition to the direct allocation to the Assembly, a further $1.09 billion is allocated to facilitate work in Tobago by Government Ministries, in keeping with their responsibilities under the Sixth Schedule of the THA Act. This will cater for ongoing construction works on the Old Grange and Roxborough Police Stations, the construction of a Desalination Plant and the expansion of the power generating capacity at the Cove Power Plant.

Energy Sector:

Madam Speaker, despite the challenges posed by the low price environment, the energy sector faces a very positive outlook based on a number of new gas projects which are scheduled to start production over the next two to three years. A new tax regime which is designed to provide incentives for increased exploration and production should also set the stage for increased oil and gas output. Oil production for the first five months of 2017 has levelled off at 73,500 bpd compared with 73,800 bpd for the corresponding period of 2016, although this is well below the rate of 100,851 bpd in May 2010. Oil production is now expected to reach around 85,000 bpd by 2020, in the context of the plans and programmes now being undertaken by the industry. Gas production has also been declining. In 2015, gas production averaged 3.833 billion standard cubic feet per day (scf); but this amount declined to 3.327 billion scf in 2016 and the downward trend continued in 2017. However, we are now firmly charting a way forward out of what was a potential gas crisis and taking steps to ensure that our gas production returns to the 2010 level of 4.3 billion scf. We expect to reach this target of 4.3 billion scf as a result of a number of projects, most of which are already on stream: the bpTT Juniper Platform which commenced gas production in August 2017 would have peak output capacity of 590 million scf; the bpTT EOG Resources Sercan Phase 2 project which began in the second half of 2016 has a capacity to produce up to 275 million scf; the bpTTs Trinidad Region Onshore Compression project which commenced production in April 2017 is expected to add up to 200 million scf; the Angelin project is expected to produce up to 600 million scf beginning at the end of 2019; Shells major work-programme on the redevelopment of the Starfish field, the use of infill drilling in the Dolphin field and the development of untapped reserves in the Bounty and Endeavour fields are expected to produce additional gas in 2019, thereby reversing Shells declining output levels of recent years; and bpTTs Cassia Offshore Compression project, which, once approved, will commence operations in 2020. Madam Speaker, with the natural rate of decline in gas production and despite the increasing production from new projects, the uplift in gas availability would amount to 3.539 billion scf. To supplement this, Government is working assiduously with the Venezuelan authorities and related companies to complete a gas sales agreement in the near future for access to across-the-border gas by the 2019 - 2020 period. With access to the Dragon Field, gas availability could be raised to around 3.839 billion scf in 2020, thereby bringing gas supply closer to gas demand. Over the longer term, we envisage that the natural gas supply to the downstream sector will be sustained by the exploration activity of the major energy companies, which is expected to accelerate over the medium-term. We anticipate that production of natural gas from the recently-announced discovery of approximately 2 trillion cubic feet (tcf) of natural gas at bpTTs Savannah and Macadamia wells could begin around 2021 or 2022. This development will ensure that gas supply will be able to meet projected gas demand. Madam Speaker, further ahead, production from the 10 tcf cross-border Loran-Manatee field between Venezuela and Trinidad and Tobago is expected to commence as early as 2023, providing access to the 2.69 tcf portion of gas within Trinidad and Tobagos territory. It is also quite possible, once the current negotiations bear fruit that over 7 tcf of gas on the Venezuelan side can be processed at this countrys Atlantic LNG facility.

Gas Master Plan Madam Speaker, it is public knowledge that the future of our gas-based industries is being threatened by shortages in domestic gas production. Since 2002, the gas reserve base has been steadily falling with the proven reserves to production ratio falling to 7.6 years as at the end of 2015. However, as noted earlier, several projects to improve the gas supply are underway and we are putting in place a road map to ensure the long-term stability of our natural gas sector. In 2017, we completed the technical work in the evaluation of the Gas Master Plan. We are committed to the policy framework as outlined in that Plan which has already been approved by the Standing Committee on Energy of Cabinet. We expect this Plan to be quickly adopted by the Joint Select Committee of Parliament on Energy, as national policy. The main elements of this Plan are: ensuring that new exploration efforts are undertaken to the maximum extent possible; ensuring that all suppliers develop and supply their gas resources to the market in an optimal manner; maximizing the Government take from the gas sector subject to ensuring that all producers along the value chain are sufficiently incentivized to perform optimally for the country; ensuring that sufficient gas supply is available to strategic downstream sectors; and ensuring that if gas supply curtailment is required it is applied in a transparent consistent and fair basis. Madam Speaker, the work has already begun. As an initial step, we are addressing the inadequate benefits flowing to Trinidad and Tobago from the high global Liquefied Natural Gas (LNG) prices in recent years. The initial assessment is that the very low weighted netback prices for LNG in Trinidad and Tobago under existing commercial arrangements were completely inconsistent with the high prices of LNG then prevailing in global markets; by some estimates, Madam Speaker the country lost billions of US dollars annually in the 2011 - 2014 period from such irregular transfer pricing practices. To address this, an international gas consultant has been engaged and is now working with the Government to establish mechanisms through which the Government can increase or maximise its share of the income generated through sales of our countrys LNG, within the scope of the existing contractual arrangements.

