Budget – Committee stage 7th Day

Votes of the Ministry of Justice, Constitutional Affairs, Ethnic Affairs and National Integration
"There is an allegation that the leader of the opposition was not supporting the devolution package"

Parliament met at 9.30 a.m. on Friday, 27 November 1998, with Speaker K. B. Ratnayake in the chair.

After announcements were made by the Speaker, petitions were presented by MPs and oral questions answered by Ministers. House sat in Committee to discuss the votes of the Ministry of Justice, Constitutional Affairs, Ethnic Affairs and National Integration.

K. N. Choksy (President’s Counsel) UNP—National List opening the discussions for the Opposition moved a cut of Rs. 10 from the votes of the Ministry.

He said:

I would refer during my speech to the ongoing peace process for the resolution of the ethnic crisis which is a matter that this Ministry is involved with.

I am not making these observations not from a party point of view but in the national interest.

There is an allegation that the Leader of the Opposition was not supporting the devolution package. This is not true.

You will know that during the last regime the SLFP called for the appointment of a Select Committee to report measures to solve the ethnic crisis.

This Select Committee was appointed and it was headed by an Opposition member Mangala Moonesinghe. The UNP was fully co-operating with this Select Committee. The UNP attended all the meetings of the Select Committee.

The government later appointed its own Select Committee and the UNP again participated in its meeting. The government presented its peace proposals.

The Leader of the Opposition did not object to the government for tabling before the Parliament the draft of the Constitution even before the Select Committee presented its report to the House.

The UNP made its own proposals, but these proposals have not been brought before the Select Committee. The Select Committee has not sat for several months.

The aim of the Liam Fox Agreement was that both the government and the opposition should co-operate in finding a solution to the ethnic crisis. The Leader of the Opposition Ranil Wickremasinghe signed this agreement and is committed to abide by it.

The accusation that the Leader of the Opposition was in the way of finding a solution to the problem therefore is unwarranted and should not have been made.

I urge the government to place the proposals of the United National Party to be presented to the Select Committee for discussion and to arrive at a compromise.

Without doing so it is unjustifiable to go on accusing the Leader of the Opposition of trying to block the peace process. This is what I have to say about the Constitutional Affairs Ministry.

Reverting to the Justice Ministry I would urge the Justice Minister to seriously consider a recommendation made by the Supreme Court to amend the Local Authorities Act to enable the Court to nullify an election to a Local Body on the ground of general intimidation and violence.

The Supreme Court made the recommendation when it delivered its judgement in the case challenging the elections of the Negombo Municipal Council.

At the last Local Government election the People’s Alliance received a slim majority of 534 votes over the UNP. Both UNP and the PA received 10 seats each and the People’s Alliance received two bonus seats because of the 534 majority.

This election was challenged on the ground that out of the 45 polling booths, where votes were received to elect members to the Galle Municipal Councils, 10 were raided by certain intruders and ballot papers had been snatched and forcibly introduced into ballot boxes.

The Supreme Court found that there was no legal provision to nullify an election to a local body on the ground of general intimidation.

The Judges pointed out that there was a serious lacuna in the law and advised the legislature to remove it.

I hope the Minister Justice would give serious thought to the Supreme Court’s observation and take action to remove the lacuna.

Kesaral Gunasekara (DUNLF, National List) said: The Justice Minister introduced many bills to this house this year. One important landmark in this long trail of legislation is the Child Protection Authority Act which was introduced to ensure the rights of the younger population.

Laws’ delays and the high costs of litigation is a matter that should be given prompt attention. Justice and equality in a society with a rising crime rate is affordable only to the rich. The delivery of justice should be stepped up.

Steps should be taken to make prison inmates a productive section of society during their rehabilitation period and afterwards. Another matter that I wish to draw the attention of the minister is the plight of prisoners who were drawing a pension at one time. It will be appropriate if some method of income is drawn up for them as well.

Henry Jayamaha (UNP—National list) said: Laws’ delays is a dangerous issue that has not been arrested so far. We hear unbelievable stories about these delays from ordinary people. Litigants from all strata of life flock to the courts and at the end of the day they leave with a postponement.

The Judicial Administrative Service is another area of concern. The Judicial Administrative staff service must be organised trained and work under the direction of a proper body.

There must be a separate Judicial Administrative Service and a Commission. Today this service is a morass of inefficiency, bribery and corruption.

There was once a suggestion to double the number of Magistrate Courts, etc. In our budgetary scheme we have a low priority for court expenditure and prisons. We have to find funds to improve the judicial structure. I hope the ongoing attempts to improve prisons and the judicial structure gain momentum during the next few years.

