The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An outspoken QC yesterday questioned whether the Government has confessed to “fiscal irresponsibility and negligence”, after a Cabinet minister asserted that revenues collected from Freeport are insufficient to meet public expenditures in the city.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business this was impossible unless the Government was failing to enforce, and act upon, the Hawksbill Creek Agreement’s terms.

This requires the Grand Bahama Port Authority (GBPA) to cover any “shortfall” between the Government’s annual revenues and expenditures in Freeport, plus pay an ‘administrative fee’ equivalent to 25 per cent of this sum.

Emphasising that Freeport should always be in ‘surplus’ with the Public Treasury, Mr Smith asked if there had been “a dereliction of duty” by the Government in failing to ensure that the GBPA fulfilled its obligations to the Bahamian taxpayer.

He was speaking out after Obie Wilchcombe, minister of tourism, told the House of Assembly on Thursday that the Government wanted a dynamic business climate in Freeport to ensure “sufficient revenues [are] generated to adequately meet public expenditure requirements, as was not now the case”.

Mr Smith, in response, called for the Ministry of Finance and the Government to disclose how much revenues it earned from Freeport, and by which taxes.

“I challenge the Ministry of Finance, and Mr Wilchcombe, who must have the figures before him, to also disclose where, and in what amount, the actual expenditure in Freeport exceeds Government revenues,” Mr Smith told Tribune Business.

“That, to my mind, is a most incredible comment,” he added of Mr Wilchcombe’s House of Assembly statement, “and I would love to see that.

“It would be a huge dereliction of duty by the Government,and negligence to the taxpayer, if the Government is not requiring the Port Authority to pay any shortfall in government revenues plus a 25 per cent administrative fee, as required by the Hawksbill Creek Agreement.

“There should be absolutely no way a fiscally responsible government should be allowing the rest of the Bahamas to bear the costs of government expenditure in Freeport when the Port Authority is obliged to meet any shortfall plus 25 per cent.”

Mr Smith has long argued that Freeport has been a net contributor to the Public Treasury, given that Freeport’s infrastructure and maintenance needs are the GBPA’s responsibility, not the Government’s.

He believes the city, despite being billed as a ‘tax free zone’, contributes $100 million per annum in government revenues - a position that directly contradicts Mr Wilchcombe’s assertion that the Government is effectively losing money on the city.

The Minister’s comments are also likely to be interpreted by many of the GBPA’s 3,500 business licensees, and 60,000 Freeport residents, as a warning that the Christie administration is set to impose a ‘tax grab’ on the city.

Mr Smith, meanwhile, reiterated that the Hawksbill Creek Agreement “guaranteed” that Freeport was “a tax positive/expenditure negative” location until 2054.

“I know the Port Authority receives annual reports from the Ministry of Finance on tax revenues and expenditures in Freeport, because Sir Jack was always very keen to make sure the Port did not have an annual exposure,” Mr Smith said.

Mr Wilchcombe, updating MPs on the Christie administration’s meetings with Hutchison Whampoa in London, also said it had discussed “greater Government involvement in governance and regulation” over Freeport.

Mr Smith told Tribune Business he would “go to my grave as a licensee in Freeport trying to stop” any government takeover over the GBPA’s quasi-governmental and regulatory authorities, as contained in the Hawksbill Creek Agreement.

“I keep reminding the Government that they have no business in the administration of Freeport’s business, and they should let the Port Authority be the ‘one-stop shop’ business jurisdiction,” Mr Smith said, “and hold the Port Authority’s toes to the fire for the development of Freeport and the proper exercise of its regulatory jurisdiction.”

He added that Freeport “will overnight become a Singapore success” if the Government adopted a “hands off” approach to the city’s regulation and investment approvals climate.

“Until then, Freeport will remain an economic backwater, always on the precipice of success,” Mr Smith told Tribune Business.

“Why does the Government continue to ignore judgment after judgment at the Supreme Court, Court of Appeal and the Privy Council? This is another reflection of the complete lack of respect for the rule of law.

“My message to the Government is: Get the hell out of dodge, and let us manage our own affairs. We know best how to manage Freeport.”