PRIVATE - Cabinet Boardrooms: Term 6

[Craig Ashley]

Mr. President, the Marticon and Infrastructure reports have been finalized and published (OOC: See MTEF thread).

I must say that I am having trouble foreseeing any type of balanced budget that also allows for long term economic growth. It seems the old saying, "you have to spend money to make money" is very true for us right now.

I believe there is a vast potential for Eutopia in shipping, ship building, and ship repair. We have an outstanding location, little competition in this geographic area, relatively low labor costs (in comparison to the other nations in the area), and the industrial capacity and workforce to conduct such operations. I have a preliminary plan that will involve several pieces of legislation:

1. Privatize Marticon. Many, but not all of Marticon's problems, stem from inefficient management and government restrictions. However, the purchasers of Marticon would have to agree to several terms.

a) To lessen the impact of removing 2.5 Billion ducats in subsidies (and therefore price controls) on the average Eutopian fisherman, they would have to agree to raise prices along a predetermined, graduated system.

b) Acceptance of government inspectors to ensure quality production - something Marticon has lacked.

In addition to these terms, the following benefits would be made available:

a) No or low interest government loans for modernization of equipment and services.

or

Government matching funds of .5 ducats for every private ducat invested for modernization. We can discuss the benefits/risks of each method latter.

b) Temporary but generous tax breaks.

c) Military contracts for repair and service.

2. Undertake a proposal similiar to the one being pushed by Per Anuzulda. The government would purchase fishing vesels and equipment at fair market value, with the condition the money be reinvested into the creation of shipping. A further condition would be that all new ships to be purchased be purchased from the former Marticon companies. This gives our new privatized ship building industry a valuable shot in the arm.

Tax breaks could be offered to further stimulate growth in this vastly underutilized sector.

A note on the purchase fishing equipment and vessels, some of them can no doubt be resold, most likely at a loss. The rest would simply be scrapped for parts and sold for whatever we could get.

There would have to be both a requirement level (i.e. a bare minimum total value, we can't buy every private fishing vessel - the company would have to have at least say 5 million ducats worth of equipment/vessels) and an upper cap on government purchases.

3. Launch a massive infrastructure renewal program to upgrade and modernize and where necessary, expand our port facilities. Buen Puerto, Spalding/Wrexford, and Kirby would be the primary recipients of such a program. Castries, Fort-aux-Francais, and Grandeville could also be included. Providing the infrastructure needed will also encourage growth in the shipping sector.

4. Look into creating additional Freeports beyond the current one in New Lancaster. The impact could vary and needs to be examined. It could create new business in cities like Buen Puerto, but it may also detract from New Lancaster. The total net gain would need to be carefully examined.

These steps, while costly in the short term, would assist in the creation of two industries that are linked, ship building and repair, and commercial transportation shipping. At the same time, it would decrease the competition in the fishing industry, while providing a means for modern fishing vessels to be purchased locally (assuming a renegotiated NAFA has our fishermen able to look into modernizing).

I have not yet looked into the exact costs this plan would entail, but it is safe to say they are significant.

 

[Estonianzulu]

Another note from the MILE-

"I would just like to remind the MDIA on my stance on an anti-terror unit. Internal security is not the job of the military. They defend from without. Civilian authorities enforce the law, not the military.

Mr. President, the ABC is not being utilized. I feel that perhaps we should take thing into our own hands. I am opposed to creating new branches to combat terror. Now, creating a joint military-civilian organization, (A single organization) would be best. This way you get the best of both worlds, the expertise of the military, and the jurisdiction of the civilian authorities."

 

[Erc]

Mr. President, the Marticon and Infrastructure reports have been finalized and published (OOC: See MTEF thread).

I must say that I am having trouble foreseeing any type of balanced budget that also allows for long term economic growth. It seems the old saying, "you have to spend money to make money" is very true for us right now.

I believe there is a vast potential for Eutopia in shipping, ship building, and ship repair. We have an outstanding location, little competition in this geographic area, relatively low labor costs (in comparison to the other nations in the area), and the industrial capacity and workforce to conduct such operations. I have a preliminary plan that will involve several pieces of legislation:

1. Privatize Marticon. Many, but not all of Marticon's problems, stem from inefficient management and government restrictions. However, the purchasers of Marticon would have to agree to several terms.

a) To lessen the impact of removing 2.5 Billion ducats in subsidies (and therefore price controls) on the average Eutopian fisherman, they would have to agree to raise prices along a predetermined, graduated system.

b) Acceptance of government inspectors to ensure quality production - something Marticon has lacked.

