The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Shrinking the size of government will be extremely hard to achieve in the Bahamas, a well-known businessman believes, because “no political party is committed to it as a philosophy”.

Sir Franklyn Wilson told Tribune Business that none of the major parties suggested in their names that they were wedded to a ‘Conservative’ political philosophy, which traditionally means a commitment to so-called ‘market forces’ and smaller government.

And the Arawak Homes chairman suggested that a fear of losing general election votes had further deterred governments from reducing the size of the public sector, given the potential job losses that could result.

“There’s never been any serious effort to reduce the size of government as no one is committed to it as a philosophy,” Sir Franklyn told Tribune Business, suggesting that Opposition politicians now calling for this were being hypocritical.

“Those in the FNM calling for that are looking for something to say, because in 15 years in office they never pursued that,” he added, referring to the 1992-2002 and 2007-2012 Ingraham administrations.”

Sir Franklyn added that recent pronouncements by Dr Hubert Minnis, the FNM leader, and senior members of his party suggested they would only slow down - not stop and reverse - the continuing expansion of government if they were elected to office.

“Everything they say means the Government will have to spend money,” he added of the FNM. “He’s [Dr Minnis] not saying he will do anything to cut the current level of expenditure; he’s only going to reduce the size of the increase.”

Challenging Branville McCartney, the Democratic National Alliance’s (DNA) leader, to produce specifics on how his party would shrink government, Sir Franklyn then suggested the real reason why the public sector keeps growing.

“You know why they don’t say it?” he said of the aversion by Bahamian politicians to publicly commit to reducing the size of government. “It’s because the public will interpret that as saying they’re going to start reducing public services, people will lose jobs, and they will lose votes.

“It’s easier for politicians to talk about new programmes and initiatives they say are going to create jobs.”

But a reduction in the size of government is exactly the medicine that many observers believe the Bahamas needs, given that public expenditure continues to outpace revenues despite the $1 billion-plus boost from Value-Added Tax (VAT).

As a result, the Government continues to miss fiscal consolidation targets that many believe are overly-optimistic, with the fiscal deficit for the 2015-2016 period projected to still come in around $300 million.

While the deficits have come down from $500 million-plus during the Christie administration’s first two years, and the rate of increase in the national debt has slowed, the latter is continuing to move towards the $7 billion mark.

Yet the 75 per cent year-over-year increase in the deficit to $157.5 million for the first four months of 2016-2017 fiscal year means the Government has already blown past its full-year projection with just one-third of the period gone.

And the size of government continues to grow, with Shane Gibson, minister of labour and national insurance, revealing last month that 4,500 net persons have been added to the public service since the Christie administration took office.

Taking $12,000 as a crude ‘average salary’ for Bahamian civil servants, Tribune Business calculations show that the 4,500 ‘new hires’ have added a collective $54 million to the Government’s annual civil service wage bill. This is likely to be an under-estimate, given that no benefits are included in the calculation, but it helps to show ‘where the VAT money gone’.

Economic theory suggests the Bahamas needs to grow the private sector and its economic output (GDP), as this would enable companies to provide jobs for persons laid-off in the public sector as a result of reducing government’s size.

However, many Bahamians plump for public sector employment in the belief that the demands will be less, and the benefits and job security greater. And then there are the ever-growing demands from the Bahamian public for expanded public services.

All of which makes reducing the ‘size of government’ difficult, especially given the short-term thinking of many politicians, and the fact constituencies can turn on 100 votes or less.

Sir Franklyn told Tribune Business that “political parties that are serious about reducing the size of government pursue a political philosophy” that is typically ‘conservative’.

Yet he pointed out that no Bahamian political party had incorporated the term in its name or philosophy, despite both the FNM’s and DNA’s founders having the opportunity to do so and differentiate themselves from the Progressive Liberal Party (PLP).

Sir Franklyn said the PLP was the only party to state its philosophy in its name - that it is ‘progressive’ and ‘liberal’.

“The reality in the Bahamas is that the PLP is the only party which is its name, saying what its political philosophy is,” Sir Franklyn said. “The other parties have never in name said they’re opposed to a progressive philosophy.

“You are looking for evidence of making the Government smaller, and can’t find evidence of it. You don’t need to look too far.”

Sir Franklyn added that “until there’s a party that comes along and says we’re the Conservative party”, a reduction in the size of Bahamian government is unlikely to happen.