By NEIL HARTNELL
Tribune Business Editor
The Deputy Prime Minister and his PLP counterpart yesterday traded accusations of “ineptitude” over which party is to blame for The Bahamas’ fiscal crisis following the $105m deficit overshoot.
The exchange between Chester Cooper, the Opposition’s finance spokesman, and KP Turnquest was sparked after the former suggested that the steep revision to the 2017-2018 deficit estimates after just five-and-a-half months showed the Government “simply doesn’t know what it’s doing”.
The Exuma and Ragged Island MP argued that the deficit was “not substantially different” from what the Christie administration incurred in 2016-2017, as its $661m worth of “red ink” would have been much lower if not for the impact of Hurricane Matthew.
This prompted an immediate riposte from Mr Turnquest, also minister of finance, who accused Mr Cooper of “amnesia” over the four successive Bahamas sovereign credit rating downgrades presided over by his party when in office.
The deputy prime minister, while touting the Minnis administration’s concrete steps towards greater fiscal accountability and transparency, failed to explain the cause of their row - the $105m, overshoot of the 2017-2018 fiscal deficit, exclusively revealed last week by Tribune Business, which came in at $415m instead of his $310m year-end prediction.
Mr Cooper, seemingly determined to have the final say, accused the Deputy Prime Minister of again seeking to distract by blaming the PLP for all the Government’s woes, adding: “The FNM would rather talk about anything other than its own ineptitude.”
The Exuma MP, in his opening salvo, charged: “The revenues fell short of budget by $110m. We projected this revenue shortfall, and urged the Government to pay attention to it, including the revamping of the Revenue Enhancement Unit that was dismantled by this administration for no other reason than it was a PLP initiative.
“We note an across-the-board under performance in most of the major categories of revenue. The deficit overshoot therefore cannot be reasonably attributed to one-off expenditure or non-recurrent expenditure such as natural disasters or payment arrears.”
Turning to spending, Mr Cooper added of the Government’s just-published Fiscal Strategy Report: “This report also confirmed that the Government overspent its budget projections by $95m.
“One has to wonder how on earth, despite firing thousands of Bahamians to cut salary costs by $62m, and starving capital works by spending $42m less than budgeted, the Government is still spending more than it said it would. Yet many small vendors across the country still complain that they can’t get paid.
“The state of the country’s roads and public infrastructure, by the way, is reflective of this cut in capital expenditure. What was the point? Despite an apparent strategy to make the grass look greener, the grass is dying, and the cattle have been nearly starved to extinction.”
Mr Turnquest, though, hit back by arguing that the Fiscal Strategy Report had informed Bahamians of the deficit overshoot within five months, whereas previously they would have to wait until the following year’s Budget.
He declined, though, to explain the reasons for the 33 percent deficit overshoot, promising only to give “a full accounting” during his contribution to the debate on the Fiscal Strategy Report.
“Last fiscal year saw a reduction in the deficit of $246m from that of the final year of the former PLP government (fiscal year 2016-2017),” Mr Turnquest said. “That is a 37 percent reduction that finally reversed the continually rising deficits of the previous government. The former PLP administration missed its deficit target in that year by $561m.
“Strangely enough, despite his propensity now to comment on fiscal matters, Mr. Cooper was not only silent while the former administration was driving the country off a fiscal cliff, he openly endorsed and supported the very Christie/Davis leadership team that had led the country to the four consecutive downgrades.”
Moody’s said the Revenue Enhancement Unit (REU) created by the Christie administration had collected around $90m in its first six-seven months, putting it on pace to collect $160-$180m in extra money per annum.
“However, this team was set up and staffed with no Cabinet or legal authority to do so,” Mr Turnquest said. “It engaged a foreign consultancy firm at $900,000 per month with no evidence of Cabinet approval. It engaged a foreign team of accountants with no plans whatsoever to recruit and train a Bahamian audit team.
“Most of all, there was nothing in the contract or in any documented work plan to have the foreign firm and foreign auditors transfer the training and know-how to the Bahamian counterparts. And seeing that the former administration missed every revenue target they set for themselves, it is difficult to understand the member’s claims for their success.”
Mr Turnquest added that the unpaid bills inherited by the Minnis administration, and for which no funding had been allocated to pay them, now totalled over $700m, “which means that the deficit positions they [the Christie administration] published were in fact worse than indicated”.
Not to be silenced, Mr Cooper responded: “In all his rantings, he [Mr Turnquest] conveniently avoided explaining why, after raising our taxes and subjecting us to hardship, they will miss their own deficit projection from just over four months ago.
“When the Minister is pressed to account to the Bahamian people he conveniently resorts to the playbook of ‘blame the PLP’, rather than addressing the substance of his administration’s shortcomings.
“I am not interested in a useless back and forth with the Minister. His record is plain to see. The Bahamian people are not pleased with his performance or his rhetoric. We will give no further credence to his glossy public relations reports but will await the formal mid-year reports to Parliament that will reaffirm our concerns and suspicions.”
Urging Bahamians to “brace themselves”, Mr Cooper added: “When the FNM talks about the PLP, they start to fire public servants. When the FNM talks about the PLP, they raise your taxes. When the FNM talks about the PLP, light bills go up.
“When the FNM talks about the PLP, they start awarding contracts to Cabinet ministers. When the FNM talks about the PLP, they start buying run down hotels at prices millions of dollars higher than the appraised value. The FNM would rather talk about anything other than its own ineptitude.”