THE CONTENTS of the 2015 Auditor General’s Report and the Financial Statement and Budgetary Proposals of June 2015 present an interesting case study in how a government can attempt to fool most of the people most of the time.
The Government is pretending that it wants to reform state-owned enterprises (SOEs) or statutory boards (SBs), but its efforts at reform are not genuine.
Indeed, it is now possible to show that the Government’s eight-year attempt at macroeconomic adjustment has not been sincere as the country’s interest was never put first. The evidence shows that the Government diagnosed an expenditure problem but chose taxation on top of taxation to correct the fiscal problem.
Having delayed addressing the expenditure problem for years, in the face of several revisions of its home-grown fiscal strategy, the minister of finance announced in last year’s budgetary proposals that “during the period January to February 2015, a team of advisers from CARTAC conducted a technical study of the SOEs and SBs in Barbados”.
He then provided a summary of the findings of the CARTAC Report and stated that several internal consultations were held with critical stakeholders. According to Minister Chris Sinckler, “coming out of that process, the report was presented to and discussed by the Cabinet and a number of decisions were taken. Of these the following are of particular note: (1) amalgamation or abolition of some of the SOEs should be pursued; (2) management accounting unit should start the process of collecting more detailed information by undertaking a survey of key fiscal data points (has been completed); (3) establishment of a formal process of performance oversight; and (4) establishment of a performance monitoring framework”.
A process of implementation was to begin with the Transport Board, Barbados Agricultural Management Company Ltd, National Housing Corporation (NHC), Queen Elizabeth Hospital and the Barbados Port Inc.
While the minister of finance was making his grand statements of intent, the Barbados Audit Office was conducting an audit of statutory boards, Government companies and controlled entities. It is noteworthy that the audit office reports on the status of these state agencies as at December 31, 2015, six months after the financial statement.
All five state agencies selected in the minister’s pilot project are reported on in the 2015 Auditor General’s Report. This is remarkable, given what the report had to say about four of the agencies with respect to access to information. In this regard, it would also be interesting to find out what the CARTAC report had to say about access to information as well.
In relation to the Transport Board, the Audit Office reported that “the Board indicated that the audit of the accounts for the financial year ended March 31, 2011, is in progress. The audit of the accounts for the financial years . . . 2012 to 2015 remains outstanding”. So what information is the Government using to reform the state agencies?
Unfortunately, the Auditor General’s Report is replete with serious concerns about the agencies’ financial data, yet CARTAC was able to present a comprehensive report on 15 agencies on work done between January and February 2015. What a tale of two audits!
In similar vein, it was reported that the NHC’s accounts for the financial years 2012 and 2013 are being audited. The audits for 2014 and 2015 are outstanding. These are the things that should be occupying the attention of the minister responsible for housing.
It is well known that the issue of adequate financial data has been a perennial problem among state agencies, but the bigger issue this time around is that SOEs/SBs are expected to sign off on letters of expectation, commit to performance monitoring guidelines and embrace corporate planning frameworks.
Now that the contents in the 2015 Auditor General’s Report have been revealed, it is clear that the announcements in the June 2015 budgetary proposals are just another chapter “of not wanting to do but pretending to do” in the Government’s book of missteps.
The expectation of non-performance with respect to the reform of SOEs/SBs must be seen in the same light as the proposal for debt management, reform and reduction also presented in the June 2015 Budget. Since then, the national debt has increased by almost $1 billion, notwithstanding the stated intention of the Government.
The Government has spent the last eight years searching for public policy that serves its interest and not that of households and/or businesses. This explains the use of excessive taxation rather the pursuit of economic growth.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party advisor on the economy. Email: clyde_mascoll@hotmail.com
