IS THERE REALLY A NEED to reform the Budget process?
Or do we need to take action to improve the business and social climate of the country that will shape the budget process?
This year’s annual budget process, which will occur on June 26, has devolved into a report on Government’s past performance and the actions that it expects to take to stimulate the economy fiscally. More importantly, it is focused on ensuring that there is sufficient revenue to pay for Government’s spending needs.
Over time we have grown Government to the point where it is the largest employer in the country and its employment costs, which are forecast at over $886 million for the 2012-2013 financial year, form about 50 per cent of Government’s $1.7 billion expenditure programme for that period.
The remainder of the programme must meet interest costs, maintenance or other recurrent expenditure and does not leave a lot of room for direct programme spending.
Our annual Budget process must focus on the strategic objectives of Government that are generally set out in the Throne Speech given when the Government came to office. Hence, expenditure should be driven towards ensuring that these national priorities are achieved.
If we wish to reform the Budget process, we need to reform the way we run our Government. If we look to our Constitution for guidance, it defines three mandatory ministerial offices – the offices of the Prime Minister, the Minister of Finance and the Attorney General.
All other ministries are the creation of the Prime Minister while departments and statutory corporations leap from the imagination of the ministers and the technocrats who support them. So the key steps to reforming the process are:
• Define the standing ministries which necessarily meet the overall national objectives and leave them alone. These are the Ministries of Agriculture, Education, Health, Commerce, Defence, Foreign Affairs, Housing, and Transportation. The others that are now full ministries should be devolved to departments and statutory bodies needed to execute the national mission.
• Define the programmes associated with the strategic vision, identify the resources and then build the vision.
• Include key performance indicators to measure success. These should be simple and meaningful and should not significantly increase the reporting burden.
• Dispel the notion that the Barbados Government must be the employer of last resort.
• Reduce taxes and duties to rates that make it more expensive and time consuming to avoid them, hence increasing the level of compliance.
   As a result, the tax base should be broadened and revenue should increase but the regressive impact of indirect taxes would be reduced due to the net reduction in rates of duties, excises and value added tax.
• The follow-on impact from such a strategy would reduce the overall need for business people to seek concessions for projects and reduce the administrative overheads needed to manage them.
• Consolidate the many concessions available to various industries into a single piece of legislation that would be administered by a single dedicated unit to increase business facilitation. The unit should be staffed with all the technical experts needed to administer the programme, removing the need for documents to be routed around various ministries for approval.
Various industries have grown too accustomed to the protection provided them by the Government. We constantly hear that these concessions are needed to allow the industry to grow, that other countries use hidden trade barriers to subvert the World Trade Organization rules, that Barbadians will abuse liberalization, and that we must protect jobs.
These are the rationalizations that have been used to preserve our existing budget process. Is it not time to change after 46 years of independence and try something new?
What we have has worked for the initial period of our statehood.
We are now in a new century and utilizing new technology. It is time to change the fundamental way we do business and our Budget process must change to accommodate the new reality.
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Colin Daniel is chairman aof ICAB’s legislation committee.
