The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A governance reformer yesterday expressed concern that Fiscal Responsibility legislation may only take effect in 2019, and warned it was "no silver bullet." Matt Aubry, the Organisation for Responsible Governance's (ORG) executive director, told Tribune Business that the Government's intention to introduce the legislation - together with so-called 'fiscal rules' - with the 2018-2019 Budget suggested it would not be implemented in the upcoming fiscal year. K P Turnquest, deputy prime minister and minister of finance, yesterday told Parliament that the legislation and accompanying rules will be tabled with May's Budget communication "if all progresses as anticipated".

Mr Aubry, though, said the schedule meant there was a "risk" that Fiscal Responsibility's implementation will be delayed for a further year just when the Bahamas needs greater transparency over its strained public finances.

"He's saying it's not going to be in place for this Budget," the ORG executive director told Tribune Business. "You're giving up another year. That doesn't seem the most ideal scenario.

"If it's going to coincide with the tabling is the Budget process going to be be reflective, anticipating you're going towards this legislation. If so, that's a pretty neat trick, but that has to be worked in now. It's truly time, and we have to be much better connected and informed as to what the Government is trying to do. Transparency, really true transparency, is the only path out of it."

Mr Turnquest, reaffirming the Government's commitment to more transparency and accountability in the Bahamas' fiscal affairs, said the proposed legislation and 'rules' were critical to preventing a repeat of the Christie administration's pre-election spending binge that increased recurrent spending by $570 million in just two years.

He suggested that 'fiscal rules' could involve imposing a "ceiling" on the Government's annual deficits, and "caps" on spending growth. As for the legislation, the Deputy Prime Minister said it could enshrine various objectives in law, such as maintaining a medium-term 'fiscal balance'; holding "prudent debt levels"; and ensuring predictable tax rates and bases for several years.

The legislation will also specify consequences for missing these targets, and the adjustments the Government must make. "This thing where they ran away with a ridiculous amount of spending in the last fiscal year will not happen," Mr Turnquest said. "We must never repeat the disasters of the previous administration.

"This is why it's so important this government puts in place Fiscal Responsibility legislation so if ever another group of craven politicians ever manage to once again take the helm, it would be our very laws that would constrain their disregard for the long-term well-being of the country.

"Never again must a government be able to write blank check after blank check to serve narrow and self-serving partisan interests to the detriment of the welfare of the country."

Mr Aubry backed Mr Turnquest's call for Bahamians to better understand the numbers behind the Government's finances, and what they mean for themselves, their families and country as a whole.

He added that Fiscal Responsibility legislation "could help with that", and said ORG had submitted a proposal to improve fiscal transparency and financial literacy to the Government.

"We see that Fiscal Responsibility legislation is very important in the current state of where the Bahamas is," Mr Aubry told Tribune Business. "I think we have to be careful to understand it's not going to be a silver bullet.

"We learned from the IDB that Fiscal Responsibility is a potential resource and can be something very important, but it has to be understood."

Mr Aubry said how such legislation is used, and responds to the particular circumstances of a country, "varies from one place to another". He explained that some nations adopted percentages for their fiscal targets, others absolute figures, while others used 'fiscal rules' for "a particular time" to bring their finances back into line.

The ORG chief added that the Bahamas' Fiscal Responsibility legislation also needed to be flexible enough to respond to shocks such as hurricanes, and said the Bahamas needed to determine whether it was going to set aside a portion of the annual Budget to cover such needs or engage in an "open, transparent process" to obtain funds post-storm.

Calling for a "much more transparent discussion" on the Government's finances, Mr Aubry said: "We need to understand it's different times now when it comes to the limits of government spending.

"There has to be a limit. We can't keep setting a line in the sand, and keep wiping it away. There will be a point when there has to be some suffering, and assessment of government jobs."