Published On:Thursday, July 29, 2010

Tribune Staff Reporter

mreynolds@tribunemedia.net

A MOVE to increase accountability and transparency of public finances set out in the Financial Administration and Audit Bill 2010 was debated in the House of Assembly yesterday following a second reading by Minister of Finance, Prime Minister Hubert Ingraham.

Support for the Bill to modernise and repeal the 1973 Financial Administration and Audit Act (FAAA) was expressed by members of parliament on both sides who highlighted the need to continue with reforms of outdated legislation and take advantage of opportunities to deepen democracy.

FNM chairman and Sea Breeze MP Carl Bethel dubbed the updated legislation “revolutionary” as it articulates the powers, duties and responsibilities of the financial secretary, who he said is the second most important person in government after the prime minister, as well as setting out a framework for cohesion within the government by clarifying how to resolve disputes between the minister and principal accounting officer.

Powers

The Bill strengthens the powers of the auditor general and establishes a new principal accounting officer as well as an Internal Audit Department in the Ministry of Finance to enhance efficiency, accountability and transparency in the management of government resources.

Provisions are also made for Internal Audit Units to be established in all government departments.

The legislation alters the financial year, moving the annual Budget Communication from June to the last Wednesday in May, and requires the treasurer to submit an annual statement of accounts within three months of the close of the financial year so it may be tabled by December 31.

The Budget Communication must also include fiscal policy objectives for the forthcoming financial year and following two years, estimates for expenditure over those three years, plans to eliminate deficit, and macroeconomics developments forecast over the next three years.

Any amendments to the annual Appropriation Act and Revenue Forecast or adjustments to revenue and expenditures will be made in a Mid-Year Budget Statement by the Minister of Finance in February.

But PLP MP for Fox Hill Fred Mitchell pointed out that the mid-year report is already practised, therefore the legislation is not revolutionary, but evolutionary.

He said, “This Bill simply identifies what the member for North Abaco (Prime Minister Ingraham) has been doing for three years, so I don’t see how it’s revolutionary,” as he pledged his support for the Bill.

Mr Ingraham said the existing system had to be modernised as government’s expenditure and revenue has now expanded, its economic and social roles have changed, and new information technologies have altered the way business is done over the last 37 years.

Developments have been inspired by the International Monetary Fund (IMF) Code of Good Practices on Fiscal Transparency 2007 and ensure clear roles and responsibilities within the sector as well as an open budget process, greater availability of public financial information, and an assurance of integrity in financial processes recognised by governments around the world, the prime minister said.

“The modernisation proposals in the Bill focus on enhancing accountability and transparency at all levels of government by making those responsible for decisions on public expenditure and revenue, and those who manage those funds in implementing government decisions, clearly and personally accountable for their actions,” said Mr Ingraham.

“The further strengthening of good governance requires a fundamental reform of the FAAA to bring it into line with today’s realities.

“More specifically, it is vitally important to bring a greater degree of accountability and transparency to public financial management.”

All public corporations in which the government has a stake of 25 per cent or more will have to present an annual report and audited accounts within six months of the end of the fiscal year, according to the proposed legislation.

And an audit of the liabilities of various government pension plans should be undertaken by external auditors every three years.

PLP MPs Alfred Sears, Frank Smith and Ryan Pinder voiced their support of the Bill, but also suggested there were missed opportunities for greater transparency.

Mr Sears said greater autonomy should be given to the office of the Auditor General and Parliament should have more power in the selection of the Auditor General.

The member for Fort Charlotte also suggested it is reckless of government to propose an increase in their borrowing capacity to 15 per cent of their average ordinary revenue.

Debt

Elizabeth MP Mr Pinder said the government’s “reckless borrowing” and “irresponsible forecasting” in the budgetary process has led to an unprecedented rise in government debt and called for greater transparency and more responsible government spending.

“In my opinion, and based on a track record of reckless borrowing and spending by this administration, we could go further with this legislation,” Mr Pinder said.

 While Mr Ingraham said it is difficult to predict when the Bill will be implemented, he anticipates it will be made law before the next financial year and urged parliamentarians to begin to prepare for the new policies by observing governments where these practices have already been tabled in law.

He said: “We should prepare as much as we can in order to comply with this Bill before the Budget Communication next May as it will become the norm in the future.

“Every effort will be made in the mid-year statement in February next year to begin to comply with this Bill if not comply fully.”