Sarvodaya Legal Centre, Human Rights Commission and the Bar Association are doing a laudable task. Justice should be within the reach of the common man. The work load and the nature of work of the Attorney General’s office should be studied and improved.

Douglas Devananda (EPDP—Jaffna District) said: Action must be taken to implement the 13th and the 16th Amendments to the Constitution.

Both Sinhalese and Tamils were living in this country for many centuries. The Sinhalese have had the right of self-determination throughout the history. So was also the right of self-determination of the Tamils. The right of self-determination of one has not be violated by the other at no time.

I urge the government to implement the 13th and 16th Amendments with provisions to make Tamil an official language.

The Commissioner of National Languages should be given the power to recruit personnel required for the implementation of the official languages.

Ariya B. Rekawa (UNP—Kurunegala District) said: In my view the Hon’ble Minister does not have a correct picture of the functioning of Magistrate Courts.

There are lawyers working in Magistrate Courts who know better than anyone the causes of delay in disposal of cases, bribery and corruption and other various deficiencies including police inaction. I suggest the Hon’ble Minister to appoint a Committee comprising of the magistrate of the area and senior lawyers to report reforms to end abuses.

We are happy you have introduced legislation to deal with crimes against children. But you must give some power by legislation for the Probation Officers to enter into a home in case there is a complaint of child abuse.

I am happy you have cut down the delay between the receipt of a case record by the Attorney General’s Department and indictments being filed by the AG in the High Court to about 8 months from two to three years.

This delay could be further reduced.

M. L. A. M. Hisbullah (Deputy Minister of Post and Telecommunications) said: Solution to the ethnic conflict is the most important task that has been entrusted to this Ministry. No tangible progress is in sight, with a lot of obstacles. Attach more priority to this matter.

The Legal Draftsman’s Department should be provided all facilities and amenities and the staff trained. The staff shortages are due to premature resignations. This is due to the irregularities in promotions and staff appointments. Take appropriate action to make it one of the most efficient department of your Ministry.

Introduce special measures to apprehend those guilty of bribery and corruption.

The people from war torn areas who come to Colombo, are subject to harassment with unnecessary arrests even when they possess proper documents.

P. P. Devaraj (CWC—Colombo District) said: If national integration is to be achieved the identities of the different groups and communities should be respected.

The people of Indian origin are a community which is different from others and they should be treated as a separate community.

There is discrimination against people of Indian origin. When large number of houses were set on fire and razed to the ground in an incident in Wewelwatta in Ratnapura District no one was taken into custody.

When such an incident occurred in the Galaboda Estate, also of the same district, one person was arrested and was released by court the same day. In Passara where there was a big commotion, in which the house of the Superintendent of the Passara was burnt, sixty to seventy people were arrested and remanded. On the top of it V. Sennan who intervened and restored peace, was ordered to be arrested and remanded by court.

The Ministries have a role to play in the present efforts to re-establish inter community harmony. The matter referred to should be looked into.

Dr. Neelan Tiruchelvam (TULF — Nationalist List) said: There can be little disagreement that there few contemporary examples of the complete mismanagement of inter-ethnic relations and of failure to build the foundations of a multi ethnic plural society. All communities are continuing to experience the tragic consequences of this failure and the consequent ethnic fratricide, collective violence and continuing ethnic antagonisms. It is in this context that the Ministry of Ethnic Affairs and National Integration assumes importance in its efforts to put into place policies and programmes which are intended to promote tolerance, accommodation and parity of respect for identities, cultures and traditions of the distinct ethnic formations in Sri Lanka. We wish to note in particular the National Integration Project Unit and its efforts to engage in public education programmes and to advocate the decommunalisation of the structures of the state. Several important studies have been undertaken on ethnic coexistence and I would like to particularly commend the recommendations of the report entitled ‘Sri Lanka, a Bitter Harvest’ by Elizabeth Nissan undertaken for the Minority Rights Group. One of the important aspects of public policy which unfortunately receives inadequate attention relates to equal opportunity with regard to public employment. This is a principle which is a bedrock of our fundamental rights regime which mandated that no person may be discriminated on the ground of ethnicity, religion, gender or political opinion. But the equal opportunity principle does not allow us to merely assert on-discrimination as a formal doctrine when in practice there are severe distortions and imbalances in ethnic representation in the public service. I submitted to the House an analysis based on official statistics that clearly demonstrated that Tamil and Muslims representation in public service was well below their proportions and was continuing to decline. In 1990, all the Tamils and Muslims constitute almost 25% of the population, they have 7.9% of representation in the public service. The figures made available to me by the Chairman of the Official Language Commission, in 543 offices surveyed, 437 did not have a single Tamil speaking officer. This means that no staff officer, no clerk, no peon. There are 488 government offices which have no bilingual facility. The seriousness of this problem was acknowledged by previous governments but there has been uncertainty with regard to the Public Administration Circulars that have been issued with regard to recruitment according to ethnic quotas. This was clearly not intended to be a permanent policy but was intended to ensure that certain minimum thresholds are achieved with regard to state recruitment.

