Creative Industries in T&T Budget 2021: To be or not to be? 🔊

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Colm Imbert, Minister of Finance

Colm Imbert, as Minister of Finance, will lay in Parliament next week Monday, the Appropriations (Financial Year 2021) Bill, 2020. We call it the Budget Statement, but in essence he will ask the Parliament to authorize the issue of tens of billions of dollars from the Consolidated Fund to service the country for the next year.

Since March, the COVID-19 pandemic and the restrictions arising therefrom have interrupted industries. At the Mid Year Review in June 2020, Imbert said, “we recognized that economic activity would be curtailed and that particular economic sectors would be seriously affected including tourism, hospitality, manufacturing, trade, distribution, construction, personal and professional services and arts, entertainment and recreation.

Two that stand out for me are the entertainment industry and tourism. We dodged a bullet here in T&T with Carnival 2020 taking place, but there is much speculation as to the fate of the 2021 festival. [As I was editing this essay for publication, PM Rowley on Sep. 28 announced that, “unless there is some dramatic wind that will blow across us…Carnival in Trinidad and Tobago in 2021 is not on.”]

We have also seen the cancellation of major music festivals and Carnivals in all the islands and in the major Caribbean diaspora cities of London, New York, Miami and Toronto.

The link between the diaspora market as a space for the commercialisation of our music product, for instance, and our inability to perform live meant a decimation of potential revenue streams in this time of COVID-19. Workarounds via streaming of virtual events did not have the financial impact of in-person crowded live events.

Allied with that product is the movement of people via a tourism network of visitors, venues, and vacations. Adjacent industries in audio-visual, fashion and other services were cut short with the roll-on effect of closure and cancellation. All this points to reduced revenues to the State via reduced personal and company taxes, and reduced VAT due to lower consumption. We don’t even have to talk about the wild volatility of gas and oil prices and its impact on State revenue. Pressure!

So what is Colm to do? There has already been an increase in spending in fiscal 2020 due to a series on new social support grants for Covid-19-related loss or reduction of income, or loss of jobs. Whether you were working in a hotel, singing or writing, acting or animating, a grant was available for a private sector wage-earning worker or self-employed in need of relief and support.

With the roll out, however, people encountered problems with delays in delivery of the grants. Months later, still no cheque! There was also the revelation during the application process that many people were still in the informal sector due to many unincorporated private sector entities and micro-enterprises being outside the National Insurance Scheme (NIS) and Board of Inland Revenue (BIR) systems, as well as slack employers just not registering their employees.

These problems point to what should be top of the list priorities for both the State and the private sector stakeholders: civil service reform and sector formalisation, respectively. The business of the creative sector, like many others, is screaming for these transformations. With less revenue available, how would these mammoth tasks be handled separately or even collectively? Efforts in the past to move the efficient delivery of public sector services forward have yielded little, in a modern context.

The disruption of a pandemic moved the needle somewhat. All of a sudden, online was a new normal, 10 years later. A new Ministry of Digital Transformation (albeit attached to Public Administration) is a sign of forward thinking, however, the continued attachment of the Ministry of Culture and the Arts to a second ministry points to priorities and old habits dying hard. A new Ministry of Tourism, Culture and the Arts awaits funding allocations come next Monday.

I wrote back in 2016 about the missed opportunity of the new PM then to create a new Ministry of Culture and the Creative Industries having a mandate “to focus on creating the enabling environment for the commercialisation of the creativity and heritage of the nation and its citizens.” There were no takers.

New industries have to be formalised to take the country forward in the 21st century. Local energy industry service companies may move their services abroad, and quite possibly their tax liabilities too, with the decline of the industry locally, and opportunities in Guyana, for example.

How we got here? The PNM manifesto

T&T is a commodity dependent economy trying to move towards a service-dependent one; tourism and financial services top a list of desired diversification industries. Job creation in agriculture, manufacturing and construction is a focus in the Roadmap to Recovery. Creative industries are on a list of diversification industries.

The promised knowledge-based economy is not gaining traction in the Cabinet room, although the PNM 2020 manifesto tells us that, “However, together with Tourism, arts, culture and entertainment are among the hardest hit by COVID-19 and this sector will be among the last to fully reopen, resulting in serious personal hardship for all industry players.

