The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Governance reformers last night urged the government to make the Fiscal Responsibility Bill "the first thing they work on" when Parliament returns, expressing disquiet over its delay until fall.

Matt Aubry, the Organisation for Responsible Governance's (ORG) executive director, expressed "disappointment" on the civil society group's behalf that the legislation will now only be brought to Parliament after the summer recess.

He told Tribune Business that the Fiscal Responsibility Bill was "critically important" to placing The Bahamas "on a more fiscally buoyant position", boosting transparency and accountability over the government's finances while also imposing greater spending discipline.

Mr Aubry urged the Minnis administration that the bill's passage to Parliament "not be delayed any further" than Autumn 2018, given that it represents the government fulfilling its side of the fiscal consolidation bargain following the 12 percent VAT rate's implementation.

The ORG executive director spoke out after the Prime Minister's press secretary, Anthony Newbold, yesterday confirmed that MPs will today debate - and aim to pass - the Economic Empowerment Zone Bill that facilitates tax incentives for revitalising Over-the-Hill areas during the last parliamentary session before summer.

He suggested that the Fiscal Responsibility Bill, together with other governance/anti-corruption legislation such as the Integrity Commission Bill and Ombudsman Bill, will head the Government's legislative agenda once Parliament returns in September or October.

However, Carl Bethel QC, the attorney general, has suggested that the legislative pipeline for the remainder of 2018 will be dominated by Bills designed to address the European Union's (EU) and Organisation for Economic Co-Operation and Development's (OECD) anti-tax avoidance demands, plus prepare the Bahamas for World Trade Organisation (WTO) accession by end-2019.

K P Turnquest, deputy prime minister, had previously told Tribune Business he hoped to have the Fiscal Responsibility Bill approved by Cabinet and brought to Parliament before the summer recess. Should that target be missed, he promised it would come forward "immediately after the break for summer".

Mr Aubry, though, last night described Mr Newbold's revelations as "disappointing". He revealed that he spoke to Dr Hubert Minnis about the Fiscal Responsibility Bill when they were together in New York for the United Nations (UN) sustainable development goals conference last week, with the Prime Minister confirming the Government is continuing to work on the legislation.

"I had a chance to talk to the Prime Minister, and he shared they were still looking and going through the Fiscal Responsibility Bill. He didn't give a timeline," Mr Aubry told Tribune Business. "He said at the time it was a priority."

He had believed there would be two parliamentary sessions before the summer recess, rather than one, and said of the Bill's delay: "I would definitely express ORG's disappointment with that. If the agenda is altered at this late stage, good, but it's probably one and done.

"We see that as such a critically important Bill, one that has important implications for keeping us on focus; keeping the Government focused in terms of spending discipline, and making sure we put ourselves in a more fiscally buoyant position. We urge that this not be delayed any further, and we hope this is settled and done before the end of session."

Mr Aubry said one positive from the further delay was that it gave ORG and other civil society groups a potential opportunity to again review the draft Bill, and see if it satisfied their concerns relating to enforcement powers and the Fiscal Responsibility Council's involvement.

He called on the Government to issue the latest Fiscal Responsibility Bill version for civil society's review, so that it can "make sure strong legislation is passed and ask for some firm commitments that this is the first thing they will work on once they get back."

The Fiscal Responsibility Bill is intended to transform the Government's fiscal discipline by locking it into specific deficit targets and longer-term debt ratios, while boosting transparency and accountability in the management of its financial affairs through enhanced public scrutiny. The latter role will be played by a newly-created Fiscal Responsibility Council, comprised of accounting, legal, financial analyst and business expertise from the private sector.

Mr Turnquest previously acknowledged that the Bill was vital to bridging a "trust deficit" between the government and Bahamian people, which he said stemmed from poor fiscal management, broken promises and a lack of transparency and accountability over the public finances.

He described the Bill's enhanced fiscal governance and reporting mechanisms, together with deficit, spending and debt targets it must meet by law, as "a critical control feature" to ensure that the current and future governments do not repeat the wasteful expenditure and borrowing habits of the past.

The Deputy Prime Minister also agreed that the Fiscal Responsibility Bill's arrival on the statute book would boost business and taxpayer confidence that the government intends to deliver on its fiscal consolidation strategy.

The Fiscal Responsibility Bill's key targets require the Government to slash the fiscal deficit to 0.5 per cent from 2020-2021 onwards, cutting it from a sum equivalent to 5.8 per cent of GDP in the 2016-2017 Budget year. This means reducing it from near $700 million to around $54 million over a four-year period.

The Bill's 'first schedule' sets out a 'glide path' or 'road map' for achieving this, acknowledging - as the IMF stated - that "significant fiscal adjustments" are needed over the next two Budget years to hit this objective.

To enable the public sector and wider Bahamian economy "to achieve the fiscal objective in an orderly manner", and avoid unnecessary shocks, the Bill calls for 2018-2019 and 2019-2020 deficits that "shall not exceed" 1.8 per cent and 1 per cent of GDP, respectively. The first target is what the Government is going for this coming fiscal year, aided by the VAT hike.

The Bill also sets out a "long-term" target of reducing the Government's direct debt-to-GDP ratio from the current 58 per cent to "no more than 50 per cent". The year by which this target is to be achieved has to be set out in the Government's 'fiscal strategy report', which must be submitted to Parliament no later than the third week of November each year.

Government spending is also to grow no faster than nominal GDP once the 0.5 percent deficit target is hit.