The Tribune

By NEIL HARTNELL

Tribune Business Editor

CUTTING spending "is not a priority" for the Government based on its 2012-2013 Budget statements, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chief executive noting the absence of any measures to reduce the public sector's costs.

Winston Rolle concurred with Tribune Business's observations that the 2012-2013 Budget presentation focused almost exclusively on the revenue side - particularly better administration and enforcement - as the way to tackle a projected $550 million fiscal deficit and national debt growing ever closer to $5 billion.

He added that the absence of any measures to reduce government spending contrasted with the approach adopted by cash-strapped private sector firms, who tackled both sides - increasing revenues and cutting spending (costs) - in a bid to regain financial stability.

"That was one of my observations as well," Mr Rolle said, when Tribune Business pointed out that the Budget statement focused almost entirely on the revenue side - in other words, the Government getting more money from individual taxpayers and businesses.

Contrasting this with the approach that would have been adopted by the private sector, Mr Rolle said no business would focus solely on increasing revenues (sales) as a means of rescuing themselves from a precarious financial position.

"Typically, you find the opportunity to reduce expenditures a little easier than to generate revenues," he said. "In most cases, organisations looking to shore up their financial position would look at increasing revenues, but would also look at reducing expenditure.

"That's what any prudent businessman would do - look at how to generate more revenue, as well as better manage expenditure. Especially in recessionary times, they pay the bare necessity expenditures with no fluff. If you took a look at it from a true business perspective, any expenditure would have to be a vital necessity or tied to revenue."

In the Government's case, while Michael Halkitis, minister of state for finance, made some noises in the Budget run-up about tackling waste and inefficiency in government spending, and getting 'value for money for every dollar spent', the 2012-2013 Budget virtually ignored expenditure.

James Smith, a former Central Bank governor and now a key adviser to the Ministry of Finance, had also suggested that at some point the growth of the Government's size would have to be "curtailed" to get the national finances back on track. But, based on the Budget, it appears the Christie government is actually committed to further growing the public sector, even though many observers believe it is on spending, rather than the revenue side, where the problems lie.

The Prime Minister told the House of Assembly that the Government would seek to 'constrain' the growth of recurrent spending, which goes to fixed costs such as salaries, emoluments and rents, in line with the economy's costs.

What this means is, if achieved, recurrent spending will still grow - and the size of government increase - albeit in line with the Bahamian economy's overall growth.

A further indication of a seeming lack of commitment to reduce recurrent spending is that it is projected to rise by 6.7 per cent or $114 million to $1.821 billion for fiscal 2012-2013, compared to $1.707 billion in the last fiscal year.

Although $55 million of that increase was blamed by the Prime Minister on increased debt principal repayments, that leaves almost $60 million of fixed-cost spending increases unaccounted for.

All this, the BCCEC chief executive said, showed that "the focus for reducing spending is not a priority".

"What they're saying is that expenditure levels are at acceptable numbers, or there's nothing they can do to reduce it," Mr Rolle said. "There really should be a formal plan that speaks as to how it should be contained.

"We need to look at the whole premise of government and the civil service to see how we can make them more effective and put some productivity clauses in."