A 100 Million giveaway: good politics, bad governance

During the week, I usually keep my “column senses” open to absorb information that can inspire my next column. Sometimes, it is one incident or occurrence. Other times it ends up being a series of occurrences that somehow can be connected like dots. This past week, I “found” the dots in seemingly random acts of government that were placed together and put in context, starting to paint a general picture. This week’s picture creates an image of government actions that seem to be led by the mantra of “good politics” but doesn’t exactly translate into “good governance”. Read along, and I will show you how I connected the dots.

Carrying capacity

Many in our community have expressed concerns over the carrying capacity of our hotel industry and the impact of adding more and more hotel rooms in a seemingly uncontrolled manner only driven by the desire of our ministers and their puppets to be able to brag about how good of a job they are doing and the great confidence that investors have in government. Organizations like the Aruba Ports Authority are eager to boast of their ever growing number of cruise visitors and fail to realize that their short-term wins will have long-term adverse effects on our island and our scarce resources. You may recall one or more columns I wrote on this topic. 

Some carrying capacity concerns were presented by serious NGOs, organizations, or individuals. Aruba Birdlife Conservation is such an organization. When they speak, we should listen. Unfortunately, occasionally we also find a “random dopehead” committing crimes while bastardizing the message. Such voices are taken with – at best – a one-tenth of a grain of salt.

New hotel policy?

Last week, the minister of tourism published a policy paper in which he announced a curbing of issuing new hotel permits and expanding existing hotels for five (5) years. This only applies to hotels of 100 rooms or more. So in theory, there are no restrictions on “boutique”-hotels consisting of 99 rooms or less. He based this on the Permit Ordinance, which regulates hotel permits. This may seem good news, but is it? The policy was based on a specific ordinance article that provides a limitative list of reasons to deny a hotel permit application. The Policy Decree contains a lengthy preamble to justify the policy. So far, so good. 

A closer look

A more critical assessment of the policy, however, would cause some – at least my – eyebrows to be raised. The preamble is extensive but in itself is not law. It can be seen as a plea from the minister to justify the intended policy. An extensive preamble, can be seen as a solid policy justification. It can also show that much thought went into drafting the policy. On the other hand, it could also be seen as window dressing. A good friend would probably look at some preamble and say something like: “…there is only so much makeup you can put on an adult services provider”. In such cases the preamble tries to sell the actual rule or pimp up the document to make it look serious. In this case, it seems like a lot of makeup was used. This is because that specific sub-article in the ordinance used to base this entire policy is more of a rest category of denial grounds instead of a firm ground. 

A firm ground, for instance, is that a hotel permit is denied if a convicted criminal applies for a license within five years of being convicted. Or if a previous hotel permit was withdrawn by the government. Or indeed the applicant is placed under legal guardianship. There are 17 grounds in total in the law. None is as detailed and broad as the published “policy”. If the minister wanted to introduce such far-fetching rules to curb 20 to 38 years of the wild and unregulated growth that was allowed and stimulated by the same government, he should have drafted an amendment to the Permit Ordinance, sent that through the mandatory legal process, and had parliament pass that proposal and write it into law. Not by means of an ad hoc policy published in the newspapers. This looks more like a “shortcut” and shortcuts don’t seem to do well in court once challenged.

A summary

I made you a summary of the preamble so you can judge the next paragraph “The legal basis” for yourself:

The preamble outlines Aruba’s considerations of tourism and accommodation policies over its 38-year history. With the increase in tourist accommodations over the last 15-20 years, there has been a disproportionate pressure on hygiene facilities (read: RWZI/Bubali Plas), public order, and public peace. Recognizing that Aruba largely depends on tourism, which significantly impacts various societal aspects and consumes scarce resources, the Aruban government in 2018 decided to allow only small-scale boutique hotels outside of Oranjestad and San Nicolas. These boutique hotels according to the preamble are typically luxurious and stylish, and they have a unique atmosphere with a higher average revenue per room but lower environmental impact. They encourage guests to use off-resort facilities, benefiting the local economy. The Ministry of Tourism and Public Health has promoted a sustainable tourism policy based on the “High-Value, Low-Impact” principle, aiming for high returns per visitor while managing the impact on public order and peace. This approach aligns with the UNWTO’s sustainable tourism guidelines. Globally, many tourist destinations are adopting similar measures to control the tourism industry’s impact on society.

The legal basis?

