Feature Address By The Hon. Freundel Stuart, QC, MP
Prime Minister Of Barbados At The?? 50th Anniversary Awards Ceremony And Dinner Of The Police Co-Operative Credit Union Ltd On Saturday, November 27, 2010
- Master of Ceremonies
- The Right Excellent Sir Garfield Sobers
- President of the Barbados Police Cooperative Credit Union
- Rev. Michael Clarke and Mrs. Clarke
- Members of the Credit Union
- Invited Guests
- Ladies and Gentlemen
As a former Minister with responsibility for police and as the Prime Minister of Barbados, it gives me tremendous pleasure to be present at this Awards Ceremony of an institution that was established to satisfy the financial needs of the members of the most important of law enforcement agencies in Barbados. I congratulate the Barbados Police Co-operative Credit Union Ltd for its 50 years of labour in the vineyard to ensure that the members of the Royal Barbados Police Force and their families have access to the many benefits that derive from the universally acclaimed co-operative movement.
I should like to thank also all those Award Winners who have been and will be recognized here tonight for the outstanding voluntary service they have given to this organization for many years. I believe that as we drift towards the standards of the new global society which tend more and more to emphasise cash payment for every service rendered, the co-operative movement is a constant reminder that the glue that holds every social institution together is not the amount of money you receive but the satisfaction you derive from performing your duties selflessly and to the best of your ability. ??Whether it’s within the family, or in any other organization in our community, people at the vulnerable stages of their lives depend on each and every one of us for unpaid but priceless support.?? A society is in serious trouble when essential providers are motivated only by the pecuniary rewards they are likely to receive.
Barbados is considered as having a relatively high cohesion index when measured by the number of people who are members of co-operatives. The Barbados Co-operative Credit Union League has reported that over 130,000 out of a population of about 275,000 people are registered members of co-operatives. They belong to organizations as large as the Barbados Public Workers Co-operative Credit Union with a membership of 60,000 and total assets in excess of half a billion dollars, right down to organizations with a few dozen members. What they all share is the fundamental principle of building financial strength through thrift, trust, co-operation, education, service, and of course democratic control.
The Barbados Police Co-operative Credit Union is one of the larger Credit Unions that have graduated from being totally dependent on voluntary labour, to having a core of dedicated staff, answerable to a larger and even more dedicated management team of volunteers. With a membership of just over 1100 total assets in excess of $20 million and room for expansion in its Strathclyde property it is poised to have an even greater impact on the socio-economic environment.
During the past 50 years you have established a track record of achievement that is worthy of emulation. You were one of the first Credit Unions to reach the goal of $1 million in assets; one of the pioneers in charging interest on the reducing balances rather than on the original sums borrowed; and you have developed a unique Benefit Fund with many advantages such as having loans dissolved and savings doubled at the death of a member.
I am mindful also of your current minor and major concerns. These range from wanting more staff to being allowed to invest more money in real estate. I must confess, however, that I have some difficulty in understanding why an organization of law enforcement officers would have 97 members with delinquent loans!! On a serious note I accept that the loan figure has been reduced to manageable proportions delinquencies, and that it now represents just over 5% of gross loans, which does reflect a measure of financial control.
No doubt the Police Co-operative Credit Union will continue to generate business during the recession. Credit Unions always do so during difficult financial times, when members of necessity request bigger loans to cushion the impact of the recession. They did it during the oil crisis and the recession of the early 1990’s and they will do it again.
??At the end of the day, I believe that the only constraint to the growth of this Credit Union will be its "limited bond" status which restricts its membership to the security sector. I want to take this opportunity to wish you a bright and continued future of success.
But I am sure that this is not all that you can do for Barbados at this time of need.
On a larger canvas, I know that you, together with all other Credit Unions, are very concerned about a number of issues that could hinder your growth. One is that the Deposit Insurance Act which was passed in 2006, ushering in the Barbados Deposit Insurance Corporation (BDIC), does not provide protection for Credit Union depositors in the event of failure of the financial institution. Up to now only the customers of commercial banks, finance and trust companies have access to Deposit Insurance.?? The coverage limit of course is $25,000 per person in any one financial institution. I appreciate that without Deposit Insurance, Credit Unions would face unfair competition from commercial banks and other financial institutions.
