KINGSTOWN, St. Vincent, CMC – Opposition Leader Dr. Godwin Friday Tuesday called on the St. Vincent and the Grenadines government to pay all outstanding National Insurance Scheme (NIS) deductions.
“Not on no payment plan like you hire purchase. You have to pay it off now because you should never be owing the NIS,” he told Parliament as debate began on the EC$1.6 billion (One EC dollar=US$0.37 cents) budget that Finance Minister Camillo Gonsalves had presented on Monday night.
Gonsalves said the reform measures he announced will push from 2035 to 2060, when the NIS is expected to be unable to meet its obligation, with percent through 2027, with the first adjustment on June 1.
But Friday told legislators that the government should be setting an example as an employer, saying, “You should be the flag-bearer of an excellent example of an employer and its relationship with the NIS.
“But we know in the past that the government has abused that position of closeness with the NIS by not paying into it, and then when they can’t pay, they force the NIS or tell the NIS they have to give them a loan so that they could contribute. And then they swap that loan for a building that who knows what will happen with now? Oh, these are not prudent things that ought to be done.”
Friday was speaking of a period when the government failed to pay into the NIS tens of millions of dollars that it withdrew for workers’ salaries and wages and was unable to pay into the NIS.
In August 2014, the government borrowed EC$1555 million from the NIS to liquidate outstanding contributions owed by the government to the NIS. In 2018, the state-owned National Properties Ltd, a state-owned company, gave a building in the capital to the NIS as part of payment on an existing loan.
The central government bought the building in 2008 for EC$6.325 million, with Prime Minister Dr. Ralph Gonsalves saying then that he wanted the property at the city entrance owned by Vincentians.
Friday said there are some other things that Gonsalves should have mentioned in his address about how the government has dealt with the NIS in the past and how they should do it going forward.
He noted that the NIS has paid students and non-contributors repayments to deserving persons.
Friday further pointed out that when he asked in Parliament during the last sitting in December, he was told that the NIS had paid EC$144 million in non-contributory pensions over the years.
“But they also had an excellent program of paying students EC$500 when they pass CXC (Caribbean Examination Council). I have no problem with that. I think it is a worthwhile program because it encourages students to do their best,” Friday said.
He noted that over the life of that program, it had cost the NIS EC$14 million “in basically a handout to the government because the government says we’re giving it to the students.
“The students don’t know where it is coming from. But the government is taking the credit because they say, ‘Here, we give you $500.’
“But it is the NIS, the pensioners, the parents and grandparents of those students who are paying for their EC$500, and at the same time, it’s undermining the system’s integrity. So, the government has to commit that in continuing the program, they will source the funding elsewhere.”
Friday said that the NIS “quite clearly needs an injection of capital.
“You can’t just get it from pensioners, taking more and more money out of them and then telling them that maybe you’re not cutting the benefits now or they’re not raising the pensionable age now? But who knows?
“That $14 million should be put back in the NIS as a contribution from the government should be treated as a loan. So that there is a capital injection to keep the NIS healthy,” Friday said, noting that if the contribution to students no longer comes from the NIS, it must come from elsewhere.
“Maybe the prime minister can cut back on some of his foreign travel and put some money into the fund to pay the students and some of the other ministers. That would help. But in any event, in the future, it should not be taken from the NS funds. Those funds should be found elsewhere.”
The Opposition Leader also called on the NIS to be more proactive in getting unemployed people to contribute to the Social Security agency, noting, for example, that people seeking private insurance for air ambulance service do not wait for people to come to their offices.
“They come to you to offer the services … I don’t see the NIS doing this. They are sitting back and saying the law says you have to do X, Y, and Z, and therefore, that’s sufficient for me,” he said, accusing the NIS of sitting back and quoting what the law says.
“They have to do better than that. If they are going manage it, then they have to be more aggressive in going out there and getting people to be part of it,” Friday said, adding that the NIS reform will cost pensioners money and have implications going forward.
However, he raised questions about whether the government could be trusted to restore and sustain the NIS, adding that the current government had taken a long time to bring the reforms, which worsened the situation.
“The government put politics ahead of the interests of NIS, pensioners, and failed to take timely and prudent measures to fix the problem,” Friday said, adding in the end, the pensions are jeopardized, noting that NIS data shows that 85% of pensioners have their NIS pension as their only source of income.
“That has implications for the wider economy because those persons were employed before,” he said, adding that the employment rate is around 21 percent.
Friday said that the opposition agrees that the country cannot do without the NIS, adding that it must continue perpetually.
“All of this happened in virtual darkness because the NIS reports were not made public,” Friday said, referring to the actuarial reports that the government failed to make public despite the legal requirement.
“Imagine that. The law says that those reports have to come to Parliament. And we had to secretly try to find out how to get a report from somebody. Policyholders can’t go and look at the report and the actuaries,” the Opposition Leader said, adding that transparency and accountability are beautiful things “because it makes for better governance.
“It may be easier if you could do things in darkness by yourself without restraint. But when you’re wrong, you become catastrophically wrong. And other people pay the consequences.
“It’s better to have all of us looking at it and saying this is what needs to be done. And if you don’t do it to have the people raising the noise, they say, get it done. So, the minister outlined a number of the proposals that were set out that you’ve accepted from the actuaries.”
Friday said that the opposition would have to study more over the few days of the reform Gonsalves announced, noting that they were just announced the night before the debate began.
“But given the situation that I’ve outlined just now, the relationship between the government and the NIS over the past, can we trust this government to restore and sustain the NIS? That’s the thing.
“Can we trust this government to do it? Given the poor record and the failure to act repeatedly? Can they be trusted with pensioners’ money? And my conclusion is that they cannot. They will continue, as they have over the years, ill-treating the NIS in a way that brought us to the crisis that we are in now.
“they have failed to create jobs. That is needed to create the revenue base for the NIS. They are fair to increase wages to increase the revenue base of the NIS,” Friday said, noting the study done last year that shows St. Vincent and the Grenadines has the lowest wages in the Caribbean.
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