There has however been great disappointment that this policy is not being followed in recent recruitments despite assurances to the contrary. Equal opportunity policy must mean that there must be a conscious effort to ensure that employment reflects the diversity of Sri Lanka. Each governmental department and public corporations must periodically review diversity profiles of its employees and try to set diversity objectives which it must endeavour to achieve. Such policy is not only necessary for the more effective implementation of language policies but also to ensure integration. This is how equality is achieved not merely in theory but as a practical outcome of public policy.

Shantha Premaratna (Deputy Minister of Plan Implementation and Parliamentary Affairs) said: Criminals that roam freely in society are a matter of growing concern. The citizens are questioning the judgements of the Supreme Court today. Even at a time when the judiciary is free from political interference the judgements issued by these institutions are questioned by the public. Prisons should be transformed to more productive institutions. Prisoners should be trained to earn a living.

Inhabitants of the east of the country are an isolated section. There is no one to speak of their helplessness when their children are abducted by the LTTE.

The new Constitution will devolve power and provide a solution to the minorities.

Mahinda Rajapaksa (Minister of Fisheries and Aquatic Resources) said: The Minister has provided solutions to many ills afflicting our society. The legislation he brought before the house were sincere attempts to uphold human rights and protect vulnerable sections of society.

The Attorney General should be able to intervene on occasions when one party feels that justice has not been delivered fairly. Labour disputes should be resolve in this manner if the occasion demands. (Contd on page 6)

People who cannot obtain bail should be provided some alternative measure of relief.

Peace should be strengthened further to avoid unnecessary legal disputes.

Gamini Rajapakse (UNP) said: You campaigned on election platforms to wipe out bribery and corruption. We supported you in this endeavour. Ultimately you were unable to examine certain cases that were brought before the Commission. Even the eminent official of this Commission is now axed.

Sarath Kongahage (UNP) said: The judiciary has been an arena of unacceptable incidents that hit headlines during the past few years. Even the litigants have been victims. The Attorney General is reviled by the entire country. I know the Minister does not approve of these developments and decline of standards and I request the Minister to take necessary action to solve these issues.

Prof. G. L. Peiris Minister said: You must talk to the people at grassroot level to understand any problem. This is how we work.

During my recent visit to Kurunegala I had the Court House completely refurbished. We do not want to leave barriers between the Judiciary, the Bar and the litigating public.

I also value the ideas expressed by Hon’ble Ariya Rekawa.

I concede that the Leader of the Opposition was not in the way of the proposed Constitutional reforms to resolve the ethnic problem.

We amended the Judicature Act to make it possible to indict an individual accused of rape of a child, in the High Court, without having the victimised child go through the agony of a non-summary proceedings in a Magistrate’s Court.

This Act also allows a suspect of rape of a minor to be detained for over 24 hours.

A great deal of work has been done by the Anti-harassment Committee. Out of 116 cases 100 have been disposed of upto September this year.

We will be initiating a programme of training of judges with the co-operation of India.

Prisons are overcrowded. A vocational training programme for prisoners with a view to preventing them from reverting to crimes, will be set up.

Mediation Boards will be appointed in Eravur and Kattankudi.

We have provided 6 vehicles to judicial officers and personal allowances of judges were restored this year.

I certainly acknowledge the members of the UNP did well at the Select Committee. The Government also accepted some proposals of the UNP. The UNP however did not give proper proposals on the question of unit of devolution.

The United National Party had some reservations about our proposals on the unreserved devolution of power and the extent of devolution.

The proposals of the UNP are far behind what is there in the 13th Amendment. No minority party would agree to such a proposal. They would neither want to look at them.

K. N. Choksy: As far as our party is concerned we have presented our full proposal. If you need explanations and elucidations you can have it at the Select Committee.

A. H. M. Azwer: Why can’t you reconvene the Select Committee. For some mysterious purpose you are declining to summon the Select Committee.

Prof. Peiris: No purpose will be served by re-summoning the Select Committee without a comple document on the table.

The votes were passed.

Votes of the Ministry of Irrigation and Power
"Petroleum Corporation suffered a heavy loss last year"

Sarathchandra Rajakaruna (UNP — Gampaha District) preposed a cut of Rs. 10 from the Votes of the Ministry of Irrigation and Power.

