MINISTER OF FINANCE AND ECONOMIC AFFAIRS CHRIS SINCKLER will deliver the 2012/2013 Financial Statements and Budgetary Proposals in the House of Assembly tomorrow.
This annual exercise is eagerly anticipated by both individuals and members of various groups in the productive and non-productive sectors.
The format of the presentation can be easily predicted and although it grabs the attention of the media and public alike, it essentially builds on Government’s Estimates Of Revenue And Expenditure which were presented and debated in March.
In usual fashion, therefore, the Minister of Finance will outline the state of the economy and then show how revenue will be raised to fund the estimates. Notably, although Government is legally required to lay the Estimates prior to the beginning of the fiscal year, there is no such requirement to produce Budgetary Proposals.
Refining the budgetary process therefore calls for changes not only to actual presentation but also how Government decides on the allocation of resources and how it decides on tax measures and the like.
Back in 2002, then Prime Minister Owen Arthur suggested that more time should be spent debating the Estimates since he felt a one-week period was too short.
According to the March 14, 2002 DAILY NATION, Arthur said Barbados needed to seriously review the Standing Orders to allow for a more comprehensive evaluation of the Estimates as well as its policies and programmes.
“We’re spending too little time dealing with the people’s business. The people’s business is obviously affected by the expenditure decisions of the Government over the wide gamut of areas covered by the Estimates,” the Prime Minister stated in his wrap-up to the Estimates 2002-2003 Appropriations Bill on Tuesday.
He said not only had the Estimates remained in their current format for 30 years but Parliament had remained static in relation to its exercise of budgetary control while the society had become more complex.
Therefore, he added, a Standing Committee should speak to the matter in a specialized way and seek to give members of Parliament an opportunity to present the needs of their constituents in greater detail.
In addition, in 2004 Arthur told the House of Assembly that since the late Errol Barrow in 1962 described the Estimates as “a conglomeration of statistics” and not the real Budget, the process had become “fiscal fossilisation”.
Arthur, who was then leader of the Opposition, announced that far-reaching changes were coming for Government’s budgetary process with the planned conversion from a four-decades-old cash system to accrual accounting and the introduction of multi-year budgeting.
He charged that the budgeting process was flawed with in-built deficiencies: one-year budgeting, cash accounting, focusing only on revenue/expenditure, and in a highly centralized Government all of its assets and liabilities were never the subject of serious discussion.
Improved financial management
According to him, the need for reform of the process was “palpable” and the Ministry of Finance had begun the exercise of committing Government to a programme of improved financial management and had embarked on a project to turn a cash system into accrual accounting.
He explained that on the cash basis, Government’s books recognized revenues when they were received and not when they were due, which led to an accumulation of arrears; and on spending, expenditures were not recorded when they were incurred but when they were paid.
Meanwhile in the December 10, 2003 DAILY NATION political analyst Peter Wickham lamented the “lack of specificity in the Prime Minister’s Budgets has made it difficult to establish what the Budget actually accomplishes”.
Wickham said it was not surprising that THE NATION no longer carries a verbatim account of what the Prime Minister said.
“The radio and television stations have, for the time being, persisted with their live coverage, but one can assume that they too will soon begin to question the logic of devoting such extensive coverage to an event which can perhaps be more easily summarized in 20 minutes,” he said.
Wickham suggested that even interest groups’ reactions to the Budget had become predictable.
“In response to the annual presentations, the private and agricultural sectors, which seem to be the only sectors receiving honourable mention each year, offer comments which are predictable. Invariably these sectors will congratulate the Prime Minister for finally appreciating the wisdom of giving them assistance and continue to argue that they need even more assistance to realize their full potential,” he said.
He added: “It is a great pity that in this environment of change, the manner in which the Budget is presented has remained unchanged. Hence we are still forced to listen to a presentation from the Prime Minister that lasted this year for more than three hours.
“To say that a presentation this long is unnecessary is an understatement . . . .”
“Although I have not conducted any empirical research on this matter, my contact with the public suggests that several people share my view that this traditional approach to the Budget only serves to pay tribute to the ability of the Prime Minister and Leader of the Opposition to run political marathons and does little for the rest of us who are supposed to be informed by the process.
“In response, people therefore seemed to have been turned off by the exercise and I can only hope that next year the Prime Minister makes the innovation that we all look forward to, which is a concise budgetary presentation which can hold the attention of the Barbadian public,” the analyst said.
