By NEIL HARTNELL
and NATARIO McKENZIE
Tribune Business Reporters
The deputy prime minister yesterday said he aims to "lay and debate" the Fiscal Responsibility Bill in Parliament next week, conceding that it is critical to the government's "credibility".
KP Turnquest told Tribune Business: "I am hoping to have it approved, the revised version, by Cabinet next week, and I'm hoping we can have it laid and debated next week. If not, then it will certainly be done before or immediately after the break for summer. I'm hoping to get it done by next week."
He was responding to calls by the Organisation for Responsible Governance (ORG), the civil society group, for the government to pass the Fiscal Responsibility Bill before Parliament takes its summer break.
ORG also urged the government to treat the Fiscal Responsibility Bill with "the same urgency" as the VAT increase, given the extra "sacrifice" demanded from taxpayers via the 2018-2019 Budget.
Mr Turnquest, though, suggested that passage of the Fiscal Responsibility Bill and the VAT rate hike to 12 percent were not necessarily connected. He pointed out that the Government had originally intended to pass the former legislation before the Budget, so that its fiscal governance mandates were in place before the 2018-2019 fiscal year.
"It will certainly add credibility to the [consolidation] plans," the Deputy Prime Minister told Tribune Business of the Fiscal Responsibility Bill. "We're hoping to get it done in the next week, so obviously it's a very pressing issue, and we're taking it with the seriousness and urgency that it deserves."
Mr Turnquest, added, though, that the revised Fiscal Responsibility Bill was unlikely to be released publicly until after it is tabled in Parliament - a move likely to disappoint ORG and other civil society groups eager to learn whether their recommendations have been incorporated.
The Deputy Prime Minister had earlier yesterday promised the private sector that "there is teeth in the legislation" when he addressed the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) breakfast meeting.
He said then: "We do intend to bring that legislation, hopefully before we break for the summer. We want to bring that as quickly as possible. We want the participation and supervision from the public with respect to our discipline in carrying out the programmes and plans that we have announced."
Matt Aubry, the Organisation for Responsible Governance's (ORG) executive director, told Tribune Business he was "hoping something comes out before the next round of sessions [of Parliament] and before they break for summer".
The Fiscal Responsibility Bill is intended to transform the Government's fiscal discipline by locking it into specific deficit targets and longer-term debt ratios, while boosting transparency and accountability in the management of its financial affairs through enhanced public scrutiny. The latter role will be played by a newly-created Fiscal Responsibility Council, comprised of accounting, legal, financial analyst and business expertise from the private sector.
Mr Turnquest yesterday said groups such as the Chamber and others were vital in ensuring the Bill is adhered to. He added that the legislation has "teeth", or provisions to allow for criminal prosecution with due process.
"The basic truth is that no one is going to set themselves up to go to jail for making honest mistakes or errors in judgment," the Deputy Prime Minister said. "Willful actions are a diffident thing. In the Bill there is provision for the Fiscal Council to make its recommendation, and the Public Accounts Committee to utilise that info and recommend to the Director of Public Prosecutions for legal actions. There is teeth in that legislation. It's a matter of going through the process to sure we don't end up with frivolous actions that could be damaging to those involved and country."
ORG, for one, previously warned that the Fiscal Responsibility legislation could be "ineffective" without tougher sanctions due to "The Bahamas' poor history of non-compliance with similar laws".
It also called for the independent, five-member Fiscal Responsibility Council that currently has just an oversight and advisory role to have more power to "proactively contribute to fiscal strategy and decisions, and enforce its advice, recommendations and decisions".
"Throughout the Bill there is a noticeable lack of reference to penalties or incentives to encourage compliance and rectify behaviour in the implementation of fiscal responsibility and discipline processes," ORG said. "Where there is mention of penalty, said penalties are not defined or codified and are left to Ministerial discretion, allowing room for uneven or unfair application, or the perception thereof....
"Given the Bahamas' poor history of compliance with similar reporting laws, such as Public Disclosure, there is concern that without methods of enforcement there is a risk that the Fiscal Responsibility Bill could ultimately be ineffective despite its thorough reporting mandates and methodically outlined goals."
The Fiscal Responsibility Bill's key targets require the Government to slash the fiscal deficit to 0.5 per cent from 2020-2021 onwards, cutting it from a sum equivalent to 5.8 per cent of GDP in the 2016-2017 Budget year. This means reducing it from near $700 million to around $54 million over a four-year period.
The Bill's 'first schedule' sets out a 'glide path' or 'road map' for achieving this, acknowledging - as the IMF stated - that "significant fiscal adjustments" are needed over the next two Budget years to hit this objective.
To enable the public sector and wider Bahamian economy "to achieve the fiscal objective in an orderly manner", and avoid unnecessary shocks, the Bill calls for 2018-2019 and 2019-2020 deficits that "shall not exceed" 1.8 per cent and 1 per cent of GDP, respectively. The first target is what the Government is going for this coming fiscal year, aided by the VAT hike.
The Bill also sets out a "long-term" target of reducing the Government's direct debt-to-GDP ratio from the current 58 per cent to "no more than 50 per cent". The year by which this target is to be achieved has to be set out in the Government's 'fiscal strategy report', which must be submitted to Parliament no later than the third week of November each year.