In addition to these terms, the following benefits would be made available:

a) No or low interest government loans for modernization of equipment and services.

or

Government matching funds of .5 ducats for every private ducat invested for modernization. We can discuss the benefits/risks of each method latter.

b) Temporary but generous tax breaks.

c) Military contracts for repair and service.

2. Undertake a proposal similiar to the one being pushed by Per Anuzulda. The government would purchase fishing vesels and equipment at fair market value, with the condition the money be reinvested into the creation of shipping. A further condition would be that all new ships to be purchased be purchased from the former Marticon companies. This gives our new privatized ship building industry a valuable shot in the arm.

Tax breaks could be offered to further stimulate growth in this vastly underutilized sector.

A note on the purchase fishing equipment and vessels, some of them can no doubt be resold, most likely at a loss. The rest would simply be scrapped for parts and sold for whatever we could get.

There would have to be both a requirement level (i.e. a bare minimum total value, we can't buy every private fishing vessel - the company would have to have at least say 5 million ducats worth of equipment/vessels) and an upper cap on government purchases.

3. Launch a massive infrastructure renewal program to upgrade and modernize and where necessary, expand our port facilities. Buen Puerto, Spalding/Wrexford, and Kirby would be the primary recipients of such a program. Castries, Fort-aux-Francais, and Grandeville could also be included. Providing the infrastructure needed will also encourage growth in the shipping sector.

4. Look into creating additional Freeports beyond the current one in New Lancaster. The impact could vary and needs to be examined. It could create new business in cities like Buen Puerto, but it may also detract from New Lancaster. The total net gain would need to be carefully examined.

These steps, while costly in the short term, would assist in the creation of two industries that are linked, ship building and repair, and commercial transportation shipping. At the same time, it would decrease the competition in the fishing industry, while providing a means for modern fishing vessels to be purchased locally (assuming a renegotiated NAFA has our fishermen able to look into modernizing).

I have not yet looked into the exact costs this plan would entail, but it is safe to say they are significant.

Much of the Maritcon report is actually more auspicious than I thought at first glance. Most of the problems with Maritcon have come from its being a public company--essentially all of those listed at the end of your report in the MTEF office. Many of these, especially low labor productivity, lack of a foreign market, et al., would be fixed by privatizing the industry and introducing competition. One thing that cannot be immediately improved, however, is the infrastructure associated with the shipyards, which is incredibly obsolete. Having new spending on shipyard improvements be tax-deductible (or, as I now see you mentioned, paid for by government loans) would help to remove the major barrier to real development in our shipyards, especially if combined with other tax decreases. As to government quality inspectors...other than the usual health & safety inspectors, I don't see much of a need for them. Private companies running the shipyards will, being under the pressure of a market economy (which Maritcon was not), have to produce ships of at least decent quality in order to compete on the world market--and market forces are a much better arbiter of that than any government inspectors.

I'll examine your points in 2, 3, and 4 tomorrow (It's getting rather late), although 4, at the very least, does seem to be a good idea at first glance.

 

[Craig Ashley]

Much of the Maritcon report is actually more auspicious than I thought at first glance. Most of the problems with Maritcon have come from its being a public company--essentially all of those listed at the end of your report in the MTEF office. Many of these, especially low labor productivity, lack of a foreign market, et al., would be fixed by privatizing the industry and introducing competition. One thing that cannot be immediately improved, however, is the infrastructure associated with the shipyards, which is incredibly obsolete. Having new spending on shipyard improvements be tax-deductible (or, as I now see you mentioned, paid for by government loans) would help to remove the major barrier to real development in our shipyards, especially if combined with other tax decreases. As to government quality inspectors...other than the usual health & safety inspectors, I don't see much of a need for them. Private companies running the shipyards will, being under the pressure of a market economy (which Maritcon was not), have to produce ships of at least decent quality in order to compete on the world market--and market forces are a much better arbiter of that than any government inspectors.

I'll examine your points in 2, 3, and 4 tomorrow (It's getting rather late), although 4, at the very least, does seem to be a good idea at first glance.

