The Tribune

By TYLER MCKENZIE

THE announcement of the increase in National Insurance Board contribution rates last week should have been an example of good planning and well-coordinated execution – instead it was a sign of governance by ineptitude at best, cowardice at worst.

Bear in mind that we have known an increase in NIB has been coming for months. Businesses in particular have been crying out for more details so they can plan ahead. The increase comes on July 1, which means businesses have been wanting to ensure they know how much they have to allocate for such an increase.

So knowing that this was a matter of national attention, for which there had been ample time to plan the rollout of the announcement, you would think the government would have been able to line up the same message across all ministries and departments. Not so.

What we got was a minister standing on his feet in the House saying one thing, then the Office of the Prime Minister hastily sending out a statement saying another. This was a government briefing against itself – within hours, even, in response to the actual ministerial statement rather than any public backlash that had not had time to start up.

Let’s go over it. Alfred Sears is the minister who has NIB in his portfolio. A thankless task, perhaps. He got to his feet for his mid-year budget contribution to announce that NIB rates will go up by 1.5 percent on July 1.

So far, so straightforward. However, that’s not where it stopped.

Mr Sears said: “NIB reform is not a matter of choice, but a matter of necessity. We can no longer delay or ignore this issue, as it affects our present and future welfare. We have a collective responsibility to protect and preserve the National Insurance Board.”

This of course is something we knew. The NIB fund has been steadily dwindling and something has been needed to be done to rescue it for far too long, through several administrations.

Mr Sears went on to say: “Therefore, effective the first Monday of July 2024, the contribution rate for NIB will be increased by 1.5 percent to be shared equally between the employer and the employee, and thereafter a 1.5 percent increase every two years from July 1, 2024, to July 1, 2044. Similarly, the same increase will be applied to self-employed persons and voluntarily insured persons.”

An increase every two years which, better accountants than me have worked out, takes the NIB rate from its present 9.8 percent to a total of 26.3 percent by that July 2024 increase. That will be split with 14.15 percent paid by the employer and 12.15 percent paid by the employee, as confirmed by no less than the acting director of NIB, Heather Maynard.

In the same mid-year budget, it should be noted, Mr Davis said that there are no plans to introduce personal income tax or other income-related taxes “at this time”. Well, who needs them when NIB contributions just got flagged to rise to the level of a substantial income tax?

The reasoning behind all this comes from an actuarial review – in fact, for a long time now. Back in 2001, a review said reserves were going to be depleted by 2029. The NIB chairman who received that review back then is now our prime minister, Mr Davis. The estimate is now for it to run out in 2028.

The most recent actuarial report, in 2022, suggested an increase of contribution rates by two percent every two years starting in that year and ending in 2036.

So the announcement is based on that reasoning – but then in swoops the Office of the Prime Minister to say hold on, wait a minute.

The statement from OPM said that while an actuarial review “recommended increasing the contribution rate not just this year, but every two years, for years to come. Those recommendations were repeated by Minister Sears”, that this represented “a worst-case scenario”. It concluded: “A decision has yet to be made beyond the initial 1.5 percent announced to commence on July 1, 2024.”

Is this incompetence in terms of communication planning or cowardice knowing people would take a deep breath looking at the scale of the increase over the years?

The rollout of an announcement affecting the finances of Bahamians and Bahamian businesses to such a scale should be coordinated from top to bottom. The minister’s office ought to be working very closely with the ministry of finance and the leadership of the administration to coordinate the speech announcing that – if the prime minister himself isn’t the one to tell people of this new burden coming their way.

There should be not one single word of that speech that has not been checked, discussed and approved.

By dashing in after the fact to say that a decision has not been made when Mr Sears very clearly suggested that was the plan for future years means one of two things – either the minister misled parliament with what he said, or he was right and the administration panicked.

Now, Mr Sears already has allegations of misleading parliament behind him in this term. When he was Minister of Works, he denied that he was briefed on the BPL fuel hedging plan that ultimately cost Bahamians tens of millions of dollars when the government decided not to go ahead with the proposal and then fuel prices shot up, costing us all in the pocket. He finally admitted that he did indeed receive an email on that and forwarded it to the Ministry of Finance and the financial secretary, Simon Wilson, for assessment.

By shooting down the minister’s speech, OPM has called into question the whole plan stated by Mr Sears in Parliament.

Bear in mind, Mr Sears said we can no longer afford to delay or ignore this issue. The review states what needs to be done – and now all we have confirmed is the first step, which will be nowhere near adequate to deal with the shortfall of the fund on its own. So we’re taking a step which is not enough, without confirming what will be done for what is needed. And the government’s position? Oh, we’ve not decided yet.

If that is true, this is abject governance, a failure of the first obligation to do what needs to be done. If instead the decision has been made, but they just don’t want to tell us, then it is cowardice. And if it is simply that two different sides don’t know what each other is going to say, then this administration is simply clueless when it comes to messaging and communication.

Whichever it is, this government has responded to its own minister in this way. It hasn’t reacted based on opposition response, or community backlash. This is a government arguing with itself, and the outcome is we still do not know what the long-term plan will actually be for NIB. Add in the lack of concrete information about what is happening with the future of BPL – a matter for another article – and it really does seem this government’s words about transparency are just that – words.