NASSAU, BAHAMAS — To expect the latest actuarial review of the National Insurance Board (NIB) to state anything other than the glaring reality that the nation’s security blanket is both paper thin and on fire would be madness.
And after kicking the can down the road since the road was first paved in 1974, it is certainly a full circle moment that the “tough decision” to stave off insolvency rests squarely with the Progressive Liberal Party.
It is a problem that – like most of country’s social ills – each administration is intimately aware of and to which a solution or several have already been full mapped out and collecting dust for no less than a decade.
In the case of NIB, it’s been each and every actuarial review since its inception stating with increasing alarm that, no matter how noble your cause, you can’t actually make a dollar out of 16 cents.
Based on recent pronouncements, it would appear that the burning red eye of government is now set on raking the mythical 84 cents it has long indoctrinated voters into thinking it didn’t need. After decades of weaponising the threat of taxation, politicians can expect to go to war with the public over any proposed hike – and deservedly so.
“The first one was in 2002 and the projections were very similar to what they are today, that 2029 was when it would be depleted if nothing was done,” said an early board member of NIB, who did not wish to officially enter public discourse at this stage.
“The pension systems are longterm and the pension promise is more generous than the contribution rate that we’re paying. if you think about a family of 10 children back then, it was easier to care for your elderly parents, everyone chipped in. But when you have two children, which is the case of now, it becomes a lot more expensive to care for the elderly. People are living longer, having fewer babes, it’s no surprise it’s happening all over the world: ageing populations with generous pension systems not being changed as the situation evolves. There have been no major changes in 20 years.”
The board member continued: “We added the unemployment benefit and raised contributions by one per cent 2008/9. The current prime minister was the chairman here when there was a social security reform committee that was formed in 2003/4. It’s all down to political will and tough choices government have to make.”
The board member added: “It also should involve dialogue with stakeholders. It’s going to be extreme and whatever you do you want to make sure you have buy-in. We have to do something what can we live with increasing contributions, increasing the age, lower benefit promises – it will likely need to be a combination. Six years is not a lot of time, and there is never a right time to make a tough decision so you have to make it now.”
But time is a tricky social construct.
The International Labor Organization’s (ILO) 11th Actuarial Review of NIB has reportedly been in the government’s possession for a little under a month, but its previous report declared the “now” time to act was 2016.
At the time, then-Minister of Labour and National Insurance Shane Gibson minced no words over the need to raise contributions or limit benefits or the fact that the writing had actually been on the wall since the first actuarial review.
Spoiler alert, nothing was done.
“When they first started National Insurance it was recommended that the contribution rate be higher than it was at the time but most persons objected to it,” said Shane Gibson, Minister of Labour and National Insurance, told Eyewitness News yesterday.
“Then every single actuarial review from the time it started kept talking about it being unsustainable. No government had the political will to do it. Every time you try to increase it, the cry is it is not the right time but unless the government decides to have the political will to do it future generations will be in trouble. As said in reports it will be pay as you go plan, you will have no reserves.”
Gibson said: “If you don’t have any reserves you have to wait to collect to pay all benefits, future generations will be in trouble in terms of collecting on time.”
“It’s always had a shortfall and from that time to now no government has had the political will to increase it to what it needs to be increased to. You didn’t have to do it all one time, but the problem is that is when is the right time because the plan is in trouble.”
Gibson continued: “Think about it, National Insurance is perhaps the single greatest thing to happen in The Bahamas in terms of paying long term and short term benefits. It’s not like someone else will benefit, it’s the same participants who are benefitting. It’s not like the money going in government pockets. You need to go through educational process where people understand and appreciate what will happen if we don’t begin to increase the contribution. Its’ going to come to a point where the can can’t be kicked any further.”
“(Politicians) are afraid of political fallout but when you look at how governments are being elected, with a new administration voted in each term, you just need to do the right thing. It’s a bitter pill to swallow but look at NIB, at all the unemployment benefits. The cash flow came from NIB when you look at healthcare facilities, some of the police stations – all projects benefitting the people of The Bahamas but we have reached the point now even if you cash in all of those, you still don’t have sufficient money to put in reserve to take care of the future generation of Bahamians.”
Gibson added: “I just think this government should bite the bullet.”
And while the Cabinet, an elite class tasked with ensuring the viability of a fund they will never be personally reliant upon, wrangles with this conundrum – let’s take a look at the tough decisions that Bahamians are facing everyday and on every front.
There have been more than 40 murders for the year, driving demand for an increasingly militarized police state with weak, inadequate accountability measures and an equally shaky antiquated justice system with more holes than National Security minister Wayne Munroe has fingers to point and whistle at.
Costs are skyrocketing at every establishment with a register, whittling away at the purchasing power of Bahamians on the other end of a wealth disparity chasm that appears to only exist when lawmakers are seeking economic support from larger countries.
To have that buying power further stripped with an up to two percent hike in contributions is a burden only on those who can afford it – for so many it’s a twisting of the knife.
Having to choose between eggs or bread to support a family of five is a bitter pill.
Choosing whether to accept money from suspected illicit or illegal means, stay in an abusive relationship or unhealthy work environment just to keep your light on, pay for childcare or cover a solitary meal is a tough choice.
But delaying a critical national issue for selfish political gain, only to turn around and bludgeon the public with the consequences of your inaction is not a tough decision, it’s the height of laziness.
Where is the creativity – the bold, transformative and progressive solutions that we have been long promised?
Not some knee-jerk response to the threat of industrial action by the Public Managers Union – yet another symptom of government inaction come home to roost, and who will likely not be swayed in the slightest.