Not surprising of course the Barbados Credit Union League has submitted a powerful paper arguing your case for similar protection. I am willing to assure you that this will remain a front burner issue for the present Administration.
I can also assure you that the Government is fully committed to regulatory reform with the aim of creating a more effective regulatory regime for financial institutions, including non-bank organizations such as Credit Unions and insurance companies. Once again the Barbados Credit Union League has given this initiative its full support and made a strong case for an efficient and well-resourced Financial Services Commission that recognizes the unique nature of Credit Unions.
I’m not Santa Clause but I can promise you that when the Financial Services Commission Bill is debated in Parliament, particular attention will be paid to getting the right balance between rigorous regulation and preventing stifling of the kind of financial innovation that is necessary for entrepreneurship to flourish.
It has also been brought to my attention that even though the Credit Union movement enjoys a membership in excess of 130,000 persons it does not have a seat at the negotiating table with government, labour and the private sector in its own right. You have a point when you insist that no other party to the Social Partnership can sufficiently, ably and adequately represent the interests of this large membership. This is a matter which I think admits of easy resolution and can be discussed with a view to hopefully uncontroversial settlement. I assure you that this will receive my attention as well.
And now I come to your most recent and as I understand it very pressing concern – the removal of tax allowances for Credit Union savings in this week’s Budget.
Let me stress that in the face of a worsening economic recession and with an uncompromising commitment to limiting the extent of suffering among the citizens of Barbados, the Government found itself confronted by a large fiscal deficit of 2009-2010. We were faced with some stark choices, which boiled down to either cutting salaries, cutting jobs, or raising taxes. We have chosen to maintain jobs and raise revenue through taxation.
At the same time we have tried to stimulate the economy by helping the private sector, especially those businesses operating in existing and potential growth areas. We have chosen to do so by, among other things:
- Providing an additional $6 million in marketing support for Tourism, our flagship industry;
- Establishing a Tourism Loan Guarantee Facility to provide guarantees to hotels up to a total of $100 million;
- Establishing a Trust to the tune of $400,000 for the Richard Stoute Teen Talent contest, to further develop the cultural industries;
- Removing the environmental levy on imports;
- Reducing the fees paid by private transport operators;
- Reducing the cost of retail liquor licenses by 50%;
- Rationalising water rates for farmers;
- Providing a range of tax credits for companies which grow and create wealth and employment over the next three years.
Therefore the fundamental question I need to ask this Credit Union and the co-operative movement as a whole is: "What can you do to help Barbados achieve its goal of economic emancipation as the most effective means of recovering from this devastating global recession?"
I am convinced that at a time when Barbadians have to dig deep into their reserves and, as it were, pull themselves up by their own bootstraps, the Credit Unions have a vital role to play.
It is now official Government Policy to spread the entrepreneurial culture to a wider cross section of Barbadians in an effort to create wealth and employment. We cannot achieve this goal if the vast majority of Barbadians continue to acquire more and more, free education to find a job, and forever thereafter focus on consumption rather than wealth creation. For example, a careful analysis of the loans made by this Credit Union during the past year indicates the following rank order of loans:
- (i) Land Purchase – 20%
(ii) ???? Home Improvements – 18%
(iii) ?? Construction – 14%
(iv) ?? Vehicle Purchase – 11%
……..And way down the list was Business Development attracting 0.01% of total approved loans of $6.79 million dollars.
I believe that this distribution is typical of the sector as a whole and represents a classic example of the "Paradox of Thrift".
It is patently obvious that the values and behaviour of our people have to change. At a time when the future of countries with small open economies depends on enterprise and innovation in culture-specific, growth industries we have to do things differently. And I believe that your intimate knowledge and regular contact with your members place you in a prime position to help change their behaviour.
This is the message of the recent Budget and this is the message I want to leave with you tonight. Meaningful response to this recession requires all Barbadians to pull together and focus on creating wealth and employment in those sectors in which we have a clear advantage. I am therefore asking the Credit Union movement, as I have asked all other stakeholders to get on board as we make decisive moves towards the long awaited economic liberation of our people.
THANK YOU AND BEST WISHES FOR A BRIGHT AND PROSPEROUS FUTURE.