The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has quadrupled the 2016-2017 Budget for the Prime Minister’s Office to $79.947 million, an increase that was yesterday branded “absolutely crazy” by its political opponents.

Details of the Government’s half-year fiscal performance, tabled in the House of Assembly, reveal a $62.532 million increase in anticipated recurrent spending by the Prime Minister’s Office compared to initial Budget estimates.

The increase is not explained, save for the fact it relates to ‘grants, fixed charges and special financial transactions’.

But what it clearly does is expand the budget for the Prime Minister’s Office from the $17.069 million approved by Parliament in June 2016 to $79.947 million - a more than four-fold increase.

Most of this sum, some $71.033 million, was spent during the first half of the 2016-2017 fiscal year, and - together with the $145.976 million increase in the Ministry of Finance’s Budget - accounts for the bulk of the $232.708 million spending rise unveiled by the mid-year Budget.

K P Turnquest, the FNM’s finance spokesman, blasted the expanded budget for the Prime Minister’s Office, and called for greater transparency surrounding the increase.

“That is absolutely crazy,” he told Tribune Business. “I will certainly have to ask for an explanation for that...

“It’s interesting that kind of increase would show up in the Office of the Prime Minister’s budget. What increased, and what’s he [the Prime Minister] in charge of so that warrants that, as opposed to individual ministries.”

Mr Turnquest speculated that the spending increase could relate to Hurricane Matthew, with the Prime Minister on Wednesday disclosing that the Government had spent $35 million on storm repairs and rebuilding to-date.

He added, though, that the mid-year Budget’s projected spending increases beyond what Parliament approved in June 2016 - a $232.708 million increase in recurrent expenditure, and $52.562 million capital spending rise - highlighted why more transparency was required over how Value-Added Tax (VAT) monies have been used.

“This is what makes the whole VAT explanation so unsatisfactory,” Mr Turnquest told Tribune Business. “We need much more detailed analysis on where the money’s been spent and why it’s been spent.”

The $232.708 million in recurrent spending is equivalent to 10 per cent of the parliamentary-approved sum, thus representing a material sum, which takes total recurrent (fixed cost) spending for 2016-2017 to $2.553 billion.

With Mr Christie acknowledging on Wednesday that the Government’s revenues are unlikely to recover sufficiently from Hurricane Matthew to hit their full-year $2.176 billion target, Mr Turnquest said the mid-year Budget figures hinted at a massive deficit.

Suggesting that the Government’s revised $350 million GFS deficit projection for 2016-2017 was also “blown”, the FNM deputy leader told Tribune Business: “It is very much unlikely that the Government is going to be able to rein in expenditure to overcome that revenue shortfall.

“The Government has not shown any kind of fiscal discipline over the last five years to give us confidence that they will be able to show that kind of expenditure control.

“We know they’ve been bragging about signing contracts on some projects. We need much more clarity on what they have spent the money on rather than these generic, superficial explanations that don’t provide any more clarity than when we started.”

Mr Christie on Wednesday did his best to ease public concerns over how the Government has used the $1.14 billion in gross VAT revenues collected in the tax’s first two years, acknowledging the “vital importance” of fiscal transparency and accountability to proper governance.

Although agreeing that both issues “most definitely need to be addressed and clarified” for the benefit of Bahamians, Mr Christie made no mention of a Fiscal Responsibility Act - something that has long been pushed by the private sector as a mechanism for ensuring greater accountability and transparency over how taxpayer monies have been used.

And, in explaining how the VAT monies have been used, Mr Christie said 40 cents out of every $1 collected had helped to narrow the fiscal deficit by financing more government spending from revenue cash flows as opposed to borrowing.

Of the balance, the Prime Minister said 30 per cent of VAT monies had replaced some $344 million revenues foregone as a result of taxes eliminated, lowered or adjusted when it was introduced in January 2015.

The final 30 per cent, or “$256 million”, have gone on ‘general expenditures’ such as new social programmes and the hiring of new security services personnel.

Besides the discrepancies between the $344 million and $256 million figures, both cited as being ‘30 per cent’ of VAT monies, the hirings cited by the Prime Minister come to less than $17 million in additional wage costs per annum.

This sum pales in comparison to the $1.14 billion gross, and $756 million net, VAT revenues collected, and seems to back Mr Turnquest’s argument that more explanation on the Government’s spending is required.

Mr Christie said VAT’s introduction had narrowed the fiscal deficit by a collective $500 million since its introduction.