He said: The Deputy Finance Ministr made an inacurate statement about the Petroleum Corporation. He may have been provided with wrong information by his officers.

The Ministr said the Petroleum Corporation suffered a heavy loss last year. But I must say that the losses were due to abuses and wasteful expenditure. I also pointed out, last year that, the losses of the corporation could be averted if these wasteful expenditurs is avoided.

The Minister said that last year we bought a barrel of crude oil at US$ 24. But this is not true. The CIF price of a barrel of crude oil was US$ 19.50. This year the price has fallen to US$ 13.70.

The difference in prices of this year and last year is US$ was 5.80.

The Corporation earned approximately Rs. 12.86 million last year. Last year’s imports amounted to 12.80 million tons.

It you prove I am wrong I am prepared to resign from my seat. I want the Minister to make a statement on this.

According to the accounts of the Corporation, in 1998 the Corporation is expected to make a net profit of over Rs. 12 million.

Now you say the Corporation suffered a mighty loss. But the figures show otherwise.

The recent oil slick in the sea between Panadura and Moratuwa was caused by the explosion of the pipe line. Officials had informed the Chairman of the CPC of the possibility of this pipe line bursting but no money was provided to replace this pipe line. The pipe line had burst sometime back too.

You must revise the salaries of the staff of the Petroleum Corporation. If you do not do this immediately we will have to live in darkness once again.

Nandasena Herath (PA — Polonnaruwa Dist.) said: The farmers of this country are grateful to the Minister for repairing and reconstructing irrigation tanks. The previous government did not utilise the massive foreign aid that was given during that term.

The North Western Province has seen the development in irrigation for the benefit of the farmer communities. It is also important that alternative methods to overcome problems of water shortage for irrigation is found.

P. Dayaratna (UNP — Ampara District) said: The Ceylon Electricity Board is facing an uncertain future. The Asian Development Bank in one of its reports has stated that the CEB has lost some of its best personnel and there has been a deteriorations of quality threatening its future role in the sector.

Is it because the Minister is busy with the war that he cannot salvage this institution, from inefficiency that has overtaken it? Certain officials who were indicted for malpractices have been reinstated in service. Why does the Board allow it? I hope the minister takes action as he did the last time I brought of a similar case.

There is a shortage of electricity meters. The people who obtain new connection can’t obtain meters and they are charged a fixed amount on their bills.

Norechcholai is the best location for a power station and it will not cause environment pollution. If somebody protests against this project they should say no to electricity as well. But don’t hand over this project to a foreign company. It is important that you implement it with your funds, perhaps with foreign funds.

The GST charged on electricity bills appear to have been charged on top of BTT. If it is the case the consumer will be paying more than they should.

Monty Gopallawa (Deputy Minister of Public Administration, Home Affairs and Plantation Industry): One of the targets of the ministry is to provide electricity to 60% of the population by next year. This will be a demanding task that will require a large amount of funds.

The minister should take care that one contractor is not given too many contracts that will ultimately delay the projects.

Sarath Amunugama (UNP — Kandy Dist.) said: Several Hydro-electricity projects seem to have been dropped after feasibility studies were done. Only the Kukuleganga project has been undertaken. Thermal power projects seem to occupy as more important place on the ministry’s agenda for power generation projects. There was a newspaper report highlighting a loss of 150 MW of power due to a defective mechanism at the Kelanitissa power station.

Minsiter: Send me the details.

The cost of power generation in Sri Lanka has been very high. We are the highest or close to it in costing in the world.

The pricing of electricity costs are hiked to what you plan to do not on the real cost of production. Your costing has to be revised to bring down the costing procedures. As you don’t regulate the costs, no wonder the BOO and BOT projects are eager to come in.

Minister: We have appointed a committee of consultants to look into this matter.

It will be vital for economic development to bring down the cost of electricity to realistic levels.

C. P. D. Bandaranayaka (PA, Gampaha Dist.) said: The electricity power capacity has been increased in the Gampaha district, to meet the demand.

Tissa Karaliyedda (PA — Anuradhapura Dist.) said: I am grateful to the minister for providing electricity to remote villages in Medawachchiya that has been under the threat of terrorist attacks.

Y. Balachandran (DPLF, Wanni district) said: I hope the minister gives attention to the reconstruction of tanks in the Mannar area. Funds for the maintenance of thermal plants alocated should be increased. Construction machinery for the Vavuniya CEB has to be brought from areas like Anuradhapura. I hope the supply of electricity will be extended to areas I have mentioned to you.