I agree that market forces should force any privatized offshoots of Maritcon to provide quality materials. However, years of shoddy craftsmanship have affected the international perception of Eutopian shipping. By creating government inspectors to ensure a certain quality level, we can begin to remove this stigma from our ship building industry. Its more to assure potential buyers than to ensure quality (which theoreticlly should already be there once market forces take hold). It would be a minimal cost and could significantly boost the perception of Marticon or Marticon successor companies. Afterall, in economics as in life, image is often just as powerful as substance.

 

[Chipchat2]

I do not believe that the MECt has a large enough burden to necessitate a deputy.

 

[Erc]

You do make a very valid point, although quality inspectors might also give the impression of a policy of overreaching government intervention in Eutopia to other businesses, an impression that we certainly do not want to give.

1.c) certainly seems like a good idea. If we're conducting naval reform in any event, if we can use defense spending to boost the economy, then so much the better for us.

As to the ports, I have one question. Who currently runs and manages the ports? The national government? Local government (through some sort of Port Authority)? Private proprietors? If it's completely private, then our approach should be different than if it is public. But in either the event, the modernization of our ports is something that desperately needs to be done.

Speaking of which...the railroad situation...if it's a completely private concern (as all transportation supposedly, then why are we spending at least a billion dollars per year on it?

 

[Erc]

Oh, and any progress on anything, Mr. Robertsson?

 

[Erc]

Mr. Langley...obviously your ministry is a bit on the overloaded side at the moment, but if either you or von Streusser could get all the WTO paperwork in order so that we can send it off as soon as possible, it would be greatly appreciated.

 

[Jools]

the MDIA still requests any information that will help us during negotiations with the US....

 

[Amric]

Minister Julseau,

If an opportunity arises when speaking to President Walker for small talk, speak of sports. The US President is a big sports fan, and that might help in some small way. Stay away from anything about drinking too much and children, as his daughters have been in trouble once in awhile about that sort of thing. Other than that, I really can't help much. But small talk can be useful in gauging a man you are negotiating with, and if you can get some kind of rapport with him, all the better.

 

[Craig Ashley]

Mr. Langley...obviously your ministry is a bit on the overloaded side at the moment, but if either you or von Streusser could get all the WTO paperwork in order so that we can send it off as soon as possible, it would be greatly appreciated.

I'll have Deputy von Streusser work on it. I'm also still awaiting a response from the ECB on my request for revenue projections this term along with a impact report on joining the WTO.

 

[Jools]

Mista President: We're going to the US, you comin' wit us or wot?

 

[Craig Ashley]

Mr. President, this is what I have pretty much set as far as the budget goes. Other areas are still under review.

Education - 43.8
- Schools and Kindgergardens - 22
- Universities and Colleges - 21.8

- Infrastructure Renewal (One time expense) - 5.5​

- Tuition Program 2​

General Administration - 0.5

Transport (domestic and international) - 4.5 + ????
-Rail -

- Commercial Rail Modernization (One time expense) - 1.5​

- Commercial Rail Maintenance - 0.4​

- Commuter Rail Modernization (One time expense) - 1​

- Commuter Rail Maintenance - 0.2​

-Roads

- Road Maintenance - 0.7​

- Urban Roadway Renewal and Upgrades - 0.3​

- Freeway Acquisition (One time expense) - ??​

- Freeway Maintenance - ??​

Airports -

- Maintenance - 0.4​

Navigation and Shipping 1.5
- Port Maintenance - 0.7
- Port Renewal and Modernization (One time expense) - 0.8

Economic Renewal 0.2 + ????
- Funding for ESHTA - 0.2
- Funding for ???? - ????

Law Enforcement and Justice 8
- SAW - 0.5

Armed Forces 11.5
- Personale - 6.5
- Upkeep of equipment - 1.5
- Exercises - 1
- Administration - 0.5
- ENDtech - 2

Public Works and Utilities - 2.5

Energy - 2

International Aid (Cut) - 0.0

Postal Service - 0.5

Natural Resource and Mining 3.0
-Recom 2.5

Additionally, I plan to introduce a bill to privatize Marticon and possibly a second bill to privatize the non-medical portion of Omnicare. That would relieve us of 15.5 billion in subsidy payments, along with the revenue generated by the sale of company's assets.