A series of actions cited in the 2015 Manifesto remain in abeyance, including critically:

Facilitate the growth of the media and the creative industries by providing an enabling legislative environment free of unnecessary regulatory and bureaucratic restrictions that encourages private sector participation and competition while diminishing the direct role of the state.

2015 “Let’s Do This Together: PNM Manifesto

As noted before, the short term solution in 2020 was grant distribution, with 27 bulleted actions to be implemented for the next 5 years for the cultural and creative industries, and a promise “[to] focus on 7 major transformative projects and programmes that are worthy of consideration.

A rationalisation of ministries to create a synergy between Tourism and Culture & the Arts in 2020 seems like history repeating itself. As we know, this Tourism/Culture combo was done before under the Manning administration in late 2001, with Penelope Beckles at the helm. Less than two years later, Tourism was separated out again. Famously, Nobel laureate, Derek Walcott published in 1970, these famous words:

The folk arts have become the symbol of a carefree, accommodating culture, an adjunct to tourism, since the state is impatient with anything which it cannot trade.

Derek Walcott. “What the Twilight Says: An Overture” in Dream on Monkey Mountain and Other Plays. 1970 (New York: Farrar, Straus and Giroux)

The phrase “creative industries” only seems to come up in parliament, for instance, when Budgets statements and debates happen once a year, unlike “tourism” and “manufacturing”. The shunting of the conversation among the political class on the industry is a sign, to me, of the low concern despite the reinforcement that it is among the priority industries earmarked for diversification since 2011.

The Numbers, so far

I am the guy who like to count things; words used by politicians to talk about the creative industries, public money spent on stakeholder’s behalf only to play hide and seek with critical information to help the local music industry. Numbers matter. And in this time of deficit budgets and dwindling tax revenue beyond our control, any stakeholder request for allocation priority should be borne on the back of economic patterns and rational spending.

The continued idea of “breastfeeding hobbyists,” as articulated by a director at a State-Owned enterprise, becomes real when one considers that the “State as benefactor” has dominated the economic landscape for decades. We bought failing companies and assets — Caroni Ltd, Texaco Refinery, Tesoro — only to see them close up shop years later with no usable skills to enrich the economy.

Balancing the investment needs of an industry with the demands of recurrent expenditure, and debt financing, is a task with a full treasury, more so with the one we have now. Investment into the sector has been a combination of public and private money. Tax incentives for creative output support, along with subsidy and transfer, and development funding make up the State’s offerings. A dive into the numbers in the Fiscal 2020 budget shows amounts that put onto perspective the relative importance of the cultural and creative industries.

Ministry of…Recurrent ExpenditureCapital Dev. ProgrammeInfrastructure Dev. FundTOTAL
Tourism62,696,46934,512,0006,500,000103,708,469
Trade119,458,47435,675,00030,900,000186,033,474
Comm. Dev, Culture & The Arts391,266,24924,246,00081,000,000496,512,249
Estimates of Expenditure, 2020 Source: ministry of Finance, Trinidad and Tobago

In the 2020 Budget, over $28 million was estimated to be spent on economic and social infrastructure development programmes across the Trade (CreativeTT and sub-companies), Tourism and Culture & the Arts ministries in areas such as redevelopment, upgrade and refurbishment of performance facilities (NAPA, SAPA, Queen’s Hall, Naparima Bowl); museum development; support for the music, film and fashion industries; and the development of a theatre district. Actual spend and implementation will be seen in the upcoming budget.

Over $221 million was estimated to be spent by the Ministry of Culture & the Arts (not including Community Development) in current transfers and subsidies to non-profit institutions, statutory Boards like the NCC and Queen’s Hall, and for facilities and programmes. 97% of NCC’s expenditure is via Government subvention! From 2010 – 2018, over $1.5 billion, to be exact. Sufficiency and efficiency of the project managers of the festival is not a priority, when tens of thousands of visitors arrive annually and spend.

With the coupling of the Tourism and Culture & the Arts ministries, recurrent expenditure figures are interesting. Collectively, these two ministries spent over $18 million, according to the 2020 Estimates of Expenditure, on contract employment in addition to recurrent personnel expenses in a highly staffed public sector, in terms of numbers, not to mention the $10 million at Trade. How the money is spent is instructive to the strategic plans of the government.