The ADB aid and most other funds go to the Sinhala areas. See that enough funds are allocated for the rehabilitation and construction of Vavuniya and the North.

E. A. Samarasinghe (PA, Matara district): The ministry is doing a magnanimous task in providing electricity to meet the demand. The minister’s intent is on finding alternative energy sources to meet the energy demands of the economy.

Irrigation is essential for agriculture. It should never be in the hands of a foreign authority.

Gamini Lokuge (UNP — Colombo Dist.) said: There is no proper management in the Ceylon Petroleum Corporation. A prison guard was employed as Deputy Manager (Investigations), a day after he retired from the Prisons Service. This person later had a fight with the Chairman. He was sacked and re-employed a few days later.

Lokuge reads a letter which he said proved the fact that a group of persons in the CPC, have organised themselves and were giving jobs for money.

(Interruptions from government benches).

Wijayamuni Soysa (PA — Moneragala District) said: Gen. Anuruddha Ratwatta was like the "Triple Gem" to the Moneragala District.

He is the hope for the so-called border villages which had been the targets of terrorist attack.

He was the hope of the cultivators, who depend on irrigation for the success of their crops.

He was also the man who lights the nights of the farmers in the remote Moneragala District.

This is why I call him the "Triple Gem" of the Moneragala farming community.

During the last 17, years no tank was built in the Bibile seat. The tanks that were built had failed due to bad workmanship of UNP stooges.

I appeal to the Minister to hand over the construction of the Malippotha Bund to the State Engineering Corporation. The Contractor who has undertaken the construction of the bund is a supporter of the UNP. He is delaying the job.

Gamini Jayawickrama Perera (UNP — Kurunegala District) said: Will the Hon’ble Minister tell the House today that he would bring down the price of petrol and diesel as the price of crude oil has come down in the world market?

If he cannot do so will he state the reasons.

Minister Gen. Anuruddha Ratwatta is burdened with too many Ministerial Portfolios. He must give up the Irrigation and Power Portfolios. You must become the Minister of Defence. It is only then you can wage the war properly and put a stop to destruction.

Ediriweera Weerawardane (PA — Kandy District) said: We have completed the small scale irrigation schemes proposed for development in 1998.

We have also established a record in supply electricity to the people. In the Kandy District alone electricity supply increased by 10 percent.

Jagath Pushpukumara (Deputy Minister of Livestock Development and Estate Irfrastructures) said: It is under the Government of President Chandrika Bandaranaike Kumaratunga that the water starved Moneragala District breathed a sigh of relief thanks to the irrigation projects implemented in the district.

S. Sivathasan (EPDP — Jaffna District) said: It is said you have completed 612 minor irrigation projects and 223 are to be completed by the end of 1998. But I want to remind you that all these are outside the North-East.

Jaffna gets only 5 megawatts of electricity. No rural electrification schemes are in Jaffna.

M. Sivalingam (CWC, Nuwara Eliya district): I hope the minister will provide funds to increase the electricity supply in the Nuwara Eliya districts. The people who have benefitted from the power generation are grateful to you.

Bandula Basnayaka (PA, Kurunegala Dist.) said: There has been a marked improvement in the supply of electricity in our area. The people in our area was especially pleased that you visited the area to commission an electricity project. Our area has developed in electricity and irrigation.

Silan Perera (PA, Badulla district): Many areas in Badulla have received an increased supply of electricity during the past few years. There are many other areas that require electricity. We request your support to improve irrigation in the Nagadeepa area. We thank you for improving irrigation and power in the Uva areas.

Lucky Jayawardena (UNP, Galle district): The electricity bills have reached sky-high during the past few years, and GST has added some more to it. The gas monopoly by "Shell" have sent the price of gas soaring. Meanwhile "Shell" is receiving concessions from the government but they are not passing it on to the people.

The international price of oil has dropped but the local prices remain static due to the irregular practices of CPC.

Abdul Majeed (SLMC — Trincomalee District) said: The last four years have seen a vast development in the Trincomalee district. The entire district has been electrified under ADB assistance.

A defect in a Muttur Anicut has left large extent of paddy land uncultivable. This should be repaired.

Alick Aluvihare (UNP — Matale District) said: This Ministry has not allocated any money for Matale District. I have provided money for certain electrification schemes, but none of them have been implemented. The officers say they cannot do anything without the approval of the Minister.

Piyasena Gamage Deputy Minister of Irrigation and Power said: Maintenance of irrigation schemes costs a considerable sum of money. During the last four years a large number of irrigation projects have been completed with aid from World Bank, the ADB, Japanese and European Union assistance.

