The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to provide timelines and details on its “fantastic” promises to reform loss-making government enterprises and introduce a Fiscal Responsibility Act.

Robert Myers, the Organisation for Responsible Governance’s principal, said quick action by the Minnis administration on these pledges was vital to restoring private sector and consumer confidence that the Government will get the Bahamas’ public finances under control.

“We’re very pleased to hear legislation will be introduced, but when?” he told Tribune Business on the Fiscal Responsibility Act. “How quickly can they do that so that consumer, investor and business confidence can return, as we will then know there’s a framework in place to prevent the reckless and irresponsible spending of government.”

A Fiscal Responsibility Act has been a recurring them raised by many in the private sector, who view such legislation as providing a check on uncontrolled spending by the Government. It would also impose greater accountability and transparency over the public finances, forcing an administration to return to Parliament to explain - and gain permission for - any spending in excess of Budget estimates.

The former Christie administration failed to deliver on promises of consultation on a Fiscal Responsibility Act, and the issue’s omission from last week’s ‘Speech from the Throne’ meant yesterday’s Budget presentation was keenly watched to see whether this was an oversight.

K P Turnquest, the minister of finance, avoided the mistake of his predecessor by pledging: “We will introduce Fiscal Responsibility legislation that would make it difficult for future administrations to incur deficits unabated.

“This law would also prevent Ministries and Departments from introducing new spending initiatives in-year without identifying the requisite financing from within their Budget allocations.”

While welcoming the Government’s legislative pledge, Mr Myers urged it to set timelines for when a Fiscal Responsibility Act will be introduced, and outline whether it planned to involve the private sector, civil society and other stakeholders in its crafting.

“It’s all very well saying this, but when?” he queried to Tribune Business. “You need to start informing the public as to what the timelines are, and what they intend to do with regard to the inclusion of the private sector, civil society in arriving at that position.

“I think what we’d like to hear more about is what is the timeline and process for achieving that [Fiscal Responsibility Act]. Will they include all the stakeholders? Still, I think it’s positive. Clearly, the Government recognises that we have to get the public finances under control.”

Mr Turnquest yesterday declined to give a definitive timeline for when the Government would seek to bring a Fiscal Responsibility Bill to Parliament, but emphasised it was a “priority item”.

“I don’t want to give a timeline at the moment, but it is a priority item,” he told Tribune Business. “As soon as we get it on the agenda, we will certainly be doing that.”

Addressing the House of Assembly yesterday on measures to get the Government’s finances in order, Mr Turnquest said it would examine privatising, outsourcing or reforming loss-making public enterprises that are now consuming almost $500 million in annual taxpayer subsidies.

“This Budget includes funding in the amount of $429 million for 25 state-owned enterprises,” the Deputy Prime Minister said. “This is $79 million more than last year, primarily because of the introduction of National Health Insurance.

“As this is clearly unsustainable, this administration will develop concrete action plans to transform these enterprises either into viable, efficient and self-sufficient entities, or transfer them to the private sector and use any gains from these transactions to retire debt.”

Among the loss-makers that continue to bleed Bahamian taxpayers are Bahamasair, with its $14.85 million subsidy for 2017-2018, plus the $30 million allocated to the Water & Sewerage Corporation. The Broadcasting Corporation of the Bahamas (BCB) is also in line to receive $8.863 million, with the likes of Nassau Flight Services and the Hotel Corporation gaining $2 million and $1 million, respectively.

A “zero tolerance” approach to tax dodgers will also be taken, with Mr Turnquest flagging planned legislation to strengthen the Government’s revenue enforcement and collection powers, and formally give the Department of Inland Revenue (DIR) a legal underpinning.

“Individuals and businesses should be alerted that, in this new era of accountability and transparency, this Government will adopt a zero tolerance approach to those who do not pay their taxes,” he added. “We will be fair and transparent in our enforcement efforts but we will also be decisive.”

Mr Turnquest also promised to seek “value for money” savings from the Government’s spending programmes, adding: “We will undertake a judicious and in-depth review of Government expenditure programmes to determine where and how value for money can be enhanced, how effectiveness and efficiency of service can be improved, and where savings and reallocations can be secured to both finance the Government’s policy priorities and facilitate a more expeditious reduction and elimination of the GFS Deficit.”

New public procurement regulations will also be introduced, the Minister of Finance explaining: “These amendments will make it mandatory for the Government to use transparent bidding procedures when it acquires goods or services from the private sector.

“It will also mandate a certain percentage of Government procurement being available for small and medium-sized businesses.”

Finally, Mr Turnquest pledged to lower to “an irreducible minimum” the amount of tax breaks and incentives granted to foreign developers.

“To bring transparency and accountability to the Government’s fiscal operations, we intend to table in Parliament a full list of financial subsidies provided to developers so the Bahamian public can see not only where the VAT money has gone but where all of the tax money has gone,” he said.

“We will also seek to reduce these subsidies to an irreducible minimum, and apply a very rigid test on future requests for financial subsidies, to ensure that more money is available to finance the operations of the Government.”

Many observers have argued that the Bahamas is, to some extent, running a welfare system for major foreign developers by failing to graduate, or wean them off, extensive investment incentives.

“The Bahamian people will be very interested to know the level of subsidies granted to foreign developers in this country,” Mr Turnquest said.