By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday warned it “cannot get water from a stone” with a likely National Insurance Board (NIB) contribution rate hike set to add to multiple cost increases facing the Bahamian private sector and consumers.

Branville McCartney, the former Democratic National Alliance (DNA) leader, likened the prospect of an imminent NIB increase (see other article on Page 1B) to “going back to the same well with a hole in the bucket” given that many businesses were still struggling for “survival” following the COVID-19 pandemic.

“Anything that increases the cost of doing business cannot be welcomed,” he told Tribune Business. “The average businessman cannot survive. It’s hard enough as it is now with the pandemic that caused many businesses to go out of business, and those in business to try and keep their doors open. Any increase in terms of NIB payments just makes the situation even worse. 

“Businesses, for the most part, are holding on for dear life, and with inflation, the cost of gasoline, it makes it extremely difficult for those wanting to get into business. They think twice, and those that are in business have to determine what direction they want to take and whether it’s worth being in business.”

Mr McCartney, who has interests in the pharmaceutical, education and real estate sectors, as well as his Halsbury Chambers law firm, said the combined impact of an NIB rate hike, soaring inflation, supply chain woes and rising gas prices - as well as a potential minimum wage increase - could have a dampening effect on confidence in a private sector that is “not just there yet” in terms of post-COVID recovery.

Emphasising that he was not against a minimum wage rise, but concerned that businesses are being hit with multiple cost rises all at once, Mr McCartney said: “To just add an extra burden to doing business in this country, it is quite frustrating to say the least....

“It’s going back to the same well, but there’s a hole in the bucket dear Liza, dear Liza. There’s a hole in the bucket dear Liza, a hole. You’re going back with that bucket and there’s nothing in it. At the end of the day, you cannot get water from a stone. It’s a difficult situation for business people as well as the general public, but we are where we are unfortunately.”

Ben Albury, Bahamas Bus and Truck’s general manager, told Tribune Business he could “live” with an NIB contribution rate hike provided the social security system was “properly managed” with the necessary accountability and transparency, and there was a plan developed to tackle all its issues.

He argued that too often NIB had been employed as a “slush fund” by successive administrations, with its assets used to finance domestic government debt (bond) issues; government buildings; and other infrastructure and pet projects that had not always delivered the best returns for the Bahamian people.

“It will have a hard impact considering inflation and all the other issues going on,” Mr Albury said of an NIB contribution rate increase, “but I don’t think anyone will find it too much of a surprise. NIB has said it was something it has been looking at increasing for a number of years for the reserve fund to remain viable. I can live with that as long as it’s properly managed and a clear cut plan is worked out.

“NIB has been used a slush fund and not always managed in the best way. Hopefully they can articulate a plan that makes NIB viable and sustainable. An increase has been thrown on the table several times, but the last one was in 2010. It’s been quite a while since we had an increase. Hopefully they can keep the increase as low as possible and introduce some accountability for the money and how it is spent, and how they will alleviate the issues.”

Robert Sands, the Bahamas Hotel and Tourism Association’s (BHTA) president, told Tribune Business that while “NIB must survive” any contribution rate increase could not be imposed “arbitrarily” or viewed in isolation without considering the other cost pressures facing the industry and wider Bahamian economy.

Pointing to the role NIB fulfills “in times of crisis” as well as fostering savings and providing pensions, he added that “the Fund must serve the purpose for which it was built. However, the BHTA chief said: “What we cannot do is arbitrarily agree where an increase in rate should be at this time in isolation from other costs that might have an impact on the sector.

“One single cost increase must be assessed against the backdrop of other costs and the environment in which we operate. An issue that concerns us is the pending minimum wage increase. We are also currently faced with the dire global supply chain issued. We certainly support some type of [NIB] increase but it has to be against the backdrop of all this taking place. We support the Government in the concept of both the minimum wage and ensuring NIB’s life can be extended.”

Noting that an NIB contribution hike will impact the entire Bahamas, Mr Sands added: “The devil is in the details of how this will be determined. The bottom line is that NIB needs to survive. It must survive, and it’s an institution that supported thousands and thousands of Bahamians in the past, and many thousands looking forward to its continued survival in the future.”

The COVID-19 pandemic both impacted NIB’s liquidity, via $100m in unemployment benefits, and its contribution income as businesses closed and workers either terminated or furloughed.