The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Developing the correct Fiscal Responsibility legislation for the Bahamas cannot be achieved “within a month or two”, a leading QC warning: “The mere passage of an Act of Parliament will not accomplish anything.”

Backing the Government’s decision to initiate a public consultation process on the issue, Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, said there was no “off the shelf template” the Bahamas could employ for modelling its own legislation.

And, in a recent interview with Tribune Business, Mr Moree said it was vital to build cross-party political will to adhere to Fiscal Responsibility legislation, and the institutional capacity in government agencies to support it, otherwise any legislation would fail.

“There is no template we can pull off the shelf from another country, tweak its provisions and apply it to the Bahamas,” Mr Moree told Tribune Business.

“That, in my view, would not be the correct process. We need to build the institutional capacity to support Fiscal Responsibility legislation, and build political will in the Government and Opposition to embrace and implement it.

“We need to educate the public and give it time to have an effective and meaningful contribution to the debate. Decisions will then have to be made as to what is the most effective model for the Bahamas.”

Prime Minister Perry Christie conceded to the private sector’s demands for the Bahamas to implement Fiscal Responsibility legislation in his mid-year Budget statement last month.

He promised to initiate a public consultation on whether the Bahamas should pass a Fiscal Responsibility law and, if so, what model to adopt, this year, with the process completed by year-end. A policy paper on the issue is supposed to be released to the public this summer.

The business community, via the Coalition for Responsible Taxation, views Fiscal Responsibility legislation as something the Government needs to do to ‘fulfill its side of the fiscal bargain’ given that it accepted, and helped to implement Value-Added Tax (VAT).

Some countries have employed Fiscal Responsibility legislation to make their governments more accountable and transparent on their spending, with others have used it to set targets and thresholds above which certain ratios, such as debt-to-GDP, must not cross. They have also used it to force governments to come back to Parliament should they need more money.

However, without proper testing and evaluation, it is unclear which of these models will be most appropriate for the Bahamas and its fiscal circumstances.

“We have to be careful,” Mr Moree warned. “Those of us who advocate for Fiscal Responsibility legislation have to accept it is a complex matter that requires a considerable amount of work to ensure all stakeholders are aware of, and understand, the issues, and can intelligently develop a model that is going to work.

“The mere passage of an Act of Parliament is not going to achieve anything. We have to develop the political will, get the buy-in of the country, develop the institutional capacity to implement it, and ensure there is widespread support throughout the Government agencies.

“We have to include some form of effective monitoring and enforcement mechanism to ensure the legislation is complied with....... It has to be done carefully to ensure it’s got right,” the well-known QC added.

“I think we need to move ahead on that basis. This is not something you can do in a month or two. It is actually nothing more than demagoguery to suggest we could put in place an effective and serious fiscal regime in a few months. If we tried to do it, we would not be serious.”