Tax Compliance and Administration: Madam Speaker, the prolonged period of high energy prices that we experienced obscured many of the ills plaguing our fiscal regime. In fact, the decade and a half leading up to the collapse of oil and gas prices in 2014 institutionalized a mix of policies and behaviours, many of which are incompatible with the type of dynamic, diversified economy we want to create. We thus need to introduce a number of fiscal reforms more in keeping with our goal of fiscal sustainability. Madam Speaker, there are important issues to be addressed with our Energy Tax Regime. Given the long history of the sector and the way it has evolved over time, Governments approach to the taxation of the sector has not always been consistent or holistic. Moreover, the proliferation of multiple tax systems in one sector raises questions about the efficiency of these arrangements and creates uncertainty regarding expected Government revenue. Against this background, we have started a review of the energy tax regime in order to simplify and rationalize the terms of both Exploration and Production licenses and Production Sharing Contracts. The main objectives of this reform are to encourage investment in the energy sector and to raise the Governments revenue-take. Critical areas being addressed are: making the Supplemental Petroleum Tax responsive not to price but to underlying profitability; extending the Supplemental Petroleum Tax to gas, which is now the countrys main petroleum product; reconciling and simplifying of the fiscal regimes applicable to the exploration and production and production sharing systems; and standardizing and uniformly applying appropriate royalty rates to all crude oil, condensate and gas. Negotiations between the energy companies and the Government are well advanced and we expect to be in a position to present the new oil and gas fiscal regime before the end of this year. However, Madam Speaker, the prolonged period of high energy taxes that this country has enjoyed, lulled significant sections of the population into believing that taxes from the non-oil sector were not needed to finance the provision of government services. That seemed to be the Oppositions rationale in suspending and later opposing the introduction of a modern property tax a tax that is widely regarded as being equitable and progressive, while at the same time being efficient and simple to administer. We in this Government, however, recognise the urgent need to identify new revenue streams, and preparations are well-advanced towards populating the valuation and assessment rolls and training the personnel needed to facilitate the implementation of this tax. Our tax reform strategy also involves a major improvement in Tax Administration. We must ensure that everyone pays his or her rightful share; not just the easily identified wage earners. The self-employed professionals need to pay their fair share; and businesses need to ensure that they collect and hand over value-added taxes as the law requires. In this context, Government plans to review the tax incentive regime to ensure that there are no companies still receiving incentives which should have expired or are no longer required. Madam Speaker, experience in the region and elsewhere has demonstrated the benefits of having an integrated Revenue Authority as the centre-piece of the tax administration system, as it brings together the Board of Inland Revenue and the Customs and Excise Division under one administrative umbrella. A wellstructured Revenue Authority not only facilitates coordination and collaboration between the two main tax collection offices, but also allows for the recruitment of specialized staff which are not always available in the traditional public service. This arrangement is conducive to greater administrative and operational efficiency since it facilitates the transfer of information between the two tax collection units. As we move ahead to more efficient revenue collection, we intend to present the legislation establishing the Revenue Authority to Parliament by December 2017. Madam Speaker, currently, Trinidad and Tobago is home to a Gaming Industry worth an estimated $15 - 20 billion, from which we collect little or no taxes. A Gambling (Gaming and Betting) Control Bill, which is identical to the one prepared by the last Administration, was presented to a Joint Select Committee of Parliament in February of this year, at the request of the Opposition. The Committee has already invited and received submissions from the public and all stakeholders in the gambling sector and interviewed all concerned. It is our expectation therefore, that the clause by clause examination of the Bill will be completed as quickly as possible, so that new comprehensive gaming legislation will be in place before the end of fiscal 2018. In the meanwhile, in anticipation of the Bill receiving the required special majority, the Ministry of Finance is working diligently on the required regulatory and compliance structure. Madam Speaker, there are also obvious unsustainable weaknesses in the structure of Central Governments expenditure. The Central Governments wage bill now consumes 31 percent of core revenue receipts. In 2014, before the collapse in oil and gas prices and before a 