The tourism minister embraced the sub-article that covers: “public order, good morals and public peace”. Right of the bet, you can wonder if the summary I provided you can stretch to regulating permits based on the sub-article mentioned above. If you ask me about the last two grounds, I would say without hesitation that those grounds don’t align with the preamble. If someone challenged the policy in court, I am pretty sure that the government would have difficulty convincing a court that the economic reasons mentioned in the preamble can’t be used to back up “good morals and public peace”.  The only ground that remains is “public order”. This is a famous catchphrase used in government by our rules-crafting bureaucrats because they like to fall back on that to justify just about anything. In the EU pursuing economic purposes is not the objective of the exception for public order. In other words one can not use the “public order”-card for the pursuit for economic purposes like curbing hotel permits. Because of this I don’t see that the “public order”-card will be enough to deny 100 plus room hotel permit applications. 

Perhaps the minister of tourism may have listened to the voices of the community and decided to take action for the greater good.  But maybe it is a little too late or if not too late, too hasty and flimsy. These sensitive topics deserve a better job and more attention, or at least a coordinated approach involving all relevant ministries. This “policy” will do little good if the prime minister/infrastructure minister keeps dishing out long-lease land to build hotels, boutique hotels, or condominiums. The government should also stop promising developers that they will get hotel permits if they make one. You, the reader,  should also know or realize that the hotel permit is not issued until the hotel is entirely built, ready to open, and undergoes the required health inspections. So this “policy” does little good at this time. It can also be revoked anytime and doesn’t prevent the minister from giving out hotel permits. This is the current minister, Danguillame Oduber, and any future minister. 

If we add all this up, it doesn’t seem like the policy will withstand a legal challenge or make a difference. So, at best, it looks like good politics but not so good governance. A more positive label could be “a good intention”,  but not more than that in any event unless a court proves me wrong and rules that the policy withstands the acid test of the court. Perhaps it wasn’t designed to pass that test. Perhaps it was just designed to play politics and keep those voices opposed to more hotels happy from now through the election.

Pay increase for civil servants

Many jaws almost dropped to the floor when they saw a headline announcing that the public unions and the government have gotten together – or rather, they colluded – to give the public sector a pay raise. They conveniently call it “purchase power adjustment – to give the public sector a whopping 11.7% increase! Two things are evident: the terminology used seems like another attempt to add make-up on a “lady that works the streets’. One can also wonder why not round it off to 12%. What is left open is the total cost to the government for the gross up for taxes, premiums and pensions. Considering the eleven of the wages it would be not unrealistic to add another 10% to 15% on top of the 12%.

The private sector doesn’t get that “adjustment”. If any business overnight increased employment costs by 12%, many would be in trouble.  The private sector got the full load of a BBO tax increase and the new BBO at the border.  Mind you that the government is strapped down with state debt that runs into the double digits of interest rates. I have 2 columns that cover the debt crisis. Click on the hyperlinks for those 2 columns. The government agreed with the Dutch government as a condition for financing to lower the government payroll. Now, the government not only keeps hiring – primarily friends, campaigners, and family – but now has the gal to add another 12% plus to the yearly payroll! Unbelievable! By the way, a payroll that already absorbs all the direct taxes that we generate roughly Afl. 470M per year. Adding 12% to that results in an extra cost of Afl. 56M per year, with no extra productivity against that. Another Afl. 56M that the private sector will have to pay. Afl. 100M with the gross up. No wonder why our students who study abroad are not incentivized to return to the island to work. Why? To work so, the government can shoot bills in the air like a pimp at a strip club? So, if the government wasn’t held to give in to the wishes of the public unions, why would the government agree to such a raise? The only answer I can come up with is good politics and bad governance. 

Public unions

In 2014 I was in Geneva and they had just had a referendum. The question was an extraordinary increase of the minimum wage to about US$ 25 per hour. It would have been the highest pay increase in the world according to the BBC. BBC wrote:

“Supporters said the move was necessary for people to live a decent life. But critics argued that it would raise production costs and increase unemployment”.

Was it a landslide acceptance? No! It was rejected by 76% of the vote. Even those who would have received the higher wage, realized that the higher wage would come at a cost that they would not be able to pay. Cost of production and of services would go up and the cost of living would go through the roof. The voters and many used their brain. 

The public unions in Aruba just added another Afl. 100M annually to the budget and the leaders are smiling for the photo opp. This is an example of unions that did not use their brain. Rather than walking the path of austerity and consciousness they chose the quick win. Perhaps for these leaders a quick win was all they cared for to get re-elected as union leaders. Seemingly they don’t vary much from the politicians also seen on the photo opps with big smiles. We should hold these union leaders accountable for their shortsighted actions, draining the pubic funds for their benefit and that of their members, will soon come back and haunt them and their members.

Watch out!

Elections are coming! We will see many more good politics and bad governance coming our way like keeping the public unions and the civil servant electorate happy leading up to the elections. This seems like good politics but not so good governance. Same as the hollow “hotel policy”, the insane “pay raise” and the “not so intelligent” public unions.

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