Electricity consumers increased from 1.4 million in 1994 to 2 million in 1998. We are planning to give electricity to at least 85 percent of the homes by the first few years of the year 2000.

Ariyapala Walpitagama (UNP, Trincomalee District): The UNP is against the Norochcholai power plant project. There is mounting opposition to this project in the area. The chairman of CPC performs a laudable service but this corporation is overstaffed provoking many problems that are a threat to its efficient function.

Gen. Anuruddha Ratwatta, Minister of Irrigation and Power and Deputy Minister of Defence winding up said: I am happy several speakers criticised the activities of some departments under my Ministry while others praised them.

I welcome criticism because criticism helps to strengthen ourselves.

It is usual for everyone to expect cheap diesel and petrol when the world market price of these products are low.

But our exchange rate has increased from Rs. 49.20 a dollar in 1994 to Rs. 67.60 a dollar in 1998.

So a barrel of crude which cost Rs. 801 in 1994 costs Rs. 845 in 1998.

So you will understand why the price of petrol and diesel cannot be reduced though world market prices had dropped.

Further more in 1996 crude oil prices reached over US$ 19 a barrel. We did not increase prices despite the international market price hike. As a result the CPC suffered a loss of Rs. 4.5 billion.

This is why I stated that the CPC had a heavy loss to make good and a price reduction in local petroleum products therefore has become impossible.

The vote was passed.

House meets at 9.30 a.m. Monday 30th November 1997.

Budget – a tragedy for the country and its people

Continuing the text of Ronnie de Mel’s Budget speech from Saturday

In the last four years, defence expenditure as a percentage of GDP has increased significantly while expenditure on infrastructure and other capital works and social welfare has declined. The Govern-ment has created this situation by increasing the defence ex-penditure significantly without a commensurate improvement in the defence situation. Defence

expenditure, Sir, as a percentage of GDP has increased from 4.1 per cent to 5.5 per cent between 1994 and 1998. The impact of this has been twofold. Firstly, the Government investment in infrastructure and social welfare has fallen and fallen drastically. The physical quality of life index, the human development index about which we boasted, our literacy rates, our health standards, our infant mortality rates, our life expectancy - all these high standards are going down. The World Bank has drawn pointed attention to the erosion of the Human Develop-ment Index, of the physical quality of life index in this country which used to be praised by everybody whether by Robert Macnamara or James Grant. All those people used to praise our physical quality of life index in the 1960s and 1970s. Under this Government, even that has begun to erode.

Secondly, the burdens on people have increased. Capital ex-penditure of the Government has fallen from 7 per cent of the GDP to 6.4 per cent between 1994 and 1997. The Defence levy has increased from 3.5 per cent in 1994 to 5 per cent in 1995. There-fore, the economic fundamentals of the country have been eroded due to a costly war without any benefits in terms of an improvement in the security situation far from the economy improving, Sir, it has declined in every way. Foreign direct investment has slowed down. I have got a chart on that also which shows the decline. A remarkable decline from UNP times. Foreign investment has slowed down due to the worsening security situation. It has never touched the peak of 1993 and 1994 in UNP Times.

Therefore, Sir, the entire economic picture is bleak and is becoming more and more bleak everyday. The worst is still to come in 1999 with interest rates rising. I will bet my last dollar. Sir, the interest rates will be soon going up to 14 per cent and 15 per cent and may be even 16 per cent. With the interest rates rising, foreign investment going down, foreign tourism declining, rubber industry totally uneconomic, tea prices declining, the market for gems and jewellery in a state of total collapse, rubber goods and ceramic exports de-clining, garments facing increasing competition, the whole economic picture is extremely bleak. No-body is fooled by these sunshine stories in the Budget Speech. The situation is ex-tremely difficult.

Next, I will deal with foreign reserves, Sir. As a result of slowing in investment flows, the comfortable foreign exchange reserves which the UNP left this Government - foreign reserves worth 7.5 months of imports have fallen to 4.5 months of imports in 1998.

Even this level of reserves has been achieved through the privatization of plantations. If not for the privatization of plantations, they would have been left with less than two months of reserves. It was done through privatization of plantations and the Telecom and not through an improvement of the trade balance. Priva-tization or forced sales of our national assets have been the only escape route for this Government. The only remedy of this Government has been to sell all our national assets for a song. The sale of the Kotagala Plantations is a case in point. We do not need to talk about it any more. Our only steel mill, our only gas company, our cement factories, our duty-free complex, our national airline, our telecommunications, our Port of Colombo are all sold or being sold for a song. Very soon you will sell our state banks. I am sure of that. You have already sold the National Develop-ment Bank which I started. You will sell our electricity, our water, our roads, our railways, etc. If this Government can, Sir, it will sell even the air we breathe. They might packet the air and sell it or they might packet the sea around us and sell it. Nothing will stop this Government’s rapacious selling spree, the selling mania. You once accused us of selling the family silver. What are you selling? You have sold not only the family silver but, as I told you previously, you have sold the entire family with the silver. We do not mind this Government selling the entire company, national family but do not sell the entirety of Sri Lanka down the river for a song to balance your Budget and finance your war in which you have totally and completely failed to achieve your objectives.