Add that to the cuts in International Aid (1 billion), General Administration (0.5 Billion), and Defense (2.5 Billion), and we already have 19.5 billion in spending cuts. Lastly, we have the coal deal providing us with an additional 4 billion in revenue. Of course that is in part offset by increases in Shipping and Navigation (1 billion), Transportation (2.5 billion + more), education (7.8 billion), and Law Enforcement and Justice (0.5). Though of the 11.8 billion in proposed increases, 8.8 billion are onetime expenses. These costs should be nearly covered by the sale of Omnicare and Marticon.

Also, as we institute economic stimulation, we should see an increase in revenue through more income taxes and corporate taxes and a decrease in expenses through less spent on welfare and unemployment. The coal deal alone should have a significant impact on these areas.

Though I should warn you that there are several other spending increases that I believe are neccessary, I only lack the final figures. We need to aquire our freeways. I've included a line for it in the budget, but I do not have a final figure. We will also need to fund the maintenance of the freeways, but that will be slightly offset by the tolls we will collect. Lastly, as I outlined earlier, I believe we need to assist our ship building and repair industry in modernization, this will take place in tax cuts (which won't affect our revenue too greatly) and government loans which will be a significant expense. Also, I feel once we have the specifics, we should adopt a plan similiar to what per Anzaldua is proposing, and that will have significant costs attached to it. However, most of these expenses are also one time costs.

Overall, I am saying we are not going to approach a balanced budget this term due to the number of one time investments and costs we must deal with due to the lack of a budget to deal with these issues in terms past. However, once they are dealt with, we should be close to a balanced budget for future terms.

 

[Erc]

If only for my own bookkeeping, this leaves to be sorted out:

(All sums in billions of ducats, and reflect the projections of your never-passed budget)

International affairs: 1
Industry/Trade/Commerce: 4 (Whatever This Is [WTI])
Regional Development: 2 [WTI]
Forestry and Fisheries: .5 [WTI]
Farm Subsidies: 4 (would, of course, like to reexamine)
Coast Guard/Customs: 1.5 (does this seem a wee bit on the high side?)
Immigration/Naturalization: .5
Environment: 1.5
Health: 28.6
--including 25.7 for Medicure (the remaining 2.9 billion is for the general upkeep of MHES services, I would assume?)
Social Insurance: 12.8
--including Omnicare 11.8 (obviously this will decrease with the privatization of most of it)
Labor and Welfare: 29
--including Unemployment Benefits 18.5 (this may change--I'll be discussing a reform of the system with Amric and yourself over the next few days)
--and Social Aid 2.5 (I would like to see this completely and utterly eliminated from the Budget)
--and Pension Fund Contributions 7 (I'd like to see some reform here, but most likely we aren't going to get it done this term, so it is not a priority)
Family and Youth 6 [WTI for the 2 billion not under Child Benefits]
--including Child Benefits 4
Language, Culture, and Communities 1.5 [WTI]
Communication and Media 1 [WTI]
Science and Technology 1.5 [WTI]
National Parks .5
Debt Interest Payments 15 ( )

 

[Erc]

A few other comments:

The military budget is significantly lower (2.5 bÐ) than Term 3's. Where, exactly, are these cuts coming from? Military procuring funds? That is, have the allocations for Personnel, Maintenance, and Exercises been cut any from their previous levels (I know you don't have any hard data on this due to the lack of specificity on the budget--a simple vague answer will do quite well here)?

Minor point on Port Maintenance...the .7 bÐ allocated for this is .2 bÐ greater than the entire Term 3 Navigation and Shipping Budget...I would be safe to assume that this is because ports were horribly underfunded under the old budget?

Is the Urban Roadway Renewal Program a one-time expense?

 

[Jools]

I'd suggest the MECT find some money for the military, after all we promised to start a military reform.

 

[Erc]

Mista President: We're going to the US, you comin' wit us or wot?

When were you planning to leave?

 

[Craig Ashley]

A few other comments:

The military budget is significantly lower (2.5 bÐ) than Term 3's. Where, exactly, are these cuts coming from? Military procuring funds? That is, have the allocations for Personnel, Maintenance, and Exercises been cut any from their previous levels (I know you don't have any hard data on this due to the lack of specificity on the budget--a simple vague answer will do quite well here)?

Minor point on Port Maintenance...the .7 bÐ allocated for this is .2 bÐ greater than the entire Term 3 Navigation and Shipping Budget...I would be safe to assume that this is because ports were horribly underfunded under the old budget?

