The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Arguments that the Bahamian constitution should mandate the Government “maintain a balanced Budget” have been rejected by the Constitutional Commission, on the grounds it would hinder responses to fiscal emergencies.

The Commission’s report, released yesterday, also called for greater independence for the Auditor General’s Office, and for the House of Assembly’s Public Accounts Committee (PAC) to be given proper constitutional standing.

Both latter moves would strengthen oversight of the Government’s oversight and the way taxpayer monies are being spent.

And the Commission also suggested the Bahamas enhance its ‘oversight of the guardians’ by amending Article 136 (6) of the constitution to allow for the accounts of the Auditor General’s department to be audited by a private sector firm.

With the Bahamas’ national debt set to soon push past the $5 billion mark, and the country’s debt-to-GDP ratio moving closer to the 70 per cent ‘danger threshold’, there was little surprise that the public finances featured in the Commission’s deliberations.

One member, Michael Albury, suggested that the Bahamian constitution be amended to require that the Government produce a balanced Budget every year - perhaps one approach to tackling the looming fiscal crisis.

A similar suggestion had been made in submissions to the Commission by former Central Bank governor, Julian Francis.

Speaking on behalf of the ‘We the People’ organisation, Mr Francis had noted the Bahamas’ public debt was “approaching worrying levels”.

As a result, he added: “Serious consideration must be given to limiting the ability of a government to spend to revenues it can raise during the term of its mandate.”

Mr Francis warned that the increasing national debt was “a serious handicap” to the Bahamas achieving its national aspirations, and suggested that the constitutional review needed to address this if it was to have any relevance.

However, the Commission appears to have rejected the submissions by Messrs Albury and Francis on the grounds that it would unnecessarily tie the Government’s hands in responding to national emergencies, such as hurricane damage.

And the Commission also felt that mandating a balanced Budget would remove the Government’s discretion as to how it spent its monies, placing this under the courts instead.

“The Commission does not recommend including a clause in the constitution requiring the Government to maintain a balanced Budget,” the report said.

“Among other recommendations to improve fiscal responsibility and governance was a novel suggestion from within the ranks of the Commission itself, (namely from Commissioner Albury), for a constitutional mandate to maintain a balanced Budget.

“However, the Commission sees this more as a matter of governance as opposed to legislation, and fears that such a provision would handicap the ability of a government to take urgent fiscal measures in the public interest.

“With the explosion of Judicial Review, it would also ultimately subject the executive discretion needed in this area to the control of the courts.”

Elsewhere, the Commission said that while the constitution aimed to make the Auditor-General independent of both Parliament and the Government, the reality was “rather different”.

“For one, this office depends on the Ministry of Finance for an operating budget, and the constitution leaves the audit of the Office of the Auditor General in the hands of the Minister of Finance,” the report said.

“Both situations have significant implications for the degree of independence that the Auditor General is able to exercise.

“The Commission recommends that the Office of the Auditor General be provided with its own budget, and the control for the appointment and disciplinary control of the staff of that office be vested in the Auditor General.

“Further, the responsibility for the audit of the Auditor General’s office itself should be forthwith removed from the control of the Minister of Finance, and provisions made for this to be done by an independent firm of auditors selected after consultation between the Minister of Finance and Public Accounts Committee.”

The Commission report also called for the links between the Auditor-General and the PAC to be strengthened, arguing that this would benefit transparency in the public finances.

While the PAC was traditionally chaired by the Opposition, and had the power to call for witnesses and documents, the Commission said it was still subject to House of Assembly control.

“Because of the importance of the PAC, the Commission recommends that the Public Accounts Committee should be enshrined in the Constitution as a special Parliamentary Body,” the report said.

“This would ensure that the functions of this committee are ensured by the Constitutional document itself, not the rules of House of Assembly.

“It is noted that the elevation of the Public Accounts Committee to direct constitutional status is becoming more and more a commonplace feature of other Caribbean constitutions.”