Friday Forum calls for a social compact in a time of multiple emergencies

The most urgent emergency is in the area of financial and economic management. For two generations this society has spent more than it has earned; since 1957, there has been only one year (1977) in which the nation lived within its means; and since 1957, there has not been a single year in which the government ran an overall surplus – Pic by Shehan Gunasekara

This society faces multiple situations that need to be addressed as emergencies; because treated otherwise complications would set in to make the malady too dangerous. These situations cannot be resolved by the government alone, and this has been demonstrated too frequently for us to leave those responsibilities to that agency alone. 

All agencies in society need to be galvanised: government, religious leaders, political leaders, business, media, the university community and intellectuals, and voluntary associations of various kinds. 

Friday Forum calls for a social compact among all these entities to understand the nature of the situations and the solutions that can ameliorate the severity of these emergencies in the first instance, and then resolve them in several further early steps. Such compacts will not emerge without wide debate and discussion. Friday Forum dares to begin such debate with this advocacy. 

The most urgent emergency is in the area of financial and economic management. For two generations this society has spent more than it has earned; since 1957, there has been only one year (1977) in which the nation lived within its means; and since 1957, there has not been a single year in which the government ran an overall surplus. 

Government is only one agency through which this society over spends; the high ratio of household debt to disposable income is an index of the excess of accumulated debt of households, a result of spending more than they earn. This over expenditure was possible because other countries and inter-governmental financial institutions made grants, and latterly, loans. 

Now we must depend almost entirely on commercial loans. As loans accumulate and mature we must pay more in interest and re-payments. In order to pay those rising amounts we must produce more. Recently our external debt has grown at 12% per year whilst the total output is likely to grow between 2.5 and 4% per year. If debt grows 12% per year and GDP (say) grows only at 3% per year, in six years the outstanding debt will double and Debt to GDP will increase by 16%. 

To avoid this impending disaster these relative figures must alternate places, GDP must grow faster than debt. These eventualities are entirely untenable, and popular unrest and disruption to normal life will be inevitable. To avoid those disruptions, the compact must adopt policies and management practices for both fast growth of output, especially for export of goods and services, and impose severe restraints on borrowing. (Large net inflows of foreign investment can change this scenario very much but such large inflows seem unlikely.)

This process of faster growth especially in exports, and restraints on imports, will put severe downward pressure on domestic consumption. About a third of all consumption expenditure is on imports. A good part of imports are essential food, medical supplies, fuel and similar items. Therefore imported consumer goods will need to be drastically cut down and supplies of those goods which are not essential for day today living of the common people must be minimised. 

Import duties and temporary CESS surcharges are an important source of government revenue that will need to be kept up. Higher rates of duty and taxes on non-essential imported goods will serve both to cut down imports and to make up, in part, for the fall in import duty collections that would otherwise occur. 

An important contribution to address the impending crisis is to demand that borrowing from overseas, especially on short term commercial terms are minimised. To cut down borrowing from overseas will require restraints on government expenditure. In that light the over generous plans of government expenditure that candidates for the office of President thrown about are entirely removed from reality. 

If it is necessary to keep down government expenditure, fertiliser cannot be distributed without cost to cultivators; all students who successfully complete the G.C.E. A/Level examination cannot be provided with opportunities for university education; all school children cannot be supplied more clothes and shoes; and these promises become hollow when at the same time some tax rates are to be reduced and other taxes are to be completely withdrawn. The compact must collectively advocate for restraints on government expenditure so that such expenditure will not need to be financed from abroad. At the same time, increased tax revenue becomes inevitable. 

If standards of living in our society are to be maintained there is no alternative to faster growth. A portion of the income produced in the country is paid out to foreigners to pay back debt and interest on the stock of debt. As the increase in repayment of debt and interest on debt rises, a larger portion of our income is lost to us. To compensate for this and yet secure rising levels of living, it is necessary that our incomes grow. In addition, it is necessary that that growth contains within it output that can be sold abroad. 

For this it is necessary that our entrepreneurs produce by joining processes of production of output which are typically the joint output of a chain of producers spread over the world. That would in turn determine patterns of investment: for many reasons we must keep away from long gestation period projects. We simply don’t have the time to wait. Our society needs to come to a compact on those patterns of growth and investment. 

Unemployment in this society is low. The major reason for that is that about 20% of our labour force works overseas. Like most of those employed at home, these workers lack any worthwhile skills and are engaged in low productivity activities. There is high productivity employment if entrepreneurs choose the right kind of lines of production of goods and services. 

