The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sir Franklyn Wilson has urged Bahamians not to take Michael Halkitis’s infamous ‘Where the VAT money gone’ speech too seriously because political conventions are for “entertainment”, rather than a serious discussion of national affairs.

The Arawak Homes chairman, coming to the minister of state for finance’s defence, said it “doesn’t take a rocket scientist” to know what has happened to the $1 billion-plus VAT revenues collected since January 1, 2015.

Agreeing with Mr Halkitis’s explanation that they had gone into the ‘pot’ known as the Consolidated Fund, and been co-mingled with the Government’s other taxes, Sir Franklyn said the issue was being exploited by the Opposition parties for “political silly season”.

When Tribune Business suggested the real issue was the Government’s continued running of $300 million-plus deficits, despite VAT having been ‘sold’ as necessary to eliminate such annual’ red ink’, Sir Franklyn blamed this on Hurricanes Matthew and Joaquin.

After this newspaper pointed out that the Christie administration was missing its Budget targets by a wide margin prior to these storms, the Sunshine Holdings chief responded by saying that no Bahamian government - and hardly any local private sector companies - were hitting their financial goals.

“I don’t listen to convention speeches to try and understand what is going on,” Sir Franklyn told Tribune Business over the controversy ignited by Mr Halkitis’s speech at the PLP’s recent convention.

“Whenever I listen to any Minister of Finance speak, the only place I listen is if he’s in Parliament. If it’s in Parliament, I assume that’s a serious speech, or a serious occasion like Business Outlook, where he knows people are taking him seriously and listening,” he added.

“I go to a convention to be entertained, not to get information about what is really happening. You get all the dancing, music and singing....You don’t go to a convention to get serious information.”

Sir Franklyn’s suggestion that speeches by all Bahamian politicians at their party conventions should not be taken seriously, and are just for entertainment purposes, will likely amuse many observers given the controversy sparked by Mr Halkitis’s ‘Where the VAT money gone’ address.

In an effort to rebut Opposition charges, and rouse the PLP’s base, the Minister listed numerous capital/investment projects undertaken by the Government, such as the $232 million and $100 million re-equipping of the Royal Bahamas Defence Force and Bahamasair fleets, respectively, the Princess Margaret Hospital Critical Care Block, and other investments in healthcare and education.

However, Tribune Business, others in the media and the Opposition were quick to point out that the initiatives identified by Mr Halkitis were financed by project-specific loans, rather than VAT revenues directly,

With the Minister sticking to his position, and Prime Minister Perry Christie promising to issue a report to show ‘where the VAT money went’, Sir Franklyn said of the controversy: “That is politics.

“Everyone knows where the VAT money gone. Those asking the question do so in a political context. You don’t need to be a rocket science. The answer is that it went into the Treasury.

“Where it came out and what they did with that money, that lies in the Government’s accounts. It’s there. It went there like all the Government’s monies, and the Government used that to finance the Government.”

Sir Franklyn continued: “The noise, in my opinion, is because we’re in silly season, and people are finding something to talk about. People are trying to make hay of this stuff.”

Tribune Business previously reported that the real question many Bahamians are asking is why the Government continues to overshoot its Budget projections, running deficits worth hundreds of millions of dollars and increasing the national debt - albeit at a slower rate - when VAT had been billed as raising enough money to eliminate the deficit and pay down the $6.695 billion national debt.

This newspaper also pointed out that what Mr Halkitis was really saying is that VAT has financed increased spending, borrowing and debt by the Government, helping it to increase the size of government.

Sir Franklyn sought to blame the Budget forecast overshooting on the fall-out from Hurricanes Joaquin and Frances, saying: “You can Budget whatever you want to Budget; there’s something called unforeseen.”

Joaquin, which devastated the southern Bahamas in October 2015, is estimated to have caused $105 million in damages. And Matthew, which arrived almost exactly a year later, is forecast to have caused $700 million worth of damage - possibly as much as $1 billion, when economic losses are thrown in.

“If those things had not happened, the money spent on those storms would likely have been spent on reducing the deficit,” Sir Franklyn added. “Whatever the deficit did not go down by, the logical place to look is the hurricanes.”

Tribune Business’s records, though, show the Government was already having difficulty meeting its Budget projections before the hurricanes, not least in the 2014-2015 fiscal year, when a projected deficit of $196 million almost doubled to $381 million.

“When has any government last issued a Budget when they did everything they said they were going to do,” Sir Franklyn responded.

“When one looks at government budgeting and they say we’re going to produce a small surplus or small deficit, when last has that ever happened?”

Suggesting the same applied to the private sector, he added: “How many companies in this country are hitting budget? How many?

“My position to you is that the majority of companies in this country I know of - I don’t know all - are struggling to hit their budget. That’s just a fact of life.

“Some people budget conservatively, but that ain’t what politicians do because they have to sell it. They don’t budget conservatively and don’t hit the target.”