Sir, I have some wonderful charts which I am pleased to give the Deputy Minister to disabuse his mind of the optimistic forecast which he has just given us. You will see the defence expenditure rising. From 2 per cent of GDP, the defence expenditure has gone up to 6 per cent of GDP. The entire budgetary policy and budgetary objectives are wrong and are based on false premises. The de-fence expenditure has become a bottomless pit with no end in sight and also with no results worth talking about to justify this colossal expenditure. There is 6.5 per cent of GDP in defence. Only 4.5 per cent is to be spent on capital expenditure.

In my time, Sir, we spent 21 per cent of the Budget on capital expenditure, on infrastructure development of this country. That is why we had all that development from 1977 to 1987. Only 4.5 per cent will be spent as against 21 per cent in our time on infrastructure alone. How long can you sustain this without totally ruining this country?

Mr. Deputy Spea-ker

Order please! The Speaker will now take the Chair. Mr. Speaker, I was just telling the House that in our time we had a correct balance bet-ween expenditure on defence, expenditure on development and growth and infrastructure and expenditure on social welfare and social justice. We balanced all three as any country should do. You must balance your defence expenditure, even if there is a war, with your expenditure on development and growth and your expenditure on social welfare and social justice for the people. We balanced all these three for 11 years since the war started in 1983. You went and completely upset the balance. You put all your eggs in one basket, defence. You starved capital expenditure.

You starved development. You starved growth. You starved infrastructure. You starved social welfare. You starved social equity. You starved social justice and today you have not even achieved the results which you hoped to achieve in the war. Sir, the entire policy goals of this Budget and of all the four previous Bud-gets are wrong. Relying on the private sector alone to do infrastructure is complete folly. They talk like parrots that the private sector is the engine of growth. I will tell you, the private sector cannot be the sole engine of growth in a country like Sri Lanka. The public sector and the private sector combined can be the engine of growth in a country like Sri Lanka.

I will tell you one experience only. There is a thing called the Private Sector Infrastructure Development Com-pany — which had US Dollars 75 million for the last three years — under my old [Interruption] Deputy Secretary to the Treasury, Mr. Kumaranatunga. US dollars 75 million for private sector infrastructure development. With US dollars 75 million abso-lutely — no takers nobody taking the money which is available. So, they call it the engine of growth. Engine of growth, engine of growth, engine of growth! No takers from the private sector even for the money which is available. The private sector,Sir, cannot be the only engine of growth in a country like Sri Lanka. That is another fallacy of yours.

Then, Sir, capital expenditure has gone down from 24 per cent of total Govern-ment expenditure in 1993 in our time to 18 per cent. Defence has gone up from 14 per cent to 21 per cent. No wonder you are in a total mess! No wonder nothing is moving in the economy. Your engine of growth would not start, even though, you are trying to give it a ‘push’ start. First, balance your expenditure better as we did.

Then, domestic borrowing requirements. T. Bill rate went down to 10 per cent in 1997. It was not due to any skill of the Government or good economic management, but only due to huge receipts from privatization. Huge receipts from privatization brought the T. Bill rate down to 10 per cent. You are selling your way out of trouble. That is what this Government has done. Selling all your national assets to get out of a trouble.

This year it is already over 13 per cent. It will go up to 14 per cent, 15 per cent and even 16 per cent. The domestic borrowing of the Government has in-creased more than two fold. In 1993, about Rs. 20 billion.In 1998 it will be about Rs. 50 billion. And you still say the UNP got into debt. This effectively crowds out the private sector when you take Rs. 50 billion. And you say, you are helping the private sector.

Then, Sir, interest payments on existing local debt and new local borrowing. Another graph shows it is going up. You are borrowing more and more, and falling more and more into a debt trap. Last year you retired Rs. 10 billion of domestic debt from the sales of our national assets. But you did not reduce the limit from Rs. 125 billion to Rs. 115 billion, as you promised in your Budget Speech. Instead, you re-issued Rs. 5 billion this year. So it is Rs. 120 billion. All the time false promises are made in your Budget.