For example, large numbers in India, Vietnam and the Philippines earn high wages working in ‘data labelling’ for use in artificial intelligence for enterprises overseas as well being engaged in off shore data, information processing and logistical service centres. These activities are neither capital intensive nor skills intensive. They raise productivity in employment, require very little physical capital and earn foreign exchange. Such patterns of development suit our present requirements admirably. 

Heath services and education touch the lives of people almost every day. They are therefore peoples’ major concerns. As demographic features, morbidity patterns and knowledge, change, health policies must correspondingly change. Education policies are subject to even greater challenges. The marked character of this age is the explosion in knowledge. Those changes have touched education at all levels, primary, secondary and tertiary, in all their complexity and even methods and techniques of teaching. In both fields, society must seek those features that are most suited to us and make them a part of policies.

The second emergency that this society is threatened with is that communities that speak two different languages, follow four different religions and sit on three different accumulations of cultural wealth, find it difficult to live and thrive together in this island. The opportunities for individuals to grow and engage in value added livelihoods may ease this friction somewhat. But the communities must arrive at a Compact that permits the emergence of such opportunities.

Thirdly, we must not permit inequalities in the distribution of opportunities to stand in the way of growth of such opportunities, nor let considerations of equality slow processes of growth. Equality includes spatial as well as interpersonal considerations. Groups in society must agree on acceptable levels of inequality in rough and ready forms. 

As a society in the comity of nations, we need to contribute to reduce the pollution of the natural environment as consumers and as producers. When we use coal to generate power we pollute the air. When we use chemical herbicides, we pollute the environment in many ways. This society must arrive at compacts that will minimise ‘the carbon footprint’ that its activities will leave. 

In order to achieve these objectives, a society needs to agree upon institutions that they will establish, and organisations that they will set up to administer those institutions. The fundamental institution for governance is the Constitution of the Republic. The 19th Amendment and subsequent statutes brought in some welcome changes. It is necessary to preserve and foster these institutions. We yet need provisions designed to further promote better relations among the several communities that comprise this nation. 

The organisations that give life to these institutions have shown much weakness in the recent past. Society needs to arrive at agreement on how their functioning can be improved to be more effective, consistent and transparent. Parliament must be the arena where policies are debated, amended and approved. Currently, there are no arrangements where Bills can be subject to analysis to help members to conduct debates. Such information will also inform the public of the nature and consequences of especially, large scale projects. 

The large size of the Cabinet of Ministers has been wasteful, confusing and unproductive. The number of members of the Cabinet should not exceed 25 with another 25 others who are non-Cabinet members. These numbers should be variable only by a resolution with two thirds of the members of parliament agreeing. The provisions in the constitution enabling ministers to direct the work of ministries has proved unproductive and the earlier practice where secretaries performed these functions must be resorted to.

The bureaucracy is that part of Government that actually helps formulate policies and implement them, once approved by Parliament. Government would not function without these employees. Society needs to ensure that they are well trained, flexible and made to function with integrity. The framework for the administration of justice has been well laid. However, inordinate delays in the legal process and the consequent accumulation of cases awaiting adjudication are major problems to solve, which society needs to find solutions for, with the agreement of all concerned.

Arriving at these compacts will not be rapid or easy. Competing interests in society will hold on to, and promote, their own interests. Without compromises on the part of all, agreement would be impossible. For such agreement to be arrived at understanding the nature of the problems and gaining knowledge of practices the world over is essential. 

The forthcoming elections between November 2019 and August 2020 can provide space for such wide ranging debates and workable compromises. The universities, knowledgeable media personnel and other intellectuals, political parties, whether in groups or as individuals have vital roles to play in giving life to these suggestions. While knowledge can flow from all over the world, solutions must be essentially local.

Dr. Geedreck Usvatte-aratchi and Chandra Jayaratne

On behalf of:

Prof. Arjuna Aluwihare, Mr. Priyantha Gamage, Mr. Tissa Jayatilaka, Dr. A.C.Visvalingam, Mr. Daneshan Casie Chetty, Dr. Ranjini Obeyesekere, Mr. Nirmala Wijayanandana, Prof. Camena Guneratne, Prof. Savitri Goonesekere, Mr. Faiz-Ur Rahman, Rev. Dr. Jayasiri Peiris, Prof. Gameela Samarasinghe and Bishop Duleep de Chickera.

(The Friday Forum is an informal group of concerned citizens pledged to uphold norms of democracy, good governance, rule of law, human rights, media freedom and tolerance in our pluralist society.)