The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The failure to deliver on the promised Fiscal Responsibility Act consultation has left the private sector doubting the wider Government’s “commitment to turning the fiscal tide”, the Chamber’s chairman says.

Gowon Bowe told Tribune Business that the business community wanted Prime Minister Perry Christie to “see through” his 2015 mid-year Budget promise to initiate public consultation on fiscal governance reforms.

It has been almost two years since Mr Christie told the House of Assembly that the Government would prepare a ‘white paper’ discussion document on a Fiscal Responsibility Act, but Mr Bowe declined to place all the blame on the Prime Minister.

He instead expressed concern that “the only time things in Government move in a meaningful way” was when the Prime Minister became personally involved - something Mr Bowe said was “of great concern” in terms of how the Bahamas is run and governed.

Asked whether he and the Chamber were disappointed by the Christie administration’s failure to deliver on promised Fiscal Responsibility Act consultation to-date, Mr Bowe replied: “I think that disappointment is probably a word you would use.

“In reality, from the private sector’s perspective, we’re looking at seriousness in terms of turning the fiscal tide. It’s probably left a question mark on their commitment to do so, as opposed to disappointment.”

Mr Bowe said the Government was “often-times” guilty of saying/promising things, but then failing to follow through, adding: “It all boils down to execution.

“Is it disappointment with the Prime Minister? No. It probably points just as much to the wider commitment of the civil service and the Government to do it.”

The Chamber chairman said Mr Christie was not directly responsible for the drafting of a Fiscal Responsibility consultation paper or Act, nor any discussions that would be held with the private sector on it.

He recalled the interplay between the private sector and the Government in talks leading up to the Value-Added Tax (VAT) implementation, which was aided by the Prime Minister’s personal involvement - and instructions to his ministers and officials to engage the business community.

Suggesting that this had failed to happen over the suggested Fiscal Responsibility Act, Mr Bowe said: “From that perspective, it’s be careful with what you promise, as once you’ve raised expectations it’s important to see things through. It’s certainly one we’d want him [the Prime Minister] to see through.”

Acknowledging that there were multiple issues and initiatives competing for the Prime Minister’s attention, he added: “Unfortunately, we’ve found that the only time things move in a meaningful way is when the Prime Minister intervenes personally.

“That is not the way to run the country, as he is one human being and it’s not fair to have the weight of the world on his shoulders.

“Are things going to happen without the Prime Minister? If it’s ‘no’, we have great concerns because the country cannot be run by one man.”

Mr Bowe said this pointed to a need for institutional strengthening in government, and a bolstering of the civil service’s permanent secretary ranks and mechanism for the efficient delivery of services and initiatives.

He added that projects could not be held up because the Prime Minister’s attention was elsewhere, and said of the Fiscal Responsibility issue: “The direction has been given by the Prime Minister. The question is: Who failed to execute?”

Many observers would argue that the latest fiscal data further highlights the need for such legislation, given that the deficit for the first quarter of the 2016-2017 fiscal year expanded by $23 million or almost 37 per cent in comparison to the same period the year before.

The $86 million deficit for the three months to end-September 2016 is already more than 80 per cent of the $100 million worth of ‘red ink’ that the Government is forecast to incur for the 2016-2017 full year.

The increase was driven by continued rises in government spending, which many believe is out of control, and which outpaced revenue growth. Mr Bowe earlier this week warned that ever-increasing spending meant the Government was failing to maximise the benefits from its $852 million VAT ‘windfall’.

The Prime Minister, in his February 2015 mid-year Budget debate, committed the Government to producing a ‘white paper’ that would launch public consultation on whether the Bahamas should introduce its own version of a Fiscal Responsibility Act.

This ‘white paper’ was supposed to have been issued in summer 2015, with Mr Christie setting out a timetable that involved recommendations going to Cabinet on whether such legislation was appropriate by year-end 2015.

None of these steps has occurred, and no ‘white paper’ has been issued, despite a Fiscal Responsibility Act having been “number one on the list” of priorities when the private sector’s Coalition for Taxation Reform agreed in late 2014 to a broad-based, low rate 7.5 per cent VAT.

Several private sector executives have subsequently told Tribune Business that the Coalition’s mistake was to agree to VAT without pinning the Government down on a Fiscal Responsibility Act, and that it should have conditioned acceptance of the new tax on such legislation being implemented.

A Fiscal Responsibility Act would force the Government to be more accountable and transparent in the management of the public finances, and require it to return to Parliament for approval to raise more money if it had to exceed the limits approved in the annual Budget.

Several observers have suggested that this Act should set fiscal targets and so-called ‘rules’, such as a maximum debt-to-GDP ratio the Government cannot exceed, but others have warned that this would lock or ‘box in’ the administration such that it would not be able to effectively respond to emergencies, such as Hurricane Matthew.

“We don’t want to be on the same path” as other Caribbean nations such as Jamaica and Barbados,” Mr Bowe told Tribune Business.

“If we have the ability now to chart our own course, we have to bite the bullet.”