14 percent wage increase to public servants and workers in many state enterprises, the wage bill only consumed 15 percent of core revenues. Madam Speaker, for years we have expressed concern about the explosive growth of transfers and subsidies, but we have done little about it, except in the area of reducing fuel subsidies. In this latter context, notwithstanding adjustments to fuel prices in 2016, the fuel subsidy in 2017, largely on diesel, still amounted to about $800.0 million. It is also important for me to emphasize and for our population to realize that our fiscal system is overrun with subsidies, many of which are unsustainable, though they are sometimes called by other names. In 2017, for example, the Water and Sewerage Authority (WASA), the Port Authority, Caribbean Airlines and the Public Transport Service Corporation (PTSC) received combined transfers of close to $3 billion from the Central Government. These are in fact subsidies on water rates and transportation tariffs. The Trinidad and Tobago Electricity Commission (T&TEC) also receives a subsidy of about $750 million a year by not paying the National Gas Company for natural gas. This is why we have the lowest electricity tariffs in the Caribbean and in Latin America. But how much longer can we afford this Madam Speaker? The Government Assistance for Tertiary Education (GATE) is another subsidy that takes up a large part of Government spending. Since its introduction by a previous PNM Administration in 2004, successive Governments have spent $6.5 billion on GATE. This subsidy has contributed to raising the student participation rate in higher education from 8 percent in 2002 to 65 percent in 2015. But at current revenue levels, this rate of expenditure is not sustainable and must be subject to constant review. In recognition of the fact that we can no longer afford to spend upwards of $700 million a year on GATE, the Government, after consultations with the relevant stakeholders, has restructured the programme, such that GATE will remain open to all students but they will have to undergo a means test to determine the level of subsidy to which they would be entitled. The idea is to give maximum assistance to those most in need and to ask those who can afford, to make a contribution to their tertiary education. The GATE programme will be subject to further review and adjustment in 2018, since a reasoned argument has been made that wealthy individuals should not benefit from any subsidy on tertiary education at all. Madam Speaker, the Government currently spends close to $1 billion annually on two employment-generation programmes the Unemployment Relief Programme (URP) and the Community Environmental Protection and Enhancement Programme (CEPEP). We have already begun to review these programmes to return them to their original mandate and to ensure they are more productive and in the national interest. Madam Speaker, consistent with the need to cut out waste and duplication, the Government has engaged the World Bank to conduct a Public Expenditure Review, starting with the major areas of expenditure. The study will focus on improving the efficiency of our spending on health, education and social services and developing systems to improve targeting and prevent overlapping of our social safety net. We expect that implementation of measures to improve the efficiency and targeting of these subsidies and transfers could produce significant savings without depriving the deserving beneficiaries of these programmes.

Diversifying the Economy: Madam Speaker, in the ensuing Budget Debate, Ministers of Government will report in detail on the progress their ministries have made, their achievements in 2017, as well as their plans for 2018. This Government is a team and our Ministers are all worthy speakers. There is thus no need Madam Speaker to dilute the fiscal message in this Statement with unnecessary reporting on all Government departments and agencies. This Budget Statement therefore will focus on those areas that we consider relevant to the new economic paradigm. In that context, as is the case with our fiscal consolidation strategy we certainly need to change the paradigm if we are to be successful at long-term economic diversification. Consecutive administrations have recognized the need for economic diversification, but the lure of windfall revenues and the spending possibilities that they present have always come in the way of the best-laid plans. Perhaps more importantly, we have never been able to reach the level of stakeholder collaboration needed to successfully pursue diversification. It is clear that the market mechanism by itself will not get us there. If business or labour pursue sectional interests it would not be sufficient and successive Governments are not without blame. Governments have too often been slow in taking the difficult decisions rather than acquiescing in short-term fixes. As an example, we have too often put off the kinds of public service reforms that are required to facilitate private sector activity and investment. Our present economic predicament provides us with yet another opportunity to get it right and we must seize and pursue it vigorously in order to protect our countrys future.

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