By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The private sector has called for Budget caps “to be imposed at all levels of government” within the next three-five years, as part of a 13-pronged strategy to rein in public spending and make the Bahamas “one of the most prized nations in the world”.

The Coalition for Responsible Taxation, in a draft letter seen by Tribune Business, sets out its strategy for dealing with the non-revenue side of the Bahamas’ fiscal imbalances, calling for a long-term capital expenditure plan and an assessment of all social security programme costs.

The letter, entitled ‘Paramount Factors required to effect fiscal reform in the Bahamas’, also calls for improvements in government productivity. And it suggests outsourcing some responsibilities to the private sector, urging that the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) becomes the Business Licensing authority.

Setting out its commitment, and willingness, to work with the Government to implement the necessary reforms, the Coalition described its proposals as a “clear path for corrective measures required by all stakeholders to implement and effect fiscal reform, while ensuring growth in the economy”.

The letter, circulated widely in the private sector before being sent to the Christie administration, urged that spending limits – approved by both Cabinet and Parliament – be set for all government ministries, departments and agencies.

“Budget caps are to be established at all levels of government, and agreed on by all stakeholders,” the Coalition said. “Once established, these caps should remain fixed unless specific requests for increases are made to, and approved by, Parliament following Cabinet approval.”

Calling for a “top down approach” when it came to the Government’s recurrent spending, which deals with fixed costs such as rents, civil service salaries and debt servicing, the Coalition said maximum spending limits needed to be set during this process.

“The historical costs of running each Ministry and Department should be assessed and Budget caps mandated, along with reductions in spending within a prescribed timeline, ideally three-five years.”

The Coalition letter again illustrates just how reluctant it is to give the Government a ‘blank cheque’ when it comes to how the extra revenues from VAT and other tax reforms are used.

Tribune Business previously reported that recurrent spending had increased by almost 60 per cent in the decade to the current fiscal year, in which the Government will spend more than $1.7 billion.

It is this unchecked growth in the size of government that the private sector is seeking to contain, fearing that the extra $500 million in annual revenues the Government is seeking by 2016-2017 will simply be used to fuel more spending, not cut the fiscal deficit and national debt.

On the capital spending side, the Coalition called for a “comprehensive plan” that included both upfront and annual maintenance costs for the Government’s capital works.

“Budgeted costs should factor in the planned useful lives and monitor the value for money proposition,” it added. “Bidding, and the awarding of major contracts, must be transparent, with contractor accountability.”

The Government’s financial reporting, too, came under scrutiny, with the Coalition saying current presentation methods made it both hard to understand revenue and spending performance, plus break it down into line items.

“The current financial reporting by the Government still does not comply with International Financial Reporting Standards or Government Accounting Standards, which results in significant unrecorded future liabilities, contingencies and commitments,” the Coalition warned.

Pushing for more transparency in government operations, the private sector group also called on the Government to determine the specific costs incurred in administering, collecting and implementing each revenue stream.

“Budget caps should be established for the implementation, collection and administration of each revenue stream to avoid spending creep,” the Coalition said.

Also calling for tax payments in cash by individuals to be phased out in favour of cards or electronic means, the group, which comes under the BCCEC, added that any company failing to come into line with this policy “should be considered a threat to the formal economy and therefore should be clear targets for revenue audits”.

When it came to selling, leasing or otherwise using government assets to generate revenue, the Coalition said the funds generated from any disposals should go solely to paying down the national debt.

Calling for transparency and clear timelines on the sale of government assets, it added: “Policies and attendant legislation [should be] developed to restrict the disposal of land assets. Such key assets should be subject to long-term leases with the title remaining with the Crown/Government.”

On the social security front, the Coalition urged the Government to “mandate budget caps and efficiency ratios (based on international benchmarks) for each programme.

“Accountability and reporting of the cost to value of each programme must be required,” it added. “For every dollar of social services provided, it costs $0.20 to administer. Therefore, the programme is 20/80 cost to value.

“For proposed future social programmes, thorough cost to value analyses must be performed prior to any significant investment, with minimum thresholds and efficiency ratios established, against which programme viability is evaluated.”

Indeed, the Coalition has even gone so far as to call for ‘whistle blowing’ legislation to protect anyone who exposes wrongdoing in government. And it is also urging policies and laws for “improving government productivity, accountability and ease of doing business”, imposing private sector-style demands on the public sector.

Finally, the Coalition has reiterated a suggestion made previously by BCCEC chairman, Chester Cooper and others, namely that the Government outsource Business Licensing to the latter body.

“Establish the BCCEC as the Licensing Authority that will confirm and sign off on compliance by businesses with laws and regulations governing their operations, along with validation of payments of all taxes and other amounts due to the Public Treasury being current,” the letter said.

“This private sector regulatory body would remove the Government from the unpopular position of having to close illegal or non-conforming businesses, assures that the Government receives its revenue (taxes), and eliminates or greatly reduces the flow of money to the informal economy, thus improving business in the formal economy.”

Summing up its proposals, the Coalition said that packages together they “will put the country back on a course to once again becoming one of the most prized nations in the world”.