Is the Urban Roadway Renewal Program a one-time expense?

The Defense cuts have come entirely from the procurement budget. The other areas of defense spending have been unchanged. I would suggest that MDIA look into eliminating the draft which would give them large savings on personnel that they could then use for other purposes, but such a study is beyond the scope of my office. There is a copy of a fairly detailed report on the status of the military in my office (OOC: its a link near the bottom of the first page).

Our ports have been allowed to fall into disrepair due to underfunding, so yes they received a significant raise in spending.

The Urban Roadway Renewal Program would be an ongoing expense. As urban areas continue to grow and spread or sprawl as some would say, former rural routes become major roadways in booming suburban areas. The often need to be widened, have increased traffic control, new turning lanes, guardrails, medians, or some other manner of upgrade. Currently the budget does not address this issue, hence the creation of URRP.

OOC: This is a first pass at these items. I have not yet recieved GM approval for how well they will deal with the various issues I am attempting to address (i.e. rail modernization, urban roadway renewal, and port modernization and maintenance). I know the education numbers are right, but that is about all I can speak 100% assured on. But generally, you know where Langley wants to cut spending and where he wants to increase it.

 

[Craig Ashley]

If only for my own bookkeeping, this leaves to be sorted out:

(All sums in billions of ducats, and reflect the projections of your never-passed budget)

International affairs: 1
Industry/Trade/Commerce: 4 (Whatever This Is [WTI])
Regional Development: 2 [WTI]
Forestry and Fisheries: .5 [WTI]
Farm Subsidies: 4 (would, of course, like to reexamine)
Coast Guard/Customs: 1.5 (does this seem a wee bit on the high side?)
Immigration/Naturalization: .5
Environment: 1.5
Health: 28.6
--including 25.7 for Medicure (the remaining 2.9 billion is for the general upkeep of MHES services, I would assume?)
Social Insurance: 12.8
--including Omnicare 11.8 (obviously this will decrease with the privatization of most of it)
Labor and Welfare: 29
--including Unemployment Benefits 18.5 (this may change--I'll be discussing a reform of the system with Amric and yourself over the next few days)
--and Social Aid 2.5 (I would like to see this completely and utterly eliminated from the Budget)
--and Pension Fund Contributions 7 (I'd like to see some reform here, but most likely we aren't going to get it done this term, so it is not a priority)
Family and Youth 6 [WTI for the 2 billion not under Child Benefits]
--including Child Benefits 4
Language, Culture, and Communities 1.5 [WTI]
Communication and Media 1 [WTI]
Science and Technology 1.5 [WTI]
National Parks .5
Debt Interest Payments 15 ( )

Quite simply put, I am not going to be able to fully investigate all of these areas in a timely manner. (OOC: I already have a bunch of proposals floating around regarding Omnicare, the freeways, plus the already published reports in MTEF. I don't have the time to fill all of these areas in the budget out like that) If you want a complete investigation of the budget, I suggest we have the appropriate minister examine the areas that fall under their prortfolio.

MHES
Labor and Welfare (includes all of the subgroupings)
Family and Youth
Enviroment
Health

MDIA
International Affairs (OOC: I would assume this would include the general upkeep of our embassies and paying for their staffs)

MILE:
Coast Guards and Customs
Law Enforcement
Immigration/Naturalization

MECT:
Communications and Media
Science and Technology (OOC: most likely government funded research)
National Parks (OOC: Most likely maintenance and staff)
Language Culture and Communities
And possibly Regional Development depending on what that actuall does

That would leave the rest for MTEF:
Industry/Trade/Commerce
Farm Subsidies (already have a proposal on that)
Forestry/Fisheries

(OOC: Just make a realistic report or budget for each area and submit it to a GM. They will then get back to you with approval, changes, or hints on how to modify your original proposal. Once you have the final report, post it either here or in your respective ministry.)

OOC: My original proposed budget included 5 0.1 billion ducat cuts in various areas. These were meant to represent government streamlining. For this budget, that streamlining is represented by cutting 0.5 from General Administration, as suggested by the GMs.

 

[Amric]

Mr. VP: I'd like to go on this trip to the US. I think I can be of some help there in some small way. Thank you.

Minister Langley:

I'll see what I can do about what is used in my department, budget wise...