CreativeTT’s goal of contributing “two percent (2%) towards diversification of the national Gross Domestic Product” was noted by its Chairman in a PA(E)C meeting in parliament in 2019. Recurrent expenditure estimates in 2020 of $10.9 million and industry development programme estimated expenditure of $7.5 million in the same year follow a pattern of fallow investment over the Rowley years. Calls for billion dollar public investment will continue to, and decidedly so, fall on deaf ears.

Development Programme Expenditure: CreativeTT

As an example, the strategic plan for the music industry developed with stakeholders was curtailed by the inability of the government to invest more than $1 million per year, scuttling the efforts of many and a plan development investment of $804,775. In 2012, over $4 million was spent at TTEnt for development programmes. That number is a lower threshold for any real world development investment, and was hinted as a target in the 2017 Strategic plan for music, never approved by Cabinet for implementation.

The vagaries of international markets and innovations beyond our control impact our local industries. To get the attention of policy makers and the Finance ministry, citing foreign exchange earnings, job creation and the reporting of that data consistently and accurately would be a great step to changing investment habits. When one compares these recurrent and development figures for the cultural and creative industries against the oil refinery industry, closed down in 2018, one can see that lack of confidence in the long term vision of sustained growth.

The political will to make substantial public investments in the creative industries is not substantiated by the numbers. The private sector must step up with a new vision, too.

What we have to do now

Given the financial challenges, which have stymied CreativeTT’s ability to execute planned projects, someone needs to make a better case for the industry. In the past, a case was made for an iron and steel industry. Where is that now? Downstream industries from gas were revenue generators. Today, ammonia plants are shutting down.

Tax payment is not to be a burden. Profit is not to be avoided.

A critical move to be made by the private sector over and above any weeping and wailing and gnashing of teeth about low State support has to be a formalisation of the industry: collective mobilisation and association formation as a part of the thrust to strategic partnership and advocacy. Leadership is critical to validate the sector.

Incorporation and commercialisation have to be the new normal. We all know it! The creative industry individual and institution is an important cog in the revenue stream of the State. Tax payment is not to be a burden. Profit is not to be avoided. Volume matters. Large dollar amounts are appealing to financial services suppliers. Together is better than alone. Exist locally, but think collaboratively and regionally, and sell internationally.

“There are two major challenges that must be overcome locally: firstly, there needs to be a cultural shift towards valuing the written word over the spoken word and secondly, people need to intimately get to know what they don’t know about their intellectual property rights. Why? Because the majority of music revenue can only be accessed through the leveraging of those IP rights, and half the battle is having those rights put down in black-and-white.”

Jeanelle Frontin, former GM, MusicTT. 2016

Ms. Frontin was not lying. The new paradigm recognises intellectual property as value. The value leads to financial sector recognition and innovations towards funding, as recognition of the limit of State investment and financial policies become clearer. Venture capital funding, securitisation of IP assets, and other jargon of the financial sector must enter the lexicon of the creative entrepreneur. Venture capital incentive programmes of the past must guide future decisions on that sector’s partnership role with creative industries.

Jamaican researcher on the local and wider Caribbean creative industries, Hopeton Dunn in 2013 noted that there is “a significant breach in the communication channel linking the financial sector and the creative industries sector.” He also said that “regional governments must expedite the process of drafting and promulgating venture capital policies.” The government has work to do too.

This leads to the priority call in any upcoming budget for a significant allocation towards reform of the civil service to meet the needs of a new generation and a new way of doing business within an industry that produces services and IP over things that can be broken with a hammer. Efficient delivery of services has been a promise of every government. Plans and funding for actualization should be a goal come Monday. I also look to see if rationalisation of tourism and cultural and creative industries is another try at a failed system of industry development.

The Prime Minister’s recent edict that Carnival 2021 “is not on,” under conditions, seemed hasty, and uninformed by the line Minister with responsibility. The State’s role is noted. The private sector immediately pushed back with virtual options and digital space commecialisation plans. We also look to see the progress in trade facilitation and e-commerce, by all. Colm Imbert’s Budget Statement on Monday and the presented supporting documents will be the clues and tools for a future of our own making.

© 2020, Nigel A. Campbell. All Rights Reserved.

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