Then I come to the Budget deficits . That is a wonderful graph dark and light which shows you the whole story. In 1992, UNP time, our target for the deficit in the Budget was 8.4 per cent of GDP. Actual what we achieved was 6.6 per cent - below the target set. In 1993, our target was 8.l per cent. It went slightly higher - 8.6 per cent. I admit it. Then you came in 1994 your target was 6.4 per cent, and it went up to 10.5 per cent. In 1995, your target was 7.5 per cent and it went up to 10.1 per cent. In 1996 the target was 7.8 and it went up to 9.4 per cent.

1997 was the only fairly good year, but that year also it went up a little bit. The target of 7.8 per cent went up to 7.9 per cent. This year the target is 6.5 per cent. It will end up, in my opinion, over 8 per cent, because some fiddling and fudging is going on. I am telling you here and now, with regard to GST revenue, some fiddling and fudging is going on in the Treasury and in the departments which give you statistics of revenue. Please stop this fiddling and fudging and give us the actual revenue. You will find that the actual deficit is over 8 per cent by the end of this year.

So, every year you have not been able to reach your target. The UNP record is much better than this. If we promise something, we keep to it. When we cannot do so, we set the target high. So, the targets were actuals. All your main macro-economic targets in all your Budgets since 1994, — I have another graph, — have gone haywire. You still have the foolhardiness to come here and say that you are doing well in financial management.

With regard to GDP growth, in 1995 you said you will get 6 per cent. You got only 5.5 per cent. That is your figure. My figure is 4 per cent. In 1996 your target was 6 per cent. You obtained only 3.8 per cent. That is half the target. In 1997 the target was 7 per cent. You got only 6.4 per cent. My figure is 5.8 per cent. This year the target is 8 per cent. You say you will get 5 per cent. By the end of this year you will get 4.8 per cent at most.

With regard to inflation, in 1995 you set the target at 7.0 per cent. It became 8.4 per cent according to you. The 1996 target was 9 per cent. It became 15.9 per cent. The 9 per cent became 15.9 per cent. The 1997 target was 7 per cent. It became 9.6 per cent. This year the target is 6 per cent. At best, you will end up at 10 per cent. So, you have kept your targets. Wonder-ful! Wonderful! All day dreams, not targets.

With regard to the Budget deficit as a percentage of GDP, in 1995 you said it will be 7.5 per cent. It became 10.1 per cent. In 1996 you said it will be 7.8 per cent. It became 9.4 per cent. In 1997 you said it will be 7.8 per cent. It became 7.9 per cent. In 1998 you said it will be 6.5 per cent. It will become 8 per cent.

With regard to capital spending as a percentage of GDP, that is where the actual thing has been going down. Other things have been going up. That is going down. You said you will have 8.6 per cent of GDP as capital spending in 1995. It became 6.3 per cent. You said it will be 7.6 per cent in 1996. It became 4.9 per cent. In 1997 you said it will be 7.9 per cent. It became 5.0 per cent. In 1998 you said it will be 7.0 per cent. It becomes 4.5 per cent. That is how you kept your macro-economic targets. Wonderful financial management! No wonder the IMF has, for four years, not given you one cent. I do not blame the IMF.

Then, I will read out some of the specific promises in Budgets, not targets. In your manifesto you said you will abolish Paye Taxes. Where? You said you will bring down the price of bread to Rs. 3.50. Where? You said you will reduce prices of diesel and petrol. Where? When you can do it now, you will not do it. You said you will set up Agricultural and Fisheries Banks. Where? You said you will set up Industrial Development Banks. Where? You said you will create one million jobs in the first two years. Where? You said you will create 300,000 self-employment opportunities. Where? You said you will give a dole of Rs. 1,500 per month till employment is found. Where? You said you will abolish import duties on motor cycles and three- wheelers. Where? All, not done! All in the little "Blue Book of President Chan-drika Bandaranaike Kumaratunga", like the little "Red Book" of Mao Tse-Tung.

Then, in January 1995 you published your Economic Po-licy Statement. It was a wonderful "blue book". I have brought that also. It is a wonderful "blue book" with a wonderful picture of the President. No wonder the people of this country fell in love with her. This is the second wonderful "blue book" of the President. Even the ranks of Tuscany could scarce forbear to cheer. Even I said that this is a very fine statement. If everything in this book was implemented, it is a fine statement. Even I applauded it, at that time. You said you will reduce the fiscal deficit to 3 to 4 per cent of GDP well before the year 2000. Now we are in 1998. I bet my last dollar that you would not get to 4 per cent of GDP by the year 2000. You said you will eradicate unemployment in five years’ time. Wonderful promise!

(Continued tomorrow)